Promotion in marketing


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Promotion in marketing

  1. 1. MODULE-I (PROMOTION) CONTENTS: 1. Introduction to Promotion 2. Promotion MixWhat is Promotion mix? Elements under Promotion mixa) Advertising b) Sales Promotion c) Personal Selling d) Public Relations e) Publicity f) Propaganda 3. Probable Questions- 1 Subash Ch. Nath, Sr.Lecturer (Marketing)
  2. 2. 1. Introduction to Promotion When a company develops a new product, changes an old one or simply wants to increase sales of an existing product or service, it must transmit its selling messages to potential customers. Although there is no direct relationship between the promotion and sales but then also we can say that if promotional programs are directed towards the target (potential) customers, it pays to the marketer. Promotion is the fourth component of a company’s total marketing mix. Promotion is only a means of communication about the product without the motive of persuading for that act which a customer do not want to do. In economic terms, the role of promotion is to change a firm’s demand curve- either shifting it to the right or changing its shape to make demand inelastic when prices increase and elastic when prices decrease. In marketing terms, the role of promotion is to inform, remind and persuade existing or prospective customers to accept, resell, recommend or use of a product, service and ideas. Usually the marketers’ communication efforts are known as promotion. Fundamentally, the communication occurs when- i) a sender transmits a message, ii) a receiver receives that message, and iii) the sender and the receiver have the shared meaning. The two major participants in the communication process are the sender (source) and the receiver. The sources of communication use channels and messages to reach their intended receivers. The communication process involves performing the communication functions of encoding, decoding, receiving feedback, and coping with noise. So, marketers must understand the communication process to communicate effectively with their target marketer and other public. 2. Promotion Mix2 Subash Ch. Nath, Sr.Lecturer (Marketing)
  3. 3. What is Promotion mix? Promotion mix consists of careful blending of advertising, personal selling, sales promotion, public relations, publicity and propaganda; to accomplish the marketer’s promotional objectives. When deciding the promotional mix, the management should considerThe target audience/ Market size and concentration The objective of the promotional effort. The nature of the product. The stage of the product’s life cycle. The funds available for the promotion/ Resource availability and the cost of each promotional tool. Customer information needs All the forms of promotion in promotional mix try to influence consumers’ attitudes, beliefs, ways of living or life style, values and preferences towards a company and its products, and thereby influence his/her behaviour. Elements under Promotion mixa) b) c) d) e) f) a) Advertising Sales Promotion Personal Selling Public Relations Publicity Propaganda ADVERTISING 3 Subash Ch. Nath, Sr.Lecturer (Marketing)
  4. 4. Introduction: The term ‘Advertising’ is derived from the original Latin word “advertere” which means” to turns the attention. ADVERTERE ------------------: TO TURN THE ATTENTION Therefore, it can be said that anything that turns the attention of the readers or the listeners or the viewers towards a product or service or idea is known as advertising. Advertising, generally speaking, is the promotion of goods, services, companies and ideas, usually performed by an identified sponsor. Marketers see advertising as part of an overall promotional strategy. Kotler and Armstrong provide an alternative definition: "Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services through mass media such as newspapers, magazines, television or radio by an identified sponsor". There are five main stages in a well-managed advertising campaign: Stage 1: Set Advertising Objectives An advertising objective is a specific communication task to be achieved with a specific target audience during a specified period of time. Advertising objectives fall into three main categories: (a) To inform - e.g. tell customers about a new product (b) To persuade - e.g. encourage customers to switch to a different brand (c) To remind - e.g. remind buyers where to find a product Stage 2: Set the Advertising Budget Marketers should remember that the role of advertising is to create demand for a product. The amount spent on advertising should be relevant to the potential sales impact of the campaign. This, in turn will reflect the characteristics of the product being advertised. 4 Subash Ch. Nath, Sr.Lecturer (Marketing)
  5. 5. For example, new products tend to need a larger advertising budget to help build awareness and to encourage consumers to trial the product. A product that is highly differentiated may also need more advertising to help set it apart from the competition - emphasizing the points of difference. Setting the advertising budget is not easy - how can a business predict the right amount to spend. Which parts of the advertising campaign will work best and which will have relatively little effect? Often businesses use "rules-of-thumb" (e.g. advertising/sales ratio) as a guide to set the budget. Stage 3: Determine the key Advertising Messages Spending a lot on advertising does not guarantee success (witness the infamous John Cleese campaign for Sainsbury). Research suggests that the clarity of the advertising message is often more important than the amount spent. The advertising message must be carefully targeted to impact the target customer audience. A successful advertising message should have the following characteristics: (a) Meaningful - customers should find the message relevant (b) Distinctive - capture the customer's attention (c) Believable - a difficult task, since research suggests most consumers doubt the truth of advertising in general Stage 4: Decide which Advertising Media to Use There are a variety of advertising media from which to choose. A campaign may use one or more of the media alternatives. The key factors in choosing the right media include: (a) Reach - what proportion of the target customers will be exposed to the advertising? (b) Frequency - how many times will the target customer be exposed to the advertising message? (c) Media Impact - where, if the target customer sees the message - will it have most impact? For example does an advert promoting holidays for elderly people have more impact on Television (if so, when and which channels) or in a national newspaper or perhaps a magazine focused on this segment of the population? Another key decision in relation to advertising media relates to the timing of the campaign. Some products are particularly suited to seasonal campaigns on television (e.g. Christmas hampers) whereas for other 5 Subash Ch. Nath, Sr.Lecturer (Marketing)
