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Table of Contents

  1. Advertising
  2. Advertising Agencies
  3. Four Banding Alternatives
  4. Introduction to Marketing Communications
  5. Personal Selling
  6. Promotion
  7. Sales Promotion
  8. The Loyalty Ladder


LESSON 1

Advertising

Advertising is an important element of the marketing communications mix. Put simply, advertising directs a message at large numbers of people with a single communication. It is a mass medium.

Planning for advertising

Advertising agencies and their clients plan for advertising. Any plan should address the following stages:
  • Who is the potential TARGET AUDIENCE of the advert?
  • WHAT do I wish to communicate to this target audience?
  • Why is this message so IMPORTANT to them?
  • What is the BEST MEDIUM for this message to take (see some of the possible media above)?
  • What would be the most appropriate TIMING?
  • What RESOURCES will the advertising campaign need?
  • How do we CONTROL our advertising and monitor success?
There are two key categories of advertising, namely ‘above-the-line’ and ‘below-the-line.’ The definitions owe a lot to the historical development of advertising agencies and how they charge for their services. In a nutshell, ‘above-the-line’ is any work done involving media where a commission is taken by an advertising agency, and ‘below-the-line’ is work done for a client where a standard charge replaces commission. So TV advertising is ‘above-the-line’ since an agency would book commercial time on behalf of a client, but placing an advert in a series of local newspapers is ‘below-the-line,’ because newspapers tend to apply their own costing approach where no commission is taken by the agency i.e. instead the agency charges the client a transparent fee. There are many facets and elements to advertising – too many to be covered in this short lesson. Try some of the other lessons to build your knowledge.
Advertising has a number of benefits for the advertiser. The advertiser has control over the message. The advert and its message, to an extent, would be designed to the specifications of the advertiser. So the advertiser can focus its message at a huge number of potential consumers in a single hit, at a relatively low cost per head. Advertising is quick relative to other elements of the marketing communications mix (for example personal selling, where an entire sales force would need to be briefed – or even recruited). Therefore an advertiser has the opportunity to communicate with all (or many of) its target audience simultaneously.

Advertising Media

Outdoor (Posters or transport) New Media – Mobile devices New Media Internet – websites and search engines
Newspapers (Local and National) Television Magazines
Radio Cinema Others…

Exercise – Advertising

This is a warm up exercise. Consider the table below, ‘Advertising Media.’ Decide upon a span of time, for example a couple of hours or perhaps a whole day. The idea is to keep a record of the adverts you see in a short span of time. Look at the table below, and record 1, 2 and 3 where you see a any type of advert. Complete the grid below (You may need to print it off).

Advertising Media

Outdoor (Posters or transport) New Media – Mobile devices New Media Internet – websites and search engines
1
2
3
1
2
3
1
2
3
Newspapers (Local and National) Television Magazines
1
2
3
1
2
3
1
2
3
Radio Cinema Others…
1
2
3
1
2
3
1
2
3
  • Having done this, summarise points below under the following headings:
  • What kind of products and services did you come across?
  • Why did the adverts catch your attention?
  • How were the adverts targeted at you and your segment?
  • Would you buy this product or service based upon the advert?

Answer – Advertising

What kind of products and services did you come across? For example:

Cars Food FMCG
Alcohol Transport e.g. cars Cosmetics
Sport White goods Others?

Why did the adverts catch your attention? For example:

Humour Testimonials Music
Facts Cartoons Before and after
Personalities Free phone numbers Others

How were the adverts targeted at you and your segment? For example:

0-$5000 $5001-$10,000 $10,001 – $15,000
$15,001 – $20,000 $20,000-$35,000 $35,000 – $50,000
$50,001 – $75,000 $75,001 – $100,000 $100,000 +

Would you buy this product or service based upon the advert? For example:

Yes No Maybe

LESSON 2

Advertising Agencies

What is an advertising agency?

The Client Agency Relationship.

An advertising agency handles part or all marketing communications activities on behalf of a client organization. The agencies themselves tend to vary in size from small, perhaps a handful of people, to vast – where many thousands of employees make up the company. A commission is generally taken by the agency which tends to be taken from the media purchases of the client organisation.

Traffic and Production Team.

