PowerPoint by: Ray A. DeCormier, Ph.D. Central Connecticut State University Chapter 13: Business Marketing Communications: Advertising and Sales Promotion

 Advertising and sales promotion supplements personal selling efforts. This chapter considers: 1. The powerful role of social media can assume in business marketing strategy 2. The decisions that must be made when forming a business advertising program 3. The business media options, including the powerful role of Internet marketing communications 4. Ways to measure business advertising effectiveness 5. The role of trade shows in the business communications mix and how to measure trade show effectiveness

Introduction Business has learned that not even the best products sell themselves. Benefits, problem solutions and cost efficiencies need to be sold through effective communications to everyone from users to influencers to decision makers.

 Due to… a. Product complexities (technical), b. The small number of buyers, c. The high price products/services, and d. Extensive negotiation process …The primary communications vehicle for selling Industrial/Business products/services is the:  SALESPERSON!

 There is a need for other non-personal requisites such as:  Advertising  Catalogs  Internet presence  Trade shows  Promotional spending  All have a unique way of getting the message out, however, they don’t close deals as well as personal selling!

B2B Social Media 6 Channels of the social web where prospects and businesses communicate across diverse platforms Key Platforms: 1.Discussion Forums 2.Blogs 3.Wiki 4.Social Networks

Use of Social Media in B2B 7  Monitor what prospects are saying about the company  Capture interest from prospects looking for products  Coordinate follow-up to social media interactions

 Several blogs in five languages  Sponsor several online communities  Support forums: find answers to laptop questions  Online community for consumers to post innovative ideas for Dell to consider

Customer Decision Journey The CDJ is the customer’s decision process in selecting a particular product Often find a mismatch between media used and the touch points at which buyers are best influenced CDJ includes two critical steps 1.Inspiration: use online channels to find, create and compare 2.Sharing: relate experiences using a variety of social media Key: Customer experience includes everything from discussions on social media to meetings with sales people. Social media facilitate targeted, personalized contact across the customer experience landscape

 Be an integral part of an integrated communication programs  Enhance sales effectiveness  Increase sales efficiency  Create awareness  Create preferences for company, products, etc.  Facilitate interactive marketing communications

Integrated Communication Programs Integrated Communications is the intertwining of all communication methods to include: Advertising Sales Promotion Online Media Public Relations Personal Selling Of these promotional techniques, personal selling is most important in B2B marketing!

E NHANCING S ALES E FFECTIVENESS Combining advertising and personal selling makes the selling job easier and more efficient. People who were aware of the ad thought the salesperson was more knowledgeable than companies that don’t advertise. Profits and gross margins also increase when advertising is employed.

 Advertising increases efficiency in two ways: 1. Serves as a reminder 2. Informs the market about new products/developments  Advertising is pennies when compared to $100’s for a sales call.

 Business advertising creates: 1. Awareness 2. Brand preference 3. Conviction that a brand will meet their requirements & hopefully 4. Facilitate purchase 14

 The Internet has created a two-way communication process, permitting the marketer and customer to more rapidly exchange information.  This flexibility has allowed the marketer to personalize communications and customize solutions.

 Effective B2B communication needs to be integrated among all media methods; however, it does have its limitations. It: 1. Cannot create product preference for many products. 2. Cannot close a sale! 3. Cannot substitute for personal selling. 4. Can supplement personal selling but not replace it.

Advertising is only one aspect of an entire marketing strategy. The advertising decision process begins with formulating advertising objectives. Equally important: selection and evaluation of media. Decision Stages The Decision Stages: Developing Business-to-Business Advertising Program Figure 13.1

Defining Advertising Objectives Marketing managers realize: 1. Advertising’s mission flows directly from the overall marketing strategy. 2. Advertising’s job is to: a.Create awareness b.Provide information c.Influence attitudes d.Remind buyers about product and company

A DVERTISING O BJECTIVES Advertising objectives must be: 1. Realistic 2. Measurable 3. Specific outcomes during specific times Example: To be effective, the advertising campaign shall increase awareness from 15% to 30% during the period from April 1 st to June 31 st.

Defining the Target Market  One objective of advertising is to reach influentials who are often difficult to contact via personal selling.  Influentials are interested in specific features and attributes that solve certain problems. Advertising needs to focus upon that issue.  Marketers must understand who the target market is and how to reach them for an advertising campaign to be effective.

