Physical Distribution System: Objective and

Decisions Area
25 Oct 2018
Physical distribution is concerned with the physical movement of the goods from
the producer to the consumer. It is an important part of marketing activity and a
major component of marketing mix. It includes all those activities which help in
efficient movement of goods from producer to consumer, such as transportation,
warehousing, material handling, inventory control, order processing, market
forecasting, packaging, plant and warehouse location and customer service.

Philip Kotler has defined physical distribution as, “Physical distribution involves
planning, implementing and controlling the physical flow of materials and final
goods from the point of origin of use to meet consumer needs at a profit.”

According to William J. Stanton, “Physical distribution involves the management of

physical flow of products and establishment and operation of flow systems.”

Physical distribution is thus, management of the physical flow of products and

management and operation of the flow system. It is a process of managing the
movement of the goods.

Objectives of Physical Distribution:

Physical distribution has two broad objectives viz. consumer satisfaction and profit
maximisation. Apart from these, there are other objectives too. A satisfied
consumer is the biggest asset that a company has. A firm can provide satisfaction to
consumers by making available right quantity of right goods at right place and time,
at lowest costs. Prompt and dependable distribution enhances consumer
satisfaction.

At the same time, by offering better service at lower price of the product, the firm
can attract additional consumers and make more profits. This can be done by
improving the efficiency and effectiveness of physical distribution activities, firm
can bring in economy which will have an effect on profit margin i.e. by lowering the
physical distribution costs, profit position can be improved.
Its importance can be judged from following points:

(A) Creating Time and Place Utility:

Physical distribution activities help in creating time and place utility. This is done
through transportation and warehousing. Transportation system creates place
utility as it makes available the goods at the right place where they are required.
Warehousing creates time utility by storing the goods and releasing them when
they are required.

(B) Helps in Reducing Distribution Cost:

Physical distribution cost account for a major part of the price of the product. If
these costs are handled systematically, decrease in costs of product can be there.
Proper and systematic planning of transportation schedules and routes,
warehousing location and operation, material handling, order processing, etc. can
easily bring in cost economies.

(C) Helps in Stabilisation of Price:

Physical distribution helps in maintaining stable prices. Even customers expect

price stability over a period of time. Proper use of transportation and warehousing
facilities can help in matching demand with supply and thus ensure stabilisation of
price.

(D) Improved Consumer Services:

Consumer service in physical distribution means making products in right quantity

available at right time and right place i.e. place where customer needs.

Different Types of Distribution Channels

14 Sep 2019
A distribution channel is a chain of businesses or intermediaries through which a
good or service passes until it reaches the final buyer or the end
consumer. Distribution channels can include wholesalers, retailers, distributors,
and even the Internet.

Distribution channels are part of the downstream process, answering the question
“How do we get our product to the consumer?” This is in contrast to the upstream
process, also known as the supply chain, which answers the question “Who are our
suppliers?”
A distribution channel is the path by which all goods and services must travel to
arrive at the intended consumer. Conversely, it also describes the pathway
payments make from the end consumer to the original vendor. Distribution
channels can be short or long, and depend on the amount of intermediaries required
to deliver a product or service.

Goods and services sometimes make their way to consumers through multiple
channels—a combination of short and long. Increasing the number of ways a
consumer is able to find a good can increase sales. But it can also create a complex
system that sometimes makes distribution management difficult. Longer
distribution channels can also mean less profit each intermediary charges a
manufacturer for its service.

Channels are broken into two different forms—direct and indirect. A direct channel
allows the consumer to make purchases from the manufacturer while an indirect
channel allows the consumer to buy the good from a wholesaler or retailer. Indirect
channels are typical for goods that are sold in traditional brick-and-mortar stores.

Generally, if there are more intermediaries involved in the distribution channel, the
price for a good may increase. Conversely, a direct or short channel may mean lower
costs for consumers because they are buying directly from the manufacturer.

Different types of channel of distribution are as follows:

Manufacturers and consumers are two major components of the market.

Intermediaries perform the duty of eliminating the distance between the two.
There is no standardised level which proves that the distance between the two is
eliminated.

Based on necessity the help of one or more intermediaries could be taken and even
this is possible that there happens to be no intermediary. Their description is as
follows:

(A) Direct Channel or Zero Level Channels

When the manufacturer instead of selling the goods to the intermediary sells it
directly to the consumer then this is known as Zero Level Channel. Retail outlets,
mail order selling, internet selling and selling

(B) Indirect Channels

When a manufacturer gets the help of one or more middlemen to move goods from
the production place to the place of consumption, the distribution channel is called
indirect channel. Following are the main types of it:

1. One Level Channel

In this method an intermediary is used. Here a manufacturer sells the goods directly
to the retailer instead of selling it to agents or wholesalers. This method is used for
expensive watches and other like products. This method is also useful for selling
FMCG (Fast Moving Consumer Goods).

2. Two Level Channel

In this method a manufacturer sells the material to a wholesaler, the wholesaler to

the retailer and then the retailer to the consumer. Here, the wholesaler after
purchasing the material in large quantity from the manufacturer sells it in small
quantity to the retailer.

Then the retailers make the products available to the consumers. This medium is
mainly used to sell soap, tea, salt, cigarette, sugar, ghee etc.

3. Three Level Channel

Under this one more level is added to Two Level Channel in the form of agent. An
agent facilitates to reduce the distance between the manufacturer and the
wholesaler. Some big companies who cannot directly contact the wholesaler, they
take the help of agents. Such companies appoint their agents in every region and
sell the material to them.

Then the agents sell the material to the wholesalers, the wholesaler to the retailer
and in the end the retailer sells the material to the consumers.

Factors affecting the choice of channel

31 Dec 2019
(A) Considerations Related to Manufacturer/Company

1. Goodwill:
Manufacturer’s goodwill also affects the selection of channel of distribution. A
manufacturer enjoying good reputation need not depend on the middlemen as he
can open his own branches easily.

2. Desire to control the channel of Distribution:

A manufacturer’s ambition to control the channel of distribution affects its

selection. Consumers should be approached directly by such type of manufacturer.
For example, electronic goods sector with a motive to control the service levels
provided to the customers at the point of sale are resorting to company owned retail
counters.

3. Financial Strength:

A company which has a strong financial base can evolve its own channels. On the
other hand, financially weak companies would have to depend upon middlemen.

(B) Considerations Related to Government

Considerations related to the government also affect the selection of channel of

distribution. For example, only a license holder can sell medicines in the market
according to the law of the government.

In this situation, the manufacturer of medicines should take care that the
distribution of his product takes place only through such middlemen who have the
relevant license.

(C) Considerations Related to Product

When a manufacturer selects some channel of distribution he/she should take care
of such factors which are related to the quality and nature of the product. They are
as follows:

1. Unit Value of the Product:

When the product is very costly it is best to use small distribution channel. For
example, Industrial Machinery or Gold Ornaments are very costly products that are
why for their distribution small distribution channel is used. On the other hand, for
less costly products long distribution channel is used.
 2. Standardised or Customised Product:

Standardised products are those for which are pre-determined and there has no
scope for alteration. For example: utensils of MILTON. To sell this long distribution
channel is used.

On the other hand, customised products are those which are made according to the
discretion of the consumer and also there is a scope for alteration, for example;
furniture. For such products face-to-face interaction between the manufacturer
and the consumer is essential. So for these Direct Sales is a good option.

3. Perishability:

A manufacturer should choose minimum or no middlemen as channel of

distribution for such an item or product which is of highly perishable nature. On the
contrary, a long distribution channel can be selected for durable goods.

4. Technical Nature:

If a product is of a technical nature, then it is better to supply it directly to the

consumer. This will help the user to know the necessary technicalities of the
product.

(D) Considerations Related to Market

Market considerations are given below:

1. Number of Buyers:

If the number of buyer is large then it is better to take the services of middlemen for
the distribution of the goods. On the contrary, the distribution should be done by
the manufacturer directly if the number of buyers is less.

2. Types of Buyers:

Buyers can be of two types: General Buyers and Industrial Buyers. If the more buyers
of the product belong to general category then there can be more middlemen. But
in case of industrial buyers there can be less middlemen.

3. Buying Habits:
A manufacturer should take the services of middlemen if his financial position does
not permit him to sell goods on credit to those consumers who are in the habit of
purchasing goods on credit.

4. Buying Quantity:

It is useful for the manufacturer to rely on the services of middlemen if the goods
are bought in smaller quantity.

5. Size of Market:

If the market area of the product is scattered fairly, then the producer must take the
help of middlemen.

(E) Others

1. Cost:

A manufacturer should select such a channel of distribution which is less costly and
also useful from other angles.

2. Availability:

Sometimes some other channel of distribution can be selected if the desired one is
not available.

3. Possibilities of Sales:

Such a channel which has a possibility of large sale should be given weight age.

hannel Strategy and design

22 Oct 2018
Marketing channels are set of mutually dependent organizations involved in the
process of making product or service available for utilization. It is established in
academic studies that Marketing channels are the means by which goods and
services are made available for use by the customers. All goods go through channels
of distribution, and marketing will depend on the way goods are distributed. The
direction that the product takes on its way from production to the consumer is
imperative because a marketer must choose which channel is best for his particular
product. It can be said that channel is the link between manufactures and
purchasers. Decisions about the marketing channel system are decisive for
management.

The marketing channels chosen by marketers influence all other marketing

decisions. The firm’s sales force and advertising decisions depend on how much
training and inspiration dealers need. Further, channel decisions involve
comparatively long-term commitments to other firms. Holistic marketers
guarantee that marketing decisions in all these different areas are made to jointly
maximize value.

Channel of distribution (Marketing channel)

In current competitive climate, big companies are using hybrid channels in any one
area. The firm must choose how much effort is needed to assign to push versus pull
marketing. A push strategy uses the manufacturer’s sales force and trade
promotion to encourage intermediaries to carry, promote, and sell the product to
customers. This is suitable where there is low brand loyalty in a category, brand
choice is made in the store, the product is desired item, and product benefits are
well understood. In a pull strategy, the manufacturer uses advertising and
promotion to influence customers to ask intermediaries for the product, thus
inducing the intermediaries to order it. This is suitable when there is high brand
loyalty and high involvement in the category, people perceive differences between
brands, and people choose the brand before they shop. A marketing channel
executes the work of moving products from producers to consumers, beat the time,
place, and possession gaps that separate goods and services from those who need
or want them.
Channel level: The producer and the final customer are part of every channel. There
are numerous channels by which goods and services are distributed. It is divided
into direct and indirect channel. In direct channel also known as zero-level channel,
manufacturer and customer deal directly with each other. There is no middleman in
this channel. It consists of a producer selling directly to final customers through
door-to-door sales, Internet selling, mail order, telemarketing, home parties, TV
selling, manufacturer-owned stores, and other methods.

In indirect channel, companies manufacture products in huge scale and sell these
products to middle man for example whole seller and retailers. This channel can be
very expensive.

Manufacturer to Customer: Manufacturer produces the goods and sells them to the
customer directly with no mediator, such as a wholesaler, agent or retailer. Goods
come from the manufacturer to the user without an intermediary.

Manufacturer to Retailer to Consumer: Purchases are made by the seller from the
manufacturer and then the retailer sells the products to the consumer. This channel
is used by manufacturers that specialize in producing shopping goods.

Manufacturer to Wholesaler to Customer: Consumers can buy directly from the

wholesaler. The wholesaler breaks down bulk packages for resale to the consumer.
The wholesaler reduces some of the cost to the consumer such as service cost or
sales force cost, which makes the purchase price cheaper for the consumer.

Manufacturer to Agent to Wholesaler to Retailer to Customer: This type of

distribution involves more than one intermediary involves an agent called in to be
the middleman and help with the sale of the goods. An agent receives a commission
from the producer. Agents are useful when products or services need to move
rapidly into the market soon after the order is placed.

Market channels by which goods and services are distributed

Characteristics of Marketing Channels

Link between Producer and Consumer.

Flow of Goods

Remuneration.

Classification-Direct and Indirect.

Activities- Financing, Credit Facility

It is important to consider some factors when choosing appropriate marketing

channel such as product, market, company. It is observed that middle man plays
vital role in distribution of product in market channel. The core responsibility of
intermediaries is to deliver products to customers in their desired location. To
accomplish this objective, they purchase goods and store these and then ship to
customers.
Marketing channel function performed by middleman.

Designing a Marketing Channel System

Designing a marketing channel system entails factors such as analysing customer

needs, establishing channel objectives, identifying major channel alternatives, and
evaluating major channel alternatives.

Analysing Customers’ Desired Service Output Levels: The marketer must recognize
the service output levels which its target customers want. Channels produce five
service outputs:

1. Lot size: The number of units the channel allows a particular

customer to buy at one time.
2. Waiting and delivery time: The average time consumers of that
channel wait for receipt of the goods. Customers generally prefer
fast delivery channels.
 3. Spatial convenience: The extent to which the marketing channel
facilitate for customers to obtain the product.
4. Product variety: The variety provided by the channel. Usually,
consumers prefer a greater collection, which enhances the chance of
finding what they need.
5. Service backup: The add-on services such as credit, delivery,
installation, repairs provided by the channel.

Providing greater service outputs denotes increased channel costs and higher
prices for consumers. The triumph of discount resellers (online and offline)
designates that many consumers will accept lower outputs if they can save money.