The traffic and media team are in charge of the production of the physical and artistic output, i.e. the marketing communication. In the case of a TV advert, they would commission scripts, recruit a ctors (mainly via agents), film crews and supporting activities (such as costumes and catering). All ads are different and so the specifics will vary. In the case of print advertising, the traffic and production team would commission and sign-off all printed advertising material such as direct marketing materials, magazine ads or posters.

Account Planning Team.

The account planning team work on the ‘customer’s’ perspective, and take an outward look at the world. They support the creative teams by supplying data and opinion on what I actually occurring in the marketing in which advertising is to be placed. They tend to use secondary data to support decisions, and would rarely commission original research. However, with material supplied my organisations such as Mori, Datamonitor, ACORN, and other – the account planning team can build an image of segments to help the creatives.

Media Team.

The media team will organise the timing and scheduling of the marketing communications campaign. They will look at the range of media to be exploited, and then look at the best slots in which to run advertising. They will help a client to decide upon the duration of and individual slot, and how many of them to run. Here the expense and return to the client are key factors that influence decision-making. The two main skills of the media team are media planning and media buying. Today there is a wealth of data on which media buying can be based. There is software for planning and simulation.
This is done rather like a theatrical agent would take a percentage of the income of an actor for whom employment had been found. The agency may also take payment from the media owners (i.e. sometimes take a discount and do not pass it on to the client). More transparent means of payment are becoming more popular, with some agencies being paid-by-results.
There are many types of agency, but it is generally accepted that the main ones are include full-service agency, a la carte agency, or specialist agency. A full-service agency will take on the whole project or campaign. An a la carte agency will offer some aspects of a campaign such as media buying, rather like buying items from a menu. A specialist agency tends to be small and more focused on a specific aspect of marketing communications and/or a specific market such as Internet Marketing.

A Full-Service Agency will offer:

  • Account management.
  • Creative.
  • Media.
  • Traffic and production.
  • Account planning.
  • Account management.
Account managers work for an agency with the client (an agency’s customers are called ‘clients’). Very often they will spend a lot of time with the client working as part of their marketing team. This is one way in which an agency works closely with its client and why the ‘chemistry’ between a client and its agency needs to be right. The account manager makes sure that the correct information is passed from the client to the other members of the agency. He or she is a co-ordinator and time manager. The account planner will work on a brief that is fed back to the agency team.

Creative Team

The first internal agency team members to see the brief tend to be the creatives and the media planners. The brief contains a ‘proposition’ that the client wishes to communicate to the target audience. The creative team will transform the proposition into something exciting and attractive to the target audience. The creative team decide upon the ‘creative concept.’ This will be a motivational idea. The words used to express the creative concept are called ‘copy.’ The images, pictures and diagrams are created i.e. the ‘design’ or ‘layout.’ This is done by ‘designers’ and ‘copywriters.’ Beware some creatives! Creatives tend to be artistic and innovative. Hence their advice should be highly regarded and any criticism should be constructive.

LESSON 3

Four Banding Alternatives

A Branding Strategy Based upon Brand Franchise Extension (Tauber 1981)

A marcoms tool that a marketer can employ for branding decision-making is the Four Banding Alternatives (Tauber 1981). Four Branding Alternatives is a strategic marketing communications technique.

References

Edward M. Tauber, ‘Brand Franchise Extension: New Product Benefits from Existing Brand Names,’ Business Horizons, vol. 24 (March-April 1981), p37.
It is a fun and creative approach that can add value to any class that likes to discuss brands and how they could be innovatively developed. It is used when an organization considers adding a product to its portfolio and its associated brand name. The two variables for this matrix are Product Category (Existing or New) and Band Category (Existing or New).
Four Branding Alternatives
  • New Product – a new product is developed with a series of new brand ideas and meanings to the consumer.
  • Flanker Brand – a new brand is introduced into a category where the organization already has established products.
  • Line Extension – a current brand name is introduced into a category where the organization already has established products.
  • Franchise Extension – a familiar brand is taken to a product category where it is unknown.
Here’s an example. Firstly let’s recall that Four Branding Alternatives is a strategic tool, so you need to base it upon a very large organisation which is likely to own a number of brands.
Examples would include car manufacturers, large IT companies, and conglomerates. You get the idea.
An example for the Japanese company, Sony Inc is as follows:
  • New Product – Sony enters the market for music downloads under a new sub-branding idea and concept.
  • Flanker Brand – Sony introduces the Sony Vaio laptops (as it indeed has).
  • Line Extension – Sony enter the market for digital HD TV’s (as it has).
  • Franchise Extension – Sony enters the market for innovative environmentally friendly small cars that run on solar power.

