978-1305405745 Chapter 17

Chapter 17: Promotional Planning

CHAPTER 17: PROMOTIONAL PLANNING

CHAPTER OUTLINE

Spotlight: Telesian Technology, Inc.

(http://www.telesian.com)

1) Promotion Is Communication

LO1: Describe the communication model and the factors that determine a

promotional mix.

i) Marketing communications that inform and persuade consumers

ii) Key decision in developing a promotional strategy is determining what you

want to get out of it

iii) Process with identifiable components

(a) Source

(b) Message

(c) Channel options

(d) Receiver

iv) Promotional mix

(1) Blend of nonpersonal, persona, and special forms of communication

aimed at a target market

(2) Promotional methods

(a) Advertising, personal selling, sales promotion tools affected by many

factors

(i) Geographical nature of the market

(ii) Size of the promotional budget

(iii)Product’s characteristics

(3) Evaluate competitor’s promotional tactics

2) Determining the Promotional Budget

LO2: Explain methods of determining the appropriate level of promotional

expenditures.

i) Four approaches that small business owners often use are:

(1) Budgeting a fixed percentage of sales

(2) Deciding how much is left over after other expenses are covered

(3) Spending at the same level as competitors

(4) Determining how much is needed to achieve objectives.

a) Budgeting a Fixed Percentage of Sales

i) Major shortcoming of this method is a tendency to spend more on promotion

when sales are increasing and less when they are declining

b) Deciding How Much Is Left Over After Other Expenses Are Covered

(1) Spending whatever is left over when all other activities have been funded

(2) May not accomplish promotional goals

c) Spending at the Same Level as Competitors

d) Determining How Much Is Needed to Achieve Objectivess

3) Promotion Using the Internet and Social Media

Chapter 17: Promotional Planning

LO3: Explain how the Internet and social media are changing promotional

practices.

a) The Small Business Website

i) Creating and Registering a Site Name

ii) Building a User-Friendly Website

(1) Exhibit 17.1 Website Design Guidelines

(a) Select and register your domain name

(b) Choose a Web host

(c) Decide on the layout

(d) Provide easy navigation

(e) Stay consistent in style

(f) Make sure the website can be accessed by multiple devices

(g) Engage a search engine optimization

(h) Keep the website fresh

(i) Include a call to action

(j) Supply contact information

iii) Promoting the Website

b) Social Media

(1) Social networking

(2) Microblogging

ii) Social Networking Sites

(1) Facebook

(2) Twitter

(3) LinkedIn

(4) Pinterest

(5) Google+

(6) Tumblr

iii) Direct E-Mail Promotion

iv) Reciprocal Advertising and Hyperlinks

v) Blogs

vi) Mobile Devices

vii) Apps

(1) Exhibit 17.2- Do’s and Don’ts of Social Media Marketing

viii) Quick Response Codes

(1) A Quick Response (QR) code is a square bar code hat connects to a

website, a video, or some other web content. The barcode makes it easy

for someone to access your site without typing in a URL.

4) Personal Selling in the Small Firm

LO4: Describe personal selling activities.

a) The Importance of Product Knowledge

b) The Sales Presentation

i) Prospecting

(1) Personal referrals

(2) Impersonal referrals

(3) Marketer-initiated contacts

(4) Customer-initiated contacts

Chapter 17: Promotional Planning

ii) Practicing the Sales Presentation

(1) Improves the salesperson’s success rate by utilizing some of the

techniques addressed in Exhibit 17.3

(a) Be honest

(b) Know your audience

(c) Know how much time you have

(d) Prepare an outline

(e) Rehearse

(f) Get to the point

(g) Be relevant

(h) Engage the customer

(i) Believe in what you are selling

(j) Be enthusiastic

(k) Use visuals

(l) Get reactions from the prospect

c) Cost Control in Personal Selling

i) Cost for outside sales calls may be high

ii) Especially important to control costs for a new business with limited resources

d) The Compensation Program for Salespeople

i) Nonfinancial compensation

(1) Personal recognition and satisfaction of reaching sales quota

(2) Personal and career advancement

ii) Financial Compensation

(1) Two basic plans

(a) Commissions

(i) Preferred by small businesses

(ii) Approach is simple and directly related to productivity

(b) Straight salary

(i) More income security

(ii) Can potentially reduce a salesperson’s motivation by providing

income despite low performance or no sales at all

(c) Combination of commission and straight salary most attractive plan

for most small businesses

iii) Advertising Practices for Small Firms

5) Advertising Practices

LO5: Identify advertising options for a small business.

i) Advertising is impersonal presentation of a business idea through mass media

a) Advertising Objectives

i) Primary goal to sell by informing, persuading, and reminding customers of the

availability or superiority of a firm’s product or service

ii) Must always be viewed as a complement to a good product and never as a

replacement for a bad product

iii) Avoid creating false expectations with advertising

iv) May seem to be a waste of money, but is the primary alternative to personal

selling which is more expensive and time-consuming

b) Types of Advertising

Chapter 17: Promotional Planning

i) Product Advertising – the presentation of a business idea designed to make

potential customer aware of a specific product or service and create a desire

for it

ii) Institutional advertising – the presentation of information about a particular

firm, designed to enhance the firm’s image

c) Using Advertising Specialists

i) Advertising agencies provide many services including:

(1) Graphic design, artwork, and even printing for specific advertisements

and/or commercials.

(2) Recommendations for the media with the greatest “pulling power”

(3) Copywriting, not just for traditional ads, but also for blogs, press release

and other materials.

