SUBJECT: ADVERTISING MANAGEMENT

B.COM 3rd

Semester

Module –I

Advertising: Meaning

• Advertisement is a form of persuasive communication with the public. It is the best

known communication channel to establish contact with the target market.

• Advertising promotes the sale of goods, services, images and ideas through information

and persuasion.

• It is a announcement to the public of a product, service or idea through a medium to

which the public has access.

Nature of Advertising

The following points summarize the nature of Advertising:

• Non- Personal: The products are advertised through media where buyers and sellers do

not personally contact each other.

• Paid form: The marketers who advertise their products whatever form have to pay for

the same.

• Identified Sponsor: Consumers can identify the products with their manufacturers in an

advertisement.

• Medium of mass communication: Advertising can be used to approach a large number

of buyers at the same time.

• Diverse Media: The communication media is diverse such as print , broadcast, direct

mail etc.

• Matter of Record: It gives information for the benefit of buyers. It guides them to a

more satisfactory expenditure of their resources.

• Creativity: An advertisement should be creative. Without it, the reader or viewer may

not notice it.

• Investment: Advertisement is an investment towards the building of goodwill and

brand image in the market.

Importance of Advertising

• Advertising is a useful promotional tool not only for manufacturers and traders, but also

holds importance for consumers and the society at large.

• The importance of advertising can be summed up in the following points:

• Corporate Image: Advertising is the most commonly adopted tool for building corporate

image. It is a more controllable form of promotion.

• Face Competition: A firm which plans its advertising campaigns, keeps its long – term

objectives of growth and survival in mind is able to sell even during periods of crisis.

• Create awareness: In each phase of buying process , effective advertising makes the

suppliers known to the buyer, identifies their names and products and helps to generate

demand for the products.

• Cost effective: It is comparatively a cheaper form of promotion than others as it is a

mass communication system that reaches a wide section of the consumers in all market

segments.

• Product differentiation: Advertising creates product differentiation through branding.

Brand establishes the identity of a manufacturer with his products.

• Source of employment: Advertising firms provide employment to people. Thus, it acts as

a source of living for those who take advertising as a career.

• Quality assurance: A good advertising campaign ensures that the quality advertised is the

same as delivered to customers.

Communication – Process & Model

1. Communication Process, as suggested by Harold D. Lasswell involves five major

questions: who says, what does he say , in what channel, to whom, with what effect.

Basically, the sender (seller) transmits a message through media to a receiver who

responds or gives his reaction either by accepting the message or reacts negatively or

indifferently. The analysis of the receiver’s (buyer) response requires skill and expertise

and should be used carefully.

The Communication Process consists of the following:

2. Message

3. Source: The source is generally the manufacturer/marketer who initiate and intend to

send a communication.

4. Encoding: putting thoughts and ideas into symbolic and proper language form.

5. Decoding: Assigning of meaning to the symbol transmitted by the sender.

6. Receiver: To whom the message is to be sent.

7. Feedback: The response from the receiver.

8. Media: Path through which message moves from one party to another.

Types of Advertising

The advertisements are classified on the basis of their targeting – geographic selectivity, media

selectivity and advertising objectives.

Advertising on the basis of Targeting

I. On this basis, advertising can be:

1. Consumer Advertising

2. Business Advertising

a. Consumer Advertising: These advertisements are directed to the consumers who buy

these products/services for themselves or for somebody else. It includes : I. Product

advertising ii. Service advertising.

b. Business Advertising: Business advertising is much smaller and is concentrated to trade

and business publications, technical magazines, email, direct mail etc. to corporate

houses.

II. Advertising classified by Purpose

Advertising can be classified on the basis of objectives which it seeks to achieve. Following

could be the types under this head:

a. Institutional Advertising: This type of advertising talks about the company or an issue,

not about the product. The aim is to build a favourable image for the company.

b. Financial Advertising: It is defined as a communication that aims at raising money

from primary and secondary markets. The main source of media is print media like press,

magazines etc.

c. Educational and NGO Advertising: These advertisements invite students for various

courses and at times, for invitation to their alumni on certain occasions.

d. Advocacy or Issue Advertising: It aims at making a point on an issue or concern. It is

directed at either specific or general targets or opponents ; the competitors , consumer

groups or governmental agencies.

