WELCOME TO THE PRESENTATION

ON PROMOTION MIX

BYDURGA PRASAD NAVULLA.

Asst. ProfessorDepartment of Management Studies

Sasi Institute of Technology & Engineering

SALES FORCE MANAGEMENT/ 4th PPROMOTION MIX

Promotion is one of the market mix elements, and a term used frequently in marketing. The specification of five promotional mix or promotional plan. These elements are personal selling, advertising, sales promotion, direct marketing, and publicity

Advertising - Presentation and promotion of ideas, goods, or services by an identified sponsor. Examples: Print ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays, posters, motion pictures, Web pages, banner ads, and emails.

Personal selling - A process of helping and persuading one or more prospects to purchase a good or service or to act on any idea through the use of an oral presentation. Examples: Sales presentations, sales meetings, sales training and incentive programs for intermediary salespeople, samples, and telemarketing. Can be face-to-face selling or via telephone

Sales promotion - Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples: Coupons, sweepstakes, contests, product samples, rebates, tie-ins, self-liquidating premiums, trade shows, trade-ins, and exhibitions

Public relations - Paid intimate stimulation of supply for a product, service, or business unit by planting significant news about it or a favorable presentation of it in the media. Examples: Newspaper and magazine articles/reports, TVs and radio presentations, charitable contributions, speeches, issue advertising, and seminars.

Direct Marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertising.

Corporate image Corporate image may also be considered as the sixth aspect of promotion mix. The image of an organization is a crucial point in marketing. If the reputation of a company is bad, consumers are less willing to buy a product from this company as they would have been, if the company had a good image.

Sponsorship is sometimes added as an seventh aspect

SALES FORCE MANAGEMENT/ 4th PPROMOTION MIX

Promotion is one of the market mix elements, and a term used frequently in marketing. The specification of five promotional mix or promotional plan. These elements are personal selling, advertising, sales promotion, direct marketing, and publicityPersonal SellingSelling through a person to person communication process. This direct and inter personal communication gives immediate feedback from the receiver. It plays an important role in industrial firms. Personal selling is vary from firm to firm depending on following1. Nature of the product or service2. Size of the organisation3. Type of industry

Personal SellingDefinitions:

“Personal selling consists of contacting prospective buyers of product personally”

----Richard

“The oral presentation in a coversaton with one or more prospective purchasers for the purpose of making sales” ---- Americal Marketing Association

Stages in Personal SellingProvider stage (Providing products to

buyers)Persuade stage (Make people to beleave

the sellers)Propector stage (Reacting the buyers

who are interest to sellers offering)Problem solver stage (customersSolve

the problems of buyers and seller)Procreator stage (match the needs of s)

Characteristic of Personal SellingSellers & Buyers in direct contact with

one anotherPersonal selling involves conversation

b/n sellers and prospective buyers regarding quality, price, use etc

Personal selling involves the sale of goods and services personally

In personal selling, sellers wants to convince the buyers about the goods and services which he wants to sell

Personal selling is the best means of two –way communication continously b/n the enterprise andits customers

Steps in Personal Selling(Searching for new customer and find the Ability of the customers)

(Determine what the customer needs and wants)

(Possible solution to the problem of them)

(Demonstration on capabilities of the firm and its product)

(Make customers to buy the products)

(Maintaing customer loyalty, generating repeat sales, and getting the opportunity to cross sales)

Pros and Cons of Personal Selling

Two-Way communication

Complete messageLack of distractionInvolvement in

decision makingSources of

research information

High CostPoor reach of manyEthical ProblemsConflictsInconsistent

message

Pros Cons

SALES PROMOTIONSales promotion refers to those activites

other then personal selling, advertisement and publicity that stimulate consumers purchasing and dealer effectiveness, such as display shows and exhibitions, demonstrations and various non recurrent selling efforts not in ordinary routine

Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples: Coupons, sweepstakes, contests, product samples, rebates, premiums, trade shows, trade-ins, and exhibitions

SALES PROMOTIONDefinitions:

“sales promotion is a marketing discipline that utilizes a variety of incentive techniques to structure sales related programs targeted to consumers, trade, and sales levels that generatea specific measurable action or response for a product or service”

------- Council of Sales Promotion

“Materials that act as a direct inducement, offering added value, or incentive for the product, to resellers, sales persons or consumers. Designed for immediate (short term) increase in product sales”.

