Department of Business Administration.
Marketing Theory and Practice.
Athar Ummad Khan
ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD,
I dedicate it to my beloved parents and respected teachers.
All praise and thanks is due to Allah, the Lord of mankind
and all that exists, for His blessings, benevolence, and guidance at
every stage of our life.
I am deeply grateful to my supervisor, Prof. Athar Ummad
Khan, for his guidance, support, and patience. He has been an
invaluable source of knowledge and has certainly helped inspire many
of the ideas expressed in this assignment.
My words will fail to express my deepest heartfelt thanks to
my family, especially my parents, for all what they did, and still doing,
to help me be at this position and for their continuous support and
encouragement. Any mistakes that remain are mine! I thank you all.
TABLE OF CONTENTS
Table of Contents iv
List of Tables viii
List of Figures ix
CHAPTER 1: The Marketing Concepts 1
1.1 The Production Concept 2
1.2 The Sales Concept 2
1.3 The Marketing Concept 3
CHAPTER 2: The Marketing Mix 5
2.1 Product Decision 7
2.2 Price Decision 7
2.3 Place Decision 8
2.4 Promotion Decision 8
CHAPTER 4: The Promotional Mix 12
4.1 Advertising 12
4.2 Personal Selling 13
4.3 Sales Promotion 13
4.4 Publicity 13
4.5 Factors That Determine Type Of Promotional Tools 15
4.5.1 Resource Availability and The Cost Of Promotional Tools 15
4.5.2 Market Size and Concentration 15
4.5.3 Customer Information Needs 15
CHAPTER 5: How To Establish a Promotional Mix 18
5.1 What To Expect. 19
5.2 What You Should Know Before Getting Started 19
5.2.1 You Deliver A Clear Message 20
5.2.2 Huffman encode data and add header info 20
5.3 Understanding The Main Communication Channels 21
5.4 Why You Need a Promotional Mix 22
CHAPTER 3: What IsYour Promotional Mix
3.1 The Tools Of Promotion 11
CHAPTER 6: Advertising 26
6.1 Stage 1. Set Advertising Objectives 26
6.2 Stage 2. Set The Advertising Budget 27
6.3 Stage 3. Determine The Key Advertising Messages 27
6.4 Stage 4. Decide Which Advertising Media To Use 28
6.5 Stage 5. Evaluate The Result Of Advertising Campaign 29
CHAPTER 7: Setting The Advertising Budget 30
7.1 Effectiveness Of Advertising 30
7.2 Approaches To Setting The Advertising Budget 31
CHAPTER 8: Advertising Media 33
8.1 Published Media 34
8.2 Visual and Oral Media 34
8.3 Why and What 34
8.4 Why Advertise 34
8.5 What To Advertise 35
8.6 Advantages Of Advertising 37
8.7 Disadvantages Of Advertising 37
CHAPTER 9: Public Relations 40
9.1 The Roll Of Public Relations 41
9.2 Public Relations Techniques 41
9.3 Consumer Communication 41
9.4 Business Communication 42
9.5 Internal Communication 42
9.6 External Communication 42
9.7 Financial Communication 42
9.8 Advantages Of Public Relations 45
9.9 Disadvantages Of Public Relations 46
CHAPTER 10: Sales Promotions 5 47
10.1 Concept Of Sales Promotion 47
10.2 Definitions Of Sales Promotion 48
LIST OF TABLES
Table 3.1 Advantages and Disadvantages Of Promotional Mix 15
Table 10.1 Major Sales Promotion Devices 53
LIST OF FIGURES
Fig 2.1 Market Mix 6
Fig 6.1 Advertising 2009 29
Fig 14.1 Community 87
Fig 14.2 Sponsorship 88
Fig 14.3 Event / Road Show 89
Fig 14.4 Advertising VAIO AW on Catalog 90
Fig 14.5 Advertising VAIO CS on Magazine 91
The Marketing Concept
The "marketing concept" is the philosophy that firms should
analyze the needs of their customers and then make decisions to
satisfy those needs, better than the competition. Today most firms
have adopted the marketing concept, but this has not always been the
In 1776 in The Wealth of Nations, Adam Smith wrote that the
needs of producers should be considered only with regard to meeting
the needs of consumers. While this philosophy is consistent with the
marketing concept, it would not be adopted widely until nearly 200
To better understand the marketing concept, it is worthwhile
to put it in perspective by reviewing other philosophies that once were
predominant. While these alternative concepts prevailed during
different historical time frames, they are not restricted to those periods
and are still practiced by some firms today.
1.1 The Production Concept:
The "production concept" prevailed from the time of the
industrial revolution until the early 1920's. The production concepts
was the idea that a firm should focus on those products that it could
produce most efficiently and that the creation of a supply of low-cost
products would in and of itself create the demand for the products. The
key questions that a firm would ask before producing a product were:
• Can we produce the product?
• Can we produce enough of it?
At the time, the production concept worked fairly well
because the goods that were produced were largely those of basic
necessity and there was a relatively high level of unfulfilled demand.
Virtually everything that could be produced was sold easily by a sales
team whose job it was simply to execute transactions at a price
determined by the cost of production. The production concept
prevailed into the late 1920's.
1.2 The Sales Concept:
By the early 1930's however, mass production had become
commonplace, competition had increased, and there was little
unfulfilled demand. Around this time, firms began to practice the
"Sales concept" (or selling concept), under which companies not only
would produce the products, but also would try to convince customers
to buy them through advertising and personal selling. Before producing
a product, the key questions were:
• Can we sell the product?
• Can we charge enough for it?
The sales concept paid little attention to whether the product
actually was needed; the goal simply was to beat the competition to
the sale with little regard to customer satisfaction. Marketing was a
function that was performed after the product was developed and
produced, and many people came to associate marketing with hard
selling. Even today, many people use the word "marketing" when they
really mean sales.
1.3 The Marketing Concept:
After World War II, the variety of products increased and hard
selling no longer could be relied upon to generate sales. With
increased discretionary income, customers could afford to be selective
and buy only those products that precisely met their changing needs,
and these needs were not immediately obvious. The key questions
1. What do customers want?
2. Can we develop it while they still want it?
3. How can we keep our customers satisfied?
In response to these discerning customers, firms began to adopt the
"marketing concept", which involves:
• Focusing on customer needs before developing the
• Aligning all functions of the company to focus on those
• Realizing a profit by successfully satisfying customer
needs over the long-term
When firms first began to adopt the marketing concept, they
typically set up separate marketing departments whose objective it
was to satisfy customer needs. Often these departments were sales
departments with expanded responsibilities. While this expanded sales
department structure can be found in some companies today, many
firms have structured themselves into marketing organizations having
a company-wide customer focus. Since the entire organization exists
to satisfy customer needs, nobody can neglect a customer issue by
declaring it a "marketing problem" - everybody must be concerned with
The marketing concept relies upon marketing research to
define market segments, their size, and their needs. To satisfy those
needs, the marketing team makes decisions about the controllable
parameters of the marketing mix.
The Marketing Mix
(The 4 P's of Marketing)
Marketing decisions generally fall into the following four controllable
3. Place (distribution)
The term "marketing mix" became popularized after Neil H.
Borden published his 1964 article; The Concept of the Marketing Mix.
Borden began using the term in his teaching in the late 1940's after
James Culliton had described the marketing manager as a
"Mixer of ingredients".
The ingredients in Borden's marketing mix included product
planning, pricing, branding, distribution channels, personal selling,
advertising, promotions, packaging, display, servicing, physical
handling, and fact finding and analysis.