III. Advertising classified on the basis of Geographical Spread: On this basis, advertisement

could take any one of the following three forms:-

a. National Advertising : It offers a product or service to general consumer audience

across the country. Where the whole country is considered as a target market place

for the offering and that media is selected which has a countrywide base. Companies

like IBM, Indian Airlines use national advertising.

b. Local Advertising: In this marketers first target a very small local targeted area and

after the success is achieved, they spread out to wider horizons.

c. Global Advertising: Multinational firms consider whole world to be their target

market. Thus, advertising is made for all the countries where the product is sold, with

minor differences made with respect to their cultural and legal factors. With internet ,

global advertising has also got an impetus.

Weaknesses of Advertising as a Promotional Tool:

Though advertising is considered as a powerful tool of promotion, however it suffers from a

number of limitations which affect its performance as an effective promotional tool. The

following points briefly highlight its weaknesses:

1. Unwanted Purchases: Some critics assert that advertising promotes wasteful and

unnecessary consumption by consumers. Attractive and repeated advertisements

influence the buyers to purchase unwanted products and to that extent, it results in change

in their expenditure and consumption patterns.

2. Misleading and Deceptive: Advertising can be misleading and deceptive since some

marketers use advertising to attract customers to the show rooms and offer them products

other than what were advertised.

3. Societal Problems: There are advertisements which give obscene presentation of their

products. This is objectionable from the ethical, social and cultural point of view.

4. Concealment of facts: Few advertisements conceal facts that distract consumers to buy

the products.

5. Unsupported by Facts: Some advertisements exaggerate facts without evidence. Thus, it

turns out to be ineffective.

6. Change in attitude: A constant barrage of commercial advertisements helps viewers

change their point of view.

Module – II: Decisions in Advertising

Setting Objectives

Advertising can aim at general or special objectives. However, commonly used objectives

include the following:

• Maximizing the demand for goods and services by pursuing the customers to increase

rate of consumption or inform the present users about new uses of the product.

• Improving sales and profits by increasing sales volumes.

• Reducing marketing cost by reducing personal selling.

• Creating awareness about new products and qualities.

• Making social awareness about social matters like smoking, fast driving, girl child, child

labor etc.

• Improving creativity , arts , entertainment and music.

Thus, the objectives in Advertising may be:

1.] To introduce a new product.

2.] To sustain an established product in the market place.

3.] To create floor traffic for a retail store.

4.] To secure sales lead.

5.] To de – market a service.

6.] To promote a public cause.

Budget Decisions

Advertising budget is an estimate of financial requirements of advertising plans.

• The preparation of advertising budget is the responsibility of the top executive.

• Advertising expenditure decisions are often arbitrary and at times merely a guess.

• Advertising budget is a plan for the company’s future advertising, it can make useful

contribution to a profitable operation.

• After determining the total funds available for advertising during a specified period, the

available funds are allocated to various advertising functions.

The budgetary process involves the following steps:

• Preparation: The total expenditure of advertising is estimated on the basis of

information of markets, product, pricing, image and media.

• Presentation: After preparing the budget, it is presented to the marketing manager to

decide the rationale and contribution of budget components.

• Execution: It considers the cost of advertising, production, purchase of advertising time

and space and other functions.

• Control: An examination is made to ensure that the actual expenditure coincides with

the budget estimates.

Methods of Allocating Advertisement Budget

1. The objective – and – task method

2. Percentage – of – sales method

3. Affordable method

4. Comparative matching parity method

5. Marginal Approach

6. Judgement Method

7. Return on Investment Method

1. The objective – and – task method:

This method is based on establishing advertising and the tasks to be accomplished, and then

determining the size of the budget. This approach takes into consideration the fact that

advertising is an investment and a tool for achieving business objectives.

2. Percentage – of – sales method

In this method, the advertisers use one of the two things in arriving at how much to be

spent on advertising. The first one is to select a factor or multiplier say 6, 7, 10 percent,

then multiply this by the sales figures in rupees , and the sum so arrived at is the amount

to be spent.

