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Advertising, Sales Promotion and Public Relations

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1 Advertising, Sales Promotion and Public Relations
PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong Chapter 15 Advertising, Sales Promotion and Public Relations

2 What is Advertising? Any form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. U.S. advertisers spend in excess of $175 billion each year. Advertising is used by: Business firms, Nonprofit organizations, Professionals, Social Agencies.

3 Major Decisions in Advertising
Objectives Setting Major Decisions in Advertising Major Decisions in Advertising This CTR corresponds to Figure 15-1 on p. 451 and relates to the material on pp Instructor’s Note: This CTR and Notes provide an overview of advertising decisions. Each decision area is covered in greater detail on subsequent CTRs. Budget Decisions Major Decisions in Advertising Setting Objectives. Advertising objectives are specific communications tasks to be accomplished for a specific target audience during a specified time period. Advertising objectives can be to inform (build primary demand), persuade (selective demand), or remind (brand loyalty). Advertising objectives are often linked to specific sales objectives. Budget Decisions. Advertising budgets are set for each product consist with the advertising objectives. The details of budget decisions are covered in greater detail on the following CTR. Message Decisions. Advertisers must construct their messages carefully to reach target markets. The details of message decisions are covered in greater detail on a subsequent CTR. Media Decisions. In selecting media for ads, advertisers must consider the several factors to reach consumer when, how, and how often it takes to reach promotional objectives. The details of media decisions are covered in greater detail on a subsequent CTR. Campaign Evaluation. Measures of communication effects and sales effects should be employed. Discussion Note: You might wish to tell students of the controversy involved in measuring campaign effectiveness. Traditionally, advertisers measured effectiveness in terms of recall or recognition. Management wants a behavioral change in purchases. Marketers who successfully merge the two have a bright career ahead of them. Message Decisions Media Decisions Campaign Evaluation

4 Setting Objectives Advertising Objectives Specific Communication Task
Accomplished with a Specific Target Audience During a Specific Period of Time Informative Advertising Build Primary Demand Persuasive Advertising Build Selective Demand Comparison Advertising Compares One Brand to Another Reminder Advertising Keeps Consumers Thinking About a Product.

5 Setting the Advertising Budget
This CTR relates to the discussion on pp Advertising Budget Methods Affordable, Percentage of Sales, Competitive-Parity and Objective-and-Task Stage in the Product Life Cycle Product Differentiation Budget Decisions Advertising budgets are set for each product consist with the advertising objectives. To implement objectives, budgets must be set in consideration of the products position in terms of: Stage in the Product Life Cycle. New product usually require larger advertising budgets to build awareness and induce product trial. Mature brands may have large dollar amounts in their budgets, but are lower in terms of advertising as a ratio of sales. Market Share. High share products need more advertising as a percent of sales than do low-share brands. Competition and Clutter. Highly competitive markets with high spending rivals require more advertising expenditures than other markets. Advertising Frequency. The greater the frequency needed to reach the target consumer, the higher the advertising budget. Product Differentiation. Brands that closely resemble other brands in a product class (like soft drinks) require high advertising budgets to create product differentiation. Advertising Frequency Market Share Factors in Setting the Advertising Budget Competition and Clutter

6 Click to add title Advertising Strategy Creating Advertising Messages
Plan a Message Strategy General Message to Be Communicated to Customers Click to add title Advertising Strategy Creating Advertising Messages Develop a Message Focus on Customer Benefits Creative Concept “Big Idea” Visualization or Phrase Combination of Both Advertising Appeals Meaningful Believable Distinctive

7 Advertising Strategy Selecting Advertising Media
Step 1. Decide on Reach, Frequency, and Impact Advertising Strategy Selecting Advertising Media Advertising Strategy Selecting Advertising Media This CTR relates to the discussion on pp Step 2. Choosing Among Major Media Types Media Habits of Target Consumers Nature of the Product Type of Message Cost Step 3. Selecting Specific Media Vehicles Specific Media Within a Given Type, i.e. Magazines. Must Balance Media Cost Against Media Factors: Audience Quality & Attention, Editorial Quality Selecting Advertising Media In selecting media for ads, advertisers must consider the factors that will influence reception of the message. Not all such factors are under the control of the marketer. Of those that are, the following concepts are important: Reach. Reach is a measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of time. Frequency. Frequency is a measure of the how many times the average person in the target market is exposed to the message. Media Impact. Impact refers to the qualitative value of a message exposure through a given medium. Media Vehicles. Vehicles are specific media within a general category. Thus, “The Tonight Show” is a media vehicle on television, whereas a single magazine, The Economist, is a media vehicle in magazine print media. Media Timing. Timing involves the how and when of presenting a campaign. Advertisements should support strategic decisions based upon such factors as peak seasons and demand. Also, the pattern of the ads while shown must be considered: Continuity. This schedules ads evenly within a given period. Pulsing. This schedules ads unevenly within a given period. Step 4. Deciding on Media Timing Scheduling of Advertising Over the Course of a Year Pattern of Ads: Continuity or Pulsing

