CHAPTER 3

TOOLS OF PROMOTION AND IMC

What is advertising?

- Advertising is a way to promote products or services through selected media outlets.

- The marketer pays for message placement.
- It can reach a large number of people but may not always be efficient.
- New technologies and media outlets offer more options for targeted advertising.
- Advertising is becoming more interactive and can stimulate demand.
- It has advantages and disadvantages.

Advantages of advertising:

- Advertiser controls the message.

- Effective way to create brand images and symbolic appeals.
- Can reach mass audiences.
- Increasingly able to reach mass audiences selectively.
- Low unit cost.
- Economical, efficient, and effective at reaching large audiences.
- Successful at brand maintenance and development.

Disadvantages of advertising:

- High costs of producing and running ads.

- Credibility problems and consumer skepticism (doubt).
- Clutter (disorder)
- Difficulty in determining effectiveness.

Managing the Advertising Campaign:

Step-1-Setting the Advertising Objective

- Advertising can be used for building product awareness, creating interest, providing
information, stimulating demand, and reinforcing the brand
- Advertising objectives can be classified into informing, persuading, and reminding
- Informing: telling the market about a new product, suggesting new uses, informing of a
price change, explaining how the product works, describing available services, correcting
false impressions, reducing buyers' fears, building a company image
- Persuading: building brand preferences, encouraging switching to the brand, changing
buyers' perception of product attributes, persuading buyers to purchase now or receive a
sales call
- Reminding: reminding buyers that the product may be needed in the future, keeping it in
buyers' minds during off-seasons, maintaining its top-of-mind awareness, reminding buyers
where to buy it
- Advertising is used to send a message containing information about some element of the
marketer's offerings, such as details about the product or changes that have taken place.
- Advertising can be used to communicate messages about price reductions or upcoming price
increases
- Other promotions, such as contests, can also be announced through advertising
- Advertising can help expand distribution channels and let customers know where to
purchase a product
- The advertising objective should be based on a thorough analysis of the marketing situation
Step-2-Setting the Advertising Budget
- The advertising budget reflects the amount an organization is willing to commit to achieve
its advertising objectives
- Methods for determining advertising budgets include

Organizations use different methods for determining advertising budgets:

- The Affordable method: Smaller companies set the budget at an affordable level and may
only advertise when extra funds are available.

- Arbitrary Allocation: The budget is determined by management solely on the basis of what
is felrt to be necessary, without any systematic thinking or objectives.

- Percentage of Sales: Advertising spending is set based on a percentage of previous sales or

forecasted sales, but this approach may not account for market changes.

- Competitive Parity: Companies may set their advertising budgets based on what their
competitors allocate, which can be influenced by competitive advertising information and
industry sources.

- Objective and Task Method: Setting objectives and budgeting should go together, not
separately. It's hard to decide on a budget without clear goals, and setting goals without
considering the available money doesn't make sense.

The objective and task method of budget setting uses a buildup approach consisting of three
steps:

1. Defining the communications objectives to be accomplished,

2. Determining the specific strategies and tasks needed to attain them, and
3. Estimating the costs associated with performance of these strategies and tasks. The total
budget is based on the accumulation of these costs.
Factors that should be considered setting the advertising budget

- Product Life Cycle: New products need more advertising to build awareness, while
established brands need less.
- Market Share and Consumer Base: Brands with high market share need less advertising to
maintain their position, but increasing market share requires more spending.
- Competition and Clutter: More competitors and high advertising in the market require
heavier advertising to stand out.
- Advertising Frequency: The number of times a brand's message needs to be repeated affects
the budget.
- Product Substitutability: Brands in competitive categories or offering unique benefits need
heavier advertising.

Step-3- Selecting Media for Message Delivery

- With an objective and budget in place, the advertising campaign needs to decide on the
media outlets for delivering the message.
- Different media outlets, such as print publications, radio, television, Internet, and mobile
devices, have unique characteristics and advantages.
- The choice of media outlet affects the type of message that can be created and how often it
can be delivered.
- Selecting the right media outlet is important for the success of a promotion and requires
balancing the pros and cons of each option.
- Advances in communication technology, especially the Internet, have led to a growing
number of media outlets that marketers need to be aware of. The following advertising
media:

1. Television 5. Direct Mail 9. Sponsorships

2. Radio 6. Signage 10. Other Media

Outlets
3. Print Publications 7. Product Placement

4. Internet 8. Mobile Devices

The characteristics by which different media outlets can be assessed include the following
seven factors:

1. Creative Options:
- Different advertising media can appeal to different senses, like sight, sound, smell, and touch.
- Some media outlets can only deliver messages using one sense, like radio only using sound
or billboards only using visuals.
- Certain media may have restrictions on the type of ads they can accept, like some websites
only allowing specific types of ads.

