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The Structure of the Advertising and Promotions Industry: Advertisers, Agencies, Media, and Support Organizations 2 1 ©2012 ©2012 Cengage Cengage Learning. Learning. All Rights All Rights Reserved. Reserved. MayMay not not be scanned, be scanned, copied copied or duplicated, or duplicated, or posted or posted to atopublicly a publicly accessible accessible website, website, in whole in whole or inorpart. in part. Scope of the Advertising Industry • U.S. Advertising Spending >$300 Billion Worldwide Advertising Spending >$600 Billion 2 2 The Promotion Industry in Transition ALTERED BY SIX TRENDS • Information in Marketplace is an Interactive System between Marketers and Consumers • Proliferation of Cable TV, Direct-Marketing & Alternative New Media Causes Media Fragmentation • Growing Investment in Advertising Causes Media Clutter The Promotion Industry in Transition ALTERED BY SIX TRENDS • New Communications/Distributions Channels are Growing in Influence • Fragmentation of Marketing Budgets Resulting in Greater Portions of Budgets going to Trade & Consumer Promotions • Improved Information Systems Allow Retailers & Distributors more Control over Marketing & Promotional Decisions Constant Transition: Trends Affecting the Advertising and Promotion Industry • Consumer control: Social media, Blogs, DVRs • Media Proliferation, Consolidation, and “Multiplatform” Media Organizations • Media Clutter and Fragmentation – Greater emphasis on IBP tools • Crowdsourcing • Mobile marketing/Mobile media 2 5 Growing Investment in Advertising Causes Media Clutter Structure of the Advertising and Promotion Industry (Exhibit 2.7) Advertisers Advertising and Promotion Agencies External Facilitators Media Organizations Target Audiences 2 7 Advertisers Manufacturers and Service Firms Procter & Gamble, Verizon Trade Resellers Sears, McDonald’s Government Federal, State, Local Social/Not-for-profit Organizations United Way, Nature Conservancy 2 8 Structure of Promotion Industry MARKETERS • Manufacturing and Service Firms • Trade Resellers • Federal, State and Local Governments • Social Organizations – March of Dimes – Nature Conservancy – MAKNA Producer of Consumer products and services, etc… Organizations that that buy products to sell to consumers 2.5 2.5 The U.S. Government is a Marketer that Relies on Advertising 2.5 2 17 Used with permission of The American Red Cross Social and notfor-profit organizatio ns also use advertising and promotion effectively ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Role of the Advertiser in IBP: Before the agencies get involved • Describe the value that the firm’s brand provides • Describe the brand’s position in the market • Describe the firm’s objectives for the brand in the near-term and long-term • Identify the target market(s) that are most likely to respond favorable to the brand • Identify and manage the supply chain/distribution system that will most effectively reach the targets • Be committed to using advertising and other promotional tools to grow the brand 2 18 Agencies Advertising Agencies: • Full-Service • Creative Boutique • Digital/Interactive • In-House • Media Specialists 2 19 Promotion Agencies: • Direct Marketing/ Database • Sales Promotion • Event Planning • Design Firms • Public Relations Firms Some of the Agency Professionals who Help Advertisers Prepare Advertising/IBP • Account planners • Marketing specialists • Media buyers • Art directors • Graphic designers • PR Specialists • Creative directors 2 20 • Copywriters • Direct marketing specialists • Sales Promotion • Event Planners • Web developers • Social media experts Agencies Advertising Agencies: • Full-Service • Creative Boutique • Digital/Interactive • In-House • Media Specialists 2 Promotion Agencies: • Direct Marketing/ Database • Sales Promotion • Event Planning • Design Firms • Public Relations Firms 21 Structure of Promotion Industry (con’t) AGENCIES – Advertising Agencies • Full Service Agency • Creative Boutique • Interactive Agency • In-House