Promotion 2

4 Ps of Marketing Mix Product Place

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Price Promotion

Utilities created by marketers for customers: Product or service utility Possession utility / price utility Time utility Place utility

What is promotion……? 

Modern marketing calls for more than just developing a good product, pricing it attractively, and making it available to target customers. Companies also must communicate with their customers, and what they communicate should not be left to chance. For most companies, the question is not whether to communicate, but how much to spend and in what ways.

What is promotion……? 

“ Promotion is the co-ordination of seller’s efforts to set up channels of information and persuasion to facilitate the sales of goods/services or acceptance of an idea. ”

What is promotion……? To Inform

To Persue PROMOTION

To Modify Behavior

To Remind

What is promotion……?  

“Promotion is an act of communication” “It includes all those activities which are aimed at creating and stimulating demand” In our daily life we all are exposed to various tools of promotion aiming at communicating one thing on other to us. For our convenience, all those promotional tools can be categorized in five major components, constituting the promotion mix

PROMOTIONAL TOOLS (THE PROMOTION MIX)

Advertising

Publicity PROMOTION

Sales Promotion

Direct Personal Marketing Selling

THE PROMOTION MIX 

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The Promotion Mix (5 tools of promotion) is the company’s primary communication activity, the entire marketing mix (4 Ps) - promotion and product, price and place - must be coordinated for greatest communication impact. Actually, communication goes beyond the 5 specific tools of promotion. The product’s design, its price, the shape and colour of package, and the stores that sell it - all communicate something to buyer.

ELEMENTS OF PROMOTION MIX Five Major promotion

methods used (Promotion Mix)

for

1.Advertising : Any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. 2.Publicity : Non-personal stimulation of demand for a product or service or business unit by planting commercially significant news about it in a published medium or obtaining favorable presentation of it upon radio, T.V., or stage that is not paid for by the sponsor.

ELEMENTS OF PROMOTION MIX 3.Personal Selling : Oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales. 4.Sales Promotion : All those marketing activities – other than advertising, publicity and personal selling that stimulate consumer purchasing and dealer effectiveness such as displays, shows & exhibition, demonstrations and various non – recurrent selling efforts. These are usually short term activities

ELEMENTS OF PROMOTION MIX 5.Direct Marketing : Has several forms - direct mail, telemarketing, electronic marketing and so on. It has a few distinctive characteristics non – public / customized / Up- to- Date (Messages can be prepared very quickly for an individual) .

NATURE OF EACH PROMOTIONAL TOOL 

Each Promotional Tool has unique characteristics and costs.

1. ADVERTISING 

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Public Presentation (Public mode of communication) Pervasiveness (Permits seller to repeat the message many times. It also allows buyer to receive and compare the massage with competitors.)

NATURE OF EACH PROMOTIONAL TOOL (1. ADVERTISING…….contd.) • Amplified Expressiveness (Provides opportunities for dramatizing the company and its products through the artful use of print, sound, colour etc.) • Impersonality (It can not be as compelling as a co’s sales representative.)

NATURE OF EACH PROMOTIONAL TOOL 2. PUBLICITY 

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High credibility (news features and stories seem more authentic and credible to readers/viewers than ads do.) Off guard (can reach many prospects who might avoid sales people and ads. The message gets to the buyers as news.) Dramatization (like advertising it also has a potential for dramatizing a co. or its products.)

NATURE OF EACH PROMOTIONAL TOOL 3. PERSONAL SELLING 

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Personal confrontation (Both way communication) Cultivation (all kinds of relationships short time or long time) Response (makes the buyer feel under some obligation)

NATURE OF EACH PROMOTIONAL TOOL 4. SALES PROMOTION 

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Communication (they gain attention and usually provide information that may lead the consumer to the product) Incentives (gives value to the consumer) Invitation (to engage in the transaction now)

NATURE OF EACH PROMOTIONAL TOOL 

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5. DIRECT MARKETING Non–public (message is addressed to specific person/group) Customized (to appeal to the addressed individual ) Up–to–date (messages can be prepared very quickly for delivery to an individual)

ADVANTAGES AND DISADVANTAGES OF PROMOTIONAL COMPONENTS Promotional compo.

Scope

Cost

Advantages

Dis -Advantages

Allows expressiveness and control over message Has high degree of credibility

Hard to measure results

Costs more than all other forms per contact

Advertising

Mass

Relativity Inexpensive per contact

Publicity

Mass

Inexpensive

Personal selling

Personal

Expensive per contact

Permits flexible presentation & gains immediate response

Sales Promotion

Mass

Can be costly

Gains attention Easy for others to and has imitate immediate effect

Not as easily controlled as other forms

(***Packaging and public relations also play Imp. role in promotion mix.)