“A direct induscement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary obejective of creating an immediate sale”

OBJECTIVES SALES PROMOTIONObtaing trail and repurchaseIncreaseing consumtion of an established brandDefending current customers and increasing

short term profitsTargeting current customersTargeting a specific market segmentEnhancing advertising and marketing efforts

Reason for Growth of Sales PromotionIncreasing Competition

Customers have become more price sensitiveConsumer AcceptanceAdvertising has become more expensive and

less effectiveSales promotion geneally create an immediate

positive impact on salesSales promotion speciality are availableTrade has become more standard

SALES PROMOTION TECHNIQUES

SALES PROMOTION TECHNIQUES

Samples:A free sample is a portion of a product given to consumers at no cost for their trial with the aim of driving product adoption.Ex: Clinic+ Provides its shampoos in big bazar and attached with times of India

SALES PROMOTION TECHNIQUES

Coupons:Usually reduce the purchase price or offered as cash. A coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product.

SALES PROMOTION TECHNIQUES

Premiums(Gifts):Premiums are prizes, gifts, or other special offers consumer receive when purchasing products. Such premiums are gifts individuals receive for buying a product.

SALES PROMOTION TECHNIQUES

Contests:Contests and sweepstakes are two forms of sales promotions which attract consumers by offering them the chance to win a valuable prize. Contests require skill; sweepstakes generally only reward luck.

Contests normally require the participant to perform some type of activity and the winner is selected based on who performs the best or provides the most correct answers

Sweepstakes entice consumers to submit free entries into drawings of chance (not skill) that are tied to the product or service wherein the featured prizes are given away by sponsoring companies

SALES PROMOTION TECHNIQUES

Contests:

SALES PROMOTION TECHNIQUESContests:

SALES PROMOTION TECHNIQUESRefunds & Rebates:A rebate is an amount paid by way of reduction, return, or refund on what has already been paid or contributed.Manufacturer or sales-promotion strategy that promises to refund part of the retail sales price to the consumer upon receipt of proof of purchase; also called rebate offer.

SALES PROMOTION TECHNIQUES

Bonus Packs:Bonus packs offers the consumer an extra amount of a product at the regular price by providing larger containers or extra units. Ex: Colgate offers 25gm extra on their 200 gm pack at the same price

SALES PROMOTION TECHNIQUES

Price-off deals:This is the direct price-off deal offered by manufacturer by reducing the price of a brand. Price-off reductions are typically offered right on the package through specially marked price packs. Ex: Nature fresh edible oil 1 litre pack is available at Rs. 55/- where as the MRP is Rs.70/-

SALES PROMOTION TECHNIQUES

Frequency Programs:One of the fastest growing areas of sales promotion is the use of frequency programs also known as continuity or loyality programs. Consumer get points on every purchase and get the offers from the companies as points accumulate. Airline companies introduced frequently flyer programs, where the customer gets points on every trip and gets discount in the form of extra miles or in the for of price reductions.

SALES PROMOTION TECHNIQUES

Event Marketing:Event Marketing is a type of promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experience for consumer and promoting a product or service

SALES PROMOTION TECHNIQUESTrade oriented sales promotion techniques:These techniques are designed to get the trade support. These are targeted to merketing intermediaties such as wholesalers and retailers. The objectives of this program are1. Obtaining distribution and support for new

products2. Maintaining support for established brands3. Encouranging retailers to display established

brands and 4. Building retail inventories

Types:a) Contests and incentivesb) Trade allowancesc) Displays and Point of Purhcase

Materials(POP)d) Sales taning Programse) Trade Showsf) Cooperative Advertising

SALES PROMOTION TECHNIQUESContests and incentives:Manufacturere may develop contests or special incentive programs to stimulate greater selling effort and support from resellers. Contests or incentive programs can be directed toward managers, sales people who work for a wholesaler, distributor as well as retailer

These programs may involve cash payments made directly to the retailer’s or wholesaler’s sales staff to encourage them to promote and sell a manufactures product

SALES PROMOTION TECHNIQUESTrade allowances:A discount or deal offered to retailers or wholesalers to encourage them to stock, promote, or display the manufacturer’s products. These allowances may be in the form of buying allowances, promotional or display allowances, and slotting allowances. Buying allowances are offered to resellers in the form of price discount on the goods ordered during a fixed period. Retailers get promotional allowances for merchandising support. Slotting allowances also known as stocking allowances, or introductory allowances are fees received by retailers for give a slot to accommodate the new product.