E. Jerome McCarthy later grouped these ingredients into the
four categories that today are known as the 4 P's of marketing,
Fig.2.1: MARKET MIX
These four P's are the parameters that the marketing
manager can control, subject to the internal and external constraints of
the marketing environment. The goal is to make decisions that center
the four P's on the customers in the target market in order to create
perceived value and generate a positive response.
2.1 Product Decisions:
The term "product" refers to tangible, physical products as
well as services. Here are some examples of the product decisions to
• Brand name
• Repairs and Support
• Accessories and services
2.2 Price Decisions:
Some examples of pricing decisions to be made include:
• Pricing strategy (skim, penetration, etc.)
• Suggested retail price
• Volume discounts and wholesale pricing
• Cash and early payment discounts
• Seasonal pricing
• Price flexibility
• Price discrimination
2.3 Distribution (Place) Decisions:
Distribution is about getting the products to the customer.
Some examples of distribution decisions include:
• Distribution channels
• Market coverage (inclusive, selective, or exclusive distribution)
• Specific channel members
• Inventory management
• Distribution centers
• Order processing
• Reverse logistics
2.4 Promotion Decisions:
In the context of the marketing mix, promotion represents the
various aspects of marketing communication, that is, the
communication of information about the product with the goal of
generating a positive customer response. Marketing communication
• Promotional strategy (push, pull, etc.)
• Personal selling & sales force
• Sales promotions
• Public relations & publicity
• Marketing communications budget
2.5 Limitations of the Marketing Mix Framework:
The marketing mix framework was particularly useful in the
early days of the marketing concept when physical products
represented a larger portion of the economy. Today, with marketing
more integrated into organizations and with a wider variety of products
and markets, some authors have attempted to extend its usefulness by
proposing a fifth P, such as packaging, people, process, etc.
Today however, the marketing mix most commonly remains
based on the 4 P's. Despite its limitations and perhaps because of its
simplicity, the use of this framework remains strong and many
marketing textbooks have been organized around it.
MARKETING-MIX AND PROMOTION-MIX:
Product Price Place Promotion
Personal Sales Direct
Selling Promotion Marketin
Fig.2.2 MARKETING-MIX AND PROMOTION-MIX
What Is Promotion?
It would be safe to say that most companies engage in some
form of promotional activity every day of the year. Promotion is one of
the four Ps of marketing—price, product, place, and promotion.
Promotion is generally thought of as a sequence of activities designed
to inform and convince individuals to purchase a product, subscribe to
a belief, or support a cause. All of the various tools available to
marketing managers for promotional activities constitute what is known
as the promotional mix.
Promotion is the activities people use to communicate with
others about their product or service and to convince them to use it.
Everything you do communicates something about your business.
Promotion involves careful planning. When you see or hear
effective promotion it is merely the "tip of the iceberg." A great deal of
work went into planning the final product. It is not enough to have good
products sold at attractive prices. To generate sales and profits, the
benefits of products have to be communicated to customers.
Generally, promotion is communicating with the public in an
attempt to influence them toward buying your products and/or
Promotion is, therefore, about companies communicating with customers.
An activity, such as a sale or advertising campaign, designed
to increase visibility or sales of a product.
But before talking about the planning process, we need to
review the tools of promotion.
3.1 The Tools Of Promotion
Day in and day out, people are bombarded with messages.
There is no way to evaluate and act on all these messages so we pick
and choose between them. This makes the choice of promotional tools
There are four main promotional tools:
2. Personal selling
3. Sales promotion
The promotional mix
It is not enough for a business to have good products
sold at attractive prices. To generate sales and profits, the benefits of
products have to be communicated to customers. In marketing, this is
commonly known as "promotion".
Promotion is all about companies communicating with customers.
A business' total marketing communications program is called
the "promotional mix" and consists of a blend of advertising, personal
selling, sales promotion and public relations tools. In this revision note,
we describe the four key elements of the promotional mix in more
It is helpful to define the four main elements of the
promotional mix before considering their strengths and limitations.
Any paid form of non-personal communication of ideas or
products in the "prime media": i.e. television, newspapers, magazines,
billboard posters, radio, cinema etc. Advertising is intended to
persuade and to inform. The two basic aspects of advertising are the
message (what you want your communication to say) and the medium
(how you get your message across)
4.2 Personal Selling
Oral communication with potential buyers of a product with
the intention of making a sale. The personal selling may focus initially
on developing a relationship with the potential buyer, but will always
ultimately end with an attempt to "close the sale".
4.3 Sales Promotion
Providing incentives to customers or to the distribution
channel to stimulate demand for a product.
The communication of a product, brand or business by
placing information about it in the media without paying for the time or
media space directly. Otherwise known as "public relations" or PR.
The following table gives examples of each tool along with advantages
and disadvantages of each.
Advantages and Disadvantages of Each Element of the
Mix Element Advantages Disadvantages
Advertising Good for building awareness Impersonal - cannot answer all a
Effective at reaching a wide audience
Not good at getting customers to
Repetition of main brand and product make a final purchasing decision
positioning helps build customer trust
Personal Selling Highly interactive - lots of Costly - employing a sales force
communication between the buyer has many hidden costs in addition
and seller to wages
Excellent for communicating Not suitable if there are thousands
complex / detailed product of important buyers
information and features
Relationships can be built up -
important if closing the sale make
take a long time
Sales Can stimulate quick increases in sales If used over the long-term,
Promotion by targeting promotional incentives customers may get used to the
on particular products effect
Good short term tactical tool Too much promotion may damage
the brand image
Public Often seen as more "credible" - since Risk of losing control - cannot
Relations the message seems to be coming from always control what other people
a third party (e.g. magazine, write or say about your product
Cheap way of reaching many
customers - if the publicity is
achieved through the right media
4.5 Factors that determine the type of promotional tools
Each of the above components of the promotional mix has
strengths and weaknesses. There are several factors that should be
taken into account in deciding which, and how much of each tool to
use in a promotional marketing campaign:
4.5.1 Resource availability and the cost of each
Advertising (particularly on television and in the national newspapers
can be very expensive). The overall resource budget for the
promotional campaign will often determine which tools the business
can afford to use.
4.5.2 Market size and concentration
If a market size is small and the number of potential buyers is
small, then personal selling may be the most cost-effective
A good example of this would be businesses selling software
systems designed for supermarket retailers. On the other hand, where
markets are geographically disperse or, where there are substantial
numbers of potential customers, advertising is usually the most
4.5.3 Customer information needs
Some potential customers need to be provided with detailed, complex
information to help them evaluate a purchase (e.g. buyers of
equipment for nuclear power stations, or health service managers
investing in the latest medical technology). In this situation, personal
selling is almost always required - often using selling teams rather than
just one individual.
By contrast, few consumers need much information about products
such as baked beans or bread. Promotional tools such as brand
advertising and sales promotion are much more effective in this case.
How to Establish a Promotional Mix?
You drive sales by promoting the benefits of your company's
goods or services to pools of potential buyers. The ways you promote
your organization will largely determine whether you successfully plant
the right messages in the minds of your target audience. This module
explains how you can establish a promotional mix best suited to your
company's needs and resources.
What You Should Know Before Getting Started?
Understanding the Main Communication Channels
Why You Need a Promotional Mix ?
