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What are Marketing Channels?
Marketing channel is a system which ensures the distribution of the
merchandise from the producer to the consumers by passing it through
multiple levels known as middlemen. It is also known as channels of
distribution.
Cadbury is India’s most popular chocolate brand and we can easily buy it
from any of our next-door grocery stores. But do you know how it reaches
each and every part of the country, even to the villages?
All this possible because of marketing channels. Cadbury has limited
manufacturing units in India. With the help of a well-designed marketing
channel, the product reaches the depots located in the various states. From
these depots, it is sent to the C&F agents and from there it reaches the
distributors located in different cities.
The distributor
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Factors Effecting Channel Choice
1. Considerations Related to Product
2. Considerations Related to Market
3. Considerations Related to Manufacturer/Company
4. Considerations Related to Government
1. Considerations Related to Product-
a) Unit Value of the Product:
When the product is very costly it is best to use small distribution channel. For
example, Industrial Machinery or Gold Ornaments are very costly products
that are why for their distribution small distribution channel is used. On the
other hand, for less costly products long distribution channel is used.
b) Standardised or Customised Product-Standardised products are those
for which are pre-determined and there has no scope for alteration. For
example: utensils of MILTON. To sell this long distribution channel is used.
On the other hand, customised products are those which are made according
to the discretion of the consumer and also there is a scope for alteration, for
example; furniture. For such products face-to-face interaction between the
manufacturer and the consumer is essential. So for these Direct Sales is a
good option.
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c) Perishability: A manufacturer should choose minimum or no middlemen
as channel of distribution for such an item or product which is of highly
perishable nature. On the contrary, a long distribution channel can be
selected for durable goods.
d) Technical Nature: If a product is of a technical nature, then it is better to
supply it directly to the consumer. This will help the user to know the
necessary technicalities of the product.
2) Considerations Related to Market
a) Number of Buyers: If the number of buyer is large then it is better to
take the services of middlemen for the distribution of the goods. On the
contrary, the distribution should be done by the manufacturer directly if
the number of buyers is less.
b) Buying Habits:A manufacturer should take the services of middlemen if
his financial position does not permit him to sell goods on credit to those
consumers who are in the habit of purchasing goods on credit.
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c) Buying Quantity:It is useful for the manufacturer to rely on the services of
middlemen if the goods are bought in smaller quantity.
d) Size of Market:If the market area of the product is scattered fairly, then
the producer must take the help of middlemen.
3) Considerations Related to Manufacturer/Company
a) Goodwill:Manufacturer’s goodwill also affects the selection of channel of
distribution. A manufacturer enjoying good reputation need not depend on
the middlemen as he can open his own branches easily.
b) Financial Strength: A company which has a strong financial base can
evolve its own channels. On the other hand, financially weak companies
would have to depend upon middlemen.
c) Financial Strength: A company which has a strong financial base can
evolve its own channels. On the other hand, financially weak companies
would have to depend upon middlemen.
4) Considerations Related to Government - Considerations related to the
government also affect the selection of channel of distribution. For example,
only a license holder can sell medicines in the market according to the law of
the government.
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Channel designs and Channel Management Decisions
Channel design is presented as a decision faced by the marketer, and it
includes either setting up channels from scratch or modifying existing
channels. This is sometimes referred to as reengineering the channel
and in practice is more common than setting up channels from scratch.
The term design implies that the marketer is consciously and actively
allocating the distribution tasks to develop an efficient channel, and the
term selection means the actual selection of channel members.
The channel design decision can be broken down into seven phases or
steps. These are:
1. Recognizing the need for a channel design decision
2. Setting and coordinating distribution objectives
3. Specifying the distribution tasks
4. Developing possible alternative channel structures
5. Evaluating the variable affecting channel structure
6. Choosing the “best” channel structure
7. Selecting the channel members
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Channel Management Decisions: Top 5 Steps
Step # 1. Selecting Channel Members:The first priority for any company is
choosing the right channel members. As the business is dependent upon
the marketing channel partners, it becomes crucial for the success of any
company to select the best channel partner. All the companies whether it’s a
product manufacturing company like Colgate or Onida or a service company
like IMS or Career Launcher, needs a good channel partner to succeed.
Generally all the companies advertise through newspapers and trade
magazines to look out for channel partners. If the company is known and
successful, it becomes quite easy for the company to find them. But in the
case of a new company launching a new product, then finding a channel
partner can be tough. In both the cases, the parameters for choosing a
channel partner should be very clear for the company as well as the channel
partner.