OBJECTIVES OF PROMOTION 

To Increase Sales

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To Increase Market Share

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To Build Brand Loyalty

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To Build Product Differentiation in Consumers’ mind

DETERMINING THE PROMOTION MIX (FACTORS IN SETTING THE PROMOTION MIX)

I. Type of Product :  

For consumer products – Heavy Advertising For Industrial products – More Personal Selling Personal Selling Personal Selling Sales Sales Promotion Promotion Publicity Publicity Advertising Advertising Consumer Products

Industrial Products

DETERMINING THE PROMOTION MIX (FACTORS IN SETTING THE PROMOTION MIX)

II. Nature of Market : 

Locational Characteristics of consumers

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Demographics of the customers

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Intensity of the competition

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Requirements of channel members

DETERMINING THE PROMOTION MIX

(FACTORS IN SETTING THE PROMOTION III. Buyer Readiness stage : MIX)       

Un-aware Informed Aware Interested Not-interested Having full knowledge Comprehension Conviction ordering Reordering etc

DETERMINING THE PROMOTION MIX (FACTORS IN SETTING THE PROMOTION MIX)

IV. Product Life Cycle Stage:

Sales Intro. Growth Maturity Decline

Time

DETERMINING THE PROMOTION MIX (FACTORS IN SETTING THE PROMOTION MIX)

V. Push v/s Pull strategy:

Push

Mfr

Marketing Activities

Demand

Intermediaries

End User

Demand Marketing Activities

Pull

Mfr

Demand

Intermediaries

Demand

End User

DETERMINING THE PROMOTION MIX (FACTORS IN SETTING THE PROMOTION MIX)

VI. Co. Market Rank : (Top ranking brands derive more benefit from advertising than sales promotion.)

VII. Available Budget VIII. Company Policy and Objectives IX. Competitive Promotional Strategy(Competitors’ role and reaction) X. Market Trend and Consumer Attitude

“PROMOTION IS AN ACT OF COMMUNICATION” 

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The word ‘communication’ is based on the Latin word meaning “COMMON”. Thus the term communication has come to mean sharing something of common use. Since, marketing communications aim at influencing the consumer behavior in favour of the firm’s offerings, these are persuasive in nature. These persuasive communications are more commonly called “PROMOTION” and constitute one of the 4Ps of the marketing mix.

“PROMOTION IS AN ACT OF COMMUNICATION” 

Modern marketing calls for more than developing a good product, pricing it correctly and making it easily available to the customer. The company that wants more than ‘walk in’ sales must develop an effective program of communication & promotion.

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Persuasive communication is said to take place when a communicator very consciously develops his messages to have a calculated impact on the attitude and/ or behavior of a target audience.

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A study of ‘Marketing communication’ is a study of promotion function of marketing.

THE COMMUNICATION MODEL WHO…... SAYS WHAT….. HOW..… TO WHOM...… (In what channel)

Communicator

Message

Channels

With what effect

Audience

HOW COMMUNICATION WORKS .........? THE PROCESS OF COMMUNICATION

Sender (Source)

Encoding (of message)

Message and Media

Noise

Decoding Of Message

Receiver

Response

Feedback

ELEMENTS OF THE COMMUNICATION (1) Source or sender orPROCESS communicator      

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(2) Encoding (Putting the thought or idea in symbolic form) (3) Message ( The set of symbols for transmission) (4) Media (The path through which the message moves) from Sender to Receiver. (5) Decoding (Assigning meanings to the symbols transmitted by the sender) (6) Receiver or audience or destination (7) Response ( The set of reactions that the receiver has after having been exposed to the message) (8) Feedback

COMMUNICATION PROCESS (a view)

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In view of the new electronic technologies, companies must ask not only “How can we reach our customers?” but also “How can we find ways to let our customers reach us?”

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For a message to be effective, the sender’s encoding process must mesh with the receiver’s decoding process. Thus the best messages are essentially signs that are familiar to the receiver.

COMMUNICATION PROCESS (a view)

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The sender’s task is to get his or her message through to the receiver. The target audience may not receive the intended message for any of three reasonsSelective attention Selective distortion ( people may twist the

message to hear what they want to hear.Receivers have set attitudes, they will hear what fits into their belief system.)

