INTRODUCTION “I will find me a business that doesn’t advertise,” Said the wise spider, “and I will weave my web across its doorway, for there I will be undisturbed” – Attributed to Mark Twain When we look at the promotion as the subject, it is impossible to separate it from the context it lies within. First and immediate surrounding is the marketing mix. Before starting to develop a successful advertising plan or strategy, each and every business must have a sound marketing plan. But think now about how you market your product or service.
Do you see your product as the consumer sees it? What does it do for the buyer? What problem does it solve? What is the primary benefit your customer gets from it? Other benefits? Can the product be changed to reduce its cost or to improve its attractiveness or to make it more competitive? Next, the company has to consider the price of its product or service. Is it competitive? Is the consumer willing to pay this price? Is there a possibility to increase the price, to gain a wider profit margin? Or can the company cut it to increase sales volume? Now consider distribution. Do you make sure your product is where the consumer can get it when he or she wants it? If you are selling a service, can you provide it on your customer’s timetable? Can you cut costs by changing your method of distribution or increase sales volume by making your product or service more easily available? If you are a retailer, does your store stock what a typical customer expects to find in a store like yours? Finally, think about promotion. Are you telling your customers about the benefits of your product or service in a way that is persuasive and competitive? And is the message going to the right potential customers? All these elements-your product, price, distribution, and promotion-work together in what is known as the marketing mix. Before you can successfully work out an advertising plan, you must look carefully at all aspects of your marketing mix and figure out what marketing problems you have. Then you must fix them-unless you see a way for advertising to fix them.
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When your marketing problems are under control, and only then, it is time to develop an advertising plan or strategy. To begin discussion on promotion and advertising, it is of a matter of extreme importance to separate these concepts, as often they are closely related in our minds and even mistaken for a single perception. Promotion represents the fourth element in the marketing mix. The promotional element comprises a mix of tools available for the marketer called the promotional mix, which consists of advertising, personal selling, sales promotion and publicity. All of these elements can be used to (1) inform prospective buyers about the benefits of the product, (2) persuade them to try it, and (3) remind them later about the benefits they enjoyed by using the product. .
THE PROMOTIONAL MIX Promotional element Mass or interpersonal Payment Strengths Weaknesses Advertising Mass Fees paid for Space or time Th Efficient means for reaching large numbers of people Th High absolute cost sTh Difficult to receive good feedback personal selling Interpersonal Fees paid to salespeople as either salaries or commissions Th Immediate feedback Th Very persuasive Th Can select audience Th Can give complex information Th Extremely expensive per exposure Publicity Mass No direct payment to media Th Often most credible source in consumers mind Th Difficult to get media cooperation Sales promotion Mass Wide range of fees paid depending on promotion selected Th Effective at changing behavior in short ruth Very flexible Th Easily abused Th Can lead to promotion warmth Easily duplicated To communicate consumers, a company can use one or more of four promotional alternatives: advertising, personal selling, sales promotion and publicity. A firm’s promotional mix is the combination of one or more of the elements it chooses to use. Three of these elements – advertising, sales promotion and publicity – are often said to use mass selling because they are used with groups of prospective buyers. In contrast, personal selling uses interpersonal selling, because the seller usually talks person-to-person with an individual who is a prospective buyer. The table above summarizes the distinctions between these four elements. ADVERTISING There are various definitions and perceptions of advertising, but most of them stress the idea of a special form of the communication between seller and buyer.
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Advertising is a mode of communication from someone who is providing a product or service to someone who is, or is likely to be, a customer. The communication in almost all cases is a sales message. . The Institute of Practitioners in Advertising (IPA), the body that 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 sponsor.” An advertiser is any individual or firm that buys time or space in any medium of communication in order to get the message to those who read, watch or listen to that medium. It is understood, that when we use word advertising, we mean that a fee is paid for the privilege of appearing in the medium. If no money changes hands, it’s not advertising.
. On behalf of advertiser, there are three main players in the advertising business and a host of supportive players. One of the main players is the advertiser: the company or the person who pays for the advertising message and for the audiences exposed to those messages. Another main player is media. The media include newspapers, TV stations, magazines, radio stations, outdoor signs, etc. , that develop an audience to sell to the advertisers so they can deliver their advertising messages.
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The third main player is advertising agencies that help them select target audiences to see and to hear those messages. . An advertising agency is a service business that takes responsibility for creating advertising messages and placing them with the media. . The responsibility may be for one or for more tasks that will be discussed later on. The growth of this business in Lithuania has experienced explosive growth in past few years.
The revenue from advertising in April – July of year 2003 amounted to 127098000 Lt. The purpose of the advertising business is to deliver advertising messages to existing and prospective customers of the advertisers and to do the job at a per customer cost that is less than it would cost to send actual sales people to deliver messages. You can envision the advertising business like this: The paid aspect of this form is important, because the space for the advertising message normally must be bought. An occasional exception is the public service announcement, where the advertising time or space is donated. A full-page, four-color ad in Time magazine, for example costs $120, 130.
The nonpersonal component of advertising is also important. Advertising involves mass media, which are nonpersonal and do not have an immediate feedback loop as does personal selling. So before the message is sent, marketing research plays a valuable role. For example, it determines that the message is understood by the target market and that the target market will actually se the medium chosen. There are several advantages to a firm using advertising in its promotional mix. It can be attention-getting and also communicate specific product benefits to prospective buyers.
By paying for the advertising space, a company can control what it wants to say, and to some extent, to whom the message is sent. If a stereo company wants college students to receive its message on CD players, advertising space is purchased in a college campus newspaper. Advertising also allows the company to decide when to send its message (which includes how often).
The nonpersonal aspect of advertising also has its advantages. Once the message is created, the same message is sent to all receivers in a market segment. If the message is properly pretested, the company can trust that the same message will be decoded by all receivers in the market segment.