Establishing Your Promotional Mix
• Determine Your Target Market
• Determine Your Objectives
• Design Your Message
• Select Your Promotional Channels
• Determine Your Budget
• Determine Your Promotional Mix
• Measure the Results and Adjust
5.1 What to Expect?
Even a superior product doesn't sell itself. Your customers
need information about your product or service before they buy it. The
ways you communicate features and benefits to your potential
customers is called a promotional mix. This Business Builder will
explain how you can maximize your company's promotional mix for
5.2 What You Should Know Before Getting Started?
When you promote your business, you're engaging in
persuasive communication: You want to convince others to buy from
you. You must select the right promotional strategy to:
Capture the attention of the right group of potential customers in a
credible yet catchy way.
Educate them about your products or services.
Influence them to buy from you.
A promotional mix is an allocation of resources among five primary
2. Public relations or publicity
3. Sales promotion
4. Direct marketing
5. Personal selling
How you integrate these elements depends on what you're
promoting, the biases and preferences of the potential customers
you're courting, general market conditions and your promotional
The communications process will succeed if:
5.2.1 You Deliver A Clear, Compelling Message.
You may have several important or beneficial product
features, but if you don't emphasize what's most important to your
target market or you overwhelm prospects with too much data, they
might reject your message. Example: If the target-market customer
cares most about saving money, your message should emphasize
how this will happen.
5.2.2 You Choose The Most Appropriate Promotion
To convey your message effectively, you must understand the
best way to reach your target market. If your key customers are
manufacturers and you supply specialized equipment, communicating
through an advertisement in a general interest consumer magazine will
waste time and money.
5.3 Understanding The Main Communication Channels
Advertising is any paid form of media communication. This
includes print ads in magazines, trade journals and newspapers,
radio and TV announcements, Web-based visibility-building, and
billboards. Advertising is a no personal promotional activity because
the seller has no direct contact with the potential customer during
the communication process.
5.3.b. Sales Promotions.
In-store demonstrations, displays, contests and price incentives
(50% off, buy-one-get-one-free) are sales promotion techniques
5.3.c. Public Relations.
These activities promote a positive image, generate publicity
and foster goodwill with the intent of increasing sales. Generating
favorable media coverage, hosting special events and sponsoring
charitable campaigns are examples of public relations.
5.3.d. Direct Marketing.
A form of advertising aimed directly at target customers
(usually in their homes or offices) that ask the receiver to take action,
such as ordering a product, clipping a coupon, phoning a toll-free
number or visiting a store. Catalogs, coupon mailers and letters are
common forms of direct marketing.
5.3.e. Personal Selling.
Face-to-face communication between buyer and seller.
5.4 Why You Need A Promotional Mix?
If you deliver your message in many different ways, you
increase your odds of reaching your target market. Hundreds of
messages a day bombard your target market, but only a select few
penetrate their consciousnesses. Of those, an even smaller
percentage eventually leads them to act.
You may want to communicate a range of messages to
different markets. If you have a product, such as spot remover, that's
used by general consumers but that auto mechanics apply in a more
specialized way, you should communicate different messages to each
market via different media and methods. You might air a TV
commercial to reach consumers and place an ad in an auto magazine
to reach mechanics.
Without the proper promotional mix, you may squander your
limited resources by taking a scattershot approach. Promotion must
advance your overall marketing plan and reinforce the dialogue you
want to establish with the segments of the marketplace you covet
In their rush to expand, some fast-growth entrepreneurs fail to
coordinate their marketing strategies with their specific promotional
efforts. A common trap: You invest heavily on advertising or sales
promotion, but you overlook quality control for your product or price it
5.5 Establishing Your Promotional Mix
Establishing the promotional mix that's right for your company
involves seven steps:
5.5.a. Determine Your Target Market
The segment of people that needs, or would benefit from,
your product or service is your target market. Understanding these
individuals' attitudes and behaviors will help you design the best
message and select the right means to reach them.
If you own an upscale jewelry store, you know from your sales
history or marketing research that your target market is consumers
earning more than $75,000 per year. Any print advertising should thus
appear in publications in which readership income exceeds $75,000.
5.5.b. Determine Your Objectives
You must determine the response you want to elicit from your
target market, such as motivating them to click on your Web ad or sign
up for a free trial of your product.
Some entrepreneurs fail to define their objectives precisely. While you
obviously want to increase sales, you need to decide the best way to
build a relationship with shoppers. If you engage them effectively, then
sales should inevitably follow.
To introduce new customers to your product, a direct-
marketing technique, such as a direct-mail letter with a money-saving
offer to first-time customers, might work. Or you can try a sales
promotion, such as two-for-the-price-of-one. If your target market has
a misconception about your product (say, that it's more expensive or
less effective than rival products), you can correct the perception by
providing comparisons or testimonials.
5.5.c. Design Your Message
The design of your communication incorporates two main
factors: content and format.
The content is the words and images you use to appeal to
your target market. You must give your potential customers reasons
they should respond to your message. Think of the most important
benefit a user of your product receives. That should lead you to the
central theme of your message's content.
Benefits fulfill a human want or need. Examples: The desire to
enhance status, save money and time, or increase safety or security.
In choosing your promotional mix, you must communicate how your
product produces a positive emotion or satisfies a particular need. In
the case of the jewelry store mentioned earlier, the message can
appeal to the target market's desire to gain status, a likely motivator
that drives jewelry shoppers. Or your message can communicate the
desire to be loved: "If you love her, then you will buy her this elegant
ring to prove it."
Each element of the promotional mix has its own format
requirements. Web advertising relies on graphics, clarity and color,
while personal selling may involve structured presentations, handouts
and diagnostic tests to engage potential customers.
To determine the best format to deliver your content, consider
the technical aspects of presenting your message. If you prefer to
demonstrate a product to sell it, you should probably include a
broadcast medium in your advertising. That in turn will lead to
decisions about sound effects, camera angles, lighting, and so on.
Format for print advertising depends on how long or big a headline
should look, how to integrate graphics and what types of photos
reinforce your message.
5.5.d. Select Your Promotional Channels
Entrepreneurs who miss revenue goals often explain the
disappointing results by saying, "We were out-marketed." That usually
indicates a failure to plan and implement the right promotional mix.
By choosing the best methods to convey your message and
extracting the most value from your financial and creative resources
you can devise an integrated marketing communications program that
reinforces your company's distinct character in your customers' minds.
The Institute of Practitioners in Advertising (IPA), the body
which represents advertising agencies, defines advertising as:
"The means of providing the most persuasive possible selling
message to the right prospects at the lowest possible cost".
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
There are five main stages in a well-managed advertising campaign:
6.1 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
(c) To remind - e.g. remind buyers where to find a product
6.2 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.
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.
6.3 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
(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.
6.4 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
(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 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.
6.5 Stage 5: Evaluate the results of the Advertising
The evaluation of an advertising campaign should focus on two key
(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.
Setting the advertising budget
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
Availability of competing products
∗ The weather (often blamed by retailers for poor sales!)
7.1 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
7.2 Approaches to setting the advertising budget
7.2.1 Method (1) Fixed percentage of sales:
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!
7.2.2 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
7.2.3 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
∗ Increase in customer recognition / awareness of the product or
brand (which can be measured)
∗ Number of viewers, listeners or readers reached by the
7.2.4 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 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.
There is a huge variety of media available through which a
business can conduct an advertising campaign. What are the main
types of media and what considerations should a business make in
choosing between them?
The starting point in the selection of appropriate advertising
media is a “media analysis”. This can be defined as:
"An investigation into the relative effectiveness and the relative costs
of using the various advertising media in an advertising campaign"
Before committing an advertising budget it is necessary to carry out
marketing research on:
• Potential customers
• Their reading habits, television-watching habits
• How many times the advertisers wish the potential customers to
see an advertisement
• How great a percentage of the market they wish to reach, etc.