Exercise – Four Banding Alternatives

Banana Computers

Banana Computers is a well-established personal computer (PC) manufacturer. Designers and computer enthusiasts alike prefer the brand and it has a cult following all over the World. Banana is innovative and creative.
Four Branding Alternatives

Your Task.

Apply the Four Banding Alternatives to the scenario of Banana Computers. How should they progress with their branding strategy

Answer – Four Banding Alternatives

Banana Computers

Recommendations for Banana’s branding strategy:

  • New Product – Banana Computers launched a digital media player that can be used to store music, images and video. It has a huge memory and builds a very diverse and loyal client base due to its cult status. It is a design icon of its era.
  • Flanker Brand – Banana Computers uses its technology to build pocket computers (PDA’s)
Four Branding Alternatives
  • Line Extension – A new faster and more compact personal computer is launched. It is the next generation of the well-known Banana.
  • Franchise Extension – Banana go into the music download business.
Of course there are many alternatives that you could create and suggest. However, the Banana example gives you an idea of how Tauber’s Four Banding Alternatives could be used to design a branding strategy.

LESSON 4

Introduction to Marketing Communications

What are marketing communications?

Marketing communications is a subset of the overall subject area known as marketing. Marketing has a marketing mix that is made of price, place, promotion, product (know as the four P’s), that includes people, processes and physical evidence, when marketing services (known as the seven P’s).
    Advertising (above and below the line).
  • Sponsorship.
  • Packaging.
  • Merchandising (and point-of-sale).
  • EMarketing (and Internet promotions).
  • Brands.
Integrated marketing communications see the elements of the communications mix ‘integrated’ into a coherent whole. This is known as the marketing communications mix, and forms the basis of a marketing communications campaign.
How does marketing communications fit in? Marketing communications is ‘promotion’ from the marketing mix.
Why are marketing communications ‘integrated?’ Integrated means combine or amalgamate, or put simply the jigsaw pieces that together make a complete picture. This is so that a single message is conveyed by all marketing communications. Different messages confuse your customers and damage brands. So if a TV advert carries a particular logo, images and message, then all newspaper adverts and point-of-sale materials should carry the same logo, images or message, or one that fits the same theme. Coca-Cola uses its familiar red and white logos and retains themes of togetherness and enjoyment throughout its marketing communications.
Marketing communications has a mix. Elements of the mix are blended in different quantities in a campaign. The marketing communications mix includes many different elements, and the following list is by no means conclusive. It is recognised that there is some cross over between individual elements (e.g. Is donating computers to schools, by asking shoppers to collect vouchers, public relations or sales promotion?) Here are the key of the marketing communications mix.

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The Marketing Communications Mix.

  • Personal Selling.
  • Sales Promotion.
  • Public Relations (and publicity).
  • Direct Marketing.
  • Trade Fairs and Exhibitions.

LESSON 5

Personal Selling

Personal selling occurs where an individual salesperson sells a product, service or solution to a client. Salespeople match the benefits of their offering to the specific needs of a client. Today, personal selling involves the development of longstanding client relationships.

A Five Stage Personal Selling Process.

Stage One – Prospecting.

Prospecting is all about finding prospects, or potential new customers. Prospects should be ‘qualified,’ which means that they need to be assessed to see if there is business potential, otherwise you could be wasting your time. In order to qualify your prospects, one needs to:
  • Plan a sales approach focused upon the needs of the customer.
  • Determine which products or services best meet their needs.
  • In order to save time, rank the prospects and leave out those that are least likely to buy.

Stage Two – Making First Contact.