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Advertising has some disadvantages. The costs to produce and place a message arc significant, and the lack of direct feedback makes it difficult to know how well the message was received. . THE COMMUNICATION PROCESS. HOW DOES ADVERTISING WORK? Communication is the sharing of meaning and requires five central elements: a source, a message, a receiver, and the processes of encoding and decoding.
The source may be the company or the person who has information to convey. This information, such as particulars on the new weight reduction drinks, forms the message. Consumers who read, hear or see the message are the receivers. The message is communicated through by means of a channel – the television, radio, Internet, or a salesperson standing outside your door. . Experts, who have studied the psychology of communication, say that how advertising works is highly dependant upon how the message is accepted in our heads, stored there, and later retrieved when we make decisions.
The information coming into us, whether it is advertising or anything else, is processed through three systems that store it. The first is called the sensory register. It receives the information and in a flash stores it into shapes and sounds and forms, getting the information instantly ready for the processing. Next, the information goes to the short-term memory – a very active area where the information stays only long enough for some reasoning and judgment to take place. Third, the information moves into long-term storage. Here is stored every piece of information we have ever processed.
Most of it, obviously, is not in current use. But then, any advertising information that reaches the long-term memory must compete for acceptance with the information that has already been through the process and has already been deposited in the long-term storage. If and when the new information is accepted, it then waits to be retrieved. People make either of two kinds of decisions: rational and emotional. You buy the needed shoes based on utility – how well they are made, how long they are expected to last – and on price.
But the emotional side affects the decision. You buy the wanted shoes based on what they will do for your self-esteem – how well will they go with the outfit you are wearing Saturday night – and maybe on a price. But you let the rational side in on the decision: if you feel that these shoes are too uncomfortable to dance in, you ask to see another pair. . Encoding and decoding are essentials to the communication. Encoding is the process of having the sender transform an abstract idea into the set of symbols.
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Decoding is the reverse process of having a receiver take a set of symbols, the message, and transform it back to the abstract idea. Decoding is performed by receivers according to their own frame of reference: their attitudes, values and beliefs. The process of communication is not always a successful one. Errors in communication can happen in several ways.
The source may not adequately transform the abstract idea into an effective set of symbols. Or a properly encoded message may be sent through the wrong channel and never make it to the receiver. Or the receiver may not properly transform the set of symbols into the correct abstract idea. Finally, the feedback may be so belayed and distorted that it is of no use to the sender. Although communication appears easy to perform, truly effective communication can be very difficult. For the message to be communicated effectively, the sender and receiver must have mutually shared field of experience – similar understanding and knowledge.
In the following picture the two fields represent the fields of experience by sender and receiver, which overlap in the message. Some of the better-known communication problems have occurred when US companies have taken their companies to other cultures with different fields of experience. Many interpretations are merely the result of bad translations. For example, General Motors made a mistake when its “Body by Fisher” claim was translated into Flemish as “Corpse by Fisher.” . In this picture there is also the line, labeled feedback loop. Feedback closes the communication flow from receiver to sender and indicates whether the message was decoded and understood as intended.
Noise includes extraneous factors that can work against effective communication, such as distorting the message or the feedback received. Noise can be a simple error, such as printing mistakes, that affect the meaning of a newspaper advertisement, or using words or pictures, that fail to communicate the message clearly. Or noise occurs when a salesperson’s message is misunderstood by buyer who concentrates on not liking the salesperson smoking instead of hearing the sales message. . PERSONAL SELLING – DIRECT RESPONSE ADVERTISING The second major clement of the promotional mix is personal selling (also called Direct Response Advertising), defined as any paid form of interpersonal presentation of goods and services. .
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Direct response includes three basic “media” – the post office, the television tube, and the telephone. To sell directly on each of these, you must know your customer. Unlike advertising, personal selling is usually face-to-face communication between the sender and receiver (although use of telephone sales is growing).
There are important advantages to personal selling. A salesperson can control to whom the presentation is made.
Although some control is available in advertising by choosing the medium, some people may read the college newspaper, for example, which are not in the target audience for CD players. For the CD-player manufacturer, those readers outside the target audience are wasted coverage. Wasted coverage can be reduced with personal selling. The personal component of selling has another advantage over advertising in that the seller can see or hear the potential buyer’s reaction to the message. If the feedback is unfavorable, the salesperson can modify the message. The flexibility of personal selling can also be a disadvantage.
Different salespeople can change the message so that no consistent communication is given to all customers. The high cost of personal selling is probably its major disadvantage. On a cost-per-contact basis, it is generally the most expensive of the four elements in the promotional mix. . Direct mail The majority of direct-mail advertising moves as the third-class mail, known as the bulk mail. It takes longer to reach its destination than the first-class, but it is considerably less expensive.
When this kind of mail comes folded in your newspaper, it is what the newspapers call the freestanding insert (FSI) – often as many as half a dozen of FSIs in one issue. When the similar piece comes in your male, the newspapers call it Junk Mail. It is simply a way of putting down the competition. The fact is that the direct sales work. Many people like it – or it wouldn’t work.
It enables people – especially those in your target audience – to shop at home any hour of any day of the week. These are perfectly respectable means of selling, and its effectiveness is second only to the live on-on-one sales call. Catalogues Catalogues are a growing industry. More than a half of US adult population orders merchandise by phone or mail from catalogues each year. The US postal service in 1991, learned that catalogues received in the mail were opened, looked at, and read or set aside to be read later by 88 percent of Americans. The key thing to know is that when people open catalogues, they look before they read.
Top-notch design is vital. You must have eye-catching graphics, whether you are using simple black-and-white line art (drawings) or full color photography. You want it short, punch, descriptive, but with full details on color, size, taste or flavor, and price. Telemarketing Telemarketing, in the vernacular of the business, is not shop-at-home via television. (Even The New York Times has made the mistake of using the word telemarketing in the headline of a story on shop-at-home.
