Sunday, February 16, 2014

Promotion Mix and its strategies

Promotion Mix: Direct selling, Advertising, Sales Promotion and Public Relations
Broadly speaking, promotion means to push forward or to advance an idea to gain its acceptance and approval. Promotion is any communicative activity whose main object is to move forward a product, service or idea in a chain of distribution. It is an effort by a marketer to inform and persuade buyers to accept, use, recommend, and repurchase the idea, good or service which is being promoted. Thus, promotion is a form of communication with an additional element of persuasion. The promotional activities always attempt to affect knowledge, attitudes, preferences, and behaviour of recipients i.e. buyers. In any exchange activity, communication is absolutely necessary. The company may have the best product, package etc. but still people may not buy the product if they haven’t heard of it. The marketer must communicate to his prospective buyers and provide them with adequate information in a persuasive language. People must know that the right product is available at the right place and at the right price. This is the job of promotion in marketing.
Thus promotion is the process of marketing communication involving information, persuasion and influence. Promotion has three specific
1. It communicates marketing information to consumers, users, and prospects.
2. Besides just communication, promotion persuades and convinces the buyers.
3. Promotional efforts act as powerful tools of communication.
Providing the cutting edge to its entire marketing programmed. Thus promotion is a form of non-price competition. Promotion is thus responsible for awakening and stimulating demand, capture demand from rivals and maintaining demand for products even against keen competition. Every company can choose from the following tools of promotion, popularly known as the promotion-mix variables:

1. Advertising,

2. Sales Promotion,

3. Personal Selling,

4. Public Relations

Advertising is perhaps the most important tool of promotion that companies use to direct persuasive communications to target buyers and publics. Advertising is defined by the American Management Association as “any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor”. Advertising through various media like magazines, newspapers, radio, television, outdoor displays etc., has many purposes: “long-term build-up the organization’s corporate image (institutional advertising), or long-term build-up of a particular brand (brand advertising), information dissemination about a sale, service or event (classified advertising), announcement of a special sale (sale or promotional advertising) and advocacy of a particular cause (advocacy advertising”. Organizations obtain their advertising in different ways. In small companies, advertising is handled by someone in the sales or marketing department who works with an advertising agency. Large companies on the other hand, set up their own advertising departments, whose job is to develop the total budget, approve advertising agency ads and campaigns, dealer displays etc. In developing an advertising programmed, marketing managers must always start with the identification of the target market and buyer motives then proceed to make the five major decisions in developing advertising programmed, known as the five Ms:
1. What are the advertising objectives (Mission)

2. How much can be spent (Money)

3. What message should be sent (Message)

4. What media should be used (Media)

5. How should the results be evaluated (Measurement)

Setting the advertising objectives
The first step in developing an advertising programme is to set the advertising objectives. These objectives must flow from prior decisions on the target market, market positioning and marketing mix. The objectives can be classified on the basis of the aim which can be either to (a) inform the target about the product features, performance, service available, a price change or new uses etc. (called informative advertising) or (b) to persuade the prospect to may be remain brand loyal, or switch brands, or to purchase now etc. (called persuasive advertising) or (c) to remind the buyer or the prospect about the product or its features, price where to buy it from etc. (called reminder advertising). The choice of the advertising objectives should be based on a thorough analysis of the current marketing situation, e.g. if the product has reached its maturity stage in its product-life cycle, and the company is the market leader, and if the brand usage is low, the proper objective should be to stimulate more brand usage (as in the case of colgate toothpaste or surf). On the other hand, if the product is new and at the introduction stage of the PLC and the company is not a market leader, but its brand is superior to the leader, (as in the case of captain cook salt) then the proper objective may be to convince the prospects about the brands superiority.

Deciding on the advertising budget
After determining the objectives, the company can proceed to establish its advertising budget for each product. Every company would like to spend the amount required to achieve the sales goal. But how should it decide how much to spend on advertising. There are several methods from which a company can choose from while deciding on how much to spend:

(a) What-all-you-can-afford method: Many companies set the promotion budget at what they think the company can afford. However, this method completely ignores the role of promotion as an investment and the immediate impact of promotion on sales volume. It leads to an uncertain annual promotion budget.

