Managing a Business/Marketing Management
Q7) What is Advertising Management? Explain the concept of Sales Promotion and Personal Selling?
Q8) Write a short note (any two) (10Marks)
a) Brand Equity
b) Global Marketing
c) Direct Marketing
d) Pricing decisions
Q7) What is Advertising Management? Explain the concept of Sales Promotion and Personal Selling?
• Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor.”
Basic Functions Of Advertising: Advertising performs 3 basic functions:
Advertising Planning Framework:
OBJECTIVE SETTING : Communication Objective Sales Objective
BUDGET DECISION: Affordable Approach Percent of sales Competitive parity Objective & task
MESSAGE DECISION : Message strategy Message execution
MEDIA DECISION : Reach ,frequency, impact, timing, media vehicles or types
CAMPAIGN EVALUATION Communication impact Sales impact
Step:1: setting advertising objective The advertising objectives must be stated clearly in a precise and measurable terms. The objectives stated clearly and precisely enable the advertiser to measure the extent upto which the objectives have been met or achieved. The advertising objectives can be “sales oriented” or “communication oriented”. Although the long term objective of each ad is to have an increase in sales, all ad campaigns are not designed with this specific objective. Some ad campaigns may focus on increasing the awareness about the product or service, changing the attitude, informing the new product etc.
Step:2: setting the advertising budget Methods: Affordable approach Percentage of sales method Competitive parity method Objective & task method
Step:3: Creating advertising message Just to gain and hold attention, advertising messages must be better planned, more imaginative, more entertaining and more rewarding to consumers. “ creativity plays an important role in developing effective message.” A creative strategy focus on what the advertising message says or communicate and guides the development of all messages used in the advertising campaign.
Advertising Appeal: The advertising appeal refers to the basis or approach used in the advertisement to attract the attention or interest of consumer and to influence their feelings towards the product, service or cause. Advertising appeals can be broken down into 3: Informational appeal Emotional appeal Moral appeal
Step:4: Media planning: A media planner needs to answer the following question: What audiences do we want to reach? When & how to reach them? Where to reach them? How many people should be reached? How often do we need to reach them? What will it cost to reach them.
Types of Media Vehicles: Print media: Newspaper, magazines, pamphlets, visiting cards, yellow pages etc. Broadcast media: Radio, T.V, Cinema. Out door Advertising: Bill boards, hot air balloons, wall writings, hoardings etc. Transit advertising: buses, loud speakers Specialty advertising: T-shirts, caps, cups etc. Internet
Step:5:Evaluating the effectiveness of advertisements: The advertising program should evaluate both the communication effect and the sales effect of advertising regularly. Measuring the communication effects of an advertisement-copy testing- tells whether the ad is communicating well. The sales effect of advertising are often harder to measure than the communication effect because sales are effected by many factors besides advertising- such as product features, price and availability.
5 M’s of advertising: MISSION MEASUREMENT MEDIA MESSAGE MONEY 5 M’s
Advertising Agency: “ an independent organization of creative people and business people who specialize in developing and preparing advertising plans, advertisements and other promotional tools.
” Types of Advertising Agencies: Full service agency: Full service agencies are geared to provide complete range of services to its clients, which includes services such as strategic planning, creative development, production, media planning, media buying and other related services.
Limited service agency: They concentrate on creative aspect of advertising. They are well appreciated and used by clients looking for high quality creative work while depending on other sources for media planning and execution of the campaign. They are also known as creative boutiques or creative shops. House agency: The house agency is an advertising agency established by a company to look after its advertising requirements. eg. Mudra Communication pvt ltd,- owned by reliance.
• The most important step lies in deciding what your advertising should say and to whom it should say it. All you need to do is to decide who buys and uses your products and why. In order to spend your media dollars wisely, you must know what they read or watch so that they will see your ads.
THE MAJOR OBJECTIVES
-Goals that an organization seeks to achieve through its promotional program in terms of communication effects such as
- creating awareness of the product/brand,
-knowledge of the product/ brand
[features/ benefits of the product usage]
-images of the product/brand,
-attitudes of the users of the product,
-help people to show their preferences for the product,
-help people to make the purchase intentions.
-increasing response rates
- contributing to ROI business goals.
• Build a brand image- Test customer awareness of brand recognition and perceived values
• Increase Sales- Levels of repeat purchase
• Build customer loyalty and relationship- Levels of customer retention
• Change customer attitudes- Measure demographic profile of purchases
- Measure type of goods ordered by new purchasers
- Compare with previous data.
