Marketing as a Concept

8/7/2019 Marketing as a Concept

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FLOW CHART OF HOW TO GO ABOUT DECIDING &EVALUATING PROMOTIONAL MIX

ResearchStage

StrategicStage


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Product Life-Cycle StagePromotional tools vary in cost effectiveness at different

stages of the PLC.

- In the Introduction/Infancy stage, advertising and publicityhave the highest costeffectiveness, followed by personal selling to gaindistribution coverage and sales


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promotion to induce trial.

- In the Growth stage, all the tools can be toned downbecause demand has its own

momentum through word of mouth.

- In the Maturity stage, sales promotion, advertising andpersonal selling all grow moreimportant in that order.

- In the Decline stage, sales promotion continues strong,advertising and publicity arereduced and sales people give the product only minimal

attention.

As we can see, Sales Promotion in specific is very importantover the various stages of the Product Life Cycle.

Promotional objectives differ considerably from oneorganization to another and within organizations over time.Large organizations with multiple promotional programsoperating simultaneously may have quite varied promotionalobjectives. Lets have detailed look at some of thepromotional objectives:

Createawareness

A considerable amount of promotion is directed at creatingawareness. For an organization introducing a new product,new brand, or brand extension, making customers aware iscrucial to initiating the product adoption process. A marketerthat has invested heavily in product development strives tocreate product awareness quickly in order to generaterevenues to offset the high costs of product development


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and introduction.Creating awareness is important for existing products, too.Promotional efforts may be aimed at increasing brandawareness, product feature awareness, and awareness of

image related issues (such as organizational size or sociallyresponsive behaviour). Some organizations are unsuccessfulbecause marketers fail to generate awareness of criticalissues among a significant portion of target marketmembers.

Stimulate DemandWhen an organization is the first to introduce an innovativeproduct, it tries to stimulate primary demanddemand for a

product category rather than for a specific brand of productthrough pioneer promotion. Pioneer promotion informspotential customers about the product: what it is, what itdoes, how it can be used, and where it can be purchased.Because pioneer promotion is used in the introductory stageof the product life cycle, which means that there nocompeting brands, it neither emphasizes brand names norcompares brand. Primary demand stimulation is not just fornew products. At times an industry trade association, rather

than a single firm, uses promotional efforts to stimulateprimary demand.To build selective demand, which is demand for a specificbrand, a marketer employs promotional efforts on thestrengths and benefits of a specific brand. Building selectivedemand requires promotional efforts that single outattributes important to potential buyers and the specificattributes of the brand. Promotional techniques aresometimes used to stimulate selective demand by

differentiating the product from competing brand in theminds of potential buyers. Stimulating selective demand byincreasing the number of product uses is sometimesaccomplishes through advertising campaigns, as well asthrough free samples, coupons, and consumer contests andsweepstakes. Promotion for large package sizes or multiple-product packages are directed at increasing consumption,


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which in turn can stimulate demand.

Encourage Product TrialWhen attempting to move customers through the product

adoption process, marketer may be successful at creatingawareness and interest, but then a significant proportion ofcustomers stall during the evaluation stage. Thus certaintypes of promotion, such as free samples, coupons, testdrive or limited free-use offers, contests, and games, areemployed to encourage product trial.

IdentifyProspectsCertain types of promotional efforts are directed at

identifying customers who are interested in the firmsproduct and are most likely to buy. A marketer may utilize amagazine advertisement with a direct response informationform, requesting the reader to complete and mail the formto receive additional information. Customers who fill outinformation blanks or call the organization usually havehigher interest in the product, which makes them possiblesales prospects.

Retain Loyal customersClearly, maintaining long-term customer relationships is amajor goal of most marketers, because such relationshipsare quite valuable. Promotional efforts directed at customerretention can help an organization control its costs becausethe costs of retaining customers are usually considerablylower than those of acquiring new ones. Frequent userprograms, such as relied on by airlines, hotels, aim atrewarding loyal customers and encouraging them to remain

loyal.

Facilitate Reseller SupportStrong relationships with resellers are important to a firmscapability to maintain a sustainable competitive advantage.Producers generally want to provide support to resellers tomaintain sound working relationships, and producers, in turn


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expect to get support for their products from resellers. Whena manufacturer advertises a product to consumers, thispromotion should be viewed by resellers as being strongmanufacturer support. If the manufacturer promotes the

new brand with free sample and coupon distribution in theretailers area, a retailer views these actions as strongsupport and is much likely to handle the product. Toencourage wholesalers and retailers to increase theirinventories, the manufacturer may provide special offers andbuying allowances to resellers.

Combat Competitive Promotional EffortsAt times a marketers objective in using promotion is to

offset or lessen the effect of a competitors promotionalprogram. This type of promotional activity does notnecessarily increase the organizations sales or marketshare, but it may prevent a sales or market share loss. Acombative promotional objective is used most often by firmsin extremely competitive consumer products markets, suchas fast-food industry.For example, a local departmental store may mail outcoupons, redeemable only on Tuesdays and Wednesdays, to

residents living within a two-mile radius of the store for thepurchase of common items such as milk, bread, or eggs. Tooffset the effects of these coupons, a competing store couldadvertise in the newspaper that it will accept any storescoupons on any day of the week.

Reduce Sales FluctuationsDemand for many products varies from one month toanother because of factors such as climate, holidays, and

seasons. A business, however, cant operate at peakefficiency when sales fluctuate rapidly. When promotionaltechniques reduce fluctuations, a manager can use the firmsresources more efficiently.Promotional techniques are often designed to stimulate saleduring sales slumps. For example, advertisementspromoting price reduction of lawn care equipment can


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increase sales during fall and winter months. During peakseason periods, a marketer may refrain from advertising toprevent over-stimulating sales to the point that the firmcannot handle all the demand. A pizza outlet might

distribute coupons that are valid only Monday throughThursday because Friday though Sunday the restaurant isextremely busy.

To achieve the major objectives of promotion discussedabove, companies must develop appropriate programs.

Thus in a nutshell:Type of Promotion Intended Effect Consumer Contact Timing

Personal selling Sales Direct ShortSales Promotion Sales Semi-Direct ShortAdvertising Attitude/Behaviour Indirect Low-moderateDirect Marketing Behaviour Semi direct ShortPR Attitude Semi-direct LongPoint of Sales/Packaging Behaviour Direct Short


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Several promotional tools can used to communicate withindividuals, groups, and organizations. When an organization

combines specific elements to promote a particular product,that combination constitutes the promotional mix for thatproduct. The five possible elements of a promotion mix areadvertising, personal selling, public relations, directmarketing and sales promotion.

The four Possible Elements of a Promotion Mix are:

AdvertisingAdvertising is any paid form of nonpersonal presentation andpromotion of ideas, goods, or services by an identifiedsponsor. Advertisers include not only business firms, butalso museums, charitable organizations, and governmentagencies that direct messages to target publics. Ads are acost-effective way to disseminate messages, whether tobuildbrand preference for Coca-Cola or to educate peopleto avoid hard drugs.

Advertising ObjectivesThe advertising objectives must flow from prior decisions ontarget market, market positioning, and marketing mix.Advertising objectives can be classified according to whethertheir aim is to inform, persuade, remind, or reinforce. Theyaim at different stages in the hierarchy of effects.


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Informative advertising aims to create awareness andknowledge of new products or new features of existingproducts. Persuasive advertising aims to create liking, preference,

conviction, and purchase of a product or service. Somepersuasive advertising uses comparative advertising, whichmakes an explicit comparison of the attributes of two ormore brands. Reminder advertising aims to stimulate repeat purchase ofproducts and services. Reinforcement advertising aims to convince currentpurchasers that they made the right choice. Automobile adsoften depict satisfied customers enjoying special features of

their new cars.

The following qualities about advertising can be noted:Public presentation:

Advertisings public nature confers a kind of legitimacy onthe product and also suggests a standardized offering.Pervasiveness:

Advertising permits the seller to repeat a message manytimes. It also allows the buyer to receive and compare the

messages of various competitors. Large-scale advertisingsays something positive about the sellers size, power, andsuccess. Amplified expressiveness:Advertising provides opportunities for dramatizing thecompany and its products through the artful use of print,sound, and colour.Impersonality:

The audience does not feel obligated to pay attention or

respond to advertising. Advertising is a monologue in frontof, not a dialogue with, the audience.

