business marketing -module_4

The Promotional

Strategies

Promotional Strategies

The promotional mix for industrial products &

services is different from the promotional mix for

consumer goods.

This is due to the fact of technical nature of

industrial product and relatively smaller in

industrial buyers and complex nature of

organizational buying process.

Developing the Industrial Communication

The major steps involved in developing effective

communication or promotional programme are:

• Determine communication objectives

• Identify the target audiences

• Determine the promotional budget

• Develop the message strategy

• Select the media

• Evaluate the promotion’s results

• Integrate the promotional programme

Determining the communication objectives

Promotional objectives are formulated based on the

firm’s overall corporate and marketing objectives.

Once the objectives are established, an industrial

firm choose the strategies and actions required to

achieve the set objectives.

Before determining communication objectives, the industrial

marketer should find out the communication problems. This

can be done by collecting the data ( Through marketing

research) on the existing levels of awareness and attitudes of

the existing & prospective customers.

Data would help in setting specific communication goal.

• Data collections permits measurement of the quantified

communication objectives.

• The purpose of the communication programme is to move the

potential buyer from unawareness to buying action.

3 stages of Buying behavior

• Buyer’s awareness levels

• Changes in buyer’s attitudes

• Buying actions

Identifying the target Audience

• BM must be clear about the target audience. In Industrial

Marketing the target market is clearly classified at 2 levels

and they are

Firstly, identify the buying organization based on the target

segments.

Secondly, identify the attitudes & buying factors used by

buying centre (committee) in the organizations

It is importance to assess the target audience’s current image of

the company, its products, and its competitors. This

information can be obtained by conducting a market

research study to understand the awareness levels and

attitudes of the buying centre members. The data will also

be useful in developing message strategy and media plan.

Determine the Promotional Budget

• This is most difficult decisions the companies are

facing is the questions as to “how much to spend

on promotional or what should be the promotional

or communications budget”

The promotional budget consist of advertising, sales

promotion, direct marketing, and publicity.

• There are four common methods used to set a

promotional budget, they are

Affordable budget

Percentage of sales method

Competitive-parity method

Objective-task method

Affordable Budget Method

• Many companies set this type of method on what they think

the company can afford.

• This method ignores the role of promotional as an

investment and its impact on sales volume

Percentage of Sales Method

• This is most common method used in Industrial Marketing

to set the expenditure budget for promotion is a specified %

of sales, either sales in the previous year or in the current

year/ Forecasted sales.

• At times a % of sales , an “what are the other competing

firms doing” and what can we afford”, thus using all the 3

methods.

The promotional budget is decided in two steps,

Firstly, total marketing budget

Secondly, the advertising or promotional budget

Advantages:

• The finance managers are satisfied that the

promotional expenses have a close relationship to

the sales.

• The method considers affordability

• The parity with competitors is maintained.

Disadvantages:

It does not encourage building up promotional

budget by determining what each product and

territory deserves.

Competitive- Parity Method

Fewer companies set their promotional budget by spending the same

percentage of the sales on promotion as that of competitors. There

are two arguments in this method.

1. Average expenditure of the companies would represent a

collective wisdom of the industry.

2. Maintaining the parity with the competitors, it would help to

prevent promotional wars.

Objective and Task Method

In this method, IM develop their promotion budgets by defining

promotional objectives, determining the tasks that should

performed to achieve the promotional objectives, and estimating the

costs of performing the tasks.

The sum of these costs is the proposed promotional budget, this

method is relatively logical steps involved.

Objective and Task Method

In this method, IM develop their promotion budgets by defining

promotional objectives, determining the tasks that should

performed to achieve the promotional objectives, and

estimating the costs of performing the tasks.

The sum of these costs is the proposed promotional budget, this

method is relatively logical steps involved.

Advantage

It forces firm to think in terms of objectives/goals &

how to achieve those goals.

Disadvantage

It has difficulty of determining in advance the

amount of funds required to achieve these goals

Developing the Message Strategy

This indicates how to achieve the communication

objectives. The message/ Theme/Appeal is

developed to determine “what to say” to the target

audience so as achieve the desired results.

In BM, the message should be more rational. The

rational appeals are developed either from position

strategy or by conducting MR studies.

BM should remember two important points while

developing communication messages.

Firstly, Any Industrial Buyers are fairly well

informed or knowledgeable.

Secondly, Instead of the message discussing product

features, the message should focus on customer

benefits

Selecting the Media

This criteria depends on the target audience to be reached,

the statement of the communication objectives, and the

promotional budget.

