1. Chapter 14 Global Marketing Communications Decisions II: Sales Promotion, Personal Selling, Special Forms of Marketing Communication

2. Introduction
In addition to advertising, publicity, and PR the promotion mix includes
Sponsorships
Sales promotion
Direct marketing
Personal selling
Internet
Infomercials
In September 2005, with 150 days to go before the opening ceremonies of the 2006 Olympic Games in Torino, Italy, Lenovo Chairman Yuanqing Yang and Philippe Davy, VP Marketing, kicked off the company’s computing equipment sponsorship in New York City. It was the official computing equipment sponsorship for the 2006 Winter Games and will sponsor the 2008 Games in Beijing as well.

3. Sales Promotion
Sales promotion refers to any paid consumer or trade communication programme of limited duration that adds tangible value to a product or brand
Price versus non-price promotions
Consumer versus trade promotions
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.

4. Sales Promotion Provides a tangible incentive to buyers
Reduces the perceived risk associated with purchasing a product
Provides accountability for communications activity
Provides a method of collecting additional data for database
Worldwide, the increasing popularity of sales promotion as a marketing communication tool can be explained in terms of several strengths and advantages. Besides providing a tangible incentive to buyers, sales promotions also reduce the perceived risk buyers may associate with purchasing the product. From the point of view of the sponsoring company, sales promotion provides accountability; the manager in charge of the promotion can immediately track the results of the promotion. Overall, promotional spending is increasing at many companies as they shift advertising allocations away from traditional print and broadcast advertising.
In addition, sweepstakes, rebates, and other forms of promotion require consumers to fill out a form and return it to the company, which can then build up information in its database for use when communicating with customers in the future. For example, Clicquot, a unit of LVMH Moët Hennessy Louis Vuitton, markets Hine cognac and other fine wines and spirits. In an effort to build the company’s in-house mailing list, managers offered cognac drinkers a gift for filling out a Hine Cognac crossword puzzle. Clicquot rented a list with the addresses of persons who had attended cigar “smoker”" events in major cities.

5. Sales Promotion: Global or Local
In countries with low levels of economic development, low incomes limit the range of promotional tools available
Market maturity can also be different from country to country
Local perceptions of a particular promotional tool or program can vary
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
• In countries with low levels of economic development, low incomes limit the range of promotional tools available. In such countries, free samples and demonstrations are more likely to be used than coupons or on-pack premiums.
• Market maturity can also be different from country to country; consumer sampling and coupons are appropriate in growing markets, but mature markets might require trade allowances or loyalty programs.
• Local perceptions of a particular promotional tool or program can vary. Japanese consumers, for example, are reluctant to use coupons at the checkout counter. A particular premium can be seen as a waste of money.
• Local regulations may rule out use of a particular promotion in certain countries. Table 14-2 lists regulations governing coupon distribution in several countries.
• Trade structure in the retailing industry can affect the use of sales promotions. For example, in the United States and parts of Europe, the retail industry is highly concentrated, that is, dominated by a few key players such as Wal-Mart. This situation requires significant promotional activity at both the trade and consumer level. By contrast, in countries where retailing is more fragmented—Japan is a case in point—there is less pressure to engage in promotional activities.

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
Kikkoman soy sauce launched in the United States with a sampling programme in supermarkets; today the United States contributes 85% of profit from international operations
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.
Today, many companies utilize event marketing and sponsorships to distribute samples at concerts, sports events, or special events such as food and beverage festivals attended by large numbers of people. In the Information Age, sampling may also consist of a week’s free viewing of a cable TV channel or a no-cost trial subscription to an online computer service; Internet users can also request free samples through a company’s website.
Compared with other forms of marketing communication, sampling is more likely to result in actual trial of the product. To ensure trial, consumer products companies are increasingly using a technique known as “point-of-use” sampling. For example, Starbucks dispatches “chill patrols” in the summertime to pass out samples of ice-cold Frappucino to overheated commuters during rush hour in busy metropolitan areas.

7. Couponing (US Speak for using Price Discount Coupons)
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 United States
Free-standing inserts, in-pack, on-pack, cross coupons
In recent years the proliferation of coupon distribution programmes has produced an excess in the marketplace. This flood of coupon offers, commonly known as "coupon clutter," has resulted in falling redemption rates
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.
NCH Marketing Services, which tracks coupon trends, reports that about 300 billion coupons are distributed in the United States each year; only about 1 percent are actually redeemed. Online coupon distribution is growing at a rapid rate; Google is among the players experimenting with them.