  6. 6. products, a regular advertising campaign throughout the year in media such as newspapers and specialist magazines (e.g. cottage holidays in the Lake District) is more appropriate. Stage 5: Evaluate the results of the Advertising Campaign The evaluation of an advertising campaign should focus on two key areas: (1) The Communication Effects - is the intended message being communicated effectively and to the intended audience? (2) The Sales Effects - has the campaign generated the intended sales growth. This second area is much more difficult to measure The Objectives of Advertising: i. To create awareness. ii. To inform iii. To remind customers iv. To reassure customers v. To offset advertising by competitors vi. To supports the sales force. vii. To persuade viii. To promotes ideas, attitudes and causes ix. To increase market share x. To differentiate from rivals. xi. To encourage trials xii. To build brand loyalty xiii. To encourage brand switching xiv. To change attitudes xv. To support activities in the distribution chain. Types of advertising: i. ii. iii. iv. v. vi. vii. Informative Persuasive Reminder Reinforcement Pioneering Competitive Defensive : Provide information. : To encourage brand switching. : To remind about a mature product. : To reassure. : To introduce new product. : To point differential advantage. : To reduce damage caused by 6 Subash Ch. Nath, Sr.Lecturer (Marketing)
  7. 7. viii. Institutional ix. Direct response campaign of a direct competitor. : Seeks to promote corporate identity, image and values. : To elicit an order, enquire or request a visit by using of prime Medias. Setting the advertising budget Introduction A famous comment usually attributed to Lord Leverhulme goes: “I know that half of my advertising budget is wasted, but I’m not sure which half” It is notoriously difficult to measure the effect of advertising on a business’ sales. Advertising is just one of the variables that might affect sales in a particular period. These include: • Consumer and business confidence • Levels of disposable income • Availability of product (e.g. does the retailer actually have stock to sell?) • Availability of competing products • The weather (often blamed by retailers for poor sales!) How can a business know whether a specific advertising campaign was effective? As a percentage of sales, advertising expenditure varies enormously from business to business, from market to market. For example, the leading pharmaceutical companies spend around 20% of sales on advertising, whilst business such as Ford and Toyota spend less than 1%. An average for fast-moving consumer goods markets (“FMCG”) is around 8-10% of sales. In practice, the following approaches are used for setting the advertising budget: Approaches to setting the advertising budget Method (1) Fixed percentage of sales 7 Subash Ch. Nath, Sr.Lecturer (Marketing)
  8. 8. In markets with a stable, predictable sales pattern, some companies set their advertising spend consistently at a fixed percentage of sales. This policy has the advantage of avoiding an “advertising war” which could be bad news for profits. However, there are some disadvantages with this approach. This approach assumes that sales are directly related to advertising. Clearly this will not entirely be the case, since other elements of the promotional mix will also affect sales. If the rule is applied when sales are declining, the result will be a reduction in advertising just when greater sales promotion is required! Method (2) Same level as competitors This approach has widespread use when products are well-established with predictable sales patterns. It is based on the assumption that there is an “industry average” spend that works well for all major players in a market. A major problem with this approach (in addition to the disadvantages set out for the example above) is that it encourages businesses to ignore the effectiveness of their advertising spend – it makes them “lazy”. It could also prevent a business with competitive advantages from increasing market share by spending more than average. Method (3) Task The task approach involves setting marketing objectives based on the “tasks” that the advertising has to complete. These tasks could be financial in nature (e.g. achieve a certain increase in sales, profits) or related to the marketing activity that is generated by the campaigns. For example: • Numbers of enquiries received quoting the source code on the a d v e r t i s e m e n t • Increase in customer recognition / awareness of the product or brand (which can be measured) • Number of viewers, listeners or readers reached by the campaign Method (4) Residual The residual approach, which is perhaps the worst of all, is to base the advertising budget on what the business can afford – after all other 8 Subash Ch. Nath, Sr.Lecturer (Marketing)
  9. 9. expenditure. There is no attempt to associate marketing objectives with levels of advertising. In a good year large amounts of money could be wasted; in a bad year, the low advertising budget could guarantee a further low year for sales. Advertising Media: 1. 2. 3. 4. 1. Broadly grouped into four categories, such asIndoor Advertising – Press, Radio, Television and Film. Outdoor Advertising – Posters, Painted displays, traveling displays, electric signs, sky, writing, Sandwich man. Direct Advertising – Envelop enclosures, Broad sides, Booklets, Catalogues, Sales Letters, Gift novelties, Store Publications, Package inserts. Display Advertising - Displays, Showrooms, Showcases, Exhibitions and store cases. Indoor Advertising Medias a. Newspapers: Newspaper is one that gives news, views, ideas, interpretations, opinions, comments and explanations on every walk of life. Merits: Wide coverage. Quick Response. Regularity and Frequency. Flexibility and Speed. Economical. Demerits: Shortest Life. Lack of quality reproduction. Waste in circulation. Possibility of duplication. 9 Subash Ch. Nath, Sr.Lecturer (Marketing)
  10. 10. The newspaper vehicle is best suited where the firm wants To introduce new produce. To supports the efforts of middleman. Quick and unexpected changes are necessary. Criteria for selection of Newspaper – The advertiser should take into account the following points for selecting the newspaper for giving the advertisements. Such as – Circulation Advertisement rates Newspaper policy. Space available. Language of the paper. Colour advertisements Time of issue. b. Magazines: Magazines are the periodicals published weekly, fortnightly, monthly, and quarterly and annually covering either a specific area of the general area of a subject or subjects. Merits: Demerits: longer life Visual display Selectivity Loyalty and prestige Geographic flexibility Inflexibility Waste in circulation Costlier Restricted frequency Magazines are more suitable where: To accommodate longer copy needs. To imprint product features by colours. 10 Subash Ch. Nath, Sr.Lecturer (Marketing)