Agency • Media-Buying Agency Grey Global Group, Omnicom Group Idea factories Visit http://www.ad4ever.com Gap, Calvin Klein, Revlon do their own inhouse work A German advertising agency with the colorful name "indigo:" Full Service Agency Services • Account Services • Marketing Research Services – Account planner • Creative and Production Services • Media Planning and Buying Services • Administrative Services 2 24 Agency Compensation Commissions: • Around 15% of airtime fees—in flux • 16 2/3 percent for outdoor media • Web media is all negotiated Markup Charges: • Production cost + fixed % Fee Systems: • Hourly rates, or by project Pay-for-Results: • Tightly-specified objectives 2 • But, who is responsible for “results” 25 External Facilitators • Marketing and Advertising Research Firms • Consultants o Database, Web, CRM, Traditional Management • Production Facilitators o Facilities, technicians, in-store displays • Software Firms o Web tracking, fulfillment 2 26 • • • • • EXTERNAL FACILITATORS Marketing and Advertising Research Firms Consultants Production Facilitators Information Intermediator Trade Partners Media Organizations • Broadcast o TV, radio, satellite • Print o Magazines, direct mail, newspapers, specialty • Digital/Interactive Media o Internet, interactive broadcast o iPad, Smartphone • Support Media o Outdoor, directories, event sponsorship, premiums, point-of-purchase, branded entertainment • Media Conglomerates o Time Warner, Disney, Liberty Media 2 28 Media Organizations and Trade Partners Available to Marketers Broadcast Media Interactive Media Print Media Support Media Media Conglomerates Wholesalers, Retailers, B2B Communities, Portals Media Organizations and Trade Partners Available to Marketers Target Audiences • Household Consumers • Businesses • Professionals • Government Organizations 2 31 AUDIENCES • • • • Household Consumers Trade Resellers Business and Professional Buyers Government and Social Organizations Design Firms Help Marketers Develop Logo Designs that Last, Like this Pillsbury Logo 2.9 PROMOTION and IMC PLANNING and STRATEGY The Promotion Plan A PROMOTION PLAN IS: • Direct Extension of Firm’s Marketing Plan • A Specification of the Analysis, Strategy, and Tasks of the Promotional Effort • Needed to Conceive and Implement an Effective Promotional Effort SIX MAJOR ELEMENTS OF A PROMOTIONAL PLAN ARE: • • • • • • Executive Summary and Overview Situation Analysis Objectives Budgeting Strategy Evaluation 3.2 The Promotion Plan A promotion plan outlines the promotional tools or tactics you plan to use to accomplish your marketing objectives. To the new or inexperienced marketer, the promotion plan might be mistaken as the entire marketing plan because it outlines where the majority of the marketing budget will be spent. It is, however, just one component of the marketing plan - there are additional strategy and planning components described in a marketing plan. •Introduction •Situation Analysis •Objectives Stages in the Promotional Plan •Budgeting •Strategy •Execution •Evaluation The Promotion Plan EXECUTIVE SUMMARY & OVERVIEW • Executive Summary-States Most Important Aspects of the Plan • Overview-What is to be Covered in the Plan in General Terms SITUATION ANAYLSIS • Marketers and Agencies Lay Out Most Important Factors Defining the Situations Facing the Firm, and Include: – Demographic Trends – Historical Context – Industry Analysis – Market Characteristics • Type of Consumer • Geographic Considerations • Competition 3.4 SITUATION ANAYLSIS • Product Characteristics – Category • Convenience Goods • Shopping Goods • Specialty Goods – Stages in Product Life Cycle • Characteristics of the Firm –Push vs. Pull Strategy –Funds Available –Size of Sales Staff –Extent of Firm’s Product Line SITUATION ANALYSIS • Characteristics of the Distribution – Intensity of Distribution • Intensive Distribution • Selective Distribution • Exclusive – Length of Trade Channel – Types of Trade Partners Intensive distribution Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another. Selective