Establishing Objectives and Constraints

Another factor in designing a marketing channel system is that marketers must

declare their channel objectives in terms of targeted service output levels. In
competitive conditions, channel institutions should coordinate their functional
tasks to reduce total channel costs and still offer desired levels of service outputs.
Generally, planners can recognize several market segments that want different
service levels. Successful planning needs to determine which market segments to
serve and the best channels for each. Channel objectives differ with product
characteristics. Channel design is also affected by numerous environmental factors
as competitors’ channels, monetary conditions, and legal regulations and
limitations.

Managing channel Dynamics, Relationships and

Channel conflicts
25 Oct 2018
Managing channel Dynamics
Products of any company should be sent to sale centers for selling
out. The way used to send goods / products of a company to
consumers is called distribution channel. Distribution channels may
not be same forever. Distribution channel should be changed
according to environmental changes. Changing of channels
according to time is called channel dynamics. As the marketing is
dynamic, so the distribution channel is dynamic. It does not remain
in traditional structure. It also remains changing and developing
according to time and is applied accordingly.

New persons and new organizations enter in marketing channel

system at different times. The functions and roles of such channel
members become different according to the changes of time. So,
distribution channel does not remain same for long, but remain
changing.

The channels unsuitable to the new behavior disappear and new

channels appear, develop and remain changing. So, it becomes
clear that the channel of marketing becomes dynamic. They are
directly related factors, market related factors, channel objective
related factors, middlemen related factors, company related
factors and environment related factors.

Channel Role

Each member involved in channel has his own roles. Such role may
be leadership providing role and also may be subordinate or
follower’s role. If any change takes place in existing roles of the
members, help may increase or conflicts appear. If any change
does not come in the roles of channel members, only then
marketing channel system can work well. So, roles of all channel
members should be clear. Only then all the channel members can
perform their responsibilities. As a result, all the activities of
distribution channel become fruitful.

Channel Power

Strong channel partners often wield what’s called channel

power and are referred to as channel leaders, or channel captains.
In the past, big manufacturers like Procter & Gamble and Dell were
often channel captains. But that is changing. More often today, big
retailers like Walmart and Target are commanding more channel
power. They have millions of customers and are bombarded with
products wholesalers and manufacturers want them to sell. As a
result, these retailers increasingly are able to call the shots. In
other words, they get what they want.

Category killers are in a similar position. Consumers like you are

gaining marketing channel power, too. Regardless of what one
manufacturer produces or what a local retailer has available, you
can use the Internet to find whatever product you want at the best
price available and have it delivered when, where, and how you
want.

The capacity that can change channel members involved in

distribution is called power. Channel leader persuades and controls
the channel members. Mostly, channel power emerges from
following five sources:

1. Reward power

The capacity to give financial or non-financial reward to the channel

members involved in distribution is called reward power. Mostly,
the producers use such type of reward power. Nowadays, this
power has become very popular.

2. Coercion power

The power to punish, frighten, threaten etc. to all the channel

members is called coercion power. Under this power, the channel
members are forced to perform any work. Such power can be used
by producers against wholesalers and retailers.

3. Referent power

Referent power comes out from intense desire of any channel

member to be involved in channel system. Many middlemen desire
to be involved for dealing with best brand of products. Due to such
desire of middlemen, producers may use referent power.

4. Expert power
Expert power is acquired from long experience and special
knowledge. Every channel member cannot use this power. Only
those who have special knowledge and experience can use this
power.

5. Legitimate power

The power which can influence / persuade and control channel

members is called legitimate power. Ownership of reputed brand
can provide this type of power. These types of powers makes every
business just and regular.

Channel Relationships

Channel Conflict

A dispute among channel members is called a channel conflict.

Channel conflicts are common. Part of the reason for this is that
each channel member has its own goals, which are unlike those of
any other channel member. The relationship among them is not
unlike the relationship between you and your boss (assuming you
have a job). Both of you want to serve your organization’s
customers well. However, your goals are different. Your boss might
want you to work on the weekend, but you might not want to
because you need to study for a Monday test.

All channel members want to have low inventory levels but

immediate access to more products. Who should bear the cost of
holding the inventory? What if consumers don’t purchase the
products? Can they be returned to other channel members, or is
the organization in possession of the products responsible for
disposing of them? Channel members try to spell out details such
as these in their contracts.

No matter how “airtight” their contracts are, there will still be

points of contention among channel members. Channel members
are constantly asking their partners, “What have you done (or not
done) for me lately?” Wholesalers and retailers frequently lament
that the manufacturers they work with aren’t doing more to
promote their products for example, distributing coupons for them,
running TV ads, and so forth so they will move off store shelves
more quickly. Meanwhile, manufacturers want to know why
wholesalers aren’t selling their products faster and why retailers
are placing them at the bottom of shelves where they are hard to
see. Apple opened its own retail stores around the country, in part
because it didn’t like how its products were being displayed and
sold in other companies’ stores.

Channel conflicts can also occur when manufacturers sell their

products online. When they do, wholesalers and retailers often feel
like they are competing for the same customers when they
shouldn’t have to. Likewise, manufacturers often feel slighted when
retailers dedicate more shelf space to their own store brands. Store
brands are products retailers produce themselves or pay
manufacturers to produce for them. Dr. Thunder is Walmart’s
store-brand equivalent of Dr. Pepper, for example. Because a
retailer doesn’t have to promote its store brands to get them on its
own shelves like a “regular” manufacturer would, store brands are
often priced more cheaply. And some retailers sell their store
brands to other retailers, creating competition for manufacturers.

Vertical versus Horizontal Conflict

The conflicts we’ve described so far are examples of vertical

conflict. A vertical conflict is conflict that occurs between two
different types of members in a channel—say, a manufacturer, an
agent, a wholesaler, or a retailer. By contrast, a horizontal conflict
is conflict that occurs between organizations of the same type say,
two manufacturers that each want a powerful wholesaler to carry
only its products.

Horizontal conflict can be healthy because it’s competition driven.

But it can create problems, too. In 2005, Walmart experienced a
horizontal conflict among its landline telephone suppliers. The
suppliers were in the middle of a price war and cutting the prices
to all the retail stores they sold to. Walmart wasn’t selling any
additional phones due to the price cuts. It was just selling them for
less and making less of a profit on them.

Channel leaders like Walmart usually have a great deal of say when
it comes to how channel conflicts are handled, which is to say that
they usually get what they want. But even the most powerful
channel leaders strive for cooperation. A manufacturer with
channel power still needs good retailers to sell its products; a
retailer with channel power still needs good suppliers from which
to buy products. One member of a channel can’t squeeze all the
profits out of the other channel members and still hope to function
well. Moreover, because each of the channel partners is responsible
for promoting a product through its channel, to some extent they
are all in the same boat. Each one of them has a vested interest in
promoting the product, and the success or failure of any one of
them can affect that of the others.

Flash back to Walmart and how it managed to solve the conflict

among its telephone suppliers: Because the different brands of
landline telephones were so similar, Walmart decided it could
consolidate and use fewer suppliers. It then divided its phone
products into market segmentsinexpensive phones with basic
functions, midpriced phones with more features, and high-priced
phones with many features. The suppliers chosen were asked to
provide products for one of the three segments. This gave
Walmart’s customers the variety they sought. And because the
suppliers selected were able to sell more phones and compete for
different types of customers, they stopped undercutting each
other’s prices.

One type of horizontal conflict that is much more difficult to

manage is dumping, or the practice of selling a large quantity of
goods at a price too low to be economically justifiable in another
country. Typically, dumping can be made possible by government
subsidies that allow the company to compete on the basis of price
against other international competitors who have to operate
without government support, but dumping can also occur due to
other factors.

One goal of dumping is to drive competitors out of a market, then

raise the price. Chinese garlic producers were accused of this
practice in the early 2000s, and when garlic prices soared due to
problems in China, other countries’ producers were unable to ramp
back up to cover the demand. U.S. catfish farmers have recently
accused China of the same strategy in that market. While there are
global economic agreements that prohibit dumping and specify
penalties when it occurs, the process can take so long to right the
situation that producers have already left the business.

Resolution of Channel Conflict

The task of solving channel conflict is also called conflict

management. Conflict surfaces for one or the other reason, but it
should be not be let go beyond certain limit. If such conflict is not
solved in time, it invites a great accident. So, conflict should be
solved immediately by identifying its responsible causes.
Generally, the following methods can be applied to solve conflict:

1. Problem solving

Various types of conflicts can emerge in distribution channel. They

should be solved as soon as possible. Problem solving method is
one of many methods. According to this method, all the channel
members sit together, interact and find a common solution of the
problem. Channel leader or any other members can also do such
work.

2. Goal modification

Channel conflict can also be solved by modifying goal. Under this

method, all the channel members sit together, scrutinize the
causes of the conflict and new goal is formed. Such goal should be
accepted by all channel members.
 3. Persuasion

Channel conflict can be solved by clearly interpreting subject

matter or persuading the channel members. Under this, channel
leader persuades and calls all channel members to work for the
interest of group members. In this method, the channel leader uses
his power to persuade or convince the members and solve the
conflict.

4. Bargaining

In this bargaining method, all the channel members sit together,

discuss the responsible causes for the conflict and agree on a new
contract. Neutral member plays an important role in facilitating
new agreement. Such agreement should be accepted by all the
channel members, channel conflict is automatically solved. But, if
the channel conflict is to be solved promptly, this method is not
suitable.

5. Diplomacy

Conflict among channel members should be minimized at certain

level or solved. Diplomatic behavior of management helps in
solving conflict. When the conflict appears, the management
should give notice or information to all the channel members that
it will be properly solved finding out the responsible causes.
Because of mannered conduct, equal behavior, evidential logics of
the management, channel members feel satisfied by which the
conflict can be slowly tapered down.

6. Improvement in communication

Distribution channel also needs different information and notices.

So, information should be clear, meaningful, and simple. Due to
weak information system, conflict arises in channel. Such conflict
can be tapered down through improvement in information system.
But improvement in communication should be on both sides.
Otherwise, information becomes meaningless.
Managing channel Relationships

Promote together

It’s very important to work tightly with partners on promotional

activities. For example, a partner may come to you and say they
are doing a trade show or a special event, and they’d like you to
be represented. Yes, you will show up as the vendor or the
manufacturer, but you’ll play an active role in helping to generate
leads. This will also help the partner sales reps see how you sell
because you know your product or service intimately. And the best
part is you can actively play a role to directly hand over new leads
to the partner reps.

Take the time

A great sales rep will understand the importance of co-selling with

partners, whether it’s a distributor or a partner sales rep. The
channel represents feet on the street above and beyond your single
self, so it’s time well invested when you work closely together.
Get social

Speaking from practical experience, when a sales rep is active in a

social media community, there’s an amazing amount to learn by
listening. It’s a very good place to learn what, where, and how you
should be selling. Customers are asking questions, but so are
distributors and partners. By participating in these forums, a sales
rep and all of the other partners can provide their own unique
expertise to questions depending on where they are coming from.
A sales rep’s time spent on social media communities, particularly
the private communities that companies have where they invite
their customers, is a tremendous way to sell more effectively
through partners.

Co-invest with your channel partner

You can also encourage co-investing between your organization

and the channel partner. Remember, a channel partner would
always like to have more salespeople, but they cost money. So
your company could actually co-sponsor or co-invest with
dedicated sales reps. This makes it very attractive to the partner
and you have reps who are very interested in your own product.

Factors influencing Retailing

21 Jun 2019

Some of the factors responsible for the growth of organised retailing are as
under:

1. Growth of middle class consumers:

In India the number of middle class consumer is growing rapidly. With rising
consumer demand and greater disposable income has given opportunity of retail
industry to grow and prosper.

They expect quality products at decent prices. Modern retailers offer a wide range
of products and value added services to the customers. Hence this has resulted into
growth of organised retailing in India.
Growing consumerism would be a key driver for organized retail in India. Rising
incomes and improvements in infrastructure are enlarging consumer markets and
accelerating the convergence (meeting) of consumer tastes.

2. Increase in the number of working women:

Today the urban women are literate and qualified. They have to maintain a balance
between home and work. The purchasing habit of the working women is different
from the home maker.

They do not have sufficient time for leisure and they expect everything under one
roof. They prefer one-stop shopping Modern retail outlets therefore offers one
store retailing.

3. Value for money:

Oganised retail deals in high volume and are able to enjoy economies of large scale
production and distribution. They eliminate intermediaries in distribution channel.

Organised retailers offer quality products at reasonable prices. Example: Big Bazaar
and Subhiksha. Opportunity for profit attracts more and more new business groups
for entering in to this sector.

4. Emerging rural market:

Today the rural market in India is facing stiff competition in retail sector also. The
rural market in India is fast emerging as the rural consumers are becoming quality
conscious.

Thus due to huge potential in rural retailing organised retailers are developing new
products and strategies to satisfy and serve rural customers. In India, Retail
industry is proving the country’s largest source of employment after agriculture,
which has the deepest penetration into rural India.

5. Entry of corporate sector:

Large business tycoons such as Tata’s, Birla’s, and Reliance etc. have entered the
retail sector. They are in a position to provide quality products and entertainment.
As the corporate – the Piramals, the Tatas, the Rahejas, ITC, [Link]’s, RPG
Enterprises, and mega retailers- Crosswords, Shopper’s Stop, and Pantaloons race
to revolutionize the retailing sector.

