2 Promotionthe element in an organization’s marketing mix that serves to inform, persuade, and reminds the market of a product and/or organization selling it, in hopes of influencing the recipients feelings, beliefs, or behavior.
4 Relationship between Advertising and the Product Life Cycle Not mentioned in your textbookChpt 13 in the Marketing 106 course Copyright, Professor W.T.G. Richardson, Seneca College
5 Promotion Objectives Informing people have to know about it, in order to buy itAdvertising that seeks to develop demand through presenting factual information on the attributes of a product or service.Tends to be used in promoting NEW products.Use in the Introductory Stage of PLC
6 Promotion Objectives Persuading when competition offers similar product, you have to “persuade” them to try yoursAdvertising that emphasizes using words and/or images to try to create an image for a product and to influence attitudes about it.Used by Coke and Pepsi re: lifestyle ads.Used after the Introductory Stage of the PLC
7 Promotion Objectives Reminding when new competition comes along, you have to “remind” customers of your greater experience, advantages etc.Advertising whose goal is to reinforce previous promotional activity by keeping the product’s or service’s name in front of the public.Used in the Maturity Period and the Decline Stage of the PLC.
9 P U S H P U L L Pushing through the promotion channel Producer personal selling wholesaler retailer customerPromotion techniques usedrun ads in trade magazines to make wholesalers aware of the productprovide incentives to retailers to carry the item “… free case of drinks with each 2 cases it buys…” page 466run contests for salespeople to win prizes for selling the product
10 P U S H P U L L Pulling through the promotion channel Producer personal selling wholesaler retailer customerPromotion techniques usedrun TV commercials so customers directly learn about the product - then they go to the store and ask for it, or call around to find out where it is soldgive free samples to potential customers
11 P U S H P U L L Pulling through the promotion channel Producer personal selling wholesaler retailer customerSometimes you do “pulling” when the Middlemen cannot be pushed, that is they already have a competitors product, so the way to get Middlemen to WANT to carry the product, is to have customers ask for it.
13 Personal Sellingdirect communication between seller and buyerface2face contactUsually used to sell industrial goods and servicesAlso used to sell some expensive consumer items, eg. Cars, computer systems
14 Advertisingcommunicating with large numbers of potential customers“non”-personal sellingused when the target market is large and dispersedany paid form of nonpersonal communication eg. Techniques include billboard ads and TV commercialsAdvertising is a form of Mass Selling
15 Sales Promotiona demand-stimulating activity designed to supplement advertising and facilitate personal selling.it is paid by a sponsorinvolves an incentive to encourage a purchaseExample: contests, trade shows, in-store displays, rebates, samples, premiums, discounts and coupons.
16 Public Relationit encompasses a wide variety of communication efforts to contribute to generally favorable attitudes and opinions toward an organization and its products.this includes newsletter, annual reports, lobbying, and sponsorship of charitable or civic events.
17 PublicityThe generation of awareness about a product beyond regular advertising methods.Usually less costly than advertising because sometimes the message is spread for free by a newspaper article or TV story.
18 Publicity Examples of Publicity famous person photographed using your productyour product mentioned in National News in a positive wayyour product featured in a movieTV commentary about aspects of your product trade magazines carrying a story eg. Road and Track doing a feature on the new Landrover
19 Publicity Publicity can be negative eg. If a famous movie star gets electrocuted using your product, this can cause people to NOT want to buy it - this would be a major problemseg. If your product is sabotaged - this could include tampering with medical products ie. Tylenoleg. If there are negative rumours about the ingredients in your producteg. If there are negative ingredients about the moral aspects of your company
20 Promotion People Sales Managers Advertising Managers Sales Promotion Managers
21 Promotion People Sales Managers Are concerned with managing personal sellingIn small companies this person also does the advertising and sales promotion
22 Promotion People Advertising Managers They manage the mass selling activitiesThey chose the company to make the commercialsPick the billboard signs etc.If the company is big enough they hire an outside agencyThey may also do publicity as well
23 Promotion People Sales Promotion Managers They manage the Sales Promotion activitiesThey decide about in-store coupons, prizes, contests etc.They spend a lot of time visiting the retail outlets where the product is sold
24 D i r e c t M a r k e t i n g Potential Mail Recipients Once your name is on a list for a newspaper subscription, your name and address can be “sold” to another company who will mail you information to try and convince you to buy their product.Buying and selling lists (databases) of such names is big business.
25 D i r e c t M a r k e t i n gComparison of Direct Marketing and General AdvertisingDirect Marketing General AdvertisingSelling to individuals. Customers are Mass selling. Buyers identified as broadoften identifiable by name, address, and groups sharing common demographic andpurchase behaviour. psychographic characteristics.Products have added value or service. Product benefits do not always includeDistribution is important product benefit. convenient distribution channels.The medium is the marketplace. Retail outlet is the marketplace.Marketer controls product until delivery. Marketer may lose control as productenters distribution channel.Advertising used to motivate an Advertising used for cumulative effectimmediate order or inquiry. over time to build image, awareness,loyalty, benefit recall. Purchase actiondeferred.Repetition used within ad. Repetition used over time.Consumers feel high perceived risk – Consumers feel less risk – have directproduct brought unseen. Recourse is contact with the product and directdistant. recourse.