  11. 11. To support promotion advertising. c. Radio Advertising: It is a mass medium that appeals to earns and brain of listeners. It ruled from 1920 to 1970 very powerfully and now curtailed role as television took its place. The types of radio advertisements are – Straight commercials. Dialogue commercials. Dramatized commercials. Integrated commercials and Music commercials. Merits: - Selectivity Human touch Flexibility and timing Mass coverage Economy. Demerits:- Message Perishability Lack of illustrations Limited time. Wastage The radio advertising is better suited where – Low cost advertising is desired. Last minute changes are possible. Products can be described needing no visual display. d. Television advertising: It is the youngest, glamorous and highly specialized in terms of sound, light, colour, vision and immediacy. Television advertising are called television commercials – lasting for 10, 20, 30 seconds. These may be programmes or announcements. 11 Subash Ch. Nath, Sr.Lecturer (Marketing)
  12. 12. Merits: - Deep impact. Selectivity and flexibility. Mass communication media Upper hand in distribution. Lifelike presentation. Demerits:- Shortest life Costlier The clutter problem Time taxing Television advertising is more suitable whereThe message needs visual display. A new product is to be introduced Freedom is needed in selection of programme and time of advertising. e. Film advertising: Cinema is a audio-visual medium for masses. It has the widest range starting from ordinary slide presentation to the ad film screening. Merits: - Dramatic Impact. Selectivity and Flexibility Mass publicity Least waste Supplimentary Demerits:- Costly Interjection Limited coverage Clutter problem The cinema advertising is most suitable whereThe product needs demonstration. Rural markets are to be reached. There is need for introducing new product. The advertiser needs selectivity and flexibility in message spread. 2. Out door Advertising Medias 12 Subash Ch. Nath, Sr.Lecturer (Marketing)
  13. 13. This is called indirect advertising which is the oldest and yet not lost its contents even today. It is one meant for the moving people that catch the notice of people within the minimum time. The components of morale advertising media are discussed as follows:a. b. c. d. e. f. Posters: A poster is a sheet of paper pasted on a wooden or card or a metal board depicting the advertising message. It is a prominent vehicle of outdoor media accounting for 75%. These may be of various sizes. The success of poster advertising depends on two factors namely, its designing and the selection of site for display. Painted Displays: These are the painted bulletins or the wall paintings. Bulletin is the metal sheet of a rectangular shape of a standard size erected at height to command the visuality from a distance. This also takes a number of varieties. Electric signs: These are non-standardized, large and permanent signs that make use of elaborate light and action effects. These provide a kind of wonderland to the passerby particularly during the night time. Traveling displays: It refers to the transit displays. These are used in and out of the vehicles. These are of three types namely- car cards, outside displays and station posters. Sky-writing: It is air advertising in the sense that even the sky is not spared by the advertisers to pass on their message. The ways are kites, balloons and search lights. Sandwich man: This is the oldest and funniest mode of outdoor advertising. Sandwich men are the men hired to pass on the message in a usual way. These persons dress themselves in the funniest way even make use of artificial props to look abnormally tall/fat. They carry posters both in front and back of their own. Merits of Outdoor advertising: Wider and deeper appeal Greater flexibility Economy 13 Subash Ch. Nath, Sr.Lecturer (Marketing)
  14. 14. Easy accommodation Beautification Demerits of outdoor advertising: Only remainder publicity. Uglification Heavy investment Immeasurability Outdoor advertising is best suited where – Repeat advertising is a must To supplement other media Package identification is sought Geographical selectivity is warranted. 3. Direct Advertising Medias It is one that passes on the printed matter by postal or hand delivery to the persons. The components of direct advertising are as follows: a. Post cards: Most widely used vehicle of direct advertising. It is designed to get direct and immediate action on the part of the recipient. It also acts as a reminder, rescinder, and announcer and so on. b. Envelop enclosures: It stands for the bunch of the papers posted and not the enclosures as normally understood. It may be a circular or suffer or a folder. All these pass on useful information to the recipient. c. Booklets: It is a very small book having not more than 8 to 10 pages fastened with staples or glue to allow it to open. It gives the product story in a colourful way and hence it is normally preserved. d. Catalogues: It is similar to the booklets but more substantial in covering more information on the entire product range. It also gives the prices of the products. It also act as a reference book for the dealers. e. Sales letters: It is the one that sells the name of the company and then sales the products. The principle of A-I-D-A is fruitfully employed in designing the sales letters. f. Gift novelties: These are the gifts to be given to the consumers, dealers and the executives. Therefore, these can be 14 Subash Ch. Nath, Sr.Lecturer (Marketing)
  15. 15. of three types namely advertising novelties, calendars and executive gifts. g. Store publications: It is the house organ that intends to promote the company goodwill speaking of its philosophy, research achievements, participation in community projects and so on. h. Package inserts:It refers to inserts and labels giving verbal information to the buyer. It is mainly used to promote the sales of jointly demanded products. i. Sampling: The practice of disturbing the goods freely to the consumers on the pretext that the pre purchase use convinces them, is sampling. These may be distributed door to door, through dealers, against coupons and vending machines. Merits: - Heavily selective. Flexibility. Personal touch. Deeper impact. Result measurability. Demerits:- High cost Low reader interest. Limited span Warrants specialized skill The direct advertising media is best suited where – The advertiser has limited and concentrated class of customers. Keenness of reaching customers and middlemen. Timely and less waste circulation. Advertiser wanted to maintain secrets of his line. 4. Display Advertising Medias This is one that convinces the customers by presentation, demonstration rather than telling. It is gaining ground these days of self service and selection. The components of display advertising are - displays, showrooms, showcases, exhibitions and trade fairs. a. Display: There can be window and counter display. Window Display: - It is the exterior display that attracts the passerby to come nearer and enter the shop. This creates love at first sight. 15 Subash Ch. Nath, Sr.Lecturer (Marketing)
