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Question 1.Explain the term Market Segmentation. Why should marketers consider segmentation as an important marketing decision? Discuss with the help of suitable examples.
2. Discuss the segmentation variables you will consider to segment the market for a 150 cc premium motorcycle.
3.Briefly explain the various steps in the consumer decision-making process. Do all consumer decisions involve these steps ? Justify your answer.
4.What type of packaging would you recommend in the following cases and why?
(i) Sea food for exports
(ii) Victor ink pen
5.Discuss the major objectives of sales promotion. Explain the sales promotion methods directed at consumers, which can be used by a herbal hair dye manufacturer.
6.Discuss the distinct stages in product life cycle giving suitable examples.
7. Write short notes on any three of the following:
(a) Pricing as a tool for Market cultivation
(b) Purpose of Marketing Research
(c) Product differentiation vs. Product diversification
(d) Perception
(e) Cyber marketing
Answer MARIA,
HERE IS THE ANSWERS FOR 1-5 QUESTIONS.
Qs 6-7 WILL BE SENT TO YOUR email id
pammison2008@gmail.com
REGARDS
LEO LINGHAM
===============================
1.Explain the term Market Segmentation. Why should marketers consider segmentation as an important marketing decision? Discuss with the help of suitable examples.
Market Segmentation
A Market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.
Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. Because each segment is fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way and promoted in a certain way.
Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private sector. Small segments are often termed niche markets or specialty markets. However, all segments fall into either consumer or industrial markets. Although it has similar objectives and it overlaps with consumer markets in many ways, the process of Industrial market segmentation is quite different.
The overall intent is to identify groups of similar customers and potential customers; to prioritize the groups to address; to understand their behaviour; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing effectiveness. With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased
The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are "most likely" to purchase your offering. If done properly this will help to insure the highest return for your marketing/sales expenditures. Depending on whether you are selling your offering to individual consumers or a business, there are definite differences in what you will consider when defining market segments.
Category of Need
The first thing you can establish is a category of need that your offering satisfies. The following classifications may help.
For businesses:
Strategic - your offering is in some way important to the enterprise mission, objectives and operational oversight. For example, a service that helped evaluate capital investment opportunities would fall into this domain of influence. The purchase decision for this category of offering will be made by the prospect's top level executive management.
Operations - your offering affects the general operating policies and procedures. Examples might be, an employee insurance plan or a corporate wide communications system. This purchase decision will be made by the prospect's top level operations management.
Functional - your offering deals with a specific function within the enterprise such as data processing, accounting, human resources, plant maintenance, engineering design, manufacturing, inventory control, etc. This is the most likely domain for a product or service, but you must recognize that the other domains may also get involved if the purchase of the product or service becomes a high profile decision. This purchase decision will be made by the prospect's functional management.
For the individual consumer:
Social Esteem or Pleasure - your offering satisfies a purely emotional need in the consumer. Examples are a mink coat or a diamond ring. There are some products that are on the boundary between this category and the Functional category such as a Rolex watch (a Timex would satisfy the functional requirement and probably keep time just as well).
Functional - your offering meets a functional requirement of the consumer such as a broom, breakfast cereal or lawnmower.
Segmentation of Needs FOR BUSINESS ORGANIZATIONS
Then you should establish what the need is and who is most likely to experience that need. Your segmentation will be determined by a match between the benefits offered by your offering and the need of the prospect. Some "need" categories for segmentation include:
Reduction in expenses
Prospects might be businesses that are downsizing (right sizing), businesses that have products in the mature stage of their life cycle or individuals with credit rating problems.
Improved cash flow
Prospects might be businesses that have traditionally low profit margins, businesses that have traditionally high inventory costs or individuals that live in expensive urban areas.
Improved productivity
Prospects might be businesses that have traditionally low profit margins, businesses that have recently experienced depressed earnings or individuals with large families.
Improved manufacturing quality
Prospects might be businesses with complex, multi-discipline manufacturing processes.
Improved service delivery
Prospects might be service businesses in highly competitive markets, product businesses requiring considerable post-sale support or individuals in remote or rural areas.
Improved employee working conditions/benefits
Prospects might be businesses where potential employees are in short supply.
Improvement in market share/competitive position
Prospects might be new entrants to a competitive market.
Need for education
Prospects might be businesses or individuals looking for books on business planning, or seminars on Total Quality Management.
Involvement with social trends
Prospects might be businesses concerned with environmental protection, employee security, etc. or individuals who believe in say 'no' to drugs, anti-crime, etc.
Specific - relating to product/service characteristics
Prospects might be businesses or individuals interested in safety, security, economy, comfort, speed, quality, durability, etc.
Factors that segment prospects
Having determined the more general segmentation characteristics you can proceed to a more detailed analysis of the market. There are literally thousands of ways to segment a market, but the following are some of the more typical segmentation categories.
For businesses:
Industry by SIC code
This is especially beneficial for vertical market offerings.
Size - revenues, # employees, # locations
In general if your offering is highly sophisticated, requires significant resources or provides greater value based on volume, then the target should be the larger enterprises.
Job position/responsibility
Examples of offerings might be planning software for managers or cleaning agents for maintenance managers.
Climate
Examples of offerings might be dehumidifiers in areas near the ocean or snow plows in northern areas.
Time related factors
Some services in this category are vacation related industries in summer and tax planners in the spring.