6. Entry of foreign retailers:

Indian retail sector is catching the interest of foreign retailers. Due to liberalisation
multinationals have entered out country through joint ventures and franchising.
This further is responsible for boosting organised retailing.

7. Technological impact:

Technology is one of the dynamic factors responsible for the growth of organised
retailing. Introduction of computerization, electronic media and marketing
information system have changed the face of retailing. Organized retailing in India
has a huge scope because of the vast market and the growing consciousness of the
consumer about product quality and services.

One of the major technological innovations in organised retailing has been the
introduction of Bar Codes. With the increasing use of technology and innovation
retailers are selling their products online with the help of Internet.

8. Rise in income:

Increase in the literacy level has resulted into growth of income among the
population. Such growth has taken place not only in the cities but also in towns and
remote areas.

As a result the increase in income has led to increase in demand for better quality
consumer goods. Rising income levels and education have contributed to the
evolution of new retail structure. Today, people are willing to try new things and
look different, which has increased spending habits among consumer.

9. Media explosion:

There has been an explosion in media due to satellite television and internet. Indian
consumers are exposed to the lifestyle of countries. Their expectations for quality
products have risen and they are demanding more choice and money value services
and conveniences.
10. Rise of consumerism:

With the emergence of consumerism, the retailer faces a more knowledgeable and
demanding consumer. As the business exist to satisfy consumer needs, the growing
consumer expectation has forced the retail organizations to change their format of
retail trade. Consumer demand, convenience, comfort, time, location etc. are the
important factors for the growth of organised retailing in India.

The retail industry is divided into organised and un-organised sectors. Organised
retailing refers to trading activities undertaken by licensed retailers, that is, those
who are registered for sales tax, income tax, etc.

These include the corporate-backed hypermarkets and retail chains, and also the
privately owned large retail businesses. Un-organised retailing, on the other hand,
refers to the traditional formats of low-cost retailing, for example, the local kirana
shops, owner manned general stores, paan/beedi shops, convenience stores, hand
cart and pavement vendors.

It is important to understand how retailing works in our economy, and what role it
plays in the lives of its citizens, from a social as well as an economic perspective.
India still predominantly houses the traditional formats of retailing, that is, the
local kirana shop, paan/beedi shop, hardware stores, weekly haats, convenience
stores, and bazaars, which together form the bulk.

Advertising: Meaning, Objectives

8 Mar 2019
“Advertising consists of all activities involved in presenting to a group a non-
personal, oral or visual, openly sponsored identified message regarding a product,
service, or idea. The message, called an advertisement, is disseminated through
one or more media and is paid for by the identified sponsor”-William Stanton.

[Link] can define term ‘advertising’ as: Advertising is a paid form of

mass communication that consists of the special message sent by the specific
person (advertiser or company), for the specific group of people (listeners, readers,
or viewers), for the specific period of time, in the specific manner to achieve the
specific goals and objectives.

Philip Kotler: “Advertising is any paid form of non-personal presentation and

promotion of goods, services, or ideas by an identified sponsor.”
Frank Presbrey: “Advertising is a printed, written, oral and illustrated art of selling.
Its objective is to encourage sales of the advertiser’s products and to create in the
mind of people, individually or collectively, an impression in favour of the
advertiser’s interest.”

Objectives of Advertising

1. To Inform Buyers

This objective includes informing customers regarding product’s availability, price,

features, qualities, services, and performance. Besides, it also includes informing
them about changes made in the existing product and introduction of new
products. Company also highlights its location, achievements, policies, and
performance through advertising.

2. To Persuade or Convince Buyers

Company uses advertisement to persuade or convince the buyers about superior

advantages offered by its product. Company communicates competitive
advantages the product offers to induce customers buy it. Comparative advertising
is used to prove the additional benefits of product at a given price.

3. To Remind Buyers

Marketer uses advertising to remind the buyers regarding existence of company,

products, maintenance of quality, superior services, and chasing customer-
orientation. Mostly, the existing firms aim their advertising for this objective.
Here, the purpose is to inform that the company is still in existence and serving
customers in a better way. Due to huge information bombarded by a number of
companies, customers are more likely to forget name of company and/or products
and services it offers.

4. To Face Competition

Advertising is treated as the most powerful weapon to fight with competitors

effectively. Advertising enables the firm to respond the competitors strongly. It
helps the firm to distinguish its total offerings from competitors.

In brief, the firm can face competition, can prevent the entry of competitors, or can
remove competitors away from the market. In competitive marketing
environment, the firm cannot survive without an effective advertisement.

5. To Achieve Sales Targets

Increase sales volume is one of the major advertising objectives. A company can
advertise its products in various media to attract customers situated in different
parts of the world. National and international marketing is the result of advertising.
Even, non-users can be converted into users and usage rate can be increased. Thus,
company can achieve its sales objectives by advertisement.

6. To Build and Improve Brand Image

Advertising is used for brand recognition and acceptance. A company can

distinguish its brand by magnifying major benefits the product offers.
Advertisement attracts customers toward the brand; they try it and accept it over
time. In the same way, bad image related to brand can be changed by systematic
presentation of facts and scientific evidences, and removing misunderstanding.

7. To Help or Educate People

Advertising is not always used only for company’s benefits. It is meant for helping
customers to make the right choice of product. It educates people about availability
of new products, its features and qualities, price, services, and other related
aspects. Such information is instrumental for purchasing suitable products. Thus, it
guides customers to choose the most appropriate product.

8. To Build Company Image and Reputation

A company opts for advertisement to build prestige and reputation in the market.
Most of the companies, though they are satisfied with the volume of sales, go for
advertising to acquire fame in the market. Many companies advertise its policies,
activities, and achievements to make a permanent place in the mind of people.

9. To Assist Sales Force and Middlemen

Advertising is an aid to middlemen and salesmen. Advertising also popularizes the

name of dealers. Likewise, advertising provides necessary information to the
buyers. Middlemen and salesmen are not required to do the same. It eases the task
of sellers. In the same way, advertising encourages sales force.

10. Other Objectives

There are certain minor objectives of advertising, such as:

• To promote new products.

• To build long-term relations.
• To remove misunderstanding.
• To expand of market.
• To gain confidence of buyers.
• To request customers to compromise with unavoidable
circumstances.
• To seek apology of the buyers for any undesirable events, etc.

Company has to select one or more objectives based on its situations. It should be
clarified that the list is not exhaustive. New advertising objectives may emerge as
per change in situations. However, the main objective of advertising is to increase
sales and earn profits. Company must define it advertising objectives clearly and
precisely.

Advertising Budget
8 Mar 2019
An advertising budget is an estimate of a company’s promotional expenditures
over a certain time period. More importantly, it is the money a company is willing to
set aside to accomplish its marketing objectives. When creating an advertising
budget, a company must weigh the value of spending an advertising dollar against
the value of that dollar as recognized revenue.
An advertising budget is part of a company’s overall sales or marketing budget that
can be viewed as an investment in a company’s growth. The best advertising
budgets—and campaigns—focus on customers’ needs and solving their problems,
not company problems such as an overstock reduction.

Advertising Budget and Goals

Before deciding on a specific advertising budget, companies should make certain

determinations to ensure that the budget is in line with their promotional and
marketing goals:

• Target consumer: Knowing the consumer and having their

demographic profile can help guide advertising spend.
• Type of media that is best for the target consumer: Mobile or
internet advertising—via social media—may be the answer,
although traditional media, such as print, television, and radio may
be best for a given product, market, or target consumer.
• Right approach for the target consumer: Depending on the product
or service, consider if appealing to the consumer’s emotions or
intelligence is a suitable strategy.
• Expected profit from each dollar of advertising spend: This may be
the most important question to answer, as well as the most difficult.

Importance of Advertising Budget

The objective of a company which markets its products is to earn profits and
increase brand awareness. Advertising objectives of a company is purely dependent
on the advertising campaign, type of customers, advertising media and what the
company wants to achieve. Hence, for any marketing activity that a company wants
to do, it has to spend some money. This is why advertising budget is important. It
helps in understanding the objectives. The costs, helps to formulate strategies and
generate profits by increasing the overall sales.

Factors Affecting Advertising Budget

Advertising is one of the variables which affect sales and hence the profit earned. It
is therefore difficult to calculate the amount to be allocated for advertisement
budget. Also the budgeting depends on various other factors like:
 1. Degree of competitiveness in market:
Monopoly/Duopoly/Oligopoly

A monopoly firm does not have to worry about the promotional spends as it is the
only player in the market. For duopoly, where market is dominated by two
dominant players, the promotional budgets would be high to outperform each
other. In an Oligopolistic market, where the market is cluttered and there are many
players, promotional spends has to be higher as the frequency of advertisements
has to be increased to get noticed among so many players. Thus depending upon the
competition the advertising budget is set.

2. Market Share: Market leader/Market Follower

The advertising budget for a market follower will be decided by the tactics of the
market leader. To improve market share one of the investment is to increase
promotional spent. Thus, where a company stands is a deciding factor in
advertising budget

3. Product life-cycle stage: Introduction/growth/maturity/decline

The advertisement budget would be higher at the introduction and growth stages
as it has to introduce the product in the market and establish itself among the
competitors so the frequency of advertisements would be high and so would be the
budget. As the product reaches maturity and decline stages the promotional spent
would be lower.

4. Advertising Frequency

An ad can be played only once or can be be multiple times. Also, it can be daily,
weekly, fortnightly, monthly etc. Depending upon the requirement, the advertising
budget is altered.

Advertising Budget Process

There are certain steps which can be followed in creating an advertising budget.
They can be explained as below:

1. Understanding advertising objectives based on the goals which have

been set by the company.
2. Determine the tasks, ad campaigns which could be done.
 3. Formulating, evaluating and preparing the breakup of advertising
budget.
4. Taking approvals form the senior management.
5. Allocation of funds for different activities under the advertising
budget.
6. Monitoring and controlling the expenditure and revising it for better
profit.

Types of Advertising Copy

As told earlier, method or style of presentation is to do with the way in which the
message is presented. It speaks of the different types of advertising copies to arrest,
inform, impress and impel the reader; certain elements are to be present in a copy
such as attention, suggestion, meaning, conviction, sentiment, education and
instinct.

These copies are classified in a number of ways. However, the most practical one is
to classify into six types as:

• Institutional
• Reason why?
• Human interest
• Educational
• Suggestive and
• Expository

1. Institutional Copy

Institutional Copy neither sells nor the products neither the service but the name of
the business house. The aim is to build the sound edifice of reputation for the selling
house. It seeks to build goodwill through its philosophy, objectives, and policies
towards public so that the prospects remember it.

2. Reason Why Copy

Reason Why Copy offers reasons as to why the customer is expected to buy a
product or service of the advertiser. It appeals straight to the intellect or the
judgment of an individual than emotion or impulses. It attempts to prove the
product superiority by means of evidences in the forms of performance test,
records, testimonials, guarantees and the like.

3. Human Interest Copy

Human Interest Copy appeals to the emotional and the senses than intellect and the
judgment, sympathy, affection, love, fear, humour, curiosity and other emotional
appeals are used to the sense of sight, touch, taste, smell and hearing.

It tells about the product in relation to the people instead of conforming to the facts
about the products. It takes several forms of which four are very significant namely,
‘fear’, ‘humorous’, ‘story’ and ‘predicament’ copy.

4. Suggestive Copy

Suggestive Copy tries to suggest or pinpoint or convey the message of the

advertiser directly or indirectly to the readers. Much is left to the reader to infer the
ad message. Like a poem, suggestive language is freely used where the hidden
meaning is to be picked by the readers. Such copy can be ‘direct’ or ‘indirect’
suggestive copy. The first tells directly about the products or services of the
company while the latter does indirectly.

5. Expository Copy

Expository Copy is open copy that exposes unlike suggestive copy. It is so open that
the facts are given in very simple and clear way so that there is no need for
interpretation. The information given is so clear and concise that hardly it taxes the
reader’s brain. It makes possible effortless grasp and act.

AIDA
24 Mar 2019
If you’ve ever been motivated to take action due to an advertisement, you’ve likely
been influenced by a technique called “AIDA.” AIDA stands for “Attention, Interest,
Desire, Action” and it’s a tried-and-true process is used by marketers to entice
prospects to make a purchase or take a desired action. The technique is commonly
used in advertising vehicles such as television commercials, website copy and direct
mail pieces.
The AIDA Model identifies cognitive stages an individual goes through during the
buying process for a product or service. It’s a purchasing funnel where buyers go to
and fro at each stage, to support them in making the final purchase.

It’s no longer a relationship purely between the buyer and the company, since social
media has extended it to achieving the different goals of AIDA via information
added by other customers via social networks and communities.

Attention

The attention portion of the marketing message occurs at the beginning and is
designed to give the prospects a reason to take notice. Presenting a shocking fact or
statistic that identifies a problem which can be solved by the product or service is
one common method of gaining attention. Other methods can include asking a
thought-provoking question or using the element of surprise. Visual elements, like
an unexpectedly elegant design, loud colors or sudden motion, can also be good
attention-grabbers. The purpose is to give the prospects a reason for wanting to
learn more.