  16. 16. Merits: - Point of purchase impact. - Colourful life size presentation. - Act as a beauty mask. Counter Display: - It is interior display an arrangement in side the shop. It has the ability of creating on the spot desire called as impulse buying. Merits: - Easy location of products. - Results in impulse buying. - Consumer Loyalty. Demerits of display advertising: - Creativity. - Placement. - Wastage; which are to be solved effectively. b. Showrooms & showcases: A showroom is a specially designed room or the room cum office rented or owned located in the prominent place or the sales territory mainly used for display, demonstration and after sales services. A showcase is a glass box or a cupboard or a glazed case or a cabinet with glass doors used to display the products in an artistic way to arrest the attention passerby. Merits: - Place to get orders. - A training ground. - Centre for after sales services. And the success of these depends upon suitable location, easy accessibility, accommodation, working staff and the testimonials of satisfied customers. c. Exhibitions & Trade fairs: Though most of the people use these two words namely exhibition and trade fairs interchangeably, there is difference between these two. 16 Subash Ch. Nath, Sr.Lecturer (Marketing)
  17. 17. An exhibition is the huge congregation of manufacturers and dealers under a single roof for displaying, demonstrating and selling their products. A trade fair is a huge gathering of prospects arranged by the manufacturers and dealers where fun and frolic and entertainment are prominent. Merits: Demerits: - Display and demonstration. - Deeper impact. - Market development. - High cost. - Management. The success of these exhibitions and trade fairs depends on sound planning as to size, site, and design of spot and sales staff, display and demonstration style. Choice of advertising media: The most important issue is one of selecting the best medium or media by every advertiser. And this depends variables like- Audience : Does it reach the target audience? - Impact : Does it have the impact to ensure the message has a chance of getting through. - Message : Does it ensures the message is clearly communicated? - Response : Does it make responding easy? - Internal Mgmt : Does it enhance the efficient management of the campaign? - The end response : Cost & projected likely response. 17 Subash Ch. Nath, Sr.Lecturer (Marketing)
  18. 18. Advertising Effectiveness: The effectiveness of advertising is expressed in terms of its ability to meet the objectives. If sales increased profit and sales are the aims, their effectiveness are measured in terms of the return on investment in advertising spending. If competitive defense is the main aim it is measured in terms of maintenance in indicators of competitive position. (e.g. market share) Measures of advertising effectiveness: Advertising awareness: The ability of a consumer to remember a particular advertisement. Advertising Coverage: The %age of the target market who have at least one opportunity to see an advertisement during a campaign. Advertisement sharing of voice: The proportion of overall advertising in a market accounted for by a brand or company. Advertising to sales ratio: Expenditure on advertising as a proportion of sales. ------------------------- 18 Subash Ch. Nath, Sr.Lecturer (Marketing)
  19. 19. SALES PROMOTION Meaning and Definitions: Sales promotion is any initiative undertaken by an organization to promote an increase in sales, usage or trial of a product or service (i.e. initiatives that are not covered by the other elements of the marketing communications or promotions mix). Sales promotions are varied. Often they are original and creative, and hence a comprehensive list of all available techniques is virtually impossible (since original sales promotions are launched daily!). 1. Short term incentives to encourage purchase or sales of a product or service. 2. The promotional and sales techniques aimed at short-term increases in sales. 3. A range of tactical techniques designed within a strategic marketing framework, to add value to a product or services in order to achieve a specific sales and marketing objectives. 4. Sales Promotion collectively comprises the tools used to promote sales in a given territory and time. 5. These are primarily short term in nature and are designed to quickly stimulate sales. 6. While advertising creates awareness, information; and providing to the target customers the rationale to buy a product… 7. Sales Promotion induces him/her to try/buy the product. And in this sense SM is an incentive to buy. Objectives of sales promotion: 1. 2. 3. 4. 5. To increase sales. To introduce new product. To encourage consumers to buy more. To encourage the consumers to try the product. To encourage the customers to buy at off peak times. 19 Subash Ch. Nath, Sr.Lecturer (Marketing)
  20. 20. REDUCE PROMOTIONS MAINTAIN/ ENHANCE 6. To reward the loyal customers by increasing customers time of contact with the company. 7. To increase sales among existing customers. 8. To regain former customers. 9. To maintain competitions. 10.To increase off peak sales. 11.To support other forms of sales promotion. 12.To extend the firm’s database of customers. 13.To motivate the supply chain. 14.To challenge the competitors. 15.To reinforce the image of the product and brand. When and how much SP needs for a firm? WIN-WIN FIRM WINS MARKET SHARE FIRM LOOSES MARKET SHARE. OTHERS GAIN MARKET SHARE NOBODY WINS:MARKET SHARE CONSTANT, PROFIT MARGINS ERODE Firm’s Strategic Options REDUCE PROMOTIONS REDUCE PROMOTIONS MAINTAIN/ ENHANCE PROMOTIONS MARKET’S STRATEGIC OPTIONS Product Life Cycle and Sales Promotion: 20 Subash Ch. Nath, Sr.Lecturer (Marketing)
  21. 21. In the INTRODUCTION STAGE of PLC, advertisement helps in awareness creation and brand positioning, while SP induces trials. In the GROWTH STAGE of PLC, advertising helps competitive differentiation and market expansion, while SP helps to create and reward loyalty. In the MATURATION STAGE of PLC, advertising helps reminding customers about product availability, while SP helps maintain customer loyalty and attract new customers. And in DECLINE STAGE of PLC, SP is more often useless and unnecessary…. Classification of sales promotions: Sales promotion can be classified asA. Consumer promotion B. Trade promotions C. Sales force promotions A. : : : Targeted at the consumers. Targeted at the intermediaries in the channel of distributions. Designed to motivate the sales force. Consumer promotions Sales promotion aimed at final consumers & designed to stimulate consumer purchasing. Role:To encourage sales. To increase usage. To increase in frequency. To increase in frequency of usage. To encourage sales of slow moving products. To increase off peak sales. Techniques:Contests Coupons Point of purchase display Free Samples Tradeshows & exhibitions Banners & streamers Cross promotions Premiums (gifts) 21 Subash Ch. Nath, Sr.Lecturer (Marketing)