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Selective recall

COMMUNICATION PROCESS (a view)

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Fiske and Hartley have outlined some general factors that influence the effectiveness of a communication : 1. The greater the monopoly of the communication source over the recipient, the greater the recipient’s change effect in favour of the source. 2. Communication effects are greatest where the message is in line with the receiver’s existing opinions, beliefs, and disposition. (contd.)

COMMUNICATION PROCESS (a view) 

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3. Communication can produce the most effective shifts on unfamiliar, lightly felt, peripheral issues, who do not lie at the center of the recipient’s value system. 4. Communication is more likely to be effective where the source is believed to have expertise, high status, objectivity, or likability, but particularly where the source has power and can be identified with. 5. The social context, group, or reference group will mediate the communication and influence whether or not the communication is accepted.

Models That Help to Conceptualize the Buying Process  Two very specific models that aid in understanding the buying process, as well as in framing communication are:(1) A I D A Model (2) Hierarchy–of–effects model

(1) A I D A

MODEL

Attention (awareness) Interest Desire Action According to ‘AIDA’ model, A marketer should begin by winning attention or gaining awareness, creating interest, inspiring desire and precipitating the action for purchase, in the prospects in order to enable its product to be adopted by the target public.

(2) Hierarchy–of–effects model Awareness Knowledge Liking Preference Conviction Purchase

(2) Hierarchy–of–effects model 

The buyers’ purchase decision is preceded by such as conviction about the product benefits, preference for the brand, liking for the brand, knowledge relating to the benefits and features of the product after an awareness of the product has been gained.

PERSONAL SELLING 

Personal Selling consists of Individual Personal Communication.

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It is oral presentation in a conversation for the purpose of making sales.

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The successful salesperson cares first for the customer, second for the products.

ADVANTAGES OF PERSONAL SELLING    

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Flexible in operation Minimum of wasted efforts Many times results in actual sales Sales persons can perform many other services Recognizing and solving customers’ problems

LIMITATIONS OF PERSONAL SELLING 

High cost

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High caliber of SRs is required

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Large number of SRs is required to to cover the total market

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Administration is complex

THE PERSONAL SELLING PROCESS ( consists of 5 Ps )

PREPARATION

PROSPECTING PRE-APPROACH

POST-SALES ACTIVITIES

PRESENTATION

SPECIFIC TASKS TO BE PERFORMED BY SALESPEOPLE 

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Prospecting : (searching for prospects,or leads) Targeting : (deciding how to allocate their time among prospects and customers) Communicating : (communicating information about the company’s products and services) (contd.)

SPECIFIC TASKS TO BE PERFORMED BY SALESPEOPLE 

Selling : (approaching, presenting, answering objections, and closing sales)

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Servicing : (providing various services to the customers consulting on problems, rendering technical assistance, arranging financing,, expediting delivery)

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Information Gathering : (conducting market research and doing intelligence work)

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Allocating : (deciding which customers will get scarce products during product shortages)

RANGE OF POSITIONS COVERED BY SALESFORCE Mc Murry distinguished six sales positions, ranging from the least to the most creative types of selling. 

Deliverer : (a salesperson whose major task is the delivery of a product - milk, bread, cig., agarbatti etc.

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Order taker : (a salesperson who acts predominantly as an inside order taker i.e. the salesperson standing behind the counter, or outside order taker i.e. booking orders with merchants in the market)

RANGE OF POSITIONS COVERED BY SALESFORCE 

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Missionary : (a salesperson who is not expected or permitted to take an order but whose major task is to build goodwill or to educate the actual or potential user e.g.. Pharmaceutical selling) Technician : (a salesperson with a high level of technical knowledge e.g.. The engineering salesperson who is primarily a consultant to the client companies)

RANGE OF POSITIONS COVERED BY SALESFORCE 

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Demand creator : (a salesperson who relies on creative methods for selling tangible products e.g.. Vacuum cleaners, refrigerators, etc. or intangibles e.g.. Insurance, advertising services, and education etc.) Solution vendor : (a sales person whose expertise is in the solving of a consumer’s problem, often with a system of the company’s products and services e.g.. Computer and communications systems)

MEETING OBJECTIONS 

Salesmanship is a difficult job. It is persuasion and inducement of an unwilling buyer to make him buy. Since majority of buyers object, salesmen must cope with objections.