2. Creative Costs:
- The type of media used affects the cost of creating the advertisement.
- Media that deliver multi-sensory experiences (like TV and Internet) can be more expensive to
create ads for.
- Some media outlets have high production standards for ads, which can be costly for small
businesses.
- Creating simple text-only Internet ads is usually less expensive.

3. Market Reach of Media:

- Market reach measures how many customers within a target market are exposed to an ad.
- Some forms of advertising, like TV, have a wide reach, while others, like a single roadside
billboard, have limited reach.
- Market reach can be measured by the channels served and the geographic scope of a media
outlet.

4. Message Placement Cost:

- Besides creative development, another major expense in advertising is the placement of ads,
such as buying ad time or space from media outlets.

5. Length of Exposure:

- Some products need more time to explain their features and benefits
- Short exposure works for simple products like snack foods
- Magazines allow longer exposure as they can be kept by the audience
- Television and radio ads have limited exposure time

6. Advertising Clutter:

- Media outlets often include many ads to increase revenue

- This creates advertising clutter, making it hard for ads to stand out
- Advertisers may need to run more ads to break through the clutter
- Online downloads and podcasts may have less clutter, making ads more noticeable

7. Response Tracking:

- New technologies make it easier to track audience response to ads

- Internet-based media offer effective tracking methods
- Other outlets like mail advertising and TV infomercials also provide useful measures of
audience reaction

Step-4-Creating an Advertising Message

When creating an advertising message the marketer must consider such issues as:
- General Message Factors
- Message Structure
- Message Testing

Advertising message structure

The Appeal

- This grabs the attention of the viewer/reader

- It can be emotional, funny, scary, sexual etc.

Value Proposition

- Why should the customer care about the product?

- What benefits do they get from it?

Slogan

- A short, catchy phrase or words

- Repeated across different ads

- Helps customers remember the brand

Step-5-Evaluating Advertising Campaign Results

- In order to evaluate an advertising campaign it is necessary for two measures to take place.
First, there must be a pre-campaign or pre-test measure that evaluates conditions prior to
campaign implementation
- A second, post-campaign or post-test measure is undertaken to see if there is an increase in
awareness. Such pre and post testing can be done no matter what the objective including
measuring.

DIRECT MARKETING

Direct marketing is a system of marketing by which organizations communicate directly with

target customers to generate a response or transaction.

The Growth of Direct Marketing

- Direct marketing has been around since the 15th century

- Major growth due to U.S. Postal Service and development of catalogs
- Factors contributing to growth include:
- Consumer credit cards
- Direct-marketing syndicates
- Changing structure of American society and market
- Technological advances
 - Miscellaneous factors
- Over 110 million TV homes receive home shopping programs
- Direct marketing is used by many companies and has potential for success in the
future
- It is an integral part of the IMC program for many organizations

The Role of Direct Marketing in the IMC Program

- Combining Direct Marketing with Advertising

- Combining Direct Marketing with Public Relations
- Combining Direct Marketing with Personal Selling
- Combining Direct Marketing with Sales Promotions:
- Combining Direct Marketing with Support Media

Tools of Direct Marketing

- Direct Mail: Unsolicited mail, often called "junk mail," which continues to be a major
advertising medium with billions of dollars spent on it.
- Catalogs: Catalog companies have seen significant growth in the number of catalogs mailed
and shoppers, with sales expected to reach billions of dollars.
- Broadcast Media: Direct marketing through TV has been very successful, generating billions
in sales, but growth is expected to slow down.
- Infomercials: Long commercials ranging from 30 to 60 minutes designed to look like regular
TV shows, allowing consumers to place orders through toll-free or 900 numbers.
- TV Advertorials: Advertisers creating TV shows to showcase their products, with Peugeot
being the first auto manufacturer to use this method.
- Teleshopping: Increased use of toll-free numbers and credit cards has led to more people
shopping via TV for various products.
- Print Media: Magazines and newspapers are difficult media for direct marketing due to
competition and high costs.
- Telemarketing: Rapidly increasing use of sales by telephone by both profit and charitable
organizations.
- Electronic Teleshopping: Online shopping and information retrieval accessed through
personal computers, becoming an important element for traditional direct marketers.
- Direct Selling: Personal presentation, demonstration, and sales of products and services to
consumers in their homes, with three forms including repetitive person-to-person selling.