Language
An example of a language specific service is a Spanish TV channel.
Status in the industry
You might want to target businesses that are the technology leader or revenue leader or employee satisfaction leader, etc.
Accessibility
To minimize promotion and sales expense you may want to target urban rather than rural or local rather than national prospects.
Future potential
A good example is how Apple Computer supplied products to schools at all levels to condition students graduating into the marketplace.
Ability to make a quick purchase decision
Targeting individual purchasers versus business committees can significantly reduce marketing expense and increase the probability of a quick close.
Access (or lack of access) to competitive offerings
Cable TV business's significant investment in their service delivery system has allowed a near monopoly for some time. IBM's service reputation insured minimal competition during the mainframe days.
Need for customization
Offerings such as police cars, busses for municipalities and specialized computer systems fall into this category.
Product or service application to a business function
Examples are data processing, accounting, human resources and plant maintenance.
============================================
For Individual Consumers:
Physical Size
Offerings might be big men's clothing, golf clubs for shorter players, etc.
Creation of or response to a fad
Examples are hula hoops, Jurassic Park T-shirts, pet rock, physical fitness, etc.
Geographic location
Marketers take advantage of location by selling suntan lotion in Hawaii, fur coats in Alaska, etc.
Time related factors
You may be able to target vacationers in summer, impulse buyers during the holidays or commuters at 7AM.
Demographics/culture/religion
Ethnic products would fall into this category.
Gender
Product examples are scarves for women, ties for men, etc.
Age
Product examples are toys for children, jewelry for women, etc.
Social status
This could include country club memberships, philanthropic contributions, etc.
Education
Product and service examples are encyclopedias, scientific calculators, learning to read tools and financial counseling.
Avocation
This could include products for hunting, fishing, golf, art work, knitting, etc.
Special Interests
You could target cat lovers, science fiction readers, jazz music collectors, etc.
Accessibility
Because the individual is more difficult to reach you may want to segment by urban versus rural, train commuters, people who read Wall Street Journal, etc.
Access (or lack of access) to competitive offerings
Due to high investment capital requirements or timing of market entry you may be able to capture a significant market share in a specific geographical area. Examples might be a trash service, emergency medical support, etc.
Need for specific information
Based on features or content of your offering you can target a market segment. A product might be books on how to start a business or a service might be seminars on how to quit smoking.
Need for customization
Product/service examples are home decoration, fashion wear, personal portraits, etc.
Need for quality, durability, etc.
Product examples are mountain climbing gear, carpenter's tools, etc.
Degree of a product/service ingredient
Segmentation based on prospect preferences is common. An example is dark chocolate for some tastes, light chocolate for others.
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While market segmentation can be done in many ways, depending on how you want to slice up the pie, three of the most common types are:
Geographic segmentation – based on location such as home addresses;
Demographic segmentation – based on measurable statistics, such as age or income;
Psychographic segmentation – based on lifestyle preferences, such as being urban dwellers or pet lovers.
If you’re interested in target marketing, the first step is to do the research that will help you define and zero in on your target market.
================================================================
The requirements for successful segmentation are:
homogeneity within the segment
heterogeneity between segments
· segments are measurable and identifiable
· segments are accessible and actionable
· segment is large enough to be profitable
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These criteria can be summarized :
D Differential: it must respond differently to a different marketing mix
A Actionable: you must have a product for this segment to be accured
M Measurable: size and purchasing power can be measured
A Accessible: it must be possible to reach it efficiently
S Substantial: the segment has to be large and profitable enough
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The variables used for segmentation include:
1.Geographic variables
region of the world or country, East, West, South, North, Central, coastal, hilly, etc.
country size/country size : Metropolitian Cities, small cities, towns.
Density of Area Urban, Semi-urban, Rural.
climate Hot, Cold, Humid, Rainy.
2.Demographic variables
-age
-gender Male and Female
-sexual orientation
-family size
family life cycle
Education Primary, High School, Secondary, College, Universities.
income
occupation
education
3.socioeconomic status
religion
nationality/race
language
4.Psychographic variables
personality
life style
value
attitude
5.Behavioural variables
benefit sought
product usage rate
brand loyalty
product end use
readiness-to-buy stage
decision making unit
profitability
When numerous variables are combined to give an in-depth understanding of a segment, this is referred to as depth segmentation.
When enough information is combined to create a clear picture of a typical member of a segment, this is referred to as a buyer profile. When the profile is limited to demographic variables it is called a demographic profile (typically shortened to "a demographic"). A statistical technique commonly used in determining a profile is cluster analysis.
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THE BY-PRODUCT OF MARKET SEGMENTATION IS THE
IDENTIFICATION OF THE PARTICULAR SEGMENT, WHICH ONE
WANTS TO EXPLOIT.
------------------------------------------------------------------------------
NANO '' SMALL CAR''
IN UNIVERSAL TERM, the nano is a small car.
IN INDIAN TERM,
-nano is specifically designed for the indian market.
-it is designed for the indian market
-it is designed ''as a value for money''
-it is designed with india made parts.
THE MARKET SEGMENTATION VARIABLES CONSIDERED
FOR THE BUSINESSES.
-reduction in capital expenses.
-reduction in operation expenses.
-reduction in maintenance expenses.
-improvement in the cash flow.