Advertising can be used to build up a long-term image for aproduct (coca-cola ads) or trigger quick sales. Advertisingcan efficiently reach geographically dispersed buyers.Certain forms of advertising (TV advertising) can require a


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large budget, whereas other forms (newspaper advertising)do not. Just the presence of advertising might have an effecton sales: consumers might believe that a heavily advertisedbrand must offer good value.

The major advertising media along with their costs,advantages, and limitations are profiled in the table below.

Public relations and Publicity

Public Relations

Public Relations is a broad set of communications effortsused to create and maintain favorable relationships betweenan organization and its publics. An organization


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communicates with various publics, both internal andexternal. Public relations efforts can be directed toward anyand all of these. A firms publics can include customers,suppliers, employees, stockholders, the media, educators,

potential investors, government officials, and society ingeneral.Public relations efforts can be used to promote people,places, ideas, activities, and even countries. Public relationsfocuses on enhancing the image of the total organization.Assessing public attitudes and creating a favorable imageare no less important than direct promotion of anorganizations products. Because the publics attitudestowards a firm are likely to affect the sales of its products, it

is very important for firms to maintain positive publicperceptions. In addition, employee morale is strengthened ifthe firm is perceived positively by the public. Although publicrelations can make people aware of a companys products,brands, or activities, it can also create specific companyimages, such as innovativeness or dependability. By gettingthe media to report on a firms accomplishments, publicrelations also helps a company maintain positive publicvisibility. Some firms use public relations for a single

purpose and others for several purposes.

Public Relations Tools

Companies use a variety of public relations tools to conveymessages and to create images. Public relationsprofessionals prepare written materials, such as brochures,newsletters, company magazines, news releases, and annualreports that reach and influence their various publics. Public

relations personnel also create corporate identity materials,such as logos, business cards, stationery, and signs thatmake firms immediately recognizable. Speeches are anotherpublic relations tool. Because what a company executivesays publicly at meetings or to the media can affect theorganizations image, his or her speech must convey thedesired message clearly.


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Event sponsorship, in which company pays for part or all ofa special event, such as a benefit concert or a tennistournament, is another public relations tool. Sponsoringspecial events is an effective means of increasing brand

recognition with relatively minimal investment. Except forthe initial underwriting cost, event sponsorship can providecompanies with considerable amounts of free mediacoverage. Organizations try to make sure that their productsand the sponsored event target a consistent audience. Publicrelations personnel can also organize unique events tocreate news about the company. These can include grandopenings with celebrities, prizes, hot-air balloon rides, andother attractions that appeal to their publics.

Certain public relations tools have traditionally beenassociated specifically with publicity, which is a part of publicrelations.

Publicity

Publicity is communicated in news story form, about anorganization, its products, or both, that is transmittedthrough a mass medium at no charge. Although public

relations has a large, more comprehensive communicationfunction than publicity, publicity is a very important aspectof public relations. Publicity can be used to provideinformation about goods or services, to announceexpansions, acquisitions, research, or new-product launches,or to enhance a companys image.The most common publicity-based public relations tool is thenews release, some-times called a press release, which isusually a single page of typewritten copy containing fewer

than 300 words. A news release also gives the firms oragencys name, address, phone number, and contactperson. News release tackle a multitude of specific issues. Afeature article is a longer manuscript (up to 3,000 words)prepared for a specific publication. A captioned photographis a photograph with a brief description explaining thepictures content. Captioned photographs are effective for


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illustrating new or improved products with highly visiblefeatures.There are several other kinds of publicity-based publicrelations tools. A press conference is a meeting called to

announce major news events. Media personnel are invited toa press conference and are usually supplied with writtenmaterials and photographs. Letters to the editor andeditorials are sometimes prepared and sent to newspaperand magazines. Video- and audiotapes may be distributed tobroadcast stations in the hope that they will be aired.

Advantages of Publicity-based public relations tools

The use of publicity-based public relations tools gas severaladvantages including credibility, news value, significantword-of-mouth communications, and a perception of beingendorsed by the media. The public may consider the newsmore truthful and credible than an advertisement becausethe media is not paid to provide the information. In addition,stories regarding a new-product introduction or a new itemsand are likely to receive notice. Finally, the cost of publicityis low compared to the cost of advertising.

Limitations of Publicity-based public relations tools

Publicity-based public relations tools do have somelimitations. Media personnel must judge company messagesto be newsworthy if they are to be published or broadcast atall. Consequently, messages must be timely, interesting,accurate, and in the public interest. Many communicationsdo not qualify. It may take a great deal of time and effort to

convince media personnel of the news value of publicityreleases. Although public relations personnel usuallyencourage the media to air publicity releases at certaintimes, they control neither the content nor the timing of thecommunications. Media personnel alter length and contentof publicity releases to fit publishers or broadcastersrequirements and may even delete parts of messages that


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company personnel view as most important. Furthermore,media personnel use publicity releases in time slots orpositions most convenient for them. Thus messagessometimes appear in locations or at times that may not

reach the firms target audiences. Although these limitationscan be frustrating, properly managed publicity-based publicrelations tools offer an organization substantial benefits.The appeal of public relations and publicity is based on threedistinctive qualities:1) High credibility: news stories and fectures are moreauthentic credible to readers than ads.2) Ability to catch buyers off guard: public relations canreach prospects who prefer to avoid sales-people and

advertisements.3) Dramatization: Public relations have the potential fordramatizing a company or product.Marketers tend to under use public relations, yet a well-thought-out program coordinated with the other promotion-mix elements can be extremely effective.

Personal selling

It means face-to-face interaction with one or moreprospective purchasers for the purpose of makingpresentations, answering questions, and procuring orders.Personal selling is the most effective tool at later stages ofthe buying process, particularly in building up buyerpreference, conviction, and action. Personal selling has threedistinctive qualities:1) Personal confrontation: personal selling involves animmediate and interactive relationship between two or more

persons. Each party is able to observe the others reaction.2) Cultivation: personal selling permits all kinds ofrelationship to spring up, ranging from a matter-of-factselling relationship to a deep personal friendship.3) Response: personal selling makes the buyer feel undersome obligation for having listened to the sales talk.


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Direct marketing

It refers to use of mail, telephone, fax, e-mail, or internet tocommunicate directly with or solicit response or dialogue

from specific customers and prospects. The many forms ofdirect marketing direct mails, telemarketing, internetmarketing share four distinctive characteristics. Directmarketing is:1) Nonpublic: the message is normally addressed to aspecific person.2) Customized: the message can be prepared to appear tothe addressed individual.3) Up-to-date: a message can be prepared very quickly.

4) Interactive: the message can be changed depending onthe persons response.

Sales Promotion

Sales promotion is a variety of short-term incentives toencourage trial or purchase of a product or service by theconsumers or the trade (retailers).There has been increase in the sales promotion budgets of

all organizations. Even smaller firms and retail outlets likeShoppers Stops have had sales promotion campaigns. Thisgrowing significance can be attributed to the following:a) Growing consumerism in India and an upwardly mobileIndian market.b) Heightened inter-firm rivalry within the industry and infact, in all sectors of the economy.c) Trades resistance to invest additional resources in theproduct mix of different companies. This resistance is mainly

because of most consumer companies enlarging theirproduct mix to preempt competition and also to satisfydifferent consumer needs. Since the trade has limitedsources they find it difficult to invest in all companiesproducts. Hence, the trade also demands more incentives forany additional investment.d) Fragmentation of viewers an readers arising out of


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multiple television channels, newspaper and magazines.e) The mass media cost has been on the rise and mostcompanies find sales promotion a more cost effectivealternative.

f) With technologies and products getting standardized,differentiation between firms has got blunted and price warshave now become a reality in most consumer goods.

Benefits offered by sales promotions

It helps in securing trial and defending shelf space againstcompetition. Smoothens out the manufacturing capacities of firms in

such a way that the peaks and the valleys are minimized. Provides opportunities to manufacturers to reach outmarket segments with differing price sensitivity Adds excitement to the in-store merchandizing ofconsumer goods Motivates the trade to keep more and push more of thosebrands that are on promotion

Types of sales promotion

Sales promotion can be grouped into the following:A. Consumer sales promotions (Pull Strategy)B. Trade sales promotions (Push strategy)Consumer sales promotion methods encourage or stimulateconsumers to patronize specific retail stores or try particularproducts. Trade sales promotion methods stimulatewholesalers and retailers to carry a producers products andto market these products more aggressively.