This is the preparation that a salesperson goes through before they meet with the client, for example via e-mail, telephone or letter. Preparation will make a call more focused.
  • Make sure that you are on time.
  • Before meeting with the client, set some objectives for the sales call. What is the purpose of the call? What outcome is desirable before you leave?
  • Make sure that you’ve done some homework before meeting your prospect. This will show that you are committed in the eyes of your customer.
  • To save time, send some information before you visit. This will wet the prospect’s appetite.
  • Keep a set of samples at hand, and make sure that they are in very good condition.
  • Within the first minute or two, state the purpose of your call so that time with the client is maximised, and also to demonstrate to the client that your are not wasting his or her time.
  • Humour is fine, but try to be sincere and friendly.

Stage Three – The Sales Call (or Sales Presentation).

It is best to be enthusiastic about your product or service. If you are not excited about it, don’t expect your prospect to be excited.
Focus on the real benefits of the product or service to the specific needs of your client, rather than listing endless lists of features.
Try to be relaxed during the call, and put your client at ease.
Let the client do at least 80% of the talking. This will give you invaluable information on your client’s needs.
Remember to ask plenty of questions. Use open questions, e.g. TED’s, and closed questions i.e. questions that will only give the answer ‘yes’ or the answer ‘no.’ This way you can dictate the direction of the conversation.
Never be too afraid to ask for the business straight off.

Stage Four – Objection Handling.

Objection handling is the way in which salespeople tackle obstacles put in their way by clients. Some objections may prove too difficult to handle, and sometimes the client may just take a dislike to you (aka the hidden objection). Here are some approaches for overcoming objections:
  • Firstly, try to anticipate them before they arise.
  • ‘Yes but’ technique allows you to accept the objection and then to divert it. For example, a client may say that they do not like a particular colour, to which the salesperson counters ‘Yes but X is also available in many other colours.’
  • Ask ‘why’ the client feels the way that they do.
  • ‘Restate’ the objection, and put it back into the client’s lap. For example, the client may say, ‘I don’t like the taste of X,’ to which the salesperson responds, ‘You don’t like the taste of X,’ generating the response ‘since I do not like garlic’ from the client. The salesperson could suggest that X is no longer made with garlic to meet the client’s needs.
  • The sales person could also tactfully and respectfully contradict the client.

Stage Five – Closing the Sale.

This is a very important stage. Often salespeople will leave without ever successfully closing a deal. Therefore it is vital to learn the skills of closing.
  • Just ask for the business! – ‘Please may I take an order?’ This really works well.
  • Look for buying signals (i.e. body language or comments made by the client that they want to place an order). For example, asking about availability, asking for details such as discounts, or asking for you to go over something again to clarify.
  • Just stop talking, and let the client say ‘yes.’ Again, this really works.
  • The ‘summary close’ allows the salesperson to summarise everything that the client needs, based upon the discussions during the call. For example, ‘You need product X in blue, by Friday, packaged accordingly, and delivered to your wife’s office.’ Then ask for the order.
  • The ‘alternative close’ does not give the client the opportunity to say no, but forces them towards a yes. For example ‘Do you want product X in blue or red?’ Cheeky, but effective.
So this is the Five Stage Personal Selling Process. Now have a go at it yourself by completing the lesson.
In comparison to other marketing communications tools such as advertising, personal selling tends to:
  • Use fewer resources, pricing is often negotiated.
  • Products tend to be fairly complex (e.g. financial services or new cars).
  • There is some contact between buyer and seller after the sale so that an ongoing relationship is built.
  • Client/prospects need specific information.
  • The purchase tends to involve large sums of money.
There are exceptions of course, but most personal selling takes place in this way. Personal selling involves a selling process that is summarised in the following Five Stage Personal Selling Process. The five stages are:
1. Prospecting.
2. Making first contact.
3. The sales call.
4. Objection handling.
5. Closing the sale.

LESSON 6

Promotion

Promotion is the marketing term used to describe all marketing communications activities and includes personal selling, sales promotion, public relations, direct marketing, trade fairs and exhibitions, advertising and sponsorship. Promotion needs to be precisely coordinated and integrated into the businesses global communications message, and this is called Integrated Marketing Communications (IMC). IMC integrates the message through the available channels to deliver a consistent and clear message about your company’s brands, products and services. Any movement away from the single message confuses the consumer and undermines the brand.

The Promotions Mix.

Let us look at the individual components of the promotions mix in more detail. Remember all of the elements are ‘integrated’ to form a specific communications campaign.