8 Advertising Evaluation
Advertising Program Evaluation Advertising Evaluation Communication Effects Is the Ad Communicating Well? Sales Effects Is the Ad Increasing Sales?

9 Advertising Departments Firm that Assists Companies
Ways to Handle Advertising Advertising Departments in Larger Companies Sales Departments in Small Companies Advertising Agency Firm that Assists Companies in Planning, Preparing, Implementing and Evaluating Their Advertising Programs.

10 Advertising Media Costs Advertising Practices
Adaptation of Global Advertising International Advertising Decisions Advertising Media Costs & Availability Regulation of Advertising Practices

11 What is Sales Promotion?
This CTR relates to the material on pp What is Sales Promotion? Mass communication technique that offers short-term incentives to encourage purchase or sales of a product or service. Rapid growth in the industry has been achieved because: Product managers are facing more pressure to increase their current sales, Companies face more competition, Advertising efficiency has declined, Consumers have become more deal oriented. Sales Promotion Sales Promotion. Sales promotion consists of short term incentives to encourage purchase or sales of a product or service. Areas of sales promotion include: Rapid Growth of Sales Promotion. Key factors contributing to the use of sales promotion include: Top management acceptance of sales promotion as an effective element in the marketing mix. Increased competition and decreased differentiation. Decreased advertising effectiveness has also put pressure on companies to shift more emphasis to sales promotion. Consumers have become more deal oriented and retailers are demanding more deals from manufacturers.

12 Consumer - Promotion Tools
This CTR relates to the discussion on pp Short-Term Incentives to Encourage Purchase or Sales of a Product or Service. Consumer-Promotion Tools Consumer-Promotion Objectives Consumer Promotion Tools A number of tools are used by marketers to reach consumers directly, including: Samples. Samples offer consumers a trial amount of a product. Coupons. Coupons give buyers a savings on specified products. Rebates. Rebates consist of cash back after the purchase. Price Packs. Price packs offer reductions in price for special combinations of products or quantities of the product. Premiums. Premiums are goods offered free or at low cost as an incentive to buy the product. Advertising Specialties. Advertising specialties are useful items imprinted with the advertiser’s name or logo. Patronage Rewards. Patronage rewards are cash or prizes offered for the regular use of the product or service. Point-of-Purchase. Point-of-purchase promotions include displays and demonstrations at the retail level. Contests, Sweepstakes, and Games. These give consumers a chance to win something and draw attention to the product. Samples Advertising Specialties Entice Consumers to Try a New Product Coupons Lure Customers Away From Competitors’ Products Patronage Rewards Patronage Rewards Cash Refunds Get Consumers to “Load Up’ on a Mature Product Contests Price Packs Sweepstakes Hold & Reward Loyal Customers Premiums Games Consumer Relationship Building Point-of-Purchase Displays

13 Trade - Promotion Tools
This CTR relates to the discussion on pp Short-Term Incentives That are Directed to Retailers and Wholesalers. Trade-Promotion Tools Trade-Promotion Objectives Price-Offs Premiums Persuade Retailers or Wholesalers to Carry a Brand Trade Promotion Tools. A discount is a reduction in the price from the manufacturer to a member of the channel of distribution. An allowance is an authorized reduction in the amount paid to the manufacturer in return for performing one or more marketing channel functions. Allowances Give a Brand Shelf Space Patronage Rewards Displays Buy-Back Guarantees Promote a Brand in Advertising Discounts Push Money Push a Brand to Consumers Free Goods Specialty Advertising Items Contests