Interest

Initial attention-grabbers work for a moment or two, but your potential customer
needs a reason to stay engaged. Once you’ve gained the prospects’ attention, the
next step is to maintain interest in your product or service. Explain to the recipients
how the problem you’ve identified in the attention step is adversely affecting their
lives. A demonstration or illustration can help the recipients to further identify with
the problem and want to actively seek possible solutions. By personalizing the
problem, you’re making it hit closer to home.

Desire

In the desire stage, your objective is to show the prospects how your product or
service can solve their problem. Explain the features of the product or service and
the related benefits and demonstrate how the benefits fulfill the need. A common
advertising process is the “before and after” technique, such as when a cleaning
product makes a soiled item look brand new. Advertisers often use the suggestion
of a better life (better health, better wealth, better romance) as a means of keeping
would-be clients engaged. If done effectively, the prospects should now have the
desire to make a purchase.

Action

Now that you’ve created the desire to make a purchase, the final step is to persuade
the prospects to take immediate action. In a one-on-one sales process, this is the
time to ask for the sale. In the advertising world, techniques involve creating sense
of urgency by extending an offer for a limited time or including a bonus of special
gift to those who act within a specific time frame. Providing a phone number to call,
a website to visit, or a digital button to click on gives prospective customers a clear
and easy next step towards making a purchase. Without a specific call to action, the
prospect may simply forget about your offer and move on.

Public Relations
8 Mar 2019

Public relations (PR) is nothing but the practice of protecting as well as enhancing
the reputation of any particular organization/firm or for that matter any individual.
In today’s world of fierce competition, where every organization strives hard to
work toward its brand image, public relations has become the need of the hour. It is
essential for every organization to communicate well with its public/target
audience. The correct flow of information is essential. Here comes the importance
of public relations.

What is Public Relations ?

The practice of maintaining a healthy relationship between organization and its

public/employees/stakeholders/investors/partners is called public relations.
Public relation activities ensure the correct flow of information between the
organization and its public also called its target audience. Public relations goes a
long way in maintaining the brand image of an organization in the eyes of its
audience, stake holders, investors and all others who are associated with it.

For schools, the target audience would be students and their parents/guardians, for
retailers the target audience would be customers and so on.

In the above examples, Public Relations ensures a smooth two way communication
between the school authorities and its target audiences (students and their
parents).Retailers must address their customers well for a positive word of mouth
and a strong brand positioning. It is really important to create a positive image of
any particular brand in the minds of consumers for it do well. Public relations
experts not only help in the flow of information from the organization to its public
but also from the public to the organization.(Two way communication).The flow of
information from the public to the organization is generally in the form of reviews,
feedback(positive/negative),appreciation and so on. Public relations strengthens
the relationship between the organization and its target audience, employees,
stakeholders, investors etc.

Public Relation Activities

Here are some ways of enhancing an organization’s brand image:

• Addressing the media

• Speaking at various press conferences, seminars.
• Advertisements to correctly position the brand, Pamphlets,
Brochures, magazines notices, newsletters and so on.
• Corporate Social responsibility (CSR Activities)
• Introducing various loyalty schemes for customers like membership
cards, premium clubs so as to retain the customers.
• Various events, shows and activities.
Effective Public Relations

Public Relations is said to be effective under all the below circumstances:

• Awareness: To create a positive image of an organization, the

message must reach the public. Information must reach in its desired
form for effective public relation.
• Acceptance: The audience must understand what the message
intends to communicate. They ought to agree with the message.
• Action: The audience ought to give feedback to the organization
accordingly.

To conclude public relations is nothing but an effort to present one’s organization

in the best light.

Types of Public Relations

According to the functions of the public relations department/agencies, public

relations can be divided into 7 types. These are:

(i) Media Relations: Establishing a good relationship with the media organizations
and acting as their content source.

(ii) Investor Relations: Handling investors events, releasing financial reports and
regulatory filings, and handling investors, analysts and media queries and
complaints.

(iii) Government Relations: Representing the brand to the government with

regard to fulfilment of policies like corporate social responsibility, fair competition,
consumer protection, employee protection, etc.
(iv) Community Relations: Handling the social aspect of the brand and
establishing a positive reputation in the social niche like environment protection,
education, etc.

(v) Internal Relations: Counselling the employees of the organization with regard
to policies, course of action, organization’s responsibility and their responsibility.
Cooperating with them during special product launches and events.

(vi) Customer Relations: Handling relationships with the target market and lead
consumers. Conducting market research to know more about interests, attitudes,
and priorities of the customers and crafting strategies to influence the same using
earned media.

(vii) Marketing Communications: Supporting marketing efforts relating to

product launch, special campaigns, brand awareness, image, and positioning.

Public Relations Types & Tools of PR

26 Mar 2019

Organizations hire public relations experts to position themselves strongly in the

minds of target audiences, investors, stakeholders, employees and all others
associated with it. Public relations activities are designed specially to create a
strong brand image. Public relations experts should ensure their target audiences
agree to what they intend to sell and thus in a way enhance as well as maintain the
reputation of their organization through ethical means.

Types of Public Relations

When it comes to companies and corporations, everyone has an opinion –

customers, shareholders, the media, the government and the general public. There
are dozens of viewpoints, and almost as many types of PR. Each type has a purpose,
and each one suits a different type of professional.

• Media relations
• Community relations
• Corporate and social responsibility
• Public affairs
• Crisis management
• Social media
• Employee relations
 • Integrated marketing and communications

(i) Media relations

Media relations is all about dealing with the media – writing press releases,
scheduling interviews and giving press conferences. The goal is to generate positive
coverage of your company or your product. Basically, you want the media to do your
advertising for free.

Key to media relations is generating a ‘hook’ to draw in audiences. You need to have
an eye for a compelling story that the media will want to cover. You also need to
have the skills to get the story out there, which can vary depending on the role.
Copywriters produce snappy, well-written press releases, while company
spokespeople stand up and give speeches to the press. In smaller organisations, one
person is responsible for everything.

(ii) Community relations

Community engagement officers work to develop a company’s relationship with

the local (and not-so-local) community.

Reasons for doing this include:

• Getting local support for a project, such a building a new

manufacturing plant.
• ‘Giving something back’, which improves the company’s ethical
reputation.
• Getting people interested in your products or services.
• Changing people’s mindset about an issue.

(iii) Corporate and social responsibility

Related to community engagement, there is PR that improves the company’s

reputation for ethics, environmental responsibility, and community and charity
works. This area of PR can hugely affect an organisation’s business practices. A CSR
PR officer might recommend the company to change its entire recycling policy, or
even its business direction.
To be a good CSR officer you need the ear of the company leaders – which takes
networking skills, people skills, persuasion and the ability to endear yourself to your
colleagues.

(iv) Public affairs

Public affairs, also known as lobbying, is all about getting the government on your
side. Say you wanted a change in farming legislation so you could sell your product
for more money. You’d need to make contact with a minister, convince them of your
case, and provide them with information so they can talk confidently about your
issue and fight your corner.

(v) Crisis Management

Crisis management is the PR you need when disaster strikes: a faulty product has to
be recalled, an oil tanker spills, an employee accuses the company of wrongdoing,
or the CEO is arrested for public indecency. These things could ruin the company’s
reputation and need to be dealt with quickly.

(vi) Social Media

Many companies use social media campaigns as a form of marketing, but social
media also has huge PR potential. Some of a company’s greatest PR successes (and
disasters) can happen on social media. It’s a place where your interactions with a
single customer are visible to the whole world. It allows companies to show their
lighter side – for example, two fast food chains exchanging friendly Twitter insults.
It’s also a good place for honest public apologies.

(vii) Employee Relations

Also known as internal PR, employee relations is the business of giving employees
a positive view of the company they work for. The goal is to keep them satisfied,
motivated and loyal.

Employee relations work might include:

• Organising employee events

• Creating internal newsletters and other communications
• Resolving disputes
• Liaising with unions
 • Helping line managers develop good relationships with their team

(viii) Integrated Marketing and Communications

Integrated marketing and communications (IMC) isn’t exactly a form of public

relations – it’s a way to take all your activities, from advertising to media relations
to internal communications, and ensure that you provide a consistent message that
serves your overall strategy.

Tools of Public Relation

Following are the tools used in media relations:-

• Press Kits: Press kits include written material about the

organization and its top people.
• Audio Releases: Audio releases or video releases are prerecorded
messages distributed to various media channels.
• Matte Releases: Small local newspapers accept articles written by
organizations when they do not have sufficient articles or stories to
publish. Such releases are called as matte releases.
• Website Press Room: Public relations experts promote their
organization and its products/services through online press rooms.
• Media Tour: Public relations experts publicize their organization and
its products through media tour where key people of the
organization travel to important places and locations and promote
their products through various interviews to media people. They
interact and share the benefits and USPs of their products/services
with people from various news channels, radio channels and even
print media. Organizations also hire celebrities or other people
popular among the masses to promote and publicize their
organization.
• Newsletters: Newsletters are nothing but publications which are
distributed on a regular basis (monthly, quarterly) among target
audiences. Public relations experts collect complete information
(name, address, agegroup) of their target customers and distribute
newsletters to create awareness about their products. Newsletters
should include information about the organization, interview from
key people, product information, testimonials from clients and so
on.
 • Events/Functions: Public relations experts organize special events,
gatherings, parties, to target their customers and promote their
organization and its products among them. People from media are
also invited for coverage.
• Speaking Engagements: One of indirect ways of publicizing an
organization and its products is through interacting with potential
customers and target audience. Company officials address the
target audience and do not only discuss about their products and
services. They generally prefer any topic which would interest the
target audiences.
• Employee interactions on a regular basis: It is really essential for
employers to stay in constant touch with employees and keep them
abreast with the latest developments and happenings within the
organization. Management or public relations experts should
circulate latest events, new product launches among employees
through emails, circulars, notices or simply communicating with
them.
• Charity/Corporate social responsibility: Public relations experts
engage in various social and charitable activities to publicize their
organization and its products. Organizations distribute products
among target audiences to create a goodwill of their organization.

Sales Promotion – Purposes, Types, Limitations

25 Jun 2019

Sales promotion refers to the use of short term incentives to persuade the people to
purchase the goods or services immediately. These incentives are discount, free gift
offer, distribution of free samples, rebate, sales contents etc. Basically, sales
promotion supplements other promotional activities viz: advertisement, personal
selling etc.

Merits of Sales Promotion:

Merits of sales promotion are evident from the following facts:

1. Attention Value:

Use of incentives helps in attracting a large number of buyers.

 2. Useful in New Product Launch:

The tools of sales promotion like discount, free gift offer etc. are very useful in
launching new products. It convinces them to use new products in place of the
products which they may have been using regularly.

3. Synergy in Total Promotional efforts:

Sales promotion tools add to the overall effectiveness of the efforts made under
personal selling and advertisement.

Limitations of Sales Promotion:

The following are the limitations of sales promotion as follows:

1. Reflects crisis:

If a firm uses sales promotion tools frequently, it may give the impression that the
numbers of consumers are very less or a firm is unable to manage its sales.

2. Spoils Product Image:

Continuous use of sale promotion tools also affects the product image. The
customer may develop an impression that “products sold through sales promotion
are overpriced & of poor quality etc.”.

Commonly used Sales Promotion Methods:

Methods or types of sales promotion are as follow:

1. Rebate:

It refers to a product being sold at special prices, less than the original price for a
limited & very short period of time. The main aim is to clear off excess inventory. For
example, offer of LG to sell 28″ colored television at a discount of Rs 5000/- for a
limited period.

2. Discount:
Certain percentage of price is reduced as discount from the list price. For example at
the end of the season, brands like Allen Solly, TNG, Peter England etc offer their
product at discount to clear off the stock.

3. Refunds:

This refers to refunding a part of price paid by customer on some proof of purchase.
For example, Rs. 3 on return of empty bottle of Pepsi.

4. Product Combination:

It involves offering another product as gift on purchase of a product. For example, a

tooth brush free with a 200gm of Colgate toothpaste or 100 gm Parle biscuit free
with purchase of 1kg of Kissan Tomato Sauce etc.

5. Quantity Gift:

It refers to offering extra quantity of the same product. For example, 1 soap free on
purchase of 3 soaps or Tata Tea offer of 40% extra quantity etc.

6. Instant Draws and Assigned Gifts:

Under this scheme, some gifts are given on the basis of draws or some events. For
example, Jainsons Westend, Karol Bagh, Delhi organize some events instantly and
deliver gifts on the spot.

7. Lucky Draw:

Under this scheme, some coupons bearing distinct numbers are issued on the
purchase of some products. At the end of a day, week or month, draws are taken and
the winner is awarded some gifts. For example, gift of computer to the lucky winner
declared on the basis of draw taken out from tickets of visitors to India International
Trade Fair.

8. Usable Benefits:

For example a holiday package of Rs 5,000 free with purchase of goods worth Rs
5,000.

9. Full Finance @ 0%:

In case of consumer durable goods like electronic goods or automobiles, the seller
offers easy financing scheme at 0% interest. For example payment of Rs 45,000 for
a bike can be done as Rs 15,000 immediately and balance in 15 installments of Rs
2,000 each.

10. Samples:

Free samples of product are distributed among the customers. The main aim is to
persuade the customers to try it. For example when Godrej company introduced
‘Ezee’ it distributed its samples as it wanted the people to try them.

11. Contests:

It refers to the competitive events organized by the companies for promoting their
products. For example, Bourn-vita Quiz Contest etc.