These elements all need to be considered and balanced to
plan a campaign that will effectively reach its target audience at a
A useful distinction can be made between “published media” and
8.1 Published media include:
• National daily newspapers
• Sunday newspapers
• Local and regional newspapers
• Consumer magazines
• Specialist magazines
• Trade and professional press
8.2 Visual and aural media include:
• Television (terrestrial and digital)
• Direct mailing
8.3 Why and What?
Why and what should a business advertise?
Before undertaking an advertising campaign, marketers
should be able to answer two key questions:
(1) Why are we advertising?
(2) What are we advertising?
On the face of it these seem like two fairly obvious questions.
But they are significant. Advertising can be a very expensive
promotional tool. It is widely believed that much advertising spend is
wasted. So careful consideration about “Why” and “What” can pay
8.4 Why advertise?
The following may be good reasons why a business is advertising:
• To create awareness, customer interest or desire
• To boost sales (moving the demand curve to the right)
• To build brand loyalty (or to maintain it at the existing level)
• To launch a new product
• To change customer attitudes – perhaps trying to move a
product more “up market” or to dispel some widely held
perceptions about the product
• To support the activities of the distribution channel (e.g.
supporting a “pull” strategy)
• To build the company or brand image
• To reminds and reassure customers
• To offset competitor advertising – businesses may defend
market share by responding to competitors’ campaigns with their
• To boost public standing: companies can boost their public
standing with advertisements that link them with generally
approved campaigns such as care for the environment
• To support the sales force – advertising can make the job of the
sales force easier and more effective by attracting leads from
potential customers and perhaps motivate them by boosting the
profile of the business
Take a look through any magazine and select a sample of
adverts. Which of the above reasons do you think are behind the
adverts you choose? Don’t forget that some adverts aim to achieve
8.5 What to advertise?
Factors that help answer the “what are we advertising”? focus on what
the advertising message should be. In general, there are really only
two kinds of effective advertising message:
Firstly, does the business/product have a Unique Selling Proposition
A unique selling proposition is a customer benefit that no
other product can claim
In reality these are rare, although that does not stop marketers from
claiming them for their products.
Secondly, does the thing that is being advertised “add value” and if so,
For example, advertising for washing powders will focus on
the “added value” created by whitening agents or the fact that a
particular formulation will last longer than the competition (take a look
at the Fairy web site to see if you can spot the other “added value”
features claimed for its products)
Whatever is advertised, it is important that the message is:
• Action upon by target customers
8.6 Advantages Of Advertising
By investing in a public presentation of your company and
its products, you can enhance customers' perceptions of
legitimacy, permanence and quality that they associate with your
You can repeat a message at strategic intervals.
Repeating your message increases the likelihood that your target
customer will see the message at a time where he is open to
hearing it. The right timing can maximize your awareness-building
The best advertising puts a human face on a company
and its products. It can convey a sense of adventure, challenge
people to test their assumptions about your business or entertain or
enlighten your audience. It can introduce consumers to images and
symbols that differentiate your company from others.
Effective advertising enables you to create and nurture
brand equity, a vital but intangible source of goodwill that flows
from a favorable image associated with a brand name. Once your
company establishes a distinctive trademark in the public eye, you
have a competitive advantage.
8.7 Disadvantages Of Advertising
Marketers often argue that advertising offers a cost-
effective way to reach large groups, and it's true that the cost
per contact can prove lower than with other promotional
methods. Nevertheless, many entrepreneurs lack the finances
to invest heavily in advertising. Producing and placing
professional advertisements is prohibitively expensive for
many emerging-growth companies.
While attention-grabbing advertising can attract
interest, even the most innovative campaigns can become
stale over time. And entrepreneurs may grow to rely too much
on advertising at the expense of more personal, direct
appeals to niche audiences.
Lack Of Feedback.
Measuring the success of advertising can prove
impossible. Some of the best TV commercials from a stylistic
standpoint may not increase sales for the advertiser.
As people get pelted with promotional messages
throughout the day, they become better at screening out ads.
Information overload and clutter can lead your target audience
to turn away from your best efforts to engage them.
The Institute of Public Relations defines public relations as follows:
“The planned and sustained effort to establish and maintain
goodwill and mutual understanding between an organization and its
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. For example, consider the relevant
“publics” for a publicly-quoted business engaged in medical research:
• Trade unions
• Members of the “general public”
• Customers (past and present)
• Pressure groups
• The medical profession
• Charities funding medical research
• Professional research bodies and policy-forming organizations
• The media
• Government and politicians
9.1 The role of public relations is to:
o Identify the relevant publics
o Influence the opinions of those publics by:
o Reinforcing favorable opinions
o Transforming perhaps neutral opinions into positive ones
o Changing or neutralizing hostile opinions
9.2 Public relations techniques
There are many techniques available to influence public
opinion, some of which are more appropriate in certain circumstances
9.3 Consumer communication
• Customer press releases
• Trade press releases
• Promotional videos
• Consumer exhibitions
• Competitions and prizes
• Product launch events
• Celebrity endorsements
• Web sites
9.4 Business communication
o Corporate identity design
o Company and product videos
o Direct mailings
o Web site
o Trade exhibitions
9.5 Internal / employee communication
In-house newsletters and magazines
9.6 External corporate communication
o Company literature (brochures, videos etc.)
o Community involvement programmed
o Trade, local, national and international media relations
9.7 Financial communication
∗ Financial media relations
∗ Annual report and accounts
∗ Meetings with stock market analysts, fund managers etc
∗ Shareholder meetings (including the annual general meeting
Given the wide range of techniques used in public relations,
how is it possible to measure the effectiveness of public relations?
It is actually quite difficult to measure whether the key messages have
been communicated to the target public. In any event, this could be
quite costly since it would involve a large amount of regular research.
Instead, the main measures of effectiveness concentrate on the
process of public relations, and include:
• Monitoring the amount of media coverage obtained (press
cuttings agencies play a role in keeping businesses informed of
• Measuring attendance at meetings, conferences
• Measuring the number of enquiries or orders received in
response to specific public relations efforts.
With effective public relations, you can increase sales through
favorable, non paid media coverage and enhance your company's
image. Public relations build goodwill toward your business by raising
your company's profile in the public eye.
Publicity is free advertising. You can generate publicity
through press releases, special events, sponsorships, newsletters and
The most common form of publicity is press coverage. It fits
into the promotional mix only when there's newsworthy information
about your company such as:
• You've developed a breakthrough technology or service that no
one else offers.
• You've won a prestigious award or industry prize that's widely
• You've made a major investment in your community, whether in
ramping up hiring (especially if you're aggressively courting
people with disabilities, senior citizens or implementing welfare-
to-work programs), purchasing land to build your new
headquarters or donating goods to charities.
• You've acquired another company.
• You're hiring new executives or announcing the addition of new
When publicity is not appropriate and your specific objective
is to improve your company's image with the public, then consider
sponsoring a charitable event. If your specific goal is to increase sales
through better customer service and relations, produce a newsletter on
a regular basis that provides your customers with useful information.
9.8 Advantages Of Public Relations
Most people perceive publicity as more credible and
believable than a paid advertisement. When you run an ad, you can
make any product claim you want. Consumers know this and often
react with skepticism. But reporters don't have to feature you in
their publications or on their programs and speak positively about
your business. You don't control the message when you don't pay
Your staff may work together to promote your company's
charitable activities or host special events and celebrations for the
community. The resulting publicity can boost their pride and
enthusiasm for their jobs.