14 What is Public Relations?
This CTR relates to the material on pp Building good relations with the company’s various publics by obtaining favorable publicity, building up a good “corporate image” and handling or heading off unfavorable rumors, stories and events. Major functions are: Press Relations or Press Agentry Product Publicity Public Affairs Lobbying Investor Relations Development Press Relations is an on-going process of establishing and maintaining good relations with the news media reporters and editors to help place newsworthy information about company products or objectives in their vehicles. Product Publicity. Product Publicity seeks news coverage of specific products usually in conjunction with other promotional efforts. Public Affairs/ Investor Relations. Public Affairs and Investor Relations involves creating and managing internal and external communications promoting understanding the of company and its objectives. Counseling of management on public issues may be included in corporate communications functions in some companies. Lobbying. Lobbying involves dealing with legislators and government administrators. Discussion Note: Lobbying has justly earned a bad reputation for the “special interest” favors awarded some companies. But it is also true that a great deal of lobbying is ethical and fair -- a point not typically found in the popular press. Also, federalism is designed precisely so that “special interests” can be taken into consideration. Not all “special interests” are bad for society as a whole.

15 Major Public Relations Tools
This CTR relates to the material on pp Web Site Public Service Activities News Key tools of Public Relations include: News and Speeches. Finding or creating favorable news stories about the company or products. Giving talks at trade association meetings or sales meetings. Special Events. Special Events consist of public service activities sponsored and controlled by public relations in-house. Written and Audiovisual Materials. Materials include written information for reporters, and audio-visual information such as slide, sound programs, and videos on corporate identity. Corporate spokespersons also make public speeches to promote the views important to the company. Public Service Activities. Public Service Activities include contributions of time and money for community projects and programs. Discussion Note: Many companies donate land and equipment to towns and cities for parks and recreational areas as part of PR. Corporate Identity Materials Speeches Audiovisual Materials Special Events Written Materials

16 Personal Selling and Sales Management
PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong Chapter 16 Personal Selling and Sales Management

17 The Nature of Personal Selling
Involves an individual acting for a company by performing one or more of the following activities: Prospecting, Communicating, Servicing, Information Gathering. The term salesperson covers a wide spectrum of positions from: Order Taking (department store salesperson) Order Getting (someone engaged in creative selling) Missionary Selling (building goodwill or educating buyers)

18 The Role of the Sales Force
Personal Selling is effective because salespeople can: probe customers to learn more about their problems, adjust the marketing offer to fit the special needs of each customer, negotiate terms of sale, build long-term personal relationships with key decision makers. The Sales Force serves as a critical link between a company and its customers since they: represent the company to customers, and represent customers to the company.

19 Managing the Salesforce
This CTR corresponds to Figure 16-1 on p. 483 and relates to the material on pp Instructor’s Note: This CTR provides an overview of the salesforce management process with following CTR covering each key area in greater detail. Managing the Salesforce Designing Salesforce Strategy and Structure Recruiting and Selecting Salespeople Training Salespeople Compensating Salespeople Supervising Salespeople Evaluating Salespeople Major Steps Salesforce Management Sales Force Management is the analysis, planning, implementation, and control of sales force activities. Major decisions include: Designing Strategy and Structure. Strategy requires decisions on salesforce structure, size, and compensation. Variations in this mixture are appropriate for differing industries, markets and sales objectives. Strategy and structure issues are covered in greater detail on a subsequent CTR. Recruiting and Selecting. Knowing in advance what characteristics will always produce good salespeople is very difficult. Selecting procedures should attempt to screen candidates for both ability and retention-related issues. Recruiting and selecting issues are covered in greater detail on a subsequent CTR. Training Salespeople. Issues in training center on skills such as order taking and order getting, seeing customers as unwilling to seeing them as people needing problem solutions. Training issues are covered in greater detail on a subsequent CTR. Compensating Salespeople. Compensation is made up of several elements -- a fixed amount, a variable amount, expenses, and fringe benefits. Compensation is covered in greater detail on a subsequent CTR. Supervising Salespeople. Supervision addresses problems in directing and coordinating salespeople's organization, time management, motivation, and customer relationships. Supervision issues are covered in greater detail on a subsequent CTR. Evaluating Salespeople. Evaluation requires both qualitative and quantitative measures of salesforce performance. Evaluation issues are covered in greater detail on a subsequent CTR.

