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INTEGRATED MARKETING COMMUNICATION
UNIT –III
INTRODUCTION TO SALES PROMOTION
Scope and role of sale promotion – Definition – Objectives of sales promotion - sales promotion
techniques – Trade oriented and consumer oriented. Sales promotion – Requirement identification–
Designing of sales promotion campaign – Involvement of salesmen and dealers – Out sourcing sales
promotion national and international promotion strategies – Integrated promotion – Coordination within
the various promotion techniques – Online sales promotions- case studies.
Table of Contents
3.1Introduction ............................................................................................................................. ..................... 2
3.1.2 Nature of Sales Promotion.................................................................................................................... 2
3.2 Scope of Sales Promotion........................................................................................................................... 4
3.2.1 Objectives of Sales Promotion ............................................................................................................ 5
3.2.2 Role of Sales Promotion ................................................................................................................... 5
3.3 Impact of Sales Promotion on Sales ............................................................................................................ 7
3.4 Advantages of Sales Promotion................................................................................................................... 9
3.4.1 Disadvantages of Sales Promotion ..................................................................................................... 10
3.5 Distinction of sales promotion & personal selling. ................................................................................... 10
3.6 SALES PROMOTION TECHNIQUES .................................................................................................... 11
3.6.1Consumer Oriented Sales Promotion .................................................................................................. 11
3.6.2 Trade Oriented Sales Promotion......................................................................................................... 20
3.7 Sales Force Oriented Sales Promotion ...................................................................................................... 23
3.8 The Purposes of sales promotion Vs. Advertising.................................................................................... 24
3.9 Promotional Activities............................................................................................................................... 25
3.10 Requirement Identification of Sales Promotion Campaign ..................................................................... 25
3.11 Designing of Sales Promotion Campaign................................................................................................ 27
3.12 Involvement of Salesmen and Dealers .................................................................................................... 29
3.13 Outsourcing Sales Promotion .................................................................................................................. 31
3.14 Measuring Impact of Sales Promotion ................................................................................................... 32
3.15 National promotion Strategies ................................................................................................................. 33
3.16 International Promotion Strategies .......................................................................................................... 34
3.17 Types of International Promotion Strategies .......................................................................................... 36
3.18 Meaning and Definition of Integrated Promotion / IMC ......................................................................... 37
3.18.1 Objectives of IMC ............................................................................................................................ 38
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3.18.2 Importance of IMC .................................................................................................................................. 39
3.18.3 Factors affecting IMC ............................................................................................................................. 39
3.14 Need for co-ordination within various promotion techniques is raised due to: ......................................... 43
3.15 Communication Mix: Elements Of Imc............................................................................................................ 45
3.16 Factors Determining Communication Mix...................................................................................................... 49
3.17 Online Sales Promotion ...................................................................................................................................... 50
3.17.1Components of Online Sales Promotion .................................................................................................... 51
3.17.2 Tools of Online Sales Promotion ........................................................................................................... 52
3.1Introduction
Sales promotion is a key factor & strategy for marketers within the promotional mix. Sales
promotion refers to many kinds of incentives & techniques directed towards consumers & traders
with the intention to produce immediate or short term effects. Sales promotion helps in stimulating
trial or purchase by final customers or others in the channel. A marketer can increase the value of
its product by offering an extra incentive to purchase a product or brand.
Sales promotions have 3 distinct characteristics –
(a) Communication – They gain attention & usually provide information that may lead the
consumer to the product.
(b) Incentive – They give certain concession, inducement or contribution that gives value to the
consumer.
(c) Invitation – They invite a distinct invitation to engage in the tre.
The word promotion originates from the Latin word ‗Promovere‘ means ―to move forward‖
or to push forward. Sales and promotion are two different words and sales promotion is the
combination of these two words.
According to William J. Stanton, ―Sales promotion is an exercise in information, persuasion and
influence‖.
According to Philip Kotler, ―Promotion encompasses all the tools in the marketing mix whose
major role is persuasive communication‖
According to the Council of Sales Promotion Agencies, ―Sales promotion is a marketing discipline
that utilizes a variety of incentive techniques to structure sales- related programs targeted to
consumers, trade and/or sales levels that generate a specific, measurable action or response for a
product or service‖.
3.1.2 Nature of Sales Promotion
The nature of sales promotion can be understood by the following points:
1) Irregular-Recurring Activity:
Sales promotion is an irregular and non-recurring activity increase the sales; and this technique is
used for specific situations only such as decline in demand, fall in profit, acute competition in the
market or during the introduction of new product in the market.
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2) Target Action:
Sales promotion can be targeted to three distinct audiences. The first is internal and is usually the
marketer‘s own salespeople. There may, however, be other employees targeted such as technical
sales support people or telemarketers. The second audience is the intermediaries in the channel of
distribution. And the third is the marketer‘s final customers or consumer.
3) Action Focused:
There seems to be no doubt that sales promotion is action focused. While adverting may be
designed to build a brand image and personal selling may be designed to build long-term
relationships, it would seem that most sales promotions are designed to elicit a specific action or
response from the target audience in the short-term.
4) Motivation and Extra Incentive:
Sales promotion involves some type of incentives that offer a reason to buy. This incentive is
usually the key element in a promotional program and is an effort by which consumers, traders, and
salesforce are motivated towards maximum sales.
5) Acceleration Tool:
Sales promotion is designed to speed-up the selling process and maximizes sales volume.
Sales promotion can be implemented quickly and gets sales results sooner than advertising. Sales
promotions offer an incentive to buy now.
6) Non-Media Activity:
Sales promotion is referred to as a non-media activity as sales promotion is differentiated from
advertising and publicity, and also includes them as part of the overall promotions mix.
7) Strategic Role:
Because of the immediate nature of the impact, sales promotion have been thought of as merely,
this view is changing; and the strategic role of sales promotion and their integral role in the
promotional mix are being recognized.
8) Planned Activity:
The fact that sales promotion can be effective throughout the life of a brand shows their strategic
role. Sales promotion activities should be planned well to stimulate sale. Sales promotion is
generally planned as a specific marketing event. In other words, it is a ‗stand alone‘ activity which,
although incorporated into the marketer‘s overall marketing communication strategy, is planned as
a unique event.
9) Versatile:
Sales promotion is extremely versatile. The different forms of sales promotion are capable of being
used with various groups, and designed to achieve different effects. Sales promotion can be useful
throughout the product life-cycle.
10) Means of Marketing Communication:
It is an important means of communication by which views aid ideas of consumers about the
products and services are exchanged with the producers regularly.
11) Element of Promotion-Mix:
Sales promotion is one of the important elements of promotion-mix, other than advertising,
personal selling, and publicity.
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12) Universal Activity:
It is a universal activity adopted by all the economies of the world in their sales efforts.
3.2 Scope of Sales Promotion
I) Exposure:
The important objective is simply to expose an adequate number of target consumers to it Managers
must choose promotional media that will reach adequate number of target co planning for exposure,
marketers should take the following steps:
i) Define target consumers,
ii) Determine their numbers
iii) Choose the promotion media, and
iv) Determine the promotion budget needed to acquire the number of exposures
2) Attention:
The term attention refers to the state of focusing one‘s mind upon something. Marketers are faced
with the need to take steps to make their promotion stand-out and say or do something to attract
consumer attention.
3) Comprehension:
To comprehend is to understand, or to receive communicated knowledge. The objective is achieved
when consumers interpret the message in the manner intended by the marketer. Consumers often
fail to comprehend promotional message when the messages are poorly designed or simply not able
to create interest.
4) Attitude Change:
It involves readiness to respond in a particular way. When a message promises a reward, it
will change the attitude of the customer. For example, a strong cleaning powder or a detergent
will increase the chances of attitudinal change.
5) Behavior/Action:
Inducing behavior or action is especially important in personal selling and sales promotion. Many
managers encourage consumers to:
i) Buy the brand for the first time,
ii) Continue to buy the brand,
iii) Buy more of the brand,
iv) Urge friends to buy the brand,
v) Visit a retail store,
vi) See a demonstration of the brand, and
vii) Try-out the brand.
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3.2.1 Objectives of Sales Promotion
The various objectives of sales promotion are as follows:
1) To Introduce New Products:
To induce buyers to purchase a new product, free samples may be distributed or money and
merchandize allowance may be offered to business to stock and sell the product.
2) To Attract New Customers:
New customers may be attracted through issue of free samples, premiums, contests, and similar
devices.
3) To Induce Present Customers to Buy More:
Present customers may be induced to buy more by knowing more about a product, its ingredients,
and uses.
4) To Help Firm Remain Competitive:
Sales promotions may be undertaken to meet competition from a firm.
5) To Increase Sales in Off Season:
Buyers may be encouraged to use the product in off seasons by showing them the variety of uses of
the product.
6) To Increase the Inventories of Business Buyers:
Retailers may be induced to keep in stock more units of a product so that more sales can be
affected.
7) To Develop Patronage Habits among Customers:
It can be done by popularizing goods and services of the producer among the potential consumers
and to motivate them towards larger purchases.
8) To Educate Customers:
Educating customers/dealers and salesmen simplifies the efforts of salesforce and motivate them for
larger purchase.
9) To Stimulate Sales:
Sales promotion can promote larger sales in certain specified segments of market. To stimulate
maximum sales on special occasions such as Diwali, religious festivals, and other such occasions.
10) To Facilitate Coordination:
Sales promotion can be easily used to facilitate coordination and proper link between advertising
and personal selling.
3.2.2 Role of Sales Promotion
From the marketer‘s perspective, sales promotion serves three essential roles it informs, persuades
and reminds prospective and current customers and other selected audiences about a company and
its products Sales promotions are intended to intensify consumer response Unlike many mass media
advertising objectives, most of which have to do with awareness and attitudes, sales-promotion
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objectives are behavior-oriented Consumer sales promotions are designed to do one or more of the
following:
I) Increases Trial and Re-Purchase:
Packaged goods brands use sales promotions to encourage trial as well as re-purchase. Sales
promotions such as special prices and product samples can motivate prospective customers to try
something for the first time America online‘s strategy is to offer a limited period of free Internet
access Coupons on and inside packages, as well as in other promotional materials such as direct
mail encourage re-purchase.
2) Increases the Frequency or Quantity of Purchases:
Because the majority of the people who take advantage of coupons and price reductions are current
costumers a good promotional strategy does more than simply offer current customers a discount It
is designed to increase purchase frequency or purchase quantity at each transaction This is the
reason for ―buy one, get one free‖ offers If one examines the pricing of these offers, he/she is likely
to find that the price of the item bought is the maximum retail price and that this price divide in half
is close to the normal per package ―on sale‖ price The ―buy one get one free‖ strategy is a way of
packaging a regular promotion, but with a twist — it motivates the customer to buy two items
instead of one item at a time.
To increase the frequency of purchases, a company first must calculate the regular purchase
frequency, in order to set a goal, and then must design a strategy that will encourage customers to
buy the product more often Suppose market research found that the average user of shampoo buys
this product every three months Knowing this, a company might schedule its promotions two
months apart, timing that is intended to increase purchase frequency and convince customers that
they should keep the brand on hand.
3) Countering Competitive Offers:
The third objective of consumer sales promotions countering competitive offers, is used frequently
in highly competitive product categories Airlines, rental car companies, and the manufacturers of
soft drinks and breakfast cereals, for example, stay abreast of what competing brands are doing and
act frequently to counter these efforts When Kellogg reduces the price of its brands aimed at
children, General Mills soon responds with similar price reductions.
4) Building Customer Databases and Increasing Customer Retention:
Companies that know who their current customers are can use promotions to build databases with
customer-contact information They can then plan programs to reward and retain customers,
particularly the most profitable ones One brokerage firm, for example, sends gifts of exotic candy
and prime-cut steaks to customers at year end, the more trading customers have done during the
year, the more expensive are the thank you premiums they receive. The IMC in action box describes
how supermarkets are using their database information to target promotions to individual customers
— known as ―segments of one‖.
5) Cross-Selling and Extending the Use of a Brand:
Cross-selling encourages current customers to try additional goods or services provided by a
company. Because customers already are familiar with the brand and trust it enough to make repeat
purchases, selling them on other products under the same brand or made by the same company can
be more cost-effective than selling to those unfamiliar with the brand. Promotions also can be used
to extend the use of a brand. An example of a promotional strategy
designed to extend a product‘s uses comes from Nabisco‘s Grey Pompon mustard. The brand
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moved from its high-profile ―Pardon me‖ advertising campaign featuring its Rolls-Royce cars and
hoity-toity passengers, to a promotional campaign that positions the spicy mustard not just for
sandwiches but as a cooking ingredient. Through a coupon redemption program, Nabisco offered
promotional products such as measuring spoons and recipe books.
6) Reinforcing the Brand Image and Strengthening Brand Relationships:
Although sales promotions by design add something extra to a brand offering, what is added should not
only be compatible with the brand‘s image but also reinforce that image. The Snapple yard sale used
goofs‘ animations of bottles to reflect the quirky brand personality that Snapple wants to
associate with its brand image. Members of frequent-flyer programs are rewarded on the basis of
miles traveled; and the more they travel, the more special they are made to feel. For example, Major
airlines give their frequent flyers a special toll-free number to call for reservations and flight
information. Callers to this number are very seldom placed on hold.
How do McDonald‘s promotions reinforce the image that McDonald‘s is a kid- friendly place? One
way is by offering figurines from the latest Disney movie. One of McDonald‘s most successful
image-building promotions has been its Teenie Beanies offer (small versions of the popular plush
toys). Some restaurant owners found eager customers lined-up at 5:30 am waiting far the store to
open. Many McDonald‘s restaurants had to set-up voice-mail systems to handle inquiries from
customers wanting to know which of the toys were available in a particular week.
Role of sales promotion:1. To popularize goods and services of the producer among the potential consumers & to motivate
them towards larger purchases.
2. To motivate the existing customers for maximum purchase.
3. To maintain the sales up to normal level even during seasonal vacations & during the declining
stage of PLC.
4. To increase goodwill of the firm.
5. To educate customers/dealers & salesmen about the techniques of sales promotion.
6. To simplify the efforts of sales force & motivate them for larger purchase.
7. To stimulate maximum sales on special occasions such as Diwali, religious festivals & other
such occasions.
8. To search for a new market & to introduce new products in to the market.
9. To counteract competition.
10. To facilitate coordination & proper link between advertising and personal selling.
11. To promote larger sales in certain specified segments of market.
12. To present a counter promotional program against the competitors.
13. To develop patronage habits among customers.
14. To prove the product better in quality & users.
3.3 Impact of Sales Promotion on Sales
It is interesting to explore how sales promotions affect sales. Mostly it is thought that four basic
mechanisms are involved.
1) Brand Switching
Some promotions encourage consumers to buy a different brand than the one they bought on an
earlier purchase occasion, or had the intention of buying now. Brand switching of this type is often
called as ‗aggressive switching‘. The second type of promotion effect on brand switching is
considered as ‗defensive switching‘ In this case the objective is to retain the customer by
encouraging her/him to buy the same brand as was bought on earlier occasion instead of switching
to a different brand on this purchase occasion.
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The manufacturer‘s concern is to compete with other similar brands, while the concern of the reseller is to encourage customers to buy from her/his store (not especially the manufacturer‘s brand).
When a retailer promotes, consumers respond by switching stores, i e, they purchase from the store
that is promoting instead of the regular store This store switching would not have happened had the
retailer not offered a promotion It is clear that from the retailer‘s point of view, store switching is
more
important
than
brand
switching
Promotions offering price deals influence the attitudes of consumers towards buying the brand.
Much would depend on the size of the discount and the consumers‘ sensitivity towards price and
how much importance consumers place on price as compared to quality If the attitude towards the
brand has been quite low as compared to some other brands, then a price promotion is likely to
encourage a switch to the promoted brand. Such price promotions may also encourage consumers to
buy an otherwise expensive brand which they could not afford on the normal list price.
2) Repeat Buying
When a consumer buys a product on promotion, it may lead to developing a habit of purchasing that
brand and also some evaluation about the performance of the brand. It may also happen that since
the brand is purchased on promotion the consumer‘s attitude towards the brand weakens and the
probability of purchase in future declines Repeat purchase may result because of habit formation
that may develop because the brand is bought more than once due to sales promotion.
Much depends on the satisfaction of the consumer with the brand purchased on promotion For
example, if a customer purchased Godrej refrigerator on promotion and was satisfied, it is very
likely that the next time, when the need arises, he would purchase the same brand again on
promotion, or other products of the same manufacturer when available on promotion.
Instrumental conditioning (operant conditioning) views sales promotions as rewards and consumer
learns to continue buying the product. However, the nature of reward may have significant effect on
behavior reinforcement. The reward should be strong enough to encourage and reinforce the
purchase behavior to sustain it.
Repeat purchasing is often the result of habit formation and learning. Sales promotions stimulate
the consumers to buy a product and this becomes the first step towards establishing a habit. Another
way is to not allow the brand user to shift to some other brand by rewarding and reinforcing the
already established behavior.
3) Purchasing more or Accelerating Timing of Purchase:
Purchasing more and accelerating timing refers to those situations when consumers buy more than
their immediate requirement or shift their purchase timing as a result of promotions. When resellers buy more than their normal requirements, it is called ‗forward buying‘. Building excessive
inventories in this manner often leads to stock diversion in non- deal areas. Another important
repercussion of this purchase behavior is that it merely shifts the purchases, which would have
occurred anyway. For example, if a consumer buys more than the immediate requirements, then in
the next purchase period this consumer either would not buy or buy less. In another situation, due to
promotion, the consumer buys the refrigerator now, though the intention was to buy it after two
months. This is purchase acceleration. Another effect of promotion can be that consumers who have
bought in excess of their requirements would be out of the market. Similar would be the case when
the retailers‘ shelves are full. This can help in pre-empting the competition. Such acceleration in
purchase quantity would also help in preventing brand switching and, in some cases, more
consumption of the product (such as Maggi noodles or other products used or consumed by
individuals and families on a regular basis).
