CHAPTER 10PROMOTION METHODS

ADVERTISING Versatility of Advertising: Multiple Objectives

PUBLICITY Applications (or objectives) of Publicity Methods of Generating Publicity

PERSONAL SELLING Personal Selling Process Supporting Personal Selling

SALES PROMOTION Trade Sales Promotion Consumer Sales Promotion Retailer Sales Promotion

01. ADVERTISING

Advertising is calling on buyers to “act”. Even for established brands, buyers need to be reminded — so that they will never ever forget!The popularity of advertising as a method of promotion is easily understood when we now discuss its versatility:

1.1 VERSATILITY OF ADVERTISING: MULTIPLE OBJECTIVESAdvertising is versatile. It has multiple purposes or applications. There are more specific promotional objectives that can be achieved by advertising

Stimulate primary demand. Primary demand is the demand for a product as opposed to a particular brand or model. Pioneers and early entrants use advertising to stimulate (Encourage) the demand for the product to the target market (usually the innovators). Hence, this normally occurs at the introduction stage of the product’s life cycle. Ex: Apple single handedly stimulated the demand for the tablet by spending massive‐ amounts on advertising of its iPad®.

Stimulate selective demand. Here, advertising attempts to increase the desire for a particular brand or model. The brand’s relative advantages are presented. Now that we all know want a smartphone is and can do. Samsung, Blackberry and Nokia are promoting the advantages of their brand/model over the iPhone®. Comparative advertising is an extreme form of such advertising where the advertised brand is openly compared against other named brands. Pepsi used to openly claim that “2 out of 3 people preferred the taste of Pepsi over Coke”. Such a strategy is risky because the advertiser can be subjected to litigation if the claim is proved to be unfounded.

Position or differentiate the brand. Advertising to position a brand involves giving the brand a strong and lasting meaning. We learn better through visual cues. Therefore, consumers are more likely to associate a brand with visible attributes or themes, than with ones that are intangible or verbalized. Advertisers are always seeking to point out the product’s unique selling proposition— those features that differentiate it from competing products.

Ex: The public may have an expectation that Volvo or Mercedes Benz’s advanced safety‐ features may be unique when in fact they are not. A pair of jeans is just a pair of jeans — but Levi’s is the original, the legend.

Pre sell the product or brand‐ . Some advertisements are intended to work their way gradually over time. The consumer is ready to purchase some of the time, but not all of the time. Advertising to pre sell a product is to maintain a‐ level of awareness of, and interest in, the product. So, when the right time comes, the consumer is more inclined to purchase that product. Ex: There is never a right time to buy a color printer. But when the time comes, the Canon Bubble Jet™ Why are we able to do that? Through our sub conscious exposure to advertising messages over time‐

Remind or reinforce buyers. The aim is to ensure that the brand remains on the top‐of‐mind position, and the brand’s association is strengthened. It’s impossible to think of Cadbury® without thinking of chocolate. Colgate will always be toothpaste.

Promote the corporation Corporate advertising can raise a company’s public profile and visibility. It can also enhance the company’s reputation and integrity — but this can be misinterpreted as blowing one’s own trumpet. Publicity may be a better option in this case — by letting others say how good the corporation is. Customers will be more willing to purchase goods & services from a strong, well respected and‐ socially responsible corporation.

2. PUBLICITYPublic relations include a broad set of communication activities employed to create and maintain favorable relations between the company and the public. Publicity is more specific to the creation of communication in news story form that is transmitted by the mass media at no charge.

2.1 APPLICATIONS (OR OBJECTIVES) OF PUBLICITYThe primary objective of publicity is to generate favorable news stories about the company or

its products through the mass media. However, publicity is ideal for the following specific situations:

Promoting newsworthy events and products. A newsworthy event or product is one that is of public interest. An unusual or exciting event can attract the attention of the media and so can an innovative or novel product. Should a business be involved in such an opportune situation, the media must be immediately approached to generate the much valued “free” publicity. ‐Tiger Woods winning a golf tournament is back page news but his infidelity is front page headlines.‐ ‐

Build corporate profile and reputationAs businesses are themselves major advertisers in the mass media, their good deeds are often publicized by the media as a return of favor. A new local restaurant gets a favorable write up (publicity) in the community newspaper at the time of opening. There is the expectation that the restaurant will start to advertise regularly in that newspaper. The company is heavily involved in community events, social causes and sponsorship of junior sports.

