Promotions Opportunity Analysis

Chapter Objectives

Prepare a promotions opportunity analysis

Compare the relationship between a companys promotional effort and its competition Identify the characteristics of various consumer segments

Promotions Opportunity Analysis

Beyond the world of advertising and personal selling, successful marketing efforts occur because someone identified an opportunity to make a quality contact with a customer A promotions opportunity analysis is the process marketers use to identify target audiences for a company's goods and services and the communication strategies needed to reach these audiences

Promotions Opportunity Analysis must accomplish two objectives

1. Determine which promotional opportunities exist for the company 2. Identify the characteristics of each target audience so that precise advertising and marketing communication message can reach them

Steps - Promotions Opportunity Analysis

Conduct a Communication Market Analysis Establish objectives Create a budget

Prepare a promotional strategy

Match tactics with the strategy

Communication Market Analysis

A Communication Market Analysis is the process of discovering the organizations strength and weaknesses in the area of marketing communication and combining that information with an analysis of the opportunities and threats present in the firm's external environment

Communication Market Analysis Step One examines five areas

Competitors Opportunities Target markets

Customers
Product positioning

Competitors
Identify
Major competitorsdomestic & foreign Communication strategies of major competitors

Sources of information

Secondary data(Advertisements, promotional materials, annual reports, prospectus for a publicly held corporation, websites) Others( trade journals, news articles, press releases ) Primary research ( visit store, meet wholesalers, distributors)

Opportunities
Customers that the competition is ignoring Saturated markets with intense competition Benefits not articulated clearly to various customer market segments

Different Marketing approach be used

Brand positioning not visible in clutter

Target Markets
Recognize needs of various consumer and business groups

Define target market more precisely

Decipher the needs and wants of individual groups Demographic and psycho- graphic profile of each market

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Customers-Types
Current company customers

Customers of competitors
Potential customers who have not purchased product

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Product Positioning
Perception In mind of consumers Relative to competition Created by factors such as Product quality, Price, Distribution, Image, Marketing communications

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Positioning Strategies
Attributes Competitors Use or application Price/Quality Product user Product class Cultural symbol

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Establish Communication Objectives Step Two

Develop brand awareness Increase category demand Change beliefs or attitudes Enhance purchase actions Encourage repeat purchases Build customer traffic Enhance firm image Increase market share Increase sales Reinforce purchase decisions
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***Benchmark measures

Create Communications Budget Step Three

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What is the relation between promotional expenditures and sales?

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A Sales Response Function Curve combined with the Downward Response curve and marginal analysis Sales
Diminishing returns

D o l l a r s

Threshold effects

Concave Downward Response Curve

Marginal Analysis Curve

Advertising and promotional expenditures

Profits

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Factors Impacting Relationship Between Promotions and Sales

Communication goals-differ depending on the stage in the buying process that is being addressed(awareness, knowledge, liking,preference, conviction) Threshold effects -Early effects of advertising is minimal. With only advertisements, little behavioral response is expected but with other marketing tactics the point is reached Diminishing returns-Part of the concave downward function, means that incremental increase in expenditures in advertising result in lower and lower increase in sales Marginal analysis shows that further advertising and promotional expenditures may even result in adverse effects on profits Carryover effects-Promotions for products which are not frequently purchased must be designed to generate carryover effect Wear out effects-Particular promotion becomes 'old' and 'boring' and may develop a negative attitude Decay effects-Consumers begin to forget the message, when a company stops advertising Random events

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Decay Effects Model

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Types of Budget
Percentage of sales

Meet-the-competition
What we can afford

Objective and task

Payout planning-ratio of advertising to sales or market share Quantitative models 20

Marketing Budgets
Advertising 25% Consumer promotions 25%

Trade promotions 50%

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Create Communications Strategies Step Four

Strategies are broad, long-term guidelines concerning the essence of the company's marketing efforts

Fit with overall company message, image, and themes

Only changes in the marketplace, new competitive forces, or new promotional opportunities should cause companies to alter strategies

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Match Tactics with Strategies Step Five

Tactics support strategies Examples of tactics Specific advertisements Personal selling enticements Sales promotions(posters, point-of-purchase displays) Trade promotions Price of products Package design and labeling

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Market Segmentation
Is the process of identifying specific purchasing groups based on their needs, attitudes and interests

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Consumer Segments
Demographics(Gender, Age, Ethnic groups, Income) Psychographics Generations Geographic Geodemographics Benefit Usage

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Psychographics

Emerge from patterns of responses that reveal a person's attitudes, interests and opinions (AIO) The SRI Consulting Business Intelligence provides a classification of lifestyles using psychographic segmentation Innovators-Successful, sophisticated Thinkers-Educated, practical consumers Achievers-Goal oriented Experiencers-Young, enthusiastic Believers-Conservative, conventional consumers Strivers-Trendy, fun loving Makers-Self sufficient consumers Survivors-Safety & security

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Generation Segmentation
Generation Y (18-24)-Gadgets Generation X (25-34)-Family and children Younger Boomers (35-44)-mortgage
expenses

Older Boomers (45-54)-luxurious items Empty Nesters (55-64)-Investments,enjoy

life

Seniors

(65+)-Health insurance
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Geodemographic Segmentation
Combines Demographic census data Geographic information Psychographic information

PRIZM (Potential Rating Index by Zip Marketing) 62 market segments

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Benefit Segmentation

Focuses on the advantages consumers receive from a product rather that the characteristics of consumers themselves

Example

Winners-Exercise to stay physically fit Dieters-Exercise to maintain weight control and physical appearance Self-improvers- Exercise to feel better and to control medical costs

***Marketers can target messages for each market segment differently

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Usage Segmentation

Is based on customer usage or purchase Goal is to provide the highest level of service to a firm's best customer(internal databases, bar-code scanners, point of sale systems, data from credit, debit cards) Is designed to maximize sales to all user groups

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