(4) Assistance with trade shows and merchandise displays

(5) Website design and social media management

(6) Mailing and email list management

d) Frequency of Advertising

i) Important and highly complex issue for small businesses

ii) Should be done regularly

iii) Part of an ongoing promotional program

e) Where to Advertise

i) Most small firms restrict either geographically or by customer type

ii) Media should reach, but not overreach, firm’s present or desired target market

iii) Combination of media depends on type of business and its current

circumstances

iv) Exhibit 17.4 Important facts about major advertising media.

6) Sales Promotional

LO6: Discuss the use of sales promotional tools.

a) Specialties

i) Calendars, pens, key chains, coffee mugs, and shirts

ii) Enduring nature and tangible value

iii) Personal, distributed directly to the customer

b) Trade Show Exhibits

i) Possible path to international markets

ii) Tips for trade shows

(1) Check out the trade show’s history

(2) Applt for a speaking opportunity

(3) Pick a good location for the booth

(4) Prepare a professional-looking display

(5) Have a sufficient quantity of literature on hand

(6) Bring the right staff

(7) Have the right giveaway

(8) Find a partner

(9) Follow up.

c) Coupons

i) The world of couponing has changed with Groupon.

ii) Groupon spawned competitors such as LivingSocial and SocialTwist.

Chapter 17: Promotional Planning

d) Publicity

i) Provides visibility for a business at little or no cost

ii) Not always free, relatively small investment

iii) Examples: underwriting school yearbooks, sponsoring youth athletic

programs, social shopping websites

e) When to Use Sales Promotion

i) Based on business objectives

ii) Based on effective communication

ADDITIONAL DISCUSSION QUESTIONS

1. Discuss the advantages and disadvantages of each approach to budgeting

funds for promotion.

a. Using a percentage of sales is simple and quick; the disadvantage is that a

2. What do you need to do to obtain a domain name?

The Domain Name System (DNS) allows users to find their way around the

3. What guidelines should you follow in designing your website?

Chapter 17: Promotional Planning

4. If you were opening an office furniture store, how would you select a social

networking site to introduce yourself to prospective customers?

5. Outline a system of prospecting that could be used by a health care spa.

Incorporate all the techniques presented in this chapter.

Prospecting is about building relationships that will ultimately lead to personal

6. Assume you have the opportunity to “sell” your course instructor on the

idea of eliminating final examinations. Prepare a sales presentation using

the techniques in Exhibit 17.3

Answers to this question will vary. Following are examples of some of the

points that may be presented and possible objections for each:

Chapter 17: Promotional Planning

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8. What are some nonfinancial rewards that could be offered to salespeople?

Security for the salesperson is the greatest advantage of a salary plan. A

straight salary makes it easier for the firm to require non-selling activities

9. What would be your first choice for an advertising medium if you owned a

rental car agency? Why?

10. As a college student, what kind of app would be most useful to you? One for

buying textbooks or for studying socially, or for finding a place to live, or

something else/ If you were marking that app, how could you get free

publicity?

Individual answers will vary.

SUGGESTED ANSWERS TO YOU MAKE THE CALL EXERCISES

Situation 1

1. Why do you think DiPippo chose videos to market his products?

2. What risks do you think Di Pippos faces with customers posting videos

about his products

3. Take a look at some of the videos showing Pen Fishing Rods products and

some that were posted by customers. Why has this approach worked? What

would you recommend to make it better?

Student answers will vary.

Commented [SN1]: tech

Chapter 17: Promotional Planning

Situation 2

1. If you were starting a company in an industry with large competitors, what

steps would you take to prepare your advertising budget?

2. If Landa had come to you for advice, what would you have told him about

building an online community?

3. Can Nulo’s online community be sustained? What kinds of information

should they be sharing on their website?

Situation 3

1. What risks are Barna and Beauchamp taking by giving away samples every

month?

Product sample giveaways are an excellent way of connecting directly and

2. If you owned a beauty product company, would you partner with Birchbox

to market your products? Why or why not?

Students will provide individual comments on these questions.

3. What questions would you want to ask Birchbox before signing up to pay the

subscription fee?

Students will provide individual comments on these questions.

SUGGESTED SOLUTION TO CASE 17: HUBSPOT, INC.

1. How has the salesperson’s role changed because of Internet marketing?

Consider differences in prospecting and presentation.

Chapter 17: Promotional Planning

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Prospecting is a systematic process of continually looking for new

customers. Sales presentations is a form of personal selling and requires the

sales person to make a perfect oral delivery of the product.

Prospecting techniques vary. There are personal referrals which are

referrals that come from friends, customers and other businesses. Another

technique is impersonal referrals which come from media publications, public

records, and directories. Prospects can also be identified through marketer-

initiated contacts. These are telephone calls or mail surveys to help locate

possible buyers.

Sales presentations give the salesperson the opportunity to respond to questions

immediately. Successful salespeople should develop the following techniques:

• The ability to respond to a direct denial

• The ability to respond to an indirect denial

• The ability to answer objection with the words, feel, felt, and found

• Take notes

• Show compensating advantages

• Find the true objection

• Follow up and follow through

2. Do you agree with HubSpot that a prospect is more “qualified” to make

purchasing decision when it uses information found on the Internet?

3. How might the salesperson’s compensation be different or the same with

Internet sales versus traditional sales methods?

4. Should a new small business rely solely on Internet promotions? What other

methods should it use?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17–10