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The reverse may also be true in certain situations, i.e., negative acceleration when consumers buy
less or decide to purchase later rather than now. This may happen when the sales promotion
stimulates brand switching. The consumer wants to try the product and buys a smaller quantity to
reduce the risk associated with using something new. The consumer may also postpone the
purchase of a product because she/he learns from some source about the forthcoming sales
promotion, or anticipates it.
4) Increasing Category Expansion and Consumption:
Sales promotions are likely to stimulate demand by creating new occasions for purchase, or by
increasing the consumption rate by consumers. In certain situations the purchase of a product
category gets accelerated.
Sales promotions, such as displays, can create new purchase occasions by reminding the customer
that the displayed product is good for growing children (such as protein biscuits). Other products,
for example, noodles or potato chips, purchased on promotion in multiple units, can increase the
consumption rate, which is often the objective of many promotions. One example can be of
condensed milk, ‗Milkmaid‘. An attractive display of this brand is arranged and a free recipe book
is given on purchase of two packs. This is quite likely to increase the rate of consumption of this
product, as consumers will be tempted to try different recipes.
3.4 Advantages of Sales Promotion
The advantages of sales promotion are:
1) Advantages to Businessmen:
The importance of sales promotion for businessmen is given below:
i) Helps in getting New Customers for Existing Product:
Through sales promotion incentives are given to new customers at opportune time in a manner that
they fee‘ Attracted towards the special product.
ii) Helps in Stimulating Middlemen:
Under sales promotion, middlemen are given different kinds of discounts and gifts. As a result,
they get encouraged to buy more.
iii) Helps in Motivating Demand during Off-season:
Generally, demand for seasonal products falls during off-season. But under sales promotion efforts
are made to maintain demand for seasonal products throughout the year.
Iv) Helps in Motivating the Sales Representatives:
Sales representatives play significant role in increasing sales. It is sales promotion that motivates
them to play this role
v) Helps in Facing the Competition
With a view to increasing their sales, competing firms evolve innovative methods of sales
promotion. Under the circumstances, by adopting relatively better methods of sales promotion this
competition is faced squarely.
2) Advantages to Consumers:
Sales promotion has the following importance for the consumers:
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i) Extra Benefits:
This method provides many advantages to the consumers before buying the product, while buying
the product and after buying the product. For example, they get samples before the purchase, get
gifts while purchasing and after-sales-service after purchasing the product.
ii) Information of Latest Products:
Consumers get influenced by sales promotion and they are attracted towards the products. This
attitude of the consumers brings them in contact with various new products By using different kinds
of new products, the standard of their life improves.
iii) Helps in Managing Budget:
In many occasions there is a heavy fall in prices because of the sales promotion. By purchasing
articles on such occasions the consumers can control their family budget.
3) Advantages to Society:
Sales promotion has the following importance for society:
i) Employment Opportunities:
A lot of man-force is required to implement sales promotion. Therefore, many unemployed young
men and women get good opportunities to earn their livelihood.
ii) Helpful for all Sections:
Under sales promotion, the customers are offered many incentives. Taking advantage of this
opportunity, every section of society can purchase things according to their needs and more
particularly the customers with weak economic status can fulfill their needs easily.
3.4.1 Disadvantages of Sales Promotion
The disadvantages of sales promotion are:
1) There is a feeling that such seasonal sales promotional activities are mainly intended to sell substandard product.
2) The second criticism is that such discounts are not real, since the prices of the products are
already inflated.
3) These activities are short-lived, so the results realized are also short-lived. As soon as these
activities offering of various concessions, free gifts, etc., are withdrawn, the demand also goes
down rapidly.
4) May have only short term impact.
5) Over use of price related sales promotion tools may hurt brand image and profits.
6) Effective sales promotions are easily copied by competitors.
3.5 Distinction of sales promotion & personal selling.
1. Role:- Sales promotion helps to increase the effectiveness of personal selling & personal selling
creates desire for a product thereby effecting sales .
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2. Motivation:-Sales promotion provides physical motivation to customers personal selling
provides physical and emotional motivation to customers
3. Personal presence:-Personal presence of salesmen is not necessary in sales promotion whereas
in personal selling salesmen is required for selling.
4. Media:-Sales promotion can be presented through any media like vocal, written or audio visual
personal selling it can be presented through vocal media only.
5. Compumentary function:- Sales promotion is complimentary to personal selling whereas
personal selling does not complement to the sales promotion program.
6. Continuity:- Sales promotion is not used as a securing activity whereas personal selling is a
routure activity which regularly operates.
7. Orientation:- Sales promotion is oriented largely towards the firms or its product , personal
selling in customer oriented.
8. Object:-The objective of sales promotion is to feel a gap between advertising & personal selling
& the objective of personal selling is to solve the problems of customers & to get more sales.
3.6 SALES PROMOTION TECHNIQUES
Sales promotion techniques signify all those activities that supplement, co-ordinate and make the
efforts of personal selling and advertising more effective. It is non recurrent in nature which means
it can‘t be used continuously.
Sales promotion techniques consist of diverse collection of incentive tools, mostly short- term
designed to stimulate quicker and/or greater purchase of a particular product by consumers or the
trade, where as advertising offers a reason to buy, sales promotion offers an incentive to buy.
The techniques of sales promotion can be broadly classified into three categories which are as
follows:
1) Consumer sales promotion (for example, samples, coupons, prizes, cash refund, warranties,
demonstrations, contest),
2) Trade/middlemen sales promotion(for example, buying allowances, free goods, merchandise
allowances, co-operative advertising, advertising and display allowances, dealer sales contests), and
3) Sales force sales promotion (for example, bonuses, contests, sales rallies).
3.6.1Consumer Oriented Sales Promotion
The primary objective of sales promotion is to motivate consumer behavior — i.e., to generate
some type of active response such as buying Snapple products in order to get the bottle cap, which
serves as currency for an online yard sale. Sales promotion is integrated into the MC mix to provide
incentives to act at one or more points in the brand decision- making process. In the case of the
Snapple yard-sale promotion, the incentive was designed to encourage purchase of the beverage.
Advertising creates awareness and interest; sales promotions influence the next steps in buying
behavior, such as desire and action. Automobile dealers, for example, offer prospects free drinks
and hot dogs just for visiting their showrooms and companies selling time-share properties offer
free dinners and an overnight stay to people willing to listen to a sales pitch. Marketers know that
prospects may be aware of and even have some interest in a brand but may not have enough desire
to seek-out the brand or risk buying it. An extra incentive, however, sometimes moves a prospect
into the desire and action stages.
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Consumer sales promotions that might induce impulse purchases include limited-time only sales,
limited edition products, and products that the consumer is already looking to purchase as
collectibles. For example, people interested in Coca-Cola collectibles buy virtually anything with
the Coca-Cola logo displayed on it, from salt and pepper shakers to tee shirts. Collectibles are
irresistible to those who have established an ongoing collection. The forms of sales promotion that
are more effective at persuading consumers to switch brands are those that compare their product
with that of a competing brand and point-out its features that the other brand does not have.
Sales promotion efforts are directed at final consumers and designed to motivate, persuade and
remind them of the goods and receives that are offered. The major forms of consumer sales
promotion are:
1)
Coupons:
A coupon is a certificate that entitles the consumer to a specified saving on the purchase of a
specified product. These coupons are usually issued by the manufacturers through the retailers or in
most of the cases; they are kept inside the package. The consumer may get a discount of the value
stated on the coupon at the time of purchase. The retailers are reimbursed the value of coupons by
the manufacturers, for example, lifebuoy issues coupons on purchase.
Coupons are used widely by marketers across many retail industries and reach consumers in a
number of different delivery formats including:
i) Free-Standing Inserts (FSI): Here coupon placement occurs loosely (i.e., inserted) within
media, such as newspapers and direct mail, and may or may not require the customer to cut away
from other material in order to use.
ii) Cross-Product: These consist of coupons placed within or on other products. Often a marketer
will use this method to promote one product by placing the coupon inside another major selling
product. For example, a pharmaceutical company may imprint a coupon for a cough remedy on the
box of a pain medication. Also, this delivery approach is used when two marketers have struck a
cross promotion arrangement where each agrees to undertake certain marketing activity for the
other.
iii) Printout: A delivery method that is common in many food stores is to present coupons to a
customer at the conclusion of the purchasing process. These coupons, which are often printed on
the spot, are intended to be used for a future purchase and not for the current purchase which
triggered the printing.
iv) Product Display: Some coupons are nearly impossible for customers to miss as they are located
in close proximity to the product. In some instances coupons may be contained within a coupon
dispenser fastened to the shelf holding the product while in other cases coupons may be attached to
a special display (see POP display below) where customers can remove them (for example, tear
off).
v) Internet: Several specialized websites, such as HotCoupons.com, and even some
manufacturer‘s sites, allow customers to print out coupons. These coupons are often the same ones
appearing in other media, such as newspapers or direct mail. In other cases, coupons may be sent
via email, though to be effective the customer‘s email program must be able to receive FTML email
(and not text only) in order to maintain required design elements (for example, bar code).
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vi) Electronic: The Internet is also seeing the emergence of new non-printable coupons redeemable
through website purchases. These electronic coupons are redeemed when the customer enters a
designated coupon code during the purchase process.
2) Bonus Offers/Premiums:
An offer of a certain amount of product at no cost of consumers who buy a stated amount of a
product or a special pack thereof is called premium offer or bonus offer. This method is yeiy
popular now-a-days in view of the acute competition. Premium may be kept inside the pack or in
the form of reusable container.
Bonus offers can take on many different characteristics. They will not appeal to as broad a group as
will price offers. Bonus deals can provide the perception of a greater value given than direct price.
When an additional 25 per cent of the product is packaged with the product as a bonus, the / user
receives full value, but the manufacturer has only a 25 per cent increase in product cost, with no
added profit cost to other channel members.
Bonus offers may take many forms Some of the more popular types of bonuses offered are stamps .
bonus packs, merchandise, spiffs, point programs, product samples, free products and extra
services. Whatever the form of bonus offered, it is an assured bonus and not a chance incentive or
reduction in price related to the purchase.
Types of Bonus Offers/Premiums
i) Free Premiums:
Free premiums are usually small gifts or merchandise included in the product package or sent to
consumers who mail in a request alongwith a proof of purchase In/on-package free premiums
include toys, balls, trading cards, or other items included in cereal packages, as well as samples of
one product included with another Surveys have shown that in/on-package premiums are
consumers‘ favorite type of promotion.
Package-earned premiums have high impulse value and can provide an extra incentive to buy the
product. However, several problems are associated with their use. First, there is the cost factor,
which results from the premium itself as well as from extra packaging that may be needed Finding
desirable premiums at reasonable costs can be difficult, particularly for adult markets, and using a
poor premium may do more harm than good. Another problem with these premiums is possible
restrictions from regulatory agencies.
ii) Self-Liquidating Premiums:
These premiums require the consumer to pay some or all of the cost of the premium plus handling
and mailing costs. The marketer usually purchases items used as self-liquidating premiums in large
quantities and offers them to consumers at lower-than retail prices The goal is not to make a profit
on the premium item but rather just to cover costs and offer a value to the consumer.
In addition to cost savings, self-liquidating premiums offer several advantages to marketers.
Offering values to consumers through the premium products can create interest in the brand and
goodwill that enhances the brand‘s image. These premiums can also encourage trade support and
gain in-store displays for the brand and the premium offer Self liquidating premiums are often tied
directly to the advertising campaign, so they extend the advertising message and contribute to
consumer franchise building for a brand.
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3) Contests and Sweepstakes:
These are part of interest promotions because such sales promotions create not only interest but also
produce excitement and enthusiasm in consumers There seems to be quite a bit of confusion in
understanding these terms A contest requires the participants to perform some task. For example,
the participants may be required to write a slogan, choose a name, or create a design, etc. To decide
which entries are first, second, or third, etc., an expert or a panel of experts examines the entries and
judges the winning ones. The prizes, depending on the announced number of prizes, are declared A
contest is based on testing the skill or ability and may or may not involve proof-of-purchase (this is
called a ‗consideration‘) to enter the contest.
.
A sweepstakes is a random drawing and is sometimes called a chance contest. This too may or may
not involve the purchase of any product or service. A lottery prize is decided on the basis of chance
and requires a ―consideration‖ for entry that may be proof of-purchase of a ticket or a product.
According to the American Association of Advertising Agencies (AAAA), ―A contest is an event
that invites the customer to apply skill to solve or complete a special problem‖.
The same agency says, ―A sweepstakes does not call for the application of skill on the part of the
consumer. Winners are determined by a drawing from all entry forms. In other words, prizes are
awarded on the basis of chance‖.
Consumers are often attracted to promotions where the potential value obtained is very high. In
these promotions only a few lucky consumers receive the value offered in the promotion. Two types
of promotions that offer high value are contests and sweepstakes. Contests are special promotions
awarding value to winners based on skills they demonstrate compared to others. For example, a
baking company may offer free vacations to winners of a baking contest. Contest award winners are
often determined by a panel of judges. Sweepstakes or drawings are not skill based but rather based
on luck. Winners are determined by random selection. In some cases the chances of winning may be
higher for those who make a purchase if entry into the sweepstake occurs automatically when a
purchase is made. But in most cases, anyone is free to enter without the requirement to make a
purchase. A sub-set of both contests and sweepstakes are games, which come in a variety of formats
such as scratch-off cards and collection of game pieces.
4) Money Refund Offer:
This offer is generally stated in media advertising that the manufacturer will return the price if the
product is not to the satisfaction of the consumer within a stated period. For example, Bull•-worker
exerciser is promoted this way.
Refunds (also known as rebates) are offers by the manufactures to return a portion of the product
purchase price, usually after the consumer supplies some proof of purchase. Consumers are
generally very responsive to rebate offers, particularly as the size of the savings increases. Rebates
are used by makers of all types of products, ranging from packaged goods to major appliances, cars,
and computer software
Packaged-goods marketers often use refund offers to induce trial of a new product or encourage
users of another brand to switch. Consumers may perceive the savings offered through a cash
refund as an immediate value that lowers the cost of the item, even though those savings are
realized only if the consumer redeems the refund or rebate offer.
Refund offers can also encourage repeat purchase. Many offers require consumers to send in
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multiple proofs of purchase. The size of the refund offer may even increase as the number of
purchases gets larger. Some packaged-goods companies are switching away from cash refund offers
to coupons or cash/coupon combinations. Using coupons in the refund offer enhances the likelihood
of repeat purchase of the brand. Rebates have become a widely used form of promotion for
consumer durables.
5) Samples Distribution/Sampling:
It involves free distribution of samples, to ultimate consumers. The samples may be distributed
door to door, or may be offered in a retail store, or with the purchase of any particular product.
These samples may also be given to professionals to recommend. This helps the consumer to verify
the real quality of the product. This is suitable for introducing a new product of daily use, for
example, promotion of surf excel.
One basic decision the sales promotion or brand manager must make is how the sample will be
distributed The sampling method chosen is important not only in terms of costs but also because it
influences the type of consumer who receives the sample The best sampling method gets the
product to the best prospects for trial and subsequent re purchase Some basic distribution methods
include door to door direct-mail, in-store, and on-package approaches, which are as follows in
detail:
i) Door-to-Door Sampling:
In this the product is delivered directly to the prospect‘s residence, is used when it is important to
control where the sample is delivered This distribution method is very expensive because of labor
costs, but it can be cost-effective if the marketer has information that helps to define the target
market and/or if the prospects are located in a well-defined geographic area Some companies have
samples delivered directly to consumers‘ homes by including them with newspapers.
ii) Sampling through the Mail:
It is common for small, lightweight, non- perishable products A major advantage of this method is
that the marketer has control over where and when the product will be distributed and can target the
sample to specific market areas.
iii) In-Store Sampling:
It is increasingly popular, especially for food products. The marketer hires temporary
demonstrators who set-up a table or booth, prepare small samples of the product, and pass them out
to shoppers. The in-store sampling approach can be very effective for food products, since
consumers get to taste the item and the demonstrator can give them more information about the
product while it is being sampled. Demonstrators may also give consumers a cents-off coupon for
the sampled item to encourage immediate trial purchase. While this sampling method can be very
effective, it can also be expensive and requires a great deal of planning, as well as the cooperation
of retailers.
iv) On-Package Sampling:
In this a sample of a product is attached to another item, is another common sampling method This
procedure can be very cost - effective, particularly for multi -product firms that attach a sample of a
new prod uct to an existing brand‘s package. A drawback is that since the sample is distributed only
to consumers who purchase the item to which it is attached, the sample will not reach non-users of
the carrier brand. Marketers can expand this sampling method by attaching the sample to multiple
carrier brands and including samples with products not made by their company
v) Event Sampling:
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It has become one of the fastest-growing and most popular ways of distributing samples. Many
marketers are using sampling programs that are part of integrated marketing programs that feature
events, media tie-ins, and other activities that provide consumers with a total sense of a brand rather
than just a few tastes of a food or beverage or a trial size of a packaged-goods product Event
sampling can take place in stores as well as at a variety of other venues such as concerts, sporting
events, and other places.
6) Discounts/Rebates/Cents-off:
Rebates, like coupons, offer value to purchasers typically by lowering the customer‘s final cost for
acquiring the product. While rebates share some similarities with coupons, they differ in several
keys aspects. First, rebates are generally handed or offered (for example, accessible on the Internet)
to customers after a purchase is made and cannot be used to obtain immediate savings in the way
coupons are used (So called ―instant rebates‘ where customers receive price reductions at the time
of purchase, have elements of both coupons and rebates, but for the purposes these will be classified
as coupons due to the timing of the reward to the customer.) Second, rebates often request the
purchaser to submit personal data in order to obtain the rebate. For instance, customer
identification, including name, address and contact information, is generally required to obtain a
rebate. Also, the marketer may ask those seeking a rebate to provide additional data such as
indicating the reason for making the purchase. Third, unlike coupons that always offer value when
used in a purchase (assuming it is accepted by the retailer), receiving a rebate only guarantees value
if the customer takes actions. Marketers know that not all customers will respond to a rebate. Some
will misplace or forget to submit the rebate while others may submit after a required deadline.