-improvement in the working conditions for field employees.
-improvement in the productivity of field employees.
-improvement in the business market coverage
-improvement in the business results.
----------------------------------------------------
FOR THE INDIVIDUALS
1.Demographic variables
*age
*gender Male and Female
*sexual orientation
*family size
*family life cycle
*Education Primary, High School, Secondary, College, Universities.
*income
*occupation
*education
--------------------------------------------------
2. socioeconomic status
*religion
*REGIONAL FOCUS
*language
-----------------------------------------
3. Geographic variables
*region of the country,NORTH / SOUTH/ EAST/ WEST/CENTRAL etc.
*metro/ rural : Metropolitan Cities, small cities, towns.
*Density of Area Urban, Semi-urban, Rural.
*climate Hot, Cold, Humid, Rainy.
---------------------------------
4.Psychographic variables
*personality
*life style
*value
*attitude
--------------------------
5.Behavioural variables
*benefit sought
*product usage rate
*brand loyalty
*product end use
*readiness-to-buy stage
*decision making unit
*profitability
*income status
=======================================
###############################################
2. Discuss the segmentation variables you will consider to segment the market for a 150 cc premium motorcycle.
IN INDIAN TERM,
-150 cc is specifically designed for the indian market.
-it is designed for the indian market
-it is designed ''as a value for money''
-it is designed with india in mind.
THE MARKET SEGMENTATION VARIABLES CONSIDERED
1.Demographic variables
*age [ 21--35]
*gender [ Male ]
*sexual orientation [ MALE]
*Education Primary, High School, Secondary, College, Universities.
*income [ AFFORDABLE -- [ 80,000 AND OVER ]
*occupation [ ALL TYPES ]
*education [ AT LEAST HIGH SCHOOL]
--------------------------------------------------
2. socioeconomic status
*religion [ ALL RELIGION ]
*REGIONAL FOCUS [ URBAN / COUNTRY TOWNS]
*language [ ALL 14 LANGUAGES]
-----------------------------------------
3. Geographic variables
*region of the country,NORTH / SOUTH/ EAST/ WEST/CENTRAL etc.
*metro/ rural : Metropolitan Cities, small cities, COUNTRY towns.
*Density of Area Urban, Semi-urban, Rural.
*climate Hot, Cold, Humid, Rainy.
---------------------------------
4.Psychographic variables
*personality ---ALL TYPES
*life style [ urban approach ]
*value [ value for money ]
--------------------------
5.Behavioural variables
*benefit sought [ quick speed]
*product usage rate [ moderate ]
*brand loyalty [ strong ]
*product end use [ medium distance travel
*readiness-to-buy stage [ now]
*decision making unit [ individual]
*income status [ medium range]
=======================================
########################################################
3.Briefly explain the various steps in the consumer decision-making process. Do all consumer decisions involve these steps ? Justify your answer.
THE CONSUMER BUYING DECISION MAKING PROCESS.
Behind the visible act of making a purchase lies a decision process that must be investigated.
The purchase decision process is the stages a buyer passes through in making choices about which products and services to buy. :
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5 STAGES OF CONSUMER BEHAVIOR
1.problem recognition,
-PERCEIVING A NEED
------------------------------------------
2.information search,
SEEKING A VALUE
----------------------------------------
3.alternative evaluation,
ASSESSING VALUE
-------------------------------------------
4.purchase decision, and
BUYING VALUES
----------------------------------------
5.post-purchase behavior
VALUE IN CONSUMPTION OR USE
========================
A. Problem Recognition: Perceiving a Need
Perceiving a difference between a person's ideal and actual situations big enough to trigger a decision.
Can be as simple as noticing an empty milk carton or it can be activated by marketing efforts.
-------------------------------------------
B. Information Search: Seeking Value The information search stage clarifies the options open to the consumer and may involve
Internal search
Scanning one’s memory to recall previous experiences with products or brands.
Often sufficient for frequently purchased products.
External search
When past experience or knowledge is insufficient
The risk of making a wrong purchase decision is high
The cost of gathering information is low.
The primary sources of external information are:
Personal sources, such as friends and family.
Public sources, including various product-rating organizations such as Consumer Reports.
Marketer-dominated sources, such as advertising, company websites, and salespeople
------------------------------------------------
C. Alternative Evaluation: Assessing Value The information search clarifies the problem for the consumer by (1) Suggesting criteria to use for the purchase. (2) Yielding brand names that might meet the criteria. (3) Developing consumer value perception.
A consumer's evaluative criteria represent both
the objective attributes of a brand (such as locate speed on a portable CD player)
the subjective factors (such as prestige).
These criteria establish a consumer's evoked set
the group of brands that a consumer would consider acceptable from among all the brands in the product class of which he or she is aware
---------------------------------------------------
D. Purchase Decision: Buying Value
From whom to buy
which depends on such considerations
Terms of sale
Past experience buying from the seller
Return policy.
When to buy
which can be influenced by
store atmosphere
time pressure
a sale
pleasantness of the shopping experience.
Do not buy
-------------------------------------------------------
E. Postpurchase Behavior: Value in Consumption or Use
After buying a product, the consumer compares it with expectations and is either satisfied or dissatisfied.
Satisfaction or dissatisfaction affects
consumer value perceptions
consumer communications
repeat-purchase behavior.