The selection depends on whether the advertiser wishes to

penetrate a particular industry or various industries

The selection depends on the circulation & cost of

advertising space. The different communication/

Promotional tools/ P Media that used in BM are…

Communication/ P Tools & P Media Used

Promotion

al Tools

Advertisi

ng

Sales

Promotion

Public

Relations

&

Publicity

Direct

Marketing

Personal

Selling

Promotional

Media,

And

Promotional

Supports

•Print

media

•General

Business

•Trade

journals

•Industrial

directories

•Trade Shows

•Exhibitions

•Catalogues

•Sales

Contests

•Promotional

Novelties

•Seminars

•Demonstratio

n

•Promotional

Letters

•Entertainme

nt

•Charitabl

e

donations

•Adopting

villages

•Communi

ty

relations

•News

item in

press

•Direct Mail

•Telemarket

ing

•On-line

Marketing

channels

•Sales calls

•Sales

presentatio

n

•Team

selling

•Relationshi

p marketing

Effectiveness of P Media

Ranking Promotional Media Index of

Effectiveness

1 Personal Selling 100

2 Catalogues, Specifications Sheets 46

3 Direct Mail 39

4 Advertising 38

5 Trade Shows and Exhibitions 35

6 Samples, demonstrations 34

7 Publicity & Public relations 31

8 Customer entertainment 26

9 Promotional gift ( Novelties) 24

Evaluating the Promotion’s Results

After selecting and Implementing the promotional

plan it is necessary for the industrial marketer to

evaluate its impact on the target audience. An

evaluation is needed before and post promotional

plan is implemented.

MR conducted after Promotional plan to position to

themselves in favorable, indifferent or

unfavorable.

The major mistakes in practice are

1. Failure to quantify the promotional objectives

into measurable goals

2. Not to plan evaluation.

Integrating the Promotional Programme

Many Companies have recognized the importance of integrating

the promotional plan and are adopting the concept of

Integrating marketing communications (IMC)

The basic objective is to provide clarity, consistency, maximum

impact, and cost-effectiveness to the company's

communication plan. To achieve this objective the following

are suggested…

• The company should appoint the head of communication

• The company should build a database by measuring the

results 0f the promotional plan in relation to the

communication goals, cost effectiveness of P Media, and

message consistency.

• Conduct the training for all the persons handling various

tools so that they think of integrating.

Role of Advertizing in IM

Promotional Tools

Consumer Markets

Promotional Tools

Industrial Markets

Advertrizing

Sales Promotion

Personnal Selling

Direct Selling

Publicity & PR

R

e

l

a

t

i

v

e

S

p

e

n

d

i

n

g

Functions Performed by Industrial

Advertizing:

• Functions by Industrial Advertizing are

considered, there are many valid reasons to advertise

industrial product or services. They are:

a. Creating Awareness

b. Reaching Members of Buying Centre

c. Increasing sales Efficiency & Effectiveness

d. Efficient Reminding

e. Sales Lead Generation

f. Support Distribution Channel Members

g. Sales Growth during Recession

Media Used for Industrial Advertizing

Selection of Media in IM depends on the target audience to be

reached, P Objectives/Goals to be achieved, expenditure

budget allocated for advertizing budget or cost is measured

by the following formula.

Cost /Thousand= Cost/ Page

_______

Circulation in Thousand

The Media generally used for Industrial advertising are

• General business publications

• Horizontal Publications

• Vertical Publications

• Trade journals and

• Industrial directories.

The Role of Sales Promotion, Public Relations, Publicity

& Direct Marketing In BM

Sales Promotion: the objectives in BM are to gatherleads, impressing, rewarding customers &stimulating the sales force to greater effort. Themethods used in IM for Sales Promotion.

• Trade Shows

• Sales Contests

• Seminars

• Demonstration

• Catalogues

• Promotional Letters

• Entertainment

• Promotional Novelties

Role of Direct Marketing:

• Direct Mail

• Telemarketing

• Online Marketing Channels

Role of Publicity & Public Relations

They typically located at head Quarters deals

various categories of people.

Publicity is more credible and low cost compare to

advertising.

Organizing

the Sales Force

Typical Methods of Organizing the

Sales Force

• Line Organizations (& Line/Staff)

• Functional Organizations

• Specialization Organization

• Sales Activities

• Geographic Areas

• Products

• Customers

A Simple Line Organization

Salesperson A Salesperson B Salesperson C

Sales Manager

A Two-Level Line Organization

Salesperson

Region A

Sales Manager

Salesperson

Region B

Sales Manager

Salesperson

Region C

Sales Manager

Sales Manager

Line Organizations

• Advantages

• Very simple to understand and use.

