1. Chapter 14 Global Marketing Decisions: Sales Promotion, Personal Selling, Special Forms of Marketing Communication
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2. Sales Promotion
Sales promotion refers to any paid consumer or trade communication program of limited duration usually aimed at stimulating sales / trials
Price (rebates, discounts, coupons) vs. non-price promotions (sampling, premiums, sweepstakes, contests, etc.)
Consumer vs. trade promotions (increase availability in channel)
Nonprice promotions may take the form of free samples, premiums, “buy one, get one free” offers, sweepstakes, and contests. Consumer sales promotions may be designed to make consumers aware of a new product, to stimulate nonusers to sample an existing product, or to increase overall consumer demand. Trade sales promotions are designed to increase product availability in distribution channels. At many companies, expenditures for sales promotion activities have surpassed expenditures for media advertising. At any level of expenditure, however, sales promotion is only one of several marketing communication tools. Sales promotion plans and programs should be integrated and coordinated with those for advertising, public relations, and personal selling.
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3. Sales Promotion
Provide a tangible incentive to buyers (lower prices, etc.)
Reduce the perceived risk associated with purchasing a product (sampling)
Provide accountability for communications activity (results can be tracked)
Provide method of collecting additional data for database (forms to be filled in)
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4. Sales Promotion: Global or Local
In countries with low levels of economic development, low incomes limit the range of promotional tools available
Free samples, demonstrations
Market maturity can also be different from country to country
Coupons and sampling in growing markets
Trade allowances and loyalty programs in mature markets
These factors must be taken into account when determining the extent to which the promotion must be localized.
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5. Sales Promotion: Global or Local
Local perceptions of a particular promotional tool or program can vary
Coupon usage not popular in India
Local regulations may rule out use of a particular promotion in certain countries
Trade structure in the retailing industry can affect the use of sales promotions
Consolidated retail structures require more trade promotions (USA, Europe)
Fragmented retail structures (India) require less trade promotions
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6. Sampling
Sampling
Provides consumer with opportunity to try product at no cost
May be distributed in stores, in the mail, through print media, at events, or door-to-door
Point-of-use sampling (Starbucks’ chill patrols; Mylanta introduction in India)
Point-of-dirt sampling (Unilever’s Lever 2000 hand wipes in food courts and petting zoos)
Marc Pritchard, vice president of global cosmetics and personal care at Procter & Gamble, noted recently, “The most fundamental thing that consumers want to do is try before they buy.” The average cost-per-sample for such promotional programs can range from 10 cents to 50 cents; 2 million to 3 million samples are distributed in a typical sampling program. Cost is one of the major disadvantages associated with sampling; another problem is that it is sometimes difficult for marketing managers to assess the contribution a sampling program makes to return on investment.
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7. Couponing
Couponing
Printed certificates entitle the bearer to a price reduction or some other special consideration for purchasing a particular product
Couponing accounts for 70% of consumer promotion spending in the US
Free standing inserts, on-pack coupons, in-pack coupons, cross coupons)
Coupons are a favorite promotion tool of consumer packaged goods companies such as Procter & Gamble and Unilever. The goal is to reward loyal users and stimulate product trial by nonusers. In the European Union, couponing is widely used in the United Kingdom and Belgium. Couponing is not as widely used in Asia where saving face is important. Although Asian consumers have a reputation for thriftiness, some are reluctant to use coupons because doing so might bring shame upon them or their families.
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8. Couponing Stimulate trial by non-users
Operant conditioning of users (Kroger’s 20 cents a gallon price off on gas)
Not widely used in Asia since using a coupon is considered a sign of cheapness
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9. Couponing Regulations for Coupon distribution for various countries.