Many firms work to produce positive postpurchase communications among consumers and contribute to relationship building between sellers and buyers.
Cognitive Dissonance. The feelings of postpurchase psychological tension or anxiety a consumer often experiences
Firms often use ads or follow-up calls from salespeople in this postpurchase stage to try to convince buyers that they made the right decision.
-------------------------------------------------------------------
F. Involvement and Problem-Solving Variations
NO. OF BRANDS EXAMINED
NO. OF SELLERS CONSIDERED
NO. OF PRODUCT ATTRIBUTES EVALUATED
NO. OF EXTERNAL INFORMATION SOURCE USED
NO. OF HOURS/ DAYS SPENT
=====================================
Consumers may skip or minimize one or more steps in the purchase decision process depending on
the level of involvement
the personal, social, and economic significance of the purchase
Three characteristics of high-involvement purchase
is expensive,
can have serious personal consequences, or
could reflect on one’s social image.
==========================================
Three general problem-solving variations exist in the consumer purchase decision process:
Routine Problem Solving
Virtually a habit
involves little effort seeking external information and evaluating alternatives.
Typically used for low-priced, frequently purchased products.
------------------------------------------------------
Limited Problem Solving
Involves the use of moderate information-seeking efforts.
Often used when the buyer has little time or effort to spend.
------------------------------------------------------------
Extended Problem
Solving
Each stage of the consumer purchase decision process is used
Considerable time and effort on
external information search and in identifying
evaluating alternatives.
Used in high-involvement purchase situations.
-------------------------------------------------------------------
Involvement and Marketing Strategy
Low and high consumer involvement has important implications for marketing strategy, which differs for products that are market leaders from their challengers.
G. Situational Influences
Five
situational
influences The purchase task The reason for engaging in the decision.
Social surroundings Including others present when a purchase decision is made.
Physical surroundings Such as decor, music, and crowding in retail stores.
Temporal effects Such as time of day or the amount of time available.
Antecedent states Which include the consumer’s mood or amount of cash on hand
########################################################################
4.What type of packaging would you recommend in the following cases and why?
(i) Sea food for exports
(ii) Victor ink pen
What is The need for packaging
It is difficult to answer whether products do need packaging, or the consumer does? For whom is the package made? The product, or the consumer? The package is tailor-made for the product, but one shall not forget that all the products are made for consumers.
From the consumer's point of view the package's function is to protect the product. In the case of bulk goods, or if the product cannot be used without the support of the package, the package must help the use of the product. Without the service of packaging, most of the goods, especially food, couldn’t reach the consumer. Living in the countryside, one can buy goods, for example milk directly from the farmer, but a can is needed to carry it home. This can also be considered as a refillable package, with almost an unlimited number of uses. In a city, milk can only be bought from the store, packed in aseptic carton box. It is not possible to avoid it, unless one goes daily to the dairy, and drink from the tap.
From the packager's point of view, the most important function of the packaging is the protection of the usage and aesthetic values of the product from damages, and get the product sold to the consumer. For the producer, the package is also a value-creating media of the product. With the help of the package, the product can be sold to the consumer. For example, a barrel full of toothpaste has almost no purchase value, since who wants to buy 100 litre of toothpaste? Most probably nobody would buy even a handful of it in the grocery, but one certainly does buy 50 grams of toothpaste in a tube.
Modern packagings are an expressive form of the consumer-lifestyle. Over the protective function, packagings are giving character, "personality" to the product. They are following the product to the consumer, giving practical as well as aesthetic value. The proportion of the usage and aesthetic functions is important. The quality of packaging reflects our universal culture. All those products that appear in the shops and offer themselves for purchase, apart of that - with very few exceptions - their usage function is primary, are creating the surrounding material environment.
==================================================================
WHAT THIS PACKAGING PERFORMS IN THE TOTAL
MARKETING FUNCTION.
Primary packaging is the material the first envelops the product and holds it.
Secondary packaging is outside the primary packaging – perhaps used to group primary packages together.
What is the Role of Packaging
The role of packaging is containment, protection, safety, and display.
If you are selling your product through retail stores, you are trying to use your packaging to :
-Catch the browsers attention
-Create desire
-Inspire confidence
What is the Importance of Packaging
The Importance of Packaging
Let's talk about packaging. Packaging can be thought about in many different ways, but if we think purely about the purpose of packaging first, we find the purpose is to:
Contain the product
Communicate product information
Facilitate product storage and shipment
Reinforce branding
Packaging is important, but you need to determine how critical it is based on your marketing/distribution methods.
The packaging is a type of advertisement – even if it goes through mail order to the customer directly. It will sit on the customer’s shelf for peers to see. These peers are potential customers – and most likely they will have the same needs as the person who already made the purchase.
The package becomes even more critical if you plan to distribute your product through resellers and it will sit on a shelf in a store. There is a lot of competition for the customer’s attention. If you plan to do this, it is probably best to get a graphic designer to help you.
Use descriptive titles for the product - not necessarily creative. Many people go into a retail store looking for products to perform a function, but don't necessarily have a specific product in mind. You need to communicate your function and benefits to them quickly and effectively.
Graphics and slogans on the package should reflect the usage of the product.
Avoid technical jargon except for declaring content requirements.
Resellers are a good source of information for good packaging design. Ask for a reseller's input on a design.