3. Affordable method:

In this method, advertising expenditure is appropriated after all other investments and

expenses have been allocated. The appropriation is set on the basis of what the company can

afford for advertising during the period.

4. Comparative matching parity method:

Here the advertising budget is framed in such a way that the company is at par with its

competitors. It spends as much as competitors do. The logic behind this is that the collective

thinking of various firms in the industry cannot be too far from the optimal figure.

5. Marginal Approach

In this method, the marginal contribution of each unit guides in estimating the cost per unit.

The aggregation of costs of units is taken as the total cost of advertising. This cost of advertising

should be, at least, equal to its benefits.

6. Judgement Method

Under this method, advertising budget depends on the judgement of the experienced

managers.

7. Return on Investment Method

Here, the advertising is considered as investment rather than expenditure. This approach is

correct as the return from advertising is generally spread over a period of time in future. The

advertising budget is prepared by taking into account the additional profits generated by increase

in sales and goodwill through advertising.

Factors Affecting Budget Size

The following factors affect the size of the advertising budget:

I. Size of the market (number of consumers)

II. Extent of the market (diversity of markets)

III. Financial resources

IV. Stages in product life cycle

V. Competitive spending

VI. Product differentiation

VII. Profit margin on sales

Decisions in Advertising:

Media Planning

Media refers to the channels through which advertisers advertise their products to targeted

customers.

• Media has important role to play in the process of advertising communication. Effective

advertisement is possible only if suitable media are available.

• Advertising can be accomplished through many types of media like newspapers, radio,

magazines, television, direct mail, point of sale, outdoor (signage and billboards) and the

internet.

• Media refers to the channels through which advertisers advertise their products to

targeted customers.

• Media has important role to play in the process of advertising communication. Effective

advertisement is possible only if suitable media are available.

• Advertising can be accomplished through many types of media like newspapers, radio,

magazines, television, direct mail, point of sale, outdoor (signage and billboards) and the

internet.

• A choice between different media is made after considering various variables like

product, advertising , objectives, message, market potential, distribution strategy,

competition level, budget , media availability etc.

• Therefore, media decisions assume considerable importance. Factors of critical

importance are choosing the type of media that is, print, broadcast or outdoor.

Media Scheduling

• Media Scheduling refers to advertising in dailies, weeklies or monthlies. Scheduling

largely depends on the advertising objectives. If the objective is to achieve recognition,

scheduling calls for a continuous campaigning. Newspaper and TV are, thus, the

appropriate advertising media. If objective is to introduce a product, heavy advertising is

required at the beginning (newspaper, radio, television) followed by regular reminders

through direct mail or telemarketing.

Media Selection:

The main factors affecting the selection of an advertising media may be summarized as follows:

1. Market: Which medium to be selected depends upon the nature and status of customers

for whom the advertising is being done.

2. Nature and Size of the market: If the potential customers are small, then direct mail

advertising may be adopted and if it is large then newspapers or radio etc would be more

effective.

3. Nature of Product: It also determines the medium of advertising. The products which

are widely used by masses like consumer products, tooth paste etc radio, television and

newspapers can be effective media.

4. Objective of Advertising: Selection of a particular medium of advertising depends upon

the object of advertising.

5. Competitors’ Media: It has an important bearing on the selection of medium.

6. Goodwill of the Media: While selecting a particular medium, customs prevailing in the

market must be followed.

7. Budget Constraints: The cost of the amount spent on advertisement is judged with

reference to the number of prospects (viewers or readers).

8. Frequency of Advertisement: With increase in the frequency of exposure, there is a

corresponding increase in the number of people who remember the advertisement and the

time that they remember it for.

Module III- Media Testing

Evaluating advertising effectiveness

All advertising efforts are directed mainly towards the achievement of business, marketing and

advertising objectives i.e., to increase the sales turnover and thus to market the maximum profit.

As soon as the advertising campaign is over, a need is generally arisen to measure the

effectiveness of the campaign. Whether, it has achieved the desired results i.e. desired sales

profitability or results in terms the change in customer behavior in favour of the company’s

product, which will naturally affect the future sale of the product.