  22. 22. B. Product Warranties Cash Rebates Free Trials Bargain packs Rewards for loyalty Special finance deals % finance scheme) Bunding Discounts Trade promotions Sales Promotion designed to gain reseller support and to improve reseller selling effort. Sales Promotion aimed at distributors to encourage them to stock a particular product. Role:1. To obtain self space. 2. To develop goodwill. 3. To encourage retailers to promote the products. 4. To increase the distribution network. 5. To encourage sales of slow moving products. 6. To assist sales force. Techniques:- C. Price off deals Promotion allowances Sales Contests Calendars/Diaries, etc Gifts Cooperative advertising Trade shows Meetings Catalogues Point of purchase display Free goods Training middlemen’s sales force Product demonstrations Sales force promotions: 22 Subash Ch. Nath, Sr.Lecturer (Marketing)
  23. 23. Sales Promotions designed to motivate the sales people and make sales force selling more effective. Sales Promotions designed to make the sales men’s effort more easy and effective. Techniques:Bonus Contests. Meetings and Conferences. Incentives Steps in Sales Promotion Process: Defining Sales Promotion target. Setting Sales Promotion objectives. Setting Sales Promotion budget. Developing the Sales Promotion strategy. Selecting the types of Sales Promotion. Coordinating the plans. Evaluating the Sales Promotion Effectiveness. Arguments for SP: Complements media advertising. Short term boosts to sales. Added incentive to purchase Can be measured in terms of sales. Arguments against SP: Excess SP result in a cut-price situation. Benefits of short lived sales falls off after the promotion is finished. ----------- 23 Subash Ch. Nath, Sr.Lecturer (Marketing)
  24. 24. PERSONAL SELLING Personal selling occurs where an individual salesperson sells a product, service or solution to a client. Salespeople match the benefits of their offering to the specific needs of a client. Today, personal selling involves the development of longstanding client relationships. In comparison to other marketing communications tools such as advertising, personal selling tends to: use fewer resources, pricing is often negotiated products tend to be fairly complex (e.g. financial services or new cars) there is some contact between buyer and seller after the sale so that an ongoing relationship is built client/prospects need specific information the purchase tends to involve large sums of money. There are exceptions of course, but most personal selling takes place in this way. Personal selling involves a selling process that is summarized in the following Five Stage Personal Selling Process. 24 Subash Ch. Nath, Sr.Lecturer (Marketing)
  25. 25. PERSONAL SELLING Vs. ADVERTISING: %age of Promotiona l Personal Advertisin Complex/Expensive Goods Simple/ Sl. No. ADVERTISING PERSONAL SELLING 1 Directed at the audiences. Directed at the individual. 2 Impersonal, indirect contact. Personal, direct contact. 3 Working in breadth. Working in depth. 4 One way flow of communication. Two way flow of communication. 5 Organised and delayed feedback. Direct and quick feedback. 6 Less directly adaptable. High level of adaptability. 7 Expensive and effectively high. Less Expensive and effectively low. But it is lower per customer as compared to personal selling. But it is high per customer as compared to advertising. 8 Pull effect Push effect 9 Collective interest is having Individual interest is having 25 Subash Ch. Nath, Sr.Lecturer (Marketing)
  26. 26. more weightage than individual. 10 more weightage than collective. Unlimited scope. Limited scope. Push and Pull strategies: "Push or Pull"? Marketing theory distinguishes between two main kinds of promotional strategy - "push" and "pull". Push A “push” promotional strategy makes use of a company's sales force and trade promotion activities to create consumer demand for a product. The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers. A good example of "push" selling is mobile phones, where the major handset manufacturers such as Nokia promote their products via retailers such as Car phone Warehouse. Personal selling and trade promotions are often the most effective promotional tools for companies such as Nokia for example offering subsidies on the handsets to encourage retailers to sell higher volumes. A "push" strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools. Pull A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product. If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers. A good example of a pull is the heavy advertising and promotion of children's’ toys – mainly on television. Consider the recent BBC promotional campaign for its new pre-school programme – the Fimbles. Aimed at two to four-year-olds, 130 episodes of Fimbles have been made and are featured everyday on digital children's channel Celebes and BBC2. 26 Subash Ch. Nath, Sr.Lecturer (Marketing)
  27. 27. As part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher-Price to market products based on the show, which it hopes will emulate the popularity of the Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and distribute a range of Fimbles products including soft, plastic and electronic learning toys for the UK and Ireland. THE ESSENCE OF PERSONAL SELLING: 1. The presentation of products & associated persuasive communication to potential clients. 2. Involves two way persuasive communications. 3. The aim is to match customer needs with the goods or services on offer. 4. Ultimate objective: To make a sale. SELLING INVOLVES: Creative positive attitudes towards a product or service. Motivating people to want to purchase a product or service. Convincing people that they will be acting wisely if they buy. Closing a sale. Reassuring people that they have acted wisely in making a purchase. THE OBJECTIVES OF PERSONAL SELLING: To increase the volume of sales. To increase sales revenue. To reduce the costs of sales. To increase the number of distribution outlets. To prospects for new customers. To reduce the number of customers with minimum viable orders. THE ROLE OF SALES EXECUTIVES: To gather information about customer wants. To communicate information specifically on the advantages of the product to the customer. 27 Subash Ch. Nath, Sr.Lecturer (Marketing)
  28. 28. To prospect look for new opportunities. Means to locate new potential customers. To display and demonstrate the product. To build goodwill To build with complaints. To close a sale that is to secure a sale. In some cases to make deliveries. SKILSS REQUIRED FOR PERSONAL SELLING: Interpersonal Skills Adaptability. Self motivation. Problem solving capabilities. Product knowledge Customer knowledge Presentation skills. SALES REQUIRED INFORMATION ON: The product The customers Territory Techniques of selling Promotional materials His/Her own organization Targets FIVE P’S IN PERSONAL SELLING: Preparation Prospecting Pre approach Presentation Post sales support STEPS IN PERSONAL SELLING- I: 28 Subash Ch. Nath, Sr.Lecturer (Marketing)
