Chapter 14 Global Marketing Decisions: Sales Promotion, Personal Selling, Special Forms of Marketing Communication © 2005 Prentice Hall

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. © 2005 Prentice Hall

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) © 2005 Prentice Hall

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. © 2005 Prentice Hall

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 © 2005 Prentice Hall

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. © 2005 Prentice Hall

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. © 2005 Prentice Hall

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 © 2005 Prentice Hall

Couponing Regulations for Coupon distribution for various countries. © 2005 Prentice Hall

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 © 2005 Prentice Hall

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. © 2005 Prentice Hall

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? © 2005 Prentice Hall

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. © 2005 Prentice Hall

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 © 2005 Prentice Hall

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 © 2005 Prentice Hall

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 © 2005 Prentice Hall

Special Forms of Marketing Communications Direct Marketing Direct mail Catalogs Infomercials, Teleshopping Event Sponsorship Concerts, sporting events Product placement in movies Internet Communications © 2005 Prentice Hall

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. © 2005 Prentice Hall

Direct Marketing vs. Mass Marketing © 2005 Prentice Hall

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 © 2005 Prentice Hall

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. © 2005 Prentice Hall

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 © 2005 Prentice Hall