Stickers on a package work very well for attracting attention. In addition, you can use them to your advantage.
Include testimonial from existing users. This will inspire confidence.
Include a sales literature in your packaging for the customer to pass on to their colleagues.
================================================================
WHY IS THE PACKAGING SYSTEM AN IMPORTANT ELEMENT
OF THE MARKETING ?
Packaging system is a set of operations that fulfil the function of creating sales units of the product. The operations of the packaging system are the follows: raw material supply, fuel and electricity production, packaging material production, package production, part of product processing that enables or helps the product to be packed, packaging (filling) operation.
Since packages are made exclusively for the product's sake, the packaging system is a part of the product's system. That is why it is very difficult to set the boundaries of the packaging system. To set system boundaries is also a dynamic process, and a basic step if a life-cycle study of the packaging system shall be conducted.
A first evaluation is made in a screening LCA (Life Cycle Assessment) to identify the key processes that have to be studied in more detailed LCA. Three aspects can be distinguished in these consecutive steps:
-boundaries between the packaging system and the environment,
-boundaries between the packaging system and the system of the packed product; and
-the distinction between relevant processes related to the product system under study.
Packaging system is often confused with only the packaging or filling operation. Although it is a very important part, but is only a part of the packaging system. The choice of the packaging operation is a complex decision, and it is based on the following main groups of factors:
-protection of the product,
-available packaging technology,
-economics (costs),
-marketing (especially marketing-communication),
-product's properties,
environmental considerations.
One would consider that the available packaging technology is the most important factor, but it is not so. The history of packaging development showed, that new packaging technologies were found first of all from the wish to improve the protection functions of packaging.
Economics is another important factor, it is crucial for the packager to be profitable, and spend the least possible on packaging the product.
Market considerations are another important factor especially at present level of "supermarket societies". If a producer wants the consumer to choose his product from the wide range of goods available, he has to do a lot more than only produce a good product. The product shall be packed to protect and enhance distribution.
Pleasing, arising attention, image creation, helping the using ease, and most important: information supply, are top functions of packages.
Naturally the package's properties are adjusted to the packed product, but it is not seldom that the product's properties are changed with the purpose of creating more practical package shapes. The motives are primarily economic -- simpler shapes are easier, and more effective to collect into secondary (retail) packages.
Another motive is the environmental concern: simpler shapes use less materials, and more effective collection to secondary packages also means reduced resource exploitation. It is sensible, and legally required that waste management options are considered already at package design. Design for reuse, recovery, or eventually disposal, are newly emerged tools of environmental marketing.
================================
(i) Sea food for exports
sealed tin with proper identification.
-product safely packed, with the right packing material.
-product quality is secured
-product flavor is retained
-product picture visible on the package.
-product content identifiable
-design layout clear
-the right font size lettering.
-packs easily visible / seen on the store shelf
-packaging functional
-easy to shop
-meets functional requirements
-meets the packaging technical requirements
-packaging carries identifiable brand
-instructions/directions ''how to use''
-nutritional value displayed
etc etc
========================================
(ii) Victor ink pen
plastic box with transparent plastic cover.
-product safely packed, with the right packing material.
-product content visible
-product content identifiable
-design layout clear
-effective color combination
-the right font size lettering.
-packs easily visible / seen on the store shelf
-packaging functional
-easy to shop
-meets functional requirements
-packaging carries identifiable brand
etc etc
========================================
######################################################
5.Discuss the major objectives of sales promotion. Explain the sales promotion methods directed at consumers, which can be used by a herbal hair dye manufacturer.
==========================================
Sales promotion is one of the MANY aspects of P4 promotional mix.
Sales promotions are non-personal promotional efforts that are designed to have an immediate impact on sales. Media and non-media marketing communications are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability.
Examples include:
-coupons
-discounts and sales
-contests
-point of purchase displays
-rebates
-free samples (in the case of food items)
-gifts and incentive items
-free travel, such as free flights
Sales promotions can be directed at either the customer, and / or distribution channel members (such as retailers).
Sales promotions targeted at the consumer are called consumer sales promotions.
Sales promotions targeted at retailers and wholesale are called trade sales promotions. Some sale promotions, particularly ones with unusual methods, are considered gimmick by many.
=======================================
MAJOR OBJECTIVES OF SALES PROMOTIONS.
-to support the advertising program.
-to support the sales team drive
-to support the sales channels - trade.
-to accelerate the sales
-to drive the people traffic to the point of sales.
-to stimulate the people to make the buying decision.
-to influence the people to choose a particular brand.
-to help the retail to move the merchandise
-to help to liquidate the stocks.
-to help to overcome the competition.
-to help to gain the market share
-to draw the customers' attention towards the product on the shelf.
etc etc
=======================
Consumer sales promotion techniques
Price deal: A temporary reduction in the price, such as happy hour
Loyalty rewards program: Consumers collect points, miles, or credits for purchases and redeem them for rewards. Two famous examples are Pepsi Stuff and AAdvantage.
Cents-off deal: Offers a brand at a lower price. Price reduction may be a percentage marked on the package.
Price-pack deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra).
Coupons: coupons have become a standard mechanism for sales promotions.
Loss leader: the price of a popular product is temporarily reduced in order to stimulate other profitable sales
Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery.
On-shelf couponing: Coupons are present at the shelf where the product is available.