) Telemarketing is selling by telephone. By some accounts, this medium gets more direct-marketing dollars than any other. The system consists of two sides: (1) Outgoing calls that solicit business on WATS lines, and (2) incoming calls that make inquiries or place orders on 800 numbers (known as “incoming WATS”).
The personal sales call is expensive. The telephone sales call, if handled by an expert, is almost as good, yet costs maybe one-twentieth as much. It can describe and persuade powerfully.
It gets excellent results. But telemarketing can be an annoyance to your customers. Nobody wants to get up from the dinner table to answer the phone and find a salesperson launching into a pitch. One survey found that 27 percent of its respondents considered telephone selling an invasion of privacy, while only 9 percent said the same about direct-mail offers. Tip: Not every product or service can be sold successfully by telemarketing. If yours needs to be demonstrated or explained in great detail, it may be a tough sell on the phone.
Be sure the people doing the selling are well trained on the primary benefit you promise so that they can interest the prospect immediately and keep his or her attention. If the entire call is likely to last more than four or five minutes, don’t bother. You need another medium. Direct response television techniques. a) Direct response television.
You ask for the order at the end of your commercial, giving the viewer or listener an 800-telephone number and a mailing address, with the assurance that credit cards are acceptable. The system is really just another version of direct response mail-order advertising, in which you sell directly to the customer, and the merchandise is delivered by mail, UPS, or delivery service. Be sure your television commercial is strong on demonstration. Stick to merchandise that is priced from low to moderate. A big-ticket item that requires some thought before purchasing is not likely to sell in this medium. You may, however, pull leads for future sales by offering to send more detailed information.
b) Shop-at-Home Television Home shopping companies are rather distribution vehicles. Why? Because they charge you from 40 to 50 percent of sales. That makes it impossible for a retailer, for instance, to make a profit. The charge is high because they handle everything from taking the order by phone to warehousing, sorting, packing, and shipping. In addition, they keep what they learn about the buyer to themselves, so you have no opportunity to build a relationship with a customer. If you are a manufacturer, however, and want to distribute your products through a high-powered, fast-growing sales medium, the shop-at-home networks can put you in he living rooms of the cable television audience, which is also fast growing.
You will need to present an information sheet on your product for approval, then a sample to be put through rigorous quality tests. Upon approval, you ship individually packaged and labeled product to the network’s warehouse so that it will be ready for immediate delivery to the network’s customers. Typical products are in the categories of apparel and accessories, toys, camcorders, power tools, home furnishings, jewelry, and health and beauty aids. Shop-at-home networks seldom handle anything priced under $15.
They target men and women 35 to 54 years old who have an annual household income of at least $40, 000 and who are accustomed to buying from catalogues and other direct-response vehicles. c) Interactive Shopping This technology is evolving rapidly. Experts predict that you will soon find interactive communications vehicles to fit every size of business, from giant to small. Their purpose? To give you direct one-to-one relationships with your customers. Exactly what is interactive technology? It is a combination of the television set, the telephone and its backup cabling system, and a complex array of advanced circuitry and software-perhaps with your personal computer thrown in-that is instantly responsive. It allows your merchandise to become the message in the living room.
Your customer sits at home and asks to see an item you are selling in as much detail as he or she needs before deciding whether or not to buy. Your customer can ask to see a model wearing a specific dress, jacket, coat, sweater, or pair of shoes; a dining room set for a formal dinner; a trail bike plunging down a ravine pathway; the interior of a car or truck- any item in action in any perspective from a wide, full-length shot down to a tight close-up. If the customer decides to buy, the order is placed with the push of a button from the couch potato position, and the buyer’s credit card is instantly charged. Or if the customer’s personal computer is tied into his or her bank’s checking account network, the purchase price is deducted immediately from the account. The advantages? Time saved.
For two-earner families with kids in day care. For moonlighters. For everyone who hates to drive to the shopping center or mall, hunt for place to park, and haul the purchases back out to the car. For everybody whose attitude toward wasting time has already doomed the giant department stores. Computer networks It is a powerful direct response marketing tool, useful for many consumer products and services and even more effective for business-to-business advertisers. Martin Nisenholtz, a senior vice president at Ogilvy & Mather Direct, a subsidiary of a major advertising agency, Ogilvy & Mather Worldwide, has suggested six valuable guidelines for advertising on Internet: 1.
Don’t send intrusive messages. 2. Don’t sell consumer data without express permission of the user. 3. Advertising should appear only in designated news groups and list services. 4.
Conduct promotions and direct selling only under full disclosure. 5. Conduct research only with the consumer’s informed consent. 6.
Never use Internet communications software to conceal functions. . PUBLIC RELATIONS The practice of public relations is that of dealing with a number of publics, ranging from employees and neighbors to government and special-interest groups. Publicity is but one aspect of the subject, but the relationship with the press often commands the majority of time spent on public relations. . A nonpersonal, indirectly paid presentation of an organization, service, or product is termed publicity.
It can take the “form of a news story, editorial, or product announcement. A difference between publicity and both advertising and personal selling; is the “indirectly paid” dimension. With publicity a company does not pay for space in a mass medium (such as television or radio) but attempts to get the medium to run a favorable story on the company. In this sense there is an indirect payment for publicity in that a company must support a public relations staff. An advantage of publicity is credibility. When you read a favorable story about a company’s product (such as a glowing restaurant review), there is a tendency to believe it.
Travelers throughout the world have relied on Arthur Frommer’s guides such as Ireland on S 25 a Day. These books outline out-of-the-way, inexpensive restaurants, hotels, inns, and bed-and-breakfast rooms, giving invaluable publicity to these establishments. They do not (nor can they) buy a mention in the guide, which in recent years has sold millions of copies. The disadvantages of publicity relate to the lack of the user’s control over it. A company can invite a news team to preview its innovative exercise equipment and hope for a favorable mention on the 6 PM newscasts.
