Agribusiness Management and Trade 3(3+0)

Lesson 15 Promotional Decisions

15.2 THE PROMOTION MIX (MARKET COMMUNICATION MIX)

Marketing communication can be defined as the process of systematic and scientific way of disseminating the relevant marketing information by a company to its target market and other public by using a mix of media. A company through its marketing communication tries to persuade its target market to purchase its products and services vis-a-vis its competitors. Since marketing communication aims at influencing the consumer behaviour in favour of the company's offerings, this is persuasive in nature. Various persuasive marketing communication tools are more commonly called 'Promotion' and constitute one of the four Ps of the marketing mix which was popularized by Jerome McCarthy in 1964. Thus marketing communication refers to the various promotion tools used by marketers to exchange persuasive messages and information to its target market and other public.

Promotion mix is the specific blend of advertising, sales promotion, public relations, and direct-marketing tools that the company uses to persuasively communicate customer value and build customer relationships. In the following sections we will discuss these tools of promotional mix.

15.3 ADVERTISING AND PUBLIC RELATIONS

Advertising is any paid for of non personal presentation and promotion of ideas, goods, or services by an identified sponsor. Public relations deals with building good relations with the company’s various publics by obtaining favourable publicity, building good corporate image, and handling or heading off unfavourable rumours, stories, and events. Key features of advertising are;

Advertising is a form of communication for which payment has been made to the media composite which has carried the communication. When there is no direct payment or no payment, it is called publicity.

• The communication process is non personal as nobody has personally conveyed the message i.e., there is no personal contact between the sender and the receiver of the message. When a retail salesman speaks to us in the sales counter, we can call it as personal selling as there is direct interaction between the receiver (buyer) and the sender( the salesman)

• The presentation of the message is for promoting ideas, places, concepts, people, parties, goods, services, organizations to create awareness and assist in the process of consumer decision making. The awareness may lead to persuasion and hence the consumer may be triggered to take a decision about buying the product or service being advertised.

• The sponsor is identified in the advertisement either in the form of the brand name or in the form of the company which produces it. This is relevant as the ownership of message communicated rests with the sender. If the sponsor is not identified then the objective of the message will be lost as the potential buyer is not sure where to search for further information in the form of enquiry or to go for a consumption choice.

15.3.1 Advertising Objective:

Advertising is a method of communication with a specified objective. The objectives of advertising as explained before are grouped as sales objectives (measured in terms of increase in sales, increase in market share and return on investment) and communication objectives. The communication objectives of advertising can be grouped into the following;

Building awareness (informing): The first task of any advertising is to make the audience appreciate that the product or service exists and to explain exactly what it is

Creating favorable attitude (persuasion): The next stage and the one that preoccupies most advertisers, is to create the favorable attitude to the brand which will eventually lead the consumers to switch their purchasing pattern

Maintenance of loyalty (reinforcement): One of the tasks which is often forgotten is that of maintaining loyalty of existing customers who will almost always represent the main source of future sales.

15.3.2 Benefits of advertising:

The benefits of the advertising to different stake holders are given below;

Benefits to Producers: Advertising is beneficial to producers in the following

It leads to an increase in sales volume. This increase in sales volume leads to a higher rate of production, which in turn may lead to economies of scale resulting in a lower cost per unit. Further, in the absence of advertising, the company would be spending more money on other expensive means of promotions such as personal selling and sales promotion.

Advertising helps in easy introduction of products in the market.

It helps to establish direct contact between manufacturers and customers

Benefits to the Middlemen: Middlemen, particularly wholesalers and retailers derive the following benefits from advertising:

• It is easier for them to sell products because consumers are aware of the product and its quality through advertising.

• The product reputation which is created through advertising is shared by wholesalers and retailers alike.

• It enables wholesalers and retailers to acquire product information.

Benefits to Customers: Advertising is beneficial to customers in the following

• Advertising stresses quality and very often prices. This forms an indirect guarantee to customers. Furthermore large scale production assured by advertising enables the seller to reduce the production cost and sell the product at a lower price.

• It helps the customers to know where and when the products are available.

• This reduces their shopping time

• It provides an opportunity for customer to compare the merits and demerits of various substitute products.Modem advertisements are highly informative. It is perhaps the only means through which consumers come to know about varied and new uses of products.

• Modem advertisements are highly informative. It is perhaps the only means through which consumers come to know about varied and new uses of products.

