Managing Advertising and Sales Promotions PDF

BM2207 MANAGING ADVERTISING AND SALES PROMOTIONS Developing and managing an advertising program (Kotler P. K., 2018) Modern marketing requires more than developing good market offerings (goods and services). It also requires companies to communicate with present and pot...

BM2207 MANAGING ADVERTISING AND SALES PROMOTIONS Developing and managing an advertising program (Kotler P. K., 2018) Modern marketing requires more than developing good market offerings (goods and services). It also requires companies to communicate with present and potential customers, stakeholders, and the public. Since customers are now taking a more active role in the communication process, companies must seek to engage and excite people, persuade them to purchase and make them experience the market offerings they promote. Effective marketing communication should establish a connection, promise a reward, inspire action, and stick in the customers’ memory. The ideal marketing communication should ensure the following: Figure 1. Steps in Developing Effective Communication Source: Marketing Management 4th European Edition, 2019, p. 556 1. Target Audience. The target audience critically influences the marketer’s decisions on what to say, how, when, and to whom. Companies must have a clear target audience in mind. 2. Communications Objectives. Marketers must determine and set objectives to establish the need for the marketing offerings category, build awareness, build the brand’s ability to meet a relevant need, and influence brand purchase intention. 3. Design communications. Marketers search for themes or ideas that will tie into the brand and help establish what to say (message strategy), how to say it (creative strategy), and who should say it (message source). 4. Communication channels. Finding the most important communication channel for delivering a message is crucial in ensuring the success of business communications. Communication channels may be personal or non-personal. 5. Total Marketing Communications Budget. Companies should set their overall budget from product and market need levels. Budgets tend to be higher when there is low channel support or a change in the marketing program. 6. Media mix (Marketing communications mix). Companies should allocate the budget over the eight (8) major modes of communication – advertising, sales promotion, public relations and publicity, events and experiences, direct marketing, interactive marketing, word-of-mouth marketing, and personal selling 7. Evaluating advertising effectiveness. The essence of measuring results is to determine the influence the advertisement has on the customers’ psychological and emotional buying decisions. 10 Handout 1 *Property of STI  [email protected] Page 1 of 8  BM2207 8. Managing integrated marketing communications. Integrated marketing communications help communicate the brand message on all essential marketing components. It ensures a similar message is delivered to all potential and existing customers. Advertising Advertising is any paid form of non-personal presentation of ideas. It can be a cost-effective way to disseminate messages, whether to build brand preferences or educate people. Even in today’s challenging media environment, good ads can pay off. In developing an advertising program, marketing managers must always identify the target market and buyer motives. Then they can make the five (5) major decisions known as “the five (5) Ms”: A. Mission: What are the advertising objectives of the company? B. Money: How much is the company willing to spend, and how to allocate spending across media types? C. Message: What should the ad campaign say? D. Media: What effective media channel should the company use? E. Measurement: How should the company evaluate the results? Figure 2. The Five Ms of Advertising Source: Marketing Management 4th European Edition, 2019, p. 556 Setting the Advertising Objectives Advertising objectives must flow from earlier decisions about the target market, brand positioning, and marketing program. An advertising objective is a specific communications task and achievement level to be accomplished with a specific audience within a particular period. Its objective should emerge from a thorough analysis of the current marketing situation: 1. The objective to stimulate more usage — If the product class is mature, the company is the market leader, and brand usage is low, the objective is to stimulate more usage. 10 Handout 1 *Property of STI  [email protected] Page 2 of 8  BM2207 2. The objective to convince the market of the brand’s superiority — If the product class is new, the company is not the market leader, and the brand is superior to the leader. Classifications of advertising objectives: A. Informative advertising aims to create brand awareness and knowledge of new products or new features of existing products. Consumer packaged goods companies like Colgate, General Mills, and Unilever often focus on key product benefits. B. Persuasive advertising aims to create liking, preference, conviction, and purchase of a product or service. Some persuasive advertising uses comparative advertising, which makes an explicit comparison of the attributes of two or more brands. Samsung ran a TV advertisement claiming to offer more and better phone features than its rival Apple. C. Reminder advertising aims to stimulate repeat purchases of products and services. Expensive, four- color Coca-Cola ads in magazines remind people to purchase Coca-Cola. D. Reinforcement advertising aims to convince current purchasers they have made the right choice. Automobile ads often depict satisfied customers enjoying the special features of their new car. Deciding on the advertising budget Although advertising is a current expense, part of it is an investment in building brand equity and customer loyalty. The allocation decision considers the media type, marketing budget, and production costs since it affects company profits. Ideally, companies should align their budget with the overall marketing goals so that it does not spend too much or too little on advertising. Factors affecting budget decisions: 1. Stage in the product life cycle — New products typically merit large advertising budgets to build awareness and gain consumer trials. Established brands usually are supported by lower advertising budgets, measured as a ratio to sales. 