But without buying advertising time, there is no guarantee of any mention of the new equipment or that it will be aired when the target audience is watching. With publicity there is little control over what is said, to whom and where. As a result, publicity is rarely the main component of the promotional mix. . An internal public relations program can help maintain and boost employee morale. An external program works to increase awareness of your company and bolster its image.
To handle public relations for both areas, it is important to develop a comprehensive public relations plan. The plan begins with situation analysis, or a public relations audit, so you know where you were when you started. Next, state objectives-such as to promote awareness of or change perceptions of your company or product, improve employee morale, support a sale or promotion, encourage a positive image in the financial community. The plan covers target audiences and strategies for reaching them, including community, trade, and minority relations.
Your budget must cover time charges for public relations services (the majority of the cost) and out-of-pocket expenses (postage, some printing, travel, etc. -the lesser part of the cost).
Finally, your public relations plan should include methods of evaluating the results on a regular basis by comparison with the benchmarks established when you started. Three major strategies are media relations, employee relations, and special events.
Media relations are dealings with the print, television, and radio journalists-the press. You get publicity with news stories or feature stories. News stories are usually offered to the press as written press releases ready for publication. Features are offered as queries suggesting articles to be written by the publication or stories to be produced by the television or radio station, or those to be prepared by your public relations person. Careful maintenance of a press list is important to the media relations operation.
Backgrounders, fact sheets, and biographies of your key people should be prepared. Press kits assemble these elements as well as photographs and company literature-if it is pertinent as background material for a journalist. Don’t indulge in a press conference unless you have something of considerable substance to impart to the press. Employee relations is the second major public relations strategy. Its goal is to boost morale-and, consequently, productivity- by improving communications between management and employees as well as among employees. Your plan may include newsletters, audiovisuals, meetings, and events.
It is important to keep a program going regularly and to include key people in planning and running it. The third key strategy, special events, includes any and every kind of event from anniversary celebrations to plant dedications, from customer tutorials to open houses. Only time, talent, and budget limit your opportunities. But handle the myriad logistical details with care and allow plenty of time. Crisis communications is a special area of public relations that you hope you never need. Nevertheless, you should think about worst-case scenarios and be ready for them, keeping your public relations director informed of any pending crisis, looking for positive responses to have ready, informing employees so they don’t start rumors or fuel them, and-most important-designating a single official spokesperson for the company so that the press and all others know whom to talk to.
In any serious situation, your CEO should be that spokesperson. . The tools of publicity In developing a campaign, several publicity tools are available to the public relations director. Many companies frequently use the news release, consisting of an announcement regarding changes in the company or the product line. The objective of a news release is to inform a newspaper, radio station, or other medium of an idea for a story. A second common publicity tool is the news conference.
Representatives of the media are all invited to an informational meeting, and advance materials regarding the content are sent. Nonprofit organizations rely heavily on PSAs (public service announcements), which are free space or time donated by the media. For example, the charter of the American Red Cross prohibits any local chapter from advertising, so to solicit blood donations, local chapters often depend on PSAs on radio or television to announce their needs. A planned campaign For publicity to be effective, a planned campaign integrated into the total promotional plan is necessary. In this way the advantages of advertising, personal selling, publicity, and sales promotion can complement each other. This planned approach often has not been used, but the success of The Cabbage Patch Kids dolls-perhaps the most successful publicity campaign for a consumer product in the 1980’s-highlights its advantages.
To start the sales snowball rolling, the Coleco public relations department sent Jane Pauley, co-host of the morning Today show, a Cabbage Patch Kids doll with its own birth certificate. This gift led to 5 minutes of valuable airtime on Today. Major women’s magazines were also sent some dolls, resulting in several publications featuring a Cabbage Patch Kids doll in their Christmas gift layouts. Two Coleco representatives also went on a media tour to 12 major cities, appearing on talk shows to discuss the dolls’ development and success. During December the effort went all out. The dolls were featured several times on the Tonight show.
Then, with Brooke Shields as a life-size Cabbage Patch Kids doll, the dolls appeared on Bob Hope’s Christmas special. The dolls, which became scarce in the final days before Christmas, were flown to children s hospitals for distribution to sick patients. The shortage of these dolls allowed Coleco to raise prices an additional $10 as sales reached 2. 5 million units in, December 1933. An integrated publicity campaign was the stimulus for the sales success. Cause related marketing A recent development that lies on the borderline between sales promotion and publicity is cause-related marketing (CRM), which is when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products.
This definition distinguishes CRM from firm’s standard charitable contributions, which are outright donations. At the same time, CRM is clearly a sales promotion effort that often wins much free publicity for the sponsoring firm. . Implementing Public Relations Your public relations people may be on staff, if the workload justifies maintaining a full-time pro. Assigning the task to a part-timer will probably bring you disappointment. A freelancer will probably work out better, but make sure he or she is experienced in public relations.
A public relations firm is the other alternative. Good public relations people are found in all firms, large or small. If you are shopping for a public relations firm, get the names and phone numbers of its current clients and talk with several of them. Check in with media people for their opinion. Invite several firms in. review their samples.
Feel their chemistry. Visit their offices. When you chose one, work out either a retainer fee (flat monthly charge) or a minimum fee or plan for a fee-per-project arrangement. . SALES PROMOTION A fourth, and also supplemental, promotional Element is sales promotion, a short-term inducement of value offered to arouse interest in buying a good or service. Used in conjunction with advertising or personal selling, sales promotions are offered to intermediaries as well as to ultimate consumers.
Coupons, rebates, samples, and sweepstakes are just a few examples of sales promotions. The advantage of sales promotions is that the short-term nature of these programs (such as the expiration date of a coupon or sweepstakes) often stimulates sales for their duration. Offering value to the consumer in terms of a cents-off coupon or rebate provides an incentive to buy. Sales promotions cannot be the sole basis for a campaign because gains are often temporary and sales drop off when the deal ends.