The three forms of direct selling are

1. Repetitive person-to-person selling. The salesperson visits the buyer’s home, job site, or
other location to sell frequently purchased products or services
2. Non-repetitive person-to-person selling. The salesperson visits the buyer’s home, job site,
or other location to sell infrequently purchased products or services (for example,
Encyclopedia Britannica).
 3. Party plans. The salesperson offers products or services to groups of people through home
or office parties and demonstrations (for example, Party Lite Gifts)

Advantages of Direct Marketing

- Selective reach: Reaches a large number of people and reduces waste coverage by targeting
specific groups.
- Segmentation capabilities: Marketers can target specific groups based on recent purchases,
demographics, and more.
- Frequency: Can build frequency levels through repeat times in direct-response TV
advertising.
- Flexibility: Can take on creative forms such as sending TV sets or detailed direct-mail pieces.
- Timing: Can be more timely than other media, allowing for quick distribution to the target
population.
- Personalization: Can personalize messages, addressing specific needs and offering solutions.
- Costs: Can specifically target the audience, reducing actual costs, and generating inexpensive
sales.
- Measures of effectiveness: Can measure the effectiveness of its campaigns with immediate
and accurate feedback.

Disadvantages of direct marketing:

-Image factors: Seen as "junk mail" promoting low-quality products. People dislike unsolicited
solicitations through mail, email, telemarketing etc.
-Accuracy: Lists used for targeting may not be up-to-date if people move or change details. This
reduces the effectiveness of targeting.
-Limited content support: Direct ads don't benefit from the surrounding editorial content of
magazines or websites which can help set the mood.
-Rising costs: Increases in postal rates directly impact profits for direct mail campaigns. High
volumes are needed to offset increased mailing costs.

SALES PROMOTION

Nature of Sales Promotion

- Sales promotion is a marketing strategy used along with advertising, public relations,
and personal selling.
- It aims to stimulate trial, increase demand, or improve product quality for a limited time
period.
- Common types include samples, coupons, sweepstakes, contests, displays, trade shows,
price discounts, premiums, and rebates.
- Sales promotion targets consumers, resellers, and sales force to provide extra incentive to
purchase a brand over others.
- It increases value and/or lowers price temporarily to influence purchasing.
- Works best for impulse purchases judged at point of sale, not complex items needing
demonstration.
 - Effectiveness depends on budget, product life cycle stage, competition level, promotion
target, and product type.
- Aim is to persuade a target market to respond or undertake an action by offering
something of value as a reward.
- Distinguishes from advertising in using short-term techniques and offering tangible
rewards for specific actions.
- Sales promotions and advertising are often confused because they can use similar
delivery methods like TV.
- Even if a promotion uses TV to deliver its message, what matters is the content of the
message.

There are two main factors that distinguish sales promotions from advertising:

1. Sales promotions involve a short-term value proposition, like a contest with a prize
that is only available for a limited time.

2. To get the value, the customer must perform some activity, like entering a contest.
- Having a time limit and requiring customer action are hallmarks of a sales promotion.
- Both consumer companies and business-to-business companies use sales promotions.
- In the US, spending on sales promotions is actually estimated to be higher than
spending on advertising.

The Growth of sales promotion

Sales promotion has grown in recent years due to several factors:

- Consumers now consider sales promotions as part of their purchasing decisions. It

provides incentives to buy a particular brand.
- Companies focus more on short-term results. Sales promotions provide an immediate
boost to sales.
- Technology allows companies to get fast feedback on promotion results like redemption
rates and sales volumes.
- Large retailers have gained power over manufacturers. Manufacturers use sales
promotions to incentivize retailers to carry their products.

Objectives of sales promotions:

- Build product awareness by exposing customers to products and collecting customer

information.
- Create interest in products by boosting customer traffic and trials.
- Provide limited product information through trials or online services.
- Stimulate demand by convincing customers to purchase through discounts and deals.
- Reinforce brands by rewarding loyal customers with promotions.
Types of Sales Promotion
Consumer Market Directed

- Promotions aimed directly at the end consumers who purchase the products. Things like
coupons, rebates, contests etc.

Trade Market Directed

- Promotions targeted at partners in the distribution channel like retailers. Things like
discounts, allowances, buy one get one offers etc.
- Used to get retailers to carry products and strengthen the relationship.

Business-to-Business Market Directed

- Promotions targeted at other businesses that purchase products, not end consumers.
- Used in industries where businesses buy from other businesses.

Consumer Sales Promotion

- Short-term promotions directly linked to purchasing to induce sales.

- Things that reduce the price or add value like coupons, rebates, bonus packs, contests
etc.
- Goal is to enhance the value of a purchase for the consumer.

12 types of consumer sales promotions:

Coupons

- Offer price savings when redeemed during purchase

- Require consumer effort to obtain and present during purchase
- (e.g., clip from newspaper)

Rebates (refund)

- Offer value after purchase by lowering cost

- Require consumer effort to submit for rebate
- For instance, rebates are a popular promotion for automobiles and computer software
where large amounts of money may be returned to the customer.

