Chapter Fifteen: Advertising, Sales Promotions and Personal Selling TOOLS FOR INSTRUCTORS • Learning Objectives • Annotated Chapter Outline with Instructor’s Notes/Teaching Tips • Answers to End of Chapter Learning Aids Concept Review Marketing Application Questions Net Savvy • Chapter Case Study • Video Activities Learning Objectives 1. Describe advertising and three objectives of advertising 2. Summarize the regulatory and ethical issues of concern to advertisers 3. Explain how sales promotions supplement a firm’s IMC strategy 4. Describe personal selling and how it adds value 5. Identify the steps in the personal selling process Annotated Chapter Outline PowerPoint Slides Instructor’s Notes Chapter 15 will focus on Advertising, Sales Promotions, and Personal Selling. These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides. Opening Vignette: auto TRADER When older generations think about Auto TRADER, it is probably as a print publication. But to reach a younger target market, the company went digital. It redesigned its website and ran an advertising campaign to drive traffic to it. The site now attracts more than 3.5 million visitors every month and won the Grand Prize at the 2013 Cassies Awards for advertising effectiveness. Ask students if any of them have used the AutoTRADER site to find a new or used car to purchase. Ask them what features of the site they use and why. Advertising is a paid form of communication, delivered through media from an identifiable source, designed to persuade the receiver to take some action, now or in the future. Word-of-mouth advertising and political advertising are not technically considered advertising, and they are not regulated in the same way as regular advertising is. Many things people call advertising are not advertising at all. Word-of-mouth “advertising,” according to the definition, fails to meet several elements. The AIDA Model Consists of Attention, Interest, Desire and Action. At each stage, consumers judge whether to take the next step. • Attention: The sender gains the attention of consumers. • Interest: Communication increases consumers’ interest and persuades them a product is worth investigating. • Desire: The IMC message moves the consumer from “I like it” to “I want it.” • Action: The ultimate goal of any marketing communications is to drive the receiver to action. • The lagged effect refers to a delayed response to a marketing communications campaign; because consumers generally require several exposures to an ad they process its message. The AIDA model provides a basis for understanding how marketing communications works. Consumers move through a readiness continuum. At each stage they need information to help them progress to the next stage. The objective of some IMC campaigns may primarily be to generate awareness (e.g. new technology such as BluRay) while other campaigns aim to have consumers buy a new product (e.g. Fitbit.) Each IMC tool can be used to move consumers through a buyer readiness continuum in different ways. For example, advertising may do a good job of creating awareness and even knowledge for a company that offers marketing consulting services but it may require a call from a sales person at that company to convince a small business, new start-up venture or entrepreneur to enlist the services of that consulting company. Ask students to pick a product. The decision to buy this product must be somewhat complex. Then walk them through AIDA using the accompanying slides. Discuss the now-famous Joe Camel study, which found a majority of three-year-old children were aware of Joe Camel, the spokes character for Camel cigarettes. The study’s authors suggested awareness would lead to smoking. Discuss whether awareness always translates to action; be sure to include the two intervening steps, interest and desire. Finally, note that in follow-up studies, preschoolers indicated they understood that cigarettes were adult products, and many were adamant that they would not smoke. Ask students: Other than purchase, what can IMC prompt consumers to do? Possible answers include behavioural changes (don’t drink and drive), attitude changes (that product is high quality), or physical actions (pick up the phone, log on to the Web site, volunteer). Sometimes consumers don’t act immediately after receiving a marketing communication because of the lagged effect —a delayed response to a marketing communication campaign. Dogs and babies are very good at attracting awareness or advertisements. LO1: Advertising Objectives • Advertising objectives derive from the overall goals of the marketing program. • The advertising plan refers to a subsection of the firm’s overall marketing plan that explicitly outlines: 1. The objective of an advertising campaign. 2. How the campaign can accomplish that objective 3. How the firm can measure the campaign’s success. An advertising campaign has three broad objectives: inform, persuade, or remind the target audience. Informative advertising creates and builds brand awareness. • The ultimate goal is moving the consumer through the buying cycle to purchase. • It is crucial when consumers have little information about the specific product. Persuasive advertising motivates consumers to take action, usually during the growth and early maturity stages of the PLC. Reminder advertising prompts repurchases. • Effective for products that have gained market acceptance and are in the maturity stage of the lifecycle. • Top-of-mind awareness occurs when a product or brand holds a prominent place in people’s memories that triggers a response without them having to put any thought into it. Group activity: List brands that might benefit from focusing on informative, persuasive, and reminder advertising. Next, list several brands that enjoy top-of-mind awareness for you (e.g., when you think of a cola, does Coke pop into your head unprompted?) Answer D; see page 474 Focus of Advertisements A. Product-focused advertisements inform, persuade, or remind consumers about specific products or services. B. Institutional advertisements inform, persuade, and remind consumers about issues related to places, politics, an industry, or particular corporations. The “Got Milk” campaign generates demand for the entire milk category; an advertisement for a single brand of milk tries to generate selective demand for that particular brand. The two