distribution Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply. Exclusive distribution Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area. A Situation Analysis Needs to Consider the Type of Trade Partners that Will be Promoting The Marketer’s Brand 3.7 The Promotion Plan OBJECTIVES Lays the Framework for Executions in Promotional Campaign and Identifies Goals of a Marketer in Concrete, Measurable Terms Create & Maintain Image for Brand Increase Customer Awareness & Curiosity about a Brand Change Consumers’ Beliefs & Attitudes about a Brand Belief – Knowledge & Feelings Accumulated about a Brand Attitude is Overall Evaluation of Brand Based on Knowledge/Emotions Influence Purchase Intentions Stimulate Trial Use Convert One-Time Users to Repeat Customers Switch Consumers from Competing Brands Encourage Brand Loyalty Stimulate More Frequent Use Increase Sales Creating Awareness and Curiosity is a Common Promotional Objective The Promotion Plan OBJECTIVES – KEY TERMINOLOGY Brand Image Brand Awareness Top-of-the-Mind Awareness Beliefs Attitude Purchase Intent Trial Usage Repeat Purchase Brand Switching Brand Loyalty Increasing the Frequency of Use The Promotion Plan COMMUNICATIONS vs. SALES OBJECTIVES – Increase Awareness of Brand Name to 40% of All Consumers in Western US – Create Trial Use by 15% of all Teenagers 13-15 – Communicate Superior Brand Performance Features to Target Audience with Series of Advertisements over Next Six Months CHARACTERISITICS OF WORKABLE PROMOTIONAL OBJECTIVES – Establish Quantitative Benchmark – Specify Measurement Methods & Criteria or Success – Specify a Time Frame The Promotion Plan BUDGETING - METHODS • Percentage-of-Sales Approach • Unit-of-Sales Approach • Share of Market/Share of Voice • Funds Available • Objective & Task The Promotion Plan (con’t) BUDGETING FOR ADVERTISING Marketing Research Message Research Production Costs: Production Companies, Talent, Site Costs Media Costs Agency Commissions/Fees Account Personnel Travel Expenses The Promotion Plan (con’t) BUDGETING FOR SALES PROMOTION Coupon Value and Dealer Handling Charges Contest and Sweepstakes Material and Charges Brochures and Collateral Material Trade Shows & Exhibits Trade Channel Partner Meeting & Entertainment Premiums Point-of-Purchase Materials Trade Allowances Trade Incentives Trade Training Programs Refunds/Rebates 3.57 Premiums—Like This One Offered by Jell-O—Must be Factored into Budget Planning for Promotion 3.15 The Promotion Plan (con’t) BUDGETING FOR DIRECT MARKETING • Uses a Simple Cost-Based Method • Exact Bids Obtained - Printing, Sorting, Bundling & Mailing for Print Campaigns • Bids Obtained for Telemarketing, Infomercial or Catalog Selling from External Facilitators Budgeting for Direct Marketing Needs to Consider the Cost of Printing and Mailing Materials 3.17 The Promotion Plan (con’t) BUDGETING FOR WEBSITES & BANNER ADS • Costs for Web Sites - $30K to $100K • Costs for Banner Ads - $10 CPM to $30 CPM The Promotion Plan (con’t) BUDGETING FOR PUBLIC RELATIONS • Most Difficult of All Budgets to Set - Most Expensive Public Relation Occurs During Crises • Most PR Firms Work on Retainers - Set on an Annual Basis The Promotion Plan (con’t) BUDGETING FOR PERSONAL SELLING • Recruiting Costs • Training Costs • Travel Expenses • Promotional Material - Samples, Catalogs, Product Brochures • Salaries & Benefits • Incentive Programs - Bonuses & Rewards The Promotion Plan (con’t) STRATEGY • Mechanism by which Something is Done • Account Planner Assists in Strategy – Works in Advertising Agency & Synthesizes all Relevant Audience Research to Formulate Promotional Strategy 3.21 The Promotional Plan (con’t) EVALUATION • Marketer Determines How Promotional Program has Performed - Factor by Factor • Main Basis for Evaluation Communications and Sales Objectives Set for the Program Evaluation of the IMC Program Will Include the Effect on Sales of Various Promotional Tools IMC Management & Planning STRATEGIC PLANNING OF IMC IS DIFFERENT FROM TRADITIONAL USE OF MULTIPLE PROMOTIONAL TOOLS • Outside-in Approach • IMC Management Planning Requires Comprehensive & Detailed Knowledge – Customers – Prospects • Knowledge about Customer & Prospects • IMC Management Plan - Built Around Brand Communications • Control of IMC Management & Planning - Centralized – Firms Appointing IMC or Marcom Managers IMC Management & Planning (con’t) MODEL OF IMC MANAGEMENT & PLANNING • IMC Model Considers Complete Process – Uses Promotion to Communicate to Target Markets – Effectively Deploys Promotional Tools – Corporate & Marketing Plans - Understood and Adopted as Part of IMC Plan – Databases - Help Identify & Profile Target Markets – Promotional Objective - Dictate Mix of Promotional Tools to Pursue for each Target 3.25 UNDERSTANDING the BUYER BEHAVIOR 70 Consumer Behavior Consumer Behavior: a wide spectrum of things that affect, derive from, or form the context of human consumption. 71 Perspectives: 1. Consumers are Systematic Decision Makers - Maximizing the benefits from purchases defines the purchase – consumers are deliberate. 2. Consumers are Active Interpreters - Cultural/social membership defines purchases. 72 Consumer Decision- Making:The System Decision Maker I think, therefore I buy 73 74 Household Consumer Behavior Complex Process through which Individuals Acquire, Use and Dispose of Products or Services to Satisfy Their Needs and Desires THE CONSUMER AS A DECISION MAKER - 4 STAGES • Need Recognition: Functional or Emotional Benefits • Information Search & Alternative Evaluation – Internal Information Search – External Information Search – Consideration Set – Evaluation Criteria 75 Problem Recognition • More cerebral – Hierarchy of needs (personal fulfillment) • Just the way life is – Out of Stock (out of toothpaste) – Dissatisfaction (Tired of same old clothes) – New needs/new wants (New baby, buy a house, buy a crib) – Related Products/related purchases (Buy computer, need printer) – Peer pressure (Everyone has a cell phone, so…) – New products (Wow, with an iPod, I can run for hours) 76 The Consumer Decision-Making Process 1. Need recognition Functional or Emotional benefits 2. Information Search and Evaluation Internal and External Consideration Set Evaluative Criteria 3. Purchase 4. Post-purchase use and evaluation Customer satisfaction Cognitive dissonance 77 THE CONSUMER AS A DECISION MAKER 4 STAGES (con’t) • Purchase -Consumer Commits to a Brand with Purchase Decision • Post Purchase Use & Evaluation – Consumer Satisfaction – Cognitive Dissonance 78 Post-Purchase Evaluation • Dissatisfaction = performance is below expectations vs. • Cognitive dissonance = buyer’s remorse – Reassurance and opinions from others to reaffirm decision – Attentive to advertising after the fact – If dissatisfaction and dissonance = negative word of mouth 79 Four modes of consumer decision making Emerging from: • Sources of Involvement & Prior Experience Create: – Extended Problem Solving - inexperienced consumer – Limited Problem Solving – new problem to solve – Habit or Variety Seeking – Brand Loyalty 80 The Consumer Decision-Making Process 1. Need recognition Functional or Emotional benefits 2. Information Search and Evaluation Internal and External Consideration Set Evaluative Criteria 3. Purchase 4. Post-purchase use and evaluation Customer satisfaction Cognitive dissonance 81 Is this a Functional or Emotional Appeal for Foster Grant Sunglasses? 82 How Does This Ad Comply with the Conditions of Extended Problem Solving? 