Promotional Pricing

- Short-term price reduction to increase demand

-Trade-In

- Allow exchange of old product for lower new product price

Loyalty Programs
 - Reward frequent purchases or activity with discounts, free products

Samples and free trials

- Allow customers to try products without buying them first. This helps get customers to
try new products.

Sampling

- Involves giving out small amounts of a product for free or for a low cost. This lets
customers experience the benefits of the product.
- Popular sampling methods include mailing samples, distributing door-to-door, and
giving samples with advertising.
- Samples can also be handed out directly through stores, media like magazines, or by
people in public places.
- Some companies specialize in putting together sample packages for certain groups like
new parents or students.

Free product

- Promotions offer extra quantities of a product for free if a purchase is made. For
example, "buy one get one free" or value packs with more products for the same price.

Premiums

- Premiums are incentives given to encourage buying a product. They can be free gifts or
discounted items.
- Direct premiums are given free at purchase. Examples include toys in cereal boxes.

Types of direct premiums:

- Traffic builders attract customers to stores, like a free tool for visiting a store opening.

- Door openers are for people at home, like a free clock for letting an insurance agent in.

- Referral premiums reward referring the seller to others.

- Mail premiums require a customer action like mailing in proofs of purchase and a fee to get the
premium.

Contests award

- Value to winners based on skills compared to others, judged by a panel.

- Sweepstakes winners are random, by chance.
- Some require a purchase for entry.
- Games are like contests and sweepstakes but may require a purchase to participate.

Demonstrations
 - Show how products are used, in person or online. They are expensive to produce due to
demonstrator costs and venue costs.

Here are the key points in bullet points:

Personal Appearances

- Having a celebrity, author, sports figure appear in person to promote a brand/product

- Generates customer traffic to physical stores/locations
- However, it can be expensive to pay appearance fees

Continuity Programs

- Reward customers for ongoing/repeated purchases over time

- Examples: trading stamps programs, frequent flyer miles, hotel loyalty programs
- Customers get future incentives/premiums for continuing to buy the brand
- Keeps customers loyal and using the brand long-term
- Reduces threat of competitors by rewarding existing customers
- Can help decide between similar competing brands that offer continuity programs

Trade Sales Promotions

Trade sales promotions target retailers and wholesalers in the distribution channel. They aim to
encourage channel members to purchase and promote a product to their customers.

- For example, a trade promotion may encourage retailers to instruct their employees to promote
a brand over competitors.
- Trade promotions help "push" a product through the channel by motivating channel members.
- With limited shelf space, spending on trade promotion is almost equal to spending on
consumer promotions.
- Trade promotions aimed at channel partners use similar designs as consumer promotions, like
promotional pricing, contests and free product samples.
- They aim to build relationships with retailers and wholesalers in the distribution channel.

In addition to these, several other promotional approaches are specifically designed to appeal to
trade partners. These approaches include

Point-of-Purchase Displays

- Displays placed in retail stores to prominently present products, often in high traffic areas
- Come in styles like standing alone in aisles or at end caps
- Can significantly increase sales compared to normal shelf placement
- Marketers may lower product costs for displays as retailer incentive

Advertising Support Programs

- Marketers provide financial assistance for retailer advertising

- Funds used by retailers to include products in their own ads
- Marketers may pay full costs or provide partial "co-op advertising funds"
 Short Term Trade Allowances

- Retailers get price breaks for stocking products

- Incentive to promote products through shelf space, ads, sales staff
- Allowances as price reductions or buy-back guarantees if unsold

Sales Incentives or "Push Money"

- Incentives for reseller's sales staff to help sell more products

- Cash or prizes for meeting sales requirements

Promotional Products

- Free branded items like calendars, cups, pens as reminders

- Serve as advertisements that remind of actual product

Trade Shows

- Industry events that bring buyers and sellers together

- Opportunity for marketers to reach many potential buyers
- Marketers set up displays, from tables to large custom booths

Business-to-Business Sales Promotions

- Price-reductions: Reducing the price of the product for a limited time to stimulate sales.
- Free product: Giving away products free of cost with another product purchase to
incentivize sales.
- Trade-in: Allowing customers to exchange their old product for discounts/credits towards
purchasing new products.
- Promotional products: Giving away branded items like pens, mugs, bags etc. with company
logo to promote awareness.
- Trade shows: Organizing events to bring buyers and sellers together under one roof. Most
popular sales promotion for B2B companies as it allows them to reach many potential
customers at once.

Of these, trade shows are the most widely used sales promotion technique for B2B marketers
according to the passage.

