MKTG434 CH15

Importance of Relationship Marketing and IMC
1. Companies need to integrate their marketing communications activities with other company functions so messages are consistent

2. Integrated marketing communications:
“Building and reinforcing relationships by developing and coordinating a strategic communications program”

Direct Marketing
Companies build their own database of customers and communicate with them directly through ads and catalogs
Key Characteristics of Direct Marketing
1. Interactive
2. Interaction can take place at any location
3. Possibility of the ongoing mutually beneficial relationships
4. Use of one or more advertising media
5. Addressable communication to identify prospective consumers
6. Inform, create awareness, and spur immediate purchase behavior
7. Distinguished from mass advertising in measurability, accountability, efficiency, and return on investment (direct response advertising)
Database marketing
Tracking and analyzing the purchasing patterns of specific customers in a computer database and targeting advertising to their needs
*cost efficient way to increase sales
Impact of Databases on Direct Marketing
1. Technology enables marketers to compile and analyze important customer information

2. Company uses its databases to identify the best customers, their value to the organization, needs, & buying behavior.

3. Enables targeting, segmentation, and grading of customers

Customer lifetime value
Total sales or profit value of a customer to a marketer over the course of that customer’s lifetime
Loyalty (continuity) programs
Reward customers with discounts and free products in return for frequent and continuous patronage
-purchases are tracked on databases
Importance of direct marketing to IMC
Direct marketing is the best way to develop a good database:

1. Allows marketers to build relationships by learning about customers

2. Helps choose the prospects they can serve most effectively and profitably

3. Helps companies send discrete messages to individual customers and prospects

Direct marketing to IMC
1. Offers:
-ACCOUNTABILITY by providing a tangible response
-CONVENIENCE to time-sensitive consumers
-PRECISION and flexibility to cost-sensitive marketers (B2B)

2. Has favorable economics
3. More private

Drawbacks to direct marketing
1. Bad reputation of being sales oriented
2. Do not get the affiliation offered by some media (no content support to rely on)
3. Clutter
4. Privacy concerns
Direct sales
Selling to customers directly, at home or at work

1. direct selling
2. telemarketing

Direct selling
Face-to-face selling away from a fixed retail location

1. introduces consumer good
2. convinces the value
3. completes the sale if successful

Telemarketing
Selling products and services by using the telephone to contact prospective customers
Direct-response advertising
Asks the reader, listener, or viewer to provide response (action) straight to the sender
Types of direct marketing activities
1. Direct mail
2. Catalog sales
3. Direct-response:
-Print advertising (newspaper ads & inserts)
-Broadcast advertising (TV & radio)
-Digital interactive media (online: display ads & search ads)
(mobile: SMS, MMS, apps, QR bar codes, & banner ads)
Personal selling
Interpersonal communication process by which a seller discovers and satisfies the needs of a buyer
*best for relationship building
Types of personal selling
-Selling to other businesses
-Selling to retailers
-Selling to consumers
-Retail store
-Direct selling situation
Advantages of personal selling
1. Personal and persuasive
2. Facilitates instant feedback
3. Flexibility to adjust the presentation, tailored to specific needs
4. Flexibility in time
5. Helps gain distribution of new products
6. Good for high-priced items
Disadvantages of personal selling
1. Labor-intensive
2. Time-consuming
3. Poor reputation/perception
4. Requires sales executives with the right personality attributes
Functions of salespeople
1. Information gathering
2. Information providing
3. Order fulfillment
4. Relationship building
(keep commitments, service accounts, solve problems)
Trade shows
Exhibitions where manufacturers, dealers, and buyers get together for product demonstrations and discussions

*Construction of trade-show booths and exhibits has become a major factor in sales promotion plans

