Advertising —consists of all the activities involved in presenting through the media a nonpersonal, sponsor-identified, paid-for message about a product or organization. 1. Has a verbal and/or visual message. 2. Has an identified sponsor. 3. Is delivered through one or more media. Television is most heavily used medium. 4. The sponsor pays for the message.
Types of advertising. 1. The target: consumer or business. 2. The type of demand: primary or selective. a. Primary demand—focuses on demand for a product category; used to generate demand for new products and sustain demand for existing products. Also called pioneering advertising . Demand-sustaining advertising is done by trade associations to stimulate and sustain demand for their industry’s products. b. Selective demand—focuses on demand for a specific brand; used to emphasize differential advantages and may utilize comparative advertising to make specific brand comparisons. c. A special case of selective demand advertising that makes reference to one or more competitors is called comparison advertising. 3. The message: product or institutional. a. Product advertising— focuses on a specific product or brand. (1) Direct-action advertising—seeks a quick response. (2) Indirect-action advertising—designed to stimulate demand over the long term. b. Institutional advertising— focuses on a business to capture favorable attitudes and goodwill. 4. The source: commercial or social. a. Word-of-mouth advertising technically does not fit the definition of advertising. b. Firms try to simulate word-of-mouth advertising. c. On the Internet, the term word-of-mouth has been replaced by viral marketing, depicting how a message is passed from one person to another through a social system.
Developing an a dvertising campaign —all the tasks involved in transforming a theme into a coordinated advertising program to accomplish specific goals for a product or brand.
Defining objectives. 1. Support personal selling—acquaint prospects with the company and products to ease the path of entry for sales people. 2. Improve dealer relations—dealers appreciate a producer providing advertising support. 3. Introduce and position a new product. 4. Expand the use of a product—advertising can lengthen the product season, increase replacement frequency, or increase variety of product uses. 5. Counteract substitution.
Once a promotional budget has been established, it must be allocated among the various activities comprising the overall promotional program. For example, at the same time it s was running traditional product advertising, Avon had professional tennis players Venus and Serena Williams under contract to appear in ads, launched a “ Kiss Goodbye to Breast Cancer” campaign that included a donation to breast cancer research for purchases of certain products, sponsored a charity concert and a fund-raising auction of celebrities, dresses etc. Establishing a budget. 1. Cooperative advertising —promotes products of two or more firms that share the advertising cost. a. Vertical cooperative advertising—involves firms on different channel levels. b. Advertising allowance—the cash discount offered by a manufacturer to a retailer to encourage the retailer to advertise or prominently display the product. c. Horizontal cooperative advertising—joint advertising in which firms on the same channel level share advertising costs.
Creating a message. 1. Attention —present material in a unique or unexpected manner; may employ the use of special effects. 2. Influence —attempt to guide buyer beliefs and/or behaviors. a. Appeal—focuses on benefits to be received by accepting the message. b. Execution—combining, in a convincing, compatible way, the feature or device that gets attention with the appeal.
Selecting media. 1. Successive levels of decision making. a. What type of media will be used (TV, radio, newspaper, etc.)? b. What specific category of selected media will be used (TV: cable, network, independent)? c. What specific media vehicles will be used (“Friends” vs. “60 Minutes,” etc.)?
Factors influencing media choice. a. Objectives of the ad. b. Audience coverage—geographic areas; minimize wasted coverage. c. Requirements of the message—media best suited for approach and execution. d. Time and location of buying decision reach the buyers when and where they make product decisions. e. Media costs—in relation to budget, cost per thousand (CPM).
Media characteristics. a. Television. (1) Combines sound, motion, special effects. (2) Allows for product demonstration. (3) Wide geographic coverage. (4) Flexible as to time of presentation. (5) Can be relatively inexpensive. (6) Lacks permanence. (7) Not well suited for complicated messages. (8) Cable is making TV more target specific. (9) Tends to reach “captive audiences.” b. Direct mail. (1) Most personal and selective of advertising media. (2) Minimizes waste. (3) Cost per contact is high. (4) As pure advertising, it must attract and hold its own readers. c. Newspapers. (1) Flexible and timely. (2) Ad size may be allowed to vary. (3) Can reach a large area or a few targeted areas. (4) Can be inserted or canceled on short notice. (5) Cost per person reached is generally low. (6) Life cycle of newspapers is very short. d. Radio. (1) Broad reach. Low CPM. (2) Good to pinpoint certain target markets. (3) Only transmits audio impressions. (4) Audience attention may be low. e. Yellow pages. (1) High familiarity among consumers. (2) Used at or near the buying decision. (3) Difficult to evaluate. (4) Message is surrounded by those of competitors. f. Magazines. (1) High quality printing and color. (2) Reaches national market for relatively low cost per person. (3) Can reach selected audiences. (4) Often read in leisurely fashion. (5) Relatively long life and readership pass-along. (6) Good for long or complex messages. (7) Must be submitted weeks in advance. (8) May be read at places or times far removed from purchase. g. Out-of-home advertising. (1) Low cost per exposure. (2) Only for short messages. (3) Flexible in geographic coverage and intensity of market coverage. (4) National campaign costs can be high. (5) Arouses public criticism for landscaping defacement. h. Interactive media. (1) Fastest growing interactive medium is the Internet. (2) Popular with firms whose products involve extensive decision-making.