  29. 29. PROSPECTING – LOCATE POTENTIAL CUSTOMERS PRE-APPROACH – GATHER INFORMATION ON PRODUCT & THE PROSPECTS.(THE POTENTIAL BUYER) THE APPROACH – - FACE TO FACE MEETING. - TO CREATE FAVOURABLE IMPRESSION. - TO VERIFY THE FACTS. - TO SET THE STAGE FOR THE REST OF THE MEETING. - TRANMIT THE PROMOTIONAL MESSAGE. - DESCRIBE THE PRODUCT. - HIGHLIGHT THE ADVANTAGE - CITE EXAMPLES SATISFACTION. - DEMONSTRATE MESSAGE THE PRESENTATIONS:- TO OF CUSTOMERS REINFORCE THE HANDLING OBJECTIONS:- THIS IS AN OPPORTUNITY TO PRESENT ADDITIONAL POINTS. - THE CRITICAL STAGE IN WHICH THE SALESPERSON SEEKS TO GAIN THE BUYER’S COMMITMENT TO PURCHASE. - TO MAKE SURE THE BUYER IS SATISFIED. CLOSING:- THE FOLLOW-UPS:ADVANTAGES OF PERSONAL SELLING: Personal selling is a face-to-face activity; customers therefore obtain a relatively high degree of personal attention. The sales message can be customized to meet the needs of the customer. The two-way nature of the sales process allows the sales team to respond directly and promptly to customer questions and concerns. Personal selling is a good way of getting across large amounts of technical or other complex product information 29 Subash Ch. Nath, Sr.Lecturer (Marketing)
  30. 30. The face-to-face sales meeting gives the sales force chance to demonstrate the product. Frequent meetings between sales force and customer provide an opportunity to build good long-term relationships. OUTLINE FOR THINGS TO OBSERVE DURING A SALES CALL: Identify customer type. What type of selling model did he/she use? How did the salesperson begin the presentation? How did the salesperson uncover needs? How many objections did the customer bring up? Did you hear any trial closes? What were they? When did they occur? Did the buyer give any closing signals? How many times did the salesperson try to close? What techniques did they use? Did the salesperson try to relieve post-purchase dissonance? How was the interview ended? Evaluate the sales call as to its effectiveness and professionalism. Exercise - Personal Selling: Fish Bourne Financial Services You are the salesperson for Fish Bourne Financial Services. You have worked hard recently on prospecting and have a meeting with Mr Boosh, regarding his personal finances. You have sent some information to him prior to your call. You are about to begin your sales call, and your objective is to sell the client a pension scheme Complete the following Tasks: 30 Subash Ch. Nath, Sr.Lecturer (Marketing)
  31. 31. (a) Mr Boosh raises the following objection - 'Your pension scheme seems very expensive' - How would you handle it? [There are 4 ways to handle this objection] (b) You have reached the end of the sales call. How would you close the deal for the pension scheme with Mr Boosh? [There are 3 ways to close this deal] Answer -Personal Selling (a) Mr Boosh raises the following objection - 'Your pension scheme seems very expensive' - How would you handle it? Yes, but the final pension is much better in comparison with other schemes, when you actually retire. [i.e. 'yes but.'] Why do you think the pension scheme is expensive? [i.e. ask 'why?'] Our pension scheme is too expensive? [i.e. restate] I appreciate your point. However, in comparison to the pension schemes offered by our competitors, this scheme is very reasonable [i.e. contradiction] (b) You have reached the end of the sales call. How would you close the deal for the pension scheme with Mr Boosh? Shall I arrange the pension for you? [i.e. ask for the business] You like the easy monthly payments, the payment holiday if needed, the added bonus for remaining with us and not moving your pension to another provider, and the free travel clock, so shall I arrange the pension for you? [i.e. summary close ] Would you like to pay by cash weekly or by regular monthly salary deductions?[ [i.e. alternative close.] ------------------ PUBLIC RELATIONS Meaning and Definitions : The term “Public Relation” is an expression of public opinion. Public relations is the art and science of managing communication between an organization and its key publics to build, manage and sustain its positive image. One of the earliest definitions of PR was coined by Danny Grisword, Publisher of 'Public Relation News. According to him "Public 31 Subash Ch. Nath, Sr.Lecturer (Marketing)
  32. 32. Relations is a management function which tabulates public attitudes, defines the policies and producers of an organisation with the interest and executes a program of action to earn public understanding and acceptance". According to two American PR professionals Scott.M.Cutlips and Allen.H.Center, "PR is a planned effort to influence opinion through good character and responsible performance based upon mutual satisfactory two-way communication". “Public Relations” is the art and science of managing communication between an organization and its key publics to build, manage and sustain its positive image. “Public Relations” is to establish and maintain a mutual understanding between an organisation and its publics; to communicate the company’s views, objectives and purposes; at the same time monitoring of feedbacks and correcting the publics attitudes and reactions. What is meant by the term “publics” in the above definition? A business may have many “publics” with which it needs to maintain good relations and build goodwill. The publics of the company are the financial community, the local community, the government, the suppliers, the stakeholders, the customers, the employees and the press. These relations are always two ways in nature. As a routine matter, but of utmost significance, the company is to understand the interests of these publics and serve them for mutual benefits and smooth getting on. Let us see what each public expects from the company and what it is prepared to pay back in return for what it has received from the company. Who are the publics of a company? 32 Subash Ch. Nath, Sr.Lecturer (Marketing)
  33. 33. THE EMPLOYEES THE CUSTOMERS THE STOCKHOLDERS THE PRESS THE COMPAN THE SUPPLIERS THE FINANCIAL COMMUNITY THE LOCAL COMMUNITY THE GOVERNMENT Public Relations involves : 1. Evaluation of Public attitude and opinions. 2. Organisations procedure and policies helping public in mind. 3. Communication programme 4. Developing rapport, good-will through a two way communication process. 5. Relationship between organisation and public. Examples include: Corporations use marketing public relations (MPR) to convey information about the products they manufacture or services they provide to potential customers to support their direct sales efforts. Typically, they support sales in the short and long term, establishing and burnishing the corporation's branding for a strong, ongoing market. 33 Subash Ch. Nath, Sr.Lecturer (Marketing)