Step # 2. Training Channel Partners: Once the channel partner is
selected, they need to be trained as they are the face of the company. All
the companies have intensive training programmes for its dealers to tell
them about their sales and service capabilities, product knowledge,
expected service quality and operational procedures to follow. For example,
LG Electronics India regularly trains its sub-dealers, direct dealers and
service franchisees.
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The training tries to facilitate performance, improve knowledge, skills and
attitude of its dealers and sales staff. The training is given both through online
and offline methods, which covers functional, technical and behavioural
aspects.
Step # 3. Motivating Channel Members:As the channel members are as
important as your customers, a company needs to make them happy. Just like
anybody, channel members are also needs to be motivated. On the one hand,
the company tries to train them for their better performance and on the other
hand, the company provides them incentives, higher margins, premiums,
display allowances, advertising allowances and special deals. When a company
is highly respected like Sony, LG, Apple, Maruti Suzuki, then they have referent
power. The channel members feel proud to be associated with it. In turn, it
makes the channel partners cooperate with the company. This is the highest
authority a company can possess
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Step # 4. Evaluating Channel Members:
Channel members are evaluated on the basis of their sales, inventory level,
service support, delivery time performance, complaint redressal, promotional
program implementation and training performance.If the performance of the
channel member is satisfactory, then it is rewarded for its efforts and if the
performance falls below mark, it is advised to make necessary changes in the
processes. In case of channel members, where the problems are beyond
rectification, they are removed and the company appoints a new channel
member.
Step # 5. Modifying Channel Arrangements:With the changing times, the
company needs to modify its channel arrangements. The product line can
expand, the consumers buying pattern can change, the new competition can
come up, a new distribution channel can emerge or the demand of the product
can change by getting into the later stages of product life cycle. All these
factors can lead the company to change its channel arrangement. When Intex
started their operations in 1996, they had just one product – Ethernet card.
Now the product has expanded to 26 product groups with more than 300 stock
keeping units. Now their marketing channel consist of 2 mother warehouses, 2
regional offices, 28 branches, 57 service centres, 183 service franchises and
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What are Channel Conflicts?
Channel conflict can be explained as any dispute, difference or discord
arising between two or more channel partners, where one partner’s
activities or operations affect the business, sales, profitability, market share
or similar goal accomplishment of the other channel partner.
Types of Channel Conflict
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Vertical Level Conflict- In the vertical level conflict, the channel partner
belonging to a higher level enters into a dispute with the channel member of
a lower level or vice-versa.
Horizontal Level Conflict-The conflict among the channel partners
belonging to the same level, i.e., issues between two or more stockists or
retailers of different territories, on the grounds of pricing or manufacturer’s
biases, is termed as horizontal level conflict.
Inter-type Channel Conflict-These type of conflicts commonly arise in
scrambled merchandising, where the large retailers go out of their way to
enter a product line different from their usual product range, to challenge
the small and concentrated retailers.
Multi-channel Level Conflict-When the manufacturer uses multiple
channels for selling the products, it may face multi-channel level conflict
where the channel partners involved in a particular distribution channel
encounters an issue with the other channel.
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Distribution System: Definition & Types
Distribution systems can be defined as the sequential flow of procedures,
systems, and activities which are designed and linked to facilitate and
monitor the movement of goods and services from the source to the
consumer. Essentially, distribution is about making products and services
available to the end users when and where they need them.
What is Multi Level Marketing(MLM)?
Multilevel marketing (MLM) is a strategy some direct sales companies use to
encourage existing distributors to recruit new distributors who are paid a
percentage of their recruits' sales. The recruits are the distributor's
"downline." Distributors also make money through direct sales of products to
customers. Amway, which sells health, beauty, and home care products, is an
example of a well-known direct sales company that uses multilevel
marketing.
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Advertising- Definition
Advertising is the attempt to influence the buying behavior of customers or
clients with a persuasive selling message about products and/or services. In
business, the goal of advertising is to attract new customers by defining
the target market and reaching out to them with an effective ad campaign.
Establishing the target market is the critical first step in any advertising
campaign – you need to know who your intended audience is before you can
reach them. If your target audience is senior citizens, for example, an
advertising medium such as Facebook is a poor choice. Similarly, Millennials
are much less likely to read newspapers or use the Yellow Pages.