Advertising support is needed to convert the customer who tried the product because of a sales promotion into a long-term buyer. If sales promotions are conducted continuously, they lose their effectiveness. Customers begin to delay purchase until a coupon is offered, or they question the product’s value. Some aspects of sales promotions also are regulated by the federal government. . The primary job of any sales promotion material or activity is to stimulate buying by the consumer during a limited period.
Sales promotion also supports your sales force, encourages wholesalers to push your product, and increases retail support. Its specific purposes are to provide information and induce prompt action. The targets of sales promotion are your company salespeople, your distributors, your dealers, and your customers. The large variety of sales promotion materials and activities ranges from price lists, spec sheets, and sales meetings for salespeople to signs, audiovisuals, and envelope stuffers for distributors; from point-of-purchase displays and counter folders for retailers to coupons, sweepstakes, and self-liquidating premiums for consumers.
You must be careful to balance sales promotion programs, which are price-oriented, with your advertising program, which is value-oriented. If you make promotion your only basis for sales, you convey the idea that you are selling a commodity on price alone. One-third of sales promotion dollars are spent on meetings and conventions. Lesser percentages (all less than 15 percent) go to direct response, premiums and incentives, and other miscellany. Some 76 percent of Americans redeem coupons, while 45 percent claim refunds, and 42 percent enter sweepstakes.
Trade shows and exhibits are a special area that reaches retailers and consumers with demonstrations and a chance to compare competitive products. Allow plenty of time for design and construction of your exhibit booth. Keep a watchful eye on the coordination of sales promotion with advertising in your total program. Don’t let sales promotion become an afterthought or the sole province of your sales director, lest you lose the synergy that your integrated marketing communications program is trying to achieve.
Consumer-oriented sales promotion. Direct to ultimate consumers, consumer oriented sales promotion, or simply consumer promotions, are used to support advertising and personal selling. A variety of those sale promotion tools exist to achieve the objectives outlined previously. The alternative consumer-oriented sales promotion tools are shown in the table below. Kinds of sales promotion Objectives Advantages Disadvantages Coupons Stimulate demand Encourage retailer support Consumers delay purchases Deals Increase trial; retaliate against competitors actions Reduce consumer risk Consumers delay purchases; reduced perceived product value Premiums Build goodwill Consumers like free or reduced-price merchandise Consumers buy for premium, not product Contests Increase consumer purchases; build business inventory Encourage consumer involvement with product Require creative and analytical thinking Sweepstakes Encourage present customers to buy more; minimize brand-switching behavior Get customers to use product and store more often Sales drop after sweepstakes Samples Encourage new product trial Low risk for consumer to try product High costs for company Trading stamps Encourage repeat purchases Help create loyalty High costs for company Point-of-purchase displays Encourage new product trial; provide in-store support for other promotions Provide good product visibility Hard to get retailer to allocate high-traffic space Rebates Encourages customers to purchase; stop sales decline Effective stimulate demand Easily copied; steal sales from future; reduced perceived product value Coupons are sales promotions that usually offer a discounted price to the consumer, which encourages trial. Coupons are experiencing explosive growth.
For mature products, coupon ing may only reduce gross revenues from already loyal users. But a resent study showed, that 14 percent of coupon redeemers were first-time buyers of the brand. 34 percent rarely or occasionally used the brand, and 52 percent almost always bought the brand. Manufacturers are offering coupons with greater values, such as $5 coupons for pots and pans sold by Wear-Ever Cookware.
Coupon use is also expanding beyond food products to drills, toys, and appliances. Coupons are often far more expensive than the face value showing the price discount; a 20-cent coupon can cost 3 times that after paving for the advertisement to deliver it, handling, redemption, and so on. Deals. Deals are short-term price reductions, commonly used to increase trial among potential customers or to retaliate against a competitor’s actions.
For example, if a rival manufacturer introduces a new cake mix, the company responds with a “two packages for the price of one” deal. This short-term price reduction builds up the stock on the kitchen shelves of cake mix buyers and makes the competitor’s introduction more difficult. Premiums. A promotional tool often used with consumers is the premium, which consists of merchandise offered free or at a significant savings over retail. This latter type of premium is called self-liquidating because the cost charged the consumer covers the cost of the item. When Return of the Jedi opened in U.
S. theaters, 2. 500 Burger King restaurants offered Star Wars glasses as a premium 2 days later. A different glass with the likeness of Luke Skywalker, Darth Vader, or R 2-D 2 was offered each week for 49 cents and the purchase of a medium soft drink. McDonald’s countered with Snoopy and the gang from peanuts. Weekly visits were required to collect the full set.
Perhaps the most unusual premiums: 10 scale-model red Corvettes among the 11 million tiny car models in 6 of Ralston-Purina’s children’s cereal boxes. What is so unusual is that each of the 10 red Corvette premiums could be turned in for the real thing-a $29, 000 1988 Chevrolet Corvette. Successful premiums must have consumer appeal, and when they are offered on a self-liquidating basis, the cost must represent a real value. The more effective premiums have a functional or logical relationship to the product being promoted. Gatorade offered a squeeze bottle for its drink that was similar to that used by athletic teams. A baby food manufacturer offers a sterling silver baby spoon for $l.
Contests A fourth sales promotion, the contest, is where consumers apply their analytical or creative thinking to try to win a prize. For example, White Horse scotch whiskey ran a contest based on information on the back of the bottle. Although not requiring purchase, it resulted in the customer going to the store, reading the label, and buying the product. More than 250, 000 entries were received, and sales rose consistently during the contest. Sweepstakes These sales promotions require participants submit some kind of entry form but are purely games of chance requiring no analytic or creative effort by the consumer. In October 1969 the federal trade commission in US issued trade rules covering sweepstakes, contests, and games to regulate their fairness, ensure that the chance for winning is represented honestly, and ensure, that prices are actually rewarded.