Marketers factor in the non-redemption rate as they attempt to calculate the cost of the rebate
promotion. Finally, rebates tend to be used as a value enhancement in higher priced products
compared to coupons. For instance, rebates are a popular promotion for automobiles and computer
software where large amounts of money may be returned to the customer.
Discounts and allowances are reductions to a basic price of goods or services. They can occur
anywhere in the distribution channel, modifying either the manufacturer‘s list price (determined by
the manufacturer and often printed on the package), the retail price (set by the retailer and often
attached to the product with a sticker) or the list price (which is quoted to a potential buyer, usually
in written form). The market price (also called effective price) is the amount actually paid. The
purpose of discounts is -to increase short-term sales, move out-of-date stock, reward valuable
customers and encourage distribution channel members to perform a function or otherwise reward
behaviors that benefit the discount issuer. Some discounts and allowances are forms of sales
promotion.
Types of Discounts and Allowances:
The most common types of discounts and allowances are:
i) Cash Discounts for Prompt Payment:
These are intended to speed payment and thereby provide liquidity to the firm. They are sometimes
used as a promotional device.
ii) Cash Discounts for Preferred Payment Method:
Some retailers (particularly small retailers with low margins) offer discounts to customers paying
with cash, to avoid paying fees on credit card transactions.
iii) Quantity Discounts:
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These are price reductions given for large purchases. The rationale behind them is to obtain
economies of scale and pass some (or all) of these savings on to the customer. In some industries,
buyer groups and co-ops have formed to take advantage of these discounts.
iv) Trade Discounts (also called Functional Discounts):
These are payments to distribution channel members for performing some function.
v) Educational Discounts (also called Student Discounts):
These are price reductions given to members of educational institutions, usually students but
possibly also to educators and to other institution staff. The rationale is to build brand awareness
early in a buyer‘s life and/or to build product familiarity early so that when a student graduates,
he/she is more likely to buy the same product for work at its normal price.
vi) Partial Payment Discounts:
Similar to the Trade discount this is used when the seller wishes to improve cash flow or liquidity,
but finds that the buyer typically is unable to meet the desired discount deadline. A partial discount
for whatever payment the buyer makes helps the seller‘s cash flow partially.
vii) Seasonal Discounts:
These are price reductions given when an order is placed in a slack period (example, purchasing
skis in April in the northern hemisphere or in September in the southern hemisphere). On a shorter
time scale, a happy hour may fall in this category. Generally, this discount is referred to as ―X
Dating‘ or ―Ex-Dating‘
viii) Forward Dating:
This is where the purchaser doesn‘t pay for the goods until well after they arrive The date on the
invoice is moved forward — for example, purchase goods in November for sale during the
th
December holiday season, but the payment date on the invoice is January 7 .
ix) Promotional Allowances:
These are price reductions given to the buyer for performing some promotional activity. These
include an allowance for creating and maintaining an in-store display or a co op advertising
allowance.
x) Brokerage Allowance:
From the point of view of the manufacturer, any brokerage fee paid is similar to a promotional
allowance It is usually based on a percentage of the sales generated by the broker.
xi) Trade-ins:
This can be a way of reducing the price By offering more for a trade-in than it is actually worth,
the net effect is to reduce the effective price earned by the seller. The advantage of this is, it
encourages replacement sales without altering the list price or the perceived value.
xii) Military Discount:
A discount offered to customer‘s who are or were enlisted in military services.
xiii) Senior Discount:
A discount offered to a customer who has reached a certain age, which depending on the type of
business or setting, may vary Similar discounts in some settings may be offered to those with
disabilities regardless of age.
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xiv) Child/Toddler Discount
A discount offered to a customer or child of a certain age or younger (for example, Kids eat free).
xv) Sliding Scale:
A discount offered based on one‘s ability to pay. More common with non-profit organizations than
with for-profit retail.
xvi) Trade Rate:
A discount offered by a seller to a buyer in a related industry. For example, a pharmacist might
offer a discount for over-the-counter drugs to physicians who are purchasing them for dispensing to
the physicians‘ own patients.
7) Loyalty Programs:
Promotions that offer customers a reward, such as price discounts and free products, for frequent
purchasing or other activity are called loyalty programs. These promotions have been around for
many years but grew rapidly in popularity when introduced in the airline industry as part of
frequent-filer programs. Loyalty programs are also found in numerous other industries, including
grocery, pizza purchasing and online book purchases, where they may also be known as club card
programs since members often must use a verification card as evidence of enrollment in the
program.
Loyalty programs are seen in many different forms; however, all such programs have the common
objective of encouraging repeat purchases or repeated visits to particular retail shops, or continued
patronization of some service. Some of the most common methods used for such sales promotions
include collecting labels, bottle caps, stamps, or specific proof-of-purchase that can be used to
redeem the prizes or premiums.
Frequent-flier schemes are announced by many airlines to ensure continued usage of service by
consumers. A particular airline offers the passengers some points (or stamps) when they travel a
specified number of kilometers by that airline, or the number of times they use the airline to travel
On accumulating the required number of points or stamps, the passenger is entitled to claim the
premium from the airline This kind of offer attracts frequent air travelers who continue patronizing
the same airline Many hotels and others use similar type of promotions to ensure that customers
would continue using their services.
Most products or services that are in their maturity stage, or where the product differentiation is not
perceived as important and persuasive by consumers, respond positively to loyalty programs as they
provide differentiation. Usually loyalty offers are made to cover a sufficiently long period of time
so that the consumers have enough time to make multiple purchases or several visits to the store
Loyalty programs are typical examples of delayed-value promotions, the response is slow but the
effects may prove long lasting This is in sham contrast to immediate value promotions, where the
impact is powerful, reward is immediate and duration of promotion is short-term.
Loyalty programs work nest when the objective is to build repeat purchase or protect present
consumers from competitive moves Normally, once consumers enter in such a program, they are
reluctant o switch to other brands The most important aspect of these promotions is to maintain
brand loyalty through a continuous program of rewarding Ions-standing customers (operant
conditioning) The focus of retail stores is on core customers to build store loyalty by rewarding
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frequent shoppers Manufacturers generally concentrate on product loading and repeat purchase
from any retail store.
Such loyalty programs can be of the following major types:
i) Trading Stamps:
A retailer may introduce trading stamps. Every customer who buys products worth, say 100 (any
sum can be specified) is giver on stamp On saving a specified number of stamps, the customer can
redeem the stamps for the prizes offered in this program For some unknown reason(s) such
promotions by retailers in the country are quite uncommon. This is a fairly popular method in many
other countries. Shoppers Stop started a somewhat similar program. They enrolled customers as
‗members‘ of Shoppers Club by charging a fee of Rs. 150. Member customers were entitled to a
variety of benefits by collecting points.
ii) Store Continuity Plan:
Such plans may consist of premium offers by a retail store to build continued patronage by
consumers for a longer duration. It works by encouraging consumers to return to the store at some
interval to make a purchase and get the premium to complete a set of toys or dishes or other
similar items.
McDonald‘s announced a promotion to stimulate repeat visits to its restaurants by consumers. A
part of the communication said, ―Now every time you buy a Happy Meal for your kids, they get a
Lego System set with it — Now every 10 days there will be a different Lego System set inside each
Happy Meal box. The trick is to collect all five Lego System sets and build many more things apart
from the ones shown in the ―What you can do with Lego System‖ book‖. Those consumers who
wished to collect all the five sets of Lego System (building blocks for kids) were required to make
repeat visit at an interval to purchase ‗Happy Meal‘ from McDonald‘s outlets These building
blocks are quite popular among kids This promotion is a typical example of store continuity plan
Many variations of this continuity plan can be developed depending on the creativity of the
promotion planner.
8) Demonstrations
Many products benefit from customers being shown how products are used through a
demonstration Whether the demonstration is experienced in-person or via video form such as over
the Internet, this promotional technique can produce highly effective results Unfortunately,
demonstrations are very expensive to produce
Costs involved in demonstrations include paying for the expense of the demonstrator, which can be
high if the demonstrator is well-known (for example, nationally known chef) and also paying for
the space where the demonstration is given
Products are being shown in action Consumers can visit the store and see the usage of product in
live action so that doubts of the consumers can be clarified in the store itself When a new product is
introduced m the market the sales promotional tool is often used For example, ultra modem mixer
grinder is being used by the company to demonstrate its specialty than the other product.
9) Personal Appearances:
An in-person appearance by someone of interest to the target market, such as an author sports
figure or celebrity, is another form of sales promotion capable of generating customer traffic to a
physical location However, as with demonstrations, personal appearance promotion can be
expensive since the marketer normally must pay a fee for the person to appear
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10) Product Warranties:
These are an important tool, especially as consumers become more quality sensitive. When My
TVS offered a two year car warranty, substantially longer than other competitors, customers took
notice. They inferred that My TVS quality must be good or else the company would be in deep
trouble. Companies must carefully estimate the sales-generating value against the potential costs of
any proposed warranty program.
3.6.2 Trade Oriented Sales Promotion
Marketers use sales promotions to target all customers including partners within their channel of
distribution. Trade promotions are initially used to entice channel members to carry a marketer‘s
products and, once products are stocked, marketers utilize promotions to strengthen the channel
relationship.
Trade promotions are the expenditures or incentives used by manufacturers and other members of
the marketing channel to help to push their products through to retailers. The best way to
understand trade promotions is to note that they are incentives that members of the trade channel
use to entice another member to purchase goods for eventual re-sale. In other words, trade
promotions are aimed at retailers, distributors, wholesalers, brokers, or agents. A manufacturer can
use trade promotions to convince another member of the trade channel to carry its goods.
Wholesalers, distributors, brokers, and agents can use trade promotions to entice retailers to
purchase products for eventual re-sale.
The difference between trade promotions and consumer or sales promotions is that the latter
involves a sale to an end-user or customer. When a manufacturer sells products to another business
for end-use, the enticements involved are consumer or sales promotions tools. On the other hand,
when a manufacturer sells to another business for the purpose of having the goods re-sold, then
trade promotions tools are being used.
The role played by trade promotions is to build strong relations with other members in the channel.
When a retailer stocks the merchandise a manufacturer promotes, consumers have the opportunity
to buy the product. The same is true for distributors, ‗wholesalers, brokers, or agents. If they carry
the product, they help to push it down to retailers.
To be effective, trade promotions should be an integral part of the IMC program. Unfortunately, in
most companies, the individual handling trade promotions is not involved in the IMC planning
process. These companies often view trade promotions as being merely a means for getting
products onto retail shelves or satisfying some channel member‘s request. To satisfy the
administration‘s demand to increase sales, trade managers often feel greater and greater pressure to
use trade promotions to push their products. Little consideration is given to the other components of
the IMC program when trade promotions programs are developed. To solve this problem, the
marketing executive must explain the benefits of a systematic approach to all parts of the marketing
mix to company leaders.
1)
Trade Allowances:
Probably the most common trade promotion is some form of trade allowance, a discount or deal
offered to retailers or wholesalers to encourage them to stock, promote, or display the
manufacturer‘s products. Types of allowances offered to retailers include the following:
i) Buying Allowances:
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It is a deal or discount offered to re-sellers in the form of a price reduction on merchandise ordered
during a fixed period. These discounts are often in the form of an off-invoice allowance, which
means a certain per-case amount or percentage is deducted from the invoice. A buying allowance
can also take the form of free goods; the re-seller gets extra cases with the purchase of specific
amount.
Buying allowances are used for several reasons. They are easy to implement and are well-accepted,
and sometimes expected, by the trade. They are also an effective way to encourage re-sellers to buy
the manufacturer‘s product, since they will want to take advantage of the discounts being offered
during the allowance period. Manufacturers offer trade discounts expecting wholesalers and
retailers to pass the price reduction through to consumers, resulting in greater sales.
ii) Promotional or Display Allowances:
Manufacturers often give retailers allowances or discounts for performing certain promotional or
merchandising activities in support of their brands. These merchandising allowances can be given
for providing special displays away from the product‘s regular shelf position running in store
promotional programs, or including the product in an ad. The manufacturer generally has guidelines
or a contract specifying the activity to be performed to qualify for the promotional allowance. The
allowance is usually a fixed amount per case or a percentage deduction from the list price for
merchandise ordered during the promotional period.
iii) Slotting Allowances
In recent years, retailers have been demanding a special allowance for agreeing to handle a new
product. Slotting allowances, also called stocking allowances introductory allowances or street
money, are fees retailers charge for providing a slot or position to accommodate the new product
Retailers justify these fees by pointing out the costs associated with taking on so many new
products each year such as re designing store shelves entering the product into their computers
finding warehouse space and briefing store employees on the new product They also note they are
assuming some risk, since so many new product introductions fail.
2) Display and Advertising Allowance:
Display, or advertising incentive, is somewhat similar to cash rebate. In case of rebate the
manufacturer makes payment in cash or by cheque to retailers, however in this case the monetary
reward earned is in the form of credit note. As in the case of rebate the manufacturer offers a
conditional incentive related to performance The retailer may be required to arrange a product
display in a prominent show window or offer discount to consumers and advertise this offer in the
local newspaper, or arrange a point-of purchase display on the shelf corner. To earn the advertising
allowance, usually the retailer is required to advertise the product offer in the local media and
promote the product In case of display, the promotion is confined within the retail store The
retailer earns the incentive only after meeting the conditions
For example, the manufacturer may offer Rs.50 per case as advertising allowance for the purchase
of the promoted product, provided the retailer advertised a discount offer on the product for the
consumers in the local media. The purpose of the manufacturer may be to encourage some
activity at the retail level or to retain the existing retailers in the distribution system and also
attract new ones.
Advertising and display allowances are primarily used for consumer products. It is easy to set-up
such a display as it generally involves some kind of written agreement with retailers. The
manufacturer shows many displays to retailers to choose from Once the retailer selects a display
and places it in the store, the retailer is paid either in cash or in the form of free goods. It is easier
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for the manufacturer to enforce this deal. The proof can be in the form of newspaper clippings (if
the agreement was about putting an ad in the local newspaper), copies of POP material, or
photographs of display, etc. Cooperative advertising is closely related to advertising and display
allowance. There is an arrangement between the manufacturer and the retailers wherein the
manufacturer agrees to pay part of the advertising expenses incurred by the retailers in advertising
the product. After the ad has appeared in the agreed content and form the manufacturer pays for the
agreed share.
Some manufacturers provide the space in their national or regional advertisements to list all the
dealers from where the consumers can buy the product. The manufacturers often use ‗dealer listing‘
when they announce the launch of a new product or when a major national promotion is announced.
Obviously, for products of mass consumption, which are stocked by almost all retailers, this is not
feasible. But in case of consumer durable goods or other high-involvement category products,
where selective distribution is in operation, this method works very well. For example, if canon is
introducing a new model of inkjet printer, the ad may include a listing of authorized dealers. In case
of regional ads communicating sales promotion, the list of all the re-sellers stocking that product is
included in the ad. This often generates store traffic and benefits the retailers as they gain some
prestige in being associated with a national ad and a national or multinational company.
3)Trade contests / Spiffs / Push money:
Spiffs are a monetary reward given to the salesforce of the dealers to sell a manufacturer‘s product.
For example, a manufacturer of washing machine may offer Rs.500 to each salesperson who sells
that manufacturer‘s brand of washing machine. The spiff money varies as does the willingness of
the dealers to allow their salesforce to accept the offer. Dealers who carry product brands of
different manufacturers, such as computers, generally hesitate to allow such offers.
To achieve sales targets and other objective, manufacturers sometimes use trade contests. Rewards
are given as contest prizes to brokers, retail salespeople, retail stores, wholesales, or agents. These
funds are known as spiff money. The rewards can be items such as luggage, a stereo, a television,
or a trip to an exotic place such as Hawaii. Contests can be held at various levels, such as:
i)
Brokers versus brokers
ii)
Wholesalers versus wholesalers
iii)
Retail stores within a chain versus one another,
iv)
Retailer store chains versus other retail chains, and
v)
Individual salespersons within retail stores versus one another.
In other words, the contest can be between brokers or agents who handle the manufacturer‘s goods.
It can be for wholesalers, or it can be a sales volume contest among individual retail stores.
Although contests can be designed between retail organizations, they are seldom used because of
conflict of interest policies in many large organizations. Buyers in large organizations are often
prohibited from participating in vendor contests because they create conflicts of interest and
unfairly influence their buying decisions. Although this is exactly what a contest is designed to
accomplish, many large retail organizations do not want buyers participating, because they may
make purchase decisions for 500 to 2500 stores. This places undue pressure on the buyer.
When conducting a contest at the individual store level, most channel members agree that these
contests work best when restricted to a specific region. Many times, they are also limited to
exclusive dealerships, such as auto, truck, or boat dealers that sell a particular brand.
The final type of trade contest is among salespeople in various retail outlets. The goal of this type of
trade contest is to encourage salespeople to push the manufacturer‘s brand over competing
brands. These types of contests are quite popular among salespeople and are common in many
industries such as those producing durable goods (refrigerators, boats, dishwashers, etc).
4) Dealer / point of purchase (POP) displays:
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INTEGRATED MARKETING COMMUNICATION
These take place at the point of purchase or sale. Display of visible mark or product at the entrance
of the store is an example.
Unfortunately many retailers do not like to handle the hundreds of displays, signs and posters they
receive from manufacturers. Hindustan Lever often use this tool to promote its products in the retail
market.
Dealer displays are specially designed materials intended for placement in retail stores. These
displays allow products to be prominently presented, often in high traffic areas, and thereby
increase the probability the product will standout POP displays come in many styles though the
most popular are ones allowing a product to stand alone, such as in the middle of a store aisle or sit
at the end of an aisle (i.e., end cap) where it will be exposed to heavy customer traffic. For channel
partners, POP displays can result in significant sales increases compared to sales levels in a normal
shelf position. Also, many marketers will lower the per unit cost of products in the POP display as
an incentive for retailers to agree to include the display in their stores The advertising materials
such as calendars, New Year diaries literature, sign boards, packing bags, posters, etc. are supplied
by the producer of the product to the dealer or middlemen for advertisement.