8. Couponing
According to Joseph Potacki, who teaches a “Basics of Promotion” seminar for the PMAA, couponing is the aspect of the promotion mix for which the practices in the United States differ the most from those in other countries. In the United States, couponing accounts for 70 percent of consumer promotion spending. Elsewhere, the percentage is much lower. According to Potacki, “It is far less—or nonexistent—in most other countries simply because the cultures don’t accept couponing.” Potacki notes that one reason couponing is gaining importance in countries such as the United Kingdom is because retailers are learning more about its advantages.

9. Couponing
Regulations for coupon distribution for various countries.

10. Sales Promotion: Issues and Problems
Fraud
Pepsi promotion with Apple
Regulations vary by country
Cultural dispositions to coupons and other sales promotions
Malaysians see coupon usage as embarrassing
Is this True ?
Why ?
What about SG & TH ?
Islam frowns on gambling so sweepstakes may not work – Is this true in MY ??
During the 2004 Super Bowl broadcast, PepsiCo launched a joint promotion with Apple Computer’s iTunes Music Store. Apple planned to give away 100 million songs for free (regular price: $.99); consumers could obtain a code from the caps of Pepsi bottles and enter the code online to quality for the download. The promotion was designed so that anyone purchasing a bottle of Pepsi had a 1-in-3 chance of being a winner. However, many people discovered that, by tilting the bottles to one side, they could tell whether the bottle was a winner. Moreover, they could read the code without having to pay for the Pepsi!
In some emerging markets, companies appear to be exploiting regulatory loopholes and lack of consumer resistance to intrusion. Sales promotion in Europe is highly regulated. Sales promotions are popular in Scandinavia because of restrictions on broadcast advertising but are subject to regulations. If such regulations are relaxed as the single market develops in Europe and regulations are harmonized, companies may be able to roll out pan-European promotions.
A recent study examined coupon usage and attitudes toward sweepstakes in Taiwan, Thailand, and Malaysia. According to Hofstede’s social values, all three countries in the studies are collectivist, and the researchers found that an individual’s positive attitude toward coupons and coupon usage was influenced by positive attitudes of family members and society as a whole. However, the three nations show some differences in value orientation. For example, Malaysia has a higher power distance and lower uncertainty avoidance than the others. For Malaysians, the fear of public embarrassment was a constraint on coupon usage. In all three countries, media consumption habits were also a factor; persons who were not regular readers of magazines or newspapers were less likely to be aware that coupons were available. Consumers in Taiwan and Thailand look more favorably upon coupons than sweepstakes. In Malaysia, where the population is primarily Muslim, the researchers assumed that consumers would avoid sweepstakes promotions. Sweepstakes can be compared to gambling, which is frowned on by Islam. However, Malaysians showed a preference for sweepstakes over coupons. In Taiwan, where Buddhism, Confucianism, and Taoism are all practiced, religion appeared to have little impact on attitudes.

11. Personal Selling
Person-to-person communication between a company representative and a prospective buyer
Focus is to inform and persuade prospect
Short-term goal: make a sale
Long-term goal: build a relationship
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.
Personal selling is also a popular marketing communication tool in countries with various restrictions on advertising. As noted in Chapter 13, it is difficult to obtain permission to present product comparisons in any type of advertising in Japan. In such an environment, selling is the best way to provide hard-hitting, side-by-side comparisons of competing products. Personal selling is also used frequently in countries where low wage rates allow large local sales forces to be hired. For example, Home Box Office built its core of subscribers in Hungary by selling door-to-door. In fact, the cost effectiveness of personal selling in certain parts of the world has been a key driver behind the decision at many U.S.-based firms to begin marketing products and services overseas. A company is more likely to test a new territory or product if the entry price is relatively low. Only if the response is favorable do the firms commit major resources to a U.S. rollout.