Consumer Sales Promotion MethodsConsumer sales promotion methods used by retailers areoften aimed at attracting customers to specific locations,whereas those used by manufacturers are generally directedat introducing new products or promoting establishedbrands. Various sales promotion like coupons,demonstration, frequent-user incentives, point-of-purchase


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displays, free samples, money refunds, premiums, consumercontest and sweepstakes have been discussed withadvantages and disadvantages of each.

CouponsA coupon is a written price reduction used to encourageconsumers to buy a specific product. Coupons reduce aproducts price and are used to prompt customers to try newor established products, to increase sales volume quickly, toattract repeat purchasers, or to introduce new packagessizes or features.Coupons are distributed on and in packages, troughfreestanding inserts (FSIs), print advertising, direct mail,

and in stores through shelf dispensers, electronic dispensers,and at checkout counters. According to a survey, consumerspreferred methods of receiving coupons are through colourleaflets in Sunday newspaper (67%) and by mail (59%)

Advantages1. Print advertisement with coupons are often more effectivethan non-promotional advertising for generating brand

awareness. The larger the coupons cash offer, the betterthe recognition generated.2. Coupons reward present product users, win back formersusers, and encourage purchases in larger quantities.3. As they are returned, coupons also let a manufacturerdetermine whether it reaches the intended target market.

Disadvantages1. Fraud and Misredemption, which can be expensive for

manufacturers. The approximate redemption rate is 2.3%,with 25% of coupons accepted being misredemptions.2. Coupons are losing their value because so manymanufacturers offer them, consumers have learned not buywithout some incentive, whether it be a coupon, rebate orrefund.3. Brand loyalty among heavy coupon users has diminished,


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and many consumers only redeem coupons for productsthey normally buy. It is believed that about three-fourths ofcoupons are redeemed by people already using the brandon the coupon. Thus coupons have questionable success as

an incentive for consumers to try a new brand or productand then continue using it.4. Stores often do not have enough of the coupon item instock which generates ill will towards both the store and theproduct.

DemonstrationsDemonstrations are excellent attention getters.Manufacturers offer them temporarily to encourage trial use

and purchase of the product or to show how the productworks. They can be highly effective for promoting certaintypes of products, such as appliances, cosmetics, andcleaning supplies. As the labour costs can be high,demonstration are not used widely.

Frequent-User IncentivesMany firms develop incentive programs to reward customers

who engage in repeat (frequent) purchases. For example,most major airlines offer frequent-flyer programs throughwhich customers that have flown a specified number of milesare rewarded with free tickets for additional travel.Frequent-user foster customer loyalty to a specific companyor group of cooperating companies that provide extraincentive for patronage. They are favoured by servicebusinesses, such as auto rental agencies, hotels and creditcard companies as well as by consumer goods market.

Point-of-Purchase DisplaysPoint-of-purchase (P-O-P) materials include outside signs,window displays, counter pieces, display racks, and self-service cartons. These items, often supplied by products,attract attention, inform customers and encourage retailersto carry particular products. A retailer is likely is to use


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point-of-purchase materials if they are attractive,informative, well-constructed, and in harmony with thestore.

Free samplesMarketers use free samples for several reasons: to stimulatetrial of a product, to increase sales volume in the earlystages of a products life cycle, or to obtain desirabledistribution. Sampling is the most expensive of all salespromotion methods because production and distribution atlocal events, by mail or door-to-door delivery, in stores, andon packagesentail very high costs. Free samples aregenerally not appropriate for slow-turnover products.

Despite high costs, use of free samples is increasing. Inagiven year, it is not unusual for three-fourths of allconsumer product companies to use sampling.

Money refunds and rebatesWith money refunds, consumers submit proof of purchaseand are mailed a specific amount of money. Usually,manufacturers demand multiple product purchases beforeconsumers qualify for refunds. With rebates, the customer is

sent a specified amount of money for making a singlepurchase. These methods used primarily to promote trail useof a product, are relatively low in cost.One of the problems with money refunds and rebates is thatmany people perceive the redemption process as toocomplicated. Consumers also have negative perceptions ofmanufacturers reasons for offering rebate. They maybelieve that these are new, untested products or productsthat havent sold well. If these perceptions are not changed,

rebate offers may degrade the image and desirability of theproducts being promoted.

PremiumsPremiums are items offered free or at minimum cost as abonus for purchasing a product. They are used to attractcompetitors customers, introduce different sizes of


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established products, add variety to other promotionalefforts, and stimulate consumer loyalty. Inventiveness isnecessary, however; if an offer is to stand out and achieve asignificant number of redemptions, the premium must match

both the target audience and the brands image. To beeffective, premiums must be easily recognizable anddesirable. Premiums are placed on or in packages and canalso be distributed by retailers or through the mail.

Consumer Contests and SweepstakesIn consumer contests, individual compete for prizes basedon analytical or creative skills. This method generates retailtraffic. Marketers should exercise care in setting up a

contest. Problems or errors may anger consumers or resultin lawsuits. Contestants are usually involved in consumercontests than in sweep stakes, even though totalparticipation may be lower. Contests may be used inconjunction with other sales promotion methods, such ascouponsEntrants in consumer sweepstakes submit their names forinclusion in a drawing for prizes. Sweepstakes are used tostimulate sales and, as with contests, are sometimes

teamed with other sales promotion methods. Sweepstakesare used more often than consumer contests and tend toattract a greater number of participants. Sweepstakes costconsiderably less than contests. Successful sweepstakes cangenerate widespread interest and short-term increases insales or market share.


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Objectives of Consumer-oriented sales promotionThe broad objective of any sales promotion programme is toinduce trial and purchase of the product. As we consider thedifferent sales promotion programmmes, we can concludethat their objectives are any one or all of the following:

1) Generate consumer interest, which should lead to trial

This is one of the most vital objective in marketing,particularly in the case of new products and those productswhich are mature and hence do not excite the interest of theconsumer. Sales promotions designed to create excitementin the target market should help in generating trialpurchases. Free samples and coupons are some of theconsumer promotion schemes commonly used by firms.Offering gifts is another alternate way. Free trialsare very common in industry, particularly in cosmetics and

the premium range of toilet soaps and shampoos. Dove, apremium brand of toilet soap from Hindustan Levers urgesconsumers to try the 7-Day test to convince themselves ofthe claims being made by the company.Free samples and coupons have generally been found usefulin stimulating trial for low involvement products becausethey generate a low cost usage experience that may create


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favourable attitudes much faster than advertising. For, morecomplex and high involvement products, in-storedemonstrations seem to deliver better results. This may beattributed to the customers search for expert advice and

information. And in most high involvement products,generally it is the dealer or store sales person who is lookedup to as an expert.In the context of multi-product firms like mens toiletriesfirm, an organization may use vehicles like cross couponingto build trial for these products. In cross couponing thefirms objective is also to piggy ride a new product on itsexisting products, which already command loyalty andmarket leadership.

2) Generate inquires from the target customer groupAnother method of consumer promotion is to generateinquires from the target consumers. This is done throughmail-in coupons, free catalogues and prizes. Since theincentive offered is generally in the context of an advertisingmessage designed to introduce product benefits, thesevehicles should be developed in coordination with theadvertising programmes. This method is particularly useful

in the following situations:a) When the firm has to identify and attract prospectivecustomers, who are difficult to be identified because of theproduct conceptb) When the customers have to be frequently replenished,like in the context of educational institutions whosestationery stocks have to be periodically replenished; herethe supplier may offer mail-in coupons or even special pricesor gifts on festivals

c) When a new model or another version of a product orservice has been planned/introduced.

3) Build consumer traffic


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Shoppers Stop, a leading garment and accessories store inthe western suburbs of Mumbai, recently had a tie festival.Earlier it had several similar events either all by itself or in

collaboration with leading brands. Such special sales, festivalsales, or even entertainment events like Filmfare Awards aredesigned to build consumer traffic at retail outlets or for abrand.