• Stimulate an increase in sales- Number of enquiries from advert, - Number of enquiries converted into sales
• Remind customers of the existence of a product- Test customer awareness both before and after the advertising campaign, - Number of enquiries
• Inform customers- Test customer awareness, - Number of requests for further information
OBJECTIVES COULD INCLUDE
-creates product awareness
-makes known product availability
-creates product perception
-helps to develop product memory
-helps to develop a brand image
-creates a desire
-develops a want
-stirs up the brand
-harnesses the desire
-helps in making the buying decision
-helps to influence the choice
-helps in buying
Several broad objectives including:
building product awareness,
stimulating demand and
reinforcing the brand. To achieve one or more of these objectives, advertising is used to send a message containing information about some element of the marketer’s offerings.
• Message About Product – Details about the product play a prominent role in advertising for new and existing products. In fact, a very large percentage of product-oriented advertising includes some mention of features and benefits offered by the marketer’s product. Advertising can be used to inform customers of changes that take place in existing products.For instance, if a beverage company has purchased the brands of another company resulting in a brand name change, an advertising message may stress “New Name but Same Great Taste”.
• Message About Price – Companies that regularly engage in price adjustments, such as running short term sales (i.e., price markdown), can use advertising to let the market know of price reductions. Alternatively, advertising can be used to encourage customers to purchase now before a scheduled price increase takes place.
• Message About Other Promotions – Advertising often works hand-in-hand with other promotional mix items. For instance, special sales promotions, such as contests, may be announced within an advertisement. Also, advertising can help salespeople gain access to new accounts if the advertising precedes the salesperson’s attempt to gain an appointment with a prospective buyer. This may be especially effective for a company entering a new market where advertising may help reduce the uncertainty a buyer has about a new company.
• Message About Distribution – Within distribution channels, advertising can help expand channel options for a marketer by making distributors aware of the marketer’s offerings. Also, advertising can be used to let customers know locations where a product can be purchased.
ADVERTISING/ PUBLICITY Communication OBJECTIVES involve ...
• Brand insistence or loyalty
• Attitudes toward the product
General Advertising/ PUBLICITY Objectives could be
• To prompt direct action
• To encourage information search
• To relate product to needs
• To encourage recall of past satisfactions.
• To modify attitudes
• To reinforce attitudes
• To highlight product differences
• To reveal product attributes or benefits
• To push price/quality
• To target product users
• To exhibit product usage or application
• To fight Against a particular competitor
• To fight Against an entire product category
• To show association
• To show a solution to a problem situation
Concept of sales promotion
1.what are the different sales promotion methods used in marketing the products by companies.
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.
-discounts and sales
-point of purchase displays
-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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
2. the promotional methods adopted by the companies vary with the type of product being marketed. suitable example
Company launching non aerated fruit juice,
CONSUMERS SALES PROMOTIONS
consumer volume discounts and sales,
point of purchase displays
RESELLERS TRADE SALES PROMOTION
-bonus for performance
-special rebate for above target performance.
Consumer durable product like Air conditioner, where dealer support is necessary to achieve target,
CONSUMERS SALES PROMOTIONS
point of purchase displays
RESELLERS TRADE SALES PROMOTIONS
-bonus for performance
-special rebate for above target performance.
Toilet Soaps,A detergent facing Heavy Competition.
CONSUMERS SALES PROMOTION
consumer volume discounts and sales,
point of purchase displays
free travel, such as free flights
RESELLERS TRADE SALES PROMOTION
-bonus for performance
-special rebate for above target performance.
One important advantage of personal selling is that the selling pitch can be adjusted and individualized to the prospect. Once you determine the prospect’s needs, you tailor the sales pitch. Unfortunately, personal selling is extremely expensive. As noted previously, door-to-door selling is disappearing in the area of consumer marketing. This is, however, not true in the area of business-to-business (B2B) marketing. Companies selling complex products such as printing presses, buses, jets, computer systems, power plants, and other expensive "installations" usually use salespeople to sell their products. These salespeople are compensated quite well and a large number of them are college graduates. When selling complex, costly products B2B (business-to-business), personal selling is extremely important. You need to develop a relationship with customers and may have to answer technical questions. A customer with a question can get an immediate response. Personal selling is also important where prices have to be negotiated and the sale involves a great deal of money. For example, when JetBlue executives decide to purchase 100 jets and want to talk to salespeople from Boeing, they expect negotiations will be extensive and that there will be several face-to-face meetings. The salesperson for Boeing will have a great deal of knowledge about jets and air travel and will expect to meet the JetBlue executives several times before the sale is closed. A key disadvantage of personal selling is that it is costly and you have to deal with customers one at a time. This is different from advertising where millions of people see the same ad. Advertising is mass selling, not personal selling.