In order to measure the effectiveness of advertising copy, two types of tests- pre-tests and post-

tests can be undertaken. Pre-tests are generally conducted in the beginning of the creation

process or at the end of creation process or production stage. There are several pre and post tests

techniques to measure the effectiveness of the advertising copy.

The effectiveness of advertising in a particular media may also be measured in any of the

following ways – (a) by giving different addresses to different media, (b) different newspapers

may be selected for advertisements of different departments, (c) coupon blank etc. May be

provided with the advertisement or (d) enquiry from consumers should mention the name of the

source of information. The technique is known as keying the advertising.

Thus in measuring the effectiveness of advertising we include measuring of the effectiveness of

advertising campaign, advertising copy and the effectiveness of individual media.

Methods of Measuring Advertising Effectiveness

Advertising is aimed at improving the sales volume of a concern so its effectiveness can be

evaluated by its impact on sales. Most of the managers believe that the advertisement directly

affects the sales volume and hence they evaluate the effectiveness of the advertising campaign by

the increase in the sales volume.

There may be two types measures (i) Direct measures: and (ii) Indirect measures:-

1. Direct Measures of Advertising Effectiveness: Under direct measures, a relationship

between advertising and sales is established. The following are some of the methods that

are generally used in measuring that advertising effects.

i. Historical Sales Method

ii. Experimental Control

2. Indirect Measures of Advertising Effectiveness: As it is very difficult to measure the

direct effect of advertising on company’s profits or sales, most firms rely heavily on

indirect measures. These measures do not evaluate the effects of advertisements directing

on sales or profits but all other factors such as customer awareness or attitude or customer

recall of advertising message affect the sales or profits or goals of the business indirectly.

Despite the uncertainties about the relationship between the intermediate effects

of advertising and the ultimate results, there is no other alternative but to use indirect

measures. The most commonly used measures are

i. Exposure to advertisement

ii. Attention or recall of advertising message content

iii. Brand awareness

iv. Comprehension

v. Attitude change

vi. Action

PRE-TEST AND POST-TEST OF ADVERTISING COPY

The main purpose of advertising is to arouse the interest of the people in the firm’s product. Can

everyone be perused by the same advertisement? Or will the same advertisement satisfy all types

of people? The simple answer is in negative because people differ so greatly in their wants, in the

economic and other motives which actuate them, and in the various ways by which their interest

is aroused. It is why some advertisements are more effective than others. To analyse the

effectiveness of advertising in attracting the attention and stimulating the desire and action of the

people for whom it is made and how will it delivers the intended message about a product or an

idea advertisement copy testing is done to be sure of its effectiveness.

Copy Testing: Copy testing is a tool involving a procedure where the effectiveness of an

advertisement is measured before it appears in its final form, during and after its exposure to the

audience to determine whether and to what extent, it has accomplished its assigned task. In this

way, the copy testing is a method used to control the effectiveness of future advertising. It

addresses the following questions –

i. Will a proposed copy theme be effective at achieving advertising objectives?

ii. Does the set of advertisings that makes up an advertising campaign create the desired

interest level and image? and

iii. Will an individual advertisement attract the attention of the audience?

Types of Tests

The various methods of testing advertising copy are

1. Pre-test methods

2. Post-test methods

1. Pre-Test Methods

Pre-test method refers to testing the potentiality of a message or copy before printing or

broadcasting. It is useful because the concepts in advertising may appear to be simple and

effective to the advertiser or advertising to be simple and effective to the advertiser or

advertising agency. It may be difficult from the layman’s point of view. All the elements in the

advertising copy require careful pre-testing to see that the matter it intends to be conveyed has

been really conveyed. The following are some of the pre-testing methods.

i. Check list method

ii. Consumer jury method

iii. Sales area test

iv. Questionnaire

v. Recall test

vi. Reaction test

vii. Readability test

viii. Eye-movement test

2. Pre-Test Methods

The following are the post-test techniques for measuring the effectiveness of the advertisements:

i. Recognition test

ii. Recall or Impact Test

iii. Psychological Analysis

The following methods are also used to measure the impact of advertisement on the sales

volume.

i. Historical method; and

ii. Experimental method.

i. Historical method: Under this method, recorded facts related to sales before and after

advertisements are compared. If an advertisement is followed with more sales, advertisement is

considered to be more effective.

ii. Experimental method: Under this method, the entire sales territory is divided into three or

four sub-areas. The advertiser spent different amount for advertising in different areas. Then

facts regarding sales are collected from these sub-areas. The result is used to measure the

effectiveness of advertisement in boosting sales. Following the result obtained, the advertiser

prepares his advertising budget for future action.