12. Personal Selling Hurdles
Political risks—unstable or corrupt governments change the rules for the sales team
Regulatory hurdles, Governments can set up quotas or tariffs that affect the sales force
Currency fluctuations—increase and decrease in local currencies can make certain products unaffordable
Market unknowns—lack of knowledge of market conditions, the accepted way of doing business, or positioning of the product may derail the sales team’s efforts
Companies must be aware of these risks and hurdles when implementing a personal sales team in a foreign country because they may reduce the sales team’s effectiveness. If all of these challenges can be overcome, or at least minimized, the personal selling endeavor can be implemented with the aid of a tool known as the strategic/consultative selling model.
Political Risk: Firms selling in Hong Kong were concerned that China would impose its will and dramatically alter the selling environment after the transfer of power in In response to such concerns, British Telecom brought many members of its Hong Kong sales staff back to London prior to the changeover. However, to the great relief of Hong Kong’s business community, Chinese officials ultimately recognized that a policy of minimal intervention would be the wisest approach.
Regulatory Hurdles: In 1998, for example, the Chinese government banned door-to-door selling, effectively blocking Avon’s business model. Avon responded by establishing a network of store representatives; today, China is Avon’s fastest growing global market. Avon CEO Andrea Jung expects annual sales in China to reach $400 million by 2007.
Currency Fluctuations: In the mid-1980s, for example, Caterpillar’s global market share declined when the dollar’s strength allowed Komatsu to woo U.S. customers away. Then, while Caterpillar’s management team was preoccupied with domestic issues, competitors chipped away at the firm’s position in global markets.
Market Unknowns: When a game plan is finally crafted to counter the obstacles, it is sometimes too late for the company to succeed. However, if management devotes an inordinate amount of time conducting market research prior to entry, it may discover that its window of opportunity has been lost to a fast-moving competitor that did not fall victim to the “analysis paralysis” syndrome. Thus, it is difficult to make generalizations about the optimal time to enter a new country.

13. Strategic/Consultative Selling
The model consists of five interdependent steps, each with three prescriptions that can serve as a checklist for sales personnel. Many U.S. companies have begun developing global markets and have established face-to-face sales teams either directly, using their own personnel, or indirectly, through contracted sales agents. As a result, the strategic/consultative selling model is increasingly utilized on a worldwide basis. The key to ensuring that the model produces the desired outcome—building quality partnerships with customers—is to have it implemented and followed on a consistent basis. This is far more difficult to achieve with international sales teams than it is with U.S.-based units that are much more accessible to corporate headquarters. The major categories are discussed on the next two slides.

14. The Strategic/Consultative Selling Model
Personal selling philosophy—commitment to the marketing concept and a willingness to adopt the rôle of problem solver/partner
Relationship strategy—game plan for establishing and maintaining high-quality relationships with prospects/customers
Product strategy—plan that can assist the sales representative in selecting and positioning products to satisfy customer needs

15. Strategic/Consultative Selling
Customer strategy—plan that ensures that the sales professional will be responsive to customer needs
Presentation strategy—consists of setting objectives for each sales call and establishing a presentation plan to meet those objectives

16. Strategic/Consultative Selling
This figure illustrates that when these five strategies, from the strategic/consultative selling model, are integrated with an appropriate personal selling philosophy, the result is a high-quality partnership.

17. The Presentation Plan Approach Presentation Demonstration Negotiation
Close
Servicing the sale

18. Approach Initial contact with the customer/prospect
Must completely understand the decision-making process and the roles of each participant
In some societies, it is difficult to identify the highest-ranking individual based on observable behavior during group meetings. This crucial bit of strategic information often is uncovered only after the rep has spent considerable time developing rapport and getting to know the overall customer organization from various perspectives and in various contexts.

19. Presentation
Prospect’s needs are assessed and matched to the company’s products
The style and message of the presentation must be tailored to the audience
In the United States, the presentation is typically designed to sell and persuade, whereas the intent of the international version should be to educate and inform. High-pressure tactics rarely succeed in global selling, despite the fact that they are natural components of many American sales pitches. The message is equally critical because what may be regarded as fully acceptable in U.S. discussions may either offend or confuse the overseas sales audience.
A humorous example of this occurred during a session between representatives from Adolph Coors Company and a foreign prospect. The first slide in the presentation contained a translation of Coors’s slogan “Turn It Loose,” but within seconds of this slide being shown, the audience began to chuckle. As translated, the slogan described diarrhea—obviously something that the presenter had no desire to convey to this group!

20. Demonstration
Salesperson has the opportunity to tailor the communication effort to the customer
Can show how the product can meet the customer’s needs
This step represents one of selling’s important advantages as a promotional tool. The prospect’s senses become involved, and he or she can actually see the product in action, touch it, taste it, or hear it, as the case may be.