PUBLIC RELATIONS

- Public relations are a management function that involves evaluating public attitudes and
identifying how company policies align with public interests.
- The goal is to execute a communication program to earn public understanding and
acceptance.
- It's a longer-term process that continues over months or years, not just individual
promotional activities.
 Integrating PR into the Promotional Mix

- PR can involve some promotional elements like press releases, events, and advertising, but
uses them differently to communicate about the company rather than just sell products.
- PR can be integrated into the promotional mix in different ways, either as the dominant
function, equal to marketing, or performing similar roles.
- As part of IMC, PR still has traditional responsibilities like assessing attitudes and building a
favorable image, in addition to directly promoting products/services.

Marketing Public Relations (MPR) Functions

- Building excitement before advertising by announcing new products through publicity. This
increases the effectiveness of ads.
- Creating publicity around advertising campaigns themselves when there is no new product
news.
- Introducing new products with little or no advertising by relying on PR. Many companies
successfully use this strategy.
- Providing value-added customer services through hotlines, recipes on websites, etc. This
builds the brand.
- Building strong brand loyalty through competitions and prizes for customers like the
Pillsbury Bake-Off.
- Influencing opinion leaders by providing them information.
- Defending and promoting products to give consumers a reason to buy. PR campaigns can
boost the corporate image and increase sales.
- MPR adds value to integrated marketing by supporting objectives like awareness, education,
trust-building, and motivating purchase. It complements other marketing elements.

The process of public relations

Determining and Evaluating Public Attitudes

- Companies need to understand public attitudes as it can affect sales if people boycott the
brand
- Negative attitudes can also hurt employee morale and the working environment

Establishing a PR Plan

- Some companies only do basic PR like press releases, but it needs to be more formalized
- A PR plan should be developed with clear objectives and integrated into the overall
marketing plan

Developing and Executing the PR Program

- The PR program may need to go beyond just promotion

- It should define the target market, objectives, messages and delivery channels in more detail

Determining relevant target audiences

- Internal audiences: employees, stockholders, investors, local community, suppliers, current
customers
- External audiences: public at large, those not closely connected to the organization

Implementing the PR program Tools:

- Press releases: provide factual information of interest to media and audiences

- Press conferences: for major announcements like new products, endorsements, events
Delivering messages to target audiences through appropriate tools and media
- Exclusives: Giving an exclusive story to one media outlet can increase chances of the story
being accepted and distributed, since that outlet will want to promote themselves
- Interviews: Watch for interviews on TV and magazines where a spokesperson from a company
answers specific questions about an issue. This allows the company to control the messaging.
- Community Involvement: Companies get involved in local communities through groups and
events to enhance their public image.
- The Internet: Companies can use websites and the internet to distribute PR information,
address issues, provide company details, and link to related articles.
- Social Media: More companies are using social networks, blogs and other new media to
distribute announcements, updates, and address issues. This allows them to directly engage
audiences and control messaging during incidents.

Measure the effectiveness of PR efforts in achieving communication objectives

- Determine the contribution of PR to overall goals

- Provide management with quantitative measures of PR achievements
- Allow management to judge the quality of PR activities

Raymond Simon suggests additional means for accomplishing this evaluation process, including
the following

- Match specific PR objectives to actual results and media coverage

- Use surveys to gather public opinion data on goal achievement
- Conduct internal and external audits to evaluate performance

A number of other bases for evaluation can be used. Walter Lindenmann says three levels

- Basic measures look at actual PR activities

- Intermediate measures examine audience reception and understanding
- Advanced measures look at resulting perceptual and behavioral changes

Advantages and Disadvantages of PR

Advantages:

- Credibility - PR messages seen as more truthful than ads

- Cost - PR is very low cost compared to potential effects
 - Avoid clutter - PR treated as news, not ads
- Lead generation - PR generates sales leads
- Reach specific groups - Used when can't do mass advertising
- Image building - Helps develop strong positive image

Disadvantages:

- Potential for not completing communication process - Recipient may not connect PR to
source
- Efforts often not associated with sponsor - PR may misfire
- Lack of coordination between marketing and PR - Can cause inconsistent messages
- Need to properly manage and evaluate PR program - Determine if it's effective

PUBLICITY

- Publicity refers to news or information about a person, product, or service that appears in the
media without being paid for.
- It is a subset of public relations, which is a longer-term strategy while publicity is typically
short-term.
- Publicity is not always positive and is not fully controlled by the organization, as it comes
from external media sources.
- The public relations department typically handles generating and distributing publicity.

Advantages of publicity:

- It has credibility since it's in the media and not paid advertising.
- It gives news value and word-of-mouth from third party endorsements.

Disadvantages of publicity:

- Timing is not fully controlled, the media decides when or if to publish.

- Accuracy can be lost as information gets interpreted by media.
- Lack of control once information goes public through social media.
- Measuring effectiveness is difficult but looks at traditional PR metrics and new digital
measures.