Educating Visitors To Your Web Site
Before the Internet, companies would issue press releases
about news designed to interest newspaper reporters. Today, you can
compose press releases and display them on your company's Web
site. While this may not reach as many people as having a reporter
integrate your press release into a news story, you can still reap
competitive value. Web researchers may read your company's press
pages to get updates on your product releases, expansion plans or
9.10 Disadvantages Of Public Relations
While arranging publicity generally costs less than
advertising, it can prove surprisingly expensive. You may need to hire
a public relations firm to develop campaigns, write press releases and
follow up with journalists. Even if you bring these tasks in-house, the
cost of developing publicity items and staging events can stretch your
budget and divert workers from their primary responsibilities.
Lack of Control.
While you can invite the media to preview your new product
or tour your new facility, there's no guarantee that a glowing article will
result. Or information might be improperly reported or key details
omitted. What's worse, publicity can backfire if it downplays the
positives and harps on negatives.
Failure To Hit Target.
You can do everything right in generating the kind of
favorable publicity you seek. But the message may not reach your
desired audience. A newscast can run your segment at a time when
fewer viewers are watching, or a newspaper can mention your
company in a short article buried in a back section that's often
Sales promotion is one of the most loosely used terms in the
marketing vocabulary. We define sales promotion as demand.
Stimulating devices designed to supplement advertising and facilitate
personal selling. In other words, sales promotion signifies all those
activities that supplement, co-ordinate and make the efforts of
personal selling and advertising more effective. It is non recurrent in
nature which means it can’t be used continuously.
10.1 Concept of Sales Promotion
Sales promotion consists of diverse collection of incentive
tools, mostly short-term designed to stimulate quicker and / or greater
purchase of a particular product by consumers or the trade. Where as
advertising offers a reason to buy, sales promotion offers an incentive
Sales promotion includes tools for consumer promotion (for
example samples, coupons, prizes, cash refund, warranties,
demonstrations, contest); trade promotion (for example buying
allowances, free goods, merchandise allowances, co-operative
advertising, advertising and display allowances, dealer sales contests);
and sales-force promotion (for example bonuses, contests, sales
Sales promotion efforts are directed at final consumers and
designed to motivate, persuade and remind them of the goods and
receives that are offered. Sales persons adopt several techniques for
sales promotion. Creative sales promotion can be very effective. It is
the marketing manager’s responsibility to specify promotion objectives
10.2 Definitions of Sales Promotion
According to American Marketing Association “ Those
marketing activities other than personal selling advertising and
publicity that stimulate consumer purchasing and dealer effectiveness
such as display shows and exhibitions, demonstrations and various
non-recurrent selling efforts not in the ordinary routine.”
W.J. Stanton defines sales promotion as all those activities
other than advertising, personal selling, public relations and publicity
that are intended to stimulate customer demand and improve the
marketing performance of sellers.
10.3 Purpose of sales Promotion
Sales promotion tools vary in their specific objectives. A free
sample stimulates consumer trial, while a free management advisory
service cements a long-term relationship with a retailer.
From the marketer’s perspective, sales promotion serves
three essential roles it informs, persuades and reminds prospective
and current customers and other selected audiences about a company
and its products. The relative importance of those roles varies
according to the circumstances faced by a firm.
The most useful product or brand will be a failure if no one
knows it is available! Because distribution channels are often long, a
product may pass through many lands between a producer and
consumers. Therefore, a producer must inform middlemen as well as
the ultimate consumers or business users about the product.
Wholesalers, in turn must inform retailers and retailers must
inform consumers. As the number of potential customers grows and
the geographic dimensions of a market expand, the problems and
costs of informing the market increase.
Another purpose of sales promotion is persuasion. The
intense competition among different industries puts tremendous
pressure on the promotional programmed of sellers. In Pakistan, even
a product designed to satisfy a basic physiological need requires
strong persuasive promotion, because consumers have many
alternatives to choose from. In the case of luxury product, for which
sales depend on the ability to convince consumers that the products
benefits exceed those of other luxuries, persuasion is even more
Consumers also must be reminded about a product’s
availability and its potential to satisfy. Sellers bombard the market
place units hundreds of messages every day in the hope of attracting
new consumers and establishing markets for new products. Given the
intense competition for consumers’ attention, even an established firm
must constantly remind people about its brand to retain a place in their
minds. Much of a firm’s sales promotion may be intended simply to
offset competitors marketing activity by keeping its brand in front of the
10.4 Objectives of Sales Promotion
The basic objectives of sales promotion are:
i) To introduce new products
To induce buyers to purchase a new product, free samples
may be distributed or money and merchandise allowance may be
offered to business to stock and sell the product.
ii) To attract new customers
New customers may be attracted through issue of free
samples, premiums, contests and similar devices.
iii) To induce present customers to buy more
Present customers may be induced to buy more by knowing
more about a product, its ingredients and uses.
iv) To help firm remain competitive
Sales promotions may be undertaken to meet competition
from a firm.
v) To increase sales in off season
Buyers may be encouraged to use the product in off seasons
by showing them the variety of uses of the product.
vi) To increase the inventories of business buyers
Retailers may be induced to keep in stock more units of a
product so that more sales can be effected.
10.5 Rationale of sales promotion
Rationale of sales promotion may be analyzed under the following
Sales promotion such as coupons and trade allowances
produce quicker, more measurable sales results. However critics of
this strategy argue that these immediate benefits come at the expense
of building brand equity. They believe that an over emphasize on sales
promotion may under mine a brand’s future.
If competitors offer buyers price reductions, contest or other
incentives, a firm may feel forced to retaliate with its own sales
Once they are offered purchase incentives, consumers and
channel members get used to them and soon begin expecting them.
Low quality of retail selling
Many retailers use inadequately trained sales clerks or have switched
to self service. For these outlets, sales promotion devices such as
product displays and samples often are the only effective promotional
tools available at the point of purchase.
10.6 Types of Sales Promotion
In using sales promotion, a company must fulfill the objectives
of the organization. Sales promotion objectives are derived from
broader promotion objectives, which are derived from more basic
marketing objectives developed for the product. The specific objectives
set for sales promotion will vary with the type of target market.
For consumers, objectives include encouraging purchase of
larger-size units, building trial among non users and attracting
switches away from competitors’ brands. For retailers objectives
include inducing retailers to carry new items and higher levels of
inventory, encouraging off-season buying, encouraging, stocking of
related items, off setting competitive promotions, building brand loyalty
of retailers and gaining entry into new retail outlets. For sales force,
objectives include encouraging support of a new product or model,
encouraging more prospecting and stimulating off-season sales.
Many sales promotion tools are available to accomplish these
objectives at the consumer level, and at the middle men level. For the
purpose of convenience, the types of sales promotion methods may be
grouped under three categories:
1. Types of sales promotion directed at consumers.
2. Types of sales promotion directed at dealers and distributors.
The following chart shows major sales promotion devices, grouped by
Business users or Households Middlemen and their Sales Forces
1. Coupons 1. Free goods
2. Cash rebates 2. Advertising allowances
3. Premiums (Gifts) 3. Contests for sales people
4. Free samples 4. Product demonstrations
5. Contests 5. Trade shows
6. Point of purchase displays 6. Exhibitions
7. Product demonstrations 7. Advertising specialties
8. Trade shows and exhibitions 8. Point-of-purchase displays
9. Advertising specialties 9. Training sales forces
Table 10.1Major sales promotion devices
10.7 Consumer Promotion Tools
The main consumer promotion tools include samples,
coupons, cash refund offers, price packs, premiums, prizes, patronage
rewards, free trials, product warranties, tie-ins, and point of purchase
displays and demonstrations.
