Promotion Mix (Sales Promotion and Personal Selling)

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

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
Selling 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 following
1. Nature of the product or service
2. Size of the organisation
3. Type of industry

Definitions:
“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

Provider 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)

Sellers & Buyers in direct contact with one another
Personal 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

(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)

Two-Way communication
Complete message
Lack of distraction
Involvement in decision
making
Sources of research
information
High Cost
Poor reach of many
Ethical Problems
Conflicts
Inconsistent message

Sales 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

Definitions:
“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”

Obtaing trail and repurchase
Increaseing consumtion of an established brand
Defending current customers and increasing short term profits
Targeting current customers
Targeting a specific market segment
Enhancing advertising and marketing efforts
Increasing Competition
Customers have become more price sensitive
Consumer Acceptance
Advertising has become more expensive and less effective
Sales promotion geneally create an immediate positive impact
on sales
Sales promotion speciality are available
Trade has become more standard

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

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.

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.

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

Refunds & 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.

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

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/-

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.

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

Trade 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 are
1. Obtaining distribution and support for new products
2. Maintaining support for established brands
3. Encouranging retailers to display established brands and
4. Building retail inventories
Types:
a) Contests and incentives
b) Trade allowances
c) Displays and Point of Purhcase Materials(POP)
d) Sales taning Programs
e) Trade Shows
f) Cooperative Advertising

Contests 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

Trade 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.

Displays 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

Trade 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
Definitions
Components
Funtions
Nature 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 Kotler
Producers 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

Information(Customers, Competitors and others)
Promotion
Contact(Finding and communicating with
prospective buyers)
Matching
Tranfering
Order (Backward Communication)
Financing
Risk Taking(Take the risks of carying the work)
Physical Flow(Producer to Competitors)
Title

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.

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.
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

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

1. Intensive Distribution (Tooth paste inMany outlets)
2. Exclusion Distribution

1. Selective

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 marketing
objectives 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 decisions
Channel 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 Vertica
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.”

Promotion Mix (Sales Promotion and Personal Selling)

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