SALES PROMOTION TECHNIQUESDisplays and Point of Purhcase Materials(POP):Point of purchase displays are an important promotional tool because they are more effective in store merchandising efforts. These POP materials include banners, posters, shelf cards, motion pieces, stand up racks.

Sales Traning Programs:Another form of manufacturer sponsored promotional assistance is conducting sales taning programs for reseller personnel. Many products sold at the retail shops require knowledge sales people who can provide consumers with information about the features, benefits, and advantages of various brands and models

SALES PROMOTION TECHNIQUESTrade Shos:A trade show is a forum where manufacturers can displays their products to current as well as prospective buyers. In many industries, trade shows, exhibitions are a major opportunity to display products and interact with the customers

Cooperative Advertising:In cooperative advertsing the cost of advertising is shared by more than one party. The most common form of cooperative advertsing is the trade oriented form. Vertical cooperative advertsing, in which a manufacturer pays for a portion of the advertising and the retailer shares the other portion.

Distribution Channels

DefinitionsComponentsFuntionsNature and importance of channels Channel behavior & organization Channel design decisions Channel Management decisions

Distribution Channels

Definitions:“ A channel of distribution or marketing channel is the structure of intra company organisation units and extra company agents & dealers, wholesale and retail through which a commodity, product or service is marketed”

----American Marketing Association“Distribution Channel is a set of interdependent organisation involved in the process of making a product or service available for use or comsumtion by consumer or business use”.

----Phillip KotlerProducers product fewer products in large quantities and customers want more product in smaller quantiites and broader assortments wanted by the customers and break them into smaller and broader assortments wanted by the customers

Distribution Channel for Consumer Marketing ChannelDistribution Channel for Industrial Goods

Information(Customers, Competitors and others)

PromotionContact(Finding and communicating

with prospective buyers)MatchingTranferingOrder (Backward Communication)FinancingRisk Taking(Take the risks of carying

the work)Physical Flow(Producer to Competitors)Title

Distribution Channel Functions

Nature and importance of channels

Most businesses use third parties or intermediaries to bring their products to market.

They try to forge a "distribution channel" which can be defined as “All the organizations through which a product must pass between its point of production and consumption“

Why does a business give the job of selling its products to intermediaries?

The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried to run a sales operation itself.

Channel Design Decision

Consumer is interested in different services from the company and the channel must deliver value to the consumer. We need to identify his needs and satisfy it.

Consumer convenience, the mode of delivery, credit, service, installation, place of purchase, type of product assorment. All these factors required here.

Understand the consumer requirements:

Nature of the company, product characteristics, type of channel memebers, competitors and the prevailing business envornment should be considered by the company.

Legal conditions and macro ecnomic situation of the country should also be considered. It is based on PLC

Framing channel objectives:

After setting the channel objectives the company should identify channel alternatives in terms of types of intermediaries, number of intermediaries, and the responsibilites of each member.

Types of Intermediaries: 1. Company Sales Force 2. Manufacturing Agency

3. Industrial Distributor(region wise ex: Supermarket, mail orders, exclusive show rooms)

Number of Marketing Intermediaries: 1. Intensive Distribution (Tooth paste inMany outlets) 2. Exclusion Distribution 3. Selective Distribution

Identifying Alternatives:

Number of Marketing Intermediaries: 1. Intensive Distribution (Tooth paste inMany outlets) 2. Exclusion Distribution

Identifying Alternatives:

Number of Marketing Intermediaries: 1. Selective

Identifying Alternatives:

Evaluating the Alternatives:The company should select the best

channel which will suit its long term objectives.

It should consider the factors like probability, share of control and adaptive nature of each of the channel

Cost of transaction is low for direct marketing channels like internet and telemarketing but value addtion also very low.

With direct sales channel like company sales force the cost per transtion is high and the value addition is high

Indirect channels like retailers, distributors the cost per transaction is moderate and the value addition is also moderate.

Analyzing customer needs

(a) Lot size (b) Waiting and delivery time (c) Spatial convenience(d) Product variety (e) Service backup

Establishing channel objectives

Channel objectives should be stated in terms of targeted service output levels. Channel design must take into account the strengths and weaknesses of different types of intermediaries.