Samples are offers of a free amount or trial of a product to
consumers. The sample might be delivered door to door sent in the
mail, picked up in a store, found attached to another product or
featured in an advertising offer. Sampling is the most effective and
most expensive way to introduce a new product.
Coupons are certificates entitling the bearer to a stated saving
on the purchase of a specific product. Coupons can be mailed,
enclosed in or on other products or inserted in magazine and
newspaper advertisements. Coupons can be effective in stimulating
sales of a mature brand and inducing early trial of a new brand.
Cash Refund Offers or Rebates
These are like coupons except that the price reduction occurs
after the purchase rather than at the retail shop. The consumer sends
a specified “proof of purchase” to the manufacturer, who in turn
‘refunds’ part of the purchase price by mail. Cash refunds have been
used for major products such as automobiles as well as for packaged
These are offers to consumers of savings off the regular price
of a product, flagged on the label or package. They may take the form
or a reduced-price pack which is single packages sold at a reduced
price (such as two for the price of one) or a banded pack, which is two
related products banded together (such as a tooth brush and tooth
paste). Price packs are very effective in stimulating short term sales,
even more than coupons.
Premiums or Gifts
These are merchandise offered at a relatively low cost or free
as an incentive to purchase a particular product. Sometimes the
package itself is a reusable container may serve as a premium. A self-
liquidating premium is an item sold below its normal retail price to
consumers who request it.
These are offers of the chance to win cash, trips or
merchandise as a result of purchasing something. Pepsi-cola offered
the chance to win cash by matching numbers under the bottle cap with
numbers announced on television. Sometimes the prize is a person,
offering the winner either cash or dinner with actor.
These are values in cash or in other forms that are
proportional to one’s patronage of a certain vendor or group of
vendors. Most airlines offer “frequent flyer plans” providing points for
miles traveled that can be turned in for free airline trips. Cooperatives
pay their members dividends according to their annual patronage.
Le Meridian adopted an “honored guest” plan that awards
points for users of their hotels.
Free trails consist of inviting prospective purchasers to try the
product without cost in the hope that they will buy the product. Thus,
often we see, auto dealers encourage free test drives to stimulate
These are an important tool, especially as consumers
become more quality sensitive. When My TVS offered a two year car
warranty, substantially longer than other competitors’ customers took
notice. They inferred that My TVS quality must be good or else the
company would be in deep trouble. Companies must carefully estimate
the sales-generating value against the potential costs of any proposed
These are becoming increasingly popular. In a tie in
promotion two or more brands or companies team up on coupons,
refunds and contests to increase their pulling power. Companies pool
funds with the hope of broader exposure, while several sales forces
push these promotions to retailers, giving them a better shot at extra
display and ad space.
These take place at the point of purchase or sale. Display of
visible mark or product at the entrance of the store is an example.
Unfortunately many retailers do not like to handle the hundreds of
displays, signs and posters they receive from manufacturers.
Hindustan Lever often uses this tool to promote its products in the
Products are being shown in action. Consumers can visit the
store and see the usage of product in live action so that doubts of the
consumers can be clarified in the store itself. When a new product is
introduced in the market, the sales promotional tool is often used. For
example ultra modern grinder mixer being used by the company to
demonstrate its specialty than the other product.
10.8 Trade Promotion Tools
More sales promotion rupees are directed to the trade than to
Manufacturers seek the following objectives in awarding money to the
i. Trade promotion can persuade the retailer or wholesaler to carry the
ii. Trade promotion can persuade the retailer or wholesaler to carry
more than it normally carries.
iii. Trade promotion can induce the retailers to promote the brand
through featuring, display, and price reduction.
iv. Trade promotion can stimulate retailers and their sales clerks to
push the product.
Manufacturers use several promotion tools. Some of which are
Price – Off
Manufacturers may offer a price – off, which is straight
discount off the list price on each case purchased during a stated
period of time. The offer encourages dealers to buy a quantity or carry
a new item that they might not ordinarily buy. The dealers can use the
buying allowance for immediate profit or price reductions.
Manufacturers may offer an allowance in return for the
retailer’s agreeing to feature the manufacturer’s products in some way.
An advertising allowance compensates retailers for advertising the
manufacturer’s product. A display allowance compensates them for
carrying a special display of the product.
Manufacturers may offer free goods, which are extra cases of
merchandise to middlemen who buy a certain quantity of items.
Manufacturers may offer push money which is cash or gifts to
dealers or their sales force to push the manufacturer’s goods.
Specialty Advertising Items
Manufacturers may offer free specialty advertising items to
the retailers that carry the company’s name such as pens, pencil,
calendars, paper weights, and memo pads.
As the number of competitive sales promotions have
increased, friction has been created between the company’s sales
force and its brand managers. The sales force says that the retailers
will not keep products on the shelf unless they receive more trade
promotion money, while the brand managers want to spend their funds
on consumer promotion and advertising.
10.9 Advantages Of Sales Promotions
Trade-oriented promotions give marketing intermediaries a
financial incentive to support your company's products. By offering
discounts to retailers in exchange for prominent shelf space or end-of-
the-aisle displays, for instance, you can strengthen relationships with
key players who can help stimulate sales.
Many consumers love contests and sweepstakes. You can
turn a drab purchase into a more lively event by promising cash prizes
to lucky winners. At its best, a sales promotion adds alluring incentives
for buyer action.
Gauge Price Sensitivity.
Using coupons or rebates can help you measure to what
extent your shopper’s base their buying decisions on price. You can
also collect their addresses and other consumer profile data that can
prove valuable in subsequent marketing campaigns.
10.10 Disadvantages Of Sales Promotions
Risk Of Misfire.
Many fast-growth entrepreneurs rush to try some form of
sales promotion, only to declare such efforts a waste. But problems
often result from poor planning. You must first identify and develop
specific strategies to boost sales before you target customers and
choose sales promotion tools, rather than plunging into sales
promotions without laying the groundwork first.
Risk Of Dependency.
Business owners can grow to rely on sales promotion and
dwell on short-term marketing ploys, at the expense of more
coordinated long-range plans. Realize that sales gains from
promotions often sputter after an initial spike and you can sacrifice
long-term brand equity in the pursuit of short-term goals.
Risk Of Trivializing Your Brand.
Giving out coupons or samples can undermine the image of
exclusivity or prestige that you wish to associate with your product or
company. Price-conscious consumers may also withhold purchases in
the absence of sales promotions.
Direct marketing is concerned with establishing an individual
relationship between the business offering a product or service and the
Direct marketing has been defined by the Institute of Direct Marketing
The planned recording, analysis and tracking of customer
behaviors to develop a relational marketing strategies
The process of direct marketing covers a wide range of promotional
activities you may be familiar with. These include:
∗ Direct-response adverts on television and radio
∗ Mail order catalogues
∗ Magazine inserts
∗ Direct mail (sometimes also referred to as “junk mail”)
∗ Door drops
Direct marketing enables you to communicate with your
customers in a more personalized way than advertising, such as
greeting them with a letter or telephoning them directly. Telemarketing,
direct mail, catalogs and coupon mailers are all examples of direct-
Successful direct marketing depends on whether you can
acquire and maintain a database of your target market. Some
marketers find this alone justifies the cost of advertising in a national
consumer publication instead.