Changing beliefs or attitude. The news story comes from the media, a third party that is apparently independent, credible, and objective. Respected journalists specialize and are regarded as experts in their respective fields (sports, politics, business, motor vehicles, fashion, food, movies, music, books, computing, etc.).An IT editor reviews the latest laptop computer from Toshiba for the computer and IT section of the local newspaper. The review should be conducted independently and objectively — stating both strengths and weaknesses. The favourable review can force a change of opinion about the brand and that does more than what advertising alone can “buy” or hope to achieve.

2.2 METHODS OF GENERATING PUBLICITY

Press conference. This is also known as a news or media conference. For announcements to the media of very significant events. The editor or news director decides whether the story gets published and in what manner.

Press release. The object is the same as a press conference. (Releases the information electronically, by telephone, or on paper). This is the most common method of seeking publicity or media coverage since the business can “hit” many journalists at the same time

Guest appearance, etc. The guest appearance of celebrities on scheduled TV and radio programs like talk shows and current affairs are there to promote their films, concerts.

Event creation and sponsorship. These are events that are deliberately created or sponsored to promote a product in news coverage. In other words, the event is the means to generate publicity for the product. In many cases, the product itself is not newsworthy. So, the business will create a newsworthy event surrounding the product. Pie eating contest, world record “attempts”‐

Press relationship. This is not an easy task. Leave it to the professionals who already have an established relationship with the media for mutual benefits. A media organization may depend on businesses for “insider” stories, especially exclusive ones, and businesses rely on the media for publicity.

03. PERSONAL SELLINGPersonal selling can be best described as the process of informing customers and persuading them to purchase products. Personal selling is not restricted to the designated sales staff. Anyone who has face to face‐ ‐ dealings with customers is actually

involved in personal selling. 3 different situations where personal selling is usually engaged

1. Field selling: Sales representatives will sell to service retailers, such as in the case of Coca Cola’s‐ reps. Large manufacturers do their own wholesaling by bypassing the traditional wholesaler. (Salesperson goes out to the “field” to visit customers)2. Direct marketing activities: using sales staff to sell to consumers at their home — sometimes it’s door to door; other times it could be a pre-arranged “party” selling. (Insurance, cable TV)‐ ‐3. In‐store retailing. Retailers’ own sales assistants advising and serving shoppers. Service providers like travel agents and banks also have sales staff engaged in face to face selling.‐ ‐

3.1 PERSONAL SELLING PROCESSIn addition to the actual selling of the product, sales staff are also involved in order taking, handling‐ the return of goods, relationship building, and after sales servicing.‐ That is why it is important to support the personal selling tasks with other methods of promotion.

Prospecting and qualifying. Prospecting involves developing a database of potential customers known as the prospects. Prospects can be sought from several sources such as past sales records, telephone/trade directories.(Potential customers for projectors are easy to identify — schools, large corporations but the customers for home insulation, window curtains harder to pin point)‐ Approaching. The referral approach involves the salesperson explaining to the customer that an associate of his suggested the sales call. The cold canvass method is where the salesperson calls on the customers without their prior consent.

Presenting. The salesperson must not only describe the product's features but also relate them to the customer’s specific product needs. The salesperson is a problem‐solver for the customer. A vacuum cleaner is not just a powerful motor to suck dirt. It’s a time saving device. A health device.‐This allows the product to be handled and demonstrated. The presentation is flexible, with the messages not fixed as in advertising. The salesperson can handle queries immediately and respond accordingly.

Closing. Closing is difficult because it requires the customer to make a decision. The customer may have genuine reasons to not purchase or to delay purchase. Supporting personal selling may have the answer to address this problem stage.

Following‐up. Some may consider this stage optional because the sale has already been closed. That’s not quite right. Marketing is about customer satisfaction and that goes well beyond the final transaction. Follow up‐ ensures that everything is in order and pleased with the product. This can involve an actual visit.

3.2 SUPPORTING PERSONAL SELLINGIt is true that personal selling is the primary method of promotion for the marketing of services and unsought products and in in store selling. The personal selling tasks are too important to be left to‐ work alone. If the sales staff fail to perform, so will the business.

Therefore, other additional methods of promotion must be employed to support the business’s personal selling tasks:

Corporate advertising Can enhance the company’s reputation and corporate image. It can also raise a company’s public profile and visibility. Potential customers will be more confident dealing with a finance and insurance company that is well known‐ like Allianz. Their receptiveness to the company and its products makes the salesperson’s approach stage

much easier.

Product advertising Creates awareness and interest (pre selling) in the product. Customers who are knowledgeable about‐ the product will be more easily sold to. The selling effort is reduced and time is saved. Therefore, product advertising can assist in the salesperson’s presentation stage.

Direct response advertisingSome advertisements are designed to stimulate interest and encourage potential customers to call‐in by visiting the store or showroom. Customers can also call‐up (by telephone) to arrange a future sales visit. Either way, the prospect has been identified and create the approaches the potential customer.