20 Compensating Salespeople
This CTR relates to the material on p. 489. Compensating Salespeople Sales Force Compensation Plans Can Both Motivate Salespeople and Direct Their Activities. Salary PAYCHECK Compensating Salespeople Compensation can be by salary, commission or bonus, and benefits. Variations in this mixture are appropriate for differing industries, markets and sales objectives. The sales force compensation plan can (and should) be designed to motivate and direct the salesperson. This can be accomplished by adjusting the combination of the following components accordingly: Salary. This is base rate of compensation. Salary levels communicate the importance the company places on the salesperson as an individual professional. High salaries tend to encourage company loyalty. Commission. This is a set percentage of compensation earned on the dollar amount of products sold. High commissions encourage higher volume per salesperson. Bonus. This is an incentive paid after reaching some specified goal. Discussion Note: Bonuses are an extremely flexible compensation tool because they can be added to reward a broad range of goal-related behaviors. For example, a bonus added to a commission rewards individual incentive and increases effort on a product or line in which it is offered. A bonus added to group, division, or department performance encourages teamwork. A bonus based on overall company profits encourages a total systems effort. Benefits. Benefits are compensation elements provided by the company that are not related to performance. An expense account covers costs. Medical and dental plans provide security. Components of Compensation Benefits Bonus Commission

21 How Salespeople Spend Their Time
Administrative Service Calls Tasks 12% 17% Companies Look For Ways to Increase the Amount of Time Salespeople Spend Selling. Telephone Selling 21% Face-to-Face Selling 30% Waiting/ Traveling 20%

22 Evaluating Salespeople
This CTR relates to the discussion on pp Expense Reports Sales Report Sources of Information Evaluating Salespeople Sources of Information. Managers get information on sales force performance from several sources, including: The Sales Report. This is the most important source of information managers have on their salesforce. The Work Plan. This is submitted and describes the calls and routing for the coming week or month. Annual Territory Marketing Plans. These are outlines for building new accounts and increasing sales. Call Reports. These log sales calls and Expense Reports. These provide information on activity and expenses to be reimbursed. Formal Evaluation of Performance. Many techniques are used to evaluate sales force performance for formal company objectives, including: Comparing Salespeople’s Performance. Comparisons are helpful although many other factors influence performance such as differing conditions in each territory. Comparing Current Sales with Past Sales. Past sales help identify trends. Interpretation is needed to evaluate trends with company expectations. Qualitative Evaluation of Salespeople. These subjective evaluations look at a salesperson’s knowledge of the company, products, customers, competitors, territory, and tasks. Call Reports Work Plan Annual Territory Marketing Plan

23 Steps in the Selling Process
Step 1. Prospecting and Qualifying Steps in the Selling Process Steps in the Selling Process This CTR corresponds to Figure 16-3 on p. 496 and relates to the material on pp Step 2. Preapproach Identifying and Screening For Qualified Potential Customers. Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Telling the Product “Story” to the Buyer, and Showing the Product Benefits. Step 3. Approach Steps in the Selling Process Prospecting and Qualifying. This step involves identifying qualified potential customers. Salespeople must always contact more people than will end up becoming a customer. Prospecting is the process of obtaining good sources of information on who might be interested in or need the product. Qualifying seeks to improve that list by separating more likely leads from poor ones. Preapproach. This step consists of doing the background research and preparation needed to understand the needs of the potential customer. Salespeople should set specific call objectives to accomplish when contacting the prospect. Approach. In this step consists of the first contact with the buyer and seeks to establish a good working relationship. The salesperson must be aware of the effect of his or her appearance, opening remarks, listening style, and closing comments. Presentation and Demonstration. In this stage the salesperson presents the product "story" to the buyer and demonstrates product benefits. Step 4. Presentation/ Demonstration

24 Steps in the Selling Process
Step 5. Handling Objections Steps in the Selling Process Steps in the Selling Process This CTR corresponds to Figure 16-3 on p. 496 and relates to the material on p. 497. Step 6. Closing Seeking Out, Clarifying, and Overcoming Customer Objections to Buying. Asking the Customer for the Order. Following Up After the Sale to Ensure Customer Satisfaction and Repeat Business. Step 7. Follow-Up Steps in the Selling Process Handling Objections. This requires seeking out and resolving concerns that would stop a customer from purchasing. Closing. This requires seeking out and resolving concerns that would stop a customer from purchasing. Follow-up. Follow-up is a necessary part of good selling to ensure satisfaction and repeat business.

25 Relationship Marketing
Process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders. Based on the idea that important accounts need focused and continuous attention.

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