Defining the target market involves building a demographic profile of the
prospective customer by taking into account criteria such as age, gender,
marital status, lifestyles, shopping habits, etc.
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Common Advertising Methods
1)Online advertising: Online marketing includes a myriad of advertising
opportunities, such as:
•Local website advertising: Many municipalities and Chamber of Commerce
chapters have websites that provide listings of local businesses.
•Business web pages: Creating and maintaining a professional website with
clearly outlined descriptions of business offerings, optimized for search traffic.
•Email: Requires a customer email list and adherence to anti-spam regulations.
Email newsletters can be useful for keeping in touch with existing customers
and passing on information about new products or services.
•Twitter: Assuming the business has Twitter followers tweets can be used to
send out short promotional messages.
2) Newspaper advertising: While on the decline (U.S. newspaper ad revenue
dropped by over 50% between 2006 and 2015) newspaper ads can still be an
effective way to reach customers. Many municipalities have special interest
newspapers which can be used by businesses for local advertising.
3) Direct mail: Can be very useful. Can be costly if sent via post, but even
without a mailing list brochures, flyers, etc. can still be delivered directly to
residences and/or businesses in targeted geographic areas. Unfortunately,
statistics show that nearly half of direct mail ads are unread by recipients and
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Cold calling – By phone or in person can still be surprisingly
effective. As an example, while on a call a service company can
take the opportunity to visit neighboring residences/businesses
and mention their services (or drop off flyers or brochures).
Objectives of Advertising-
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1) Introduce a product- The most common reason Advertising is used is to
introduce a new product in the market. This can be done by existing
brands as well as new brands.
2) Introduce a brand-There are many startups in the market today and
many of them are services. Services are generally marketed as a brand
rather than marketing their individual service product. Thus, Uber will
market its own brand and introduce that Uber has started servicing
customers in a new market.
3) Awareness creation-According to the AIDA model, the most important
job of advertising is to get attention which is nothing but Awareness
creation. Advertising needs to capture the attention of people and make
them aware of the products or their features in the market. Most of the
Bank ads that you see are awareness campaigns.
4) Acquiring customers or Brand switching-One of the major objectives of
advertising and the first objective of many advertising campaigns is to
acquire more customers. This is also known as making the customers
switch brands. This can happen by passing on a strong message so that
the potential customer leaves the brand which he is tied up with and
comes to your brand.Ex Telecom companies
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5) Differentiation and value creation-
A most important aspect of Advertising is to differentiate the product or the
service from those of the competitor. A customer can only differentiate
between services based on the value the firms provides over that of
competitors. If a competitor is just advertising the features, whereas your
firm advertises the promises and commitments that it will keep, naturally
more customers will “trust” your brand over others. This is the reason that
advertising is used commonly to create value and to differentiate one brand
from another.
6) Brand building- When a brand regularly advertises and delivers quality
products and fulfills the promises it makes, automatically the value of the
brand is built. Recently we observed the problems of Maggi in India where
Maggi was banned completely due to high lead content. However, this did
not affect the parent brand Nestle much and neither affected its other
brands like Nescafe which had done their own brand building and were
independent of the parent brand. This brand was built by good products
and constant advertising towards building brand equity and making a
connect with the audience
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7) Positioning the product – Product and brand recall- One of the key
factors in the actual purchase of a product is the products recall and
the brand recall at the time of purchase. Amongst the objectives of
advertising, one objective is to correctly position the brand in the minds of
the customer. Examples include premium brands like Ralph
Lauren, Gucci, Hermes or others which are clearly positioned premium
8) Increase sales- Naturally, with so many steps being taken to advertise
the product, it is no doubt that one of the objectives of advertising is
to increase sales. Many a times this objective is achieved via advertising.
However, if the campaign is improper or the audience is not targeted
properly, then advertising can fail in its objective.
9) Increase profits- With the value being communicated and the brand
being differentiated as well as sales being increased, there is no doubt
that advertising can contribute a lot to increasing profits. Advertising
should never be looked at as an expense or a liability. In fact, it is an
investment for a firm just like a brand is an investment.
Look at the likes of Siemens or Bosch – Brands which have invested
heavily in positioning themselves on the basis of their German
engineering.
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10) Create Desire
Again, referring to the AIDA model, one of the key factors in advertising is
to create a desire for the product so that the customer wants the product.
A unique example in this case are the bottles of Absolut Vodka. Absolut
Vodka is so famous for its bottles that there are collectors who desire to
collect all different bottle types of Absolut Vodka. Such desire creation is
an effect of advertising + brand building + the fan following over time.