Sales promotion incentives. Wouldn’t it be ideal if the product being sold by the salesperson comes with an added bonus or incentive of some sort? The product becomes more attractive and easier to close the sale. (Chapter 8 the importance of building a long term seller buyer relationship between the supplier and the‐ ‐ retailers)

4. SALES PROMOTIONMany sales promotion activities are short–term and are aimed at producing immediate result. They are costly but effective. (3 types: Trade sales, consumer sales, and retailer sales promotion)

4.1 Trade Sales PromotionIn an attempt to "push" the products through the trade (retailers) a supplier would normally offer some hard to‐ ‐resist incentives to retailers. These trade sales promotion

incentives are designed to encourage retailers to “stock and support” the supplier's products and brands.

Objectives: To get retailers to stock and support the product 1. Increase in‐store promotions 2. Motivate individual retail staff 3. Secure better and more shelf space

Strategies: Incentives to achieve the above 1. Trade discounts. 2. Quantity discounts. Additional discounts are given for the purchase of large or bulk quantities.3. Advertising allowances. Cooperative advertising is an arrangement whereby the supplier

contributes toward the cost of the retailer’s advertisements in exchange for its products or brands being featured.

4. Stocking fees. This is usually a one off payment for the product to be stocked. Initial costs‐ involved in administration and handling. Therefore, the fees are sometimes “disguised” as administrative charges or special handling charges, etc.

5. Dealer listing. Supplier advertises the product and includes the names and details of the few participating retailers. Dealers appreciate such cooperative promotion and will reciprocate.

6. Territorial exclusivity. One of the biggest concerns of conventional store based retailers is the‐ fact that the same product can be sold in many outlets — and very close together. It enables shoppers to easily shop around for the lowest price — squeezing the margins of all the outlets.

7. Training of retail staff and incentives. A supplier may actually undertake to train the retailer’s sales staff to ensure that they are well equipped with adequate product knowledge to advise shoppers. An individual salesperson will be more inclined to recommend a brand that he or she is most familiar with.

8. Promotional materials and other marketing support. A supplier can provide fridges, display shelves, brochures and even al fresco umbrellas, tables and chairs to these outlets.

4.2 Consumer Sales Promotion

These are incentives (rewards, inducements, sweeteners, special offers, deals and so on) given by the supplier to its consumers to obtain a certain “response” from

Objectives: To get customers to act 1. Trial of a new product. 2. Encourage brand switching. 3. Encourage immediate

purchase. Early bird gets the worm

4. Facilitate large purchases.5. Build brand loyalty.

6. Draw consumer attention.

Strategies : Incentives to achieve the above 1. Free samples are given to get consumers to quickly try the new product — try before you buy.2. Introductory prices (or offers) are offered to encourage the first time purchase of a new‐

product as a trial. It’s similar to free samples but not as costly. 3. Discount vouchers can get consumers to switch brands, buy quickly, buy more, purchase more

so on. A major concern is loyal customers taking advantage of these vouchers every time. 4. Cash rebates represent “money back” directly from the supplier. 5. Contests and competitions entice buyers into purchasing a certain quantity in order to

participate in the contest. Proof of purchase is required. ‐ ‐6. Frequent‐buyer plans can encourage brand loyalty. Reward points are given each time the

product or brand is bought. Airlines’ frequent flyer programs.‐7. Multi‐packs are offered to encourage large purchase quantities. Beer, bath soaps, toilet tissues

4.3 Retailer Sales Promotion

Objectives: “Principles of Retailing” 1. Increase store traffic: Attracting shoppers, just to window shop. But, it’s a good start. 2. Encourage larger or more purchases per visit — “buy more while you’re here”. 3. Increase store loyalty — “come back soon”. A conventional retail store is fixed at a given

location.

Strategies: I ncentives: 1. In–store demonstrations. Fashion designers can organize fashion parades within the premises

of a store. A cosmetic house can conduct free make over sessions by a renowned make up artist.‐ ‐2. Product bundling. Combo meals found in fast food chains. ‐ cross‐selling where other (related)

products are sold — pasta and pasta sauce, haircut and manicure, bank account and credit card

3. Store discount and discount vouchers. Discounts are given for the purchase of a specific item or any item from the participating store.

4. Loss leaders. These are heavily discounted sale items that are advertised to attract more shoppers with the hope that they will also end up buying other products at regular prices.

5. Frequent‐shopper plans. Points are given to shoppers in proportion to the amount purchased. These can be accumulated and redeemed for cash vouchers or goods.