  34. 34. Corporations also use public-relations as a vehicle to reach legislators and other politicians, seeking favorable tax, regulatory, and other treatment, and they may use public relations to portray themselves as enlightened employers, in support of human-resources recruiting programs. Non-profit organizations, including schools and universities, hospitals, and human and social service agencies, use public relations in support of awareness programs, fund-raising programs, staff recruiting, and to increase patronage of their services. Politicians use public relations to attract votes and raise money, and, when successful at the ballot box, to promote and defend their service in office, with an eye to the next election or, at career’s end, to their legacy. Organisation Structure of PR:In most companies, public relations are not the responsibility of the marketing department. If there is an organized effort, it is usually handled by a small public relations department that reports directly to the top management. Functions of PR Department: Press (Media) Relations: Presenting news and information about the organisation in the most positive light. Product Publicity: Sponsoring efforts to publicize specific products. Corporate Communication: Promoting and understanding of the organisation through internal & external communications. Lobbying: Dealing with legislators & govt. officials to promote or dealt legislation and regulation. Counseling: Advising management about public issues and company position & image during good times and crisis. Building a perfect PR Programme:This should be a long term time bound programme. And a perfect PR Programme has six steps approach, such as1. The public relation audit. 2. Correlation of public relations weakness. 34 Subash Ch. Nath, Sr.Lecturer (Marketing)
  35. 35. 3. Setting of public relations objectives. 4. Formulations of the public relations programme. 5. Carrying out the programme. 6. Determine the programme effectiveness. Tools of PR:Press Media: - Include Books, Booklets, Reports, Broachers, Feature Articles, Specially designed literatures and the like. Visits and Tours: - Specially arranged visits to the organisation for the financial and local community members are of immense importance to create a good impression as what company is and what they can expect for the future. Audio Visuals: - Include films, displays, exhibits, conferences, bulletins to portrait the present status and the future preogrammes of the organisation. Treatment Extended: - This is the invisible thread attached with the publics by the company employees. Relationship of PR with Advertising:Contributions of Advertising towards PR Contributions of PR towards Advertising 1. It provides channel to publics. 1. It guarantees organisational soundness. 2. It builds institutional advertisements. 2. It refines advertising. 3. It creates congenial climate. 3. It places publicity releases. Marketing PR (MPR):35 Subash Ch. Nath, Sr.Lecturer (Marketing)
  36. 36. Assisting in lunch of new products. Assisting in repositioning a mature product. Building interest in a perfect category. Influencing specific target groups. Defending products that have encountered public problems. Building the corporate image in a way that reflects favouring on its product. Major decisions in MPR:In considering when and how to use MPR, management must establish- The marketing objectives. - Choose the PR message and vehicles. - Implement the plan carefully, and- Evaluate the results. PUBLICITY Meaning of Publicity… a. Publicity is a tool of PUBLIC RELATION. b. Publicity is a type of public relations in the form of a news item or story which conveys information about a product, service, or idea in the media. c. Whereas public relations is the management of all communication between the client and selected target audiences, publicity is the management of product- or brand-related communications between the firm and the general public. d. Communications regarding an organization, product, service, or idea that is not directly paid for or run under identified sponsorship. e. "Publicity is information from an outside source that is used by the media because the information has news value. It is an uncontrolled method of placing messages in the media because the source does not pay the media for placement. f. Publicity is the "information designed to appear in any medium of communication for the purpose of keeping the name of a person or 36 Subash Ch. Nath, Sr.Lecturer (Marketing)
  37. 37. company before the public or of creating public interest in their activities“. g. Publicity is typically generated from an organization's public relations department and its goal is to gain media coverage. h. Publicity is the deliberate attempt to manage the public's perception of a subject. The subjects of publicity include people (for example, politicians and performing artists), goods and services, organizations of all kinds, and works of art or entertainment. i. Publicity is the means of using an external entity (celebrities, people from the media, etc) to increase the awareness levels of the product, company, goods etc amongst the public and/or buying segment. Definitions: - PUBLICITY is any form of non personal presentation of goods/ideas/services to a group. Such presentation may or may not be sponsored only by the one responsible for it and it may or may not be paid for. In this way, advertising is only a type of publicity. And that’s why publicity is more comprehension than the word advertising itself. Therefore, it can be said that all advertising is publicity but all publicity is not advertising. Means of gaining good publicity:Prepare and distribute a story (called a news release) to the media: - The intention is for the selected newspapers, television stations or other media to report the information as news. Personal communication with a group of people: - A press conference will draw media representatives if they think the subject or speaker has news value. One-to-one personal communication: - Companies lobby legislators or other powerful people in an attempt to influence their opinions and subsequently their decisions. Similarities with Advertising…. Both of them deal with the conveying of information regarding the goods/ services/ideas. Both are the attempts to present information impersonally. Both use the components of mass media for effective communication. 37 Subash Ch. Nath, Sr.Lecturer (Marketing)
  38. 38. Dissimilarities with Advertising…. Publicity may or may not be related with the communication of commercial information, -while advertising is essentially a commercial communication of information to the public. In case of publicity, the message of the sponsor is controlled by the media owners in respect of space and timing with other dimensions such as the style, the format, etc. On the other hand, in case of advertising, it is the sponsor who decides on these facts as he is paying for the services of the media owners and agencies. Benefits of Publicity:Lower cost:- As there is no media space or time costs for conveying the message and no sales people is to support in case of publicity. Increased attention: - Publicity is more likely to be watched, listened to, or get read. More information: - Publicity contains greater detail than the usual ad. Timeliness: - A company can put a news release very quickly when some event occurs, expectedly or unexpectedly. Limitations of Publicity…. Loss of control over the message: - There is no way to control how much or what portion of a story the media will print or broadcast. Limited exposure: - The media will typically use news releases to fill space when there is a lack of other new and only use them once. If the target audience misses the message when it is presented, there is no second and third chance. Publicity is not free: - Even though there are no media time and space costs, there are expenses in generating ideas for publicity and in preparing and disseminating news releases. ------------38 Subash Ch. Nath, Sr.Lecturer (Marketing)