11) Call to action
One of the most common objectives of digital advertising and digital
marketing is to get a call to action. Brands invest in banner ads, link ads
as well as social ads to get their potential customers to take an action.
This action can be filling up an Email form, clicking on a link, watching a
video, giving a survey or what not.
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An advertising budget is an estimate of a
company's promotional expenditures over a certain time period. When
creating an advertising budget, a company must weigh the value of
spending an advertising dollar against the value of that dollar as
recognized revenue
AIDA MODEL EXPLAINED
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The AIDA concept was developed by American businessman Elias St. Elmo Lewis in
1898. Lewis was an advertising advocate who wrote and spoke often about
advertising’s potential. This model describes a series of steps or stages that
customers follow when making purchasing decisions. The AIDA stages are:
Awareness: Customers are made aware of a product, brand, or service. Awareness
typically comes from advertising.
Interest: Customer interest grows as prospects learn more about what benefits the
product has to offer and how it fits with their lifestyle.
Desire: The customer develops a connection with the product and moves from being
interested to wanting or “needing” it.
Action: Customers decide to interact with the product or service, by downloading a
trial version, creating an account, subscribing to an email, or making a purchase.
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1) Attract attention- At this stage of the AIDA model, you want to make
potential customers aware of your brand, product, or service. Types of
content commonly used at the awareness stage include advertisements,
videos, podcasts, and social media.
Your biggest challenge may be attracting the attention of your target
audience. You can’t engage with potential customers if they don’t know you
exist.
2) Maintain interest- After you get your potential customer’s interest, you
need to keep it—a feat that can be harder than attracting attention. You’ve
piqued the interest of a sizeable chunk of your audience enough to click a
link or watch a video, but what do you do to keep them engaged?
This AIDA stage generally uses web content, newsletters, blogs and
articles, and email campaigns.
Keeping interest may be a little easier if you create funny, entertaining
videos or use music that is familiar with your target audience. It may be
more difficult to keep attention if you overload a page with too much text. Try
to keep it light with short chunks of information and break it up with lively
subheads and graphics.
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3) Create desire - As you build your customer’s interest, you have to tell
them how your product or service can help them in real ways. This is where
you persuade your audience that they need your product to solve a problem
or to appeal to some emotion.
In this stage, you want to stress the features and benefits you are offering
and show how these features and benefits are different from or superior to
your competitors’ products. Don’t stress the features too much. The benefits
are generally more persuasive than a stale list of features.
4) Take action- After you grab attention, maintain interest, and create
desire, you need a call to action that will compel the customer to purchase
or start a trial. On a website, you can add a link to more information, to sign
up for a free trial, to create an account, or to place items in a shopping cart.
In the real world, this means you need to compel your customer to get up off
the couch and walk into your store.
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What are Public Relations?
Public relations (PR) refer to the variety of activities conducted by a
company to promote and protect the image of the company, its products
and policies in the eyes of the public.
Thus it aims to manage public opinion of the organization. Public relations
encompasses a broad range of activities. The major areas are discussed
below, with particular attention given to those used most frequently in
brand communication campaigns.
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Difference between PR, Marketing and Advertising
Marketing is the overall process of boosting public awareness of a product,
person or service, while advertising and PR are promotion methods that fall
under the ‘marketing’ umbrella term.
What is advertising?
When a marketing team decides it needs advertising as part of a campaign, it
will go to an advertising agency. Sometimes a large marketing consultancy will
have its own advertising department but most jobs in this area can be found in
agencies.
Advertising is a method of persuading a target audience to buy a product.
What is PR?
While advertising is more geared towards pushing sales of a new product, PR
focuses on maintaining the good reputation of the company in the media. The
goal of PR officers is to get their employers or clients noticed by the media.
While audiences are savvy about advertising, any positive press coverage
puts the organisation in the public eye and promotes it in a more subtle way.
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•Creating awareness about the company, its goals, products and services where
this counts.
•Sustaining the awareness as an ongoing process, keeping in mind what the
competitors are doing, and knowing that public memory is short.
•Striving to be accepted by the various publics. Special efforts are required to be
accepted by employees.
•Creating a bond of trust. In times of rumors, misinformation, etc., a company
has to establish the truth.
•Earning recognition. It is not enough to perform feats but it is necessary to get
these noticed and talked about. Through winning awards, certifications etc. and
getting these read and seen, a company gets recognition.