PERSONAL SELLING

- Personal selling involves face-to-face communication between a salesperson and customer to

promote a product or service.
- It is used more by industrial firms while consumer packaged goods rely less on personal
selling.
- The role of personal selling is changing to be better integrated with other promotional
methods.

Objectives of personal selling include:

- Building product awareness

 - Providing information to customers
- Stimulating customer demand
- Reminding customers of the brand
- Increasing sales revenue and volume
- Reducing the costs of sales
- Increasing distribution outlets for the product
- Finding new potential customers
- Increasing sales to existing customers

Types of Salespeople

Creative Selling/ Order Getter

- Prospect for new customers

- Assess customer needs and present solutions
- Responsible for completing the sale

Order Taking

- Handle repeat purchases from existing customers

- May involve straight reorders or modified reorders
- Inside order takers (receive orders by phone/email)
- Field order takers (travel to customers to take orders)

Missionary Sales Reps

- Introduce new products and promotions

- Provide support but don't take the actual orders

Technical Selling

- Have expertise in technical fields like engineering

- Communicate complex product features to customers

Team Selling

- Serve large, complex accounts

- Include experts from different departments like sales, marketing, engineering

The New Role of Personal Selling

Surveying

- Educating themselves about customers' businesses

- Regularly assessing customers' businesses to become knowledgeable authorities

Mapmaking

- Outlining an account strategy and solutions strategy for the customer

 - Creating a plan and discussing it with the customer
- Revising the plan as needed

Guiding

- Providing value to the customer by identifying problems and opportunities

- Offering alternative options and solutions
- Providing tangible solutions

Fire starting

- Engaging customers and driving them to commit to a solution

Basic steps in personal selling

- Prospecting and evaluating prospects

- Find potential customers from various sources
- Evaluate their ability and willingness to buy

- Preparing for each customer

- Thoroughly research the customer before each meeting

- Approaching the customer

- Make the initial contact whether a referral or cold call

- Presenting to the customer

- Discover their needs and show how your product meets them

- Handling objections

- Address any concerns the customer raises

- Closing the sale

- Get the order while respecting the customer's process

- Following up after the sale: Ensure everything went well and build ongoing relationship

Advantages and disadvantages of personal selling in bullet points:

Advantages of Personal Selling:

- Allow two-way interaction and feedback

- Can tailor the message to the specific customer
- Less distractions compared to mass media
- Seller becomes more involved in the buying decision process
 - Salespeople can provide research information to the company

Disadvantages of Personal Selling:

- Messages may not be consistent if salespeople alter the intended message

- More expensive than other promotional methods
- Requires a large sales force which increases costs
- Customers may perceive salespeople as pushy or insincere
- Success depends on individual salesperson's skills and abilities
 CHAPTER FOUR

ADVERTISING AGENCIES AND OTHER MARKETING COMMUNICATION

ORGANIZATIONS

CONCEPT AND MEANING OF ADVERTISING ORGANIZATION

Advertising and Promotion Organization:

- The process of integrated marketing communications involves five major groups: the
advertiser, advertising agencies, media organizations, specialized communication services, and
collateral services.

- Advertisers or clients are the key participants in the process. They have the products, services,
or causes to be marketed, and they provide the funds that pay for advertising and promotions.

- Media organizations provide an environment for the firm’s marketing communications

message.

- Specialized marketing communications services include direct marketing agencies, sales

promotion agencies, interactive agencies, and public relations firms.

- Collateral services are the wide range of support functions used by advertisers, agencies,
media organizations, and specialized marketing communications firms.

ORGANIZING FOR ADVERTISING AND PROMOTION IN THE FIRM: THE CLIENT’S

ROLE

The Centralized System

 Many companies have an advertising department headed by an advertising manager

operating under a marketing director.
 The advertising manager controls the entire promotions operation in a centralized
system, including budgeting, coordinating creation and production of ads, planning
media schedules, and monitoring and administering the sales promotions programs for
all the company’s products or services.
 The specific duties of the advertising manager depend on the size of the firm and the
importance it places on promotional programs.
 Basic functions the manager and staff perform include planning and budgeting,
administration and execution, coordination with other departments, and coordination
with outside agencies and services.
 A centralized organizational system is often used when companies do not have many
different divisions, product or service lines, or brands to advertise.
Decentralized System:

 Large corporations with multiple divisions and many different products find it difficult to
manage all advertising and promotional functions through a centralized department.
 Companies that use a decentralized system assign each product or brand to a brand
manager who is responsible for the total management of the brand.
 Each brand may have its own ad agency and may compete against other brands within the
company.
 The role of marketing services is to assist the brand managers in planning and coordinating
the integrated marketing communications program.