Promotion: Promotional Mix and Tools of

Promotional Mix
13 Sep 2019

Promotion

In marketing, promotion refers to any type of marketing communication used to

inform or persuade target audiences of the relative merits of a product, service,
brand or issue. The aim of promotion is to increase awareness, create interest,
generate sales or create brand loyalty. It is one of the basic elements of the market
mix, which includes the four Ps, i.e., product, price, place, and promotion.

Promotion is also one of the elements in the promotional mix or promotional plan.
These are personal selling, advertising, sales promotion, direct marketing publicity
and may also include event marketing, exhibitions and trade shows. A promotional
plan specifies how much attention to pay to each of the elements in the
promotional mix, and what proportion of the budget should be allocated to each
element.

Promotional Mix

The Promotion Mix refers to the blend of several promotional tools used by the
business to create, maintain and increase the demand for goods and services.
The fourth element of the 4 P’s of Marketing Mix is the promotion; that focuses on
creating the awareness and persuading the customers to initiate the purchase. The
several tools that facilitate the promotion objective of a firm are collectively known
as the Promotion Mix.

The Promotion Mix is the integration of Advertising, Personal Selling, Sales

Promotion, Public Relations and Direct Marketing. The marketers need to view the
following questions in order to have a balanced blend of these promotional tools.

• What is the most effective way to inform the customers?

• Which marketing methods to be used?
• To whom the promotion efforts be directed?
• What is the marketing budget? How is it to be allocated to the
promotional tools?

Tools (Elements) of Promotion Mix

1. Advertising

The advertising is any paid form of non-personal presentation and promotion of

goods and services by the identified sponsor in the exchange of a fee. Through
advertising, the marketer tries to build a pull strategy; wherein the customer is
instigated to try the product at least once. The complete information along with the
attractive graphics of the product or service can be shown to the customers that
grab their attention and influences the purchase decision.

2. Personal Selling
This is one of the traditional forms of promotional tool wherein the salesman
interacts with the customer directly by visiting them. It is a face to face interaction
between the company representative and the customer with the objective to
influence the customer to purchase the product or services.

3. Sales Promotion

The sales promotion is the short term incentives given to the customers to have an
increased sale for a given period. Generally, the sales promotion schemes are
floated in the market at the time of festivals or the end of the season. Discounts,
Coupons, Payback offers, Freebies, etc. are some of the sales promotion schemes.
With the sales promotion, the company focuses on the increased short-term
profits, by attracting both the existing and the new customers.

4. Public Relations

The marketers try to build a favourable image in the market by creating relations
with the general public. The companies carry out several public relations campaigns
with the objective to have a support of all the people associated with it either
directly or indirectly. The public comprises of the customers, employees, suppliers,
distributors, shareholders, government and the society as a whole. The publicity is
one of the form of public relations that the company may use with the intention to
bring newsworthy information to the public.

E.g. Large Corporates such as Dabur, L&T, Tata Consultancy, Bharti Enterprises,
Services, Unitech and PSU’s such as Indian Oil, GAIL, and NTPC have joined hands
with Government to clean up their surroundings, build toilets and support the
swachh Bharat Mission.

5. Direct Marketing

With the intent of technology, companies reach customers directly without any
intermediaries or any paid medium. The e-mails, text messages, Fax, are some of
the tools of direct marketing. The companies can send emails and messages to the
customers if they need to be informed about the new offerings or the sales
promotion schemes.

E.g. The Shopper stop send SMS to its members informing about the season end
sales and extra benefits to the golden card holders.
Thus, the companies can use any tool of the promotion mix depending on the
nature of a product as well as the overall objective of the firm.

Sales Promotion: Different Types of Sales

Promotion
26 Mar 2019
Sales promotion is a type of Pull marketing technique. If you have a product which
is new in the market or which is not receiving a lot of attention, then you can
promote this product to customers via sales promotions. You can use various
techniques like giving discounts on the product, offering 1 + 1 free schemes, etc.

When a brand wants to increase the sales of its products, it uses Sales promotion.
The brand can increase the sales by attracting new customers to their products or
by retaining the old customers by various means. The company can also motivate
the dealers and distributors of their channel to perform better for their brand, and
to get their stock moving.

Types of Sales Promotion

There are two types of Sales promotions

1. Consumer Sales Promotions

Any sales promotion activity that you do keeping the end consumer in mind is
known as consumer sales promotions. Example – if an E-commerce website gives
10% discount on its products, then it wants the consumers to make the best of this
deal. This is a consumer focused promotional activity and hence can be called as
consumer sales promotions.

The objective of Consumer sales promotions might be various. A consumer might

be asked to test a sample of a completely new perfume in the market and rate it. An
existing customer might be asked to use a Scratch card so that he receives a gift.

At the end, the result should be an action from the consumer. Either the consumer
should purchase the product right away, or he should come to know about the
product so that further awareness is created for the brand.
 2. Trade Sales Promotions

If your promotional activities are focused on Dealers, distributors or agents, then it

is known as trade promotions. There is a lot of competition in any field. And in
channel sales, to get the products moving and to motivate the dealer to perform
better, trade discounts are given.

Example – You are a dealer for Televisions. Now Sony comes and tells you, you will
be given 5% discount if you cross a sale of 100 televisions. Naturally, you will be very
motivated because 5% in television sales is huge. Plus selling Sony TV’s is easy
because it is already a brand. Thus, you divert all potential customers to Sony
Televisions so that you can achieve the target.

Similarly, there are other types of trade sales promotions which can be used to
motivate the dealer and distributor. More such techniques of sales promotions are
discussed below.

As the noise of competitors rises, you will find more and more companies using
sales promotions techniques. The advantage of sales promotion is that they are not
too expensive for the company when compared with ATL advertising mediums like
Television or newspaper. Hence, even small businesses use it quite effectively.
Sales Promotion Techniques

Below are some of the most common type of sales promotion techniques used
across all industries. Some industries, like FMCG, see a lot of these techniques being
implemented simultaneously mainly because of the sheer volume of business as
well as because of the competition in FMCG. Other businesses, like Consumer
durable, furniture etc also use a combination of these sales promotion techniques.

(i) Discounts – Trade / consumer

The most common type of sales promotions is consumer discounts or trade

discounts. In trade discounts, the dealer may or may not forward the discount to the
customer. It is not necessary that the dealer will give additional 5% discount to
customers when he is himself receiving 10% additional discount. However, many
dealers know the importance of achieving sales volumes hence they pass on
discounts to customers whenever they receive trade discounts.
(ii) Gifting

One of the most common ways to promote your store during festival time or when
there is a huge walk in expected is Gifting. It is also a way to increase the sales of the
products because customers have an anticipation that they might win a gift from
the store.

Another popular way to use gifting is to advertise “Assured gifts”. Basically, you
have different gifts on offer like a mixer grinder or a steam iron. A customer who
purchases a set amount of products will get the “Assured gift” from you. This
creates excitement in the mind of the customer and he received something for
“free”. He might visit again and again.

(iii) Coupons

Quite commonly used to motivate people to purchase when they think the price is
high or it can be incentive to buy your product above the competitors. Domino’s,
Pizza hut and McDonalds very prominently use coupons in their marketing. If you
have their coupon in hand, you get a discount of X amount on the purchase.

(iv) Financing

Financing is ingenious amongst the various types of sales promotions. It is a

combination of various factors. Companies which have huge resources generally
act as Financers. They allow customers to purchase a product on EMI or on different
financing options. All this happens for a minor processing fee and less interest.

As a result, the customer, who does not have complete money to buy the product,
will likely purchase the product using financing options. Such financing helps the
dealer to liquidate the product faster and also helps the customer in making
purchasing decisions.

(v) Sampling

It is predominantly used in the FMCG industry for perfumes, deodarants, soaps or

even eatables. Sampling is an excellent way to introduce your product in the market
and at the same time to increase the awareness of the product.

The customers who are being targeted by sampling carry a huge “lifetime value”.
Once they get hooked onto your product, they won’t leave it that early. Hence,
Sampling might be of higher cost to the company but it is quite successful in the
various types of sales promotions.

(vi) Bundling

Bundling is when you put a combination of products on sale for the same price. So,
for example, normally a 100 dollars might buy you just a shirt. However, with
product bundling, 100 dollars might buy you a set of shirt and pants. As a result, the
consumer is much more likely to buy this bundled offer as compared to a single
offer.

(vii) Contests

There are different forms of contests which can be run to gather more customer
information or to motivate the customer to try the product or to create awareness
about the new retail place. Contests can be as simple as winning a gift through a
scratch card, or it can be an in house game in a retail showroom or it can be an online
contest for which users have to enter their information.

Due to the phenomenal rise of the internet, online contests have become very easy
and important. They also penetrate faster and reach a lot of customers.

(viii) Refunds & Rebates

As the name suggests, refunds are a marketing tactic when you get a partial amount
refunded to you based on an action you have taken. For example – if you bring the
parking ticket to the showroom, your parking amount will be refunded by the store.
Such refunds make the customer excited to visit a store.

Similarly, rebate is a type of partial refund which is most popular in the United
states, though not much popular in other countries. In rebates, you fill forms while
checking out of stores. And if you have won the rebate, you will have to mail your
details to the company and the company will refund you the rebate amount in your
bank or via a paypal account.

(ix) Exchange offers

Exchange offers are quite commonly used all across the world and used strongly in
festive season when sales will be more and people are in a purchasing mood. In
exchange offer, you can exchange an old product for a new product. You will receive
a discount based on the valuation of your old product.
So, if you had an old washing machine at home and there was an Exchange offer in
the market, then you will receive an X amount for the washing machine which is
decided by the parent company or the retailer. This X amount will be deducted from
your final payable amount and will be reduced under the header of “Exchange offer
reimbursed”.

(x) Free trial

We have come across several softwares or online programs which offer a free trial to
you before you purchase the product. Shareware programs are also a kind of free
trial programs where you can use the product for some time but later on have to
purchase the product to use it completely.

This is done so that the customer gets a chance to trial run the product before he
pays for the product in full. Programs like Adobe Photoshop, Microsoft office 365
and others are known to give free trial programs of upto a month so that the
customer can know more about the product, he can try it and then purchase.

Sales Promotion
21 Mar 2019
Sales Promotion is one of the elements of the promotional mix. (The primary
elements in the promotional mix are advertising, personal selling, direct marketing
and publicity/public relations). Sales promotion uses both media and non-media
marketing communications for a pre-determined, limited time to increase
consumer demand, stimulate market demand or improve product availability.
Examples include contests, coupons, freebies, and loss leaders, point of purchase
displays, premiums, prizes, product samples, and rebates.

Sales promotions can be directed at either the customer, sales staff, or distribution
channel members (such as retailers). Sales promotions targeted at the consumer
are called consumer sales promotions. Sales promotions targeted at retailers and
wholesale are called trade sales promotions.

Sales promotion includes several communications activities that attempt to

provide added value or incentives to consumers, wholesalers, retailers, or other
organizational customers to stimulate immediate sales. These efforts can attempt
to stimulate product interest, trial, or purchase. Examples of devices used in sales
promotion include coupons, samples, premiums, point-of-purchase (POP)
displays, contests, rebates, and sweepstakes.
Sales promotion is implemented to attract new customers, to hold present
customers, to counteract competition, and to take advantage of opportunities that
are revealed by market research. It is made up of activities, both outside and inside
activities, to enhance company sales. Outside sales promotion activities include
advertising, publicity, public relations activities, and special sales events. Inside
sales promotion activities include window displays, product and promotional
material display and promotional programs such as premium awards and contests.

Advantages of Sales Promotions

The main advantages in using sales promotional activity, either alone or to support
mainstream marketing activity and communications, are:

(i) Very flexible and adaptable in terms of tackling specific problems or supporting
mainstream marketing communications Bata national or local level

(ii) Capable of specific action through specific focus and structure

(iii) Relatively short lead times to design and implement (compared with media
communications)

(iv) Often more easy to monitor the effect or tangible results

(v) Economical and cost saving, possibly with economies of scale

(vi) Can be adapted to large and small markets, major or minor products or brands.
11 Important Techniques of Sales Promotion

1. Rebate

Under it in order to clear the excess stock, products are offered at some reduced
price. For example, giving a rebate by a car manufacturer to the tune of 12,000/- for
a limited period of time.

2. Discount

Under this method, the customers are offered products on less than the listed price.
For example, giving a discount of 30% on the sale of Liberty Shoes. Similarly giving
a discount of 50% + 40% by the KOUTONS.

3. Refunds

Under this method, some part of the price of an article is refunded to the customer
on showing proof of purchase. For example, refunding an amount of 5/- on showing
the empty packet of the product priced 100/-.

4. Product Combination

Under this method, along with the main product some other product is offered to
the customer as a gift. The following are some of the examples:
 5. Quantity Gift

Under this method, some extra quantity of the main product is passed on as a gift to
the customers. For example, 25% extra toothpaste in a packet of 200 gm tooth
paste. Similarly, a free gift of one RICH LOOK shirt on the purchase of two shirts.

6. Instant Draw and Assigned Gift

Under this method, a customer is asked to scratch a card on the purchase of a

product and the name of the product is inscribed thereupon which is immediately
offered to the customer as a gift. For example, on buying a car when the card is
scratched such gifts are offered – TV, Refrigerator, Computer, Mixer, Dinner Set,
Wristwatch, T-shirt, Iron Press, etc.