1. Personal Selling.

Personal Selling is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high.

2. Sales Promotion.

Sales promotions tend to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative.

3. Public Relations (PR).

Public Relations is defined as ‘the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics’ (Institute of Public Relations). PR can be relatively cheap, but it is certainly not free. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is an incident. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan.

4. Direct Marketing.

Direct marketing is any marketing undertaken without a distributor or intermediary. In terms of promotion it means that the marketing company has direct communication with the customer. For example Nintendo distributes via retailers, although you can register directly with them for information which is often delivered by e-mail or mail.
Direct mail is very highly focussed upon targeting consumers based upon a database. As with all marketing, the potential consumer is targeted based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors’ surgeries as the basis of your mail shot.
Similarly e-mail is a form of online direct marketing. You register, or opt in, to join a mailing list for your favourite website. You confirm that you have opted in, and then you will receive newsletters and e-mails based upon your favourite topics. You need to be able to unsubscribe at any time, or opt out. Mailing lists which generate sales are like gold dust to the online marketer. Make sure that you use a mailing list with integrity just as you would expect when you sign up. The mailing list needs to be kept up-to-date, and often forms the basis of online Customer Relationship Management (CRM).

5. Trade Fairs and Exhibitions.

Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer.

6. Advertising.

Advertising is a ‘paid for’ communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising ‘media’ such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides). There is much more about digital, online and Internet advertising further down this pages, as well as throughout Marketing Teacher and the Marketing Teacher Blog.

7. Sponsorship.

Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization.
The elements of the promotional mix are then integrated to form a unique, but coherent campaign.

Online Promotions

Online promotions will include many of the promotions mix elements which we considered above. For example advertising exists online with pay per click advertising which is marketed by Google. You can sponsor are website for example. Online businesses regularly send out newsletters which are targeted using e-mail and mailing lists, which is a form of direct marketing. Indeed websites are premium vehicle in the public relations industry to communicate particular points of view to relevant publics.
The online promotions field is indeed emerging. The field will soon spread into Geo targeting of adverts to people in specific locations via smart phones. Another example would be how social media targets adverts to you whilst you socialising online. Take a look at Marketing Teacher’s Blog for more up-to-date examples of the emerging online promotions space.
The promotions mix (the marketing communications mix) is the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.
Kotler et al (2010).
Promotion is the element of the marketing mix which is entirely responsible for communicating the marketing proposition. Marketers work hard to create a unique marketing proposition for their product or service. McDonald’s is about community, food and enjoyment. Audi is about the driver experience and technology.
Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different. It is the same with promotions. You can integrate different aspects of the promotions mix to deliver a unique campaign. Now let’s look at the different elements of the promotions mix.
The elements of the promotions mix are:
  • Personal Selling.
  • Sales Promotion.
  • Public Relations.
  • Direct Mail.
  • Trade Fairs and Exhibitions.
  • Advertising.
  • Sponsorship.
And also online promotions.
Image
The elements of the promotions mix are integrated to form a coherent campaign. As with all forms of communication, the message from the marketer follows the ‘communications process’ as illustrated above. For example, a radio advert is made for a car manufacturer. The car manufacturer (sender) pays for a specific advert with contains a message specific to a target audience (encoding). It is transmitted during a set of commercials from a radio station (message/medium).
The message is decoded by a car radio (decoding) and the target consumer interprets the message (receiver). He or she might visit a dealership or seek further information from a web site (Response). The consumer might buy a car or express an interest or dislike (feedback). This information will inform future elements of an integrated promotional campaign. Perhaps a direct mail campaign would push the consumer to the point of purchase. Noise represents the thousands of marketing communications that a consumer is exposed to everyday, all competing for attention.

Exercise – Promotion

Integrating the Promotions Mix – Exercise

‘www.cuttingitshort.com’ – The Campaign

Clarissa Drive-Terrior is one of the new breed of entrepreneurs that have taken advantage of the massive opportunities open to e-businesses. Her idea was to sell travel and flights, theatre tickets, and similar products and services, to consumers that need them at very short notice; hence the name cutting it short. www.cuttingitshort.com became extremely popular almost immediately. It was so popular that Clarissa decided to float the business. This was also a huge success, with stocks/shares exchanging hands for more than $20.00 each.
Now that the business was a success, it needed a campaign to reinforce its brand attributes in the mind of existing consumers, and the generate new ones.
Your task is to integrate the promotions mix to form a campaign for www.cuttingitshort.com.
Use the different elements of the mix which were:
  • Personal Selling.
  • Sales Promotion.
  • Public Relations.
  • Direct Mail.
  • Trade Fairs and Exhibitions.
  • Advertising.
  • Sponsorship.