REASONS FOR OBJECTIONS         

Natural Process Not appreciate the benefits of product Have not understood presentation properly (Poor sales talk) Sometimes to test salesman In comparison to competitive products Un-pleasing experience with product unqualified prospect ( not fulfilling requirements ) Un-pleasing experience with tricks of salesman To secure more information

SOME COMMON OBJECTIONS 

Price Objection : ( salesman can offer - some substitute product, discount offer, justify the price - show profits )

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Quality Objection

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Payment Objection

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Service Objection

HANDLING THE OBJECTIONS

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Listening attentively Cushioning the jolt (make the shock of objection lighter by giving examples of third party) Anticipating objection Preventing objection

METHODS OF HANDLING OBJECTIONS (1) Direct Denial Method (2) Indirect Denial or Yes….But…..Method (3) Reverse Position Method / Why Method (4) Compensation Method (5) Interrogation Method (6) Pass up Method

THE SUCCESS OF SALESMANSHIP DEPENDS ON THREE MAJOR FACTORS

Personality of the salesman  Knowledge of the product  Knowledge and psychology of the customers 

QUALITIES OF A GOOD SALESMAN Desired traits may be grouped under four categories : (1) Physical Qualities : Health, Posture, Voice, Appearance (2) Mental Qualities : Alertness, Imagination, Self confidence, Initiative, Memory, Observation, Cheerfulness (3) Social Qualities : Ability and eagerness to meet people, Effective speech, Courtesy, Tact, Co-operation, Good manner, Patience and tolerance (4) Character Qualities : Honesty, Courage, Loyalty, Determination

STEPS IN SALES FORCE MANAGEMENT (1) Establishing sales force objectives (2) Determining sales force strategy, structure, size, shape and compensation (3) Recruiting and selecting SRs (4) Training SRs (5) Supervising SRs (6) Evaluating SRs

1. ESTABLISHING SALES FORCE OBJECTIVES      

Prospecting Communicating Selling Servicing Information gathering Allocating

2. DETERMINING SALES FORCE STRATEGY (A.) Sales contact approaches to customers “5 Types” - S.R. to buyer - S.R. to buyer group - Sales team to buyer group - Conference selling - Seminar selling A co. can have its own Direct sales Force or can hire the Contractual Sales Force

2. DETERMINING SALES FORCE STRATEGY (B.) Sales Force Structure The effectiveness of sales force depends on how it is organized. A sales force can be organized around Company Territories (Territorial Structured Sales Force), Products (Product Structured S.F.), Customers (Customer Structured S.F.), Some Mixture of the Three (Complex S.F. Structure e.g. territory-product, territory-customer, etc)

2. DETERMINING SALES FORCE STRATEGY (C.) Sales Force Size Companies use the workload approach to establish the size. Steps : i. Customers are grouped into size classes according to their sales volume ii. Number of sales calls on an A/C per year iii.Average number of sales calls an S.R. can make per year iv. Divide ii/iii i.e. No. of sales calls on an A/C per year / Average no. of sales calls an S.R. can make

2. DETERMINING SALES FORCE STRATEGY (D.) Sales Force Functioning (Territory Shape / Routing)

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Circular Territory (Head Quarter in the Centre) Clover Leaf Pattern (S.R. travels in series of loops around his territory) Wedge Shaped Territory (When total area is too large for one S.R. to handle)

2. DETERMINING SALES FORCE STRATEGY (E.) Sales Force Compensation (Components :) i. Fixed Salary / Amount ii. Variable Amount

(income regularity) (bonus,commission,profit

sharing)

iii. Expense Allowances

(T.A. , D.A.)

iv. Fringe Benefits (medical,leave,accident benefits,LIC policies, pension,LTC, etc.)

3. RECRUITING AND SELECTING SALES REPRESENTATIVES 

Mc Murry gave 5 traits for a super salesman I. High level of energy ii. Abounding self confidence iii. A chronic hunger for money iv. A well established habit of industry v. A state of mind that regards each objection, resistance or obstacle as a challenge

3. RECRUITING AND SELECTING SALES REPRESENTATIVES 

Mayer and Greenberg gave shortest list of traits for a super salesman (must have 2 major qualities) i. Empathy (the ability to feel as the customer does) ii. Ego drive (strong personal need to meet the challenges)

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Recruitment : seeking applicants by various means

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Selection : selecting suitable candidates by conducting tests and interviews

4. TRAINING S.R. 5. SUPERVISING S.R. 6. EVALUATING S.R’S PERFORMANCE

4. TRAINING S.R. (two approaches) A. Sales Oriented B. Customer Oriented 5. SUPERVISING S.R. (supervision helps in directing and motivating S.Rs) 6. EVALUATING PERFORMANCE (quantitative and qualitative methods)

SALES PROMOTION Sales Promotion consists of a wide variety of tools designed to stimulate earlier and stronger market response.  Sales Promotions are short term incentives to encourage purchase or sale of a product or service. 