(b) Percentage of sales method: Many companies set their promotion expenditure at a specified percentage of sales (either current or anticipated). A number of advantages are claimed for the percentage of sales method. First, it means that promotion expenditures would vary with what the company can “afford”. Second, it encourages management to think in terms of the relationship between promotion cost, selling price and profit per unit. Third, it encourages competitive stability to the extent that competing firms spend approximately the same percentage of their sales on promotion.

(c) Competitive parity method: Some companies set their promotion budget to achieve parity with their competitors. Two arguments have been advanced for this method. One is that the competitors’ expenditures represents the collective wisdom of the industry and second is that maintaining a competitive parity helps prevent promotion wars.

(d) Objective-task method: This method calls upon marketers to develop their promotion budgets by defining their specific communication objectives, determining the tasks that must be performed to achieve these objectives, and estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget. This method has the advantage of requiring management to spell out its assumptions about the relationship between the amount spent, exposure levels, trial rates and regular usage.

Deciding on the massage
Many studies on ‘sales effect of advertising expenditures’ neglects the message creativity. One study found that the effect of the creativity factor in a campaign is more important than the amount of money spent. Only after gaining attention can a commercial help to increase the brand’s sales.
Advertisers go through the following steps to develop a creative strategy message generation, message evaluation and selection and message execution.

Message Generation: In principle, the product’s message (theme, appeal) should be decided as part of developing the product concept; it expresses the major benefit that the brand offers. Creative people use several methods to generate possible advertising appeals. Many creative people proceed inductively by talking to consumers, dealers, experts and competitors. Consumers are the major source of good ideas. Their feelings about the strength and shortcomings of existing brands provide important clues to creative strategy. How many alternative ad themes should the advertiser create before making a choice? The more the advertisements created, the higher the probability that the agency will develop a first-rate appeal. Yet, the more time it spends on creating ads, the higher the costs. Thus, there must be some optimal number of alternative ads that an agency should create and test for the client.

Message Evaluation and Selection: The advertiser needs to evaluate the alternative messages. A good ad normally focuses on one central selling proposition without trying to give too much product information, which dilutes the ad’s impact. Messages should be rated on desirability, exclusiveness and believability. The message must first say something desirable or interesting about the product. The message must also say something exclusive or distinctive that does not apply to every brand in the product category. Finally, the message must be believable.

Message Execution: The impact of the message’ depends not only upon ‘what is said’ but also on ‘how it is said’. Some ads aim for rational positioning (designed to appeal to the rational mind) e.g. Surf-washes clothes whitest, whereas other advertisements aim for emotional positioning, which appeal to the emotions of love, tenderness, care etc. The choice of headlines, copy and so on, can make a difference to the ad’s impact. The advertiser usually prepares a copy strategy statement describing the objective, content, support and tone of the desired ad. Creative people must find a style, tone, words, and format for executing the message. All of these elements must deliver a cohesive image and message. Since few people read the body copy, the picture and headline must summarize the selling proposition. A number of researchers of print advertisements report that the picture, headline, and copy are important in this order. The reader first notices the picture and hence it must be strong enough to draw attention. Then the headline must be effective in propelling the person to read the copy which itself must be well composed. Even then, a really outstanding ad will be noted by less than 50% of the exposed audience, about 30% of the exposed audience might recall the headline’s main point, about 25% might remember the advertiser’s name and less than 10% will have read most of the body copy.

Deciding on the media
The advertiser’s next task is to choose advertising media to carry the advertising message. The steps are deciding on desired reach, frequency and impact, choosing among major media types, selecting specific media vehicles, and deciding on media timing.

(a) Deciding on reach frequency and impact: Media selection is the problem of finding the most cost-effective media to deliver the desired number of exposures to the target audience. But what do we mean by the desired number of exposures? Presumably, the advertiser is seeking a certain response from the target audience. g. a certain level of product trial. The impact of exposures on audience awareness depends on the exposure’s reach, frequency and impact.

Reach (R): The number of different person or households exposed to a particular media schedule at least once during a specified time period.

Frequency (F): The number of times within the specific time period that an average person or household is exposed to the message.

Impact (I): The qualitative value of an exposure through a given medium e.g. a woman’s product in Femina would have a higher impact than in the Dalal Street).