21. Negotiation
Ensures that both the customer and the salesperson come away from the presentation winners
Experienced American sales reps know that persistence during the negotiation stage is one tactic often needed to win an order in the United States. However, American-style persistence inferring tenacity or arm-twisting can be considered rude and offensive by some foreign customers. This can end the negotiations quickly—or, in the worst case, such behavior can be taken as a display of self-perceived American superiority, which then must be countered aggressively or brought to an immediate end. Inappropriate application of American-style negotiation tactics has plagued some U.S. sales reps attempting to assertively close deals with Canadian companies. Conversely, in other countries, persistence often means endurance, a willingness to patiently invest months or years before the effort results in an actual sale. For example, a company wishing to enter the Japanese market must be prepared for negotiations to take from 3 to 10 years.

22. Close Ask for the sale Must be culturally sensitive
In Latin America, a bold closing statement is respected, whereas in Asia, it is something that must be done with more deference toward the decision-maker. As with objection handling and negotiation, the close is a selling skill that comes with both knowledge and experience in global business and sales.

23. Servicing the Sale To ensure customer satisfaction
Implementation process must be outlined
Customer service programme established
Implementation can be complicated because of logistical and transportation issues as well as potential problems with the in-country resources to handle all the necessary steps. Transportation alternatives were discussed in Chapter 12. There are cost benefits to using in-country nationals for implementation, but quality control is more difficult to guarantee. Establishing expatriates for the primary function of implementation is costly and normally cannot be justified until international operations are more mature and profitable. However, sending an implementation team to the host country creates a variety of expense and regulatory concerns. Even when implementation has been adequately addressed, the requirement for solid customer service raises all of the same questions again: in-country nationals, expatriates, or third-country nationals?

24. Sales Force Nationality
Expatriates
Host-country nationals
Third-country nationals
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.
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. These are summarized in Table Not surprisingly, a company with an ethnocentric orientation is likely to prefer expatriates and adopt a standardized approach without regard to technology or the level of economic development in the target country. Polycentric companies selling in developed countries should opt for expatriates to sell technologically sophisticated products; a host-country sales force can be used when technological sophistication is lower. In less-developed countries, host-country nationals should be used for products in which technology is a factor; host-country agents should be used for low-tech products. The widest diversity of sales force nationality is found in a company in which a regiocentric orientation prevails. Except in the case of high-tech products in developed countries, third-country nationals are likely to be used in all situations.

25. 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
Maintaining expatriate sales personnel is extremely expensive; the average annual cost to U.S. companies of posting employees and their families overseas exceeds $250,000. In addition to paying expat salaries, companies must pay moving expenses, cost-of-living adjustments, and host-country taxes. Despite the high investment, many expats fail to complete their assignments because of inadequate training and orientation prior to the cross-border transfer. In addition, studies have shown that one-quarter of U.S. expats leave their companies within a year of returning home.

26. Host Country Nationals
Advantages
Economical
Superior market knowledge
Language skills
Superior cultural knowledge
Fast implementation
Disadvantages
Need product training
May be held in low esteem
Language skills may not be important
Difficult to ensure loyalty
Locals offer several advantages, including intimate knowledge of the market and business environment, language skills, and superior knowledge of local culture. The last consideration can be especially important in Asia and Latin America. In addition, because in-country personnel are already in place in the target country, there is no need for expensive relocations. However, host-country nationals may possess work habits or selling styles that do not mesh with those of the parent company. Furthermore, the firms’ corporate sales executives tend to have less control over an operation that is dominated by host-country nationals. Headquarters executives may also experience difficulty cultivating loyalty, and host-country nationals are likely to need hefty doses of training and education regarding both the company and its products.

27. Third Country Nationals eg TH selling US product in CN
Advantages
Cultural sensitivity
Language skills
Economical
Allows regional sales coverage
Disadvantages
May face identification problems
May be blocked for promotions
Income gaps
Needs product and/or company training
Loyalty not assured
A third option is to hire persons who are not natives of either the headquarters country or the host country; such persons are known as third-country nationals. For example, a U.S.-based company might hire someone from Thailand to represent it in China. This option has many advantages in common with the host-country national approach. In addition, if conflict, diplomatic tension, or some other form of disagreement has driven a wedge between the home country and the target sales country, a sales representative from a third country may be perceived as sufficiently neutral or at “arm’s length” to enable the company to continue its sales effort. However, there are several disadvantages of the third-country option. For one thing, sales prospects may wonder why they have been approached by someone who is neither a local national nor a native of the headquarters country. Third-country nations may lack motivation if they are compensated less generously than expats or host-country sales personnel; also, they may find themselves passed over for promotions as coveted assignments go to others.