SALES PROMOTION 

Sales Promotion deals with promotion of sales by the offer of incentives which are essentially nonrecurring in nature. It is also known by the names of extra purchase value (EPV) and below the line selling.

SALES Sales Promotion encompasses all the PROMOTION tools in the marketing mix whose major 

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role is persuasive communication. Sales Promotion is an exercise in information persuasion and influence. SALES PROMOTION Increase Sales Communication Persuasion

Influence

Information Purchase & Sale of goods

TYPES OF SALES PROMOTION 

Sales Promotion schemes can be used to influence the three target groups : Consumers, Dealers and Sales Force.

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Keeping in mind the objectives, company can use the suitable sales promotion schemes. Consumers- Sales Promotion Schemes Dealers- Sales Promotion Schemes Sales Force-Sales Promotion Schemes

SALES PROMOTION OBJECTIVES (ROLE OF SALES PROMOTION) 1. To increase sales 2. To make the sales of slow moving items faster 3.To stabilize the fluctuating sales pattern 4. To launch a new product quickly (encouraging customers for quick trial) 5. To educate customers regarding product change / improvements 6. To identify and attract new customers

SALES PROMOTION OBJECTIVES (ROLE OF SALES PROMOTION) 7. To motivate dealers to stock and sell more 8. To attract dealers for better display and sales contests 9. To get more and better shelf space 10. To bring more customers to dealer stores 11. To improve manufacturer dealer relationships 12. To motivate sales force for achieving set targets 13. To reward sales force for rendering better customer services 14. To counter competitors’ sales promotion and marketing efforts

SALES PROMOTION LIMITATIONS

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1. May increase the price of the product 2. Consumers may feel that goods are sub-standard 3. Consumers may feel cost of Sales Promotion scheme has been included in the prices 4. Gives short term results 5. Often misleading and confusing 6. Give rise to un-healthy competition

DIFFERENT TYPES OF SALES PROMOTION SCHEMES 1. Price off offers 2. Quantity off offers 3. Premium / free gifts 4. Coupons 5. Refund offers 6. Trading Stamps (A kind of discount coupons) 7. Consumer contests and lucky draws 8. Dealer stock display contests

DIFFERENT TYPES OF SALES PROMOTION SCHEMES 9. Dealer sales contests 10. Discounts 11. Trade allowances / trade shows 12. Dealer gifts 13. Additional compensation to sales force 14. Merchandise deals 15. Point-of-purchase promotions 16. Sales rallies / Exhibitions 

……..(Immediate impact and delayed impact schemes)

WHY RAPID GROWTH OF SALES PROMOTION IN INDIA 1. Market has become more competitive 2. Transformation from sellers’ market to buyers’ market 3. S.P. makes an immediate effect on sales 4. Measurement of the effectiveness of S.P. schemes are easier than other methods of promotion

WHY RAPID GROWTH OF SALES PROMOTION IN INDIA 5. Channels of distribution are emerging as powerful entities and demand greater use of incentives 6. Products are similar and non-price factors help in increasing sales (greater value to customers) 7. Impulse buying has increased. S.P. helps in increasing the number of marginal customers.

INGREDIENTS OF SUCCESS OF SALES PROMOTION SCHEMES        

The right offer The right merchandising back-up The right timing The right outlet the right advertising (right promotion of S.P. scheme) Projecting the right image Greater value for customers Competitive differential

SOME FINAL DOs AND DON’Ts 

Don’t do a promotion at all if the objective can be achieved more cheaply by other means

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Don’t run promotions that you are not sure are going to be successful

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Don’t promote the whole brand if the objective relates e.g. only to one pack size

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Don’t promote the brand too often. Constant, small, ineffective promotions communicate to the trade and consumer that the brand is only worth buying when it’s on promotion

SOME FINAL DOs AND DON’Ts

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Keep trade promotions to a minimum. Otherwise they will become part of what the trade regards as the brand’s normal terms of business Keep it simple. Simple to understand what’s being offered, simple to sell in, simple to display, simple for the consumer to practice Don’t let your competition do your planning. Be proactive, not reactive