4) Motivate customers to repeat their purchaseSeveral companies use promotion like first citizens club(Shoppers Stop) which promises the customer a free shirtor any garment on the purchase of a specific number of

garments. Likewise, Citibank with master card offers itsmembers JPMiles for every purchase made on the Citibankmaster credit card and by earning JPMiles one can fly freethrough Jet Airways. These tools are aimed at creatingbrand loyalty. Likewise, a firm may offer continuitypromotions like contests that run over several days andweeks or gifts distributed in increments over time. Frequentflyer programmes of airlines are another form of continuitypromotion.

5) Increasing rates of purchase

Strategically the firms motivation here is to retain thecustomer or to generate primary demand. Tactically, for theformer motivation, the firm may offer a multipack or a largepack at a lower price than the competition and its ownsmaller units. The net effect of this strategy is to make theconsumer stock the companys products brand above the

normal level. Any consumer who does that will not have themotivation to buy the competing brand.Sales promotion tools coupons, contests, premiums, andthe likeoffer three distinctive benefits:1) Communication: they gain attention and may lead theconsumer to the product.2) Incentive: they incorporate some concession,


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inducement, or contribution that gives value to theconsumer.3) Invitation: they include a distinct invitation to engage inthe transaction now.

Trade Sales Promotion Methods With the influx of so many brands and variants in themarket, there is a huge clutter and low consumerinvolvement leading to commoditisation of brands. Consumers are fatigued by the choices they have to makebetween nearly similar brands lacking a clear Rational orEmotional differentiator This makes the Retailers Push or recommendation

essential. He is becoming an essential part of the MarketingMix. He can choose not to sell/stock a brand. No matter how much advertising is done- if the product isnot available on the retail shelf- it will not be bought.To encourage resellers, especially retailers, to carry theirproducts and promote them effectively, producers use salespromotion methods. These include buy-back allowances,buying allowances, scan-back allowances, count andrecount, free merchandise, merchandise allowances,

cooperative advertising, dealer listings, premium or pushmoney, sales contests, and dealer loaders. Discussed belowis the analysis of each of these trade sales promotionschemes with advantages and disadvantages of each ofthem.

Buy-Back AllowancesA buy-back allowance is a sum of money given to a resellerfor each unit bought after an initial deal is over. This method

is a secondary incentive in which the total amount of moneythat resellers receive is proportional to their purchasesduring an initial trade deal, such as coupon offer. Buy-backallowance foster cooperation during an initial salespromotion effort and stimulate repurchase afterwards. Themain drawback of this method is expense.


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Buying AllowancesA buying allowance is a temporary price reduction toresellers for purchasing specified quantities. A soapproducer, for example, might give retailers Re 1 for each

case of soap purchased. Such offers may be an incentive tohandle new products, achieve temporary price reductions, orstimulate purchase of items in larger than normal quantities.The buying allowance, which takes the form of money, yieldsprofits to resellers and is simple and straightforward. Onehazard of buying allowances is that customers will buyforward, meaning that they buy large amounts that keepsupplied for many months. Another problem is thatcompetition can beat the reduced price, which can lower

profits for all sellers.

Scan-Back AllowancesA scan-back allowance is a manufacturers reward toretailers based on the number of pieces moved through theirscanners during a specific time period. To participate inscan-back programs, retailers usually are expected to passalong savings to consumers through special pricing. Scan-back are becoming widely used by manufacturers because

they directly link trade spending to product movement at theretail level.

Count and RecountThe count-and-recount promotion method is based onpayment of a specific amount of money for each productunit moved from a resellers warehouse in a given timeperiod. Units of a product at the start of the promotion andagain at the end to determine how many units have moved

through the warehouses and can also clear distributionchannels of obsolete products or packages and reducewarehouse inventories. The count-and-recount methodmight benefit a producer by decreasing resellersinventories, making resellers method might benefit aproducer by decreasing resellers inventories, makingresellers more likely to place new orders. However, this


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method is often difficult to administer and may not appeal toresellers with small warehouses.

Free Merchandise

Free merchandise is sometimes offered at resellers whopurchase stated quantities of the same or different products.Occasionally, free merchandise is used as payment forallowances provided through other sales promotionmethods. To avoid handling and book-keeping problems, thegiving of free merchandise is usually accomplished byreducing the invoice.

Merchandise Allowances

A merchandise allowance is a manufacturers agreement topay resellers certain amounts of money for providingpromotional efforts, such as advertising or displays. Thismethod is best suited to high-volume, high-profit, easilyhandled products. Its major drawback is that some retailersperform activities at a minimally acceptable level simply toobtain allowances. Before paying retailers, manufacturersusually verify their performance. Manufacturers hope thatretailers additional promotional efforts will yield substantial

sales increases.

Cooperative AdvertisingCooperative advertising is an arrangement whereby amanufacturers agrees to pay a certain amount of a retailersmedia costs for advertising the manufacturers products. Theamount allowed is usually based on the quantitiespurchased. Before payment is made, a retailer must showproof that advertisement did appear. These payments give

retailers additional funds for advertising. Some retailersexploit cooperative advertising programs by crowding toomany products into one advertisement. Surprisingly, not allavailable cooperative advertising amounts are used. A largeproportion of all cooperative advertising amount are spenton newspaper advertisements.


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Dealer ListingDealer listing are advertisements promoting a product andidentifying participating retailers that sell the product.Dealer listings can influence retailers to carry the product,

build traffic at the retail level, and encourage consumers tobuy the product at participating dealers.

Premium, or Push MoneyPremium, or Push money is additional compensationprovided to salespeople by the manufacturers in order topush a line of goods. This promotion method is appropriatewhen personal selling through self-service. The methodoften helps manufacturers obtain commitment from the

sales force, but it can be very expensive.

Sales contestsA sales contest is designed to motivate distributors,retailers, and sales personnel by recognizing outstandingachievements. To be effective, this method must beequitable for all salespersons involved. One advantage of themethod is that it can achieve participation at all distributionlevels. However, positive effects may be temporary, and

prizes are usually expensive.

Dealer loadersA dealer loader is a gift to a retailer who purchases aspecified quantity of merchandise. Often dealer loaders areused to obtain special display efforts from retailers byoffering essential parts as premiums. For example, amanufacturer might design a display that includes a sterlingsilver tray as a major component and give the tray to the

retailer. Marketers use dealer loaders to obtain newdistributions and push larger quantities of goods.


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Objectives of Trade PromotionsThe prime objective of trade promotion is to push theproduct through marketing intermediaries and also to getthem to market the product aggressively. As inter-firmrivalry intensifies, more and more manufacturers will seeksupport of traders to aggressively market their product. Thetrader, too, has become selective and wiser and hence

demands substantial incentives from manufacturers to pushtheir brands in the market.

If we were to scan various promotional tools like shelfdisplay contest, merchandize allowance, returns allowance,joint promotions, we will find that there are two objectivesthat explain their use:

a) Encouraging trade to build inventory

Any promotional tool designed to motivate trade to investand build inventory of a particular brand at the expense ofa competing brand is a good tactical weapon to preemptcompetition. This is also useful when marketers developconsumer-oriented promotions to boost their sales, as theydo during the festive season.During such occasions it is necessary to prevent anystockouts in the retail market. Thus, manufacturers mayoffer special margins or extra merchandise at no additional

cost or even offer allowances for additional shelf and spaceor pay rent for additional godown space for a limited timeperiod. The manufacturers may even offer to promotespecific retail outlets for those who join his trade promotionprogramme.In the case of new products, manufacturers may offer thetrader additional margins, pay for promotions, part pay the


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wholesaler/retailers salesmen salaries or may offer cashincentives.

b) Getting trades cooperation in promotions

Often the manufacturer wants the distributor/wholesaler toparticipate in his promotional activities. One reason for thisis because it can help lower promotion costs of themanufacturer. Another reason is, it helps heighten theinterest and motivation of the distributor in the companysbrand/products. It also helps get a commitment form thedistributor. Here Joint advertising, joint consumerpromotions and joint sales contexts among retailers in theterritory are some of the commonly used vehicles.

Generally, in such situations, a major proportion of thepromotional expenditure is borne by the manufacturers.Companies use sales-promotion tools to draw a stronger andquicker buyer response. Sales promotion can be used forshort-run effects such as to dramatize product offers andboost sagging sales.

Sales Promotion: Organizational PerspectiveCase Study: Nestle India Ltd.