Evaluating the advertising effort. 1. Difficulty of evaluation . a. Differing objectives affect the evaluative measures to be used. b. Effects over time must be looked at, not just short-term outcomes. c. Measurement problems complicate evaluation. 2. Methods used to measure effectiveness. a. Direct tests—measure or predict the sales volume stemming from the ad or campaign; for example, counting numbers of redeemed coupons, counting number of inquiries in response to a specific ad. b. Indirect tests—measure something other than actual sales or inquiries; for example, recall tests recognition tests.
Sales promotion —demand-stimulating devices designed to supplement advertising and facilitate personal selling; examples include coupons, displays, premiums, trades shows, etc.; may be conducted by producers or middlemen, while targets may be middlemen, end users, or the sales force. A. Nature and scope of sales promotion. 1. Two categories of sales promotion. a. Trade promotion. b. Consumer promotions. 2. Factors determining the use of sales promotion. a. Objectives and results are short-term. b. Competitors are employing sales promotions. c. Buyers’ expectations. d. Retail salesmanship quality is low. 3. Determining objectives and strategies—stimulate demand, improve middlemen or sales force performance, supplement and facilitate forms of promotion. 4. Determining budgets—sales promotions must have their own separate budgets. 5. Directing the sales promotion effort—may be done internally or externally. a. Promotional services agencies—specialize in executing sales promotion programs. b. Promotional marketing agency—specializes in consulting, planning, and executing sales promotion programs.
Selecting the appropriate techniques—is influenced by the nature of target audience, the nature of the product, the cost of the device, and current economic conditions. a. Sampling—to get the product in the hands of users; cost is higher per person than advertising, but the conversion rate is better than advertising. b. Couponing—the most frequently used sales promotion; consumers like them but firms think they may have reached saturation; produce quick sales boosts but are expensive and undermine brand loyalty. c. Sponsorships and events marketing—most are for sporting events but others are concerts, tours, fairs, festivals, and causes; it can be expensive and difficult to measure, but may offer long-range goodwill. d. Trade shows—are efficient but expensive; growing rapidly. e. Product placements—paying for products to be used in TV shows and movies; networks don’t usually like them and may present problems with use of rival products.
Public Relations —designed to build or maintain a favorable image for a firm and favorable relationships with its publics. A. Why management pays no attention to public relations. 1. Organizational structure—it is not part of the marketing department. 2. Inadequate definitions—not clear definition of what public relations is. 3. Unrecognized benefits. B. Nature and scope of public relations. 1. Unlike advertising, public relations need not use the media to communicate its message. 2. There are many ways to achieve good public relations.
Publicity as a form of public relations—any communication about an organization or its products that is presented by the media but is not paid for by the organization; usually appears as some form of news story or press release. D. Channels for gaining publicity: 1. Prepare a story and circulate it to the media as a news release. 2. Engage in personal communications with a group. 3. Lobbying. E. Benefits of publicity 1. Lower costs than advertising or selling. 2. Increased readership; viewership. 3. More information is usually transmitted. 4. May not always be most timely. F. Limitations of publicity. 1. Loss of control over the message. 2. Limited exposure. 3. Publicity is not always “free.”
Personal selling —the personal communication of information to persuade someone to buy something.
Personal selling as a form of promotion . 1. It provides flexibility to adapt the promotional message across to prospective customers. 2. It can be focused on qualified prospects, eliminating waste from contacting non-prospects. 3. Its end result may be closing the sale. 4. It is costly to develop and operate a sales force. 5. It is not always possible to obtain qualified people for the job.