Creative Strategy Statements Provide guidelines for the company and advertising agency to position (or reposition) the product. All creative efforts should include: 1. Copy 2. Theme 3. Color, design, etc. 4. Media 5. Tactics

Determining Advertising Expenditures Managers tend to employ the following rule of thumb: 1. Allocate some percent of sales to advertising 2. However, this is a dysfunctional rule!

 Advertising’s purpose is to inform and influence sales, but it is not to create sales.  A dysfunctional policy of tying advertising budgets to % of sales defeats the purpose.  For example:  If there are no sales, then is there no advertising budget?  If sales are declining, do you cut advertising costs too?  Does that make sense?

 A better approach for allocating advertising costs is to relate them to advertising objectives.  The Objective-Task Method focuses on the communications effects of advertising…  Not on the sales effects.

1. Establish objectives in terms of sales volume, market share, profit contribution and market segments. 2. Assess all communication functions to realize these objectives. 3. Define specific measurements required to meet these objectives such as market share. 4. Estimate the budget needed to accomplish them.

 How much is enough?  Advertising costs is like owning an old gold mine. It can return millions, or be a bottomless pit.  The only way to assure success is to establish and measure against goals.  Another matter is the political side of the decision. The concern here is that internal politics often determine budgets, not the technique-driven process.

Passing the Threshold  In order for a message to be heard, it is necessary to repeat it often.  Of course, the question is: “How often?”  Research suggests that advertising must pass through a certain threshold before a meaningful message can be understood by the market to move product from awareness to preference.

Passing the Threshold  A small budget is not enough  A large budget is like throwing money away  Because budgeting advertising is so important, marketing managers should:  1. Set clear objectives  2. Evaluate tasks required  3. Compare costs against industry norms  4. Allocate a proper budget  5. Design an effective advertising message

D EVELOPING THE M ESSAGE Three Considerations: Perception Benefits focus Understanding buyer motivations

Developing B2B Advertising Message 1. Determine advertising objectives 2. Evaluate target audience’s buying criteria 3. Analyze most appropriate language, format and style to present message. 4. Then consider the message!

P ERCEPTION, P ERCEPTION, P ERCEPTION In business, perception is almost the same as truth. The message needs to attract the right person. In most cases, that is the decision maker. For an advertising messages to be considered, it has to: Attract the right person’s attention, & Be interpreted properly. For example, techies respond to technical ads and non- techies respond better to non-technical ads.

 Industrial buyers focus on solutions to business problems that considers: a. A better way to accomplish tasks b. A less expensive way to manufacture something c. A new approach to either make or save the company money d. A different way to “free” up time

 Of all the challenges, this is one of the most difficult to understand.  Understanding the buyer is a very complex matter because “the standard rules” change as the environment changes.  One way to address this problem is to employ marketing research to delineate influencers’ criteria for buying in each segment.

Effective Ads Effective ads are: A. Logical B. Rational C. Provide a clear description of the product D. Present product benefits clearly E. Details product quality F. Provide performance measures

 B2B media are selected by target audiences  Should we use trade publications, direct mail, Internet or all of them?  What is the best way to spend advertising money to generate the desired response (customer contacts)?

Shifting of Advertising to Digital Form B2B marketers are always looking for ways to communicate better with customers & prospects. Use of Internet microsites (specialized web pages that prospects jump to from an or PR piece that contain videos) is providing excellent results. Use of online videos help customers and prospects from around the world solve their business problems. Videos are particularly effective for telling the story and producing serious leads.

 Using proper key words or key phrases within the site is an absolute necessity for driving leads to that site. Ideas for successful Internet advertising include: 1. Make sure site is search-crawler friendly 2. Good key words must tie into solutions sought 3. Create a relevant, targeted keyword list that reflects problem, product, etc. 4. Write clear, compelling ads that use key words and isolate your “value proposition” 5. Track results and measure everything

Business Publications  There are more than 2700 business publications—selecting the right ones is another difficult task.  Horizontal Publications are directed at the specific task, function or technology regardless of industry.  Vertical Publications are oriented to readers in a specific industry.

Business Publications  Many trade publications are requester publications.  This is where the reader is interested in a certain subject and receives a certain publication for free in exchange for demographic information such as title, function and buying responsibilities.  Advertisers know who their desired audience are!