Sales Promotion Activity: Operation Area Storm for MaggiExtra Taste

A popular perception is that sales promotions can havenegative impact on brands equity, a part of which is createdby Advertising, Publicity, and Public Relations. A naturalquestion that arises is, why do companies spend crores ofrupees on advertising to boost a brands image whilesimultaneously spend crores of rupees on sales promotions


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that call attention to price and, therefore, erode equity?Furthermore, many companies seem to increase promotionalspending at the expense of media advertising.So is there any justification for carrying out extensive sales

promotion activities for companies like Nestle India Ltd.when results in the long run will be detrimental to the brandimage of the company. Or sales promotional activities fulfillobjectives oblivious to popular marketing perceptions.If we take a look at the promotional strategies adopted byNestle India Ltd., we observe that Nestle relies heavily onsales promotion with respect to its products that fall withinthe processed foods category. As far as beverages andchocolates and confectionery are concerned Nestle employs

all the elements of the promotional mix to inform, educate,remind, persuade consumers.In effect promotional strategies differ from oneorganization to another based on their belief of the role ofpromotions in marketing.Without getting into the debate and forming an opinion, wethrough a little bit of toil, poking and needling managed togather information vis--vis one of Nestle India Ltds salespromotion exercises which was implemented in the city of

Mumbai called the Operation Area Storm. The projectlasted for a period of two months from 15.05.02 to28.07.02.

Through a detailed study of their project by way ofrummaging through secondary data and interactions with afew company personnel, I attempted to understand howsales promotion activities are conducted, what are theobjectives for such activities and how they serve as excellent

feedback mechanisms for organizations.Secondary DataMaggi Extra TasteOperation Area Storm(15.05.02 to 28.07.02)

Operation Area Storm was initiated as part of Flavour World


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Project to popularize Maggi Extra Taste (Maggi SuperSeasoning Cubes).

This activity was carried out in a lower income group locality

at Vikhroli (Kannawar Nagar), one of the central suburbs ofMumbai city.

Flavour World Project, objective of which is to popularizeMaggi Extra Taste has been limited to Mumbai and Pune,although Maggi cubes are available throughout the country.Nestle believes that the markets for Maggi Extra Taste needfurther development and the current volumes(approximately 300 tonnes) warrant additional levels of

awareness.As a result Flavour World Project was confined to two citiesto determine receptivity and sales potential.

Brief about Vikhroli (Kannamwar Nagar)Vikhroli-Kannamwar Nagar is one of the central suburbs ofMumbai city en-route to Thane on the Eastern ExpressHighway. It has a population of approximately 40000(majority Maharashtrians) from both middle as well as lower

income groups.The nagar has 100 buildings of 40 flats each and 196 chawlsof 25 to 30 flats each.It was an ideal location to conduct an activity of this kindand also conveniently measure its impact/effectiveness.

Scope of Operation Area Storm The consumption of Maggi cubes was mostly restricted tocommunities like Christians and Parsis. This was an ideal

opportunity to introduce the cubes to a different set ofconsumers. The project could be treated as test marketing for it to bereplicated in other cities and areas to attract non-traditionalconsumers.

Objectives to be achieved


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Popularize the concept of Maggi Extra Taste. Make Maggi Extra Taste an integral part of local cuisine. Identify regional recipes with Maggi Extra Taste

The entire exercise was divided into the following stages Conceptualization Actual Methodology Employed Feedback

The ConceptThe idea was to reach the residents by way of sampling,one-to-one briefing about the use of the cubes, attractiveschemes and redemption offers. While awareness would be

created for the cubes, it would also serve the purpose ofascertaining receptivity and sales potential in cities andareas dominated by non-traditional consumers of Maggicubes.

Actual Methodology EmployedThe activity began by extending distribution of cubes

through various outlets in and around the targeted area.Awareness about the coming activity was communicated to

the residents of the Nagar by way of wall paintings, bannersand rice headers (kirana shops).

This was followed by a dealers (retailers) meet. The ideawas to involve them in Operation Area Storm in the followingways: Existing dealers to be made to stock higher volumes ofMaggi cubes for the length of the activity Get new dealers into the existing supply chain

High visibility for Maggi cubes in the various outlets(shops)

The dealers were sufficiently compensated by way ofincentives and also giveaways like plastic utility items, waistpouches, dealer boards, parchi books etc.


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Sampling was done by contacting all residents in theNagar. Teams of 40 promoters went to each building in theNagar with samples of cubes and a questionnaire to getimmediate feedback. Each of the residents was also provided

with recipe leaflets that contained local recipes prepared byusing the cubes.

This led to a one-to-one contact with the consumer whowere then effectively briefed on Maggi cubes

Each questionnaire had a tear off slip with details of aredemption offer. The offer allowed a certain number of

empty pillows of cubes to be redeemed for plastic utilityitems bearing Maggi logo. The redemption of empties was tobe carried out at the retail outlets.

Cook-n-serve meets were organized for groups of 15-20ladies in the area where local recipes prepared by usingMaggi cubes were displayed. A minimum of 20 such Cook-n-serve meets was organized during the period of the activity.

In-shop (retail outlets) activities like aggressive point-of-purchase displays and sampling to visiting customers wasalso carried out for the entire duration of Operation AreaStorm.The following gives a date-wise schedule of the two monthexercise:Sr. No. From To Activity

1 15.05.02 16.05.02 Extension of distribution of cubes. Creating awareness for the intended activity (OperationArea Storm).2 17.05.02 Dealers Meet3 17.05.02 19.05.02 House to house activity through 40promoters4 21.05.02 28.07.02 Commencement of Cook-n-serve


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meets. Commencement of In-shop activities and sampling at bothretail outlets and at strategically acquired stalls withincolonies in the Nagar.

5 29.06.02 30.07.02 Redemption of cube empties at selectoutlets.

List of Materials used

Feedback Feedback was solicited both from the dealers and theconsumers alike. The activity was a success in terms ofcreating awareness for the above product category andmanaged to achieve more than the projected sales volumes. Also the questionnaire that consumers were asked to fill

during the sampling done gave valuable insights into theexisting food patters of people in the locality, penetration ofcompetitors products in the same category and receptivityof Maggi Extra Taste. As operation area storm was not conducted to drive upvolumes to achieve short-term sales targets, the success ofthe campaign helped gauge consumer preferences for such a


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product category.

Effectiveness vis--vis levels of awareness and volumes In an area where awareness about the product wasdismally low, rise in sales during the activity and afterconfirmed Nestles belief in Maggi Extra Taste as a massproduct instead of it being confined to only selectcommunities with particular food patterns. All variants of Maggi Extra Taste like Chicken, Veg, Lemon,and Prawn notched up sales equivalent to the first quarter

sales (January-April); during the two-month period of theactivity. The activity also helped induct new stockists into theexisting supply chain. The exercise evoked a favorableresponse from all the dealers who readily agreed to stock upMaggi cubes and facilitated in-shop activities in return forsome innovatively designed schemes and incentives. In addition to high visibility and awareness for Maggi ExtraTaste, entire Maggi range of products benefited extensively

with the exercise.

Suggestions

The area storm activity proved very effective andimpactful for a product category like Maggi TasteThis activity could be conducted once a quarter for a Maggi


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Taste in and around wet markets / any other area forgreater visibility and awareness of Maggi Extra Taste.This concept could be useful for any new product category

as a support to other multiple below the line activities.

Branding and Promotion: An Uneasy cohabitationSales promotion seems to be the easiest and the best bet forsome quick wins in the marketplace. It is an effective tool toincrease the sales in the short run. Though it can help meet

short term sales targets, marketers are not very clear aboutits effects on Brand image.Branding and promotions are not always good bedfellows.For example When McDonalds enters into a promotion warwith rival Burger King and begins touting 99-cent Big Macs,it Damages more than its bottom line. Its because pricepromotion runs counter to the image of Everyday Value


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that was one of the four pillars Quality, Service,Cleanliness and Value which is the McDonalds mantra.During Ray Krocs tenure, price promotions were banned.A price promotion means that you are offering more value

during the promotional period than at other times. Itdiscloses a pricing flexibility, which in the eyes of yourcustomer, you could not have if value was central to youroperation.Branding creates predictability; Promotion relies on creatingurgency

Does this mean that you should not run promotions?Not at all! At least not without doing some homework. It

means a few important pointers enlisted below: A good promotion must justify its existence. Somethinglike a new store opening, a company anniversary, etc. Youcant fool the customer after a few times and you willjeopardize your credibility and branding efforts.For exs- Haagen Dazs could do an annual promotion on oraround 9th July for itsDulce de Leche ice creamand coincide with the ArgentineNational day, the flavour

and the name originated in Argentina

Formalise the promotion planning process to include amandatory rationale for the existence and the timing of eachpromo. Look at every promo not only as a short termtactical job- but also as a communication tool. Brand Building Promotions are very rarely seen becausethey require extra work by the promotion tacticians (prdtmanagers) to accomplish a strategic purpose that few

companies have formalized. But use of imagination isrequired like researching into historical events or oddcharacters- like Sylvester Graham who promoted Grahamflour,etc. Wherever the inspiration, exercise creativity tocreate brand centric promo opportunities.