- Advantage: each brand receives concentrated managerial attention, resulting in faster

response to both problems and opportunities.

- Drawbacks: brand managers often lack training and experience, individual brand managers
often end up competing for management attention and resources, and failing to provide
brand managers with authority over the functions needed to implement and control the
plans they develop.

In-House Agencies:

 Some companies set up their own advertising agencies internally called an in-house
agency to reduce costs and maintain greater control over agency activities.
 An in-house agency is an advertising agency that is set up, owned, and operated by the
advertiser.
 Many companies use in-house agencies exclusively or combine in-house efforts with those
of outside agencies.
 A major reason for using an in-house agency is to reduce advertising and promotion costs.
 Time savings, bad experiences with outside agencies, and increased knowledge and
understanding of the market are also reasons.
 Flexibility is greater because an outside agency can be dismissed if the company is not
satisfied, whereas changes in an in-house agency could be slower and more disruptive.

FUNCTIONS OF THE ADVERTISING DEPARTMENT

- Determine advertising goals, budget, and plan in consultation with top management
- Help select the advertising agency
- Set up a plan of activity, allocating work between agency and advertiser
- Transmit company policies and problems to the agency
- Interact with agencies and media
- Oversee outdoor advertising
- Participate in campaign and media planning
 - Frame and allocate the advertising budget
- Oversee broadcast media
- Handle press relations and public relations
- Publish a company newsletter/journal

ADVERTISING AGENCY

Types of Advertising Agencies:

Full-Service Agencies

- Offer a full range of marketing, communications, promotions services

- Perform research, create and produce ads
- Select media
- Provide strategic planning, sales promotions, PR, packaging etc.
- Made up of departments for various advertising functions

Here are the functions of full-service advertising agencies:

a. Account Services
- Manage the relationship between agency and client
- Understand client's marketing needs
- Coordinate agency efforts

b. Marketing Services
- Conduct research like gathering and analyzing customer data
- Provide insights to develop effective ads

c. Creative Services
- Come up with ideas and concepts for ads
- Write copy for ads like headlines, text etc.
- Design layout of print and video ads

d. Management and Finance

- Develop organizational structure
- Oversee projects from start to finish
- Manage budgets

II. Other Types of Agencies and Services

Here are the types of agencies and services

Creative Boutiques

- Provides only creative services

- Full-service agencies often outsource creative work to boutiques when busy or to avoid
hiring full-time employees
 Media Buying Services

- Specialize in analyzing and purchasing advertising time and space

- Paid a fee or commission for their work

Agency Compensation and Selection

I. Agency Compensation

1. Commissions from Media

- The traditional method is a commission system where the agency receives 15%
commission from media on advertising purchases.

2. Fee, Cost, and Incentive-Based Systems

Fee Arrangement

- Straight/fixed fee or hourly rate

Cost-Plus Agreement

- Client pays costs plus agreed profit margin (often % of total costs)

Incentive-Based Compensation

- Determined by media commissions, fees, bonuses

3. Percentage Charges

- Agency adds markup percentage to outside services

II. Agency Evaluation and Selection

1. Financial and Operational Audit: Verifies costs, expenses, profitability

2. Qualitative Assessment: Creativity, communication, client service

III. Why Agencies Lose Clients

1. Poor performance/service
2. Poor communication
3. Unrealistic client demands
4. Personality conflicts
5. Personnel changes
6. Size changes of client/agency
7. Conflicts of interest
8. Changes in client strategy
 3.5. SPECIALIZED SERVICES

- Direct-Response Agencies

Divided into 3 main departments: account management, creative, and media

Sales Promotion Agencies

- Develop and manage sales promotion programs like contests, rebates, premium offers,
and sampling

Public Relations Firms

- Develop and implement programs to manage organization's publicity, image, and

affairs with publics
- Analyze relationships with publics, develop PR strategies and programs
- Implement programs using PR tools and evaluate effectiveness

Interactive Agencies
- Specialize in development and strategic use of interactive tools like websites,
banner ads, CD-ROMs
- Design and develop websites as well as manage and support them

Collateral Services

- Provide additional support services

- Examples: marketing research companies, package design firms, consultants,
media buying, photographers, printers, video producers, event marketers
- Marketing research companies conduct studies to understand audiences and
gather info for programs

The criteria for evaluating personal selling

Provision of marketing intelligence

- Sales force provides feedback on competitors, customer reactions, market

trends etc. This helps in developing promotional programs.

Follow-up activities

- Sales force uses and distribute promotional materials like brochures. They
follow up with new and existing customers on effectiveness of promotions.
Program implementations

- Number of promotional programs implemented by sales force. Number of

shelf/counter displays used. Implementation and assessment of cooperative
advertising programs.

