Multimedia Marketing/Marketing.iso/market/chapter7.1p

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SECTION 7.1  The Promotion Function

INSTRUCTIONS Answer this question: "Why do marketers engage in promotion?
Then go into this section for answers.

EXAMPLE

Many people think of advertising as a tool of big business--of
expensive Super Bowl commercials, big spreads in national magazines,
and full-page ads in large city newspapers. But advertising is an
important tool for hundreds of thousands of small businesses.

A small music store was experiencing difficulty in maintaining sales.
The owner of the store had tried upgrading the product line and
improving the store interior, but these had little or no effect. She
decided to mail advertisements to past customers, notifying them of
their "preferred customer" status and inviting them to shop at
reduced prices one afternoon a week. The campaign was a tremendous
success, as numerous customers responded to the advertisement and
took advantage of the offer. The store owner now uses this campaign
frequently throughout the year and credits it with improving her
sales far beyond her initial hopes.

DETAILS

Numerous companies allocate substantial resources to promotion, which
is communicating with potential buyers about a product's existence
and uses to stimulate sales. Many organizations engage in promotion,
including both large and small businesses, political candidates,
not-for-profit organizations, and even doctors and lawyers engage
in some kind of promotion.

Some examples of this activity are:

1. A magazine advertisement proclaims to consumers that their cats
do not really have nine lives, and that consumers should purchase
the company's brand to protect the cat's health.
2. Television commercials for a mouthwash announce that the company
brand lasts two times longer than competing mouthwashes.
3. A computer sales representative calls upon a committee of school
board members, school principals, and the superintendant of schools
of a local district. The sales representative attempts to convince
them that they should purchase the company brand for their system.
4. A paint manufacturer provides its retail outlets with mailers
which can be sent to customers and with displays carrying the
producer's insignia.
5. An auto manufacturer executive sends a press release describing
a new automobile model to various newspapers.
6. A candidate for the United States Senate makes a speech to a
Women's rights group and promises that he will fight for equal
opportunity in the workplace.


All promotional activities have the same general objective of
changing the behavior of potential buyers--to turn them into actual
buyers of a particular product, service, or idea. In its simplest
form, management might promote a product by simply telling people about
its existence. One example is the signs that one sees along highways
that call out "Food ahead" or "Five Miles to Jim's family restaurant."

More often, however, promotional activities extend far beyond this
by involving persuasion--attempting to convince people that the
sponsor's product, service, or idea is better than others. For
instance, through promotion, marketers can persuade some customers
to believe that a brand is "favorable".

To illustrate, many studies have indicated that in blindfold tests
(where people are asked their preferences when the brand names are
not revealed) most consumers cannot distinguish between brands of
cola, beer, turkey, cigarettes, and many other products. Yet, due
to promotional themes, most consumers have decided preferences for
many items. Consumers who place a high value on time tend to be
brand-loyal, for instance. Presumably they have neither the time
nor the inclination to experiment with different brands. Promotion
campaigns help to develop and maintain such preferences.

TV ads, contests, and sweepstakes are among the many promotional
techniques that can help to position a product and develop its
link with needs and social acceptance. This does not mean that false
promises lead to lasting marketing relationships; lasting relationships
depend on delivering products which do, in fact, satisfy needs. But
promotion efforts can help to bring this about.

PROBLEM 1

An advertising campaign for a marketer of ski boots has the general
objective of:

A. Informing target customers about the existence of the brand.
B. Persuading target customers to remember the brand name.
C. Reminding target customers to buy the brand.
D. Changing the behavior of target customers.

WORKED

An advertising campaign for a marketer of ski boots has the general
objective of changing the behavior of target customers. This
objective is very general, indicating that advertising and other
forms of promotion can be used for many purposes. The advertisement,
for example, may be designed to induce consumers to replace their
old boots with the latest innovation. Or it may urge consumers to
visit a ski shop and try on the boots. In addition, it could ask
target consumers to compare the price of the boots with those of
competitors. Many other behaviorally-oriented objectives are possible.

ANSWER  D
INSTRUCTIONS Answer this question: "Why do marketers engage in promotion?
Then go into this section for answers.

EXAMPLE

Many people think of advertising as a tool of big business--of
expensive Super Bowl commercials, big spreads in national magazines,
and full-page ads in large city newspapers. But advertising is an
important tool for hundreds of thousands of small businesses.