Choosing among Major Media Types: The media planner has to know the capacity of the major media types to deliver, reach, frequency and impact. The major media types are newspapers, television, direct mail radio, magazines, and outdoor. Media planners make their choice among these media categories by considering several variables, the most important ones being the following:
Target-Audience Media Habits: e.g. television and radio are the most effective media for reaching teenagers.

Product: Women’s dressers are best shown in colored magazines.

Massage: A message announcing a major sale tomorrow will require radio or newspapers.

Cost: Television is very expensive, whereas newspaper advertising is comparatively much cheaper. What counts are the cost per thousand exposures and not the total cost?

(c) Selecting specific media vehicles: Now the media planner searches for the most cost-effective media vehicle. There are hundreds of magazines and newspapers specially targeted at special audience which a planner chooses from. Similarly on the television media, there are several channels and programmes from which a choice can be made. However, every media vehicle entails a certain cost and has certain customer coverage. How to select the most cost-effective media is done using the “Cost-Per-Thousand Criterion” e.g. if a full page, four color advertisement in India Today costs Rs. 80,000/- and has a readership of 20 lac people, the cost of reaching each one thousand persons is approximately Rs. 40/- The same advertisement in Business Today may cost Rs. 25,000 but reach only 50,000 people, the cost per thousand people would be approximately Rs. 500/. Similarly, the media planner would rank reach magazine by cost per thousand and favour those magazines with the lowest cost per thousand for reaching the target consumers. Media planners are increasingly using more sophisticated measures of media effectiveness and employing them in mathematical models for arriving at the best media-mix. Many advertising agencies use computer programmes to select the initial media and then make further improvements based on subjective factors cited in the model.

(d) Deciding on media timing: The advertiser faces a macro scheduling problem and a micro scheduling problem.

Macro-scheduling Problem: The advertiser has to decide how to schedule the advertising in relation to seasonal & business cyclic trends. Suppose 70% of a product’s sales occur between June & September, the firm has three options-either it could follow the seasonal pattern, to oppose the seasonal pattern or to be constant throughout the year.
Micro-scheduling Problem: The micro scheduling problem calls for allocating advertising expenditures within a short period to obtain the maximum impact.

Evaluating advertising effectiveness
Good planning and control of advertising depends critically on measures of advertising effectiveness. Most advertisers try to measure the communication effect of an ad that is its potential effect on awareness, knowledge or preference. They would like to measure the sales-effect but often find it is too difficult to measure. Yet both can be researched.

Communication-Effect Research: Communication-effect research seeks to determine whether an ad has been able to communicate effectively i.e. copy testing. It can be done before an ad is put into media and after it is printed or broadcast.
There are three major methods of advertising pre-testing:

(a) Direct-rating method: Which asks consumers to rate alternative ads?

(b) Portfolio tests: entail a group of consumes to view and/or listen to a portfolio of advertisements and then they are asked to recall all the ads and their content, aided/unaided by the interviews.

(c) Laboratory tests: use equipment to measure consumer’s physiological reactions-heartbeat, blood pressure, pupil dilation etc. which measures the ad’s attention-getting power.
Sales Effect Research: Communication-effect advertising research helps advertisers assess advertising’s communication effects but reveals little about its sales impact. Advertising’s sales effect is generally harder to measure than communication effect. Sales are influenced by many factors besides advertising, such as the product’s features, price, availability & competitors’ actions. Researchers try to measure sales impact through analyzing either historical or experimental data. The historical approach involves correlating past sales to past advertising expenditures on a current basis using advanced statistical techniques. Other researchers use experimental design to measure the sales impact of advertising. Instead of spending the normal percentage of advertising to sales in all territories, the company spends more in some territories and less in others. These are called high-spending and low-spending tests. If the high-spending tests produce substantial sales increases, it appears that the company has been under spending. If they fail to produce more sales and if low-spending tests do not lead to sales decreases, then the company has been overspending. These tests, of course, must be accompanied by good experimental controls.