Co-ordinate advertising about the Sales promotion with


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actual availability of the offer at the retail outlets. Neglect tothis aspect leads to consumer disillusionment anddissatisfaction.

Sales Promotion can bolster marketing efforts in adownturn or recessionary period--New products can be introduced in this period. Productrange must be expanded-Must generate good Word of Mouth Publicity-Keep in touch with your customers and constantly delivermore VFM.

Sales promotionary offers also helps in generating

Customer Loyalty- if the product it supports is of goodquality.

It is important to realize that the Retailer is an importantlink of your Supply Chain- he is in the business of makingmoney and 30% of the times he will get your customer toswitch over to a better deal offering brand. At the sametime care must be taken to see that this does not lead tohim overtly taking advantage of his trade interests and

making unreasonable demands Marketing as a Concept

The concept of marketing is essentially a concept ofcustomer orientation. For a long time it has been preachedthat customer is king. What this implies is thatproducts/services are bought not merely because of theirquality, packaging or brand name, but because they satisfya specific need of a customer. It also implies thatorganizations have to provide services to their customer and

that too without any obligations. In other words, marketingmeans understanding and responding to customer needs,prerequisite for any organizations success. And this cannotbe ignored by any organization in todays competitiveenvironment.However, to be successful, any organization has to becompetition oriented too. It has to continuously determine


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its competitive advantage and should take steps to furtheraugment it. Thus, the marketing concept involves:a) Customer orientationb) Competition orientation

c) The ability to respond to environmental changes (changesin consumer needs, competition, government policy,technology, etc) before the competition.

Marketing as a PROCESS

The process of marketing involves an exchange transactionbetween the buyer and seller. In this form, the origin ofmarketing can perhaps be traced to the first known human

civilization. The barter system is well known to us. Today, inthis system, money has replaced the commodity. What thenis the difference between marketing and barter other thanthe means of exchange? The difference lies in the fact thatmarketing emphasis on the mutual satisfaction of boththebuyer and the seller. In this exchange transaction, theunderlying assumption is the developing of a long-termrelationship between them. The buyers gain is thesatisfaction on the purchase and the subsequent

consumption of the product, whereas the sellers gain is theprofit that he/she makes on such a transaction. If the buyeris not satisfied, then the transaction has been, at best, aselling transaction, and if the seller does not make a profit,then it has been a dumping transaction. Thus, to be termedas a marketing transaction, the exchange must result inmutual satisfaction to both the buyer and the seller. Theessence of this is:a) Marketing is an exchange processboth buyer and seller

must have something to give to each other.b) Both the buyer and the seller must gain.c) It should result in a long-term satisfying relationshipbetween both of themrelationship management is crucialto successful business.

Marketing as a Managerial Function


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Marketing as a managerial activity involves analyzing themarket opportunities, planning the marketing activities,implementing marketing plans and setting control

mechanisms in such a way that organizational objectives areaccomplished at the minimum cost.

In other words, marketing is:a) Understanding consumer needsb) Environment scanning and market opportunity analysisc) Development of a competitive marketing plan andstrategy that an organization is able to satisfy not only theconsumers needs but also achieve its own objectives

d) Implementation of the marketing plan and developmentof tactical plans to overcome problems at the market placee) Development of control mechanisms

This perspective implies that in order to achieve competitiveadvantage, a firm needs to scan its external environment tospot market opportunities. Its marketing mix needs to fit thelocal market dynamics. Further, in order to ensure a highrate of customer acquisition and retention, firms marketing

mix has to be customer centric.Marketing management, therefore, is a critical functionespecially in highly competitive markets. It can provide themuch needed competitive advantage to an enterprise,irrespective of its size and product mix.

Marketing tools

The marketers task is to build a marketing program or plan

to achieve the companys desired objectives. The marketingprogram consists of numerous decisions on the mix ofmarketing tools to use. The marketing mix is the set ofmarketing tools the firm uses to pursue its marketingobjectives in the target market. These tools are classifiedinto four broad groups that are called the four Ps ofmarketing: product, price, place, and promotion.


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The particular marketing variables under each P are shown

in the figure. marketing-mix decisions must be made forinfluencing the trade channels as well as the finalconsumers. The following figure shows the companypreparing an offering mix of products, services, and prices,and utilizing a promotion mix of sales promotion,advertising, sales force, public relations, direct mail,telemarketing, and Internet to reach the trade channels andthe target customers.

The firm can change its price, sales force size, andadvertising expenditures in the short run. It can developnew products and modify its distribution channels only in thelong run. Thus the firm typically makes fewer period-to-


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period marketing-mix changes in the short run than thenumber of marketing-mix decision variables might suggest.

Note that the four Ps represent the sellers view of the

marketing tools available for influencing buyers. From abuyers point of view, each marketing tool is designed todeliver a customer benefit. Also the sellers four Pscorrespond to the customers four Cs.

Four Ps Four CsProduct Customer solutionPrice Customer cost

Place ConveniencePromotion Communication

Promotion means communicating with Individuals, groups,or organizations to directly or indirectly facilitate exchangesby informing and persuading one or more audiences toaccept an organizations products.A variety of organizations spend considerable resources onpromotion. Marketers indirectly facilitate exchanges by

focusing information about company activities and productson interest groups (such as environmental and consumergroups), current and potential investors, regulatoryagencies, and society in general. Some marketers usecause-related marketing, which links purchase of theirproducts to philanthropic efforts for a particular causefavored by their target market. Marketers also sponsorspecial events, often leading to news coverage and positivepromotion of an organization and its brands.

From this wider perspective, promotion plays acomprehensive communication role. Some promotionalactivities help a company justify its existence and maintainpositive healthy relationships between itself and variousgroups. Although companies can direct a single type ofcommunicationsuch as an advertisementtowardnumerous audiences, marketers often design a


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communication precisely for a specific target market. A firmfrequently communicates several different messagesconcurrently, each to a different group.

For maximum benefit from promotional efforts, marketersstrive to properly plan, implement, coordinate, and control

communications. Effectively promotional activities are basedon information about customers and the marketingenvironment, often obtained from an organizationsmarketing information system. How successfully marketersuse promotions to maintain positive relationships demandlargely on the quantity and quality of information anorganization receives. Because promotions basic role iscommunication, we should analyze what communication isand how the communication process work

Promotion and the Communication Process

Communication can be viewed as the transmission ofinformation. For communication to take place, both thesender and receiver of information must share somecommon ground. They must share a common understandingof the symbols, words, and pictures used to transmitinformation. Thus communication is defined as a sharing of

meaning. Implicit in this definition is the notion oftransmission of information because sharing necessitatestransmission.As the figure below shows, communication begins with asource. A source is a person, group, or organization with ameaning it intends and attempts to share with an audience.A source could be a salesperson wishing to communicate a


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sales message or an organization wanting to send amessage to thousands of customers through anadvertisement. A receiver is the individual, group, ororganization that decodes a coded message, and an

audience is two or more receivers.

