1 PRINCIPLES OF MARKETING I OCMT Ch. 3& 4 ADVERTISING AND SALES PROMOTION

Learning Objectives 1.ADVERTISING 1.1. Advertising: Meaning 1.2. Functions of advertising 1.3. Classifications of advertising 2.DEVELOPING AND MANAGING ADVERTISING PROGRAM 2.1. Setting the Advertising Objectives 2.2. Deciding on the Advertising Budget 2.3. Developing the Advertising Campaign 2.4. Deciding on Media 2.5. Measuring Effectiveness 2 3. SALES PROMOTION 3.1 Sales promotion: meaning 3.2. Objectives of sales promotion Stimulate trial Increase consumer inventory and consumption Encourage repurchase Neutralize competitors Increase sales of complementary products Stimulate impulse purchasing: Allow flexible pricing 4. SALES PROMOTION TOOLS

1. ADVERTISING: MEANING 1.1. Meaning of advertising: Advertising is a paid, non-personal and persuasive form of presentation and promotion of ideas, goods and services by an identified sponsor. 3

1.2. Advantages/Functions/Objectives of Advertising 1.To identify products and differentiate them from others. (branding) 2.To communicate information. 3.To induce consumers to try new products and to suggest reuse. (new and repeated consumers) 4. To stimulate the distribution. 5. To build brand awareness, preference and loyalty. 6. To lower the cost of sales. (For the cost of reaching just one prospect through personal selling, companies can reach thousands of people through media advertising.) 4

1.3. Classifications of Advertising… I Classification by target audience: 1. Consumer advertising: Consumer advertising is aimed at people who buy for their own use. 2. Business advertising: Business advertising is aimed at people who buy for use in business. II Classification by geographic area: 1. International/global advertising (foreign markets) 2. National advertising (in the whole country) 3. Regional advertising (in one area or region) 4. Local advertising (in only one city or local trading area) 5

…Classifications of Advertising III Classification by medium: 1. Print advertising (newspaper, magazines, brochures, flyers) 2. Electronic advertising (television, radio: commercials; Internet) 3. Outdoor advertising (billboards, kiosks, public transport, events) 4. Direct-mail advertising (through the Postal Service and by e- mail) 5. POP (point of purchase) advertising 6

Developing and Managing an Advertising Program: Process Five Ms of Advertising

The process of developing and managing an advertising program comprises 5 major steps. They are: 2.1. Setting the Advertising Objectives 2.2. Deciding on the Advertising Budget 2.3. Developing the Advertising Campaign 2.4. Deciding on Media 2.5. Measuring Effectiveness 2. Developing and Managing an Advertising Program: Process 8

The process of developing and managing an advertising program comprises 5 major steps. They are: 2.1.Setting the Advertising Objectives It states the objectives of the advertising. It also includes the sales goals of the company. 2.2.Deciding on the Advertising Budget It gives an idea that how much money should be spent by the company for the advertisement. Factors to be considered for this are stage of product life cycle, market share and consumer base, competition, advertisement frequency and product substitutability. Developing and Managing an Advertising Program: Process 9

The process of developing and managing an advertising program comprises 5 major steps. They are: 2.3. Developing the Advertising Campaign It includes message generation, message evaluation and selection, message execution and social responsibility review Deciding on Media It includes which media should be used for the advertisement. It also includes reach, frequency, impact of the advertisement. It also contains major media types, media vehicles, media timing and geographical media allocation. Developing and Managing an Advertising Program: Process 10

The process of developing and managing an advertising program comprises 5 major steps. They are: 2.5. Measuring Effectiveness It is nothing but evaluation of the results. It measures communication impact and sales impact by an advertisement. Developing and Managing an Advertising Program: Process 11

3. SALES PROMOTION 3.1. Sales promotion: Meaning Sales promotion consists of media and non-media marketing communications employed for a predetermined, limited time to stimulate trial, increase consumer demand, or improve product availability. 12

3.2. Objectives of Sales Promotion Stimulate trial: Sales promotion stimulates consumers to try the product offering incentives Increase consumer inventory and consumption: Sales promotion incentives urge consumers buy, store and consume more quantity of goods Encourage repurchase: Sales promotion encourages consumers to repeat purchases as there are incentives on every purchase they make Neutralize competitors: Sales promotion neutralizes competitors urging the consumers to buy more from them offering various benefits Increase sales of complementary products: Sales promotion increases sale of complementary products as the quantity is sold more, the need for complementary products also increases Stimulate impulse purchasing: Sales promotion stimulates consumers purchase more as they get more benefits on repeated purchases Allow flexible pricing: Sales promotion allows the shopkeeper to reduce the price to stimulate the consumer to buy more. 13

4. Sales Promotion Tools… 1. Samples: offers of a free amount of a product, goods or services, delivered door to door, sent in the mail, picked up in a store, attached to another product, or featured in an advertising offer. 1. Samples: Samples are offers of a free amount of a product, goods or services, delivered door to door, sent in the mail, picked up in a store, attached to another product, or featured in an advertising offer. 2. Coupons: certificates entitling the bearer to a stated saving on the purchase of a specific product: mailed, enclosed in other products or attached to them, or inserted in magazines and newspaper ads. 2. Coupons: Coupons are certificates entitling the bearer to a stated saving on the purchase of a specific product: mailed, enclosed in other products or attached to them, or inserted in magazines and newspaper ads. 3. Cash Refund Offers (rebates): rovide a price reduction after purchase rather than at the retail shop: consumer sends a specified “proof of purchase” to the manufacturer who “refunds” part of the purchase price by mail. 3. Cash Refund Offers (rebates): Cash refund offers (rebates) provide a price reduction after purchase rather than at the retail shop: consumer sends a specified “proof of purchase” to the manufacturer who “refunds” part of the purchase price by mail. 4. Price Packs (cents-off deals): offers to consumers of savings off the regular price of a product, flagged on the label or package. A reduced-price pack is a single package sold at a reduced price (such as two for the price of one). A banded pack is two related products banded together (such as a toothbrush and toothpaste). 4. Price Packs (cents-off deals): Price packs are offers to consumers of savings off the regular price of a product, flagged on the label or package. A reduced-price pack is a single package sold at a reduced price (such as two for the price of one). A banded pack is two related products banded together (such as a toothbrush and toothpaste). 14

5. Price-Off (off-invoice or off-list): A straight discount off the list price on each case purchased during a stated time period. 6. Allowance: An amount offered in return for the retailer’s agreeing to feature the manufacturer’s products in some way. An advertising allowance compensates retailers for advertising the manufacturer’s product. A display allowance compensates them for carrying a special product display. 7. Free Goods: Offers of extra cases of merchandise to intermediaries who buy a certain quantity or who feature a certain flavor or size. 8. Trade Shows and Conventions: Industry associations organize annual trade shows and conventions. Business marketers may spend as much as 35 percent of their annual promotion budget on trade shows. Participating vendors expect several benefits, including generating new sales leads, maintaining customer contacts, introducing new products, meeting new customers, selling more to present customers, and educating customers with publications, videos, and other audiovisual materials. 9. Sales Contests: A sales contest aims at inducing the sales force or dealers to increase their sales results over a stated period, with prizes (money, trips, gifts, or points) going to those who succeed. …Sales Promotion Tools 15