7. Lucky Draw

Under this method, the customers of a particular product are offered gifts on a fixed
date and the winners are decided by the draw of lots. While purchasing the product,
the customers are given a coupon with a specific number printed on it.

On the basis of this number alone the buyer claims to have won the gift. For
example, ‘Buy a bathing soap and get a gold coin’ offer can be used under this
method.

8. Usable Benefits

Under this method, coupons are distributed among the consumers on behalf of the
producer. Coupon is a kind of certificate telling that the product mentioned therein
can be obtained at special discount.

It means that if a customer has a coupon of some product he will get the discount
mentioned therein whenever he buys it. Possession of a coupon motivates the
consumer to buy the product, even when he has no need of it.

Such coupons are published in newspapers and magazines. Some companies

distribute coupons among its shareholders. Sellers collect the coupons from the
customers and get the payment from the company that issues the same.

9. Full Finance @ 0%
Under this method, the product is sold and money received in installment at 0%
rate of interest. The seller determines the number of installments in which the price
of the product will be recovered from the customer. No interest is charged on these
installments.

10. Samples or Sampling

Under this method, the producer distributes free samples of his product among the
consumers. Sales representatives distribute these samples from door-to-door.

This method is used mostly in case of products of daily-use, e.g., Washing Powder,
Tea, Toothpaste, etc. Thus, the consumers willy-nilly make use of free sample. If it
satisfies them, they buy it and in this way sales are increased.

11. Contests

Some producers organize contests with a view to popularizing their products.

Consumers taking part in the contest are asked to answer some very simple
questions on a form and forward the same to the company. The blank form is made
available to that consumer who buys the product first.
Push vs. Pull Strategy
29 May 2019
Push Marketing Strategy

A push promotional strategy is a marketing strategy that sees companies take

its products to its consumers. The goal of this strategy is to get the product
directly in front of the customers, in the form of trade shows and point of sale
displays. These are the most common push promotion strategies used today:

• Direct selling to customers in showrooms

• Point of Sale (POS) displays
• Trade show promotions
• Package or display design

Push marketing strategies are commonly used to gain and increase product
exposure. Push marketing relies mainly upon traditional avenues of
advertising/marketing, such as a series of television ads or a series of direct
mail pieces. Again, a primary goal is simply making as many consumers as
possible aware of the product and its benefits. “Push” refers to the fact that
the company that sells the product is continually pushing it into the potential
customer’s purview, their field of vision, so to speak.

Although virtually every company seeks to establish and nurture relationships

with its customers or clients, push marketing is more concerned with gaining
an immediate sale than with fostering relationships that create brand loyalty.
Establishing a brand identity and building a loyal customer base falls more
under the heading of “pull marketing.” Therefore, it is quite commonplace to
see a company utilizing both push marketing and pull marketing to create a
more complete, overarching marketing strategy with maximum effectiveness
in terms of expanding the company’s market share and increasing revenues
and profitability.

Push marketing methods are:

• Display advertising across devices i.e. publishers media buyer,

network media buy, behavioral marketing
• Social Marketing i.e. Facebook, Instagram, Linkedin, Twitter.
• Video marketing i.e. Youtube, Facebook, Tik Tok…
• Content Marketing i.e. blogging, an advertorial on publishers’
site, contest

Helpful

• When releasing new products.

• During holidays, or seasonal events.
• When launching a new business or website without a reputation.
• For sales and temporary promotional campaigns.
• When expanding to a new niche.
• To generate cash-flow or sales quickly.
• To help clear out product stock before the end of a season.
• To help promote brand recognition when competing against a
dominant competitor.

Advantages:

• The ability to establish a sales channel.

• Able to forecast and predict demand.
 • Create product exposure, demand, and consumer awareness
about a product.

Disadvantages

• Poor negotiating power with retailers and distributors; the

producers are the ones asking retailers to stock their products,
and the product may be a new one and, therefore, not yet
established as a profitable item for retailers to stock.
• It requires an active sales team that is able to work/network
actively with retailers and distributors.
• Product may be new, it may be difficult to accurately forecast
demand.
• Initial marketing efforts are likely to be expensive, and because
they are more focused on securing a one-time purchase than on
building customer relationships and loyalty, the results may be
short-lived.

Pull Strategy
A pull promotional strategy also called a pull marketing strategy, is the
opposite of a push strategy. Instead of directly attempting to get products in
front of customers, a pull strategy aims to get the customers to come to the
product.

A pull strategy is all about getting the customer to come to you. There are six
widely used pull marketing strategies employed today:

• Word-of-mouth referrals
• Advertising and mass media production
• Customer relationship management
• Sales promotions and discounts
• Social media coverage
• Email marketing

Pull marketing is often the primary business strategy for companies looking
to:

• Maintain dominance in a specific niche or industry

• Build a return customer base or improve loyalty
 • Ensure long-term business growth
• To promote brand recognition with customer engagement and
visibility
• Increase social media traffic as well as social media sharing
• Grow traffic to their site across organic, referral, and social
segments
• Improve sales and revenue affordably, without an expensive ad
budget
• Engage with customers before they know what they want, at the
top of their shopping funnel.

Advantages

• Stronger bargaining power with retailers and distributors.

• Able to establish direct contact with consumers and build
consumer loyalty.
• Focuses on creating brand equity and product value.
• Consumers are actively seeking out the product, which removes
much of the pressure of conducting outbound marketing.
• Can be used to test a product’s acceptance in the market and
obtain consumer feedback on the product.

Disadvantages

• Usually works effectively only when there is high brand loyalty.

• Requires creating a high demand for a product, which can be
difficult in a highly competitive marketplace landscape.
• Lead time is long, as consumers are comparing alternatives
before making a purchase.
• Requires strong marketing efforts to convince consumers to
actively seek out the product (they may, instead, just decide to
settle for whatever similar product a retailer has in stock, rather
than insisting on getting your product).

Types:

Advertisements

Content advertising
Since needs and wants can motivate a customer to make a purchase, creating
an answer for customer demands is an important part of pull marketing
strategies. Content advertising specifically focuses on how a product could
meet consumer demand. For example, around a holiday like Thanksgiving, a
kitchen appliance company may advertise a new line of oven mittens due to
a higher number of people cooking and baking.

Pay-per-click advertising

Also called paid advertising, pay-per-click advertising shows customers

products based on their search questions and customer data, such as
demographic, occupation or age. For example, a college student may see an
advertisement for a new laptop after searching for affordable laptops online.
Paid advertisements can appear on social media, webpages or videos. While
paid advertising can cost more than other methods of advertising, it can be
effective in targeting specific customers for your pull marketing strategy.

Outbound advertising

Outbound advertising is a marketing tactic that involves contacting customers

via email or phone call concerning a product that may interest them. This kind
of advertising could reach potential customers who have either already
interacted with the company or who haven’t shown interest at all. For
example, a company may send a promotional email about a new line of
products to previous customers. Companies may also offer recent customers
a discount for a future purchase. Keeping customers loyal and continuously
gaining more customers can help a pull marketing strategy increase profits.

SEO

Search engine optimization (SEO) refers to when companies adjust their

webpages to include popular keywords in order to rank higher in search
results. High-ranking search results can further a company’s exposure to
customers, which may lead to increased sales and more new customers. By
adjusting a website to include specific search questions, a business can match
a customer’s potential questions with products that answer them. For
example, a shower company can optimize its blog to appear more often when
users search for new showerheads. As a result, users may become interested
in the company’s product.

Personal Selling: Purpose, Types, Limitations

29 May 2019

Personal selling happens when companies and business firms send out their
salesmen to use the sale force and sell the products and services by meeting the
consumer face – to – face. Here, the producers promote their products, the attitude
of the product, appearance and specialist product knowledge with the help of their
agents. They aim to inform and encourage the customer to buy, or at least trial the
product.

For example, salesmen go to different societies to sell the products. Another

example is found in department stores on the perfume and cosmetic counters. A
customer can get advice on how to apply the product and can try different products.
Products with relatively high prices, or with complex features, are often sold using
personal selling. Great examples include cars, office equipment (e.g. photocopiers)
and many products that are sold by businesses to other industrial customers.

Types of Personal Selling

Retail Selling: Retail selling the product the consumers through retail store or door
to door visit .in door sales persons work at the store and they deal with the
customers visiting the sorters and outdoor sales personal visit the potential
costomers in their homes or offices and persuade them to buy the product.

Trade Selling: It involves selling the product to the retailers and wholesellers trade
saales personal made regular contact to the wholeseller and retailers and receved
bulk order from them, trade sales personal work either for wholeseller or
manufactures.

Missionary Selling: In missionary selling missionary sales personal create demand

for the product they do not directly sales the product .they visit retial staores and
incourage them to place orders from the deailers and wholesellers they work for
manufactures.

Industrial Selling: It involves selling the capital item like equipment ,machineres to
the industrial users ,industrial sales personal are useually very well educated
experience and train people they provides technical information and assitances.

Advantages of Personal Selling

• It is a two-way communication. So the selling agent can get instant

feedback from the prospective buyer. If it is not according to plan he
can even adjust his approach accordingly.
 • Since it is an interactive form of selling, it helps build trust with the
customer. When you are selling high-value products like cars, it is
important that the customer trusts not only the product but the
seller also. This is possible in personal selling.
• It also is a more persuasive form of marketing. Since the customer is
face to face with the salesperson it is not easy to dismiss them. The
customer at least makes an effort to listen.
• Finally, direct selling helps reach the audience that we cannot reach
in any other form. There are sometimes customers that cannot be
reached by any other method.

Disadvantages of Personal Selling

• It is a relatively expensive method of selling. High capital costs are

required.
• Also, it is an extremely labour intensive method. A large sales force is
required to carry out personal selling successfully.
• The training of the salesperson is also a very time consuming and
costly.
• And the method can only reach a limited number of people. Unlike
TV or Radio ads it does not cover s huge demographic.

Merits:

The strength of personal selling is measured in terms of the merits to its credit as a
distinct form of promotion. These are:

1. Flexibility and adaptability:

Personal selling by its very nature is capable of providing more flexibility, being
adaptable. A salesman can adjust’ himself to the varying needs, moods, motives,
impulses, attitudes and other behavioural variables of the prospects with a view to
communicate effectively and effect the sales for the unit.

2. Minimum waste:

The efforts put in by the salesman are highly focused on a single customer or a small
group of customers. The message is likely to reach them without distortion and
diffusion. This is perhaps the greatest merit in contrast to advertising where the ad
message is released en-masse resulting in message diffusion and distortion
causing more wastage or promotional efforts.

3. Acts as a feed-back:

The salesman is, in effect, a researcher. Being in direct contact with the consumers,
he has the advantage of collecting and transmitting the relevant market
information affecting his company.

Such timely, authentic and verifiable data is the basis of vital decisions, strategies,
and tactical adjustments. Thus, he feels the pulse of the market that is ever
changing.

4. Creates lasting impression:

The personal selling process is so direct and penetrating that lasting business
relation can be developed between the selling house and the clientele. In case of
advertising, it acts like a flash of a thunder-bolt from the blue. The light though
very powerful, lasts only for a few seconds. The light of salesmanship is like an
electric current that lasts longer.

5. Pulls through logical sequence:

The personal selling follows a logical selling process which matches to the
reasoning of one and all. A salesman pulls through the customer in the step-by-
step selling process starting with attention and ending with satisfaction with
interest, desire, conviction and action juxtaposed between.

Further, he detects loss of consumer attention and interest and brings the
consumer back to the track by repetitions and reinforcements.

Limitations:

However, all is not well with process of personal selling. There are certain
limitations which one should take into account before giving the conclusion as to its
real worth.

1. It is expensive:

Personal selling as a method of promotion is quite expensive. Getting salesman is

one thing and retaining him for long is another. Further, there are no definite
correlations between his stay and cost of retaining and the contributions of his, in
return, to the firm, for such costs.

2. Difficulty of getting right kind of salesmen:

Though, theoretically certain guidelines are prescribed for getting right kind of
salesmen from the potential candidates, it is really very difficult to get suitable
salesmen from company’s point of view. The potential salesmen so selected,
trained and placed, do not guarantee loyal service to the company.

3. Stake in consumer loyalty:

Personal selling is such a process-direct and close between the customer and
salesman that the consumer loyalty depends on the presence of such a salesman.
The firm’s fortunes are tied to the loyalty of consumers which, in turn, depends on
the very presence of salesman. The moment the salesman moves out, the clientele
drops down to the detriment of the firm.

4. More administrative problems:

Personal selling involves more of administrative problems than impersonal selling.

Since, the firm is to deal with manpower a driving force behind sales the company
has to meet the challenges in the areas of manpower-planning, organizing,
directing, coordinating, motivating and controlling. The solutions to these
problems, even if found out, are not everlasting because, human content in
management is unique.

Personal Selling Process and Approaches

11 Jul 2018
Personal selling can be termed as the oral presentation given by the salesperson to
one or more than one consumers face to face to sell the product or service. Personal
selling is a highly peculiar form of promotion. It is mostly two-way communication,
which not only involves a particular individual but also social behavior.