5) Trade Shows:
One final type of trade promotion is the industry trade show (also called exhibitions, conventions)
Trade shows are organized events that bring both industry buyers and sellers together in one central
location Spending on trade shows is one of the highest of all sales promotions In fact the Promotion
Marketing Association estimates that over (US) $20 billion is spent annually by marketers to
participate in trade shows Marketers are attracted to trade shows since these offer the opportunity to
reach a large number of potential buyers in one convenient setting At these events most sellers
attempt to capture the attention of buyers by setting up a display area to present their product
offerings and meet with potential customers These displays can range from a single table covering a
small area to erecting specially built display booths that dominate the trade show floor.
6) Dealer Display Contests:
Dealer Display contests are more of an advertising medium rather than a dealer incentive offer
However, display contests carry prizes in order to mduce the dealer to take active part in the sales
promotion program Dealers are offered attractive incentives on the basis of the sales achieved
Selected dealers are offered free trips, free gifts and so on depending upon the sales targets they
achieve Sales competitions are arranged, prizes are announced or special offers are made on the
sale of new products.
7) Free Gifts:
Under this method producer gives free gifts to the dealer on the basis of quantity of product
purchased by him. Some companies regularly give gifts to their dealers to maintain good relations
with them. These could be wall clocks, calendars or even some items for personal use at home, such
as stainless steel vessels, casseroles, etc
8) Credit Facility:
The producers allow credit to their dealers, based on the quantity purchased by them. This enables
them to purchase bulk quantity.
3.7 Sales Force Oriented Sales Promotion
Personal selling by far is the most important method of sales promotion. To make it highly
effective, sales force promotion schemes are felt necessary. The tools for sales force promotions
are:
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INTEGRATED MARKETING COMMUNICATION
1) Bonus/Incentive to Sales Force:
A quota of sale is fixed for each salesman during a fixed stated period Bonus is offered on sales in
excess of the quota fixed In order to get the higher premium the salesman will try to sell more
quantities of goods.
The manufacturer sets a target of sales for a year. If the salesforce sell the products above the
targeted sales, bonus is offered to them. This is an encouragement incentive given to the
salespeople to sell more products — to cross the quota or targeted sales.
2) Sales Force Contest:
Salesforce contests are announced to stimulate company salesmen to re-double their interest and
efforts over a stated period with prices to be the top performer. These are organized as an effective
measure of sales promotion. The main purpose of sales contests is to increase the sales through
retailers or salespersons. An off-season sale can be motivated by such contests. When the volume of
sales is declining, it creates a sense of security and stability It is also useful in getting repeat orders
from present and past customers. Cash awards, merchandise prizes, travel and special honors make
the contest prizes more effective than the cash awards because more contestants are attracted to
participate in the contest Young energetic sales personnel are tempted by travel awards, particularly
when their spouses are offered this award to visit an exotic land.
3) Sales Meetings, Salesmen’s Conventions and Conferences:
These are conducted by the manufacturers for the purpose of educating, inspiring, and rewarding
the salesmen. New products and new selling techniques are described and discussed in such
meetings.
4) Training Programs:
Manufacturers often provide training programs to the members of the sales staff at a retailer
location or to wholesalers. Manufacturers are willing to provide training to these salespeople,
because they learn more about the manufacturer‘s brand. This makes it more likely that the retail or
wholesale salesforce will push the manufacturer‘s brand instead of a competitor‘s product. Having
additional knowledge about one brand over other brands biases salespeople toward that brand.
To compete in the highly competitive software market, Microsoft launched a training program
aimed at value added re-sellers. The training program was entitled ―Helping Clients Succeed‖. The
three-day workshop was designed to help re-sellers to better understand Microsoft software.
Traditionally, Microsoft‘s field representatives concentrated on technology Re-sellers tended to
focus on providing solutions to customer problems The primary goal of the training program was to
encourage resellers to utilize Microsoft‘s factory representatives in consultative selling While SBLI
focused on training at the retail level, Microsoft focused on training at the re seller or wholesaler
level.
5) Sales Rallies:
These encourage open participation by retailers and salesmen They are publicly honored at the
winning positions Sales rallies should be designed in such a way as to ensure that every participant
has a fair chance of winning the award.
3.8 The Purposes of sales promotion Vs. Advertising
SMS campaigns are a great way to instantly inform your customer database of your
latest sales promotion. Your audience is permanently ‗switched-on‘, a simple text
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INTEGRATED MARKETING COMMUNICATION
message with promotional details of an upcoming sale or special offer can be delivereddirectly into
the palm of your customers hand.
‗Sales promotion campaign‘ is important and widely used series of sales promotion 5 efforts in a
common theme for pushing sales of products The Sales promotion campaign must be well planned
and strategically drafted using the right campaigns as well as strong, persuasive and attention
grabbing words Companies introduce sales promotion campaigns for capturing market. Price
discounts and schemes like buy one, get one free are also offered as sales promotion. Various sales
promotion techniques are introduced at the consumer and dealer levels. Window display, provision
of after sales services and coordinal public relations also facilitate sales promotion, Massive
advertising is useful to support the sales promotion campaigns.
3.9 Promotional Activities
Promotional activity is above all a communication instrument for introducing our products to
consumers and for trying to influence their purchasing decisions. There are four types of
promotional activities: Direct Sales, Advertising, Public Relations and Sales Promotions, which
mainly differ in the media used to communicate with the target market.
3.10 Requirement Identification of Sales Promotion Campaign
Sales promotion usually involves non-recurring and no-routine methods, in contrast with the
routine and recurring nature of advertising and personal selling. Though almost all companies resort
to sales promotion techniques, only some of them go about the job in a planned way. Others mostly
view sales promotion as a weapon that can be taken out just like that and used in an emergent
situation. Sales promotion yields the intended results only when it meets certain basic requirements.
These basic requirements that must be identified by the marketer before going for sales promotion
are as follows:
I) Identifying the Need:
The first requirement is to identify the specific needs of the firm in resorting to sales promotion.
The firm finds-out its need:
i) Is it to bring in substantial extra sales immediately?
ii) Is it to offload accumulated stocks?
iii) Is it to regain loosing consumer interest in the product?
iv) Is it to enlist some support for the advertising effort that is already on?
2) Identifying the Right Promotion Program:
The next step is to identify the appropriate program. The firm has to select the program suitable to
the current need and situation. Should it go in for product demonstration? Or free samples of the
product? Or should it go in for a large-scale consumer contest? The choice of the program will be
primarily decided by the resources available with the firm. A big consumer contest cannot be
organized and implemented unless the firm can command substantial resources and organizing
capacity.
3) Enlisting the Involvement of Salesmen:
Often, sales promotion programs are conceived and planned at the head office of the firm and
implemented in a hurry without enlisting the cooperation and involvement of the field salespeople.
For the campaigns to succeed, it is essential that the salesmen be briefed on the context and content
of the program.
4) Enlisting the Support of the Dealers:
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INTEGRATED MARKETING COMMUNICATION
It is also essential to enlist the support of the dealers in any large-scale sales promotion venture.
Since a major part of the activity has to take place around the dealer shop, the campaign may flop if
the dealer is not motivated to support it. The POP materials and the product under campaign will get
the required prominence only if the dealer so desires.
5) Enlisting the Advertisement Agency’s Support:
The advertisement agency‘s support is also essential for the successful working of a sales
promotion campaign. Carrying-out a sales promotion campaign is as challenging as conducting an
advertising campaign. In fact, for an advertisement campaign, quite often the results do not lend for
immediate measurement. For the sales promotion campaign, the results are readily available to be
measured. So companies while committing heavy funds for sales promotion make it a point to
ensure that they benefit from the experience and expertise of their agency.
6) Maintaining the Tempo:
Sometimes the sales promotion campaigns are launched with great publicity and fanfare. But
subsequently the tempo of the program is allowed to die out. It is essential that the initial tempo
built around the program be maintained through the entire period of the campaign, through
advertising and POPs.
7) Timing of the Campaign:
Timing of the campaign is another factor that decides its success. The sales need of the company is
of course the prime factor that decides the timing. But the firm also has to consider factors like
seasonality of purchase of the product, climate conditions, festival seasons, etc., in timing the
campaign.
8) Coordination with Other Elements of Promotion:
Sales promotion programs yield the best results when they are well-coordinated with the other
elements of promotion — advertising, personal selling, and publicity. Sales promotion program
cannot be run totally independent of these major promotion variables. When used in combination
with them, sales promotion stands a better chance of meeting its aims. The requirement of right
sales promotion is set on the basis of two criteria as, cost of reaching an audience member and
acceptability of the tools to be used. These criteria are developed taking into consideration the
following variables/factors:
1)
Kinds of Product:
The product is one of the factors determining the form of promotion. Toys, toilet soaps, and
cosmetics are effectively shown on television. Mass selling consumer goods can be easily promoted
through radio and television. Industrial and specialty goods should be promoted through technical
journals and through sales engineers.
2)
Buyer:
If the marketers are to provide realistic solutions to the problem of buyers, they must know their
customers, their needs and desires, their attitude, values, aspirations, and expectations. Hence
marketers must have up-to-date information about customer demand and customer behavior. If the
buyers are educated then demonstrations or instructions can be used as sales promotion technique.
Similarly, contests and quizzes can be used if buyers are of young age and educated.
3)
Nature and Size of Market:
The number, geographical location, and purchasing power of potential customers exercise a
significant impact on the sales promotion. Sampling, coupon, money-refund orders, premium offer,
price-off and trading stamps, etc., are suitable for sales promotion in local markets. On the other
hand, fairs, exhibitions, and fashion shows are more appropriate for sales promotion on the national
level particularly for garments, books, and electronic items.
4)
Stages in Product Life Cycle:
This is an important managerial tool in sales promotion. A product life cycle consists of four
stages:
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INTEGRATED MARKETING COMMUNICATION
i) Introduction: Introduction of the product requires lot of energy to create awareness, acceptance,
and demand for the product. Introducing a new product for most companies is a costly and difficult
exercise that is why they mostly depend on middlemen.
ii) Growth: It includes a fast growth both in sales volume and profit
iii) Maturity: This stage is longer. But the speed in achieving sales volume reduces during this
stage. Profit also starts declining much faster than the sales.
iv) Declining: This is the last stage in product life cycle. After a period of stability, the buyers
loose interest on the product and sales start falling more quickly. At this stage either high cost sales
promotion technique may be used or existing product may be improved.
5) Management Policy:
In the management policy, first of all, sales promotion objectives are set, then communication tools
required to achieve these objectives are designed, and the third step is to determine the cost required
to execute promotional activities and programs. In short sales promotion expenditure is directly
related to the objectives to be achieved.
6) Budget Allocation Available:
The decision on how much to spend on promotion is externally difficult on account of multitude of
promotion tools on the one hand and varieties of products and markets on the other For example,
the greater the geographical dispersion of a target market the greater the communication
expenditure required Similarly if an offering is in its early lifecycle, there is a greater need of
expenditure But promotion budget should always justify the tasks to be undertaken. A basic
principle would be the cost and returns of sales promotion tools to be adopted. Hindustan Lever has
its well drawn-up sales promotion budget. If any business house does not have its promotion budget
fixed, then promotion programs will have to be designed to support the marketing plan.
7) Government Regulations:
Government has passed various laws and made rules to protect the consumer interest, such as the
prevention of Food Adulteration Act, the Drugs and Magic Remedies (Objectionable
Advertisements) Act, and Drugs and Cosmetics Act, etc Sales promotion policy must take into
consideration the government regulations relating to the particular product, e.g., the commodity
rates must be- specified on the package and in case of medicines drug contents and date of
manufacturing, date of expire, and price must be specified.
3.11 Designing of Sales Promotion Campaign
A sales promotion is a short-term program that aims to intensify the sales of a product or service. It
usually works to increase the value of the product in the consumer‘s mind, forcing the consumer
take action. To make the product more valuable to a consumer, a sales promotion often offers a
reduced cost or heightened product benefit. The major steps involved in designing a sales
promotion campaign are:
1) Establishing Objectives:
Sales-promotion objectives are derived from broader promotion objectives, which are derived from
more basic marketing objectives developed for the product. The specific objectives for sales
promotion vary with the target market. For consumers, objectives include encouraging purchase of
larger-size units, building trial among nonusers, and attracting switchers away from competitors‘
brands. For retailers, objectives include persuading retailers to carry new items and higher levels of
inventory, encouraging off-season buying, encouraging stocking of related items, offsetting
competitive promotions, building brand loyalty, and gaining entry into new retail outlets. For the
sales force, objectives include encouraging support of a new product or model, encouraging more
prospecting and stimulating off-season sales.
2) Select the Tools:
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INTEGRATED MARKETING COMMUNICATION
There are three types of tools:
i) Selecting Consumer-Promotion Tools:
The promotion planner should take into account the type of market, sales promotion objectives,
competitive conditions, and each tool‘s cost effectiveness.
ii) Selecting Trade-Promotion Tools:
Manufacturers use, a number of trade- promotion tools. Surprisingly, a higher proportion of the
promotion pie is devoted to trade-promotion tools than to consumer promotion with media
advertising capturing the remaining 25.2 percent. Manufacturers award money to the trade for four
reasons:
a) To Persuade the Retailer or Wholesaler to Carry the Brand:
Shelf space is so scarce that manufacturers often have to offer prices off, allowances, buyback
guarantees, free goods, or outright payments (called slotting allowances) to get on the shelf, and
once there, to stay on the shelf.
b) To Persuade the Retailer or Wholesaler to Carry More Units than the Normal Amount:
Manufacturers will offer volume allowances to get the trade to carry more in warehouses and stores.
Manufacturers believe the trade will work harder when they are ―loaded‖ with the manufacturer‘s
product.
c) To Induce Retailers to Promote the Brand by Featuring, Display, and Price Reductions:
Manufacturers might seek an end-of-aisle display, increased shelf facings, or price reduction
stickers and obtain them by offering the retailers allowances paid on ―proof of performance‖.
d) To Stimulate Retailers and their Sales Clerks to Push the Product:
Manufacturers compete for retailer sales effort by offering push money, sales aids, recognition
programs, premiums, and sales contests.
iii) Selecting Business and Sales Force Promotion Tools:
Companies spend billions of rupees on business- and sales force promotion tools. These tools are
used to gather business leads, impress and reward customers, and motivate the sales force to greater
effort. Companies typically develop budgets for each business-promotion tool that remain fairly
constant from year to year.
3) Developing the Program:
In planning sales-promotion programs, marketers are increasingly blending several media into a
total campaign concept. In deciding to use a particular incentive, marketers have several factors to
consider:
i) Size: They must determine the size of the incentive. A certain minimum is necessary if the
promotion is to succeed. A higher incentive level will produce more sales response but at a
diminishing rate.
ii) Conditions: The marketing manager must establish conditions for participation. Incentives
might be offered to everyone or to select groups A premium might be offered only to those who
turn in proof-of-purchase seals or UPC codes.
iii) Duration: The marketer has to decide on the duration of promotion. If the period is too short,
many prospects will not be able to take advantage of it. If the promotion runs too long, the deal will
lose some of its ―act now‖ force.
iv) Distribution Vehicle: The márketer must choose a distribution vehicle. A fifteen - cents-off
coupon can be distributed in the package, in stores, by mail, or in advertising. Each distribution
method involves a different level of reach, cost, and impact.
v) Timing: The marketing manager must establish the timing promotion. For example, brand
managers develop calendar dates for annual promotions. These dates are used by the production,
sales, and distribution departments.
vi) Sales-Promotion Budget: The marketer must determine the total sales- promotion budget. The
budget can be built from the ground up, with the marketer choosing the individual promotions and
estimating their total cost. The cost of a particular promotion consists of the administrative cost
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INTEGRATED MARKETING COMMUNICATION
(printing, mailing, and promoting the. deal) and the incentive cost (cost of premium or cents-off,
including redemption costs), multiplied by the expected number of units that will be sold on the
deal.
4) Pre-testing the Program: Although most sales-promotion programs are designed on the basis
of experience, pretests should be conducted to determine if the tools are appropriate, the incentive
size optimal, and the presentation method efficient.
5) Implementing and Controlling the Program:
Marketing managers must prepare implementation and control plans for each individual promotion.
Implementation planning must cover lead time and sell-in time. Lead time is the time necessary to
prepare the program prior to launching it: initial planning, design, and approval of package
modifications or material to be mailed or distributed; preparation of advertising and point-of-sale
materials; notification of field sales personnel; establishment of allocations for individual
distributors; purchasing and printing of special premiums or packaging materials; production of
advance inventories in preparation for release at a specific date; and, finally, the distribution to the
retailer. Sell-in time begins with the promotional launch and ends when approximately 95% of the
deal merchandise is in the hands of consumers.
6) Evaluating Results: Manufacturers can use three methods to measure sales-promotion
effectiveness: sales data, consumer surveys, and experiment. A long-term promotion can cause
participants to lose interest. In order to sustain awareness, keep: participants informed of their status
in, the program, encourage them with other offers and send out small gifts or incentives during the
promotion. At the end of the promotion, publish the results and send them to all participants.
3.12 Involvement of Salesmen and Dealers
Many of the biggest and most high profile promotion are developed and implemented.
•
They are often called ―consultancies‖ because unlike advertising and insuranceagencies.
•
They derive much of their income from fees rather than commission.
•
Sales promotion firms also derive a proportion of their income from sellingartwork,
merchandise, print and other services. which is normally practicedamong consultancies.
how they work:
•
they charge for creative and conceptual work on a fee basis that reflects their timeinput.
•
They are normally equipped to supply design art work premium sourcing and ahost of other
services that are promotionally happens.
•
They are involved in a broad range of marketing service.
•
Accounts handlers are heavily involved in the creative process.
5 key attributed that a company normally look for a campaign is:
The involvement of salesmen and dealers can work wonders for sales promotion activities.
However it is a task which demands, sincere efforts.