83 5.6 THE CONSUMER AS A DECISION MAKER: Key Psychological Processes • Attitudes and Beliefs – Brand Attitudes – Beliefs – Salient Beliefs • Multiattribute Attitude Models – Evaluative Criteria – Importance Weight – The Consideration – Beliefs 84 85 THE CONSUMER AS A DECISION MAKER :Key Psychological Processes (con’t) • Perception – We Use it to Create a Reality – Creates an Orientation to the World – Has Specific Implications for Each Consumer • Experimental-Hedonic Influences – Emphasis on Pleasure & Personal Enhancement – Consumers Buy & Consume to Feel Good – In Contrast to Rigorous Cognitive Evaluation 86 of Other Factors The Consumer in a Sociocultural Consumption Context CULTURE • Total Life Ways of a People • The Way People Eat, Groom, Celebrate & Mark Their Space/Position • Cultures are Small VALUES • Express in Words & Deeds • Examples - Individual Freedom, Propriety & Restrained, Behavior, etc. RITUALS • Cultures Affirm, Express & Maintain Values • Ritual-laden Holidays Perpetuate American Culture 87 Culture is the “Total Life Ways of People.” How is Life in Singapore Different From the U.S.? 5.11 88 The Consumer in a Sociocultural Consumption Context SOCIETY • Social Class • Family • Reference Groups • Race & Ethnicity • Gender • Community 89 Is this Ad Using a Reference Group Appeal? 90 5.13 91 Business Buyer Behavior STAGES IN BUYING PROCESS • Need Recognition • Product & Scheduling Specifications • Evaluation of Products • Product & Supplier Choice • Product & Supplier Evaluation 92 Business Buyer Behavior NATURE OF DECISION MAKING IN BUSINESS MARKET • Styles – Rational – Conservative • Type of Decision – Straight Rebuy – Modified Rebuy – New Task Buying 93 NATURE OF DECISION MAKING IN BUSINESS MARKET (con’t) • Buying Center – Several Different People Involved in a Single Decision – May Require Different Promotional Tools • Business Buyer Behavior on the Internet – Internet Buying is Efficient – Sites Offer Product & Pricing Information from Many Sources Simultaneously 94 Evaluation Criteria Used in Business Decision Making • • • • • • Efficiency of Product Supplied Certainty of Supply Dependability in Meeting Schedules Technical Assistance From the Seller Product Features Supplier Loyalty/Patronage 95 Issues in Communication and Information Processing INFORMATION PROCESSING & PERPETUAL DEFENSES • Two Major Obstacles to Overcome for a Message to Have an Effect: Cognitive Consistency Impetus and Information Overload – Cognitive Consistency Impetus • Mental State • New Information • Cognitive Consistency 96 • Information Overload –Consumers Employ Perceptual Defenses to Simplify & Control Information Processing • Selective Exposure • Selective Attention • Selective Comprehension • Selective Retention 97 –Shaping Attitudes via Perceptual Route • Low-Involvement Products • Attitude Formation • Peripheral Cues –Any Feature of a Promotion that Prompts a Pleasant Emotional Response 98 Consuming in the Real World Family Values Object meaning Gender Social Class Reference Groups Culture Race/ Ethnicity 99 UNDERSTANDING the MARKET ENVIRONMENT: SEGMENTING, TARGETING and POSITIONING 100 China is an attractive target market for many companies because of its huge population --- Kotler et al.2006 101 Segmentation : breaking down of a diverse, heterogeneous markets STP Positioning: Act of assigning & representing a brand Target Segment: Focus to sub group 102 1.Break the market into smaller, more homogeneous segments 2.Specifically target the discrete market segments 3.Position the product or service to appeal to the targeted segments. 103 The Value of STP Marketing. WHY?? • Precise Specification of Marketing Objectives • Better Understanding of Needs and Motives of Target Market • Better Understanding of Customers and Non customers • More Efficient Allocation of Resources • Ability to Assess Strengths and Weaknesses • Ability to Identify Messages to be Used Across All Promotional Tools • Better IMC Management of Promotional Effort • Ability to Respond More Quickly to Changes in the Environment 104 Beyond STP Marketing. AFTER?? • STP Decisions are Continuously Evolving Due to the Dynamic Nature of Markets • To Maintain the Profitability of Brands, Segmentation Decisions Must be Reassessed Regularly • Product Differentiation Infuses STP Decisions with Vitality 105 106 Demographic Segmentation • Segmentation Based on Physical Descriptors of Individuals –Age Are you a DINK? –Gender –Ethnic Background What are you? –Education –Marital Status –Occupation 107 Brands in Common Product Categories Can Be Targeted to Audiences Based on Ethnic Background 108 4.6 What is the Basis for Segmentation in this Message? 