Advertising agencies and profile of advertising in
Today, the advertising job has become so complex and large, that normally no business firm chooses to handle the function directly. They employ the services of advertising agencies. These agencies carry forward the task of planning, execution and evaluation of the promotional campaigns of companies. Stanton has defined an advertising agency as “an independent company rendering specialized services in advertising in particular and marketing in general.” They are independent concerns working as a specialist, an agent or consultant of the advertiser. They perform all activities right from preparation and development of advertising copy to the evaluation of the effectiveness of the advertising programme.

Advertising agencies render a lot of services to advertisers like
1. Copy writing,
2. Photographing,
3. Media planning,
4. Buying of space,
5. Marketing research,
6. Public relations,
7. Merchandising,
8. Sales promotion,
9. Forwarding the advertising material etc.
All these specialized services help the advertisers in raising the effectiveness of advertising.

Advertising in the Indian perspective
In a country like India, where we find diverse languages, low-income levels, large-scale illiteracy, the growth in advertising has also been slow as a natural consequence. An experienced marketing man in India feels that the greatest difficulty in India is to find a common link of communication for the entire country. The advertising campaigns are usually not conceived in Indian languages and are often translations of the original advertisement in English. The advertising themes lack Indian images, associations and expressions. India being a country of villages, the ultimate task before the advertising men is to make the advertising appeal simple. No doubt to reach and influence the rural market is a challenge. However, in the yester decades, we find multifaceted changes in our socio-economic set-up, an increase in the pace of industrialization & an increase in the level of income of the general masses. We also find satisfactory developments in the field of education and all these developments have paved wider avenues for advertisements. The technological sophistication in the field of mass communication has also been instrumental in making the advertising come of age. Indian advertising practices are under-going a see-saw change and the credibility would probably be to the rising tempo of industrialization in all the sectors of the Indian economy. Of late, the Indian businessmen have learnt to appreciate and visualize the social responsibility of business. Hence, it is pertinent that advertising is given new orientation. With these developments, advertising has become a communication device as well as an indispensable weapon in the armory of today’s business. Even the area of advertising research needs special attention. Advertising thus is a sensitive tool of promotion-mix with a very wide coverage and now that the level of consumerism and competition is reaching its peak in India too, business houses have understood that they need the effective tool of advertising to promote the special selling proposition of product to their prospects.
Sales Promotion
“Sales Promotion is a direct and immediate inducement that adds an extra value to the product so that it prompts the dealers, distributors or the ultimate consumers to buy the product.” According to the American Marketing Association, “Sales promotion means to give short term incentives to encourage purchase or sale of a product or service. Sales promotion includes those activities that supplement both personal selling and advertising, and co-ordinate them and help to make them effective, such as display, shows and expositions, demonstrations and other non-recurrent selling efforts not in the ordinary routine”. Sales promotion helps in solving the short-term problems of the marketing manager, the impact of these methods is not very lasting or durable and the results of these efforts are not as lasting as those of advertising and personal selling. Sales promotion is more of a catalyst and a supporting communication effort to advertising and personal selling.

Objectives of sales promotion
Sales promotions, as a tool of communication and promotion, fulfils the following objectives:

(a) Sales promotion helps in introducing new products.

(b) It also helps in overcoming any unique competitive situation.

(c) It is useful for unloading the accumulated inventory or stock of the goods in the market.

(d) It can be used for overcoming the seasonal slumps in sales.

(e) Sales promotion helps in getting new accounts i.e. clients or customers.

(f) It helps in retrieving the lost accounts.

(g) It acts as a support and supplement to the advertising effort.

(h) It also acts as a support and supplement to the salesmen’s efforts.

(i) It aims at persuading salesmen to sell the full line of the products and not just concentrate on a few products.

(j) It helps in persuading the dealer to buy more stock from the company i.e. to increase the size of the order.

(k) Its objective is to create a stronger and quicker response from the consumers.

(l) It also helps to boost dropping sales of any product of the company.