In Lithuania the law of promotion and advertising has been issued in 18 of July, year 2000. It institutes the rules of advertising in order to protect consumers and to ensure fair competition. Samples. Another common consumer sales promotion is sampling, which is offering the product free or at a greatly reduced price. Used for new products, sampling puts the product in the consumer’s hands.
A trial size is generally offered that is smaller than the regular package size. If consumers like the sample, it is hoped they will remember and buy the product. Sampling is appropriate for products that are frequently purchased, have a low unit cost, and are new. Sampling is often done in test marketing a new product. For example, P&G test marketed Tide with Bleach powder determent in Denver in 1988 using samples, print ads, and TV ads. Trading Stamps.
Trading stamps are a sales promotion tool in which customers are given stamps in relation to the dollar size of their purchase. These stamps can be redeemed for merchandise or cash. This sales promotion was widely used by supermarkets and gas stations in the 1960’s and 1970’s to encourage store loyalty but has declined recently because of the cost involved. Point-of-Purchase Displays.
In a store aisle, you often encounter a sales motion called a point-of-purchase display. These product displays take the form of advertising signs, which sometimes actually hold or display the product, and are often located in high-traffic areas near the cash register or the end of an aisle. Because of the space needed, some retailers avoid such displays. As the Marketing research Report shows, point-of-purchase displays can increase sales significantly even with no price discounts. Some studies estimate tint two-thirds of a consumer’s buying decisions are made in the Store. This means that grocery product manufacturers want to get their message to you at the instant you are next to their brand in your supermarket aisle-perhaps through a point-of-purchase display.
Rebates A Final consumer sales promotion, the cash rebate, offers a return of money based on proof of purchase. Car manufacturers facing increased competition have used this tool heavily. Computer companies like Apple have also used it effectively in selling PCs to ultimate consumers. When the rebate is offered on lower-priced items such as detergent or dog food, the time and trouble of mailing in a proof-of-purchase to get the rebate check means that many buyers-attracted by the rebate offer-never take advantage of it.
However, this “slippage” is less likely to occur with those frequent users of rebate promotions. Trade-oriented sales promotion Trade-oriented sales promotions, or simply trade promotions, also supplement advertising and personal selling but are directed to wholesalers, retailers, or distributors. Some of the sales promotions just reviewed are used for this purpose, but there are three other common approaches targeted uniquely to these intermediaries: (1) allowances and discounts; (2) cooperative advertising; and (3) training of distributors’s ales force. Allowances and Discounts. Trade promotions often focus on maintaining or increasing inventory levels in the channel of distribution. An effective method for encouraging such increased purchases by intermediaries is the use of allowances and discounts.
However, overuse of these “price reductions” can lead to retailers changing their ordering patterns in the expectation of such offerings. Although there are many variations that manufacturers can use with discounts and allowances, three common approaches include the merchandise allowance, the case allowance, and the finance allowance. Reimbursing a retailer for extra in-store support or special featuring of the brand-is a merchandise allowance. Performance contracts between the manufacturer and trade member usually specify the activity to be performed, such as a picture of the product in a newspaper with a coupon good at only one store. The merchandise allowance then consists of a percentage deduction from the list case price ordered during the promotional period. The manufacturer does not pay allowances until it sees proof of performance (such as a copy of the ad placed by the manufacturer in the local newspaper).
A second common trade promotion, a case allowance, is a discount on each case ordered during a specific time period. These allowances are usually deducted from the invoice. A variation of the case allowance is the “free goods” approach, whereby retailers receive some amount of the product free, based on the amount ordered, such as 1 case free for ever 10 cases ordered. A final trade promotion, the finance allowance, involves paving retailers for financing costs or financial losses associated with consumer sales promotions.
This trade promotion is regularly used and has several variations. One type is the floor Stock protection program. Manufacturers give retailers a case allowance price for products in their warehouse, which prevents shelf stock from running down during the promotional period. Also common are freight allowances that compensate retailers that transport orders from the manufacturer’s warehouse. Cooperative Advertising.
Resellers often perform the important function of promoting the manufacturer’s products at the local level. One common sales promotional activity is to encourage both better quality and greater quantity in the local advertising efforts of resellers through cooperative advertising. These are programs by which a manufacturer pays a percentage of the retailer s local advertising expense for advertising the manufacturer’s products. Usually the manufacturer pays a percentage, often 50 percent, of the cost of advertising up to a certain dollar limit, which is based on the amount of the purchases the retailer makes of the manufacturer’s products.
In addition to paying for the advertising, the manufacturer often furnishes the retailer with a selection of different ad executions, sometimes suited for several different media. A manufacturer may provide, for example, several different print layouts as well as a few broadcast ads for the retailer to adapt and use. Cooperative advertising represents a substantial investment for the manufacturer. However, it is very effective because both the manufacturer and the retailer receive benefits.
The retailer receives partial payment of the local advertising expenses along with better quality ads. The manufacturer, on the other hand, involves the retailer in local advertising and generally receives stronger support in other areas such as maintaining sufficient inventory and receiving prominent display space for their products in the retailer’s store. Training of Distributors’s ales Forces. One of the many functions the intermediaries perform is customer contact and selling for the producers they represent. Both retailers and wholesalers employ and manage their own sales personnel. A manufacturer’s success often rests on the ability of the reseller’s sales force to represent its products.
So it is in the best interest of the manufacturer to help train the reseller’s sales force. Because the reseller’s sales force is often less sophisticated and knowledgeable about the products than the manufacturer might like, training can increase their sales performance. Training activities include producing manuals and brochures to educate the reseller’s sales force. The sales force then uses these aids in selling situations.
Other activities include national sales meetings sponsored by the manufacturer and field visits to the reseller’s location to inform and motivate the salesperson to sell the products. Manufacturers also develop incentive and recognition programs to motivate reseller’s salespeople to sell their products. SELECTING PROMOTIONAL TOOLS In putting together the promotional mix, a marketer must consider the balance of elements to use. Should advertising be emphasized more than personal selling? When should a promotional rebate be offered? Several factors affect such decisions: the target audience for the promotion, the stage of the product’s life cycle, characteristics of the product, decision stage of the buyer, and even the channel of distribution.