Answer – Promotion

Integrating the Promotions Mix – Answer

‘www.cuttingitshort.com’ – The Campaign

Personal Selling.

It was decided very early on that personal selling did not suit the nature of the business. The other elements of the promotions mix were far better suited to the mass market.

Sales Promotion.

A promotion was organized with a national daily newspaper that share the same target consumer. Coupons were put in seven separate issues. Once collected, the consumer would post them to www.cuttingitshort.com for a free mountain bike spanner (a product that was very slow moving anyway).

Public Relations.

The company invested around $100,000 in a first rate public relations agent.

Direct Mail.

Direct mail was passed up in favour of an e-mail campaign to existing users promoting the recent additions to the site.

Trade Fairs and Exhibitions.

The company invested $50,000 in a special stand that used Internet technology to explain the virtues of buying www.cuttingitshort.com’s products using the Web.

Advertising.

A huge $2,000,000 was spent on an international campaign which used TV, Radio and poster media.

Sponsorship

A decision was made to invest $1,000,000 on sponsoring a round-the-world yacht race.
As with all case studies, there could be many realistic answers. How did you get on.

LESSON 7

Sales Promotion

What is sales promotion?

Sales promotion is any initiative undertaken by an organisation to promote an increase in sales, usage or trial of a product or service (i.e. initiatives that are not covered by the other elements of the marketing communications or promotions mix). Sales promotions are varied.
(e) Free gifts e.g. Subway gave away a card with six spaces for stickers with each sandwich purchase. Once the card was full the consumer was given a free sandwich.
(f) Discounted prices e.g. Budget airline such as EasyJet and Ryanair, e-mail their customers with the latest low-price deals once new flights are released, or additional destinations are announced.
(g) Joint promotions between brands owned by a company, or with another company’s brands. For example fast food restaurants often run sales promotions where toys, relating to a specific movie release, are given away with promoted meals.
(h)  Free samples (aka. sampling) e.g. tasting of food and drink at sampling points in supermarkets. For example Red Bull (a caffeinated fizzy drink) was given away to potential consumers at supermarkets, in high streets and at petrol stations (by a promotions team).
(i) Vouchers and coupons, often seen in newspapers and magazines, on packs.
(j) Competitions and prize draws, in newspapers, magazines, on the TV and radio, on The Internet, and on packs.
(k) Cause-related and fair-trade products that raise money for charities, and the less well off farmers and producers, are becoming more popular.
(l) Finance deals – for example, 0% finance over 3 years on selected vehicles.
Many of the examples above are focused upon consumers. Don’t forget that promotions can be aimed at wholesales and distributors as well. These are known as Trade Sales Promotions. Examples here might include joint promotions between a manufacturer and a distributor, sales promotion leaflets and other materials (such as T-shirts), and incentives for distributor sales people and their retail clients.
Often they are original and creative, and hence a comprehensive list of all available techniques is virtually impossible (since original sales promotions are launched daily!). Here are some examples of popular sales promotions activities:
(a) Buy-One-Get-One-Free (BOGOF) – which is an example of a self-liquidating promotion. For example if a loaf of bread is priced at $1, and cost 10 cents to manufacture, if you sell two for $1, you are still in profit – especially if there is a corresponding increase in sales. This is known as a PREMIUM sales promotion tactic.
(b) Customer Relationship Management (CRM) incentives such as bonus points or money off coupons. There are many examples of CRM, from banks to supermarkets.
(c) New media – Websites and mobile phones that support a sales promotion. For example, in the United Kingdom, Nestle printed individual codes on KIT-KAT packaging, whereby a consumer would enter the code into a dynamic website to see if they had won a prize. Consumers could also text codes via their mobile phones to the same effect.
(d) Merchandising additions such as dump bins, point-of-sale materials and product demonstrations.