Sales promotion techniques
The sales promotion techniques or tools have three distinctive features:

(a) Communication- Sales promotion attracts the attention of the consumer and gives him such information that he is led to the product or service.
(b) Incentive: they give some incentive, concession, inducement or contribution that gives added value to the consumer.
(c) Invitation: They give a distinct invitation to the consumer to enter into a transaction with the dealer or the company. The various tools or techniques of sales promotion can be described below:
1. Sales promotional letters: Several companies utilize the medium of letters for sales promotion. These letters serve different purposes. Sometimes they are used to give information about the company's products, at other times; they are used as reminders for the customers to continue to buy a particular brand. Some letters seek information from the customers regarding various aspects of their purchases.
2. Point of purchase (POP) displays: This is the most widely used sales promotional tool. Various kinds of display materials like posters, danglers, stickers, mobile wobblers and streamers are used at the retailer's outlet to induce customers to purchases. POP displays are generally useful in the case of products like liquors for which advertising is prohibited. At times, to enhance the display effect, manufacturers use different approaches such as illuminated designs and motion displays etc. companies use the technique of mass display within the limited space available in the retail store. The stocks are artistically arranged to gain maximum attention.
Displays of various types such as window displays, wall display, counter displays or floor displays are also used. The retailer's role is very important from the point of view of displays.

3. Customer service programmes: At times, the company organizes and conducts customer service programmes or camps with the aim of providing service to the customers at different points of purchase.

4. Demonstrations: Companies do product demonstrations for sales promotion, especially when they are introducing a new product in the market. Demonstrations are usually used for low unit price products like washing powder or high unit price products like washing machines and vacuum cleaners. Demonstrations may be organized at the retail stores by the company salesmen for the benefit of retailers as well as consumers. Door to door demonstrations and institutional demonstrations are also considered to be highly specialized form of sales promotion. Sometimes demonstrations are organized for influential people such as journalists, media men, opinion leaders, etc, who are invited to see the demonstration of the product. Demonstration is a good sales promotion technique which involves the cooperation of the sales representatives and the prospective customers.

5. Free samples: Free samples of the product are offered to persuade the consumers to try them out. By offering free samples to a large section of the new market, a company seeks to gain an entry into that market. For using this tool, the product should be of low cost and subject to frequent purchases. e.g., soaps, detergents, toothpastes, tea, etc.

6. Contests: Contests of various kinds are also commonly used as sales promotion tool. There are dealer contests which are exclusively for the dealers of the company and consumer contests for the general public. Companies spend a large amount of money on these contests because they have to be publicized widely and the expenditure on the attractive prizes is also to be covered.
Consumer contests may be in the form of quiz contests, beauty contests, scooter and car rallies, lucky draws, suggesting a brand name, writing a slogan, suggesting a logo, etc. The consumer has to be induced to get interested in the contest and purchase the product associated with it.

7. Premiums and free offers, price-off schemes and instalment offers: In the Indian markets today, these tools are being used extensively by different companies. A premium offer is given for a particular product and along with it is a free offer of another product to be given free to anybody buying the product, for e.g., an Arial bar free with a pack of Arial washing powder. Price-off schemes are also introduced by different companies from time to time. e.g. Kelvinator and Allwyn refrigerators, Hawkins pressure cooker, etc. Other companies give the instalment offer to the consumer for buying their product which is usually high priced and give the consumers the facility of paying a certain amount of money as down payment and pay the balance amount in a specified number of equal instalments. This sales promotion measure has been found to be very effective.
8. Coupons: These are certificates which promise price reduction to consumer on specified items. Coupons generally perform specific functions for the company. Firstly, they encourage the consumers to make use of the bargain offered and secondly they also serve as an inducement to the channel members for stocking the items of that company. Coupons may be distributed through newspaper and magazine advertisements or by direct mail or along with the package consisting the product. Coupons are generally used while introducing a new product or for strengthening the image of the product.
9. Catalogues: Catalogues carry essential information on the products offered by the company. A well-designed catalogue carries complete information relating to the products, their pictures, size specifications, colours, packing, uses and prices. The products are listed and indexed properly in order to facilitate order booking and processing.
10. Trade fairs and exhibitions: These tools are based on the premise that 'seeing is believing' and are extensively used. These fairs and exhibitions provide the companies with the opportunity of introducing and displaying their products. This brings the company's products and consumers in direct contact with each other. Trade fairs and exhibitions are very effective in international marketing and a lot of trade orders and enquiries are generated at the international level also.
11. Gifts: Companies also distribute gifts to people like customers, dealers and other influential people. These gifts may include pens, pencils, calendars, diaries, decoration pieces, etc. The gifts generally carry the company's name and logo. These gifts are intended to create goodwill amongst the various people towards the company and indirectly help in furthering the sales of the company.
12. Sponsoring major national and international events: Companies associate themselves with the major national and international events such as sports like cricket, hockey, tennis, golf, etc. The business houses generally sponsor the event as a whole or may associate themselves with specific aspects of the events. e.g., companies of soft drinks, cigarette manufacturers, etc. The purpose behind sponsoring is to remain a part of the news and got the best of sales promotional efforts in the form of benefits.