2. Market share and consumer base — High-market-share brands usually require less advertising expenditure to maintain their share as a percentage of sales. Building share by increasing market size requires larger expenditures. 3. Competition and clutter — A brand must advertise more heavily to be heard in a market with many competitors and high advertising spending. Even advertisements not directly competitive with the brand create clutter and a need for heavier advertising. 4. Advertising frequency — The number of repetitions needed to convey the brand’s message to consumers obviously impacts the advertising budget. 5. Product substitutability — Brands in less-differentiated or commodity-like product classes (beer, soft drinks, banks, and airlines) require heavy advertising to establish a unique image. 10 Handout 1 *Property of STI  [email protected] Page 3 of 8  BM2207 Sales Promotion (Kotler P. K., 2018) A sales promotion is a marketing strategy in which a business uses a temporary campaign or offer to increase interest or demand in its market offering. It is more budget-friendly and consists of a collection of incentive tools, mostly short-term, designed to stimulate quicker or greater purchases of particular products or services by consumers or the trade. Advertising, on the other hand, is a permanent strategy that involves expensive marketing and sales campaign. It presents a reason for consumers to buy a product or service and helps increase the loyalty of existing customers. Advertising vs. Promotion Consumer franchise development is one type of sales marketing tactic. They include free samples, frequent rewards, coupons with a selling message, and premiums associated with the product to impart a selling message along with the bargain. Price-off packs, customer premiums unrelated to a product, competitions and sweepstakes, consumer refund offers, and trade allowances are examples of sales promotion tactics that often do not establish brands. Sales promotions in markets with a high level of brand similarity can result in a significant sales reaction in the short term but no long-term permanent gain. They could be able to change market shares in markets with significant brand dissimilarity permanently. Consumers may stockpile in addition to switching brands — buying earlier than usual or in larger amounts. But the sales can then decline. Since small-share competitors cannot match the advertising budgets of market leaders, secure shelf space without paying trade allowances, or encourage consumer trials without providing incentives, they may gain from focusing on sales promotion. Because most promotions primarily benefit current users, dominant market leader brands tend to give deals less frequently. Consumer promotions that promote brand building and product movement can provide the best of both worlds. They frequently result in greater long-term sales of high-quality goods. For instance, digital coupons that may be redeemed on a smartphone or downloaded to a customer’s printer are the area of sales promotions that is expanding the fastest. Digital coupons feature higher redemption rates, less printing expenses, less paper waste, and are quickly updated. Events and Experiences (Kotler P. K., 2019) Events Objectives. Events can deliver beneficial impacts and outcomes for the organizers, the host community, and other stakeholders such as participants, spectators, sponsors, and the media. Marketers report several reasons to sponsor events: 1. To identify with a particular target market or lifestyle — Customers can be targeted geographically, demographically, psychographically, or behaviorally according to events. Old Spice, an American brand of male grooming products, sponsors a collegiate basketball tournament to highlight product relevance and sample among its target audience of 16- to 24-year-old males. 2. To increase the salience of the company or product name — Sponsorship offers sustained exposure for a brand, a necessary condition for reinforcing brand salience. Top soccer sponsors Emirates, 10 Handout 1 *Property of STI  [email protected] Page 4 of 8  BM2207 Hyundai, Kia, and Sony benefited from the repeated brand and ad exposure over the month-long World Cup tournament. 3. To create or reinforce perceptions of key brand image associations — Events have associations that help create or strengthen brand associations. To toughen its image and appeal to the American cultural region, Toyota Tundra sponsors BASS fishing tournaments and has sponsored Brooks & Dunn country music tours. 4. To enhance the corporate image — Sponsorship can improve perceptions that a company is likable and prestigious. Although Visa views its long-standing Olympic sponsorship to enhance international brand awareness and increase usage and volume, it also engenders patriotic goodwill and taps into the emotional Olympic spirit. 