LESSON 8

The Loyalty Ladder

Turning a prospect into an advocate

The loyalty ladder is a tool for marketing communicators. The idea is that consumers can be moved along a continuum of loyalty using a number of integrated marketing communications techniques (it is also referred to as a branding ladder).

Example – Tesco PLC.

In the United Kingdom Tesco plc is by far the most successful company in regard to relationship marketing. There are number of reasons for this which would include loyalty programmes, consistently adding value at every customer touch point, and making it difficult for customers to actually end the relationship. Let’s have a look at an example of each. The Tesco loyalty scheme or loyalty program is called the Tesco Clubcard. The card is scanned every time that there is a transaction. So data is ‘grabbed’ and recorded from each customer. Here we have a highly developed customer database. Customers are sent coupons which are strongly connected to their buying habits, based upon Tesco’s knowledge of other customers. As you leave the till after payment you are given money-off coupons for petrol so that you can fill your car when you leave for home. This consistently adds value to your experience as a customer. Since a British consumer now heads for a Tesco village to do his/her weekly shopping, it is difficult to swap to another store or to go back to shopping in smaller shops. The relationship is difficult to break.
Essentially, consumers become loyal to a brand which has meaning to them in relation to a product, service, solution or experience.
As with continuums of behaviour such as UACCAUnawareness, Awareness, Comprehension, Conviction, Action, or AIDAAwareness, Interest, Desire, Action, the loyalty ladder begins from a point where the consumer has Not Yet Purchased, then he or she buys the product for the first time (Trialist), if the trial has been a success he or she returns to buy again and again (Repeat Purchaser) and finally the consumer buys no other brand (Brand Insistent).
The Loyalty Ladder
At the Not Yet Purchased Stage the consumer is merely a Prospect. As he or she trials they become a Customer. The Repeat Purchaser is a Client since he or she is becoming loyal. Finally, the consumer becomes an Advocate (i.e. activist or campaigner) since he or she is Brand Insistent. At this point the brand is difficult to dislodge since it has so much meaning to the consumer. Great brands such as Nike, BMW, Rolls-Royce, and Apple are in this highly desirable position.
The idea is to move your prospect along the loyalty ladder to the point where there are partner. Marketing activities support relationships with external customers. So there will be directly indications and measurement of the results between the marketer and the customer as he or she moves along the loyalty ladder. Both the loyalty ladder and the Pareto principle are useful because they aid customer retention and loyalty.

Exercise – The Loyalty Ladder

Farley’s Irish Dream

Farley’s Irish Dream is a brandy-based liqueur (i.e. a sweet and creamy alcoholic drink) that is popular in most parts of Canada. It is associated with the sports of skiing, bobsleigh and snowboarding. It is most well liked during the months of winter when it is seen as a warming and relaxing treat that is shared with friends and family after participating in winter sports. Farley’s has decided to enter the European market, by targeting countries that have regions with a similar climate, and where the brand associations of winter sports can be exploited.
Farleys
Recommend an integrated marketing communications campaign that will turn Prospects into Advocates in the new European markets.

Answer – The Loyalty Ladder

Farley’s Irish Dream

Recommendations for Farley’s Irish Dream’s launch into European markets are as follows:

Prospect

Sponsor well-known professional skiers, snowboarders and bobsleigh teams in order to gain some early awareness amongst prospects.
Employ a promotions agency that will visit top competitive events throughout Europe to hand out small trial bottles to prospects.

Customer

Target bars, supermarkets and hotels in the winter sports regions. Here run sales promotions and distribute free merchandise such as ski hats, point-of-sale and drip trays carrying the Farley’s brand.
The Loyalty Ladder

Client

Sponsor websites that carry news and information about ski resorts and their current climate. Get clients to register their e-mail address and mobile phone numbers for e-mail and text information about skiing conditions.
Begin a campaign that aligns the brand with aspiring, 25-40 year old professionals by advertising in targeted magazines.

Advocate

This is the culmination of the previous three sections. Use text and e-mail to promote Farley’s to advocates, and reward them for forwarding e-mail and texts to their friends (using viral techniques). Record data on the success of campaigns by individual advocate, and continue to develop innovative and fresh ideas to keep your valuable advocates loyal.

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