26 Adoption Process Innovators Early Adopters - sales people concentrate their efforts hereEarly majorityLate majorityLaggards, or nonadopters
27 Setting the promotion budget Most common method is based on using past percentages- that is to say,,,,If you sold $ 1,000,000 and you spent 20% on advertising, which = $200,000then,if you spend $400,000 you should sell $2 million!
28 Setting the promotion budget Other methods - used in real worldMatching what competition spendsBased on what is required to get number of customers that will meet corporate objectives - called the Task Method - sometimes stated as a % of sales
29 The Evolution of Personal Selling Personal selling: interpersonal influence process involving a seller’s promotional presentation conducted on a person-to- person basis with the buyer“A salesman is someone who sells goods that won’t come back to customers who will.” (Anonymous)
30 Has been a standard business activity for thousands of years Early peddlers sold goods they manufactured or imported viewed selling as a secondary activityIn 18th century America, peddlers sold directly to farmers and settlers in the WestIn the 19th century, drummers sold to both consumers and intermediaries sometimes using questionable practices and built negative stereotypes which persist today
31 Today’s salesperson is usually a highly- trained professional Sales professionals take a customer- oriented approach employing truthful, nonmanipulative tactics in order to satisfy the long-term needs of both the customer and the selling firmToday’s professional salespeople are problem solvers who seek to develop long-term relationships with customers
32 Factor affecting the importance of personal selling in the promotional mix VariableConditions That Favor Personal SellingConditions That Favor AdvertisingConsumerProductGeographically concentratedRelatively low numbersExpensiveTechnically complexCustom madeSpecial handling requirements Transactions frequently involve trade-insGeographically dispersedRelatively high numbersInexpensiveSimple to understandStandardized No special handling requirements Transactions seldom involve trade-insPriceRelatively highRelatively lowChannelsRelatively shortRelatively long
33 The Four Sales Channels Personal selling occurs through several types of communication channels including these four:Over-the-CounterField SellingTelemarketingInside Selling
34 Over-the-Counter: personal selling conducted in retail and some wholesale locations in which customers come to the seller’ place of businessField selling: sales presentations made at prospective customers’ homes or businesses on a face-to-face basis
35 Telemarketing: promotional presentation involving the use of the telephone on an outbound basis by salespeople or on an inbound basis by customers who initiate calls to obtain information and place ordersInside Selling: performing the functions of field selling but avoiding travel-related expenses by relying on phone, mail, and electronic commerce to provide sales and product service for customers on a continuing basis
37 Trends in Personal Selling Relationship selling: regular contacts over an extended period to establish a sustained seller-buyer relationshipConsultative selling: meeting customer needs by listing to them, understanding -- and caring about -- their problems, paying attention to details, and following through after the saleCross-selling
38 Buyers prefer to do business with salespeople who: Orchestrate events and bring to bear whatever resources are necessary to satisfy the customerProvide counseling to the customer based on in-depth knowledge of the product, the market, and the customer’s needsSolve problems extremely proficiently to ensure satisfactory customer service over extended time periodsDemonstrate high ethical standards and communicate honestly at all timesWillingly advocate the customer’s cause within the selling organizationCreate imaginative arrangements to meet buyers’ needsArrive well-prepared for sales calls
39 Team Selling: combination of salespeople with specialists from other functional areas to promote a productVirtual sales teamSales Force Automation (SFA): applications of computer and other technologies to make the sales function more efficient and competitiveBenefits include improved effectiveness due to improved access to information, lower costs, improved product launches, and attentive customer service
40 Sales Tasks Three basic sales tasks can be identified: Order ProcessingCreative SellingMissionary sales
41 Order Processing: selling, mostly at the wholesale and retail levels, that involves identifying customer needs, pointing them out to customers, and completing ordersCreative Selling: personal selling involving situations in which a considerable degree of analytical decision making on the buyer’s part results in the need for skillful proposals of solutions for the customer’s needsMissionary sales: indirect type of selling in which specialized salespeople promote the firm’s goodwill among indirect customers, often by assisting customers in product use
42 The Sales ProcessThe AIDA Concept and the Personal Selling Process
43 Prospecting: personal-selling function of identifying potential customers Qualifying: determining that a prospect has the needs, income, and purchase authority necessary for being a potential customer
44 Approach: salesperson’s initial contact with a prospective customer Precall Planning: use of information collected during the prospecting and qualifying stages of the sales process and during previous contacts with the prospect to tailor the approach and presentation to match the customer’s needs
45 Presentation: describing a product’s major features and relating them to a customer’s problems or needsDemonstration allows the customer to experience a good or service
46 Handling Objections: expressions of sales resistance by the prospect Example: A customer’s “I don't like the color” is probably their way of asking what other colors are availableObjections are reasonable and professional salespeople are prepared to handle them appropriately