Personal selling is divided into three tasks:
Order getting – order getters attempt to increase their firm’s sales by selling to new customers or by convincing current customers to buy more of a company’s products. They are important to a company because they develop new business and are therefore compensated quite well. Salespeople in computer stores or fancy clothing stores are often order getters. Their job is to convince the customer to purchase an expensive computer or a fancy outfit. They need to have persuasive abilities, and they generally receive commissions plus salary. It takes talent to convert prospects into customers and companies are willing to pay people who have this ability. Order getters understand the importance of focusing on benefits and not simply describing features of products.
Order taking – order takers are involved in the routine completion of a sales. They complete the sales transaction and mainly deal with the same or similar customers. A sales clerk in a supermarket is an order taker. They are paid minimum wage and do not have to persuade anyone to buy anything. Example: In a fancy women’s clothing store, the order getter convinces the customer to purchase some very expensive gowns. She will then take the customer with the merchandise to the order taker who will complete the transaction and take care of such matters as payment, delivery, etc. A smart retailer does not want to waste an order getter’s valuable time with such routine and mundane matters as completing the order.
Support Personnel – Do not make any sales but help facilitate the selling function. There are two major types of support personnel: missionary salespeople and technical specialists. A missionary salesperson for a drug company (i.e., a detailer) will visit doctors and try to convince them to use various drugs manufactured by her company. They do not sell anything and often leave many free samples with the doctors. Technical specialists are necessary when very technical products are sold (e.g., advanced computers). They have the ability to explain how to use the product and its limitations. Some support personnel are sent to retailers to help them with displays and provide advice about promoting the product.
The Personal Selling Process:
Step 1: Prospecting and Qualifying
Prospecting, the first step in the personal selling process, focuses on developing a list of potential customers (prospects). Both internal (a company’s own records) and external sources can be used to prospect. Many salespeople use the telephone to prospect. Some firms get names of prospects from list brokers. For instance, one firm that sells burglar alarms purchases a list of new home buyers. One good way of getting leads is by running a direct response ad in a magazine. For instance, Xerox might run an ad in a trade publication describing a new copying machine that can make one million color copies a month at a price of a few cents per copy. The ad will provide a toll-free number and offer a free brochure describing this machine. Anyone who calls will be asked a few critical questions (e.g., when do you expect to make a purchasing decision) and their name and the company name will be entered into a database.
Qualifying deals with determining which prospects are most likely to purchase the product. In some firms, prospects are rated A, B, C, D, and F depending on the chance that they will purchase and the amount they might spend. In many firms, prospects who plan on buying the product within 3 months are classified as "hot leads."
Step 2: Preapproach
A good salesperson attempts to know his/her prospect well. You want to know something about the buyer’s company, the buyer’s specific product needs, and what brands are currently being used. The more you know about your prospects, the easier it is to sell to them. Knowing about a prospect’s needs also makes the salesperson more credible in the eyes of the buyer.
Step 3: Approaching the Customer
Cold calls are not the most effective way of approaching customers. Some salespeople spend a great deal of time canvassing an area trying to find prospects willing to listen to their spiel without a prior appointment. This wastes a great deal of time since it may take hours to find an individual with the authority to make the purchase willing to listen to the sales pitch.
Referrals (referred leads) are usually more effective than cold calls.
Step 4: Presentation Step = Making the sales presentation
During the presentation step, the salesperson has a vital job. The salesperson has to convert prospects into customers by creating a need and desire for the product or service. S/he has to tell the prospect the "product story" and highlight the benefits of the product. You are familiar with the term USP (unique selling proposition) that is used in advertising. A good salesperson has to convince prospects that the product is special and will provide important benefits. Did you get a call from the college when you were a high school senior? If you did, what were you told that made you choose this college? Research indicates that students selecting a college are concerned with reputation and variety of programs to choose from. A good salesperson knows which attributes/benefits to stress in trying to convert the prospect into a customer. The attributes or benefits that should be stressed should be important to prospects.