Ethics in Advertising

Proponents of advertising argue that it is the life blood of business. It provides consumers with

information about products and services and encourages them to their standards of living. They

say advertising creates jobs and helps new firms to enter the market place. Firms employ people

who make the products and provide the services that advertising sells. But not everyone is sold

on the value of advertising. Critics argue that most advertising is more propaganda than

information; it creates needs and faults, consumers never knew they had. Ads suggest that

children won’t succeed without a computer, that our bodies should be leaner, our faces younger

and our houses cleaner.

Marketers must often make decisions regarding appropriate and responsible actions on

the basis of ethical considerations rather than what is legal or within industry guidelines. Ethics

are moral principles and values that govern the actions and decisions of an individual or group

The role of advertising in society is controversial and has sometimes resulted in attempts

to restrict or ban advertising. The level of alcohol consumption by college students has become a

serious problem. Alcohol related problems have proliferated on college campuses and have

advocated a ban on alcohol related advertising.

Ethical criticism of advertising

Much of the controversy over advertising stems from the ways many companies use it as a

selling tool and from its impact on society’s tastes, values, and lifestyles. Specific techniques

used by advertisers are criticized as deceptive or untruthful, offensive or in bad taste and

exploitative of certain groups. Some of the arguments against advertising are as:

i. Advertising as untruthful or deceptive: one of the major complaints against advertising is

that many ads are misleading or untruthful and deceive consumers. A number of studies

have shown a general mistrust of advertising among consumers.

ii. Advertising as offensive or in bad taste: another common criticism of advertising,

particularly by consumers, is that ads are offensive, tasteless, irritating, boring,

obnoxious, and so on. In the study of Shavitt and her colleagues, about half of the

respondents reported feeing offended by advertising at least some times. A number of

other studies have found that consumers feel most advertising insults their intelligence

and that many ads are poor in taste.

iii. Advertising and children: one of the most controversial topics advertisers deal with is the

issue of advertising to children. Television is a vehicle through which advertisers reach

children easily. Current estimates are that children spend an average of 5 hours a day

using media. Approximately 80 percent of all advertising targeted to children falls within

four product categories: toys, cereal, candy and fast food restaurants. Critics argue that

children, particularly young ones, are especially vulnerable to advertising because they

lack the experience and knowledge to understand and evaluate critically the purpose of

persuasive advertising appeals.

iv. Social and cultural consequences: concern is often expressed over the impact of

advertising on society, particularly on values and life style. While a number of factors

influence the cultural value, lifestyle and behavior of a society, the overwhelming amount

of advertising and its prevalence in the mass media lead many critics to argue that

advertising plays a major role in influencing and transmitting social values.

Sales Management

Scope of Salesmanship

Scope implies the span or coverage. In other words, scope of a subject projects the idea of the

entire gamut of study. Salesmanship as a subject is a science and art and has reached the status

of rewarding and challenging profession. Salesmanship is a dynamic area and cover:

i. It covers sales of consumer, industrial and agricultural goods.

ii. Modern salesmanship covers works on the statement that salesmen are made than born.

iii. Salesmanship encompasses the strategies and the techniques of creating and maintaining

sound relations with all levels in the organization and with immediate outside world.

iv. Salesmanship has turned into a highly regarded profession.

Objectives of Salesmanship

Every business firm has certain objectives to achieve. These objectives may be very explicit

and definitive, or they may be implicit or general. Although, firms have different mixes of

objectives, and they do place differing emphasis, on individual ones, the typical objectives

Include:

(i) Profitability,

(ii) Sales-Volume,

(iii) Market Share,

(iv) Growth, and

(v) Corporate-Image.