1) Sales Force Participation:
The participation of sales forces is indicated by how frequently sales managers requested
information from salespeople, and how often they (i.e., sales managers) received information
requests from upper management. The frequency of requests made directly to salespeople from
other departments was also obtained. Although sales managers are probably aware of these direct
requests, they do not necessarily coordinate responses with salespeople. In addition to these
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INTEGRATED MARKETING COMMUNICATION
questions indicating the frequency of requests, they were asked how effectively their salesforce are
used by the firm as information sources:
i) Many of the biggest and most high profile promotion are developed and implemented.
ii) They are often called ―consultancies‖ because unlike advertising and insurance agencies.
iii) They derive much of their income from fees rather than commission.
iv) Sales promotion firms also derive a proportion of their income from selling artwork,
merchandise, print and other services, which is normally practiced among consultancies.
How they Work
i) They charge for creative and conceptual work on a fee basis that reflects their time input.
ii) They are normally equipped to supply design art work premium sourcing and a host of other
services that are promotionally happens.
iii) They are involved in a broad range of marketing service.
iv) Accounts handlers are heavily involved in the creative process.
2) Dealer Participation:
Dealers consider sales promotion to be important because it involves cheaper rates being offered to
customers. Dealer loader is an incentive given to induce a retailer to purchase and display a
product. These are ways of encouraging dealers to build-up their stocks in sufficient time, so that
inadequate supplies and last- minute transport problems are avoided. For example, offering
discounts on orders taken early and progressive, volume discounts on large orders (quantity
discounts). These discounts can, of course, be passed on to the customer. Involvement of dealer in
sales promotion activity can be understood in following points:
i) Maximum Cooperation: Dealers aim at obtaining maximum cooperation from distribution
channels such as wholesalers, semi-wholesalers, and retailers who form the vital links in the
distribution chain.
ii) Providing Location and Display: Manufacturers want preferred store locations and special
displays. They want the product to he displayed in those retail outlets where it is possible to attract
the maximum number of consumers.
iii) Free Samples: Dealers can give out samples of new varieties. The indiscriminate use of free
samples can be counterproductive, however, as the farmer may not achieve a good result and blame
the variety or may not use the sample as it was free.
iv) Seed Exchange: Seed can be exchanged for farmers‘ grain to overcome initial resistance to
buying and using improved seed. This is perhaps more of an extension practice which should be
organized by the seed company on a direct basis.
v) Coupon Offer: Refundable coupons can be used offering ‗money off‘ the next purchase to
encourage repeat orders or purchases of other products in the company‘s range.
vi) Price Reduction: This will obviously be popular but the danger is that revenue will simply be
reduced without significantly increasing sales so the technique needs to be used selectively.
vii) Competition: Competitions only create interest if they capture the imagination, e.g., a yield
competition and membership to a ‗yield club‘ for a certain achievement. They can be organized on
a village level or directed at a certain group, such as young farmers.
viii) Premium Offers: The offer of an extra product for a promotional price can be made This
could be a Joint promotion with a non-seed product or linked to seed of another species that could
be grown by the farmer.
ix) Field Demonstrations and Group Discussions: These are both very effective ways of
promoting seed products and supporting the local dealer. These topics are dealt with later when
seed extension and demonstration are considered.
Dealer participation in sales-promotion activities is aimed at obtaining extended or more focused
distribution of a product or more attractive presentation of the product, at the point of sale.
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3.13 Outsourcing Sales Promotion
Some companies outsource certain sales promotions. In this section, several types of
outsourced sales people are introduced, as well as the reasons for and challenges associated with
outsourcing various sales activities are elaborated. A company can outsource part or all of the sales
cycle. When a company hires a call center to make phone-calls, and set-up appointments, it is
outsourcing only the lead to- suspect conversion portion of the sales cycle In other words, every
appointment the center sets-up would be with a suspect. The suspect-to prospect and prospect tocustomer conversions could then be the responsibility of either the outsourcer or another type of
sales organization it hires for that purpose.
Independent agents are salespeople who are not employees of the company. They set their own
hours, determine their own activities, and for the most part, manage themselves. Typically, they are
paid on a straight commission basis — i.e., based only on the revenues they generate for the
company. Sometimes, however, they receive base pay, too Independent agents often sell competing
products from copeting companies and are common in insurance markets. In other industries agents
are less likely to sell for competing companies. From the buyer‘s point of view, an independent
agent representing multiple products lines should mean the buyer is in a better position to find the
best offering with the least amount of hassle.
A manufacturer‘s representative is an agent that sells a manufacturer s product Typically, they do
not sell competing products, rather, they sell complementary products, i e, products that the same
buyer wants to purchase, e g, an agent that sells bathroom faucets for one manufacturer might sell
bathroom towel-rods and mirrors for another manufacturer When a company hires a manufacturer‘s
representative, it does so because the representative is already selling to the desired market Buyers
are more willing to see the representative because of the broad array of products he or she offers.
Distributors often have salespeople who complete the entire sales cycle However, they may or may
not take title to the inventory before reselling it Industrial distributors often employ both field
salespeople, who call on customers where they are located, and employ inside salespeople, who
may sell products by phone or by e-mail at the distributors‘ locations as well as handle customers
who come to those locations Distributors are like manufacturer‘s representatives in that they can
sell offerings from multiple manufacturers Some distributors are exclusive, meaning they sell the
products of only one manufacturer
Outsourcing the sales promotion can be done through distributors, independent agents, and
manufacturers‘ representatives, as well as other types of sales organizations. The entire sales cycle
can be outsourced or only parts of it. Outsourcing can cost less, and requires less investment than a
company-employed salesforce. Moreover, independent agents, distributors, and manufacturers‘
representatives often have established relationships that make it easier for a company to enter and
penetrate new markets.
Outsourcing the sales promotion(s) means that a company will lose some control over its sales
activities To counteract that loss of control, companies try to devise attractive compensation
schemes, as well as effective marketing strategies for the independent sales organizations and
people, with whom they work Companies also hire sales managers to manage the relationships with
the outsourced sales staff.
Advantages of Outsourcing Sales Promotion
Outsourcing some of its sales efforts can provide, a producer with several advantages. Having a
broad array to choose from is more desirable from a buyer‘s perspective. Moreover, outsourced
salespeople have existing relationships with the buyers that can be leveraged. Thus, entering new
markets, such as new product markets or new countries via distributors, independent agents, or
manufacturer‘s representatives can increase the speed at which the company‘s offerings penetrate a
market. These people and organizations also possess key market information and understand
competitors and their strategies — information marketers can leverage.
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In terms of a company‘s costs, outsourcing can be less expensive The company that outsources the
work does not bear the responsibility and expense of training the salespeople, except to inform
them about the company‘s products In addition, because the salespeople often work on a straight
commission basis, the company only pays them when they sell its products.
Disadvantages of Outsourcing Sales Promotion
The disadvantages of outsourcing can be boiled-down to one word — control. Distributors,
manufacturer‘s representatives, and agents are independent They can decide what to sell and when
to sell it Unlike an employee who can be required to offer a particular product, they can choose to
offer a customer a competing product or simply a different product than the one being sold Nor can
anyone force them to make sales calls.
To deal with control issues, companies often create incentive programs to motivate independent agents
and manufacturer‘s representatives Attractive commissions are more likely to get a particular
product mentioned on every call. So are spiffs. Spiffs (which is an acronym for Special Promotion
Incentive Funds) are short-term bonus payments companies use to encourage salespeople to sell
certain products. Also keep in mind that salespeople want to pitch products that are easy to sell and
have short sales cycles. Why? because they get rewarded for making sales. To the extent you can
shorten a product‘s sales cycle and increase their conversions, you will gain their attention, time,
and effort.
In addition to creating incentives for independent salespeople, a company will usually employ a
sales manager to work independently with them. The sales manager‘s job is about selling as much
as it is about managing, though. The manager has to constantly sell the agents on selling the
company‘s offerings, and provide them with product information and tips that help them do so.
Finally, just as they listen to their on sales forces, good marketing professionals pay attention to
what the independent salespeople and organizations they work with are saying Not only can
marketing managers create better strategies by doing so they will create strategies that get used In
other words, the salespeople will be more likely to support those strategies with their own efforts
because they believe in them.
3.14 Measuring Impact of Sales Promotion
Measures to evaluate the effectiveness of promotion program, although difficult and costly, are
essential parts of any marketing plan. Without an assessment strategy, marketers will not know
whether their sales promotion technique achieves the objectives of the marketing plan or whether
the rupees in the sales promotion budget are well spent. There can be three types of testing for sales
promotion effectiveness which are as follows:
1) Pre-Testing: Pre-testing is preferred because it enables one to know how effective an sales
promotion is likely to be, before spending the budget and adopting sales promotion technique The
marketer should use only those sales promotion techniques which prove to be the strongest in
producing the desired results.
2) Concurrent Testing: Concurrent or coincidental testing is that which takes place while the
sales offers are run The feedback is received from such testing and corrective actions can be taken
While the campaign is on. These tests are used to determine the sales promotion effectiveness.
3) Post Testing: It is applied after the sales promotion has ended to find out how far it has been
successful. The objective of sales promotion is to arouse consumer stimulation, persuasion brand
loyalty and brand switching as per his/her interest, desire and attitude to the product.
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3.15 National promotion Strategies
The major sales promotion strategies pertaining to the national context are as follows:
1) Pull Strategy:
The pull strategy is directed toward the final buyers. It persuades the buyers to go to the sellers to
buy. Sales promotion, particularly customer promotion is an important form of the pull strategy.
Customer promotion may call for the offer of samples money-refund offers, prices off, premiums,
and so on.
Pull strategies depend upon mass communication. Products are literally pulled by buyers through
the channels on the basis of mass promotional efforts. In a pull strategy, the product is pulled
through the channel by creating end-user demand. Customers force retail shops to stock those masspromoted products. In turn, retailers demand the highly advertised product from wholesalers. The
firms having well- known brands can exercise control over channels through pull promotion
strategies. Personal salesmanship plays a secondary role in pull promotion. Marketer rely on
intensive distribution. Dealer margins are also lower in pull promotion.
2) Push Strategy:
The push strategy asks the sellers or retailers to attract the layers. Trade promotion is thus the main
form of the push strategy. Trade promotions refer to buying allowances, free goods, cooperative
advertising, push money, sales contests, and so on. The marketing manager has to adopt both these
strategies to promote sales.
Industrial marketing strategies are mostly the push type strategies relying primarily on personal
selling Also in the sale of medical products and in life insurance, marketers have to employ a lot of
salesmen to call on physicians and prospects for life insurance In push type promotion, personal
selling expenses are considerable and dealer margin is also higher In this, after sale service is also
important and marketers rely on selective distribution.
3) Push-Pull Strategy:
Most consumer goods manufacturers generally employ a push pull (combination) strategy to sell
their products. The ratio of pull to push may differ according to the requirements of market situation
Salesmen are used to push the goods through the marketing channel, while advertising and sales
promotion will support personal selling to accelerate sales Thus, all tools of promotion work
together.
4) Sustaining Promotional Strategy:
The main aim of this strategy is to stabilize the market share. Sales promotion becomes necessary
to sustain a market share. At a laggard stage, the markets may shrink. Unless appropriate steps are
taken, the marketer may find that the market may be slipping away for, to his product. But this
strategy can be adopted only after employing the penetrating strategy. That is, the market share
should not decline after a higher level of sale has been attained. The sustaining promotional strategy
stabilizes the market share. Salesforce promotion by way of bonus and other incentives many
contain the market from slipping away. Steps are taken to prevent the salesforce from going across
to the competitors. Brand loyalty of customers is fostered and reinforced.
5) Developmental Promotional Strategy:
The introduction of new products may require expansion of the market. Innovators need to have a
developmental strategy. New products or brands are popularized by offering trade discounts, cash
rebates, premiums, money refunds, and so on. The new consumers are given effective after-sales
service. Consumer franchise building is done with development strategy. The promotional mix for a
brand not yet popular may require emphasis on both personal selling and sales promotion.
6) Promotional Appropriation:
Promotional objectives determine promotional appropriation. The forms of promotion, the costs of
each component of promotion, the activities to be performed and appropriation on personal selling,
sales promotion, advertising, and publicity are determined under this strategic approach. The
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marketing Manager has to arrive at the optimum promotional mix of the given objectives. And this
requires proper planning and program evaluation.
Product attributes, brand differentiation, purchase frequency, the nature of the market, the size of
market and its location, the nature of prospective buyers, their purchase frequency, distribution, and
price strategies are evaluated before the formulation of an appropriate sales promotion strategy.
7) Product Life Cycle Strategy:
The promotional tools vary in their cost effectiveness at different stages of the product life cycle.
In the introduction stage, advertising and publicity have high cost effeteness, followed by sales
promotional to induce trial and personal selling to gain distribution coverage. In the growth stage,
all the tools can be toned down because demand has its own momentum through word-of-mouth. In
the maternity stage, sales promotion, advertising, and personal selling all become more important in
that order. In the decline stage, sales promotion continues strong, advertising, and publicity are
reduced and salespeople give the product only minimal attention.
8) Cross Promotion:
Under this sales promotion strategy, the manufacturer may use all the potential tools such as
advertisement, personal selling, and sales promotion to hit the market simultaneously so that the
buyer will be induced to buy a product. For example, when Deccan Chronicle, a daily newspaper,
was introduced in Chennai, the management had used all promotional activities, such as display,
holding, price-off, and media to influence the reader to buy the paper. This promotional strategy is
called cross promotion.
9) Surrogate Selling:
Under this strategy, when the manufacturer is unable to sell his product in the market he may
handover the product to a well-known organization to sell on behalf of the manufacturer. This
strategy is called surrogate selling.
For example, shampoo products are manufactured at Puducherry by a number of small and medium
manufactures. But they find it difficult in selling the product in the market. What they have done
was, handing over the finished product to Hindustan lever, proctor and gamble who have sufficient
logistics in selling the product, thereby relieving the burden of converting the product into cash.
They have in fact act as a surrogate in selling their merchandise in the market.
10) Bait and Switch Advertising:
Bait means something that is meant to tempt someone. Under this strategy, the Marketing Manager
use AIDAS formula to tempt someone to look the advertisement and influence him to buy a
product. For example, Bharat Sanchar Nigam Limited has used 10 paisa prominently in its
advertisement to bring the attention of its users in mind which will influence them to go for using
the BSNL service. This way of tempting the viewer to opt for BSNL is called Bait advertising.
Switch means a device that is pressed or turned to stop or start something working especially by
electricity. Switch advertising means when an advertisement is released, it should ignite the minds
of the buyer to notice the advertisement and take a decision to buy the product. For example, during
festival times manufacturer may offer some discount on cash price to the buyer on some selected
products. So he has put this in the local newspaper —which would have ignited the minds of the
buyers. Buyers will certainly be influenced to buy the product. This strategy is called switch
advertising strategy.
3.16 International Promotion Strategies
INTERNATIONAL CONSUMER PROMOTION PROGRAMS:
•Integrate marketing communications means the firm must develop on overall,global IMC program.
Each country or each region requires some flexibility inorder to adapt marketing activities,
including consumer promotions, to fit localneeds.
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• Although the desire may be to centralize global consumer promotions program,this process can be
difficult. Customs, laws and views toward various type of sales promotions differ throughout the
world. Even within Europe, the lawsgoverning consumer promotions are not consistent. For
example, in France andEngland, contests offering free prizes are legal; in Germany, the
Netherlands, andthe Belgium, they are illegal. Coupons, which are common in the United States,are
legal in all Europe countries except Germany.• Coupons are not as prevalent in the United States.
Culturally, coupon redemptionis associated with being underprivileged in England. Customers fear
that usingcoupons will causes the cashier to judge them to be poor and needy. Still,
couponredemption rates are higher in Europe than they are in the United States.•Contests and
sweepstakes are successful in many countries. Marketers must becareful to research the laws,
regulations and most importantly, consumer attitudestoward contests and sweepstakes. A cultural
assimilator helps the company assetsthe potential impact of local attitudes toward the contest.
•In order to manage the consumer promotion function within a global marketsuccessfully, a
company needs an experienced international sales promotioncoordinator are:
•Promoting the transfer of successful consumer promotion Ideas among thecompany‘s brands from
one country to another.
• Proposing and soliciting ideas for consumer promotion within and across each region or country.
•Developing and presenting training on consumer promotion planning to each localregion that is
responsible for developing them.
•Gathering performance data on each sales promotion program and making theinformation available
to each regional sales promotion manager.
•Developing methods for measuring the effectiveness and efficiency of the variousconsumer
promotions.
•Coordinating relationships with all sales promotion agencies that are being used.
Traditionally, international promotion referred to promotion undertaken beyond a
company‘s domestic market, using a common message to a definable international audience. It was
accepted that, within the domestic market, a company‘s market penetration was greater than in the
international arena, its local market was broader, its sales message was more detailed, and its
advertising was created to match actual or perceived local nuances. ‗International‘ usually meant
using different advertising for each country covered so that a Multi-National Corporation (MNC)
such as Gillette might have different toothpaste campaigns appearing in Spain, Sweden or Hong
Kong, although some of these markets might have a translated version of the same copy line. These
campaigns were seen as attacking a ‗local‘ market. With all but a few exceptions, international
promotion was limited to products and services that were common across borders and were
associated with the frequent traveler, e.g., cigarettes, up-market drinks, expensive luxury goods,
hotels and airlines.
As MNCs have extended their product coverage globally, international promotion has evolved more
global images and applications, with the same, or similar, messages being promoted worldwide.
Such promotion has been dependent on the existence of an international medium that was, and still
is, predominantly the published word, using English or English/American. But this has been
changing. As the press sector has moved towards providing publications with cross-border coverage
so, too, have broadcasting media, both television and radio, extended their services beyond national
borders in Europe, the Middle-East and Asia. Improved telecommunications with 24-hour computer
links, e-mail, internet and facsimile transmission have all contributed to making international
operations more feasible.