Types of personal selling. 1. Inside selling —customers bring themselves to salespeople, primarily retail sales. 2. Outside selling —sales people go to the customers, making contact by phone, in writing, or in person. 3. Wide variety of sales jobs: basic sales jobs include order taking, customer support, and order getting. a. Delivery-salesperson —sales persons primarily deliver the product and selling responsibilities are secondary, though they may be rewarded for increasing sales or closing new accounts. b. Inside order taker —salesperson takes orders and assists customers at the seller’s place of business; serves customers efficiently and may use suggestive selling. c. Outside order taker —the salesperson goes to the customer to generate repeat or new sales through making sales presentations. d. Missionary sales person —usually found in pharmaceutical or foods firms, their primary responsibilities are to develop goodwill and provide customer service, not to generate sales. e. Sales engineer —the major task is to explain the product to prospects and adapt it to customer needs. f. Consultative salesperson —the primary responsibility is to design a system to fit the needs of a particular customer; the most challenging of sales jobs.
Changing patterns in personal selling. A. Selling centers or team selling —a group of people representing various departments in an organization (sales, finance, R&D, etc.) who participate in the selling process; expensive and used only when there is potential for high profits and sales volume. B. Systems selling —selling a total package of related goods and services to solve a customer’s problems; a major step beyond selling individual products separately. C. Global sales teams —responsible for all sales to accounts anywhere in the world; located in offices or distribution centers in foreign locations near important customers.
D. Relationship selling —involves developing mutually beneficial relationships built on trust with selected (usually large) customers over time; trust is developed through: 1. Giving customers’ needs primary importance. 2. Having a shared vision of success. 3. Having a long-term orientation focusing beyond an immediate sale. 4. Taking a partnership, not an adversarial, approach. E. Telemarketing —the innovative use of telecommunications equipment and systems in selling. 1. Buyers prefer it in selected situations, and it can increase efficiency. 2. May be used for the following: a. Seeking leads to new accounts and identifying good prospects. b. Processing orders for standardized products. c. Dealing with small-order customers. d. Improving relationships with middlemen. F. Internet selling —most sales of these types are not considered personal; however, the impersonal nature speeds up purchasing and reduces frequency of errors; used for both consumer and business-to-business markets. G. Sales-force automation —equipping sales people with laptops, cell phones, fax machines, and pagers to give them access to data bases, the Internet, e-mail and other information and communication tools. Implementing sales-force automation involves several challenges: 1. Identifying which parts of the sales process can benefit the most from automation. 2. Designing a user-friendly system. 3. Gaining the cooperation of the sales force so they incorporate the technology in their jobs.
The personal selling process. A. Prospecting —an application of market segmentation. 1. Prospects are identified by developing an ideal customer profile using records of past and current customers, sales manager suggestions, customer referrals, trade/industry directories, leads from ads, etc. 2. Prospects are qualified by determining the willingness to buy, the ability (financially) to buy, and the authority to buy. B. Preapproach to individual prospects —learning all possible about prospects, consumer or business—their buying processes, preferences, needs, habits, etc. C. Presenting the sales message. 1. Attract attention—The approach. a. Objective is to attract prospect’s attention and generate curiosity. b. This may be relatively easy or quite difficult and requires creativity. c. Sales people must be sensitive to the prospect’s personality and circumstances. 2. Hold interest and arouse desire a. There is no set pattern to follow. b. Product demonstrations can be useful. c. Salesperson must focus on the product’s benefits to the customer. d. Some presentations are “canned,” meaning they have a script from which little deviation is made. 3. Meet objections and close the sale. a. Closing —obtaining the prospect’s agreement to buy. b. Trial close —used to measure willingness to buy. c. Sales person must uncover objections, spoken or unspoken, and resolve them before a close can be made. 4. Post-sale services—selling does not end when the order is taken . After-sale service is used to: a. Build customer goodwill. b. Lay the foundation for future business. c. Reduce cognitive dissonance.
Staffing and operating a sales force. A. Recruitment and selection. 1. Determining hiring specifications. a. Requires a detailed job analysis and written job description. b. Determine the important attributes of successful performers. 2. Recruiting applicants. a. Performed continuously, not only when vacancies occur. b. A systematic approach to reach all appropriate sources of applicants. c. Should provide a flow of more applicants than are needed. 3. Matching applicants with hiring specifications. a. Application forms. b. Interviews—at least one is necessary to determine interest, skill matches, and motivation. c. Reference checks. d. Credit reports. e. Psychological and aptitude tests—useful if they are actually accurate in predicting performance. f. Physical examinations.