Major areas of exhibit booth planning
1. Budget
2. Image of the company or brand
3. Frequency of the shows
4. Flexibility of the booth configuration
Factors to be considered when planning an exhibit booth
1. Size and location of the space
2. Desired image or impression of the exhibit
3. Complexities of shipping, installing, and dismantling
4. Number of products to be displayed
5. Need for storage and distribution of literature
6. Use of preshow advertising and promotion
7. Cost of all the factors
Budgeting for exhibit booth program
Trade shows are expensive, and costs have increased substantially in the last decade
-can be a cost effective way to reach people
Promotion for Exhibit booth program
Marketers build traffic by:
1. Sending out personal invitations
2. Conducting direct-mail campaigns
3. Placing ads in trade publications
4. Issuing news releases
5. Performing telemarketing
Staff for exhibit booth
Should be articulate, people-oriented, enthusiastic, knowledgeable about the product, and empathetic listeners
Productivity for exhibit booth program
Contact information from prospective customers should be collected and organized into a lead list
Product packaging
1. Encompasses the physical appearance of the container
2. Includes the design, color, shape, labeling, and materials used
In what ways does packaging serve marketers?
1. Protection
2. Preservation
3. Information
4. Promotion
Function of product packaging
1. Creates immediate relationship with customers
2. Influences in-store shopping decisions
3. Sets the product apart from competitors
4. Informs customers of features and benefits
Design factors for product packaging
1. Stand-out appeal
2. How it communicates verbally and nonverbally
3. Image and prestige desired
Environmental issues for product packaging
1. Consumers expect green packaging
2. Recyclable tin-coated steel and aluminum packages have gained popularity
Government impact on packaging
1. Food and Drug Administration (FDA)
2. Nutrition Labeling and Education Act
*stricter labeling requirements for nutrition and health products
Reasons to change a package
1. Product alteration or improvement
2. Substitution in packaging materials
3. Competitive pressure
4. Environmental concerns
5. Changes in legislation
6. Need to increase brand recognition
Sales Promotion
Direct inducement offering extra incentives all along the marketing route
-To accelerate the movement of the product from the producer to the customer
Positive effects of sales promotion on brand volume
1. Adds value to brand
2. Maximizes sales volume
3. Helps build short-term market volume
4. Accelerates sales by motivating customers to try a new product or brand
Negative Effects of Sales Promotion on Brand Value
1. Excessive sales promotion can reduce profitability
2. Emphasis on brand image and quality makes customers become deal-prone rather than loyal
3. Overemphasis on price destroys brand equity
4. High cost
5. Excessive efforts can lead to a price war
Point of consumption strategies
1. Push strategies
2. Trade promotions
Push strategy
Help get products into the dealer pipeline and accelerate sales by offering inducements to dealers, retailers, and salespeople
*secure the cooperation of retailers

1. Producer
2. Resellers
3. End users

Trade promotions
Aimed at wholesalers and retailers to induce product purchase, display, and consumer sales promotion
*principal tactics to push products and gain self space
Trade advertising
Stimulates intermediaries to buy goods for resale to customers or for use in their businesses
*advertising in publications era by member of the trade
Pull strategies
Activities aimed at inducing trial purchase and repurchase by consumers
*To attract customs and increase demand

1. Producer
2. End users
3. Resellers

Consumer sales promotions
Aimed at consumers to stimulate product interest, trial, or repurchase
Slotting allowances
Fees paid by manufacturers to retailers for obtaining shelf or floor space for a new product
Display allowances
Fees paid to retailers to make room for and set up manufacturers’ displays
Trade deals
Short-term dealer discounts on the cost of a product or other dollar inducements to promote a product
-dealers pass savings on to customers with sale prices or specials
Forward buying
Stocking up on a product when it is discounted and buying smaller amounts when it sells at a regular price
Diverting
Purchasing large quantities of an item at a promotional discount and shipping portions to areas of the country where the discount is not offered
Buyback allowance
Manufacturer’s offer to pay for an old product to take it off the shelf to make room for the new product
Advertising allowances
Percentage of gross purchases or a flat fee paid to the retailer for advertising the manufacturer’s product
Cooperative (co-op) advertising
Sharing of advertising costs by the manufacturer and the distributor or retailer
Push money (PM)
Monetary inducements for salespeople to push the sale of particular products
(spiff)
Company conventions
Meetings held by companies with their employees, sales representatives, and/or customers to announce new products, policies, and marketing programs
Dealer meetings
Meetings held by companies with their authorized brokers, distributors, and/or retailers to announce new products, policies, and marketing programs
Consumer sales promotions to pull brands through
1. point of purchase materials
2. coupons
3. electronic coupons and convenience cards
4. cents-off promotions, refunds, and rebates
5. premiums
6. sampling
7. combination offers
8. contests, sweepstakes, & games
Point of purchase (POP)
Materials set up as a retail location to build traffic, advertise the product, and promote impulse buying
-window displays
-counter displays
-floor and wall racks to hold merchandise, streamers, and posters
Coupon
certificate with a state value that is presented to a retail store for a price reduction on a specified item
electronic coupons
offer benefits similar to paper coupons, but they are distributed at the point of purchase, based on customer information in an electronic database
convenience cards
cards issues by retailers that allow them to track their customers’ purchasing habits and demographics profiles
cents-off promotions
a short-term reduction in the price of a product designed to induce trial and usage
-one-cent sales
-free offers
-box top refunds
rebates
cash refunds on items, offered as incentives to purchase the product
premium
item offered for free or at a bargain price to encourage the customer to buy an advertised product
-improve product image, gain goodwill, broaden customer base, and produce quick sales
sampling
Offering consumers a free trial of a product, hopping to convert them to habitual use
-costly
combination offers
2 related products are packaged together at a special price
-Introduced new product by tying purchase to an established product at a special price
contest
Creates consumer involvement in which prizes are offered based on the skill of the entrants
sweepstakes
prizes are offered based on a chance drawing of entrant’s name
game
prizes are offered based on chance
-conducted over a long period of time