Lecture 8Sales promotion and other means

of marketing communications

• Public relations is an organization's broad, overall communications effort intended to influence various groups' attitudes toward that organization.

• Public relations activities typically are designed to build or maintain a favorable image for an organization and a favorable relationship with the organization's various "publics."

• These publics may be customers, stockholders, employees, unions, environmentalists, the government, people in the local community, or some other group in society.

• The aim of public relations by a company often is to persuade the public, investors, partners, employees, and other stakeholders to maintain a certain point of view about it, its leadership, products, or of political decisions.

• Common activities include speaking at conferences, winning industry awards, working with the press, and employee communication

• Ivy Lee and Edward Louis Bernays established the first definition of public relations in the early 1900s as

• "a management function, which tabulates public attitudes, defines the policies, procedures, and interests of an organization... followed by executing a program of action to earn public understanding and acceptance."

• In August 1978, the World Assembly of Public Relations Associations defined the field as• "the art and social science of analyzing trends, predicting their consequences, counseling

organizational leaders, and implementing planned programs of action, which will serve both the organization and the public interest."

• The Public Relations Society of America (PRSA) defined public relations in 1982 as:• "Public relations helps an organization and its publics adapt mutually to each other."

• In 2011 and 2012, the PRSA developed a crowd-sourced definition:• "Public relations is a strategic communication process that builds mutually beneficial

relationships between organizations and their publics."

• Public relations can also be defined simply as the practice of managing communication between an organization and its publics.

• The European view of public relations notes that besides a relational form of interactivity there is also a reflective paradigm that is concerned with publics and the public sphere; not only with relational, which can in principle be private, but also with public consequences of organizational behavior

• Public relations offers several advantages not found with other promotional options.

• First, PR is often considered a highly credible form of promotion. One of PR’s key points of power rests with helping to establish credibility for a product, company or person (e.g., CEO) in the minds of targeted customer groups by capitalizing on the influence of a third-party -- the media.

• Audiences view many media outlets as independent-party sources that are unbiased in their coverage, meaning that the decision to include the name of the company and the views expressed about the company is not based on payment (i.e., advertisement) but on the media outlet’s judgment of what is important.

• For example, a positive story about a new product in the business section of a local newspaper may have greater impact on readers than a full-page advertisement for the product since readers perceive the news media as presenting an impartial perspective of the product.

• Second, a well-structured PR campaign can result in the target market being exposed to more detailed information than they receive with other forms of promotion. That is, media sources often provide more space and time for explanation of a product.

• Third, depending on the media outlet, a story mentioning a company may be picked up by a large number of additional media, thus, spreading a single story to many locations.

• Finally, in many cases public relations objectives can be achieved at very low cost when compared to other promotional efforts. This is not to suggest public relations is not costly, it may be, especially when a marketer hires PR professionals to handle the work. But when compared to the direct cost of other promotions, in particular advertising, the return on promotional expense can be quite high.

Disadvantages of Public Relations• While public relations holds many advantages for marketers,

there are also concerns when using this promotional technique.

• First, while public relations uses many of the same channels as advertising, such as newspapers, magazines, radio, TV and Internet, it differs significantly from advertising in that marketers do not have direct control over whether a message is delivered and where it is placed for delivery.

• For instance, a marketer may spend many hours talking with a magazine writer, who is preparing an industry story, only to find that their company is never mentioned in the article.

• Second, while other promotional messages are carefully crafted and distributed as written through a pre-determined placement in a media vehicle, public relations generally conveys information to a member of the news media (e.g., reporter) who then recrafts the information as part of a news story or feature. Thus, the final message may not be precisely what the marketer planned.

• Third, while a PR campaign has the potential to yield a high return on promotional expense, it also has the potential to produce the opposite if the news media feels there is little value in running a story pitched (i.e., suggested via communication with the news outlet) by the marketer.

• Fourth, with PR there is always a chance that a well devised news event or release will get “bumped” from planned media coverage because of a more critical breaking news story, such as wars, severe weather or serious crime.

• Finally, in some areas of the world the impact of traditional news outlets is fading forcing public relations professionals to scramble to find new ways to reach their target markets.

Objectives of Public Relations

• Building Product Awareness – When introducing a new product an existing product, marketers can use a PR element that generates consumer attention and awareness through media placements and special events.

• Creating Interest – Whether a PR placement is a short product article or is included with other products in “round up” article, stories in the media can help entice a targeted audience to try the product. For example, around the holiday season, a special holiday food may be promoted with PR through promotional releases sent to the food media or through special events that sample the product.

Objectives of Public Relations

• Providing Information – PR can be used to provide customers with more in depth information about products and services. Through articles, collateral materials, newsletters and websites, PR delivers information to customers that can help them gain understanding of the product.

• Stimulating Demand – A positive article in a newspaper, on a TV news show or mentioned on the Internet, often results in a discernable increase in product sales.