5. To create experiences and evoke feelings — The feelings engendered by an exciting or rewarding event may indirectly link to the brand. Audi models featured prominently in the 2010 blockbuster Iron Man 2, including the main character Tony Stark’s R8 Spyder and the A8, Q5 and Q7 SUVs, and A3 hatchback. After a month-long marketing blitz, positive word of mouth doubled for the brand. 6. To express commitment to the community or social issues — Cause-related marketing sponsors nonprofit organizations and charities. Firms such as Globe’s Gcash Forest (a charity program to battle deforestation in the Philippines), SM’s Trash-to-Cash (a waste collection program to support earth day), and San Miguel Corporation’s river clean-up and mangrove tree planting projects. These companies have made their support of causes a vital cornerstone of their marketing programs. 7. To entertain key clients or reward key employees — Many events include lavish hospitality tents and other special services or activities only for sponsors and guests. These perks arouse goodwill and establish valuable business contacts. PLDT-Smart Philippines used its Ka-Partner Reward Program to give back to its load retailers from all over the Philippines. The event includes fun games, exciting prizes, and entertainment from today’s celebrities. 8. To permit merchandising or promotional opportunities — Many marketers tie contests or sweepstakes, in-store merchandising, direct response, or other marketing activities with an event. Ford and Coca-Cola have used their sponsorship of the popular TV show American Idol in this way. Despite these potential advantages, the result of an event can still be unpredictable and beyond the sponsor’s control. And although many consumers credit sponsors for providing the financial assistance to make an event possible, some may resent its commercialization. Major Sponsorship decisions. Making sponsorships successful requires choosing the appropriate events, designing the optimal sponsorship program, and measuring the effects of sponsorship. A. Choosing events — Because there are so many expensive sponsorship options, many marketers are becoming selective. The event must adhere to the brand’s marketing goals and communication plan. The event needs to have the desired appearance and produce the required consequences. A perfect event reflects or strengthens the sponsor’s brand or corporate image, is distinct but not overrun with sponsors, and lends itself to auxiliary marketing initiatives. B. Designing sponsorship programs — Many marketers think that an event sponsorship’s success ultimately depends on the marketing strategy that goes with it. Spending on associated marketing 10 Handout 1 *Property of STI  [email protected] Page 5 of 8  BM2207 initiatives should be at least two (2) to three (3) times the amount of the sponsorship expense. More businesses are now utilizing their names to sponsor stadiums, arenas, and other locations where events are held, investing billions of dollars in the naming rights to significant venues. However, like any sponsorship, additional marketing initiatives should be prioritized. C. Measuring sponsorship activities — The media coverage of an event is evaluated using supply-side metrics, such as the length of time a brand is visible on television or the number of column inches of press clippings that mention it. The cost of advertising a particular vehicle can be calculated based on these possible “impressions.” The advertiser employs media time and space to spread a carefully thought-out message. D. Creating Experience. A large part of local, grassroots marketing is experiential marketing, which communicates features and benefits and connects a product or service with unique and interesting experiences. “The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s life.” Many firms create events and experiences for consumer and media interest and involvement. Public Relations (Kotler P. K., 2019) A public is any group with an actual or potential interest in or impacts a company’s ability to achieve its objectives. Public relations (PR) includes a variety of programs to promote or protect a company’s image or individual products. The wise company takes concrete steps to manage successful relationships with its key public. Most have a public relations department that monitors the organization’s public attitudes and distributes information and communications to build goodwill. The best PR departments counsel top management to adopt positive programs and eliminate questionable practices so negative publicity doesn’t arise in the first place. They perform the following five (5) functions: 1. Press relations — Presenting news and information about the organization in the most positive light. 2. Product publicity — Sponsoring efforts to publicize specific products. 3. Corporate communications — Promoting understanding of the organization through internal and external communications. 4. Lobbying — Dealing with legislators and government officials to promote or defeat legislation and regulation. 5. Counseling — Advising management about public issues, company positions, and image during good times and bad. Marketing public relations. Many companies use marketing public relations (MPR) to support corporate or product promotion and image-making. MPR goes beyond simple publicity and plays a vital role in the following tasks: Launching new products. The remarkable one-time commercial success of toys such as LeapFrog, Beanie Babies, and Silly Bandz owes a great deal to strong publicity. Repositioning mature products. In a classic PR case study, New York City had horrible press from the 1970s until the “I Love New York” campaign. 