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10. Sales Promotion: Issues and Problems
Consumer fraud
Pepsi promotion with Apple
Regulations vary by country
Europe regulates promotions heavily
Cultural dispositions to coupons and other sales promotions
Malaysia, India see coupon usage as embarrassing
Islam frowns on gambling so sweepstakes may not work
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11. Personal Selling
Person-to-person communication between a company representative and potential buyers
Focus is to inform and persuade prospect
Short-term goal: make a sale
Long-term goal: build relationship
Buyer and seller may come from different cultural backgrounds
Because selling provides a two-way communication channel, it is especially important in marketing industrial products that may be expensive and technologically complex. Sales personnel can often provide headquarters with important customer feedback that can be utilized in design and engineering decisions. global marketing presents additional challenges because the buyer and seller may come from different national or cultural backgrounds. Despite such challenges, it is difficult to overstate the importance of a face-to-face, personal selling effort for industrial products in global markets.
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12. Personal Selling Useful when countries regulate media heavily
Japan – comparative advertising is difficult hence product comparisons can be made on a face to face basis
Low wage countries – cheaper to build a sales force
Issue: host country nationals or expats?
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13. Sales Force Nationality
Expatriates
Host country
Third country
Other options
A basic issue for companies that sell globally is the composition of the sales force in terms of nationality. It is possible to utilize expatriate salespersons, hire host country nationals, or utilize third-country sales personnel. The staffing decision is contingent on several factors, including management’s orientation, the technological sophistication of the product, and the stage of economic development exhibited by the target country.
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14. Expatriates Advantages Disadvantages Superior product knowledge
Demonstrated commitment to service standards
Train for promotion
Greater HQ control
Disadvantages
Higher cost
Higher turnover
Cost for language and cross-cultural training
Return
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15. Host Country Advantages Disadvantages Economical
Superior market knowledge
Language skills
Superior cultural knowledge
Implementation quicker
Disadvantages
Needs product training
May be held in low esteem
Language skills may not be important
Difficult to ensure loyalty
Return
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16. Third Country Advantages Disadvantages Cultural sensitivity
Language skills
Economical
Allows regional sales coverage
Disadvantages
May face identity problems
May be blocked for promotions
Needs product and/or company training
Loyalty not assured
Return
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17. Special Forms of Marketing Communications
Direct Marketing
Direct mail
Catalogs
Infomercials, Teleshopping
Event Sponsorship
Concerts, sporting events
Product placement in movies
Internet Communications
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18. Direct Marketing
Any communication with a consumer or business recipient that is designed to generate a response in the form of:
An order
Request for further information
A visit to a store or other place of business
Worldwide, the popularity of direct marketing has been steadily increasing in recent years. One reason is the availability of credit cards—widespread in some countries, growing in others—as a convenient payment mechanism for direct response purchases. (In fact, Visa, American Express, and MasterCard generate enormous revenues by sending direct mail offers to their cardholders.) Another reason is societal: Whether in Japan, Germany, or the United States, dual-income families have money to spend but less time to shop outside the home. Technological advances have made it easier for companies to reach customers directly.
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19. Direct Marketing vs. Mass Marketing
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20. One-to-One Marketing Building from Customer Relationship Management
Identify customers and accumulate detailed information about them
Differentiate customers and rank them in terms of their value to the company
Interact with customers and develop more cost efficient and effective forms of interaction
Customize the product/service offered to the customer
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21. Catalogs
A magazine style publication that features photographs and extensive information about a company’s products
Catalogs are widely recognized as an important part of an integrated marketing communications program, and many companies use catalogs in tandem with traditional retail distribution. The U.S. mail order market generates $90 billion in annual revenues; U.S. companies are the world’s leading catalog marketers, accounting for 50 percent of global catalog sales. European companies rank second, with a 40 percent share.
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22. Product Placements Movies, TV programs, books, etc.
Low attributions hence low skepticism
Circumvent zipping and zapping
Realistic slice-of-life placement
Ethically-charged products
Fit of the brand with the placement segment and its effect on recall and attitudes
Risk of the product being shown in an unfavorable light
Joint promotions between the movie and the product
Too many placements in a program
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