To transmit meaning, a source must convert the meaninginto a series of signs representing ideas or concepts. This iscalled the coding process, or encoding. When codingmeaning into a message, a source must consider certaincharacteristics of the receiver or audience. To sharemeaning, the source should use signs that are familiar to thereceiver or audience. Marketers who understand this realizehow important it is to know their target market and to make

sure that an advertisement, for example, uses a languagethat the target market understands.To share a coded meaning with the receiver or audience, asource selects and uses a medium of transmission. Amedium of transmission carries the coded message from thesource to the receiver or audience. When a source choosesan inappropriate medium of transmission, several problemsmay arise. A coded message may reach some receivers, butnot the right ones. Coded messages may also reach

intended receivers in incomplete form because the intensityof the transmission is weak.In decoding process, signs are covered into concepts andideas. Seldom does a receiver decode exactly the samemeaning that a source coded. When the result of decoding isdifferent from what was coded, noise exists. Noise isanything that reduces the clarity and accuracy of the


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communication; it has many sources and may affect any orall parts of the communication process. Noise sometimesarises within the medium of transmission itself. Noise alsooccurs when a source uses signs that are unfamiliar to the

receiver or that have a different meaning from the oneintended. Noise also may originate in the receiver. Areceiver may be unaware of a coded message whenperceptual processes block it out.The receivers response to a message is feedback to thesource. The source usually expects and normally receivesfeedback, although perhaps not immediately. Duringfeedback, the receiver or audience is the source of a message

directed toward the original source, which then becomes areceiver. Feedback is coded, sent through a medium oftransmission, and decoded by the receiver, the source of theoriginal communication. Thus communication is a circularprocess.During face-to-face communication, such as a personalselling situation or product sampling, verbal and nonverbalfeedback can be immediate. Instant feedback letscommunicators adjust messages quickly to improve the

effectiveness of their communication. For example, when asalesperson realizes through the feedback that a consumerdoes not understand a sales presentation, the salespersonadapts the presentation to make it more meaningful to thecustomer. When mass communication such as advertising isused, feedback is often slow and difficult to recognize.Advertisers obtain feedback in the form of changes in salesvolume or in consumers attitudes and awareness levels.FLOW CHART OF HOW TO GO ABOUT DECIDING &

EVALUATING PROMOTIONAL MIX

ResearchStage


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StrategicStage


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Product Life-Cycle StagePromotional tools vary in cost effectiveness at different

stages of the PLC.

- In the Introduction/Infancy stage, advertising and publicityhave the highest costeffectiveness, followed by personal selling to gaindistribution coverage and salespromotion to induce trial.

- In the Growth stage, all the tools can be toned downbecause demand has its ownmomentum through word of mouth.

- In the Maturity stage, sales promotion, advertising andpersonal selling all grow moreimportant in that order.


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- In the Decline stage, sales promotion continues strong,advertising and publicity arereduced and sales people give the product only minimal

attention.

As we can see, Sales Promotion in specific is very importantover the various stages of the Product Life Cycle.

Promotional objectives differ considerably from oneorganization to another and within organizations over time.Large organizations with multiple promotional programsoperating simultaneously may have quite varied promotionalobjectives. Lets have detailed look at some of thepromotional objectives:

Createawareness

A considerable amount of promotion is directed at creatingawareness. For an organization introducing a new product,new brand, or brand extension, making customers aware iscrucial to initiating the product adoption process. A marketerthat has invested heavily in product development strives tocreate product awareness quickly in order to generaterevenues to offset the high costs of product developmentand introduction.Creating awareness is important for existing products, too.

Promotional efforts may be aimed at increasing brandawareness, product feature awareness, and awareness ofimage related issues (such as organizational size or sociallyresponsive behaviour). Some organizations are unsuccessfulbecause marketers fail to generate awareness of criticalissues among a significant portion of target marketmembers.


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Stimulate DemandWhen an organization is the first to introduce an innovativeproduct, it tries to stimulate primary demanddemand for a

product category rather than for a specific brand of productthrough pioneer promotion. Pioneer promotion informspotential customers about the product: what it is, what itdoes, how it can be used, and where it can be purchased.Because pioneer promotion is used in the introductory stageof the product life cycle, which means that there nocompeting brands, it neither emphasizes brand names norcompares brand. Primary demand stimulation is not just fornew products. At times an industry trade association, rather

than a single firm, uses promotional efforts to stimulateprimary demand.To build selective demand, which is demand for a specificbrand, a marketer employs promotional efforts on thestrengths and benefits of a specific brand. Building selectivedemand requires promotional efforts that single outattributes important to potential buyers and the specificattributes of the brand. Promotional techniques aresometimes used to stimulate selective demand by

differentiating the product from competing brand in theminds of potential buyers. Stimulating selective demand byincreasing the number of product uses is sometimesaccomplishes through advertising campaigns, as well asthrough free samples, coupons, and consumer contests andsweepstakes. Promotion for large package sizes or multiple-product packages are directed at increasing consumption,which in turn can stimulate demand.

Encourage Product TrialWhen attempting to move customers through the productadoption process, marketer may be successful at creatingawareness and interest, but then a significant proportion ofcustomers stall during the evaluation stage. Thus certaintypes of promotion, such as free samples, coupons, testdrive or limited free-use offers, contests, and games, are


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employed to encourage product trial.

IdentifyProspectsCertain types of promotional efforts are directed at

identifying customers who are interested in the firmsproduct and are most likely to buy. A marketer may utilize amagazine advertisement with a direct response informationform, requesting the reader to complete and mail the formto receive additional information. Customers who fill outinformation blanks or call the organization usually havehigher interest in the product, which makes them possiblesales prospects.

Retain Loyal customersClearly, maintaining long-term customer relationships is amajor goal of most marketers, because such relationshipsare quite valuable. Promotional efforts directed at customerretention can help an organization control its costs becausethe costs of retaining customers are usually considerablylower than those of acquiring new ones. Frequent userprograms, such as relied on by airlines, hotels, aim atrewarding loyal customers and encouraging them to remain

loyal.

Facilitate Reseller SupportStrong relationships with resellers are important to a firmscapability to maintain a sustainable competitive advantage.Producers generally want to provide support to resellers tomaintain sound working relationships, and producers, in turnexpect to get support for their products from resellers. Whena manufacturer advertises a product to consumers, this

promotion should be viewed by resellers as being strongmanufacturer support. If the manufacturer promotes thenew brand with free sample and coupon distribution in theretailers area, a retailer views these actions as strongsupport and is much likely to handle the product. Toencourage wholesalers and retailers to increase theirinventories, the manufacturer may provide special offers and


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buying allowances to resellers.

Combat Competitive Promotional EffortsAt times a marketers objective in using promotion is to

offset or lessen the effect of a competitors promotionalprogram. This type of promotional activity does notnecessarily increase the organizations sales or marketshare, but it may prevent a sales or market share loss. Acombative promotional objective is used most often by firmsin extremely competitive consumer products markets, suchas fast-food industry.For example, a local departmental store may mail outcoupons, redeemable only on Tuesdays and Wednesdays, to

residents living within a two-mile radius of the store for thepurchase of common items such as milk, bread, or eggs. Tooffset the effects of these coupons, a competing store couldadvertise in the newspaper that it will accept any storescoupons on any day of the week.

Reduce Sales FluctuationsDemand for many products varies from one month toanother because of factors such as climate, holidays, and

seasons. A business, however, cant operate at peakefficiency when sales fluctuate rapidly. When promotionaltechniques reduce fluctuations, a manager can use the firmsresources more efficiently.Promotional techniques are often designed to stimulate saleduring sales slumps. For example, advertisementspromoting price reduction of lawn care equipment canincrease sales during fall and winter months. During peakseason periods, a marketer may refrain from advertising to

prevent over-stimulating sales to the point that the firmcannot handle all the demand. A pizza outlet mightdistribute coupons that are valid only Monday throughThursday because Friday though Sunday the restaurant isextremely busy.

To achieve the major objectives of promotion discussed


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above, companies must develop appropriate programs.

Thus in a nutshell:Type of Promotion Intended Effect Consumer Contact Timing

Personal selling Sales Direct ShortSales Promotion Sales Semi-Direct ShortAdvertising Attitude/Behaviour Indirect Low-moderateDirect Marketing Behaviour Semi direct ShortPR Attitude Semi-direct LongPoint of Sales/Packaging Behaviour Direct Short

Several promotional tools can used to communicate withindividuals, groups, and organizations. When an organizationcombines specific elements to promote a particular product,that combination constitutes the promotional mix for thatproduct. The five possible elements of a promotion mix areadvertising, personal selling, public relations, directmarketing and sales promotion.


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The four Possible Elements of a Promotion Mix are:

AdvertisingAdvertising is any paid form of nonpersonal presentation andpromotion of ideas, goods, or services by an identifiedsponsor. Advertisers include not only business firms, butalso museums, charitable organizations, and governmentagencies that direct messages to target publics. Ads are acost-effective way to disseminate messages, whether tobuildbrand preference for Coca-Cola or to educate peopleto avoid hard drugs.