A small music store was experiencing difficulty in maintaining sales.
The owner of the store had tried upgrading the product line and
improving the store interior, but these had little or no effect. She
decided to mail advertisements to past customers, notifying them of
their "preferred customer" status and inviting them to shop at
reduced prices one afternoon a week. The campaign was a tremendous
success, as numerous customers responded to the advertisement and
took advantage of the offer. The store owner now uses this campaign
frequently throughout the year and credits it with improving her
sales far beyond her initial hopes.

DETAILS

While fundamentally geared toward influencing behavior, management
may have any of several secondary objectives in mind for a given
promotional activity. It is important to identify these ahead of
time, so that more effective promotions can be designed. While many
objectives are possible, they essentially fall into one of three
categories: stimulating demand, building a company image, or reinforcing
past behavior.

The most widely adopted purpose for engaging in promotion is to
directly stimulate the demand for a product, service, or idea. This
might be accomplished through efforts to stimulate primary demand
(for a generic type of item) or selective demand (for a brand).

Stimulating primary demand focuses on building the demand for a
generic type of item, for example artificial sweeteners. The aim
is to get people to choose the generic type over a substitute
product, such as sugar. Using this focus in designing promotions makes
sense in three circumstances:

1. To help build a market for a generic product that is in the early
stage of its product life cycle. This strategy was used when
artificial sweeteners were first introduced. Consumers were not
aware of the product and its advantages, so primary demand stimulation
was a good decision.

2. When the collective efforts of all competitors can be mustered
together to battle against sellers of a substitute. Examples are
where the beef producers or the pork producers promote their
products as being superior to other meats. Associations of tourist
businesses in southern states advertise in northern states during
cold months to attract tourists. Trade associations, agricultural
commissions, and shopping center associations often engage in this
practice.

3. When the sponsoring company has a dominant market share in an
industry. If this is the case, most of the benefit of the promotion
will go to the dominant company. If several companies had approximately
equal market shares in the industry, one company's promotion efforts
would assist its competitors as much as the sponsoring company.

PROBLEM 2

Why is it that beef producers are willing to promote their products,
as a group, against pork products  rather than against each other?

A. Several beef producers have a dominant market share in the industry.
B. Beef consumption by U.S. consumers has been increasing in recent
   years.
C. Competition between types of meat is greater than between producers
   of any one type.
D. Beef consumption is highly dependent on retail prices for beef.

WORKED

Beef producers are willing to promote their products, as a group,
rather than against each other because competition between types of
meat is greater than between producers of any one type. There is
only limited competition between individual beef growers because,
to a large degree, beef is a commodity. Brand preference among
consumers ranges from limited to none. On the other hand, there is
considerable competition between types of meat, as the groups of
producers attempt to convince consumers that their products taste
better, are more nutritious, are more healthful, have fewer calories,
and other benefits. Meats differ in many ways and differences have
been created in the minds of consumers through advertising. Promotions
by members of trade associations and cooperatives are common.

ANSWER C
INSTRUCTIONS Answer this question: "Why do marketers engage in promotion?
Then go into this section for answers.

EXAMPLE

Many people think of advertising as a tool of big business--of
expensive Super Bowl commercials, big spreads in national magazines,
and full-page ads in large city newspapers. But advertising is an
important tool for hundreds of thousands of small businesses.

A small music store was experiencing difficulty in maintaining sales.
The owner of the store had tried upgrading the product line and
improving the store interior, but these had little or no effect. She
decided to mail advertisements to past customers, notifying them of
their "preferred customer" status and inviting them to shop at
reduced prices one afternoon a week. The campaign was a tremendous
success, as numerous customers responded to the advertisement and
took advantage of the offer. The store owner now uses this campaign
frequently throughout the year and credits it with improving her
sales far beyond her initial hopes.

DETAILS

Most promotion activity, however, is oriented around building selective
demand for a particular brand. This is especially prevalent among
companies with products in the later stages of their life cycles.
The focus is to stress actual or even psychologically perceived
differences in brand attributes. Aspirin, for instance, is a widely-
known long-used remedy for headaches and other ailments. Because
significant increases in primary demand are unlikely, it makes sense
for individual aspirin producers to stress their own brand in
promotional messages, as they all fight for market share.

Breakfast cereal is another product in the later stage of its life
cycle. To establish perceived superiority over competitors most
companies point out that their brand tastes better, is healthier,
stays crisp, or provides other benefits that competing products do
not. The individual companies are attempting to establish differential
advantage and to maintain or increase the company's share of market.