  39. 39. PROPAGANDA Meaning and Definition:Propaganda is a specific type of message presentation directly aimed at influencing the opinions of people, rather than impartially providing information. Propaganda is originally a neutral term used to describe the dissemination of information in favor of a certain cause. Propaganda is the means of gaining support for a given cause or belief or an attitude. The word propaganda refers to any technique that attempts to influence the opinions, emotions, attitudes, or behavior of a group in order to benefit the sponsor. To protect yourself against the techniques of propaganda, three good questions to ask yourself are: 1. Who does this benefit? 2. Why did they do that? 3. According to whom? For Example… The example below is a clever way of blaming everything that happened on Saddam Hussein. It shows the blood splashed flag of Kuwait with Hussein saying, in Arabic, that he didn't know how this happened. What else might this imply? How about: Is he a thoughtless leader? Does he take responsibility for his actions? Does he realize what he's doing to his people, and to other people? Does he care? 39 Subash Ch. Nath, Sr.Lecturer (Marketing)
  40. 40. For Example… This cartoon shows Saddam Hussein cutting off his own head with his sword. This image shows how Iraq would suffer because of Hussein's warlike and thoughtless actions. What else might this imply? For Example… US Office for War Information … propaganda message: Working less helps our enemies U.S. Propaganda from WWII, Depicting Hitler as foolish Fo r Exa mple I P O A S R P G A ND A ALW A Y S NEGATIVE? People often think of propaganda as something negative. But propaganda really doesn't have anything to do with negative or positive. It's a technique. The word propaganda refers to any technique that attempts to influence the opinions, emotions, attitudes or behavior of a group in order to benefit the sponsor. 40 Subash Ch. Nath, Sr.Lecturer (Marketing)
  41. 41. Classification of Propaganda… Propaganda can be classified according to the source and nature of the message – 1. White propaganda generally comes from an openly identified source, and is characterized by gentler methods of persuasion, such as standard public relations techniques and one-sided presentation of an argument. 2. Black propaganda is identified as being from one source, but is infact from another. This is most commonly to disguise the true origins of the propaganda, be it from an enemy country or from an organization with a negative public image. 3. Gray propaganda is propaganda without any identifiable souce or author. Techniques of propaganda generation :A number of techniques which are based on social psychological research are used to generate propaganda. Many of these same techniques can be found under logical fallacies, since propagandists use arguments that, while sometimes convincing, are not necessarily valid Following are some techniques for generating propagandaAppeal to authority: Appeals to authority cite prominent figures to support a position idea, argument, or course of action. Appeal to fear: Appeals to fear seek to build support by instilling fear in the general population. Argumentum ad nauseam: Uses tireless repetition. An idea once repeated enough times, is taken as the truth. Works best when media sources are limited and controlled by the propagator. Bandwagon: Bandwagon and inevitable-victory appeals attempt to persuade the target audience to take the course of action that "everyone else is taking." a. Inevitable victory: invites those not already on the bandwagon to join those already on the road to certain victory. Those already or at least partially on the bandwagon are reassured that staying aboard is their best course of action. 41 Subash Ch. Nath, Sr.Lecturer (Marketing)
  42. 42. b. Join the crowd: This technique reinforces people's natural desire to be on the winning side. This technique is used to convince the audience that a program is an expression of an irresistible mass movement and that it is in their best interest to join. Black-and-White fallacy: Presenting only two choices, with the product or idea being propagated as the better choice. (Eg. You can have an unhealthy, unreliable engine, or you can use Brand X oil) . Common man: The "plain folks" or "common man" approach attempts to convince the audience that the propagandist's positions reflect the common sense of the people. It is designed to win the confidence of the audience by communicating in the common manner and style of the target audience. Propagandists use ordinary language and mannerisms (and clothe their message in face-to-face and audiovisual communications) in attempting to identify their point of view with that of the average person. Direct order: This technique hopes to simplify the decision making process. The propagandist uses images and words to tell the audience exactly what actions to take, eliminating any other possible choices. Authority figures can be used to give the order, overlapping it with the Appeal to authority technique, but not necessarily. The Uncle Sam "I want you" image is an example of this technique. Euphoria: The use of an event that generates euphoria or happiness in lieu of spreading more sadness, or using a good event to try to cover up another. Or creating a celebrateable event in the hopes of boosting morale. Euphoria can be used to take one's mind from a worse feeling. i.e. a holiday or parade. Falsifying information: The creation or deletion of information from public records, in the purpose of making a false record of an event or the actions of a person during a court session, or possibly a battle, etc. Glittering generalities: Glittering generalities are emotionally appealing words applied to a product or idea, but which present no concrete argument or analysis. A famous example is the campaign slogan "Ford has a better idea!" Intentional vagueness: Generalities are deliberately vague so that the audience may supply its own interpretations. The intention is to move the 42 Subash Ch. Nath, Sr.Lecturer (Marketing)
  43. 43. audience by use of undefined phrases, without analyzing their validity or attempting to determine their reasonableness or application. The intent is to cause people to draw their own interpretations rather than simply being presented with an explicit idea. In trying to "figure out" the propaganda, the audience foregoes judgment of the ideas presented. Their validity, reasonableness and application is not considered. 43 Subash Ch. Nath, Sr.Lecturer (Marketing)