4.7 109 Identifying Target Segments • Geographic Segmentation –Climate & Topographical Features –Food Preferences & Preparation Habits –Entertainment Preferences –Recreational Activities 110 Identifying Target Segments (con’t) WHO you are? WHAT you buy? Do you need to spend > $ RM? HOW you use? • Usage Patterns & Commitment Levels – Heavy Users – Nonusers e.g. nonsmokers – Brand Loyal Users Difficult to convert – Switchers or Variety Seekers First time buyer – Emergent Customers • Psychographic & Lifestyle Segmentation – AIO’s Target segment identified • Benefit Segmentation by various benefit packages 111 Psychographics and Lifestyle segmentation AOI Lifestyles segmentation provides insight into consumer’s motivations. e.g. Honda --Prestige?, Passenger Safety? Fuel Economy? Club Med, Bintan, Banyan Tree, etc Benefit Segmentation Divide market based on different benefits that consumer seeks. 112 A Classic Example of Benefit Segmentation 4.10 113 Segmenting Business-to-Business Markets Types of organization segmentation Standard industrial classification (sic) segmentation Size of organization segmentation Geographic location segmentation End use of segmentation Horizontal & Vertical market segmentation 114 Prioritizing Target Segments Capabilities of the organization Size and growth potential of the segment Competitive Field 115 Formulating a Positioning Strategy for a Brand ESSENTIALS OF EFFECTIVE BRAND POSITIONING STRATEGIES • Substantive Value • Consistency • Simplicity & Distinctiveness FUNDAMENTAL BRAND POSITIONING THEMES • Benefit Positioning • User Positioning • Competitive Positioning REPOSITIONING BRANDS 116 THE INTERNATIONAL ENVIRONMENT FOR PROMOTION and IMC Cultural Communications • Culture - Total Way of a People, the Social Legacy the Individual Acquires from His or Her Group • Culture is Typically Invisible to Those Who are Immersed In It, Making Communication Across Cultures Difficult Importance of International Communication • Complex Social, Political & Economic Changes Affect International Communications Environment. • International Developments Relevant to the Rise in International Commercial Communications: – Development of Trading Blocs - May be Prelude to a Rise in Nationalism – Loosening of Political and Economic Constraints Importance and Rise of International Communication (con’t) – Liberalization of the Flow of Labor and Increase in movements of Peoples Across Borders – Growing Size of Ethnic Groups From Elevated Birth Rates – Rise of Cultural Borders and Barriers even as Economic Barriers Begin to Fall Overcoming Cultural Barriers in International Promotion • Barriers to Creating Successful International Promotions The tendency to view – Ethnocentrism – Self-Reference Criterion and value things from the perspective of one’s own culture. The unconscious reference to one’s own cultural values, experiences and knowledge as a basis for decisions. How Might This American Ad Be Viewed as Ethnocentric 7.6 Overcoming Cultural Barriers in International Promotion (con’t) • Cross-Cultural Research Helps Overcome Barriers – Secondary Data - Data Gathered by Someone Else for Some Other Purpose – Primary Data - Specific Data Collection Unique to a Promotional Situation • Economic Conditions • Demographics Characteristics • Values • Custom & Ritual • Product Use & Preference Challenges in International Advertising • Creative Challenge • Media Challenge –Media Availability & Coverage –Media Costs & Pricing • Regulatory Challenge International Markets Prefer Different Creative Executions 7.9 Challenges in International Sales Promotion, Direct Marketing and e-Commerce CHARACTERISTICES OF THE PRODUCT • Product Prevalence & Use • As Competitive Environment Becomes More Complex, Advertising Designed to Differentiate Brands will Become More Predominant • Products Moving into Growth Stage will Need to be Differentiated Challenges in International Sales Promotion, Direct Marketing and eCommerce (con’t) LEVEL OF ECONOMIC DEVELOPMENT • All Forms of Production & Direct Marketing are Applicable