While all these objectives are important to a business firm, the objectives, relating to sales-

volume, market share and profitability, are greatly affected by the effectiveness and

efficiency, with which the sales-function is managed.

Functions of sales management

A sales organization performs the following functions:

i. Analysis of markets thoroughly, including products and market research.

ii. Adoption of sound and defensible sales-policy.

iii. Accurate market or sales forecasting and planning the sales campaign, based on relevant

data or information supplied by the marketing research staff.

iv. Deciding about prices of the goods and services; terms of sales and pricing policies to be

implemented in the potential and existing markets

v. Labeling, Packaging and packing, for the consumer, who wants a container, which will

satisfy his desire for attractive appearance; keeping qualities, utility, quantity, and correct

price and many other factors in view.

vi. Branding or naming the product(s) and/or services to differentiate them from the

competitors and to recognize easily by the customer.

vii. Deciding the channels of distribution for easy accessibility and timely delivery of the

products and services.

viii. Selection, training and control of salesmen, and fixing their remuneration to run the

business operations efficiently and effectively.

ix. Allocation of territory, and quota setting for effective Selling and to fix the responsibility

to the concern person.

x. Sales-programmes and sales-promotion-activities prepared so that every sales activity

may be completed in a planned manner

xi. Arranging for advertising and publicity to inform the customer about the new products

and services and their multiple uses.

xii. Order-preparation and office-recording to know the profitability of the business and to

evaluate the performance of the employees.

xiii. Preparation of customer s record-card to the customer loyalty about the products.

xiv. Scrutiny and recording of reports to compare the other competitors and to compare with

the past period.

xv. Study of statistical-records and reports for comparative analyses in terms of sales, etc.

xvi. Maintenance of salesman’s records to know their efficiency and to develop them.

Module IV- Fundamentals of Selling

Selling Process: The sales process or selling process refers to sequential or series of actions

undertaken by the salesman to convert a prospect into a customer. In other words, selling process

is a series of logical steps taken by a salesman in order to induce prospects to take desired

actions, leading to purchase and post purchase satisfaction. The time required to complete each

step will vary according to the product that is being sold. For example: a door to door sales

representative may go through all the steps from prospecting to closing of sale in a matter of ten

to fifteen minutes in contrast, the selling process for computer or electronic typewriter may take

several visits, even years, for getting an order. The most commonly accepted stages of the sales

process are as follows:

1. Prospecting: the selling process begins with finding qualified potential customers. It

includes two steps:

i. Identifying prospects: The identification of potential customers is not an easy job,

especially for a new sales person. Rejection rate is quite high and immediate

payoffs are usually minimal. In some consumer goods businesses, identification

of prospects usually comes from friends and acquaintances, other sales people,

former customers, present customers etc.

ii. Qualifying prospects: Once the sales person has identified potential customers, he

or she must qualify them to determine, if they are valid prospects. Unless this is

done, time and energy is wasted in trying to sell to people who cannot or will not

purchase the product or service.

2. Preparation: After a prospect has been identified and qualified, the sales personprepares

for the sale of product or service. The preparation stage involves the two key activities

i.e. Pre-approach and Call Planning.

i. Pre- approach: the pre-approach step includes all the information gathering

activities necessary to learn relevant facts about the prospects and his or her needs

and situations.

ii. Call planning: it involves a specific planning sequence. The sales person defines

the objectives of the call, devise a selling strategy to achieve this objective and

make the appointment. The primary objective is to get an order.

3. Presentation: after establishing rapport with the prospects, the sales person proceeds to

formal sales presentation. The job of the sales person is to inform the prospect about the

characteristics, capabilities and availability of goods and services that are for sale.

Presentation comprises of two distinct activities: approach and demonstration.

4. Handling objections: All sales persons confront sales resistance i.e. actions or

statements by a prospects that postpone, hinder or prevent the completion of the sale.