Checkout dispensers: On checkout the customer is given a coupon based on products purchased.
On-line couponing: Coupons are available on line. Consumers print them out and take them to the store.
Online interactive promotion game: Consumers play an interactive game associated with the promoted product. See an example of the Interactive Internet Ad for tomato ketchup.
Rebates: Consumers are offered money back if the receipt and barcode are mailed to the producer.
Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product.
Point-of-sale displays:
Aisle interrupter: A sign the juts into the aisle from the shelf.
Dangler: A sign that sways when a consumer walks by it.
Dump bin: A bin full of products dumped inside.
Glorifier: A small stage that elevates a product above other products.
Wobbler: A sign that jiggles.
Lipstick Board: A board on which messages are written in crayon.
Necker: A coupon placed on the 'neck' of a bottle.
YES unit: "your extra salesperson" is a pull-out fact sheet.
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Trade sales promotion techniques
Trade allowances: short term incentive offered to induce a retailer to stock up on a product.
Dealer loader: An incentive given to induce a retailer to purchase and display a product.
Trade contest: A contest to reward retailers that sell the most product.
Point-of-purchase displays: Extra sales tools given to retailers to boost sales.
Training programs: dealer employees are trained in selling the product.
Push money: also known as "spiffs". An extra commission paid to retail employees to push products.
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Consumer SALES Promotions
Consumer sales promotions are steered toward the ultimate product users—typically individual shoppers in the local market—but the same techniques can be used to promote products sold by one business to another, such as computer systems, cleaning supplies, and machinery. In contrast, trade sales promotions target resellers—wholesalers and retailers—who carry the marketer's product. Following are some of the key techniques used in consumer-oriented sales promotions.
PRICE DEALS. A consumer price deal saves the buyer money when a product is purchased. The main types of price deals include discounts, bonus pack deals, refunds or rebates, and coupons. Price deals are usually intended to encourage trial use of a new product or line extension, to recruit new buyers for a mature product, or to convince existing customers to increase their purchases, accelerate their use, or purchase multiple units. Price deals work most effectively when price is the consumer's foremost criterion or when brand loyalty is low.
Buyers may learn about price discounts either at the point of sale or through advertising. At the point of sale, price reductions may be posted on the package, on signs near the product, or in storefront windows. Many types of advertisements can be used to notify consumers of upcoming discounts, including fliers and newspaper and television ads. Price discounts are especially common in the food industry, where local supermarkets run weekly specials. Price discounts may be initiated by the manufacturer, the retailer, or the distributor. For instance, a manufacturer may "pre-price" a product and then convince the retailer to participate in this short-term discount through extra incentives. For price reduction strategies to be effective, they must have the support of all distributors in the channel. Existing customers perceive discounts as rewards and often respond by buying in larger quantities. Price discounts alone, however, usually do not induce first time buyers.
Another type of price deal is the bonus pack or banded pack. When a bonus pack is offered, an extra amount of the product is free when a standard size of the product is bought at the regular price. This technique is routinely used in the marketing of cleaning products, food, and health and beauty aids to introduce a new or larger size. A bonus pack rewards present users but may have little appeal to users of competitive brands. A banded pack offer is when two or more units of a product are sold at a reduction of the regular single-unit price. Sometimes the products are physically banded together, such as in toothbrush and toothpaste offers.
A refund or rebate promotion is an offer by a marketer to return a certain amount of money when the product is purchased alone or in combination with other products. Refunds aim to increase the quantity or frequency of purchase, to encourage customers to "load up" on the product. This strategy dampens competition by temporarily taking consumers out of the market, stimulates the purchase of postponable goods such as major appliances, and creates on-shelf excitement by encouraging special displays. Refunds and rebates are generally viewed as a reward for purchase, and they appear to build brand loyalty rather than diminish it.
Coupons are legal certificates offered by manufacturers and retailers. They grant specified savings on selected products when presented for redemption at the point of purchase. Manufacturers sustain the cost of advertising and distributing their coupons, redeeming their face values, and paying retailers a handling fee. Retailers who offer double or triple the amount of the coupon shoulder the extra cost. Retailers who offer their own coupons incur the total cost, including paying the face value. In this way, retail coupons are equivalent to a cents-off deal.
Manufacturers disseminate coupons in many ways. They may be delivered directly by mail, dropped door to door, or distributed through a central location such as a shopping mall. Coupons may also be distributed through the media—magazines, newspapers, Sunday supplements, or free-standing inserts (FSI) in newspapers. Coupons can be inserted into, attached to, or printed on a package, or they may be distributed by a retailer who uses them to generate store traffic or to tie in with a manufacturer's promotional tactic. Retailer-sponsored coupons are typically distributed through print advertising or at the point of sale. Sometimes, though, specialty retailers or newly opened retailers will distribute coupons door to door or through direct mail.
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CONTESTS/SWEEPSTAKES. The main difference between contests and sweepstakes is that contests require entrants to perform a task or demonstrate a skill that is judged in order to be deemed a winner, while sweepstakes involve a random drawing or chance contest that may or may not have an entry requirement. At one time, contests were more commonly used as sales promotions, mostly due to legal restrictions on gambling that many marketers feared might apply to sweepstakes. But the use of sweepstakes as a promotional tactic has grown dramatically in recent decades, partly because of legal changes and partly because of their lower cost. Administering a contest once cost about $350 per thousand entries, compared to just $2.75 to $3.75 per thousand entries in a sweepstake. Furthermore, participation in contests is very low compared to sweepstakes, since they require some sort of skill or ability.