The traditional international advertisers have been the Fast Moving Consumer Goods
(FMCG) mass market producers, such as Coca-Cola, Heinz, Kodak, Nestle and Unilever. Over
time, as international trading has encompassed other diverse businesses, in particular the financial
services, so promotion and media have had to expand across national borders to meet their
demands. As more executives have become involved in contacts either within their own MNC, or
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with their clients in other countries, management strategy and marketing have become more
internationalized. International promotion has been evolving to meet the associated demand.
However, while promotion has become increasingly internationalized, it is not necessarily global
promotion. Hanger distinguished between international and global promotion in the following way:
1) ‗Global‘ implies a universal way of thinking of acting, a common product and a common
message. In that respect, precisely the same promotion campaign is seldom, if ever, used
worldwide. Rather, the same image may be used and it is likely to be adjusted to suit the
expectations of the populations of the different countries targeted. On occasion, in place of global,
some promotion campaigns can be considered to be multinational, covering groups of countries
with the same campaign.
2) ‗Multinational‘ suggests a common promotion message being used in different countries with
different implementation methods for each group of countries and with different languages to match
customer demand. For example, Coca-Cola used the same theme across the core European countries
when it showed Coca-Cola consumption against background scenes associated with the major
European cities including Barcelona, Paris and London, targeting the fashion-conscious European
consumer.
3) ‗International‘ promotion implies covering markets beyond the domestic market. Traditionally, this
form of promotion used a common message and, often, a single language. Intentional marketing is
expanding towards multinational marketing with the goal of achieving global marketing.
However, few companies have the resources for global marketing, which places a constraint on
reaching this goal. The terms ‗global‘ and ‗international‘ are converging and moving towards
multinational geographic coverage, but implementation is dependent on resources. International
promotion is used for promotion strategies that are implemented across groups of countries, many
of which often coincide with economic groupings such as the EU and ASEAN.
3.17 Types of International Promotion Strategies
Whichever structure a firm has adopted, there remain three quite different forms of
international promotion activity. These are promotions that are planned in one country, but run in
another country; the almost, but not quite, mythical pan-European or pan-world promotions; and the
relatively new phenomenon of promoting within a well-defined market that just happens to be
global. These three types can be described in shorthand as ‗single country‘, ‗multiple country‘ and
‗borderless‘.
1) Single Country:
The process for promoting in another country is little different to that for promoting in the home
country, it is required for a promoter to imagine the expectations of the people of the country, and
what is allowed by law and by custom in that country. Not all that long ago, an English company
decided to promote its products in an Irish chain of supermarkets by offering a free draw for a tea
set to be won in each store, every day for one week. By 11 o‘clock on the first day, all the free draw
entry forms had been used-up. All the stores were so jammed with people that no business could be
done until new entry forms Shad been delivered and the crowds dispersed. It is hard to believe, but
it is true. Not a good promotion. If only the promoter had realized that housewives in Eiré were far
less promotionally sophisticated than in the countries, all using a modified form of the U K
catalogue. An important sales opportunity is presented each year by the need to buy new clothes for
growing children at the beginning of the school year in September. Thus, a form of ‗Back to school‘
promotion has proved successful in every market. The promotion itself may be simple and similar
in every market What is different is the timing In Japan and Europe, it is possible to promote in
August, when mothers are beginning to think of the peace and quiet that lies ahead when the
children return to school In the Middle East, families tend to stay abroad on holiday until much later
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and therefore the timing of the promotion needs to be as much as two months later, in late
September/early October.
2) Multiple Country:
If a promotion is to run across several countries, it is likely that the greater the number of countries
will be included, the simpler will be the promotion. Often it will become a basic theme that may
then be implemented locally using a variety of techniques Coca Cola and Pepsi-Cola are well
known for their global promotional themes In 1996, Shell became the world‘s largest distributor of
the cast model cars, selling over 26 million via its worldwide ‗Colleczione‘ promotion. The
international objective was to reinforce Shell‘s sponsorship of the Ferrari formula one team. The
model Ferrari cars were offered by the local Shell companies in any appropriate way they saw fit.
Some gave them away with oil purchases, some redeemed them free on petrol sales while others
offered only a discount on the car in return for a smaller purchase of petrol.
The promotional objectives were selected locally as the local situation dictated. In this type of
international promotion, the global theme provides a stronger tool than any of the individual
companies could afford to provide for themselves as advantage can be taken of tremendous
economies of scale. Multiple country promotions on a regional basis are becoming increasingly
possible as trading groups harmonize their laws and companies set-up a single structure to market
their products across a group of countries. This has long been the pattern in Northern Europe, and
will be extended by the completion of the Single Market. It is also more and more the case in South
East Asia. If, as some argue, the fundamental building block of the future is regions rather than
individual countries, sales promotion will increasingly, take place on a multiple country basis rather
than either globally or nationally.
3) Borderless:
The world is shrinking rapidly. There are now well defined markets that cross geographical borders.
While the customers may be from many different countries, they are often more similar to each
other than they are to their fellow citizens. These markets may well-increase rapidly. once the
Internet becomes a true marketplace out, until then, perhaps the best example is that of the frequent?
business traveler. These people stay at the same hotels, and fly on the same aeroplanes. The brands
to be found in international airports are already identical across the world, and hotel chains are
similarly interchangeable from country to country. Loyalty is what the hotels and airlines want to
promote, and they do this by a variety of frequent flyer and frequent visitor promotions. The key
point is that the structure for truly global promotion is in place. The communication appears mainly
at the point of use or by direct mail Customers are more similar than different.
3.18 Meaning and Definition of Integrated Promotion / IMC
Integrated marketing communication is integration of all marketing tools, approaches, and
resources within a company which maximizes impact on consumer mind and which results into
maximum profit at minimum cost. Generally, marketing starts from ―Marketing Mix‖. Promotion is
one element of Marketing Mix. Promotional activities include Advertising (by using different
media), sales promotion (sales and trades promotion), and personal selling activities. It also
includes internet marketing, sponsorship marketing, direct marketing, database marketing, and
public relations. And integration of all these promotional tools along with other components of
marketing mix to gain edge over competitor is called integrated marketing communication.
Promotion mix refers to the combination of various promotional elements viz. advertising, personal
selling, publicity and sales promotion techniques used by a business firm to create, maintain and
increase demand of the product. It involves an integration of all the above elements of promotion.
Usually a firm chooses more than one type of promotional tools and the manager of the firm is to
decide how he is going to choose the communication media and blend them into an effective
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promotion program. Promotion mix is the name given to the combination of methods used in
communicating with customers.
According to The American Marketing Association, ―IMC is a planning process designed to assure
that all brand contacts received by a customer or prospect for a product, service, or‘ organization
are relevant to that person and consistent over time‖.
Integrated Marketing Communication (IMC) is also broadly known as the term ‗Promotion Mix‘.
In traditional marketing, promotion activities are handled, by various specialist agencies. The
marketing effect is fragmented and the result could be conflicting communications that confuse the
customer. The result is wasted time, money, and effort. Integrated Marketing Communication
(IMC) is the coordination and integration of all marketing communication tools, avenues, and
sources within a company into seamless program that maximizes the impact on consumers and
other end-users at a minimal cost.
‗Integrated marketing communications‘ is a term used to describe a holistic approach to marketing
communication. It aims to ensure consistency of message and the complementary use of media.
‗The concept includes online and offline marketing channels. Online marketing channels include
any e-marketing campaigns or programs, from Search Engine Optimization (SEO), pay-per-click,
affiliate, e-mail, banner to latest web-related channels for webinar, blog, micro-blogging, RSS,
podcast, Internet Radio, and Internet TV. Offline marketing channels are traditional print
(newspaper, magazine), mail order, public relations, industry relations, billboard, radio, , and
television. A company develops its integrated marketing communication program using all the
elements of the marketing mix (product, price, place, and promotion).
3.18.1 Objectives of IMC
1) Building Brand Equity:
One of the most important IMC goals is to build a global brand and corporate image. These, in turn,
generate brand equity. Brand equity is a set of characteristics that makes a brand more desirable to
consumers and businesses. These benefits can be enhanced when effective advertising combined
with quality products. Higher levels of brand equity give the company a distinct advantage as
consumers move towards purchase decisions.
IMC is a critical component in the effort to build brand equity Successful brands have two
characteristics being:
i) ―Top of mind‖, and
ii) The consumers‘ ―top choice‖
When consumers are asked to identify brands that quickly come to mind from a product category,
one particular brand is nearly always mentioned. That name has the property of being a top of mind
brand.
2) Providing Information:
Besides building brand recognition and equity IMC serves other goals. For example advertising
often is used to provide information to both consumers and business buyers. Typical information for
consumers includes a retailer‘s store hours, business location, or sometimes more detailed product
specifications. Information can make the purchasing process appear to be convenient and relatively
simple, which can entice customers to finalize the purchasing decision and travel to the store.
3) Manage Demand and Build Sates:
IMC can convince consumers that a particular brand is superior to other brands. They can show
consumers the negative consequence of failing to use a particular brand. Changing consumer
attitudes and persuading them to consider a new purchasing choice is a challenging task.
4) Differentiate Products:
Differentiation is the process of creating a perceived difference, in the mind of the consumer,
between an organization‘s brand and the competition‘s. This definition emphasizes that brand
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differentiation is based on consumer perception. The perceived differences can be tangible
differences, or they may be based on image or style factors.
When advertising is used to help create a difference in the mind of the consumer between an
organization‘s brand and its competitors‘ brands, the ad may emphasize performance features, or it
may create a distinctive image for the brand.
5) Influence Perceptions:
Positioning is the process of designing a brand so that it can occupy a distinct and valued place in
the target consumer‘s mind relative to other brands and then communicating this distinctiveness
through advertising. Positioning, like differentiation, depends on a perceived image of tangible or
intangible features. The importance of positioning can be understood by recognizing that consumers
create a perceptual space in their minds for all the brands they might consider purchasing. A
perceptual space is how one brand is seen on any number of dimensions-such as quality, taste, price
or social display value – in relation to those same dimensions in other brands.
6) Influence attitude and buyer behavior:
IMC affects favorably the consumer choice because; it helps the consumer to exercise his power of
sovereignty in the most appropriate way, by acting as a counsel, as a guide to the consumer – the
king of the market. IMC provides detailed and up-to-date information regarding the various
products available in the market so that the consumer would decide to buy wisely. That is, selection
of the best product or service depends on his ability to get and analyze the knowledge about the
markets.
3.18.2 Importance of IMC
Some of the reasons for growing importance of IMC include the following:
1)
Marketing budget is being shifted from advertising to other forms of promotion, particularly
consumer and trade promotions.
2)
Retailers are becoming more powerful and dominating than the manufacturers.
3)
New tools of marketing communication are emerging that are economical and target
specific rather than the mass media.
4)
The internet and e-commerce have emerged which have redefined the way business is done
and the way companies interact and communicate with consumers.
5)
Companies are giving emphasis on communication with the consumers.
6)
Advertisers are emphasizing more accountability on the part of the ad agencies and the
change is taking place in the way ad agencies are compensated.
7)
There is rapid growth and development of database marketing.
3.18.3 Factors affecting IMC
1)
Nature of Products:
Nature of product affects the selection of communication mix. The product may be consumer
product or industrial product Consumer products are directly consumed by ultimate consumers.
Their number of customers is very large. It is communicated with masses so mass communication
i.e, advertising and publicity are more effective. Industrial products are not directly consumed, but
are used in
industry for example, plant and machinery, furnace, Ultra sound machine, X-ray machine etc. These
products are expensive and often very technical in nature. Hence it requires appointment of experts
as sales-personnel to explain the technical nature of the product to potential buyer Industrial
customers may have technical questions while buying the product. These questions can better be
answered by experts. So personal selling is a better communication/promotional tool in case of
Industrial products.
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2) State of Product Life Cycle:
Product passes through different stages of product life cycle, viz introduction growth, maturity,
decline and obsolescence During these stages promotion may have different objectives So different
elements of communication are used in these different stages of product life cycle
i) Introduction Stage: In this stage, high level of advertising is done to make the target customers
aware of the product. At the same time, personal selling is used to find good channel members
(whole-sellers, retailers) and to persuade them to carry the new product.
ii) Growth Stage: In this stage, advertising is used to persuade customers to buy and keep buying the
company‘s product. But personal selling is also used for expanding the channel members (whole
sellers, retailers) to increase the number of outlets for sale.
iii) Maturity Stage: In this stage, level of competition is very high, so advertising has to be
supported with sale promotion devices like coupons, free sample contests, discounts etc, to retain
the present customers and to persuade customers to stay with company‘s product.
iv) Decline Stage: In this stage, sales are declining. Company starts cutting promotional expenses.
As the company is left with very less number of customers so personal selling is more economical
than advertising.
v) Obsolescence Stage: In this stage the product is withdrawn from the market so all
communication efforts are stopped.
3) Nature of Target Market:
For following characteristics of target market affect the communication mix for a product:
i) Size of Market: Market size refers to number of present and potential customers of a product. If
size of market is small, personal selling will be more effective and economical. On the other hand,
if size of market is large, then advertising will be more economical.
Advertising can reach very large number of people and hence cost per individual becomes less, for
example, ad in TV or newspaper may seem to be very expensive but as it can reach very large
number of people, so cost per audience becomes very low. On the other hand, if number of
audience is small then advertising proves costly. Here, personal selling direct mail, telephonic
contacts with target audience are more effective.
ii) Concentrated or Scattered Customers:
If customers are located and concentrated in one geographical area, then personal selling is more
feasible as cost of contacting customers in one geographic area will be cheaper. If customers are
scattered over a vast geographic areas, i.e., some customer are in one state and the other customers
are in different states, then advertising will be more feasible as compared to personal selling;
because salesmen will have to move from one state to other state to contact the potential customer
and the expenses of personal selling will increase.
iii) Socio-Economic Characteristics of Customers:
Socio-economic characteristics like age, income, education etc. also affect the type of promotional
techniques to be used. For example, for communicating with less educated people, audio-visual
advertisement and sales promotion will be more effective than print advertisement. If target
customers are kids, then advertising is more effective than personal selling. If target group consists
of persons of low income group then sales promotion schemes are more effective.
iv) Intensity of Market Coverage: When a product is marketed through intensive distribution,
firms mainly depend on advertising. Intensive distribution here means firm has many distributors to
sell its products. For example, in case of products like toothpaste, washing powder, salt, soap, pens
etc., where intensive distribution is done, advertising is more effective. Where marketers have opted
for selective distribution, personal selling is more effective. Selective distribution here means
distributors are very few in number. Products like very expensive watches, very high quality
furniture, rare leather products, gems and jewellery etc., are sold through selective distribution.
Here expert sales personnel are to be appointed to persuade the customers to buy these rare
products.
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4) Size of Promotion Budget:
The amount of money available with the firm for promotional activities affects the choice of
promotional methods. If amount of promotion budget is small, then firm cannot afford to invest
heavily in advertising and sales promotion as these are very costly. On the other hand if amount of
promotion budget is large, then firm can afford advertising through costly media like TV, national
newspaper, and sales promotion activities. If promotion budget is less then advertisement on cable
TV, pamphlets, banners, posters etc., are more suitable.
5) Push and Pull Strategy:
Push and Pull strategy also affect the choice of promotional tools. In push strategy, the producer
promotes the product only to the wholesalers. The wholesaler promotes the product to the retailers.
Then retailers promote the product to the final consumers. Thus, in push strategy each channel
member promotes the product to the next channel member in downward direction. Push strategy
usually relies on personal selling and sales promotion for dealers to promote the product.
In pull strategy, product is promoted directly to the consumers through mass communication tools
like advertising. In this strategy first consumer demand is created, and then they demand the
product from retailers, who in turn demand it from wholesalers. Then wholesalers demand the
product from the producer. The policy is thus intended to pull the product upward through the
channel by creating demand at the consumer level. In this strategy advertising and sales promotion
to consumers are used to promote the product.
6) Promotional Objectives:
If the company‘s objective is to create mass awareness of a new product then its promotional mix is
heavily oriented towards advertising, and publicity. If the company‘s objective is to educate the
potential consumers about the product, (like to explain the technicalities of product, the method of
using the product) then personal selling can be used along with advertising. If firm‘s objective is
immediate increase in sales, then sales promotion activities are used along with advertising. If
firm‘s objective is to take immediate feedback of consumers regarding test marketing of its new
product then personal selling and direct marketing can be use.
7)Price Policy:
If the product is high priced, then personal selling is needed to persuade the customers to buy the
product, as in case of high priced products, customer‘s associate greater risk with the purchase of
expensive product, and they need advice of salesmen. At the same time, advertising is required for
brand-popularity.
For example, in case of products like A.C., car, scooter, T.V., computers, microwave- oven etc.
companies do advertising for brand-popularity and appoint salesmen to explain the technical nature
of product to customers. But in case of low-priced products like tooth paste, tooth brush, soap, etc.
customers do not associate risk with the purchase of product and do not need salesmen to advise
them, so only advertising is done for brand-popularity.
8)
Distribution Policy:
If the product is sold directly to the ultimate user, the company mainly relies on personal selling
and direct marketing (telemarketing, direct mail etc.), while advertising has a supporting role. In
this case the company appoints efficient sales- personnel to persuade the potential customers to buy
the product. If products are sold through longer channels (i.e., through wholesalers, retailers), the
marketers rely more on advertising. In this case, marketer mainly depends on advertising because
middlemen will be easily available if brand is popular. In this case sale promotion for dealers is also
done so as to maintain their interest in company products.
9)
Availability of Promotional Methods:
The availability of promotional method may also affect promotional mix.
For example, a firm may wish to increase the size of its sales force, but is unable to find skilled and
experienced sales personnel. So in such case company will have to select promotional method out
of available promotional methods.
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10)
Level of Competition:
If level of competition is very high then company will have to use all the components of
communication mix to retain its market share. On the other hand, if level of competition is low only
informative advertising by mass media will serve the purpose.