Cost of Advertising Companies need to allocate an advertising budget for: Business Publications Sales Promotions Direct Marketing (mail & ) Internet Advertising

 Include:  Cost/1000 contact is one consideration  Circulation based on the TARGET audience  Does the medium also have Internet viewing?  Frequency and scheduling is another complicated issue

Direct Mail  Direct Mail is commonly used for: a. Image, product and service promotion b. Sales force support by providing leads c. Distribution channel communications d. Getting pertinent information directly to influencials  Direct mail is efficient providing the list is good.  Much direct mail is considered junk mail.

 Direct mail is 10 times more expensive than  campaigns often yield more responses and results are quicker ◦ Example: 1/3 of all responses were generated within 24hrs.  Many firms integrate their CRM programs with  Many firms provide an alert service and/or an newsletter

 In order to successfully accomplish this, it is important to have all the systems in place first.  They include: a. acknowledgements b. Order entry c. Order fulfillment d. Money exchanges e. Follow-up contact f. Q&A service g. Troubleshooting systems

 Rarely do ads result in immediate business.  But, it does create awareness hopefully leading to preference.  Measurements can be direct or indirect.  Direct communication is measured by: “percent awareness.”  Indirect communications are measured by: “word-of-mouth” and “understood perceptions”.

1. Sound measurement program entails substantial advanced planning. 2. The advertising strategist must determine:  What is to be measured  How to measure it  In what sequence 3. Establish benchmarks in pre-evaluation phase Evaluating Advertising Five Primary Areas for Evaluating Advertising Figure 13.2

 Knowledge  Recognition  Recall  Awareness  Preference  Motivation  It is not always possible to measure effects on actual sales.

Trade Shows Another important form of promotion is trade shows. Effective selling message can be delivered to a relatively large and targeted audience at one time. Firm can identify potential clients and provide sales personnel with qualified leads. Trade shows can also be used to introduce new products.

Trade Shows: Strategy Benefits  Customers can get hands-on experience with product in one-on-one selling situation.  Company can enhance general goodwill.  Company often benefits from free publicity.  Trade shows allow competitors to look at each other.  International business can be facilitated resulting in quicker entry into foreign markets.  Many sales are also made at these shows too!  Cost of meeting prospects is around $250 which is much less than making a personal sales call.

Trade-Show Communications Strategy To develop an effective trade show communications strategy, certain questions need to be addressed: What functions should trade show perform in total marketing communications program? To whom should trade show marketing effort be directed? What is company’s appropriate communication mix at the show? How should trade show investments be audited?

Trade Show Objectives 1. Discover decision influencers. 2. Identify potential customers. 3. Provide company product, service and information. 4. Try to discover product application problems. 5. Create sales. 6. Handle customer problems. 7. Build corporate image. 8. Gather competitive intelligence. 9. Enhance sales force morale.

 Challenge Question: What trade show to attend?  Answer: Attend trade shows that are attended by prospective customers.  To find trade shows, use leading trade show directories such as: a. American Trade Show Directory b. ExhibitNet.com database c. Exhibit Surveys, Inc.

S ELECTING /E VALUATING T RADE S HOWS Exhibit Surveys, Inc. publishes data on: Net Buying Influences Measures percentage of show audience that have decision authority for product types being exhibited Total Buying Plan Measures percentage of audience planning to buy exhibited products within 12 months

Lead Generation Trade shows are probably most important for lead generation. Attaining leads is so important to companies because without them, a company cannot survive. There is a natural turnover of customers so a company has to constantly be looking for new business. It’s just a way of life.

 Trade shows are different than personal selling even though one is selling never-the-less.  The trade show is more theatrical, and contact is very short (5-10 min.), therefore the process is to:  Sell the product first,  Sell the company next,  Sell the salesperson last.  This is opposite to traditional selling situations.

Trade Show Traffic Flow Flows Tactical Activities Show Attendees Target Audience Attracted To Booth Contact w/Salesperson Sales Leads Pre-Show & At-Show Impersonal Promotional Activities Personal Promotional Activities Source: Gopalakrishna & Lilien, A Three-Stage Model of Industrial Trade Show Performance,” Working Paper #20, Marketing Science 14 (Winter 1995) :pp.22-42

Measuring the Success Companies need to set measurable goals in advance of the trade show including: a. Number of leads b. Likely effect on sales c. Potential effect on new accounts d. Effect on corporate image e. Expenditures that tie into an adequate ROI