The intention is to deliver the right product to the right customers. Depending upon
the complexity of product, personal selling plays an important role. Industries
manufacturing technical products like laptops, computers, digital phone, gadgets,
etc., likely depend on personal selling as compared to the other manufactures.
The reason behind this is to explain the features of the product, tackle the customer
queries and provide the best customer service. The competition in the market has
increased today and therefore the importance of the salesperson in the
organization.

Salespersons are also called salesman or salesgirl or sales representative and their
payment is made as the commission to push the product in the market by
motivating the customer through oral conversation.

The consumer wants all kinds of goods and services in the market but lack of
interest keeps them away from making decisions or purchasing products. This is
where the salesman needs to act as a catalyst and explain the product or service to
the customer. He/she should motivate the customer by giving a presentation and
he may sometimes act as a consultant. This helps the consumer to make a decision.

In case of technical products, the salesperson plays a more vital role as compared to
the promotions. It becomes difficult for the customers to make decision while
purchasing high value products with complex nature. The salesperson helps the
customers by making personal contact with them and making them understand the
quality and utility of the product.

Objectives of Personal Selling

Personal selling contributes in achieving the long-term objectives for the

organization.

The following are some of the objectives of personal selling

• To do the complete selling job when there are no other components

in promotional mix
• To provide service to the existing customers and try to maintain
contacts with the present customers
• Identify and find new prospective customers
• Promote the products to increase sales
• Provide the information to the customers regarding the change in
product line
• Provide assistance to the customers to help in decision-making
• Provide technical advice to customers for complex products
 • Gather the data in relation to market and provide it to company’s
management

The reason behind setting personal selling objectives is to make decision on sales
policies and personal selling strategies, which helps in promoting the product. The
objectives are set for long-term, as it becomes the important element for
qualitative personal selling objectives.

The objectives can also be quantitative if they are short-term and it could be
adjusted from one promotional period to another. The quantitative personal selling
objective is related to sales volume objective. Hence, the sales volume objective
should also be explained.

The following are a few sales objectives

• Capture and maintain a specific market share

• Increase sales volumes that help the organization to gain maximum
profit
• Reduce or keep the expenses provided for personal selling within
limits
• Obtain the percentage of customers as per the set targets

Relevant Situation for Personal Selling

In some situations, personal selling becomes more relevant. The following are some
relevant situations:

Product Situation

Product selling is more effective for the following types of products.

• Product with high value like machinery, computers etc.

• Product in its first stage of life cycle, when it needs more demand.
• Product to match consumer needs like insurance policy
• Products that need presentation, for example, industrial products
• When the products need after sales service
• Product with less brand loyalty
Market Situation

Personal selling can be utilized optimally depending upon the market situation.

• An organization selling products to small number of buyers

• Company selling in local market
• Required middle men or agents not available
• No direct channel available for selling products

Company Situation

Personal selling is comparatively more adequate to the companies when

• A company cannot invest huge amount of money in advertisement

on regular basis.
• A company is unable to find and make use of relevant non-
commercial media in promoting the product.

Consumer Behavior Situation

In case of some consumer behaviors, personal selling can be effective when

• The product purchased by the consumer is expensive but it’s not

regular.
• The consumers need answers instantly without delay.
• The customers need follow up in competing pressure.

These are the four situations where personal selling is important. This will help the
salesperson to spot the customers and provide product knowledge through face to
face presentation. Once the consumer understands the nature of the product, it
helps him/her to decide whether to purchase the product.

Diversity of Selling Situation

In our day to day life, we come across different types of selling situations. This
depends on the individual selling styles because of the marketing factors. The
activities of the salesperson differ as per the situation.

Example − The job of a salesperson selling soft drinks is different as compared to

that of a salesperson selling computers. In case of soft drinks, the salesperson is not
required to explain the significance or the nature of product but in case of
computers, the salesperson has to clarify all the technical requirements.

The categorization of the salesperson is done on the basis of selling styles, creative
skill required in the job, complexity of the product etc.

Let us now discuss different kinds of selling positions:

Delivery Salesperson

As the name suggests, the job of the delivery salesperson is to deliver the product;
the selling responsibility is secondary. Example − Milk, curd, bread, soft drinks etc

Inside Order Taker

The person standing behind the counter is known as inside order taker. He does not
help the customers much with suggestions. The main purpose is to provide the
product requested by the customer. Example −General stores.

Missionary Sales People

The salesperson does not have the permission to promote an order. Their primary
job is to develop goodwill and educate the customers about the
products. Example − Medical Representatives.

Consultative Salesperson

This type represents those products or services sold to consumer, which are highly
priced and need huge investment to purchase. Due to high capital investment by
the customer, the salesperson cannot put much pressure to sell.

The salesperson should have a thorough knowledge regarding the product and the
patience to discuss and advise the features and advantage of the product.

During the sales process, the salesperson has to be creative. He should maintain the
interest with customer without exerting much pressure on the client. Example −
Huge Machines, computer systems, etc.
Technical Salesperson

The most important character of the salesperson should be the knowledge relating
to the product. The salesperson should have a detailed knowledge regarding the
product features, benefits, disadvantages, etc.

Most of the people do not have the required technical knowledge and easily agree
to the points of salesperson but there are few customers having knowledge that
may influence the decision of purchasing the product. The salesperson should
satisfy these types of customers by explaining the product features, installation
etc. The salesperson should be well trained to tackle the questions of customers and
provide relevant knowledge.

Commercial Salesperson

In this category, the salesperson has to sell the product to other business, industry
or government organization etc. It’s generally business to business where the
salesperson closes the sale in the first or the second call. The sales process is short
as compared to business to customer sales.

The salesperson has to be aggressive and highly motivated for the follow up and
maintenance of accounts. Example − Wholesale goods, construction products,
office equipment etc

Direct Sales People

Direct sale of product involves selling the products and services to the final
consumers. The sales process is short and closed in a short period of time. There are
many products available in market for direct sales; hence the salesperson is trained
to close the deal in the first visit because the consumer will either purchase the
product or switch to its competitor. Example − Insurance, door to door sales,
magazines, etc.

Steps In Personal Selling

The selling process consists of several steps; there are few basic steps, which need
to be followed for all types of products. The selling process can be for short time or
long time, depending upon the nature of the product. A product, which needs huge
investment, may take longer time to complete the selling process whereas in case
of daily products where the customer is aware of the nature of the product, the
selling process ends in shorter time.
Example − Door to door sales, where the salesperson explains all the steps and ends
the process in 10 to 15 minutes. However, for heavy machinery, it may take time to
present the technical nature and explain the product; it takes more than one visit to
complete the selling process.

Prospecting

The initial step of selling process starts with prospecting or searching for potential
customers. Apart from retail sales, it’s very rare when customers reach out to the
salesperson. It’s the salesperson who reaches out to customers in order to sell the
product.

The following are the two major activities under prospecting:

• Find the prospects or the potential customers

• Educate them in order to figure out if they are valid customers

Find the Prospects or the Potential Customers

Finding the prospect is not an easy step for a sales person because consumers would
not even like to listen to the presentation regarding the product they do not need.
The rate of saying “No” is very high. In few consumer goods, the identification of
customers comes from sources like friends, relatives, colleagues etc. The following
are some of the best sources.

• Existing Customers: One of the good sources of prospects is an

existing customer. For a salesperson, it is very easy to sell the
products to an existing customer instead of selling to the new
customers.
• Never-ending Chain: This is a competing strategy to find out
prospects. The salesperson reaches many new customers with the
help of existing customers. The salesperson selling the product to
existing customers asks to provide referral to friends or relatives and
the salesperson reaches the new customers. This chain goes on and
on.
• Cold Call: In this technique, the salesperson has to visit door to door
to sell the products. The sales process starts from introduction but in
this case, the rejection rate is high.
 • Directories: The salesperson tries to find out prospect customer
contact with the help of a directory. The salesperson can also collect
the information through membership directories of trade
associations, social organization etc.
• Mailing: The companies promote their product through mails by
sending advertisements. The advantage is that it’s cheap and the
company targets many customers by sending mass mailers.
• Exhibition: The salesperson could target the prospective customers
through tradeshows and exhibitions. It’s one of the simplest ways
and the salesperson could also practically show the use of the
product and the features. Announcement is advance, before the
exhibitions starts, is very helpful to attract more customers.

Train/Educate the Prospects

After the salesperson has identified the potential customers, he should find out if
they are valid prospects. After finding the valid prospects, the salesperson has to
give the presentation.

There are several approaches for qualifying customers and the prominent approach
is MAN, i.e., Money, Authority and Need.

• Money− The salesperson should know the financial status of the

customers because money matters a lot, and, without it, the
prospect cannot purchase the product. The consumer or the
prospect should be able to pay money in return of the product.
• Authority− The prospect that is purchasing the product should have
the authority to make decision. This is important while dealing with
government agencies, corporate etc.
• Need− This is one of the most important points because if the
prospect has money and also the authority but there is no need of the
product, he or she will not purchase the product.

The salesperson has to find out about these aspects before proceeding to the selling
process.

Preparation for the Sale of Product

Once the prospect has been identified and qualified as discussed in first step, the
salesperson has to prepare for the sales of product or service. The following are the
two stages involved in preparation:

• Pre-approach
• Call Planning

Pre-approach

This step involves collecting all the information important to learn about the
prospects and their needs. The following are the four steps of pre-approach:

• Prospect need and ability should be disclosed.

• All the required information, which would help the salesperson to
prepare the presentation.
• Relevant information, which helps salesperson not create any errors
during presentation.
• Confidence to tackle the questions of the prospect.

Call Planning

Call Planning includes a particular planning sequence. The salesperson calls the
customer and explains the objective of the call and explains the product to makes
appointments.

The first objective of the salesperson is to get an order from the customer. Some
objectives may also be required in the mid-of-the-call progress, depending on the
call. Following are a few objectives for call planning −

• Collect more information from the customer .

• Find out the need of the customer and link with the features of
product.
• Take permission from customer before presentation of product.
• Suggest a new distributor.

The salesperson has to develop a strategy and plan accordingly to achieve the
objective or goal. The salesperson should be very careful while checking the
background of the customers and obtaining details. This helps to frame a strategy
and develop a plan. The calls made by salesperson are costly, so they have to take
prior appointment.
Presentation

In this step, the salesperson has to give the presentation regarding the product to
the customer. She/he should explain the features of the product and how it will
fulfill the needs. The presentation should be clear and understandable by the
customer. It should also be interesting to keep the customer involved in the
conversation.

A presentation can be classified into the following categories −

• Fully automated
• Semi-automated
• Memorized
• Organized
• Unstructured

Fully Automated

In this approach, the salesperson gives the presentation with the help of slides in a
structured manner. He also explains and clears the doubts of the customers.
Example: Life Insurance.

Semi-Automated

The salesperson reads out the company brochures and adds comments as per
requirement or queries from the client. Example: Pharmaceutical products.

Memorized

The company presents its message, which is short and crisp, and which can be easily
memorized by the customer.

Organized

One of the most attractive, effective and often-used approaches is organized

presentation. The salesperson can make changes in the presentation as required
but based on the company’s pre-defined outline. In this approach, the sale person
covers the four steps, i.e., Attention, Interest, Desire and Action.
Unstructured

The salesperson and the customer together try to resolve the problems. Hence this
approach is also known as problem solving. This type of presentation is not well
focused many a times; some points are missed and time is wasted. Also the
salesperson has to face many queries from the customers and if the salesperson is
new in the field, he/she will not be able to answer the queries in an effective
manner.

Thus, we can conclude that the presentation to the established customers should
be done by an effective salesperson.

Handling Objections

The salesperson has to struggle to sell the product to the customers. During the
sales process, the prospects raise objections, which can be stated or hidden.
Prospects may state the reason for objections and give a chance to salesperson to
answer. This is an absolute situation because the prospect is informed regarding the
objections.

Unfortunately, in many cases, the prospects do not provide the reason for objection
of the product. They hide their real reason for not buying the product. If the
salesperson is unable to know the real reason, he/she will not be able to resolve the
problem.

To resolve this, there are two techniques to find out the objections.

• To allow the prospect to talk to find out the hidden objection.

• The observation gained by experience and mixing with the
knowledge of the prospects.

Many times, the objection is due to high price of the product. That objection can be
answered when the salesperson has the knowledge of the competitor’s products as
well.

Also, in many cases, the prospects do not understand the technical aspects and are
misinformed. The salesperson should provide additional information in this case.

Now we can conclude that the objection can be resolved by providing an alternative
product to the prospects.
Closing the Sale

After answering the objections made by prospects, the salesperson asks for the
prospect to order the product. If the prospect does not agree to buy the product, the
entire effort gets waste. The following are some effective techniques to close the
sale −

Gift Close

In this technique, the customers get an incentive for immediate buying action. The
salesperson informs regarding the benefits of the product to the prospects.

Example − A company provides an option to the prospect that if the bill exceeds
Rs.3000, he can buy a bed sheet worth 2000 for just Rs.200.

Here, if the customer has made a purchase of Rs.2500, he will check out to buy
something else to reach 3000. This helps the company to sell two extra products —
one for Rs.500 or more to reach 3000 and another, bed sheet for Rs.200.

Direct Close

This is one of the simplest techniques to close the sales. This happens when the
buyer has positive approach to buy a product. The salesperson summarizes the
important points that were made prior to sale.

Example − A prospect needs beauty cream and steps into a shop. The salesperson
offers the products; if required, shows the demo. Once the prospect is satisfied,
he/she will buy it.