Personal selling
It is essential to communicate, persuade and motivate the target customers in order to make the product and price known and acceptable to the target consumers. For this, personal selling is adopted as an effective tool. The company's sales persons who may be referred to as the salesmen or sales representatives or sales executives, who are on its payroll, communicate with the target consumers, so as to make an order of sale and motivate them to positively respond to it and finally to clinch the deal. According to the American Marketing Association, “Personal selling can be defined as an oral presentation, in conversation with one or more prospective purchasers, for the purpose of making sales”. According to F.E. Webster, Jr. "Personal selling is a highly distinctive form of promotion. Like other forms of promotion, personal selling is basically a method of communication, but unlike others it is a two-way, rather than unidirectional communication. It involves not only the individual but social behaviour. Each of the persons in face-to-face contact, salesman and prospect influences the other. The outcome of each sales situation depends heavily upon the success that both the parties experience in communicating with each other and reaching a common understanding of needs and goals. The main task involved in personal selling is to match specific products with specific consumers so as to secure transfer of ownership". According to K.B. Hass- "Personal selling basically consists of the interpretation of product and service features in terms of benefits and advantages to the buyer and of persuading the buyers to buy the right kind and quantity of the product."

Objectives of personal selling

Personal selling helps in the following major areas:

1. To improve the sales volume of the company's different products.

2. To ensure the proper mix of products in the total sales volume.

3. To increase the market share of the company.

4. To increase the profits of the company.

5. To reduce the overall selling expenses.

6. To gain new accounts and improve business growth.
7. It helps in the appointment of dealers and expansion of the distribution channel.

8. To secure channel members co-operation in stocking as well as selling the products of the company.

9. To achieve the desired proportion of cash and credit sales.

10. To provide pre-sale and after-sale services.

11. To train the dealers and customers.

12. To assist and support other promotional measures.

13. To help in collecting the amounts due from the market.

14. To help in gathering and reporting marketing intelligence.

4.6. Public relations
Public relations are a very important and resourceful tool of the promotion mix. According to Kotler, “Public relations induces a variety of programmes designed to improve, maintain or protect a company of product image. e.g., through press conferences, seminars, speeches, annual reports, charitable donations, etc.” The major tools in public relations are
(i) Publications: annual reports, brochures, articles, company magazines and newsletters.

(ii) Events: special events like news conference, anniversary celebration of the company, sponsoring sports and cultural events.
(iii) News: the companies find and create favourable news
(iv) Speeches: by company executives at trade associations, sales meetings, etc.
(v) Identity media: companies also use such devices as company logos, stationery, business cards, uniforms, etc., which help in identifying the company. Public relations (PR) are another important marketing tool, which until recently, was treated as a marketing step-child. The PR department is typically located at corporate headquarters; and their staffs is so busy dealing with various publics- stockholders, employees, legislators, community leaders- that PR support for product marketing objective tends to be neglected.
Objectives of public relations
1. Social awareness can be created through the PR promotion plan, regarding a product, service, person, organizer, etc.
2. It helps to build credibility by communicating the message for example, in editorials of newspapers, etc.
3. It assists in the launch of new products.
4. It assists in repositioning of a product.
5. It helps in building up consumer interest in a particular product category.
6. It also helps in influencing the specific target groups.
7. Public relations help to define products that have faced problems or complaints from the public.
8. It helps to build the corporate image in such a way that it projects favourably on its products.
PR department perform following activities:
 Press relations- The aim of press relations is to place newsworthy information into the news media to attract attention to a person, product or service.
Corporate communication- This activity covers internal and external communications and promotes understanding of the organization.

Lobbying- It involves dealing with legislators and government officials to promote or defeat legislation and regulation.

Counselling- Counselling involves advising management about public issues and company position and image.