Types of PR
•Media Relations: Establishing a good relationship with the media
organisations and acting as their content source.
•Investor Relations: Handling investors events, releasing financial reports and
regulatory filings, and handling investors, analysts and media queries and
complaints.
Objectives of PR
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•Government Relations: Representing the brand to the government with
regard to the fulfilment of policies like corporate social responsibility, fair
competition, consumer protection, employee protection, etc.
•Community Relations: Handling the social aspect of the brand and
establishing a positive reputation in the social niche like environment
protection, education, etc.
•Internal Relations: Counselling the employees of the organisation with
regard to policies, course of action, organisation’s responsibility and their
responsibility. Cooperating with them during special product launches and
events.
•Customer Relations: Handling relationships with the target market and
lead consumers. Conducting market research to know more about interests,
attitudes, and priorities of the customers and crafting strategies to influence
the same using earned media.
•Marketing Communications: Supporting marketing efforts relating to
product launch, special campaigns, brand awareness, image, and
positioning.
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Public Relations Examples
Google’s Fight Ebola Campaign
The outbreak of Ebola virus in 2014 was critical as it was spread among
many countries and took many lives. Google, to help the people in need
and to build up a positive brand image, started a donation campaign
where it pledged to give $2 for every $1 donated to the cause through its
website.
The public relations strategy attracted the media attention and resulted to
be a huge success as Google raised $7.5 million.
Paramount Pictures The Ring Publicity Stunt
Paramount Pictures, to promote its new horror franchise, The Ring, and
to get more user attention, took a step forward and planned a publicity
stunt where the protagonist haunted the people in a real-life scenario.
The film’s most iconic scene of Samara crawling out of the TV set was
recreated in a TV showroom where the protagonist came crawling out of
the hidden compartment behind a TV screen and scared people.
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What is Sale Promotion?
American Marketing Association defines sales promotion as “Media and
nonmedia marketing pressure applied for a predetermined, limited period of
time in order to stimulate trial, increase consumer demand, or improve
product availability”.
Sales promotion is a marketing strategy where the product is promoted using
short-term attractive initiatives to stimulate its demand and increase its sales.
Importance Of Sales Promotion
Sales promotion is a handy technique to fulfil the short term sales goals by
persuading potential customers to buy the product. It is an important
promotional strategy to –
Spread information about the brand to new customers or new market
Stabilize sales volume and fulfil short-term sales goals
Stimulate demand for a short term by making the product look like a great
deal.
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What is Sales Promotion Mix?
The Promotion Mix refers to the blend of several promotional tools used by the
business to create, maintain and increase the demand for goods and services.
The fourth element of the 4 P’s of Marketing Mix is the promotion; that focuses
on creating the awareness and persuading the customers to initiate the
purchase. The Promotion Mix is the integration of Advertising, Personal Selling,
Sales Promotion, Public Relations and Direct Marketing.
Types of Sales Promotion :-
Consumer Sales Promotion
Dealer Promotion
Business Promotion and Public Relations
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Tools and Techniques of sales promotion
Distribution of Samples:
Many big businessmen distribute free samples of their products to the
selected people in order to popularise their products. Distribution of samples
is popular in case of books, drugs, cosmetics, perfumes and other similar
products. As the distribution of samples is very costly, this system is
confined to those products of small value which have often repeated sales.
Rebate or Price-Off Offer:
In order to increase sale, many producers introduce price off offer to the
customers. Under this, the product is offered at a price lower than the
normal price. For example, during off season (winter), ceiling fans, coolers
and refrigerators may be offered at 20 to 30% off price.
Partial Refund:
A firm may use the strategy of refunding a part of the price paid by the
customer on the production of some proof of purchase of its product. For
instance, the buyer of two cakes of a branded soap may be refunded Rs. 5
on returning the empty packages to the dealer.
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Discount Coupons:
A discount coupon is a certificate that entitles its holder to a specified
saving on the purchase of a specified product. Coupons may be issued
by the manufacturers either directly by mail through sales-force or
through the dealers.
Push Pull Strategies of Promotion
The primary difference between push and pull marketing lies in how
consumers are approached. In push marketing, the idea is to promote
products by pushing them onto people. For push marketing, consider
sales displays at your grocery store or a shelf of discounted products. On
the other hand, in pull marketing, the idea is to establish a loyal following
and draw consumers to the products.
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What is Push Marketing?