Three types of sales presentations:
Prepared sales presentation – The salesperson does almost all of the talking. Usually, the entire sales pitch is "canned," i.e., the salesperson memorizes what s/he has to say. This approach is used by many telemarketers who are trying to sell an inexpensive product (e.g., home delivery of a paper or a warranty extension) and untrained people are used for this type of selling. The entire training consists of reading a script. This is a selling approach used by telemarketers that sell relatively inexpensive and uncomplicated products or services (e.g., home delivery of a newspaper). The telemarketers are not trained, other than being given a script to memorize, and have a very high turnover. The pay is quite low and high school students are often used. If you were ever called by a telemarketer trying to convince you to use a particular long distance service, you know what I am talking about. The telemarketers do virtually all the talking and have no interest in understanding (or satisfying) your needs.
Need satisfaction approach – The customer does most of the talking and the salesperson attempts to understand the customer’s needs. A problem solving approach is used. This approach is good for complicated and expensive products. Salespeople need extensive training for this approach. In fact, firms using the need satisfaction approach to selling may require a six-month training period for their salespeople. If you get a job as a salesperson for IBM or Xerox selling high-technology products, this is the approach that you will be taught.
Selling formula approach – This is in between the first two approaches. Salespeople are trained to use an approach similar to AIDA (Attention – Interest – Desire –Action). The salesperson does most of the talking in the beginning of the selling pitch. Afterwards, the customer is brought into the discussion to help clarify his/her needs. The training is not as extensive as with the need satisfaction approach.
An important part of the preparation for the sales presentation involves Overcoming Objections. It is important to anticipate and prepare counterarguments for any objections that a prospect might have. For instance, if a prospect states that she likes the product but her firm cannot afford it, a possible counterargument could be that financing is available at very reasonable terms. Alternatively, the salesperson might note that the product actually saves the company money in the long run and is therefore quite reasonably priced.
Step 5: Closing the Sale
Here is where you are trying to get the order. The salesperson asks the prospect to buy the product. One common approach is to assume that the prospect does want to buy the product and to ask "when you do want delivery?" or "how many do you want?"
Step 6: Follow-up
A good salesperson follows up and ensures that everything went well. Was the product delivered on time? Is the customer satisfied? Any problems? By demonstrating that you care about your customers, you will increase the chances that customers will continue to buy from you and recommend you to others. Marketing is all about customer satisfaction and following up is necessary to determine whether or not your customers are satisfied.
Most firms use a combination of a fixed salary and a commission based on sales.
Door-to-Door Personal Selling: Door-to-door selling to consumers is virtually obsolete. There was a time when vacuum cleaners, cosmetics, cleaning supplies, encyclopedias, aluminum siding, were sold by salespeople who went door-to-door. This is not a feasible way of selling most consumer products and is very costly. Few people are home nowadays (most women with children work) so many of the companies that sold products this way have changed their channel of distribution. Many use catalogs or use stores or websites to sell their products. Avon was a company that sold cosmetics door-to-door using salespeople. Many of the salespeople were women who did this part time and they used a selling formula approach. Today, you can shop online and use an Avon online representative and select personal delivery or free shipping. If you want to learn more about how Avon sells cosmetics, go to the Avon website at avon.com. They recruit for independent Avon sales representatives on their website. Tupperware is sold using a special kind of personal selling. A representative will make a Tupperware party. One can also make a Tupperware online party.
Relationship marketing refers to a philosophy that a company that wishes to succeed should maintain a strong, continuous, long-term relationship with its customers, suppliers, and distributors. Companies that follow this philosophy understand the importance of communicating with their customers, suppliers, and distributors on a regular basis. In order to have this kind of relationship customers and intermediaries have to feel good about doing business with the company. Also, customers and intermediaries should find it easy to contact the company and feel welcome when communicating with it. They should feel that they are part of a big family and that the company is upset if the product or service fails to perform properly. Obviously, it is much easier to make customers and intermediaries feel this way if you strive to understand their needs.
a) Brand Equity
MEANS CREATING A BRAND IDENTITY
FOR THE PRODUCT THROUGH
-symbol / logo / fonts/ color/ sound.
-product features/ benefits/ quality/ certainty/ reliability/delivery/ packaging/design.