Identifying major channel alternatives

A channel alternative is described by three elements : (a)the types of available business intermediaries, (b) the number of intermediaries needed, (c) and the terms and responsibilities of each channel member. Evaluating major channel alternatives

Channel design decisions

Analyzing customer needs(a) Lot size :

In buying cars for its fleet, Hertz prefers a channel from which it can buy a large lot size.

A Household wants a channel that permits buying a lot size of one.

(b) Waiting and delivery time :

The average time customers of that channel wait for receipt of the goods. Customers increasingly prefer faster and faster delivery channels.

(c) Spatial convenience : The degree to which the marketing channel makes it easy for customers to purchase the product.

Example : Chevrolet offers greater spatial convenience than Cadillac, because there are more Chevrolet dealers.

Chevrolet’s greater market decentralization helps customers save on transportation and search costs in buying and repairing an automobile.

(d) Product variety :

The assortment breadth provided by the marketing channel.

Normally, customers prefer a greater assortment because more choices increase the chance of finding what they need.

United Spirits Limited (USL) is the largest spirits company in the world by volume, selling 114 million cases for the fiscal ending March 21, 2011.

(e) Service backup :

• The add-on services are the credit, delivery, installation, repairs and others provided by the channel. The greater the service backup, the greater the work provided by the channel.

Establishing channel objectives

Channel objectives are a part of and result from the company‘s marketingobjectives that need to be stated in terms of targeted service output levels.

Profit considerations and asset utilization must be reflected in channel objectives and the resultant design.

It should be the Endeavour of the channel members to minimize the total channel costs and still provide with the desired level of service outputs.

For example, 1. Perishable products require more direct marketing because of the dangers

associated with delays and repeated handling.2. Products requiring installation and/or maintenance services are usually sold and

maintained by the company or exclusively branches dealers.3. Custom-built machinery and specialized business forms are sold directly by

company sales representatives because middlemen lack the requisite knowledge.

Identifying major channel alternatives

Three Elements of Channel Alternatives :

1. The type of business intermediaries Company Sales force, prospects in the area, Manufacture’s Agency, Industrial Distributors..

2. The number of intermediaries Intensive Distribution & Exclusive Distribution.

3. Terms and responsibilities of each channel participants price policies, conditions of sale, territorial rights and specific service to be performed by each party.

Companies can choose from a wide variety of channels for reaching customers from sales forces to agents, distributors, dealers, direct mail, telemarketing, and the internet.

Evaluating major channel alternatives

Economic criteria :- Each channel alternative will produce a different level of sales and cost. Example : Company sales representatives are better trained to sell the company’s products.. A Sales agency could comically sell more than a company sales force due to more sales guys and better knowledge of the geographical area..

Control criteria :- Channel evolution has to include control issues. Using a sales agency poses a control problem. Example : The agent might not master the technical details of the company’s product or handle its promotion materials effectively.

Adaptive Criteria :- Each channel involves some duration of commitment and loss of flexibility. Example : A manufactures seeking a sales agency might have to offer a five year contact. During this period, other means of selling such as direct mail might become more effective, but the manufactures is not free to drop the sales agency

Channel Management decisionsChannel management warrants :

Selecting channel members : characteristics of intermediaries channel member’s length of business,

other lines carried, growth and profit record, cooperativeness and reputation.

Motivating individual channel members : Positive motivators higher margins, special deals, premium, cooperative

advertising allowances, display allowances and sales contests. Negative motivators threatening to reduce margins, to slow down

delivery, or to end the relationship altogether. Evaluating their performance over time : Evaluating standards sales quotas, average inventory levels, customer

delivery time, treatment of damaged and lost goods, cooperation in company promotion and training programs and customer service.

For example,

when IBM first introduced its PS/2 personal computers, it re-evaluated its dealers and allowed only the best ones to carry the new models .

Each IBM dealer had to submit a business plan, send a sales and service employee to IBM training classes and meet new sales quotas.

Only about two-thirds of IBM’s 2,200 dealers qualified to carry the PS/2 models.

Channel Conflicts Horizontal and Vertical

Horizontal conflicts occurs among firms at the same level of the channel.

For example, some Ford dealers in Chicago complained about other dealers in the city who stole sales from them by being too aggressive in their pricing and advertising or by selling outside their assigned territories.

Vertical conflicts refers to conflicts between different levels of the same channel.

For example, General Motors came into conflict with its dealer some years ago by trying to enforce service, pricing, and advertising policies.

Solution : “For ensuring good performance of the channel, each channel member’s role must be specified and channel conflict must be managed.”

THANKS