If the product is a commodity--if the physical products of all
companies are basically the same (as in the case of salt) promotion
may be the best tool to gain differential advantage. Most consumers
cannot tell the difference between their favorite soft drink and
other soft drinks in blindfold tests. Since consumers are unable to
perceive physical differences, promotion may be the best way to
differentiate the brand.

PROBLEM 3

A producer of breakfast cereal is likely to promote selective rather
than primary demand because:

A. The collective effort of all competitors can be mustered
   together to battle against sellers of substitutes.
B. Several companies have dominant market shares in the industry.
C. Breakfast cereal is a luxury, not a necessity, product.
D. The product is in a later stage of the product life cycle.

WORKED

A producer of breakfast cereal is likely to promote selective
rather than primary demand because the product is in a later stage
of the product life cycle. At present, breakfast cereal is in the
maturity stage of the cycle. Here, there is substantial competition
among firms in the industry--each of which is fighting for market
share. Since the product class has matured, there is probably no
point in primary demand creation, as this would not increase total
industry sales. If individual companies promoted primary demand,
this would help competitors, as well as themselves. Hence, the best
approach is to stimulate secondary demand.

ANSWER  D
INSTRUCTIONS Answer this question: "Why do marketers engage in promotion?
Then go into this section for answers.

EXAMPLE

Many people think of advertising as a tool of big business--of
expensive Super Bowl commercials, big spreads in national magazines,
and full-page ads in large city newspapers. But advertising is an
important tool for hundreds of thousands of small businesses.

A small music store was experiencing difficulty in maintaining sales.
The owner of the store had tried upgrading the product line and
improving the store interior, but these had little or no effect. She
decided to mail advertisements to past customers, notifying them of
their "preferred customer" status and inviting them to shop at
reduced prices one afternoon a week. The campaign was a tremendous
success, as numerous customers responded to the advertisement and
took advantage of the offer. The store owner now uses this campaign
frequently throughout the year and credits it with improving her
sales far beyond her initial hopes.

DETAILS

Institutional image building is another promotion objective. Companies
use promotion to improve their images. This, in turn, can assist the
sponsor in attaining its objectives, such as sales, higher stock
prices, better relations with public officials, and better terms from
banks and other financial institutions. One firm, for example,
touted its progress in developiing an elliptical radial tire designed
for better gas mileage. Telling people about the company's R & D
leadership helped in selling other company tires. Similarly, much of
the advertising a running shoe producer sponsors for its running
shoes is designed to build the company quality image. Its sales
representatives stress the same theme.

Promotional activities are also used to offset negative public
opinions generated by pressure groups such as consumerists. Many
environmentalists, for instance, have condemned tree harvesting in
certain wilderness areas. In response, a lumber producer has placed
ads showing how modern harvesting techniques can actually enrich
both forests and animal life. An oil company sponsors institutional
image building promotions in regions of the U.S. where public
attitudes toward the company are negative. These promotions help to
sway public support to favor a company's activities.

Finally, reinforcement is a secondary promotion objective. Memory
decay causes people to forget about products over time, especially
those they purchase infrequently (such as major durables) and those
associated with low levels of personal involvement in the decision
(such as convenience items). Promotional activities  may be used to
remedy this by reinforcing past learning and brand loyalty.

To illustrate, many credit unions and savings and loan associations
send their members monthly or quarterly newsletters to remind them
of the financial rewards made possible by making regular deposits.
Similarly, an automobile producer publishes a magazine it sends
montly to past new car buyers. Featuring interesting travel articles,
the publication also contains considerable narrative praise about
company products. The firm reinforces past buying behavior through
this medium, enhancing the liklihood of repeat purchases. Small
companies sometimes sponsor local softball teams. The name of the
sponsor appears on the uniforms and serves to reinforce past patronage
of the company.

PROBLEM 4

A food service company wants to engage in institutional
image building. Which of the following promotion messages would
further that goal?

A. "Our products are all inspected rigorously".
B. "We offer overnight delivery".
C. "We are a sponsor of the olympics."
D. "We will match any competitor's price.

WORKED

A food service company that wants to engage in
institutional image building could stress that the firm is a
sponsor of the olympics. The objective of this message is that the
company does desirable things and is a good citizen. Institutional
advertisements do not focus on company products and services or
their benefits to consumers. Their objective is not directly to
sell goods and services. In the long run, however, institutional
promotion may help sell the company's output if it generates enough
goodwill among consumers. A consumer may have been exposed to this
kind of promotion in the past and the message may have cut into
his or her subconscious, promoting purchase of company products
at a later time.

ANSWER  C