THE TARGET AUDIENCE Promotional programs are directed to the ultimate consumer, intermediary (retailer, wholesaler, or industrial distributor), or both. Promotional programs of consumer products to ultimate consumers use mass media. Geographical dispersion and the number of potential buyers are the primary reasons for a mass approach. Personal selling is used at the place of purchase, generally the retail store. To industrial buyers, advertising is used more selectively, as in trade publications such as Fence magazine for buyers of fencing material. Because industrial buyers often have specialized needs or technical questions, personal selling is particularly important.
The salesperson can provide information and the necessary support after sales. Intermediaries are often the focus of promotional efforts. As with industrial buyers, personal selling is the major promotional ingredient. The salespeople inform retailers on future advertising efforts to ultimate users, for example, and they assist retailers in making a profit. Intermediaries’ questions often pertain to the allowed markup, merchandising support, and return policies, which are best handled by a salesperson. Related to the issue of the target audience is the composition of the decision-making unit (DMU), or the people in a household or in a buying center in an organization involved in making the decision to buy the product.
The more people in the DMU, the greater the emphasis on personal selling. A salesperson can provide a specific message for each member of the DMU to try to address her or his concerns and objections. For example, in office equipment sales, a salesperson can address more efficiently the technical concerns of the office worker, the cost concerns of the financial officer, and the service questions of the purchasing agent. Three separate messages in very different magazines would be required if advertising were used. THE PRODUCT LIFE CYCLE All products have a product life cycle, and the composition of the promotional mix changes over the four life-cycle stages. Introduction Stage.
Informing consumers in an effort to increase their level of awareness is the primary promotional objective in the introduction stage of the product life cycle. In general, all the promotional mix elements are used at this time, although the use of specific mix elements during any singe depends on the produce and situation. Advertising is particularly important as a means of reaching as many people as possible to build up interest. Publicity may even begin slightly before the product is commercially available. Growth Stage. The main promotional objective of the growth stage is to persuade the consumer to buy the product rather than substitutes.
So the marketing manager seeks to gain brand preference and solidify distribution. Sales promotion assumes less importance in this stage, and publicity is not a factor because it depends on novelty of the product. The main promotional element is advertising, which stresses brand differences. Personal selling is used to solidify the channel of distribution. For consumer products such as dog food the sales force calls on the wholesalers and retailers in hopes of increasing inventory levels and gaining shelf space.
For industrial products the sales force often tries to get contractual arrangements to be the sole source of supply for the buyer. Maturity Stage In the maturity stage the need is to maintain existing buyers, and advertising’s role is to remind buyers of the product’s existence. Sales promotion, in the form of discounts and coupons offered to both ultimate consumers and intermediaries, is important in maintaining loyal buyers. In a test of one mature consumer product, it was found that 80 percent of the product’s sales at this stage resulted from sales promotions. Price cuts and discounts can also significantly increase a mature brand’s sales.
The sales force at this stage seeks to satisfy intermediaries. An unsatisfied customer who switches brands is hard to replace. Decline Stage The decline stage of the product life cycle is usually a period of phase out for the product, and little money is spent in the promotional mix-especially in sales promotions. CHANNEL STRATEGIES Achieving control of the channel is often difficult for the manufacturer, and promotional strategies can assist in moving a product through the channel of distribution. This is where a manufacturer has to make an important decision about whether to use a push strategy, pull strategy, or, both in its channel of distribution.
Push strategy is directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. In this approach, personal selling and sales promotions play major roles. Salespeople call on wholesalers to encourage orders and provide sales assistance. Sales promotions, such as case discount allowances (20 percent off the regular case price), are offered to stimulate demand. By pushing the product through the channel, the goal is to get channel members to push it to their customers. Anheuser-Busch, for example, spends a significant amount of its marketing resources on maintaining its relationship with its distributors, and through them, with retailers.
Anheuser-Busch provides a series of incentives and assistance to its distribution system to maintain its channel dominance. The company arranges group discounts on purchase of trucks, insurance, and even the IBM computers that wholesalers use to order beer. Even specialized computer software is provided to help retailers maximize the shelf space of Anheuser-Busch products. Pull Strategy. In some instances manufacturers face resistance from channel members who do not want to order a new product or increase inventory levels of an existing brand. A pull strategy is then warranted, in which a manufacturer directs its efforts in the form of advertising and sales promotions to ultimate consumers to encourage them to ask the retailer for the product.
Seeing demand from ultimate consumers, retailers order the product from wholesalers and thus the item is pulled through the intermediaries. In the beer industry, efforts to pull the brand through the channel are also important. As mentioned earlier, Anheuser-Busch spends about $450 million on media advertising to stimulate consumer demand for its brands. Successful advertising campaigns can have dramatic effects on the sales of a brand. The distinguishing elements in a push or pull strategy are (1) the target audience for promotional efforts and (2) the emphasis on personal selling or advertising. As the Anheuser-Busch example points out, most companies rely on elements of both push and pull strategies because both intermediaries and consumers are crucial to the brand’s success.
DEVELOPING CREATIVE STRATEGY. The perception of the creativity in advertising differs from the one used in common language. It is not drama or entertainment, nor it is innovation or words printed so large you have to hold your newspaper at arms length to read them. Creativity is the process that finds the most promising way for you to tell your prospective buyers about the benefits of your service or product or store. The more innovative or dramatic or entertaining you can be in the process, the more creative your advertising will be. .
The heart of company’s advertising is its creative work: ideas and the ways in which it “executes” them. Ideas and execution together become what the advertising professionals call the creative strategy. It is the tool that is intended to help you to select the best possible sales message to use in your advertising. It is the tool that links your advertising plans to your marketing plans. It ensures your advertising messages reinforce and support your marketing objectives. It is amazing how often advertising execution gets unhinged from the best-laid marketing plans.