WITH WHICH CREATE
-a perception through
-a visual/ communication/ behavior
WHICH RESULTS IN A BRAND PERSONALITY
WHICH CONSISTS OF
WHICH HELPS TO DEVELOP
1. BRAND PLATFORM, WHICH INCLUDES
2.BRAND ARCHITECTURE, WHICH INCLUDES
WHICH CREATES FOR THE PRODUCT
-raises relative price
WHICH RAISES THE PRODUCT
WHY BRANDING IS IMPORTANT
FOR A PRODUCT TO BE SUCCESSFUL, IT MUST
-bring continuous sales
-gain market share,
-win consumer preference
-raises the relative price.
WHICH RAISES THE EQUITY/ BRAND EQUITY OF THE PRODUCT
THAT IS WHY BRANDING IS SO IMPORTANT.
THIS EQUITY VALUE IS VERY IMPORTANT
TO THE COMPANY ---- WHY
the figures below indicate why?????
BRAND EQUITY VALUE OF [US DOLLARS]
1.Coca-Cola 65.3 BILL.
2.Microsoft 58.7 BILL.
3.IB M 57.1 BILL.
4.GE 51.5 BILL.
6.Toyota 32.1 BILL.
7.Intel 30.9 BILL
8.McDonald’s 29.4 BILL.
9.Disney 29.2 BILL.
10.Mercedes-Benz 23.6 BILL.
d) Pricing decisions
Factors influencing the pricing decision.
The final price for a product may be influenced by many factors which can be categorized into two main groups:
• Internal Factors - When setting price, marketers must take into consideration several factors which are the result of company decisions and actions. To a large extent these factors are controllable by the company and, if necessary, can be altered. However, while the organization may have control over these factors making a quick change is not always realistic. For instance, product pricing may depend heavily on the productivity of a manufacturing facility (e.g., how much can be produced within a certain period of time). The marketer knows that increasing productivity can reduce the cost of producing each product and thus allow the marketer to potentially lower the product’s price. But increasing productivity may require major changes at the manufacturing facility that will take time (not to mention be costly) and will not translate into lower price products for a considerable period of time.
• External Factors - There are a number of influencing factors which are not controlled by the company but will impact pricing decisions. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these factors can vary by market.
The price that an organization can charge for its products will be determined to a greater or lesser degree by the market in which it operates. Here are some familiar terms that might feature as background for a question or that you might want to use in a written answer.
• Perfect competition-Many buyers and many sellers all dealing in an identical product. Neither producer nor user has any market power and both must accept the prevailing market price.
• Monopoly-One seller who dominates many buyers. The monopolists can use his market power to set a profit-maximizing price.
• Monopolistic competition-A large number of suppliers offer similar, but not identical products. The similarities ensure elastic demand whereas the slight differences give some monopolistic power to the supplier.
• Oligopoly-Where are relatively few competitive companies dominate the market whilst each large firm has the ability to influence market prices the unpredictable reaction from the other giants makes the final industry price in determinate. Cartels are often formed.
1. Prices Sensitivity.
2. Price Perception.
3. Compatibility with other Products.
5. Competition from substitute products.
in periods of inflation the organization may need to change prices to reflect increases in the prices of supplies and so on. Such changes may be needed to keep relative (real) prices unchanged.
in the absence of other information, customers tend to judge quality by price. Thus a price change may send signals to customers concerning the quality of the product. A price rise may indicate improvements in quality, a price reduction may signal reduced quality, for example through the use of inferior components.
in times of rising incomes, price may become a less important marketing variable compared with product quality and convenience of access (distribution). When income levels are falling and /or unemployment levels rising, price will become a much more important marketing variable.
Ethical considerations are a further factor, for example whether or not to exploit short-term shortages through higher prices.
If a rival cuts its prices in the expectation of increasing its market share, a firm has several options.
• It will maintain its existing prices if the expectation is that only a small market share would be lost, so that it is more profitable to keep prices at their existing level. Eventually, the rival firm may drop out of the market or be forced to raise its prices.
• It may maintain its prices but respond with a non-price counter-attack. This is a more-positive response, because the firms will besecuringor justifying its current prices with a product change, advertising, or better back-up services.
• It may reduce its prices. This should protect the firm's market share so that the main beneficiary from the price reduction will be the consumer.
• It may raise its prices and respond with a non-price counter-attack.the extra revenue from the higher prices might be used to finance an advertising campaign or product design changes. A price increase would be based on a campaign to emphasize the quality difference between the firm's own product and the rival's product.