Normally sales resistance takes the form of an objection which can be classified as stated

or hidden. Prospects may state their objections to a proposition openly and give the sales

person a chance to answer them. Unfortunately, in many instances prospects hide their

real reasons for not buying. Besides having hidden objections, their stated objection may

be phony. Unless one can determine the real barrier to the sale one shall not be able to

overcome it.

5. Closing the sale: After having answered and overcome objections, it is the stage for sales

person to ask for the order from the prospects. The entire effort is wasted unless the sales

person can get the prospect to agree to buy the product. There are several closing

techniques which are being used by sales person in India. Sales person should select

among these technique one that fits the specific prospect and selling situation.

6. Follow-up: The selling process is not complete by merely making the sale, as generally

assumed by many sales person. After sales activities is important part of the whole selling

process. Effective sales-follow-up reduces the buyer’s doubt about the product or services

and improves the chance that the person will buy again in the future. In addition to post-

sale activities, sales person are also required to maintain good customer relations.

Knowledge of customer

The essential elements of a sales transaction constitute- the salesman, the product or the service,

and the prospect or the customer. The success of salesmanship depends to a large extent, on the

approach of a salesman and his winning capability over customers. Customer is the focal point in

a sales transaction for achieving success. Therefore, it is the customer who determines the fate

and fortune of the business. It becomes then obligatory for the salesperson to understand the

motives, needs and desires of the customer and persuade him accordingly. In addition it

necessitates thorough examination of the customers so as to devise a strategy for dealing with

them. It also enables salespersons to deal with them effectively and efficiently.

Classification of customers

1. On the basis of gender – male and female.

2. On the basis of age – children, youngsters, middle aged and elderly.

3. On the basis of geographical area – rural and urban.

4. On the basis of purpose – industrial buyers, resale buyers and consumption buyers.

5. On the basis of characteristics – argumentative, shy, silent, talkative, suspicious, friendly,

hesitant, impatient, sarcastic etc

The salesperson has to devise his/her strategy according the nature of the customer.

Concept of sales promotion

Sales promotion consists of diverse collection of incentive tools, mostly short-term designed to

stimulate quicker and / or greater purchase of a particular product by consumers or the trade.

Whereas advertising offers a reason to buy, sales promotion offers an incentive to buy. Sales

promotion includes tools for consumer promotion (for example samples, coupons, prizes, cash

refund, warranties, demonstrations, contest); trade promotion (for example buying allowances,

free goods, merchandise allowances, co-operative advertising, advertising and display

allowances, dealer sales contests); and sales-force promotion (for example bonuses, contests,

sales rallies).

Purpose of sales promotion

Sales promotion tools vary in their specific objectives. A free sample stimulates consumer trial,

while a free management advisory service cements a long-term relationship with a retailer.

From the marketer’s perspective, sales promotion serves three essential roles it informs,

persuades and reminds prospective and current customers and other selected audiences about a

company and its products. The relative importance of those roles varies according to the

circumstances faced by a firm.

The most useful product or brand will be a failure if no one knows it is available! Because

distribution channels are often long, a product may pass through many lands between a producer

and consumers. Therefore, a producer must inform middlemen as well as the ultimate consumers

or business users about the product. Wholesalers, in turn must inform retailers and retailers must

inform consumers. As the number of potential customers grows and the geographic dimensions

of a market expand, the problems and costs of informing the market increase.

Objectives of sales promotion

The basic objectives of sales promotion are:

i. To introduce new products

ii. To attract new customers

iii. To induce present customers to buy more

iv. To help firm remain competitive

v. To increase sales in off season

vi. To increase the inventories of business buyers

Types of Sales Promotion:

Many sales promotion tools are available to accomplish sales promotion objectives at the

consumer level, and at the middle men level. For the purpose of convenience, the types of sales

promotion methods may be grouped under two categories:

1. Consumer promotion tools

The main consumer promotion tools include:

Samples

Coupons

Cash refund offers

Price packs

Gifts

Prizes

Free trials

Warranties

Point of purchase display

2. Trade promotion tools

More sales promotion tools are directed to the trade than to consumers and include:

i. Price-off

ii. Allowances

iii. Free goods

iv. Specialty advertising goods

v. Push money