Consider using direct marketing in your promotional mix if:
o Your Primary Means Of Distributing Your Product Is Through
The Mail Or Directly To Customers.
With the growth of the Internet, many companies don't use
retail outlets at all. Others supplement their retail efforts by selling
through the Web, the mail or telephone. Companies that distribute
products through the mail must assemble and maintain databases and
mailing lists. Direct mail is a particularly cost-effective communication
vehicle for them.
o You Are Selling Products With Many Benefits.
Your product may have multiple benefits to the user, but
space limitations in an advertisement may prevent you from
mentioning all but the most prominent ones. A direct-mail letter lets
you communicate all your benefits. It's also a good way to announce
sales promotions or special discounts.
o Your Advertising Efforts Fail To Reach Your Target Market.
As the upscale jewelry store owner, you may feel that the ad
you placed in a high-end magazine isn't increasing your business. You
can try buying a list by ZIP code in an exclusive residential area. This
assures you that you're concentrating on your actual target market.
o You Are Selling An Expensive Product Or Service.
When you're engaging in high-ticket sales, you must expend
more effort to convince potential customers to buy. A direct-mail letter
gives you more opportunity to expand your appeal than an
advertisement with limited space.
o Your Business Depends On Reorders And/or Volume.
Magazine publishers use telemarketing because subscribers
often put off renewing their subscriptions. A sales rep's reminder call
often spurs a renewal sale.
11.1 Advantages Of Direct Marketing
By staging initial tests and measuring the results, you
can roll out a direct-marketing campaign to a wider universe of
potential customers with a strong likelihood that it will succeed.
You can mitigate your risk by strategic sampling.
Effectiveness In Reaching The Right Target.
Through direct marketing, you can contact narrow
market segments and customize your message to appeal to
Ease Of Measurement.
Evaluating direct-marketing campaigns is
straightforward because you can measure outcomes with
quantifiable data, such as number and size of orders, leads
generated or requests for more information.
11.2 Disadvantages Of Direct Marketing
Many consumers are rebelling against the onslaught
of direct marketing. They're more apt to discard direct mail,
resent telemarketing calls, turn away door-to-door salespeople
and laugh off TV infomercials.
Reliance On Obsolete Direct-mail Lists.
In this transient society, increasing numbers of people
relocate more frequently or use two addresses. Despite
advances in technology that update mailing lists, it remains
difficult to buy reliable lists that reach the market segment you
want. Incorrect list selection can wipe out the appeal of a great
product, a great package or a great offer.
Heightened Need For Customer Service.
If you rely on direct-response ads, telemarketing or
direct mail to introduce your company to shoppers, you must
deliver an even higher level of personalized service to win over
prospective customers. This requires additional investment in
staffing and customer service training and delivery that some
11.3 Direct mail
Of the above direct marketing techniques, the one in most
widespread use is direct mail.
Direct mail is widely thought of as the most effective medium to
achieve a customer sales response.
o The advertiser can target a promotional message down to an
individual level, and where possible personalize the message.
There are a large number of mailing databases available that allow
businesses to send direct mailing to potential customers based on
household income, interests, occupation and other variables
o Businesses can first test the responsiveness of direct mailing (by
sending out a test mailing to a small, representative sample) before
committing to the more significant cost of a larger campaign
o Direct mailing campaigns are less visible to competitors – it is
therefore possible to be more creative, for longer
However, direct mail has several weaknesses:
o A piece of direct mail is less “interactive” than a television or radio
advert, although creative packaging can still stimulate customer
o Lead times to produce direct mailing campaigns can be quite long
o There is increasing customer concern with “junk mail” – the receipt
of unsolicited mail which often suggests that the right to individual
privacy has been breached.
11.5 The Direct marketing database
Direct mailing is based on the “mailing list” – a critical part in
the direct marketing process. The mailing list is a database which
collects together details of past, current and potential customers. A
properly managed mailing database enables a business to:
Focus on the best prospective customers
Cross-sell related products
Launch new products to existing customers
The Internet and New Media (e.g. mobile phones or PDA's)
are perfect for direct marketing. Consumers have never had so many
sources of supply, and suppliers have never had access to so many
markets. There is even room for niche marketers - for example
Scottish salmon could ordered online, packed and chilled, and sent to
customers in any part of the world by courier.
Many companies use direct marketing, and a current example
of its use, as part of a business model, is the way in which it is used
by low-cost airlines. There is no intermediary or agent; customers book
tickets directly with the airlines over The Internet. Airlines capture data
that can be used for marketing research or a loyalty scheme.
Information can be processed quickly, and then categorized into
complex relational databases.
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
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. The
five stages are:
2. Making first contact.
3. The sales call.
4. Objection handling.
5. Closing the sale.
12.1 A Five Stage Personal Selling Process.
12.1.1 Stage One - Prospecting.
Prospecting is all about finding prospects, or potential new customers.
Prospects should be 'qualified,' which means that they need to be
assessed to see if there is business potential, otherwise you could be
wasting your time. In order to qualify your prospects, one needs to:
• Plan a sales approach focused upon the needs of the customer.
• Determine which products or services best meet their needs.
• In order to save time, rank the prospects and leave out those
that are least likely to buy.
12.1.2 Stage Two - Making First Contact.
This is the preparation that a salesperson goes through
before they meet with the client, for example via e-mail, telephone or
letter. Preparation will make a call more focused.
• Make sure that you are on time.
• Before meeting with the client, set some objectives for the sales
call. What is the purpose of the call? What outcome is desirable
before you leave?
• Make sure that you've done some homework before meeting
your prospect. This will show that you are committed in the eyes
of your customer.
• To save time, send some information before you visit. This will
wet the prospect's appetite.
• Keep a set of samples at hand, and make sure that they are in
very good condition.
• Within the first minute or two, state the purpose of your call so
that time with the client is maximized, and also to demonstrate to
the client that you are not wasting his or her time.
• Humour is fine, but tries to be sincere and friendly.
12.1.3 Stage Three - The Sales Call (or Sales
It is best to be enthusiastic about your product or service. If
you are not excited about it, don't expect your prospect to be excited.
Focus on the real benefits of the product or service to the specific
needs of your client, rather than listing endless lists of features.
Try to be relaxed during the call, and put your client at ease.
Let the client do at least 80% of the talking. This will give you
invaluable information on your client's needs.
Remember to ask plenty of questions. Use open questions,
e.g. TED's, and closed questions i.e. questions that will only give the
answer 'yes' or the answer 'no.' This way you can dictate the direction
of the conversation.
Never be too afraid to ask for the business straight off.
12.1.4 Stage Four - Objection Handling.
Objection handling is the way in which salespeople tackle
obstacles put in their way by clients. Some objections may prove too
difficult to handle, and sometimes the client may just take a dislike to
you. Here are some approaches for overcoming objections:
• Firstly, try to anticipate them before they arise.
• 'Yes but' technique allows you to accept the objection and then
to divert it. For example, a client may say that they do not like a
particular colour, to which the salesperson counters 'Yes but X is
also available in many other colours.
• Ask 'why' the client feels the way that they do.
• 'Restate' the objection, and put it back into the client's lap. For
example, the client may say, 'I don't like the taste of X,' to which
the salesperson responds, 'You don't like the taste of X,'
generating the response 'since I do not like garlic' from the client.
The salesperson could suggest that X is no longer made with
garlic to meet the client's needs.