47 Closing: stages of personal selling where the salesperson asks the customer to make a purchase decisionFollow-up: postsales activities that often determine whether an individual who has made a recent purchase will become a repeat customerHelps build mutually beneficial long-term relationships
48 Managing the Sales Effort Sales management: Activities of planning, organizing, staffing, motivating compensating, and evaluating and controlling a sales force to ensure its effectiveness
49 Recruitment and Selection One of the sales manager’s greatest challengesCareful selection is important for two reasons:Substantial costs involvedMistakes are costly and detrimental to customer relations and sales-force performance
50 TrainingPrincipal methods used are on-the-job training, individual instruction, in-house classes, and external seminarsPopular training techniques include instructional videotapes/DVDs, lectures, roll-playing exercises, slides, films, and interactive computer programs
51 OrganizationGeneral organizational alignment may be based on geography, products, types of customers, or some combination of these factorsNational accounts organization: organizational arrangement that assigns sales teams to a firm’s largest accounts
53 SupervisionSpan of control: the number of sales representatives who report to the first level of sales managementOptimal span of control is affected by such factors as complexity work activities being performed, ability of the individual sales manager, degree of interdependence among individual salespersons, and the extent of training each salesperson receives
54 MotivationEfforts to motivate salespeople usually take the form of the briefings, information sharing, and both psychological and financial encouragementPsychological encouragement includes appeals to emotional needs, recognition, and peer acceptanceFinancial encouragement includes monetary rewards and fringe benefits such as club memberships and sales contest awardsExpectancy theory
55 CompensationCommission: incentive compensation directly related to the sales or profits achieved by a salespersonSalary: fixed compensation payments made periodically to an employee
56 Evaluation and Control Sales quotas: level of expected sales for territory, product, customer, or salesperson against which actual results are comparedOther measures such as customer satisfaction, profit contribution, share of product-category sales, and customer retentionAnother way to categorize a salesperson’s strong points:Task, or technical abilityProcess, or sequence of work flowGoal, or end results (output) of sales performance
57 Ethical Issues in Sales Promotional activities, including personal sales, raise many ethical questionsSales managers can foster a corporate culture for an ethical sales environment:Employees understand what is expected of themOpen communication exists between employees and managersManagement leads by exampleEmployees are proud of and loyal to their organization
58 Sales PromotionMarketing activities other than personal selling, advertising, and publicity that stimulate consumer purchasing and dealer effectiveness; includes displays, trade shows and expositions, demonstrations and various non- recurrent selling effortsConsumer-Oriented PromotionsTrade-Oriented Promotions
59 Consumer-Oriented Promotions Coupons and RefundsCoupons offer discounts on the purchase price. Nearly $5 billion redeemed annuallyFree-standing inserts (FSIs) in Sunday newspapers account for about 75 percent of all couponRefunds offer cash back to consumers with proof of purchasing one or more products
60 Samples, Bonus Packs, and Premiums Sampling refers to the free distribution of a product in an attempt to obtain future sales. “Try it, you'll like it.”A bonus pack is a specially packaged item that gives the purchaser a larger quantity at the regular price.Premiums are items given free or at a reduced cost with the purchases of other products
61 Contests and Sweepstakes Contests require entrants to solve problems or write essays -- they may also require proofs of purchaseSweepstakes select winners by chance -- no product purchase is necessary
62 Specialty Advertising Sales promotion technique that places the advertiser's name, address, and advertising message on useful articles that are then distributed to target marketsMore than $8 billion worth of specialty advertising items are given out annually
63 Trade-Oriented Promotions Sales promotion that appeals to marketing intermediaries rather than to consumersTrade allowances: deals offered to wholesalers and retailers for purchasing or promoting specific productsPoint-of-purchase (POP) advertising: a display or other promotion located near the site of the actual buying decision
64 Trade shows: vendors’ displays and the demonstrations at sites often organized by industry trade associations, perhaps as part of these association’s annual meetings or conventions.Dealer incentives, contest, and training programs are run by the manufacturers to induce retailers and their salespeople to increase sales and to promote productPush money is an incentive that gives retail salespeople cash rewards for every unit of a product they sell
65 Measuring Sales Promotion Effectiveness Since many sales promotions result in direct consumer responses, marketers can relatively easily track their effectivenessAs with other methods, marketers must weigh the cost against the benefits
66 Ethics in Sales Promotion Sales promotions provide opportunities for unscrupulous companies to take advantage of consumersTrade allowances, particularly slotting allowances, have been criticized for years as a form of bribery
67 ACTIVITIES:Assume you are marketing a new perfume scent for men and women. Briefly describe the roles you would assign to advertising, personal selling, sales promotion and publicity in your promotional campaign.A promotional campaign is a coordinated series of promotional efforts built around a single theme and designed to reach a predetermined goal. For recruiting new student, describe the promotional tools that you will used.