28. Other Options Sales agents Exclusive license arrangements
Contract manufacturing or production
Management-only agreements
Joint ventures
Sales agents: From a global perspective, it often makes a great deal of sense to set up one or more agent entities to at least gain entry to a selected country or region. In some cases, because of the remoteness of the area or the lack of revenue opportunity (beyond servicing satellite operations of customers headquartered elsewhere), agents are retained on a fairly permanent level. To this day, the majority of U.S., Asian, and European companies with an Africa-based sales presence maintain agent groups to represent their interests.
Exclusive license arrangements are those for which a firm will pay commissions to an in-country company’s sales force to conduct personal selling on its behalf. For example, when Canada’s regulatory agency prevented U.S. telephone companies from entering the market on their own, AT&T, MCI, Sprint, and other firms crafted a series of exclusive license arrangements with Canadian telephone companies.
Contract manufacturing or production is accomplished with a degree of personal selling made available through warehouses or showrooms that are open to potential customers. Sears has employed this technique in various overseas markets, with the emphasis placed on the manufacturing and production but with the understanding that opportunities for some sales results do exist.
Management-only agreements are those through which a corporation will manage a foreign sales force in a mode that is similar to franchising. Hilton Hotels has these types of agreements all over the world; not only for hotel operations but also for personal selling efforts aimed at securing conventions, business meetings, and large group events.
Joint ventures with an in-country (or regional) partner. Because many countries place restrictions on foreign ownership within their borders, partnerships can serve as the best way for a company to obtain both a personal sales capability as well as an existing base of customers.

29. Special Forms of Marketing Communications
Direct Marketing
Direct mail
Catalogues
Infomercials, teleshopping
Event sponsorship
Concerts, sporting events
Product placement in movies
Internet communications
The Direct Marketing Association defines direct marketing as any communication with a consumer or business recipient that is designed to generate a response in the form of an order, a request for further information, and/or a visit to a store or other place of business. Companies use direct mail, telemarketing, television, print, and other media to generate responses and build databases filled with purchase histories and other information about customers. By contrast, mass marketing communications are typically aimed at broad segments of consumers with certain demographic, psychographic, or behavioral characteristics in common.
The United States is home to a well-developed mailing list industry. A company can rent a list to target virtually any type of buyer; naturally, the more selective and specialized the list, the more expensive it is. The availability of good lists and the sheer size of the market are important factors in explaining why Americans receive more direct mail than anyone else. However, on a per capita basis, German consumers are world-leader mail-order shoppers, buying more than $500 each in merchandise annually. Americans rank second, with annual per capita spending of $379.

30. 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.

31. Direct Marketing—Going Global
Like politics, all marketing is local. Just because your direct mail campaign worked in London, do not assume it will work in Kuala Lumpur.
Although there may be a European Union, but there is no such thing as a “European.” (Not True !!)
Pick your target, focus on one country, and do your homework.
Customers need to be able to return products locally or at least believe there are services available in their country.

33. 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
Customise the product/service offered to the customer

34. Catalogues
A magazine style publication that features photographs and extensive information about a company’s products
Catalogues 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.
Prior to the advent of the single market, catalogue sales in Europe were hindered by the fact that mail order products passing through customs at national borders were subject to value-added taxes (VAT). Because VAT drove up prices of goods that crossed borders, a particular catalogue tended to be targeted at intra-country buyers. In other words, Germans bought from German catalogs, French consumers bought from French catalogs, and so on. Market-entry strategies were also affected by the customs regulations; catalogers grew by acquiring existing companies in various countries. For example, Otto GmbH & Co KG distributes hundreds of different catalogs in 20 countries.
As noted in Chapter 12, Japan’s fragmented distribution system represents a formidable obstacle to market entry by outsiders. An increasing number of companies use direct marketing to circumvent the distribution bottleneck. Annual revenues for all forms of consumer and business direct response advertising in Japan passed the $1 trillion mark in the mid-1990s; they declined to $525 billion in 2000 as Japan’s economic difficulties continued. Success can be achieved using different strategies. For example, Patagonia dramatically increased sales after publishing a Japanese-language catalog, whereas L. L. Bean offers a Japanese-language insert in its traditional catalog.