Advertising ObjectivesThe advertising objectives must flow from prior decisions ontarget market, market positioning, and marketing mix.Advertising objectives can be classified according to whethertheir aim is to inform, persuade, remind, or reinforce. Theyaim at different stages in the hierarchy of effects. Informative advertising aims to create awareness andknowledge of new products or new features of existing

products. Persuasive advertising aims to create liking, preference,conviction, and purchase of a product or service. Somepersuasive advertising uses comparative advertising, whichmakes an explicit comparison of the attributes of two ormore brands. Reminder advertising aims to stimulate repeat purchase of


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products and services. Reinforcement advertising aims to convince currentpurchasers that they made the right choice. Automobile adsoften depict satisfied customers enjoying special features of

their new cars.

The following qualities about advertising can be noted:Public presentation:

Advertisings public nature confers a kind of legitimacy onthe product and also suggests a standardized offering.Pervasiveness:

Advertising permits the seller to repeat a message manytimes. It also allows the buyer to receive and compare the

messages of various competitors. Large-scale advertisingsays something positive about the sellers size, power, andsuccess. Amplified expressiveness:Advertising provides opportunities for dramatizing thecompany and its products through the artful use of print,sound, and colour.Impersonality:

The audience does not feel obligated to pay attention or

respond to advertising. Advertising is a monologue in frontof, not a dialogue with, the audience.

Advertising can be used to build up a long-term image for aproduct (coca-cola ads) or trigger quick sales. Advertisingcan efficiently reach geographically dispersed buyers.Certain forms of advertising (TV advertising) can require alarge budget, whereas other forms (newspaper advertising)do not. Just the presence of advertising might have an effect

on sales: consumers might believe that a heavily advertisedbrand must offer good value.The major advertising media along with their costs,advantages, and limitations are profiled in the table below.


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Public relations and Publicity

Public Relations

Public Relations is a broad set of communications effortsused to create and maintain favorable relationships betweenan organization and its publics. An organizationcommunicates with various publics, both internal andexternal. Public relations efforts can be directed toward any

and all of these. A firms publics can include customers,suppliers, employees, stockholders, the media, educators,potential investors, government officials, and society ingeneral.Public relations efforts can be used to promote people,places, ideas, activities, and even countries. Public relationsfocuses on enhancing the image of the total organization.


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Assessing public attitudes and creating a favorable imageare no less important than direct promotion of anorganizations products. Because the publics attitudestowards a firm are likely to affect the sales of its products, it

is very important for firms to maintain positive publicperceptions. In addition, employee morale is strengthened ifthe firm is perceived positively by the public. Although publicrelations can make people aware of a companys products,brands, or activities, it can also create specific companyimages, such as innovativeness or dependability. By gettingthe media to report on a firms accomplishments, publicrelations also helps a company maintain positive publicvisibility. Some firms use public relations for a single

purpose and others for several purposes.

Public Relations Tools

Companies use a variety of public relations tools to conveymessages and to create images. Public relationsprofessionals prepare written materials, such as brochures,newsletters, company magazines, news releases, and annualreports that reach and influence their various publics. Public

relations personnel also create corporate identity materials,such as logos, business cards, stationery, and signs thatmake firms immediately recognizable. Speeches are anotherpublic relations tool. Because what a company executivesays publicly at meetings or to the media can affect theorganizations image, his or her speech must convey thedesired message clearly.Event sponsorship, in which company pays for part or all ofa special event, such as a benefit concert or a tennis

tournament, is another public relations tool. Sponsoringspecial events is an effective means of increasing brandrecognition with relatively minimal investment. Except forthe initial underwriting cost, event sponsorship can providecompanies with considerable amounts of free mediacoverage. Organizations try to make sure that their productsand the sponsored event target a consistent audience. Public


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relations personnel can also organize unique events tocreate news about the company. These can include grandopenings with celebrities, prizes, hot-air balloon rides, andother attractions that appeal to their publics.

Certain public relations tools have traditionally beenassociated specifically with publicity, which is a part of publicrelations.

Publicity

Publicity is communicated in news story form, about anorganization, its products, or both, that is transmittedthrough a mass medium at no charge. Although public

relations has a large, more comprehensive communicationfunction than publicity, publicity is a very important aspectof public relations. Publicity can be used to provideinformation about goods or services, to announceexpansions, acquisitions, research, or new-product launches,or to enhance a companys image.The most common publicity-based public relations tool is thenews release, some-times called a press release, which isusually a single page of typewritten copy containing fewer

than 300 words. A news release also gives the firms oragencys name, address, phone number, and contactperson. News release tackle a multitude of specific issues. Afeature article is a longer manuscript (up to 3,000 words)prepared for a specific publication. A captioned photographis a photograph with a brief description explaining thepictures content. Captioned photographs are effective forillustrating new or improved products with highly visiblefeatures.

There are several other kinds of publicity-based publicrelations tools. A press conference is a meeting called toannounce major news events. Media personnel are invited toa press conference and are usually supplied with writtenmaterials and photographs. Letters to the editor andeditorials are sometimes prepared and sent to newspaperand magazines. Video- and audiotapes may be distributed to


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broadcast stations in the hope that they will be aired.

Advantages of Publicity-based public relations tools

The use of publicity-based public relations tools gas severaladvantages including credibility, news value, significantword-of-mouth communications, and a perception of beingendorsed by the media. The public may consider the newsmore truthful and credible than an advertisement becausethe media is not paid to provide the information. In addition,stories regarding a new-product introduction or a new itemsand are likely to receive notice. Finally, the cost of publicityis low compared to the cost of advertising.

Limitations of Publicity-based public relations tools

Publicity-based public relations tools do have somelimitations. Media personnel must judge company messagesto be newsworthy if they are to be published or broadcast atall. Consequently, messages must be timely, interesting,accurate, and in the public interest. Many communicationsdo not qualify. It may take a great deal of time and effort to

convince media personnel of the news value of publicityreleases. Although public relations personnel usuallyencourage the media to air publicity releases at certaintimes, they control neither the content nor the timing of thecommunications. Media personnel alter length and contentof publicity releases to fit publishers or broadcastersrequirements and may even delete parts of messages thatcompany personnel view as most important. Furthermore,media personnel use publicity releases in time slots or

positions most convenient for them. Thus messagessometimes appear in locations or at times that may notreach the firms target audiences. Although these limitationscan be frustrating, properly managed publicity-based publicrelations tools offer an organization substantial benefits.The appeal of public relations and publicity is based on threedistinctive qualities:


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1) High credibility: news stories and fectures are moreauthentic credible to readers than ads.2) Ability to catch buyers off guard: public relations canreach prospects who prefer to avoid sales-people and

advertisements.3) Dramatization: Public relations have the potential fordramatizing a company or product.Marketers tend to under use public relations, yet a well-thought-out program coordinated with the other promotion-mix elements can be extremely effective.

Personal selling

It means face-to-face interaction with one or moreprospective purchasers for the purpose of makingpresentations, answering questions, and procuring orders.Personal selling is the most effective tool at later stages ofthe buying process, particularly in building up buyerpreference, conviction, and action. Personal selling has threedistinctive qualities:1) Personal confrontation: personal selling involves animmediate and interactive relationship between two or more

persons. Each party is able to observe the others reaction.2) Cultivation: personal selling permits all kinds ofrelationship to spring up, ranging from a matter-of-factselling relationship to a deep personal friendship.3) Response: personal selling makes the buyer feel undersome obligation for having listened to the sales talk.

Direct marketing

It refers to use of mail, telephone, fax, e-mail, or internet tocommunicate directly with or solicit response or dialoguefrom specific customers and prospects. The many forms ofdirect marketing direct mails, telemarketing, internetmarketing share four distinctive characteristics. Directmarketing is:1) Nonpublic: the message is normally addressed to a


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specific person.2) Customized: the message can be prepared to appear tothe addressed individual.3) Up-to-date: a message can be prepared very quickly.

4) Interactive: the message can be changed depending onthe persons response.

Sales Promotion

Sales promotion is a variety of short-term incentives toencourage trial or purchase of a product or service by t

Documents

Marketing as a Concept