Push marketing is a promotional strategy where businesses attempt to
take their products to the customers. The term push stems from the idea
that marketers are attempting to push their products at consumers.
Common sales tactics include trying to sell merchandise directly to
customers via company showrooms and negotiating with retailers to sell
their products for them, or set up point-of-sale displays.
What is Pull Marketing?
Pull marketing takes the opposite approach. The goal of pull marketing is
to get the customers to come to you, hence the term pull, where marketers
are attempting to pull customers in. Common sales tactics used for pull
marketing include mass media promotions, word-of-mouth referrals and
advertised sales promotions. From a business perspective, pull marketing
attempts to create brand loyalty and keep customers coming back,
whereas push marketing is more concerned with short-term sales.
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Personal Selling
Personal selling is an act of convincing the prospects to buy a given product or
service. It is the most effective and costly promotional method. It is effective
because there is face to face conversation between the buyer and seller and
seller can change its promotional techniques according to the needs of
situation. It is basically the science and art of understanding human desires
and showing the ways through which these desires could be fulfilled.
According to American Marketing Association, “Personal selling is the oral
presentation in a conversation with one or more prospective purchasers for the
purpose of making sale; it is the ability to persuade the people to buy goods
and services at a profit to the seller and benefit to the buyer”.
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Features of Personal Selling:
The main features of personal selling are:
i. It is a face to face communication between buyer and seller.
ii. It is a two way communication.
iii. It is an oral communication.
iv. It persuades the customers instead of pressurizing him.
v. It provides immediate feedback.
vi. It develops a deep personal relationship apart from the selling relationship
with the buyers and customers.
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Steps Involved in Personal Selling
PROSPECTING-
The first step of the personal selling process is called ‘prospecting’.
Prospecting refers to locating potential customers. There are many sources
from which potential customers can be found: observation, social contacts,
trade shows, commercially-available databases, commercially-available mail
list and cold calling.
PRE-APPROACH-The nest step in the personal selling process is called the
‘pre-approach’. The pre-approach involves preparation for the sales
presentation. This preparation involves research about the potential
customers, such as market research. Research is useful in planning the right
sales presentation. During the pre-approach the salesperson may also plan
and practice their sales presentation.
THE APPROACH-The next step in the personal selling process is called the
‘approach’. The approach refers to the initial contact between the salesperson
and the prospective customer. During this stage the sales person takes a few
minutes for “small talk" and get to know the potential customer. The goal of
the approach is to determine the specific needs and wants of the individual
customer, as well as allowing the potential customer to relax and open up.
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SALES PRESENTATION- The next step in the personal selling process is
called the ‘sales presentation’. The sales presentation involves the
salesperson presenting the product or service, describing its qualities and
possibly demonstrating features of the product. Ideally the sales
presentation will be individualized to match the needs and desires of the
potential customer.
HANDLING OBJECTIVES- In some cases, after receiving the sales
presentation, the potential customer will have some questions or
concerns. In order to secure a sale, the salesperson must address these
questions or concerns; this step is referred to as ‘handling objectives.’
CLOSING THE SALE-The next step in the personal selling process is
referred to as ‘closing the sale’. ‘Closing the sale’ refers to finalizing the
sale and persuading the potential customer to make the purchase. During
the ‘closing the sale’ step, prices and payment options may be negotiated.
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FOLLOW UP-The final step in the personal selling process is referred to as the
‘follow up.’ The follow up involves the salesperson contacting the customer after
the sale to ensure that the customer is satisfied. If the customer has any existing
issues with the product, the salesperson will address them. A successful follow
up stage of personal selling can be very effective in ensuring repeat sales,
evaluating the effectiveness of the salesperson, and obtaining additional
referrals from the satisfied customer.
Editor's Notes
What is a Advertising Budget?
The AIDA concept was developed by American businessman Elias St. Elmo Lewis in 1898. Lewis was an advertising advocate who wrote and spoke often about advertising’s potential. This model describes a series of steps or stages that customers follow when making purchasing decisions. The AIDA stages are:
Awareness: Customers are made aware of a product, brand, or service. Awareness typically comes from advertising.
Interest: Customer interest grows as prospects learn more about what benefits the product has to offer and how it fits with their lifestyle.
Desire: The customer develops a connection with the product and moves from being interested to wanting or “needing” it.
Action: Customers decide to interact with the product or service, by downloading a trial version, creating an account, subscribing to an email, or making a purchase.