 Benefits to the Community: Community as a whole also derives the following benefits:

• Advertising leads to large-scale production, thus creating more employment opportunities. It assures employment opportunities to advertising professionals i.e. artists, copywriters etc.

• It starts a process of creating more wants and their satisfaction, resulting in a higher standard of living. Advertising has made more popular and universal a number of inventions such as automobiles, radios, TVs and other household appliances.

• Newspapers would not have become so cheap and popular if there had been no advertisements. It is the advertising revenue that makes newspapers thrives.

• Advertising need not necessarily lead to a monopoly. It is quite possible that new entrants with better and newer products have a better chance of acceptance by the consumers.

15.4  PERSONAL SELLING

In contrast to advertising and publicity, which use impersonal methods of communication, personal selling makes use of direct personal communications to influence the target customers. Personal selling is a highly distinctive method of promotion, and makes use of oral presentation in conversation with existing and potential customers, for the purpose of making a sale. Personal selling may be defined as the personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.

15.4.1 Situations conducive for personal selling:

In certain marketing situations, personal selling provides ans an efficient solution to most of the selling problems. The following are the situations where the personal selling in a company will be more relevant.

Product situations:

• A product of a high unit value like photocopying machine, computers etc.

• A product is in the introductory state of its life cycle and requires creation of core demand

• A product requires personal attention to match specific consumer needs e.g. insurance policy

• A product requires demonstration, e.g. most of the industrial products

• A product requires after-sales service

• A product has no brand loyalty or very poor brand loyalty

Market situations:

• Company is selling to a small number of large-size buyers

• Company sells in a small-local market or in government or institutional market

• When desired middlemen are not available

• An indirect channel is used for selling to merchant-middlemen only.

Company Situations:

• When a company is not in a position to make use of suitable non-personal communication media

• When a company cannot afford to have a large budgetary outlay

Consumer behaviour

• Infrequent but valuable purchase

• When consumer wants instant answers to his questions

• Consumer requires persuasion and follow-up in face of competitive pressure.

15.5 SALES PROMOTION

Of all the methods of promotion that constitute the promotion mix, sales promotion is the only method that makes use of incentives to complete the push-pull promotional strategy of motivating the sales force, the dealer and consumer in transacting a sale. This may be defined as the short-term incentives to encourage the purchase of sale of a product or service.

15.5.1 Objectives of sales promotion

Some of the commonly attempted objectives are to;

• increase sales

• make the sale of slow-moving products faster

• stabilise a fluctuating sales pattern

• identify and attract new customers launch a new product quickly educate customers regarding product improvements

• reduce the perception of risk associated with the purchase of a product

• motivate dealers to stock and sell more (including complete product line)

• attract dealers to participate in manufacturer's dealer display and sales contests

• obtain more and better shelf space and displays

• bring more customers to dealer stores

• make goods move faster through dealers

• improve manufacturer-dealer relationship

• motivate salesforce to take the achievement higher than targets

• attract salesforce to give desired emphasis on new accounts, latent accounts,

• new products, and difficult territories

• reward salesforce for active market surveillance and for rendering superior

• customer service

• put power into the sales-presentation

• counter competitors' sales-promotion and marketing efforts

• provide punch to the company's advertising efforts

• build goodwill.

15.6 DIRECT MARKETING

It is the direct connection with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.

15.6.1 Benefits of direct marketing

Direct marketing has become the fastest-growing form of marketing. It also continues to be more web-oriented. Both buyers and sellers have advantages of direct marketing.

Benefits to Buyers:

• It is convenient, easy and private. From the comfort of their homes or offices, they can browse catalogs or company websites at any time.

• It also gives access to comparative information about companies, products and competitors. Finally, it is interactive and immediate.

Benefits to Sellers:

• It is powerful tool for building customer relationships. Using database marketing, marketers can target small groups or individual customers and promote their offers.

• It is low cost, efficient and speedy.

• It provides greater flexibility. Marketer can adjust product’s price and program.

• It gives sellers access to buyers that they could not reach through other channels.

15.6.2 Forms of direct marketing:

• Direct mail marketing: Direct marketing by sending an offer, announcement, reminder or other item to a person at a particular address. It is well suited to direct, one-to-one communication. It permits high market selectivity, can be personalise and flexible.

• Catalog marketing: Direct marketing through print, video, or electronic catalogs that are mailed to select customers, made available in stores of presented online.

• Telephone marketing: Using the telephone to sell directly to customers.

• Direct response television marketing: Direct marketing via television, including direct response television advertising and home shopping channels.