11)
Degree of Brand Familiarity:
If the product has brand familiarity and brand preference then, only reminder type advertising is
required to promote the product. For example, Cadbury chocolate has brand preference; hence it
needs only reminder type advertising in its promotional programs. Popular brands easily get dealers
and distributors. On the other hand if brand is not familiar and is unpopular, then sale promotion
and personal selling for dealers and customers is required along with advertising.
12) Branded/Unbranded Products:
If the firm sells branded products, advertising is to be done for brand popularity. If the firm sells
unbranded products, advertising is not done as the product has no brand name. In this case sale
incentive to salesmen and dealers is best promotional tools. For example, in case of products like
sugar, unbranded tea, pulses, flour, broom etc., advertising is not done.
13) Seasonal Products: Seasonal products are the products whose demand varies with change in
climatic and weather conditions, such products like A.C., coolers, heat convectors, woolen
garments, rain-coats, umbrellas etc., have seasonal demands. In some months their demand is very
high, while in off-seasons, their demand is very low. In on- season time, marketers do only
advertising to attract the customers. But in the off-season- time marketers provide various salepromotion schemes like off-season discount, free gifts, extra warranty, etc. so that seasonal product
can be sold throughout the year.
Challenges in IMC
Though there is increased interest in IMC by marketers, adopting the process is relatively slow.
This is because of impediments that companies face while implementing the IMC approach. Let us
look at some factors that pose a challenge to companies while implementing IMC:
I) Top Management Support:
IMC requires an organization wide change, which cannot be implemented without the consent and
support of top management. The support extended by the top management plays a major role in
successful implementation of IMC. In some cases, the CEO may resist the change owing to ego
problems and his own views on the IMC process.
2) Organizational Barriers:
Another key barrier that prevents a company from fully implementing IMC is the organizational
barrier. The traditional organizational structure consists of various departments taking care of
different functions. As IMC requires a flexible structure that helps in integrating all communication
functions under one umbrella, the hierarchical structure of the organization will impede the
implementation of IMC. Some organizations pursue a Strategic Business Units (SBUs) strategy,
where each SBU has the authority to take its own decisions. Such a set up makes it difficult to
centralize marketing communication functions.
3) Cultural Barriers:
The culture of the organization may also impede implementation of IMC. Integration of marketing
communications requires coordination, and cooperation between employees. A corporate culture
that reflects a reluctance to change can become a major barrier for implementation. This reluctance
is more observed in old economy companies and government controlled companies.
Coordination within Various Promotion Techniques
Integrated promotion is the coordination and integration of all marketing communication tools,
avenues, and sources within a company into a seamless program that maximizes the impact on
consumer and other end users at a minimal cost.
Integrated promotion can also help to kick start the event industry if it is failing. It can be an
efficient use of the funding to assist a country or region reach its economic development objectives.
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It requires cooperation from a large number of stakeholders and competing events. To be successful
on the international arena an integrated promotion needs complete political and bureaucratic
support.
3.14 Need for co-ordination within various promotion techniques is raised due to:
1) Market fragmentation has resulted in media fragmentation,
2) Alternative media channels abound, and
3) All messages seen as one single message to consumer.
Advertising is a non-personal form of mass communication, paid for by an identified sponsor.
Personal selling involves a seller attempting to persuade a potential buyer to make a purchase. Sales
promotion encompasses short-term activities such as giving coupons, free samples, etc., that
encourage quick action by buyers. The company has control over these three variables, but has little
control over the fourth variable, publicity/public relations. This is another non-personal
communication method that reaches a large number of people, but it is not paid for by the company
and is usually in tile form of news or editorial comment regarding a company‘s product or service.
Companies can gain some control over the publicity it receives by the release of news items.
Put together, these promotional activities make-up the promotional or communications mix with
varying emphasis on each element according to the type of product or service, characteristics of
consumers, and company resources. Company size, competitive strengths and weaknesses, and
style of management all influence the promotional mix.
Other communications elements with which promotion must be coordinated are the product itself,
price and distribution channels used. Product communication, including brand name, design of
packaging, and trade-marks are all product cues which convey a message about the total product
offering. Price can communicate different things under varying circumstances, e.g., conveying
‗prestige appeal‘ for those buyers who perceive that a high price is equal to quality and prestige.
The place in which the products are to be found also has notable communications value. Retail
stores have ‗personalities‘ that consumers associate with the products they sell. Products receive a
‗halo effect‘ from the outlets in which they can be found and two stores selling similar products can
project entirely different product images. For example, a perfume sold through an upmarket store
will have a much higher quality image than one sold through supermarkets.
The various promotional tools can be coordinated to give a synergistic effect to marketers‘
objectives in a following manner:
I) Coordinating Sales Promotion and Advertising:
Those involved in the promotional process must recognize that sales promotion techniques usually
work- best in conjunction with advertising and that the effectiveness of an ad campaign can be
enhanced by consumer-oriented sales promotion efforts. Rather than separate activities competing
for a firm‘s promotional budget, advertising, and sales promotion should be viewed as
complementary tools. When properly planned and executed to work together, advertising and sales
promotion can have a synergistic effect much greater than that of either promotional mix element
alone.
Proper coordination of advertising and sales promotion is essential for the firm to take advantage
of the opportunities offered by each tool and get the most out of its promotional budget. Successful
integration of advertising and sales promotion requires decisions concerning not only the allocation
of the budget to each area but also the coordination of the ad and sales promotion themes, the
timing of the various promotional activities, and the target audience reached.
2) Coordinating Personal Selling with other Promotional Tools:
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Like the other program elements personal selling is usually one component of the integrated
marketing communications program. Rarely, if ever, is it used alone. Rather, this promotional tool
both supports and is supported by other program elements.
3) Coordinating Personal Selling and Advertising:
With specific market situations and communications objectives, the advantages of advertising make
it more effective in the early stages of the response hierarchy (e.g., in creating awareness and
interest), whereas personal selling is more likely to be used in the later stages (e.g., stimulating trial
and getting the order). Thus, each may be more or less appropriate depending on the objectives
sought. These elements can be combined in the promotional mix to compensate for each other‘s
weaknesses and complement each other.
4) Coordinating Personal Selling and Public Relations:
The job descriptions demonstrate that personal selling involves much more than just selling
products and/or services. The personal selling agent is often the firm‘s best source of public
relations. In their day-to-day duties, salespeople represent the firm and its products. Their
personalities, servicing of the account, cooperation, and empathy not only influence sales potential
but also reflect on the organizations they represent.
5) Coordinating Personal Selling and Direct Marketing:
Companies have found that integrating direct marketing, specifically telemarketing, into their field
sales operations makes their sales efforts more effective. The cost of a sales call and the cost
associated with closing the sale are already very high and on the increase. Many marketers have
reduced these costs by combining telemarketing and sales efforts (a typical telesales call costs about
11 cents for each $1 in revenue generated). A number of companies now offer consulting services
to help organizations in the sales process including assisting in direct-marketing methods.
6) Coordinating Personal Selling and Sales Promotion:
The program elements of sales promotion and personal selling also support each other. For
example, many of the sales promotions targeted to re-sellers are presented by the salesforce, who
will ultimately be responsible for removing or replacing them as well. While trade sales promotions
are designed to support the re-seller and are often targeted to the ultimate consumer, many other
promotional tools are designed to assist the sales staff.
7) Coordinating Personal Selling with the Internet:
The increasing use of the internet - as a support to personal selling is a latest trend now. The
internet has been used to provide product information, generate leads, screen prospects, and build
and market from databases. While many marketing mangers see the internet taking business away
from channel members and direct sales, few are ready to relinquish their salesforce.
It is important that the elements of the promotional program work together, as each has its specific
advantages and disadvantages. While personal selling is valuable in accomplishing certain
objectives and supporting other promotional tools, it must be supported by the other elements. Ads,
sales promotions, and the like may be targeted to the ultimate user, re-sellers, or the organization‘s
salesforce.
Benefits of Coordination within Various Promotion
Techniques 1) Budget Allocation:
While many companies are spending more money on sales promotion than on media advertising, it
is difficult to say just what percentage of a firm‘s overall promotional budget should be allocated to
advertising versus consumer and trade-oriented promotions. This allocation depends on a number of
factors, including the specific promotional objectives of the campaign, the market and competitive
situation, and the brand‘s stage in its lifecycle.
2) Coordination of Ad and Promotion Themes:
To integrate the advertising and sales promotion programs successfully, the theme of consumer
promotions should be tied in with the advertising and positioning theme wherever possible. Sales
promotion tools should attempt to communicate a brand‘s unique attributes or benefits and to
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reinforce the sales message or campaign theme. In this way, the sales promotion effort contributes
to the consumer franchise building effort for the brand. At the same ‗time, media advertising should
be used to draw attention to a sales promotion program such as a contest, sweepstakes, or event or
to a special promotion offer such as a price reduction or rebate program.
3) Media Support and Timing:
Media support for a sales promotion program is critical and should be coordinated with the media
program for the ad campaign. Media advertising is often needed to deliver such sales promotion
materials as coupons sweepstakes, contest entry forms, premium offers, and even samples. It is also
needed to inform consumers of a promotional offer as well as to create awareness, interest, and
favorable attitudes toward the brand.
By using advertising in conjunction with a sales promotion program, marketers can make
consumers aware of the brand and its benefits and increase their responsiveness to the promotion.
Consumers are more likely to redeem a coupon or respond to a price-off deal for a brand they are
familiar with than one they know nothing about.
Moreover, product trial created through sales promotion techniques such as sampling or high-value
couponing is more likely to result in long-term use of the brand when accompanied by advertising.
Using promotion without prior or concurrent advertising can limit its effectiveness and risk
damaging the brand‘s image. If consumers perceive the brand as being promotion dependent or of
lesser quality, they are not likely to develop favorable attitudes and long- term loyalty. Conversely,
the effectiveness of an ad can be enhanced by a coupon, a premium offer, or an opportunity to enter
a sweepstakes or contest.
3.15 Communication Mix: Elements Of Imc
Introduction
Communication / Promotion is one element of Marketing Mix. Promotional activities include
Advertising (by using different media), sales promotion (sales and trades promotion), and personal
selling activities. It also includes Internet marketing, sponsorship marketing, direct marketing,
database marketing, and public relations. And integration of all these promotional tools along with
other components of marketing mix to gain edge over competitor is called promotion mix.
Communication/Promotion mix refers to the combination of various promotional elements viz,
advertising, personal selling, publicity and sales promotion techniques used by a business firm to
create, maintain and increase demand of the product. It involves an integration of all the above
elements of promotion.
Usually a firm chooses more than one type of promotional tools and the manager of the firm is to
decide how he is going to choose the communication media and blend them into an effective
promotion program. Promotion mix is the name given to the combination of methods used in
communicating with customers.
According to Philip Kotler, ―A company‘s total marketing communication mix-also called
promotion mix consists of specific blends of advertising, personal selling, sales promotion, public
relations and direct marketing tools that the company use to pursue its advertising and marketing
objectives‖.
According to Gary Armstrong, ―A company‘s promotional mix includes advertising, personal
selling, sales promotion, public relations, direct marketing. It also includes product design, shape,
package, color, label etc. as all these communicate something to buyer‖.
When these tools are integrated in a harmonious manner to reach and exceed the promotion
objective, the outcome is called Integrated Marketing Communication (IMC).‘ IMC has been
adopted as the best possible way to promote one‘s offering according to the situation.
Elements of IMC
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Marketers have at their disposal the major methods of promotion i.e. advertising, sales promotion,
publicity, pubic relation, personal selling and word of mouth. Taken together these comprise the
promotion mix. But in the present scenario, the promotional tools have widened their scope and
number of types.
There are many other promotional tools also which are considered under the promotion mix. IMC
involves coordinating with various elements of promotion that communicates to the customers.
Most of the tools used in IMC are complimentary in nature, i.e., mutually help each other in
attracting the customers towards products and services. Latest entrant to the IMC is the Internet.
1) Advertising:
Advertising includes any informative or persuasive message carried by a non-personal medium and
paid for by a sponsor whose product is in some way identified in the message. Traditional mass
media, such as television and magazines, are most commonly used. However, the direct mailing of
catalogues, electronic media advertisements featuring, computerized ordering and other directresponse vehicles are becoming increasingly popular.
2) Personal Selling:
Personal selling is a person-to-person dialogue between buyer and seller. The purpose of the
interaction, whether face-to-face or over the phone, is to persuade the buyer to accept a point of
view, to convince the buyer to take a specific course of action, or to develop a customer
relationship.
3) Sales Promotion:
It includes activities other than advertising, personal selling publicity and public relations which are
used in promoting sales of the product or in persuading the customer to purchase the product.
Distribution of samples, premium coupon, point of purchase display, off-price selling, etc. is the
examples of sales promotion techniques.
4) Publicity:
Publicity is a non-personal not paid stimulation of demand of the products or services or business
units by planting commercially significant news or editorial comment in the print media or by
obtaining a favorable presentation of it upon radio, television or stage.
5) Public Relations:
Most firms in today‘s environment are not only concerned to customers, suppliers and dealers but
also concerned about the effect of their actions on people outside their target markets. It is a
planned effort by an organization to influence the attitudes and opinions of a specific group by
developing a long term relationship. There target may include a large number of interested public
(customers, stock holders, government agencies, special interest groups).
6) Direct Marketing:
In Direct Marketing, organizations communicate directly with target customers to generate a
response and/or a transaction. Traditionally, direct marketing has not been considered an element of
the promotional mix. However, because it has become such an integral part of the IMC program of
many organizations and often involves separate objectives, budgets, and strategies, we view direct
marketing as a component of the promotional mix.
Direct marketing is much more than direct mail and mail order catalogs. It involves a variety of
activities, including database management, direct selling, telemarketing, and direct response ads
through direct mail, the Internet, and various broadcast and print media.
7) E-commerce/Internet Marketing:
As the new millennium, begins we are experiencing perhaps the most dynamic and revolutionary
changes of any era in the history of marketing, as well as advertising and promotion. These changes
are being driven by advances in technology and developments that have led to dramatic growth of
communication through interactive media, particularly the Internet. Interactive media allow for a
back-and-forth flow of information whereby users can participate in and modify the form and
content of the information they receive in real time. Unlike traditional forms of marketing
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communications such as advertising, which are one-way in nature, the new media allow users to
perform a variety of functions such as receive and alter information and images, make inquiries,
respond to questions, and, of course, make purchases. In addition to the Internet, other forms of
interactive media include CD-ROMs, kiosks, and interactive television. However, the interactive
medium that is having the greatest impact on marketing is the Internet, especially through the
component known as the World Wide Web.
While the Internet is changing the ways companies design and implementing their entire business
and marketing strategies, it is also affecting their marketing communications programs. Thousands
of companies, ranging from large multinational corporations to small local firms, have, developed
websites to promote their products and services, by providing current and potential customers with
information, as well as to entertain and interact with consumers. Perhaps the most prevalent
perspective on the Internet is that it is an advertising medium, as many marketers advertise their
products and services on the websites of other companies. and/or organizations.
8) Sponsorship:
Sponsorship can be defined as ―an investment in cash or kind in an activity, in return for access to
the exploitable commercial potential associated with this activity‖. Although sponsorship does not
merit a share of the total budgetary appropriation, it is still recognized worldwide as an important
tool for marketing communications.
With increasing resistance towards advertising, sponsorships can be a blessing for marketers.
Sponsorship is a sort of commercial agreement in which the sponsor facilitates the activity of the
person, team or organization sponsored, in kind or in cash, and in return convinces the latter to
assist in the fulfillment of the objective desired by the sponsoring company. If the recipient‘s
cooperation is not sought, then it is nothing other than charitable patronage, directed towards the
benefit of society.
9) Exhibitions:
Trade exhibitions bring various constituents of a market — buyers, sellers and competing firms —
to a common platform. Here, all the firms in a particular industry get together in a bid to attract the
prospective customer‘s attention.
Exhibitions hold lot of importance for electronics, computer and other types of companies where
personal demonstration of products is necessary. The underlying concept here is ―Seeing is
Believing‖. Though trade shows have the advantages of promoting and selling products, gathering
competitive information, face to face contact with the customer, demonstrating the product,
providing necessary information, answering queries, taking down orders, noting customer reactions
and suggestions, it is not a worthwhile activity due to the following disadvantages. Even if it helps
to demonstrate technical products, the cost of transporting and installing these products can be high.
It necessitates not only the construction of a stand which might cost thousands of rupees but also
extra staffing, which results in loss of normal calls Incoming customers are sometimes to be
entertained and this also requires a lot of product literature.
10) Packaging:
The function of a package is not just limited to wrapping the product or protecting it from damage
or deterioration. It has become a medium for branding and improving brand recall.
Managers today expect packaging to act as a silent, ever present salesman, beckoning customers to
―pick me‖. The importance of packaging has gained Importance with the ‗self service‖ concept
being implemented by big format retailers.
Packaging can reinstate a desired image for the product through attributes such as color, nature of
container, label, etc. It should stand out on the store shelf, helping customers to notice a particular
brand. The brand name must be strongly visible, highlighting the USPs and lending convenient
usage tips. Even the package design is known to develop competitive advantage for a company by
adding value, demanding stronger shelf space and enhancing customer relationships by means of
product associations. A good package design always remains consistent with the brand‘s core
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qualities and conveys the same image and personality as highlighted by the brand message.
Consistency of design in packaging creates a high level of brand awareness, which is why
sometimes consumers prefer buying a particular brand.
11) Point-of-Purchase Displays:
While advertising budgets are being overshot to create awareness, not much is invested to attract
the customer through creative Point of Purchase (POP) displays. Only companies marketing
cosmetics and some other impulse products like confectionaries paid special attention to improving
the attractiveness of the point-of purchase displays. But companies from across all the sectors,
consumer to industrial, now recognize that well-planned displays can induce brand switching and
impulse purchases. Today, marketers, especially from the consumer durables sector, are starting
their own exclusive stores to provide the right ambience to display their product. Marketers are
acknowledging that a carefully designed display can communicate the right image of the product
and at times influence the customers‘ perceptions of a brand. With in store brands competing for
shelf space and consumer attention and with the increase in the number of brands in the same
product category, it becomes imperative to bring in creative thinking and innovative displays to
ensure the success of the brand. The need for innovative thinking is required in industrial wholesale
outlets where merchandising facilities are still untapped.