Attainment of communications objectives

- Number of accounts sales force presented to for awareness and evaluation.

Number of trial offers accepted by customers.
- Combining these criteria with sales department's metrics helps promotions
manager accurately assess effectiveness of personal selling program.
- Requires cooperation between sales, marketing and promotions departments
for these evaluations.
 CHAPTER FIVE

Measuring Effectiveness of the Promotional Program

- Advertising/promotion effectiveness measures how well a marketing campaign met the

company's goals
- It helps understand the impact and reach of a campaign
- It determines the ideal amount of exposure and what is and isn't working in promotional
strategies

Reasons to Measure Effectiveness:

Avoiding Costly Mistakes:

- If the program isn't achieving its objectives, it's important to stop spending money on it
- Measuring advertising effects saves money and creates opportunities for gain

Evaluating Alternative Strategies:

- Research helps determine which strategy is most likely to be effective

- It helps in deciding which medium or message is more effective

Increasing the Efficiency of Advertising:

- Research helps companies develop more efficient and effective communication

Determining if Objectives are achieved:

- If objectives are attained, new ones need to be established in the next planning period

Reasons not to Measure Effectiveness: Companies give a number of reasons for not measuring
the effectiveness of advertising and promotional strategies.

- Cost: Research can be expensive in terms of both time and money, especially for smaller firms.

- Research Problems: It's difficult to isolate the effects of advertising due to the many variables
in the marketing mix.

- Disagreement on What to Test: Different people within a company may have different
objectives for the promotional program, leading to disagreements on what to test.

- The Objections of Creative: The creative department may not want their work to be tested,
and some agencies may be reluctant to submit their work for testing.

- Time: A lack of time is another reason given for not testing.

Measuring Promotional Program Effectiveness

What to Test

- Source Factors: Evaluating the effectiveness of the spokesperson and how the target market
responds to them.
- Message Variables: Assessing the strength and impact of the message and how it is
communicated.
- Media Strategies: Evaluating which media channels and specific vehicles generate the most
effective results.
- Budgeting Decisions: Studying the effects of advertising budget size on effectiveness and
sales impact.

When to Test

- Pretests: Measures taken before implementing the campaign.

- Post-tests: Measures taken after the ad or commercial has been in the field.
- Pretesting: Evaluation at various stages, from idea generation to final version testing, using
methodologies like focus groups.

Pretesting Methods can be done in two ways

1. Laboratory Methods
- In a controlled setting, participants from the target market evaluate the ad and provide
feedback.
- Advantages: Allows researchers to manipulate different aspects of the ad for evaluation.
- Disadvantages: Lack of realism and potential for participants to overanalyze, leading to
biases.
- Consumer Panels: A group representing the target market provides feedback through
surveys, interviews, and focus groups.
- Theater Tests: Test material is presented to an audience in a theatre setting to evaluate
television advertising.
- Readability Tests: Measure how easy a piece of text is to read based on factors like sentence
length and word familiarity.
- Portfolio Tests: Respondents recall different versions of an advertisement from a portfolio
and their effectiveness is measured.
- Rough Tests: Advertisers test their commercials in a rough format to find the best ones and
make them better. Photomatic rough testing refers to a technique used in advertising to test
the rough visual content of commercials. It includes the commercial test in.
- Techniques like animatics, photomatics, and ripomatics are used to test the rough visual
content of commercials.

- Comprehension and Reaction Tests

- Advertisers want to know if people understand and react well to their ads.
 - Tests like personal interviews, group interviews, and focus groups are used to assess these
responses.
- Physiological Measures
- Physiological responses are measured in a lab setting to see how people involuntarily react to
ads.
- Measures like pupil dilation and eye tracking are used to eliminate biases.
- Concept Tests
- These tests evaluate ad campaign ideas before they are released to the public.
- Surveys are used to ask customers about the company's ideas and if they like them.

- Field Methods
- Field Methods Disadvantages is Lack of control in field testing may not provide specific
information on why participants evaluate an ad in a certain way.
- Participants' mood, feelings towards the company and other external factors can influence
their evaluation, leading to biased results.

Types of Field Tests

- On-air tests: Measure recall of a commercial or program during a real broadcast.

- Dummy advertising vehicles: Pretend magazines with test ads distributed to households for
feedback.

- Post Testing: Determines if the campaign achieved objectives and provides input for future
analysis.

- Where to Test
- Laboratory Tests: People are brought to a specific location to view ads and commercials.
- Field Tests: Ads are tested in natural viewing situations with noise, distractions, and home-
like settings.

- How to Test
- Comprehension and reaction tests: Assess if an ad conveys the intended meaning and its
impact on viewers.
- Consumer juries: Consumers form a group and rank ads based on preferences and purchase-
provoking factors.