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SPECIAL EVENTS. According to the consulting firm International Events Group (IEG), businesses spend over $2 billion annually to link their products with everything from jazz festivals to golf tournaments to stock car races. In fact, large companies like RJR Nabisco and Anheuser-Busch have special divisions that handle nothing but special events. Special events marketing offers a number of advantages. First, events tend to attract a homogeneous audience that is very appreciative of the sponsors. Therefore, if a product fits well with the event and its audience, the impact of the sales promotion will be high. Second, event sponsorship often builds support among employees—who may receive acknowledgment for their participation—and within the trade. Finally, compared to producing a series of ads, event management is relatively simple. Many elements of event sponsorship are prepackaged and reusable, such as booths, displays, and ads. Special events marketing is available to small businesses, as well, through sponsorship of events on the community level.
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PREMIUMS. A premium is tangible compensation that is given as incentive for performing a particular act—usually buying a product. The premium may be given for free, or may be offered to consumers for a significantly reduced price. Some examples of premiums include receiving a prize in a cereal box or a free garden tool for visiting the grand opening of a hardware store. Incentives that are given for free at the time of purchase are called direct premiums. These offers provide instant gratification, plus there is no confusion about returning coupons or box tops, or saving bar codes or proofs of purchase.
Other types of direct premiums include traffic builders, door openers, and referral premiums. The garden tool is an example of a traffic-builder premium—an incentive to lure a prospective buyer to a store. A door-opener premium is directed to customers at home or to business people in their offices. For example, a homeowner may receive a free clock radio for allowing an insurance agent to enter their home and listening to his sales pitch. Similarly, an electronics manufacturer might offer free software to an office manager who agrees to an on-site demonstration. The final category of direct premiums, referral premiums, reward the purchaser for referring the seller to other possible customers.
Mail premiums, unlike direct premiums, require the customer to perform some act in order to obtain a premium through return mail. An example might be a limited edition toy car offered by a marketer in exchange for one or more proofs-of-purchase and a payment covering the cost of the item plus handling. The premium is still valuable to the consumer because they cannot readily buy the item for the same amount.
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CONTINUITY PROGRAMS. Continuity programs retain brand users over a long time period by offering ongoing motivation or incentives. Continuity programs demand that consumers keep buying the product in order to get the premium in the future. Trading stamps, popularized in the 1950s and 1960s, are prime examples. Consumers usually received one stamp for every dime spent at a participating store. The stamp company provided redemption centers where the stamps were traded for merchandise. A catalog listing the quantity of stamps required for each item was available at the participating stores. Today, airlines' frequent-flyer clubs, hotels' frequent-traveler plans, retailers' frequent-shopper programs, and bonus-paying credit cards are common continuity programs. When competing brands have reached parity in terms of price and service, continuity programs sometimes prove a deciding factor among those competitors. By rewarding long-standing customers for their loyalty, continuity programs also reduce the threat of new competitors entering a market.
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SAMPLING. A sign of a successful marketer is getting the product into the hands of the consumer. Sometimes, particularly when a product is new or is not a market leader, an effective strategy is giving a sample product to the consumer, either free or for a small fee. But in order for sampling to change people's future purchase decisions, the product must have benefits or features that will be obvious during the trial.
There are several means of disseminating samples to consumers. The most popular has been through the mail, but increases in postage costs and packaging requirements have made this method less attractive. An alternative is door-to-door distribution, particularly when the items are bulky and when reputable distribution organizations exist. This method permits selective sampling of neighborhoods, dwellings, or even people. Another method is distributing samples in conjunction with advertising. An ad may include a coupon that the consumer can mail in for the product, or it may include an address or phone number for ordering. Direct sampling can be achieved through prime media using scratch-and-sniff cards and slim foil pouches, or through retailers using special displays or a person hired to hand out samples to passing customers. Though this last technique may build goodwill for the retailer, some retailers resent the inconvenience and require high payments for their cooperation.
A final form of sample distribution deals with specialty types of sampling. For instance, some companies specialize in packing samples together for delivery to homogeneous consumer groups, such as newlyweds, new parents, students, or tourists. Such packages may be delivered at hospitals, hotels, or dormitories and include a number of different types of products.
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Trade SALES Promotions
A trade sales promotion is targeted at resellers—wholesalers and retailers—who distribute manufacturers' products to the ultimate consumers. The objectives of sales promotions aimed at the trade are different from those directed at consumers. In general, trade sales promotions hope to accomplish four goals: 1) Develop in-store merchandising support, as strong support at the retail store level is the key to closing the loop between the customer and the sale. 2) Control inventory by increasing or depleting inventory levels, thus helping to eliminate seasonal peaks and valleys. 3) Expand or improve distribution by opening up new sales areas (trade promotions are also sometimes used to distribute a new size of the product). 4) Generate excitement about the product among those responsible for selling it. Some of the most common forms of trade promotions—profiled below—include point-of-purchase displays, trade shows, sales meetings, sales contests, push money, deal loaders, and promotional allowances.