10 Handout 1 *Property of STI  [email protected] Page 6 of 8  BM2207 Building interest in a product category. Companies and trade associations have used MPR to rebuild interest in declining commodities such as eggs, milk, beef, and potatoes and to expand consumption of such products as tea, pork, and orange juice. Influencing specific target groups. McDonald’s sponsors special neighborhood events in Latino and African American communities to build goodwill. Defending products that have encountered public problems. PR professionals must be adept at managing crises, such as those weathered by well-established brands such as Johnson & Johnson’s cyanide-laced Tylenol capsules (1982), Jollibee’s fried towel Incident (2021), and Cherry Mobile’s Trident Q300 model plagued with numerous software and hardware issues (2010). Building the corporate image in a way that reflects favorably on its products. The late Steve Jobs’s heavily anticipated Macworld keynote speeches helped create an innovative, iconoclastic image for Apple Corporation. MPR is also effective in blanketing local communities and reaching specific groups, and it can be more cost-effective than advertising. Increasingly, MPR takes place online, but it must be planned jointly with advertising and other marketing communications. Creative public relations can affect public awareness at a fraction of the cost of advertising. The company does not pay for media space or time but only for staff to develop and circulate stories and manage certain events. An interesting story picked up by the media can be worth millions of dollars in equivalent advertising. Some experts say consumers are five (5) times more likely to be influenced by editorial copy than by advertising. Major decision in Marketing Public Relations. When and how to use MPR, management must establish the marketing objectives, choose the PR messages and vehicles, implement the plan, and evaluate the results. The main tools of MPR are: Publications: Companies rely extensively on published materials to reach and influence their target markets. These include annual reports, brochures, articles, company newsletters and magazines, and audiovisual materials. Events: Companies can draw attention to new products or other company activities by arranging and publicizing special events such as news conferences, seminars, outings, trade shows, exhibits, contests and competitions, and anniversaries to reach the target public. Sponsorships: Companies can promote their brands and corporate name by sponsoring and publicizing sports and cultural events and highly regarded causes. News: One of the PR professionals’ major tasks is finding or creating favorable news about the company, its products, and its people and getting the media to accept press releases and attend press conferences. 10 Handout 1 *Property of STI  [email protected] Page 7 of 8  BM2207 Speeches: Increasingly, company executives must field questions from the media or give talks at trade associations or sales meetings, and these appearances can build the company’s image. Public Service Activities: Companies can build goodwill by contributing money and time to good causes. Identity Media: Companies need a visual identity that the public immediately recognizes. The visual identity is carried by company logos, stationery, brochures, signs, business forms, business cards, buildings, uniforms, and dress codes. Establishing objectives. MPR can build awareness by placing stories in the media to bring attention to a product, service, person, organization, or idea. It can build credibility by communicating the message in an editorial context. It can help boost sales force and dealer enthusiasm with stories about a new product before it is launched. It can reduce promotion costs because MPR costs less than direct mail and media advertising. Implementing the plan and evaluating results. MPR’s contribution to the bottom line is difficult to measure because MPR is used along with other promotional tools. The easiest gauge of its effectiveness is the number of exposures carried by the media. For example, how many people recall hearing the news item? How many told others about it (a measure of word of mouth)? How many changed their minds after hearing it? References Bhasin, K. (2011) 9 PR Fiascos That Were Handled Brilliantly By Management https://www.businessinsider.com/pr- disasters-crisis-management-2011-5 Bueno, F.(2022) Going Green: 8 Companies Paying it Forward with Environmental Commitments in the Philippines. https://pinoybuilders.ph/going-green-8-companies-with-environmental-commitments-in-the-philippines/ Kotler, P., Keller, K. L, Ang S.W., Tan C.T., Leong S.W. (2018). Marketing Management 7th Edition: An Asian Perspective. Pearson Education Limited. Kotler, P., Keller, K.L., Brady M., Goodman, M., Hansen T. (2019). Marketing Management 4th European Edition. Pearson Education Limited. Olandres, A. (2010) Cherry Mobile’s Trident plagued with problems. https://www.yugatech.com/mobile/cherry-mobiles- trident-plagued-with-problems Penalosa, G. (2021) Why is Jollibee still trending after its ‘Fried Towel’ incident? https://pop.inquirer.net/110788/why-is- jollibee-still-trending-after-its-fried-towel-incident#ixzz7giSEE4J4 Smart Communications Inc. (2019) PLDT, Smart retailers win big at Ka-Partner Rewards 2019 https://smart.com.ph/About/newsroom/full-news/2019/08/19/pldt-smart-retailers-win-big-at-ka-partner- rewards-2019 10 Handout 1 *Property of STI  [email protected] Page 8 of 8