If the salesperson is experienced, he/she will try to close it as early as possible

because he/she would understand if the prospect is inclined to buy the product. A
good salesperson makes sure that he has completed all the steps during sales
process.

Thus, closing is an important step in sales process. The other steps are meaningless
without closing.

Follow-up

After making the sale, the salesperson has to follow up with the prospects. After
sales activities are important parts of the selling process. This helps in reducing any
doubt by the customer regarding the product or service. There is also a chance that
the buyer with buy again in future.

There are specific policies by a company for after sales activities. Even though the
company provides good products, there will be few complaints from customers.
The complaints should be taken seriously and the company should try to resolve.
This helps the company to improve in terms of product or service.

An experienced salesperson tries to provide the best service to its customers. As a

part of handling complaints, they also keep the prospect informed regarding the
latest products or services and also provide other types of assistance. The
salesperson should build good rapport with the customer. This helps to get more
customers because the existing customer will refer to his friends and relatives.

The salesperson should thank the customer for the business and offer small gifts.

Direct Marketing and Sales Promotion

3 Mar 2018

DIRECT MARKETING

Direct marketing is a form of advertising where organizations communicate

directly to customers through a variety of media including cell phone text
messaging, email, websites, online adverts, database marketing, fliers, catalogue
distribution, promotional letters and targeted television, newspaper and magazine
advertisements as well as outdoor advertising. Among practitioners, it is also
known as direct response.

Any product that is sold through the market goes through an elaborate system of
production, transportation, procurement at market place and subsequently one or
two steps before reaching the end consumer. In the entire value chain, some value
is added either in transportation, storage, delivery or product improvement.

How is direct marketing campaign developed?

Effective direct marketing begins with data. Marketers examine categories of

customers or prospects they think will be interested in their product or service, and
develop or procure lists for making contacts.
Lists can be obtained through public or commercial sources, and may represent all
the people in a particular neighbourhood, all the people who entered a contest
drawing, all the people who opted in to a newsletter, a customer list from another
business, etc. Such lists should not be used indiscriminately; instead, the data
should be analyzed to create messages and offers that are likely to be relevant to
these customers or prospects.

A direct marketing campaign may use multiple communications channels including

mail, e-mail, phones, and face-to-face contact (See also Direct Mail Marketing).
Different channels will be selected based on the target group. For example, a new
restaurant might prefer distributing flayers or leaflets door to door, which saves
money on mailing costs, targets the restaurant’s immediate neighborhood, and
provides an opportunity for person-to-person engagement. Face-to-face
engagement might also be used for in-store marketing. Home Depot In-Home
Services, for instance, uses direct marketers in their stores to generate leads for
various home improvement programs, such as cabinet resurfacing.
 Figure:- Direct Marketing

Direct marketing channels

The following are the most common forms of direct marketing channels:

• Email marketing
• Online tools
• Mobile
• Voicemail marketing
• Direct mail
• Insert mail
• Coupon
• Telemarketing
• Direct response marketing
• Direct selling
• Grassroots/community marketing

Advantage of Direct Marketing

(i) Save distribution costs: The major advantage of direct marketing is huge saving
on distribution costs. As already stated, it cuts through a clutter of stakeholders
before it reaches the customer hence huge savings is effected. This savings can be
passed on to the consumers partially or retained by the company for greater
investment in products and technologies. Amway, for e.g. claims to distribute the
distribution costs saved to independent distributors after keeping a share for
themselves.

(ii) Product or service at door steps: The conventional method of selling involves
the buyer going to the shop or market place to search for products and selecting
them. There is often no way to demonstrate the effectiveness of the product in real
life setting. With direct marketing, it is possible to reach the door step of the
consumer and give a live demo in real setting and convince the customer effectively
to buy a product.

(iii) Environmental Costs: Huge costs on transportation, hoardings, point-of-sale

promos can be saved which in turn has impact on carbon foot print and associated
environmental costs. The more products come under direct marketing, the lesser
would be the logistical costs. Moreover, for the consumer fuel, time savings are
effected when product is delivered on premises. No shop space and infrastructure
required to develop the brand.

(iv) Independent Salesmen/Distributors to benefit: Direct marketing may have

some impact on traditional sales, however, several new professionals looking for
independent work and income can benefit by becoming associates of such
companies. Or become a network marketing professional.

(v) Understand customer requirement better: Direct marketing companies are in

face-to-face contact with the customer and hence in a better position to get
product feedback, understand their requirements and fine tune products.

SALES PROMOTION

Sales promotion is one of the elements of the promotional mix. (The primary
elements in the promotional mix are advertising, personal selling, direct marketing
and publicity/public relations). Sales promotion uses both media and non-media
marketing communications for a pre-determined, limited time to increase
consumer demand, stimulate market demand or improve product availability.
Examples include contests, coupons, freebies, loss leaders, point of purchase
displays, premiums, prizes, product samples, and rebates.

Sales promotions can be directed at either the customer, sales staff, or distribution
channel members (such as retailers). Sales promotions targeted at the consumer
are called consumer sales promotions. Sales promotions targeted at retailers and
wholesale are called trade sales promotions.

Sales promotion includes several communications activities that attempt to

provide added value or incentives to consumers, wholesalers, retailers, or other
organizational customers to stimulate immediate sales. These efforts can attempt
to stimulate product interest, trial, or purchase. Examples of devices used in sales
promotion include coupons, samples, premiums, point-of-purchase (POP)
displays, contests, rebates, and sweepstakes.

Sales promotion is implemented to attract new customers, to hold present

customers, to counteract competition, and to take advantage of opportunities that
are revealed by market research. It is made up of activities, both outside and inside
activities, to enhance company sales. Outside sales promotion activities include
advertising, publicity, public relations activities, and special sales events. Inside
sales promotion activities include window displays, product and promotional
material display and promotional programs such as premium awards and contests.
When undertaking a sales promotion, there are several factors that a business
must take into account:

• What does the promotion cost – will the resulting sales boost justify
the investment?
• Is the sales promotion consistent with the brand image? A
promotion that heavily discounts a product with a premium price
might do some long-term damage to a brand
• Will the sales promotion attract customers who will continue to buy
the product once the promotion ends, or will it simply attract those
customers who are always on the look-out for a bargain?

There are many methods of sales promotion, including:

• Money off coupons – customers receive coupons, or cut coupons

out of newspapers or a products packaging that enables them to buy
the product next time at a reduced price
• Competitions – buying the product will allow the customer to take
part in a chance to win a prize.
• Discount vouchers – a voucher (like a money off coupon)
• Free gifts – a free product when buy another product
• Point of sale materials – e.g. posters, display stands – ways of
presenting the product in its best way or show the customer that the
product is there.
• Loyalty cards – e.g. Nectar and Air Miles; where customers earn
points for buying certain goods or shopping at certain retailers –
that can later be exchanged for money, goods or other offers.

Loyalty cards have recently become an important form of sales promotion. They
encourage the customer to return to the retailer by giving them discounts based on
the spending from a previous visit. Loyalty cards can offset the discounts they offer
by making more sales and persuading the customer to come back. They also provide
information about the shopping habits of customers – where do they shop, when
and what do they buy? This is very valuable marketing research and can be used in
the planning process for new and existing products.

There are two types of Sales promotions:

(a) Consumer sales promotions

Any sales promotion activity that you do keeping the end consumer in mind is
known as consumer sales promotions. Example – if an E-commerce website gives
10% discount on its products, then it wants the consumers to make the best of this
deal. This is a consumer focused promotional activity and hence can be called as
consumer sales promotions.

The objective of Consumer sales promotions might be various. A consumer might

be asked to test a sample of a completely new perfume in the market and rate it. An
existing customer might be asked to use a Scratch card so that he receives a gift.

At the end, the result should be an action from the consumer. Either the consumer
should purchase the product right away, or he should come to know about the
product so that further awareness is created for the brand.

(b) Trade Sales promotions

If your promotional activities are focused on Dealers, distributors or agents, then it

is known as trade promotions. There is a lot of competition in any field. And in
channel sales, to get the products moving and to motivate the dealer to perform
better, trade discounts are given.

Example – You are a dealer for Televisions. Now Sony comes and tells you, you will
be given 5% discount if you cross a sale of 100 televisions. Naturally, you will be very
motivated because 5% in television sales is huge. Plus selling Sony TV’s is easy
because it is already a brand. Thus, you divert all potential customers to Sony
Televisions so that you can achieve the target.
 Figure: Sales Promotion

Growth and Benefits of Direct Marketing

18 Nov 2020
Direct marketing is an interactive marketing system that uses one or more
advertising media to affect a measurable response and/or transaction at any
location. Direct marketing helps in building a long-term relationship with the
customers. Direct marketers occasionally send birthday greeting cards, marriage
anniversary greeting cards and Diwali/New year Greeting cards etc. to select
number of customers.

Direct marketing channels such as catalogs, direct mail and telemarketing are
showing prominence in the recent times. Home shopping is being preferred more
and more due to lack of time, inconvenience of family members going out together
for shopping, and high cost of transportation etc. Moreover, consumers would feel
delighted to avail the marketers’ toll-free phone numbers available day and night
for direct shopping.

The growth of affordable computer power and customer databases has enabled
direct marketers to single out the best prospects for any product they weigh to sell.
Increasingly, business marketers have turned to direct marketing such as
telemarketing in response to the high and increasing costs of reaching business
markets through the sales force.

Electronic communication is showing explosive growth and the internet traffic is

growing at the fastest rate. McKinsey and Company, the world-renowned
management consultant had estimated that in the beginning of the new
millennium the e-commerce sales would be over $300 billion. Electronic markets
are sponsored web sites that describe products and services offered by sellers, allow
consumers to search for information, and place orders with the help of a credit or
debit card.

Purpose:

1. It can be used to directly elicit order for sales. Products can be

delivered (for instance, exercise equipment), or they can be mailed
to the customer (for instance, magazine subscriptions).
2. It can be used to invite further queries about the product and its
features, usually by using toll-free numbers.
3. It also allows customers to fix up appointments with companies for
free product demonstrations according to their convenience.
4. Salespeople can be asked to follow up with those customers who
have initiated queries. Therefore, it helps to generate leads.

Formats such as teleshopping networks and infomercials (provides detail product

information) in direct response television marketing combines the benefits of
traditional advertising with effective measurement of response rates.

For small firms, direct response marketing using print media may be the only viable
option because of lower costs involved (as compared to catalogue marketing, direct
mailers or even telemarketing).

Direct responses are initiated by the customer, and hence, conversion rates are
higher as compared to telemarketing and direct mailers.
Direct response television marketing provides an opportunity to show product
demonstrations to customers, though it is expensive.

Business to business direct marketing:

Business to business marketers uses direct marketing to sell their offerings to

organizational buyers rather than individual consumers. Business to business
transactions typically have a longer sales cycle. Sales in business markets take place
over a longer period of time as compared to consumer markets.

Therefore, the most important role of direct marketing in business to business

transactions is to support personal selling. Visits by sales people may be preceded
by telemarketing or use of direct response advertising or direct mailers to generate
some leads.

Differences between consumer and business markets result in differences in the

role and execution of direct marketing campaigns in these markets.

1. Organizational buying involves multiple purchasing roles played by

various members or groups in an organization. For instance,
purchase of heavy equipment may involve the R&D, purchasing,
manufacturing, finance and marketing departments playing
different roles.

Members of each of these departments may want different type of information,

and hence, a single mailer may not be useful in such a case. A single mailer
containing all the desired information will be unnecessary for others, and a
different mailer for each group will be expensive, though more effective.

5 Main Reasons for Growth in Direct Marketing Activity are as follows:

Direct marketing attempts to acquire and retain customers by contacting them

without the use of intermediaries.

Direct Marketing

Direct marketing is the distribution of products, information and promotional

benefits to members of the target market through interactive communication
vehicles in a manner that allows customer response to be measured.
The objective of direct marketing is to achieve a direct response from the customer,
which may take the following forms:

1. Purchase over telephone or by post (mail) or via the internet.

2. A request for catalogue or sales literature.
3. A request for product demonstration.
4. A request for a salesman’s visit.

Direct marketing techniques have experienced growth due to several reasons:

Reasons for Growth in Direct Marketing Activity

1. Market fragmentation has limited the applicability of mass

marketing techniques. Increased fragmentation has lead to the
emergence of segments that are smaller in size. Such consumer
segments have finer, distinct sets of needs which may not be fulfilled
by the current offering of the marketer. Therefore, the capability of
direct marketing techniques to target distinct consumer groups is of
increasing importance.
2. The increasing supply of lists and their diversity has provided raw
data for direct marketing activities. There is large amount of
transaction data available with retailers and internet marketing
companies that can be used to target individual customers more
accurately.
3. Sophisticated software allows generation of personalized letters,
messages and offerings.
4. Sophisticated analytical tools are available now that help companies
to classify and understand customers better. Households can be
classified into types of neighbourhoods by using geodemographic
analysis. For example, neighbourhoods of elderly people, or private
houses or single people can be identified. These in turn can be cross-
referenced with product usage, media usage and lifestyle segments.
5. High cost of personal selling have led companies to take advantage
of direct marketing techniques such as direct response advertising
and telemarketing to make the sales force more effective. Direct
marketing techniques generate leads that can be screened by
outbound or inbound telemarketing.