in Highly Industrialized Markets • In Less Developed Countries - Lack of Wide Range of Consumer Goods & Low Income Make Promotion a Non Issue – Few Competitors Serve these Markets – Low Literacy Make Communication Difficult w/Print Media – Without TV, Radio & Newspaper, Direct marketing is Undermined – Unsophisticated Mail Systems Challenges in International Sales Promotion, Direct Marketing and e-Commerce (con’t) LEVEL OF ECONOMIC DEVELOPMENT (con’t) • Newly Industrialized Markets – Better Environment for Promotional Tools – Must be Managed Carefully – Consumer Income Rises – More Consumer Goods are Introduced and Succeed – As Media Proliferate, Sales Promotions and Direct Marketing can be Introduced Based on Market-by-Market Assessment Challenges in International Sales Promotion, Direct Marketing and e-Commerce (con’t) STRUCTURE OF TRADE CHANNELS • Highly Developed Distribution & Retailing Systems – Trade Channel Members Demand Support or Carry Marketers Brand – Trade Allowances, Incentives, Point-of-Purchase Displays & Sampling – Must Have the Means to Handle Coupon Redemption or Premium Distributions • Less Developed Trade Channels – May Not be Able to Use Traditional Promotional Techniques – Fragmentation of Trade Channels • Retailers - No Way of Handling Coupons • Some Countries So Small May Not be able to Handle Point-of-Purchase – Trade Show Challenges in International Sales Promotion, Direct Marketing and e-Commerce (con’t) REGULATIONS – Regulation of Promotion, Direct Marketing, and e-Commerce Varies Widely Market-to-Market • Most Sales Promotion Tools are Legal Across Europe • Sweepstakes are Either Heavily Banned or Regulated in All European Markets • In Japan – Value of Premium Offered with a Product is Limited to 10% of the Value of the Original Price Promotions in International Markets Must be Researched for Regulation and Legality 7.15 Challenges in International Public Relations Companies have less control over global publicity relative to domestic situations, and no corporations are powerful enough to control a host country’s media Promotion Agencies Around the World GLOBAL AGENCY • Will Know Marketer’s Products & Current Promotion Program • Agency may then Either Adapt Domestic Campaigns or Launch New Ones • Disadvantage is their Distance from Local Culture. Exporting Meaning is Never Easy INTERNATIONAL AFFILIATE • Set Up as a joint Venture w/Local Agencies • Join Networks or Take Minority Ownership • Benefits in this Arrangement LOCAL AGENCY • Knowledgeable about Culture/Local Market • Have Well-Established Contacts • One Problem-Less Standardization of Creative Effort Standardized vs. Promotional Customized Campaigns standardized campaigns use same appeal & creative execution across all international markets customized campaigns involve preparing creative executions for each market a firm has created a brand is well suited for a standardized campaign when: • communication primarily uses visual appeal • communication is “culture-less” • brands that are standardized • products have global reputation Certain Product Lend Themselves to Standardized Campaigns 7.19 Standardized vs. Promotional Customized Campaigns (con’t) environment for standardized promotion is more favorable due to: • expansion of global communications media • emergence of global teenager • trend towards universal demographic & lifestyle trends • americanization of consumption values Challenges in Developing & Managing A Global Sales Force developing a global sales force can be achieved with: • expatriate personnel • local nationals • third country nationals Challenges in Developing & Managing A Global Sales Force managing the global sales force • training – expatriate – foreign national personnel – training for foreign personnel • motivation & compensation – companies must consider culture – guidelines include examining the way firms are compensating people • high tax-rate countries – sales personnel push for packages instead of direct taxable income • e.g., cost of living allowances, private school tuition, etc.