B. Assimilating new sales people—integrating new persons into the company family; often overlooked, which may lead to discouragement and turnover. C. Training a sales force—needed for both new as well as experienced sales personnel. D. Motivating a sales force—a high degree of motivation is required to be in sales; management must determine which incentives are motivational for which people under what circumstances. 1. Financial incentives—compensation plans, expense accounts, fringe benefits. 2. Nonfinancial rewards—job enrichment, praise, recognition, awards. 3. Sales meetings and contests.Strategic sales-force management. F. Supervising a sales force—helps ensure policies are being carried out, creates two- way communication between management and sales people, but may be difficult due to the nature of the sales job; field observation may overcome this.
E. Compensating a sales force. 1. Straight salary. a. Offers the most security and stability of earnings. b. More control of management over work assignments. c. Less likelihood of high pressure selling tactics; more likelihood of considering prospect’s best interests. d. Limits incentive to close sales. e. Fixed cost basis of compensation. f. Used for new salespeople, missionary salespeople, when opening new territories, for technical products and lengthy negotiation periods. 2. Straight commission. a. Provide maximal incentive to close the sale; may cause sales person to lose sight of prospect’s needs and best interests. b. Little work not directly related to selling is required. c. Offers company a variable-based compensation method. d. Company has less direct control over activities of sales force. 3. Combination plan—tries to combine the best features of both straight salary and straight commission, eliminating as many drawbacks as possible.
Evaluating a sales person’s performance—provides the necessary information to offer rewards or make constructive proposals, make effective training programs, determine salary decisions. A. Quantitative measures —specific and objective. 1. Inputs such as call rate, number of formal proposals presented, and non-selling activities (displays, training, etc.). 2. Outputs such as sales volume, gross margins, orders, closing rates, and accounts retained and numbers of new accounts opened. B. Qualitative Measures —based on and limited by the subjective judgment of evaluators (i.e., knowledge of product, time management, quality of reports, customer relations, and personal appearance).
MA NA G ING MA S S C OMMUNIC A TION DEVELOPING AND MANAGING ADVERTISMENT DECIDING ON MEDIA AND MEASURING EFFECTIVENESS OF ADVERTISEMENT
Ad ve rtis ingVerbal and/or visual Identified sponsorNonpersonal message Payment Delivery By sponsor through To media media Carrying message
The media spend of Indias leading advertisers in 2005 Company Spend in millions of USD Hindustan Lever 99 Maruti Udyog (suzuki) 27 Pepsico 27 LG Electronics 25 Procter & Gamble 25 Dabur India 24Source: Group M/M&M, www.adbrands.net/in
Typ e s of Ad ve rtis ingTARGET: Consumer or BusinessTYPE OF DEMAND: Primary or SelectiveMESSAGE: Product or Institutional SOURCE: Commercial or Social
Ad ve rtis ing C am p aignAdvertising Campaign All tasks involved in transforming a theme into a coordinated advertising program to accomplish a specific goal for a product or brand Involves Several different messages Over an extended time Using a variety of media
D e ve lop ing an Ad ve rtis ing C am p aign Framework Advertising Campaigns Identify the Establish Set target promotional Determine promotional audience goals promotional budget theme
D e fining O b j ctive s eTypicaladvertising objectives are to: Support personal selling Improve dealer relations Introduce and position a new product Expand the use of a product Reposition an existing product Counteract substitution
Bu d ge ts Vertical AdvertisingCooperative allowanceAdvertising Horizontal Cooperative Advertising
C re ating a M e s s ageAttention Influence Execution Appeal
S e le cting M e d iaType OfMedia Category Of Medium Specific Media Vehicles
S e le cting M e d ia: G e ne ral F actors Objectives of the Ad Audience Coverage Requirements of the Message Time and Location Media Cost
A S S IG NME NT Visita supermarket, drugstore, or hardware store, and make a list of all the sales promotion tools you observe. Describe how each one relates to the sales promotion objectives discussed in the class. Which do you think are particularly effective? Why? Individual assignment Deadline: 09th November 2011.
P u b lic R e lations Management tool designed to favorably influence attitudestoward an organization, Its products, and its policies
Be ne fits of P u b licity Lower Costs Increased attention More information Timeliness
Lim itations of P u b licity Loss of control Limited exposurePublicity is not free
P e rs onal S e lling Major promotion tool Personal communication of information to persuade somebody to buy something.16,000,000 500,000 People People In sales In advertising
P e rs onal S e lling as P rom otionFlexible Goal is sale Focused Costly Difficult to Minimize attract quality waste people
Wh e n P e rs onal S e lling is U s e d When MARKET When PRODUCT is concentrated: •value is not apparent, •has high unit cost, •geographically, •is technical, •in few industries, •requires demonstration, •or in several •is fitted to customer’s need, large customers •is in introductory stage of the Product Life Cycle