12)
Corporate Communications / ldentity:
Corporate identity can change the market conditions for a company. It is a symbolic, visual system
that embraces everything from the company logo and signage, to its brochures, advertising, and
even the company‘s website. It even includes the working ambience inside the office.
It is corporate identity that sets the corporate image in the minds of the people. It is possible that the
major reason for the high sales volume and revenue of a company is its corporate identity, which
the company is unaware of. Hence, it is necessary to build a corporate identity that reinforces the
image and personality the company desires to highlight. A positive corporate identity ensures that
all investments towards the operations of the company are paid off. This has led companies to think
seriously about developing their corporate identity through identity programs. A meticulously
organized and managed identity program can considerably reduce the number of bottlenecks in its
operations, resulting in the manufacture of premium quality products thereby ensuring increased
sales and revenue, It is necessary that the corporate identity is reflected through all the different
promotion materials of the company from envelopes, letterheads and business cards to the websites.
An identity development program also includes exploiting the competitor‘s weaknesses and making
the most of the advantages of one‘s own corporate identity. With the Internet becoming the
buzzword, more and more companies are using it to develop their websites and access the global
marketplace. Since the Internet provides the best way of mass marketing, it becomes imperative to
maintain consistency in terms of the corporate identity by a tactful combination of quality content
and superior technology.
13) Word-of-Mouth:
Of course, an organization‘s image can be projected through channels other than the formal
communication process. There is a lot of evidence, for example, that, when differentiating between
a variety of professional and personal services providers, customers prefer to be guided by
information from friends and other personal contacts rather than the usual promotion mix. Of
course, positive word-of- mouth recommendation is generally dependent on customers having good
experiences with an organization, and studies have shown how unexpectedly high standards of
service from a company can promote recommendation.
14) Event Marketing:
Special events combine many IMC tools like advertising, sales promotion, public relations, etc., in
linking the brand to a specific event. Organizations can arrange special events themselves or
participate in events organized by other parties to create exciting product-related experiences for
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their consumers. Special events are different from sponsorships where the company‘s association is
limited to financial or in-kind support.
15) Trade Shows and Exhibition:
Trade shows or fairs are exhibitions where companies in a specific industry get together to
showcase their new or prominent products, called exhibits, in specially designed booths. They are
attended by members of the industry, suppliers and buyers, media, and at times by the general
public during certain hours. The primary objectives are to provide information to highly targeted
audiences and get visibility.
16) Customer Service:
The services that customers receive from organizations during and after the purchase process, also
go on to communicate about the organization‘s ethos.
Services include after-sales services like home delivery, installation, warranties and guarantees, and
other services in managing customer relations like answering queries, assisting selection,
troubleshooting, etc. The ‗no questions asked‘ return policies of many U S companies communicate
about their commitment to quality and customer satisfaction.
3.16 Factors Determining Communication Mix
Companies must consider several factors in developing their communications mix. Following are
the major factors considered by companies while determining the promotion mix strategy:
1) Type of Product:
The promotion task depends on the type of product marketed. Low-priced, frequently purchased
consumer goods like toilet soap, toothpastes, soft drinks, etc., will need frequent repeat messages to
influence and remind the existing consumers about the brand and to persuade new consumers to
buy. Advertising is used for such products on a mass scale at a high frequency. The promotion mix
will consist of press ads, magazine ads, TV spots, cinema slides, incentive offers, contests, etc.
For an industrial product of high value and high technology which is purchased infrequently,
personal selling, product demo, exhibition, and sales presentations become the necessary promotion
mix.
2) Nature of Market:
The intensity of competition in the market, locational characteristics of the consumers, and the
requirements of channel members also influence the promotion mix decision. If the target audience
is large and widely spread-out in different parts of the country, advertising and sales promotion will
be effective and economical. For example, consumer goods.
3) Stage in the Product Life Cycle:
Based on the stage at which the product is in the PLC the promotion mix has to change. When the
product is in the introduction and early growth stages, the tasks involved are awareness creation and
motivating product trials. The best promotion mix will consist of publicity, spreading information
advertising, consumer sales promotions and trade promotions. Later, as the product reaches the
maturity stage, the objectives of maintaining brand loyalty and creating brand preferences become
more important. Aggressive brand advertising and dealer promotions become important
components of the promotion mix at that stage.
4) Budget Availability:
Using each promotion tool adds to the cost. Hence, the budget availability with a company has to
be considered while deciding the promotion mix. Companies with limited resources will have to go
for localized activities like dealer display, wall paintings, and personal selling. Companies with
larger resources can go for large scale and more sophisticated promotion tools.
5) Company Policy:
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All the considerations given above should fit in with the overall marketing and promotion policy of
the company, while deciding the promotion mix. The conviction of the top management in the role
of promotion, the product market strategy, and the type of corporate image it wants to project are
factors influencing the decision.
6) Type of Product Market:
Communications-mix allocations vary between consumer and business markets. Consumer
marketers tend to spend comparatively more on sales promotion and advertising; business marketers
tend to spend comparatively more on personal selling. In general, personal selling is used more with
complex, expensive, and risky goods and in markets with fewer and larger sellers (hence, business
markets).
7) Buyer-Readiness Stage:
Communication tools vary in cost-effectiveness at different stages of buyer readiness. Advertising
and publicity play the most important roles in the awareness-building stage. Customer
comprehension is primarily affected by advertising and personal selling. Customer conviction is
influenced mostly by personal selling. Closing the sale is influenced mostly by personal selling and
sales promotion. Re-ordering is also affected mostly by personal selling and sales promotion, and
somewhat by reminder advertising.
3.17 Online Sales Promotion
Online sales promotions have expanded dramatically in recent years. Marketers are now spending
billions of dollars annually on such promotions. Sales promotions online have proved effective and
cost-efficient, generating response rates three to five times higher than those of their offline
counterparts. The most effective types of online sales promotions are free merchandise,
sweepstakes, free shipping with purchases, and coupons.
Eager to boost traffic, internet retailers are busy giving away free services or equipment, such as
personal computers and travel, to lure consumers not only to their own websites but to the internet
in general. Another goal is to add potential customers to their database.
Marketers have discovered that online coupon distribution provides another vehicle for promoting
their products. Online coupons have redemption rate of around 15 per cent, five to eight times the
redemption rate for traditional coupons. In facts, nearly 50 per cent of consumers who purchase
something online use a coupon or discount promotional code. In addition, e-coupons can help
marketers lure new customers.
Online versions of loyalty programs are also popping-up, and although many types of companies
have these programs, the most successful are those run by hotel and airline companies.
Online sales promotion is quickly becoming a pervasive mode of communication with prospective
consumers Whether the promotion involves sweepstakes, printed coupons promotional pricing, or
other strategies, companies find that consumers around the world respond well to aggressive online
promotions Most of the communications firms (the former traditional advertising firms) now serve
their clients by providing to target consumers extensive interactive sales promotion that is inline
with the company‘s other types of communications.
Online sales promotion offers can build brands, increase website visitors and length of stay at the
site, build databases, and support increased online or offline sales. As with other types of marketing
communication, most promotional dollars are spent offline; however, a few important online tacties
are important in the consumer market like coupons, sampling, contests, and sweepstakes. Among
those, sampling, sweepstakes, and contests are the most effective.
Some companies offer samples from their own home pages, however, most farm-out the efforts to
online companies that specialize in handling sample offers and fulfillment. Some of these online
sampling companies are — freesampleclub corn, startsampling corn, freesamples.com, and
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sampleville.com. There are also freebie portals such as amazingfreebies corn, nojunkfree com, and
the freesite.com that have endless offers for gratis goodies. Sampling over the internet is not cheap
for companies. Although traditional store sampling costs 17 cents per sample, and event sampling
runs about 25 cents per sample, online sampling costs 75 to 90 cents. The reason for the high cost is
the money it takes to set-up and run the website.
3.17.1Components of Online Sales Promotion
1) Website Design:
A website is a collection of web pages populated with text, images, audio, and video content that
best describe a business, company or product. The primary aim of a website is to carry information,
news and views to a wide audience, preferably a targeted group of people exclusively interested m
receiving information about a particular company, business or product.
Some of the obvious advantages of having a website is its ability to reach people across
geographical boundaries. The global market is enormous and websites primarily help businesses to
reach its rich bank of consumers through the web. Furthermore, as a marketing technique, it lets the
business stay in touch with its customers around the clock
A website is the virtual face of any business. Hence, not only should the website be visually
appealing, but also be able to clearly promote the company or products to its customers. A welldesigned website is the foundation stone for business expansion in the web market. Hence
aesthetics intelligent concepts, and an user-friendly interface are prime imperatives to follow for
quality website designing.
2) Sales Page Designing:
A sales page, quite simply, is a webpage that is written like an advertisement for the product. Sales
pages usually urge positive customer action i e, by including a ‗buy now‘ or ‗visit now‘ button, it
asks customers to buy the company s products, fill in surveys, etc
Most product based websites include sales pages to exclusively market their products. Sales page
designs should be a reflection of the website so far as the color scheme and layout is concerned. It
should be captivating well-written and include images and audio or video in controlled frequency
that will help to advertise the product without overdoing the sales pitch, or delaying page load time.
A good sales page design follows the basic rules of website designing:
i) Attractive but not too flashy.
ii) Simple without being sketchy.
iii) A business relevant theme.
iv) Includes a logo, product image known aspects of the company/business/product.
v) Strategically placed content, images, audio, video, ‗buy now‘ button, etc.
3) E-mail Marketing Design:
E-mails are online pamphlets that talk about a business, which one can send out to the prospective
customers or dedicated buyers. Spam is universally hated and while conducting email marketing
campaigns, the emails run the risk of negative association. While one may want to continue
association with an existing customer base or build new contacts with targeted prospects, it is
important that to conduct e-mail marketing right.
Newsletters can be sent out either in plain text or in html format. Plain text formats are usually
safe, they take-up low bandwidth and there is the assurance that all recipients will be able to read it.
Html formats on the contrary, while they are more attractive, may or may not load as desired due to
a recipient‘s e-mail or computer configurations
4) Banner Design:
Banners bearing the company logo, motto or product ads are excellent ways to advertise the
business on other relevant sites. Needless to mention, a banner‘s design should follow along the
lines of the website design. Note however, since banners are not direct extensions of the website
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like a sales page or newsletter, one may exercise creative liberties and come-up with fresh color
schemes that will make the business stand out among its competitors on other sites. Alternatively,
one can play with color shades to make the banner similar, yet exclusive of the site‘s design.
Whatever chosen, banners must be attractive and appealing. Avoid over- crowding with too many
images or text, or their combination. Usually, banners with creative images and witty texts have a
better visitor click-rate than those without.
5) Social Media:
Social media advertising is one sales technique that rarely fails. If a promoter manages to find a
slot for the business in social sites like twitter, facebook, myspace, etc, rest assured to see an
increased traffic flow to his website. Social media helps in connecting the target audience
effectively. Developing facebook applications that will promote business or placing ads on relevant
pages, ensures a better visitor click-rate.
Banner advertising is a fantastic way to get the business noticed on social networks. To conclude,
the internet is a powerful and effective medium to promote the company and products. Where a
quality website design helps is gain prominence among millions of similar business websites across
the web. Of course, several search engine marketing factors come into play in the run for good
rankings. However, where good website designing helps is retaining the visitors long enough to
convert them into customers.
3.17.2 Tools of Online Sales Promotion
It is very essential for the marketers that customers are able to find the name of promoted company.
Once customers locate the promoted company, it is necessary to engage them in the browsing or
buying process, depending on site objectives, using various promotional tools and techniques to
enhance the online experiences. Some attention gainer tools are explained below:
1) Feedback Forms:
Before asking to the customer about their need this is better to find out that what is the perception of
the customers for the company. Using customer feedback marketers can improve site and provide
better service to the customers. Using feedback forms also shows customers that company is
interested in their service, and provides an opportunity to build relationships with them. For
instance, marketer may send out an email thanking a particular customer for bringing an issue to the
promotion and follow-up with a coupon to show appreciation. The disadvantage with a feedback
form is the type of information people provide or the questions they may ask. If customers cannot
find answers on company‘s site, they may resort to using the feedback form. To receive targeted
feedback, it is useful to develop an online form for customers to complete that leads them through
the feedback process.
2) Bookmarking:
A good way to encourage customers is to visit company‘s site and to ask them to bookmark it.
Through bookmarking, they have easy access to company‘s site and do not have to remember site‘s
exact URL to visit. Bookmarking a site is particularly beneficial for web surfers who like to follow
links. It enables them to go back and take a more in-depth look at what is the company‘s offerings
form which customers are looking for.
3) Content:
Content is a strong driver for encouraging repeat visits by customers, particularly when it is fresh,
timely, and gives customers a reason to visit regularly. For example, perhaps customer has a ‗Tip of
the Day‘ or a regular visit by an ‗expert‘ well-known in field of business who provides online
advice. Content is useful for the visitors and will enable them to leave with new knowledge will
attract them to company‘s site and encourage them to check back regularly.
4) Daily Give-Away/Coupons/Contests:
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Sites that offer regular promotions such as a ‗give-away‘, coupons and contests are in a solid
position to capture a regular audience. While the promotion acts as the driver that attracts customers
to visit initially, it provides an opportunity to showcase new products and services, and deliver
important news about company. For instance, marketer may initiate a ‗giveaway‘ that is a printer,
but also take the opportunity to tell customers about a printer sale next week. Promotional tools not
only bait customers to the site, but it also increases the likelihood of getting a sale. Offering various
promotions also enables to obtain customer information that a marketer can use in future marketing
campaigns.
5) Surveys:
Surveys provide an effective avenue through which to gather important customer data that will help
to improve business and plan for the future. To encourage visitors to complete the survey,
marketers can provide an incentive such as an opportunity to win a prize.
6) Awards/Testimonials:
Awards and testimonials on company‘s site will provide credibility to business. They will also
provide a foundation for building rapport and trust with the customers, who will be more willing to
visit a site they can trust.
7) Online Chat:
Online chat mechanisms provide a forum where customers can come together and share their
experiences with each other and company through the site. This interactive tool allows the marketer
for accessing directly to customer opinions where marketer can consider trends and determine their
views on the industry.
8) Tours:
Online tours provide an opportunity to showcase particular products and services and highlight their
key benefits.
3.17.4 Importance of Online Sales Promotion
I) It is Simple:
Promotions can be implemented without making a change to the back- office.
2) It is Automatic:
An automate management for the period of the promotion is achieved, one can set how many orders
the promotion is available for (after completion the promotion will stop by itself), automate
discount (no need for an additional discount coupon).
3) Control:
You get a wide range of reports that show you important information — sales, volumes, and sites
that send you most buyers, etc.
4) Easy coupon delivery:
Coupons can be delivered via the internet. Several sites have been designed for this. Catalina‘s
Value Page website (www.valupage.com) allows users to print coupons that they can use at 7,000
supermarkets. The coupon is printed with a bar code and is used with the shopper‘s store card. If
Corn Crunchies were to offer coupons this way, the site could link the shopper‘s internet
information with store card information, which the Corn Crunchies brand manager could use in
determining whether the coupon strategy was effective.
5) Sweepstakes and contests:
Sweepstakes and contests are effective promotional tools for driving people to marketers‘ internet
sites. America Online has conducted numerous promotions to drive users to its advertisers‘ sites.
One recent promotion gave visitors a chance to win a $1 million drawing, one of the dozens of daily
prizes including merchandise emblazoned with the online service‘s logo. The results from internet
sweepstakes can be huge.
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3.17.5 Trends in Online Sales Promotion
I) Electronic Delivery:
Sales promotions are delivered to customers in many ways such as by mail, in-person or within
print media. However, the Internet and mobile technologies, such as cellphones, present marketers
with a number of new delivery options. For example, the combination of mobile devices and
geographic positioning technology will soon permit marketers to target promotions to a customer‘s
physical location. This will allow retailers and other businesses to issue sales promotions, such as
electronic coupons, to a customer‘s mobile device when they are near the location where the coupon
can be used.
2) Internet Communication:
For many years consumers typically became aware of sales promotions in passive ways. That is,
most customers obtained promotions not through an active search but by being a recipient of a
marketer‘s promotion activity (e.g., received coupons in the mail). The Internet is changing how
customers obtain promotions. In addition to websites that offer access to coupons, there are a large
number of community forum sites where members share details about how to obtain good deals
which often include information on how or where to find a sales promotion. Monitoring these sites
may offer marketers insight into how customers feel about certain promotions and may even
suggest ideas for future sales promotions.
3) Clutter:
In the same way an advertisement competes with other ads for customers‘ attention, so to do sales
promotions. This is particularly an issue with inserted coupon promotions that may be included in
mailing or printed media along with numerous other offerings. The challenge facing marketers is to
find creative ways to separate their promotions from those offered by their competitors.
4) Tracking:
Tracking customer‘s response to marketers‘. promotional activity is critical, for measuring success
of an advertisement. In sales promotion, tracking is also used. For example, grocery retailers, whose
customers are in possession of loyalty cards, have the ability to match customer sales data to
coupon use. This information can then be sold to coupon marketers who may use the information to
get a better picture of the buying patterns of those responding to the coupon.
5) Customers Expectations:
Marketers who employ sales promotion as a key component in their promotional strategy should be
aware of how the climate for these types of promotions is changing. For example, the onslaught of
sales promotion activity over the last several decades has eroded the value of the short-term
requirement to act on sales promotions. Many customers are conditioned to expect a promotion at
the time of purchase otherwise they may withhold or even alter their purchase if a promotion is not
present. For instance, food shoppers are inundated on a weekly basis with such a wide variety of
sales promotions that their loyalty to certain products has been replaced by their loyalty to current
value items (i.e., products with a sales promotion). For marketers the challenge is to balance the
advantages short- term promotions offer versus the potential to erode loyalty to the product.
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