• Easy to trace accountability.

• Relatively inexpensive (only a few highly-paid

executives are necessary)

• Quick action possible since decision-making is in

hands of relatively few people.

• Disadvantages

– As organization size increases, problems become

more complex.

– Specialized skills often needed.

– Many sales managers cannot keep on top of all

functions that relate to sales.

– Lack of trained replacements.

A Line & Staff Organization

Market Forecaster

Salespeople

Region A

Sales Manager

Salespeople

Region B

Sales Manager

Salespeople

Region C

Sales Manager

Training Director

Sales Manager

Line and Staff Organizations

• Characteristics

• Same as line organization except staff positions added

• Staff positions don’t have authority over line positions

• Advantages

• Staff provide sales manager with specialized skills

• Allows sales manager to be more efficient/ effective.

• Doesn’t dilute his/her authority/contact w/salespeople.

A Functional Organization

Salespeople

Region A

Sales Manager

Salespeople

Region B

Sales Manager

Training Director

Salespeople

Region C

Sales Manager

Market Forecaster

Sales Manager

Functional Organizations

• Characteristics

• Organization divided by function.

• Functional specialists have line authority.

• Salespeople report to multiple bosses.

• Advantages

• Specialist ensure their functions are carried out.

• Should improve performance in each functional area due to the

specialization.

• Disadvantages

• Can be more expensive than a line organization.

• Conflicts may arise between line & staff executives.

• Staff executives may attempt to exert authority over line

personnel.

• Line executives may ignore the counsel of the staff

Centralized vs. Decentralized?

Factors That Influence

• Size of Sales Force

• As sales force size increases, the need to decentralize increases.

• Span-of-control problems emerge

• More field managers will be necessary

• Decentralization more feasible

Sales Organizations

• Geographical Organization

• Product Organization

• Combination of Product and Geographical

• Market Organization

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Sales Force Administration

Recruitment and Selection

Training

Supervision and Motivation

Evaluation and Control

Managing the Sales Force

• Recruitment and selection begins with Selection criteria:

• Human relation skills, communication skills, Technical background, job knowledge etc

• Personal interviews

Training Industrial sales force

• Aims

• Contents(Company product and Market

information)

• Methods

• Execution

• Evaluation

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Managing the Sales Force

• Training topics include:• Company background, products

• Customer characteristics

• Competitors’ products

• Sales presentation techniques

• Procedures and responsibilities

• Training time needed and training method used vary with task complexity

Managing the Sales Force

• Motivating the Sales Force

• Most valued rewards

•Pay, promotion, personal growth, sense of

accomplishment• Least valued rewards

•Liking and respect, security, recognition• Sales quotas as motivation tools

• Supplementary motivators

Orville Walker Jr., Gilbert Churchill Jr., and Neil Ford define

motivation as:

The amount of effort the salesperson “desires to expend on each of

the activities or tasks associated with his (her) job, such as calling

on potential new accounts, planning sales presentations, and filling

out reports.”

Determinan

ts of a

Salesperso

n’s

Performanc

e

Two Types of Rewards

1. Internally mediated rewards

2. Externally mediated rewards

Developing the sales force

• BLAKE AND MOUTON MANAGERIAL GRID

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BLAKE AND MOUTON MANAGERIAL GRID

1-43

Evaluating the Sales Force

• Sources of information

•Sales or call reports, personal observation, customer letters and complaints, customer surveys, other representatives

• Formal evaluation

•Performance comparisons

•Knowledge assessments

Evaluation

• Quantitative

• Comparison of actual sales performance with sales

quota or goals

• Sales expenses to Total sales

• Number of customer Developed

• Increase in market share

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Qualitative

• Customer satisfaction

• Product Knowledge

• Sales Presentation

• Team Orientations

• Negotiating skills

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Management By Objectives(MBO)

(Effective control tool)

• Joint Goal setting

• Review actual performance periodically

• Identify reasons for deviations

• Corrective actions

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Deployment of sales force

• Setting up of sales territories

• Determining size of sales force

• Allocating sales force to the sales territories

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A critical sales management task: deploying the sales

force.

Deployment Decisions Facing Sales Organizations

• Deployment analysis

matches sales resources to

market opportunities.

• A sales resource

opportunity grid can be

used to classify the

industrial firm’s portfolio of

PCU’s.

• PCU opportunity is the

total potential that the

PCU represents for all

sellers.

• Sales organization strength

includes the competitive

advantages or distinctive

competencies that the firm

enjoys within the PCU.

Sales Resource

Opportunity Grid