35. Infomercials and Teleshopping
An infomercial is a form of paid TV in which a particular product is demonstrated, explained, and offered for sale to viewers who call a toll-free number on the screen
Teleshopping on channels like HSN and QVC is exclusively devoted to demonstration and selling
Thomas Burke, president of Saatchi & Saatchi’s infomercial division, calls infomercials “the most powerful form of advertising ever created.” The cost of producing a single infomercial can reach $3 million; advertisers then pay as much as $500,000 for time slots on U.S. cable and satellite systems and local TV channels. Because infomercials are typically 30 minutes in length and often feature studio audiences and celebrity announcers, many viewers believe they are watching regular talk show–type programming. Although originally associated with personal care, fitness, and household products such as those from legendary direct-response pitchman Ron Popeil, infomercials have gone up-market in recent years. For example, Lexus generated more than 40,000 telephone inquiries after launching its used car program with an infomercial; 2 percent of respondents ultimately purchased a Lexus automobile.
Infomercials are also playing a part in the development of China’s market sector. The government has given its blessing by allowing China Central Television, the state-run channel, to air infomercials and give Chinese consumers access to Western goods. Despite low per capita incomes, Chinese consumers are thought to achieve a savings rate as high as 40 percent because housing and health care are provided by the state. China Shop-A-Vision is in the vanguard, signing up 20,000 “TV shopping members” in its first year of airing infomercials. As these and other pioneers in Chinese direct-response television have learned, however, many obstacles remain, including the limited number of private telephones, low penetration of credit cards, and problems with delivery logistics in crowded cities such as Shanghai.

36. Interactive Television
Interactive TV allows viewers to interact with the programming content they are viewing
In the United Kingdom, more than half of pay-TV subscribers use ITV
Remote controls have buttons to push to order products shown on screen
The remote control units provided by pay-TV service providers in the United Kingdom have a red button that viewers press to order products from home-shopping channels, choose different camera angles during sports broadcasts, vote during audience participation shows such as “Big Brother,” or order free samples of advertised products. In 2005, Diageo tested an interactive ad for Smirnoff vodka; after the first 60 seconds, viewers must press the button two more times to see the ad in its entirety. Comparing traditional TV ads with the new format, James Pennefather, Smirnoff brand manager for the United Kingdom noted, “Interactive advertising is a lot more unproven and untested, and it is a calculated risk for us. We have to do this kind of thing to learn if it will be a success or not.”

37. Expenditures for Outdoor Advertising as a Percenatage of Total Ad Spending
Traditional support media include transit and billboard advertising. In most parts of the world, outdoor advertising is growing at a faster rate than the overall advertising market. As countries add mass transportation systems and build and improve their highway infrastructures, advertisers are utilizing more indoor and outdoor posters and billboards to reach the buying public. Japan’s population relies heavily on public transportation; the average Tokyo resident spends 70 minutes commuting to work.

38. Sponsorships
A company pays a fee to be associated with an event, team, athletic association, or sports facility
Combines elements of PR and sales promotion
Draws media attention
Sony recently became an official U.S. sponsor of the National Basketball Association with the signing of a $10 million per year deal. One part of the deal calls for recordings by musicians on the Sony Music label—Aerosmith, Pearl Jam, and Mariah Carey, for example—to get priority consideration for air time during games. Hoping to achieve higher levels of brand awareness in the United States, Nokia sponsors the Sugar Bowl; Ericsson paid to have its name emblazoned on the new stadium where the Carolina Panthers football team plays. In 1997, Fila and Adidas engaged in a bidding war for sponsorship rights to the New York Yankees baseball team. Adidas eventually won a 10-year deal with a total value of $100 million; although that deal sets a record for sponsorship of an American sport, it is dwarfed by Nike’s $200 million deal to sponsor the Brasilian national soccer team.

39. Product Placement
Arranging to have the company’s products and brand names appear in TV shows, movies, and other types of entertainment
Marketeers also lend or donate products to celebrities and other public figures
Placements can be arranged in several different ways. Sometimes companies pay a fee for the placement; alternatively, a show’s producers will write the product into the script in exchange for marketing and promotion support of the new production. A brand’s owners can also strike a barter agreement whereby the company (Sony, for example) supplies the filmmakers with products that serve as props in exchange for licensing rights to the James Bond name in retail promotions. Product placement agencies such as Propaganda, Hero Product Placement, and Eon function like talent agencies for products. As such, the agencies fulfill several important functions such as obtaining legal clearances from a brand’s owners, promoting their clients’ products to producers, and arranging for products to be delivered to a sound stage.

40. Ends