• Reinforcing the Brand – In many companies the public relations function is also involved with brand reinforcement by maintaining positive relationships with key audiences, and thereby aiding in building a strong image. Today it is ever more important for companies and brands to build a good image. A strong image helps the company build its business and it can help the company in times of crises as well.

Marketers have at their disposal several tools for carrying out public relations. The

key tools available for PR include:

• Media Relations • Media Tours • Newsletters • Special Events • Speaking Engagements • Sponsorships • Employee Relations • Community Relations and Philanthropy

• Before choosing among the various tools marketers should begin by identifying their targeted audiences (e.g., target markets) and key messages they wish to send. These should align with the messages and audiences identified for the product being promoted or corporate goals for non-specific product promotions, such as corporate image promotions.

• The key messages are used in the development of public relations materials and supporting programs described below. The purpose of key messages is to provide a consistent point of view over time and across numerous PR methods that reinforce product positioning (i.e., customer's perceptions) and reach the desired target audience.

Sponsorship • Companies and brands use sponsorships to help build goodwill

and brand recognition by associating with an event or group. Marketers can examine sponsorship opportunities to find those that reach target groups, fit within a specified budget and provide sponsorship benefits that suit the marketer’s objectives. There are numerous local, regional, national and international sponsorship opportunities ranging from a local art center or theatre to the Olympics. Most organizations seeking company sponsors provide information on the variety of sponsorship levels which include data on event audience, exposure opportunities, which can include signage, T-shirts, public announcements and numerous other opportunities, receptions and much more. Marketers can use this information to help match sponsorship opportunities with the company’s objectives.

Sales Promotion

• Sales promotion describes promotional methods using special short-term techniques to persuade members of a target market to respond or undertake certain activity.

• As a reward, marketers offer something of value to those responding generally in the form of lower cost of ownership for a purchased product (e.g., lower purchase price, money back) or the inclusion of additional value-added material (e.g., something more for the same price).

• Sales promotions are often confused with advertising. For instance, a television advertisement mentioning a contest awarding winners with a free trip to a Caribbean island may give the contest the appearance of advertising. While the delivery of the marketer’s message through television media is certainly labeled as advertising, what is contained in the message, namely the contest, is considered a sales promotion. The factors that distinguish between the two promotional approaches are:

• whether the promotion involves a short-term value proposition (e.g., the contest is only offered for a limited period of time), and

• the customer must perform some activity in order to be eligible to receive the value proposition (e.g., customer must enter contest).

• The inclusion of a timing constraint and an activity requirement are hallmarks of sales promotion.

• Sales promotions are used by a wide range of organizations in both the consumer and business markets, though the frequency and spending levels are much greater for consumer products marketers. One estimate by the Promotion Marketing Association suggests that in the US alone spending on sales promotion exceeds that of advertising.

Sales promotion is a tool used to achieve most of the five major promotional objectives

• Building Product Awareness – Several sales promotion techniques are highly effective in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction. Additionally, as part of the effort to build product awareness, several sales promotion techniques possess the added advantage of capturing customer information at the time of exposure to the promotion. In this way sales promotion can act as an effective customer information gathering tool (i.e., sales lead generation), which can then be used as part of follow-up marketing efforts.

• Creating Interest – Marketers find that sales promotions are very effective in creating interest in a product. In fact, creating interest is often considered the most important use of sales promotion. In the retail industry an appealing sales promotions can significantly increase customer traffic to retail outlets. Internet marketers can use similar approaches to bolster the number of website visitors. Another important way to create interest is to move customers to experience a product. Several sales promotion techniques offer the opportunity for customers to try products for free or at low cost.

• Providing Information – Generally sales promotion techniques are designed to move customers to some action and are rarely simply informational in nature. However, some sales promotions do offer customers access to product information. For instance, a promotion may allow customers to try a fee-based online service for free for several days. This free access may include receiving product information via email.

• Stimulating Demand – Next to building initial product awareness, the most important use of sales promotion is to build demand by convincing customers to make a purchase. Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to stimulate sales.

• Reinforcing the Brand – Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty (see loyalty programs below). Many companies, including airlines and retail stores, reward good or “preferred” customers with special promotions, such as email “special deals” and surprise price reductions at the cash register.

• Consumer Market Directed - Possibly the most well-known methods of sales promotion are those intended to appeal to the final consumer. Consumers are exposed to sales promotions nearly everyday, and as discussed later, many buyers are conditioned to look for sales promotions prior to making purchase decisions.

• Trade Market Directed – Marketers use sales promotions to target all customers including partners within their channel of distribution. Trade promotions are initially used to entice channel members to carry a marketer’s products and, once products are stocked, marketers utilize promotions to strengthen the channel relationship.

• Business-to-Business Market Directed – A small, but important, sub-set of sales promotions are targeted to the business-to-business market. While these promotions may not carry the glamour associated with consumer or trade promotions, B-to-B promotions are used in many industries.