• The sales person could also tactfully and respectfully contradict
12.1.5 Stage Five - Closing the Sale.
This is a very important stage. Often salespeople will leave
without ever successfully closing a deal. Therefore it is vital to learn
the skills of closing.
• Just ask for the business! - 'Please may I take an order?' This
really works well.
• Look for buying signals (i.e. body language or comments made
by the client that they want to place an order). For example,
asking about availability, asking for details such as discounts, or
asking for you to go over something again to clarify.
• Just stop talking, and let the client say 'yes.' Again, this really
• The 'summary close' allows the salesperson to summaries
everything that the client needs, based upon the discussions
during the call. For example, 'You need product X in blue, by
Friday, packaged accordingly, and delivered to your wife's office.'
Then ask for the order.
• The 'alternative close' does not give the client the opportunity to
say no, but forces them towards a yes. For example 'Do you
want product X in blue or red?' Cheeky, but effective.
An increasingly common form of promotional activity is
sponsorship. What is sponsorship?
Sponsorship can be defined as follows:
Supporting an event, activity or organization by providing
money or other resources that is of value to the sponsored event. This
is usually in return for advertising space at the event or as part of the
publicity for the event.
There are many kinds of sponsorship:
13.1 Television and radio programmed sponsorship:
(E.g. Cadbury’s sponsor broadcasts of Coronation Street). The
increasing fragmentation of television in the UK through new digital
channels is providing many more opportunities for sponsorship of this
13.2 Sports sponsorship:
Major sporting events have the advantage of being attended and
(more importantly) watched by large numbers of people. They also
attract significant media coverage.
13.3 Arts sponsorship:
Arts events or organizations are not as well attended as sports events
but are often regarded as more “worthy” and more in keeping with the
image of certain businesses and brands.
13.4 Educational sponsorship:
This can take several forms from the sponsoring of individual students
at college through to the provision of books and computers nationwide
using the redemption of product or store-related vouchers.
13.5 What is involved in developing a sponsorship
Smith suggests a six-stage process to decide what and how to
1. Analyze the current situation: look at which other businesses
are sponsoring in the target area. Are competitors already doing
this and is it providing them with an advantage?
2. Define the sponsorship objectives: e.g. raise awareness of
the brand; build an image; promote a new product
3. Agree the strategy: how does the sponsorship fit in with any
other promotional activity?
4. Develop the tactics: agree the details of what to sponsor, price,
5. Define the target audience
6. Consider what resources are needed to make the sponsorship a
Sony Corporation is a multinational conglomerate
corporation headquartered in Tokyo, Japan, and one of the world's
largest media conglomerate with revenue of US$88.7 billion (as of
2008) based in Minato, Tokyo. Sony is one of the leading
manufacturers of electronics, video, communications, video game
consoles and information technology products for the consumer and
professional markets. Its name is derived from Sonus, the Greek
goddess of sound.
Sony Corporation is the electronics business unit and the
parent company of the Sony Group, which is engaged in business
through its five operating segments—electronics, games,
entertainment (motion pictures and music), financial services and
other. These make Sony one of the most comprehensive
entertainment companies in the world. Sony's principal business
operations include Sony Corporation (Sony Electronics in the U.S.),
Entertainment, Sony Computer Entertainment, Sony BMG
Music Entertainment, Sony Ericsson and Sony Financial Holdings. As
a semiconductor maker, Sony is among the Worldwide Top 20
Semiconductor Sales Leaders. The company's slogan is
Sony like no other.
The first market mix element is Product. A product is anything
that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a need or want.
Product decision normally base on brand name, Functionality,
Styling, Quality, Safety, Packaging, Repairs and Support, Warranty,
accessories and Services. These product attributes can be
manipulated depending on what the target market wants. Also,
customers always look for new and improved things, which are why
marketers should improve existing products, develop new ones, and
discontinue old ones that are no longer needed or wanted by the
Sony has a variety of products ranging from electronic
devices, games and entertainment. So, briefly Sony products can be
categorized in the following major product categories:
i. Television and Projectors.
ii. Home video.
iii. Home Audio.
iv. Home Theatre system.
v. Digital Photography.
vi. Hand cam video camera.
vii. Computer Peripheral.
viii. Portable Audio.
x. In-Car entertainment.
xi. Mobile phones.
xii. Storage and Recording media.
xiii. Batteries and Charger.
xiv. Other Accessories.
Promotion is a key element of marketing program and is
concerned with effectively and efficiently communicating the decisions
of marketing strategy, to favorably influence target customers’
perceptions to facilitate exchange between the marketer and the
customer that may satisfy the objective of both customer and the
A company’s promotional efforts are the only controllable
means to create awareness among publics about itself, the products
and services it offers, their features and influence their attitudes
Sony Marketing Communication Mix:
Sony Pakistan will spend Rs 200 crore in this financial year
on advertising and promotion (Promotional Budget) of the entire range
of consumer electronics, out of which Rs 60 crore will be spent only on
digital imaging products.
The major elements of promotion mix include advertising,
personal selling, sales promotion, direct marketing, and publicity. Sony
Corporation has used all of these marketing communication mix
Advertising is any paid form of non-personal mass
communication through various media to present and promote
product, services and ideas etc. by an identified sponsor.
So far, SONY has advertised its products through many different ways
and media. Through TV we have seen different advertisements of its
products such as Bravia televisions or Sony wega TV. Sony also
advertise its products by targeting those favorable television programs,
like sports, series and also it has its own channel called Sony TV
Also, Sony has advertised its games like Play station 3, Play
station 2 and PSP using sports like football in England premiere
Through newspapers like DAWN, The NEWS, etc. Sony has
advertised a wide range of products it offers to its customers. And also
through Posters a message has been sent to a lot of people to be
aware of the products which Sony offers.
Sony also uses direct – response advertising. This is type
of advertising that encourages the consumer to respond either by
providing feedback to the advertiser or placing the order with the
advertiser either by telephone, mail or the internet. Such advertising is
done through direct mail or catalogues.
Sony incorporates co-operative advertising in its advertising
Sony Corporation provides the dealers (e.g. Sony World) with the
materials and guidelines to develop ads for print, television or radio
commercials. This ensures that message is in line with, what the
manufacture wants to communicate. The company and the dealers
usually share the media costs and hence, the name ‘co-operative
Sales promotion is a marketing discipline that utilizes a variety
of incentives techniques to structure sales – related programs targeted
to customers, trade, and/or sales levels that generate a specific,
measurable action or response for a product or service.
Sales promotions for example includes free samples,
discount, rebates, coupons, contents and sweepstakes, premiums,
scratch cards, exchange offers, early bird prizes, etc.
Sony has promoted its products through different sales
promotional strategies. For example after the release of the Sony
BRAVIA television sets,
Sony promoted them by earl bird prizes by saying that all BRAVIA full
TVs purchased during July 2008 and registered within two
weeks of purchase qualify for a Bonus Play station 3 as long as the
customer claims is one of the first 35,000 received and validated by
Also Sony has promoted its Sony Ericsson P1i phones by
including a scratch card which gives the customer the offer to
download 10 free software applications for that mobile phone.
Sony Ericsson has also promoted its Sony Ericsson K550i Mid-Range
Cyber-shot Phone that if you buy it you get a free Bluetooth headset
with one year manufacturer’s warranty.
Public Relations and Publicity
Public relations is a broad set of communication activities
employed to create and maintain favorable relationship with
employees, shareholders, suppliers, media, educators, potential
investors, financial institutions, government agencies and officials and
society in general.
Through its website, Sony Corporation has its provided
contacts for those customers who will be in need of any information
from the company. In this way