POINT-OF-PURCHASE (POP) DISPLAYS. Manufacturers provide point-of-purchase (POP) display units free to retailers in order to promote a particular brand or group of products. The forms of POP displays include special racks, display cartons, banners, signs, price cards, and mechanical product dispensers. Probably the most effective way to ensure that a reseller will use a POP display is to design it so that it will generate sales for the retailer. High product visibility is the basic goal of POP displays. In industries such as the grocery field where a shopper spends about three-tenths of a second viewing a product, anything increasing product visibility is valuable. POP displays also provide or remind consumers about important decision information, such as the product's name, appearance, and sizes. The theme of the POP display should coordinate with the theme used in ads and by salespeople.
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TRADE SHOWS. Thousands of manufacturers display their wares and take orders at trade shows. In fact, companies spend over $9 billion yearly on these shows. Trade shows provide a major opportunity to write orders for products. They also provide a chance to demonstrate products, disseminate information, answer questions, and be compared directly to competitors. Related to trade shows, but on a smaller scale, are sales meetings sponsored by manufacturers or wholesalers. Whereas trade shows are open to all potential customers, sales meetings are targeted toward the company's sales force and/or independent sales agents. These meetings are usually conducted regionally and directed by sales managers. The meetings may be used to motivate sales agents, to explain the product or the promotional campaign, or simply to answer questions. For resellers and salespeople, sales contests can also be an effective motivation. Typically, a prize is awarded to the organization or person who exceeds a quota by the largest percentage.
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PUSH MONEY. Similarly, push money (PM)—also known as spiffs—is an extra payment given to sales-people for meeting a specified sales goal. For example, a manufacturer of refrigerators might pay a $30 bonus for each unit of model A, and a $20 bonus for each unit of model B, sold between March 1 and September 1. At the end of that period, the salesperson would send evidence of these sales to the manufacturer and receive a check in return. Although some people see push money as akin to bribery, many manufacturers offer it.
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DEAL LOADERS. A deal loader is a premium given by a manufacturer to a retailer for ordering a certain quantity of product. Two types of deal loaders are most typical. The first is a buying loader, which is a gift given for making a specified order size. The second is a display loader, which means the display is given to the retailer after the campaign. For instance, General Electric may have a display containing appliances as part of a special program. When the program is over, the retailer receives all the appliances on the display if a specified order size was achieved.
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TRADE DEALS. Trade deals are special price concessions superseding, for a limited time, the normal purchasing discounts given to the trade. Trade deals include a group of tactics having a common theme—to encourage sellers to specially promote a product. The marketer might receive special displays, larger-than-usual orders, superior in-store locations, or greater advertising effort. In exchange, the retailer might receive special allowances, discounts, goods, or money. In many industries, trade deals are the primary expectation for retail support, and the marketing funds spent in this area are considerable. There are two main types of trade deals: buying allowances and advertising/display allowances.
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BUYING ALLOWANCES. A buying allowance is a bonus paid by a manufacturer to a reseller when a certain amount of product is purchased during a specific time period. For example, a reseller who purchases at least 15 cases of product might receive a buying allowance of $6.00 off per case, while a purchase of at least 20 cases would result in $7.00 off per case, and so forth. The payment may take the form of a check or a reduction in the face value of an invoice. In order to take advantage of a buying allowance, some retailers engage in "forward buying." In essence, they order more merchandise than is needed during the deal period, then store the extra merchandise to sell later at regular prices. This assumes that the savings gained through the buying allowance is greater than the cost of warehousing and transporting the extra merchandise. Some marketers try to discourage forward buying, since it reduces profit margins and tends to create cyclical peaks and troughs in demand for the product.
The slotting allowance is a controversial form of buying allowance. Slotting allowances are fees retailers charge manufacturers for each space or slot on the shelf or in the warehouse that new products will occupy. The controversy stems from the fact that in many instances this allowance amounts to little more than paying a bribe to the retailer to convince them to carry your company's products. But many marketers are willing to pay extra to bring their products to the attention of consumers who are pressed for time in the store. Slotting allowances sometimes buy marketers prime spaces on retail shelves, at eye level or near the end of aisles.
The final type of buying allowance is a free goods allowance. In this case, the manufacturer offers a certain amount of product to wholesalers or retailers at no cost if they purchase a stated amount of the same or a different product. The allowance takes the form of free merchandise rather than money.
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ADVERTISING ALLOWANCES. An advertising allowance is a dividend paid by a marketer to a reseller for advertising their product. The money can only be used to purchase advertising—for example, to print flyers or run ads in a local newspaper. But some resellers take advantage of the system, so many manufacturers require verification. A display allowance is the final form of trade promotional allowance. Some manufacturers pay retailers extra to highlight their display from the many available every week. The payment can take the form of cash or goods. Retailers must furnish written certification of compliance with the terms of the contract before they are paid. Retailers are most likely to select displays that yield high volume and are easy to assemble.
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the promotional methods adopted by the companies vary with the type of product being marketed. suitable example
EXAMPLES
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which can be used by a herbal hair dye manufacturer
CONSUMERS SALES PROMOTION
consumer coupons
consumer volume discounts and sales,
consumer contests
point of purchase displays
free samples
gifts
incentive items
RESELLERS TRADE SALES PROMOTION
-stockholding bonus
-sales target
-bonus for performance
-retailer contests.
-special rebate for above target performance.