. The company doesn’t have to be big or national or even regional to need a creative strategy. Retailers with one shop or a small chain, manufacturers with a single big-ticket product or a line of inexpensive small items-all use creative strategies to help their advertising programs work. . The Creative Strategy statement is essentially an extension and elaboration of a brand’s marketing strategy principles into the brand’s advertising or creative area. It picks up from a creative standpoint where the marketing strategy leaves off-indicating agreed-upon basic and relatively long-term selling approaches to the consumer.
Its basic function is to define clearly: 1. The total net impression which advertising is expected to leave with a specific target group. 2. Other basic decisions that will shape and direct the content and form of the advertising copy. Thus the creative strategy describes the basis upon which a product is to be distinguished from competitive products; how the product is to be positioned in the minds of the target group; or how it will be given a distinct identity of its own.
It is used as a guide in the development of advertising and as a benchmark of evaluating advertising. Creative strategy should be thought of as long-term strategy, since one of the purposes of this statement is to give continuity to the advertising program over a period of time. Basic creative strategy is ordinarily changed only when there is a fundamental change in the character of the market, or the product, a major competitive threat, or demonstrated failure of the existing strategy to achieve specific objectives. Since the creative strategy is a logical extension of the marketing objective and strategy of the Brand, the marketing group and the agency account team are responsible for the initiation and development of a new or revised creative strategy. What the Creative Strategy Includes Every creative strategy should include the specific, basic selling idea (s) or the basic concept (s) that the product’s advertising is designed to establish with the consumer and, as a result, motivate her to purchase the brand in preference to competition. The following kinds of ideas will ordinarily appear in a creative strategy (not all of them need appear in any one statement).
. Before discussing ad as the whole, we must determine the key Advertising Messages. Spending a lot on advertising does not guarantee success (witness the infamous John Cleese campaign for Sainsbury).
Research suggests that the clarity of the advertising message is often more important than the amount spent.
The advertising message must be carefully targeted to impact the target customer audience. A successful advertising message should have the following characteristics: (a) Meaningful – customers should find the message relevant (b) Distinctive – capture the customer’s attention (c) Believable – a difficult task, since research suggests most consumers doubt the truth of advertising in general . 1. A concise statement of the principal benefit offered by the product. This idea represents the basic reason consumers are expected to purchase the product in preference to a competitive product. It is important to note that this part of the statement is not an analysis of all possible product benefits, but represents a decision as to which of these benefits is / are to be emphasized in advertising.
2. A statement of the principal characteristic (s) of the product which makes it possible to claim this benefit-that is, the “reason why” this benefit exists and has meaning to the target group. (Examples: an ingredient, a process, a quality standard. ) Stated another way, these ideas identify points of product distinctiveness or superiority that bear directly on the consumer benefit claimed. 3. A statement of the character or personality which is to be built for the product and which will be reflected in the mood, tone, and overall atmosphere of the advertising (long term).
Elements of such a product character might include ideas like feminine, progressive, vital, playful, conservative, wholesome, luxurious, etc. 4. A statement of what the product is and what the product is used for (if the answers to these questions are not obvious).
Examples: Is it a meal or a snack? A food dish or an ingredient? A beverage or a multiple use product? A basic food or a problem solving dietetic? In short, answers to the question ‘ ‘where is this product supposed to fit into the consumer’s experience. . Two advertising professors, Don E.
Schultz and Stanley I. Tannenbaum, of Northwestern University’s Medill School of Journalism, developed the Creative Strategy Development Form. Both have extensive experience not only in teaching but also in practicing the art of advertising. Creative strategy development form A.
The problem 1. The key fact 2. The marketing problem advertising can solve B. The creative strategy 1. What Is the Product? Or Service? a. In reality? b.
As perceived? 2. Who Are the Prospects? a. Geographics b. Demographics c. Psycho graphics d.
Media patterns e. Buying / use patterns 3. Who Is the Principal Competition? 4. What Is the Competitive Consumer Benefit? 5. What Is the Support for the Benefit? The Reason Why? 6. The Target Market Incentive Statement 7.
What is the Tone of the Advertising? 8. What is the Communication Objective? a. What is the main point? b. What action should be taken? . When developing creative strategy, the first thing to know is what is the key fact to deal with. It is also may be considered as the problem.
The only key fact to identify is the one fundamental to the firms marketing situation. The key fact may be that the firm is introducing a new product. Or that its sales have leveled off. Or that it has added a feature or a service or improved something that the customers perceived as a drawback. Looking at the key fact, firm’s creative people will want to know what is the marketing problem that advertising can solve.
If the key fact is that the firm is introducing a new product, the marketing problem may be how to bring your product to the attention of people who need it-even if they don’t realize they need it. More than two generations ago, nobody knew they needed Scotch brand cellophane tape. In 1950, nobody knew they needed Xerox copiers. And only a few years ago, nobody knew they needed 3 M’s Post-its. Advertising showed them they did. If the key fact is that your sales have leveled off, your creative people might say that the marketing problem advertising can solve is to get people to use your product more.
If you agree with them, say so-on paper. Put your key fact, along with a brief description of the problem that advertising can solve, on your office wall or conference room corkboard. Now your creative people will zero in your product. How does it work? Where do its parts come from? What does it do – exactly? By poking and prying and demanding answers to penetrating questions, your creative people might soon know more about your product than you do. They want to be loaded with facts, even those you consider inconsequential, about the product you are going to be selling. But they won’t stop with just the facts.
Next, they ” ll want to know about perceptions. What do people think about your product, service, or store? How do they feel about it? Do they have warm feelings you can appeal to? Cold feelings you must overcome? And what do they think about the entire field of business you are in? To come up with sound answers to questions like these, you and your sta.