are not mutually exclusive; when Coca-Cola introduced Diet Coke, it created both industry wide demand for diet soda and product specific demand for Diet Coke. Companies like Exxon-Mobil advertise their commitment to the environment, not their products, to inform, persuade, and remind consumers of positive thoughts about the company, which can prompt the purchase of products and services. Ask students: Why might Esso be particularly interested in institutional advertising? Oil and Gas companies are often accused of engaging in practices that are harmful to the environment. Therefore it is important for the firm to stress that they are an environmentally responsible firm to negate some of this criticism. • Product Placement is the inclusion of a product in nontraditional situations, such as in a scene in a movie or TV program. • Public service advertising (PSA) centers on public welfare and generally is sponsored by nonprofit institutions, civic groups, religious organizations, trade associations, or political groups. • Social marketing applies marketing principles to a social issue to bring about attitudinal and behavioural changes. Public service announcements are designed to raise awareness of public welfare issues and receive free airtime, as required by the CRTC. Ask students: What issues have you seen “advertised” in PSAs? Are they effective? LO2: Regulatory and Ethical Issues in Advertising Federal Agencies Regulate Advertising • The Competition Bureau enforces truth-in-advertising laws and defines deceptive and unfair advertising practices. • The Canadian Radio-television and Telecommunications Commission (CRTC) regulates all aspects of the Canadian broadcasting system, e.g. communications over radio, television, satellite, and cable. • Health Canada’s Food and Drug Act regulates food, dietary supplements, drugs, cosmetics, medical devices. • Advertising Standards Canada is a self-regulatory body that monitors voluntary industry codes. • Many product categories fall under self-regulatory restrictions or guidelines. • Puffery is legally exaggerated praise that stops just short of deception. Most marketing communications have an economic motivation, so they do not have the same level of protections as non-economically motivated communications. The first is regulated, meaning that the firm engaging in it is responsible for the contents of the message. You might encourage students to discuss the implications of Charter of Rights and Freedoms rulings regarding what speech is regulated and what is not. What effects do these rulings have for marketing? Unlike in many European countries, puffery is legal in Canada. Generally these claims are so outrageous that no rational consumer would believe them. Ask students: Could puffery ever be considered deceptive? If so, how should we draw the line between puffery and deception? The line between puffery and deception is a fine one. Obvious exaggerations are not the problem it is the more subtle issues that create the problem. The line is currently drawn which determines how many individuals hold a false belief as a result of an advertising. It is a very grey area of advertising law. For an example of false advertising, you could discuss the Competition Bureau’s $300,000 penalty against Beiersdorf Canada, the distributor of Nivea products. It claimed that its My Silhouette cream could erase as much as 3 cm from targeted body parts such as thighs, hips, waist and stomach while making the skin better toned and more elastic. TV ads said that the cream “visibly firms skin in just four weeks.” The Competition Bureau ruled that Beiersdorf misled consumers by claiming a person could slim down by simply applying a skin cream. Ethical Dilemma 15.1: When makeup companies really do make up models’ faces. Many regulatory bodies consider touching up to be wrong. They feel that doing so is misleading the public. Do consumers really want realistic images & measured promises, or do they accept & even prefer exaggerated claims & unrealistic images of beauty? Ask students: what do they think? LO3: Sales Promotion Sales Promotions can be used to stimulate sales by either the end user consumers or to stimulate channel members to sell more of a given product/service. If focused on the end user, the promotion is using a “pull strategy.” If focused on channel members, it is using a “push strategy.” Remind students that as advertising has decreased as a portion of total marketing communications budgets, sales promotions have increased. Promotions can be used to stimulate sales by either the end user consumers or to stimulate channel members to sell more of a given product/service. If focused on the end user, the promotion is using a “pull strategy.” If focused on channel members, it is using a “push strategy.” This ad represents a deal. The promotion encourages consumers to increase their rate of purchasing by offering a free product. Consumer Sales Promotions • Coupons offer a discount on the price of specific items when purchased • Deals are a type of short-term price reduction, e.g. a price lower than the regular price; a buy one, get one free offer • Premiums offer an item for free or at a bargain price • Contests are brand-sponsored competitions requiring some form of skill or effort • Sweepstakes offer prizes based on a chance drawing of entrants’ names • Samples offer potential customers the opportunity to try a product or service before they make a buying decision • Loyalty Programs are designed to retain customers by offering premiums or other incentives • POP Displays are merchandise displays located at the point of purchase • Rebates are price reductions where a portion of the purchase price is returned by the seller to the buyer Pop-up stores exist for a limited time and focus on new or limited edition products. • May be offered by a retailer, manufacturer, or service providers. • Give consumers a chance to interact with the brand. • Build brand awareness. Cross-promoting occurs when two or more firms join together to reach a specific target market. • The products must appeal to the same target market. • In combination, the products must create value for consumers. Sales promotions occur either in conjunction with an advertising campaign or as a stand-alone component of a marketing communications plan. In either case, they must be consistent with the brand image. Ask students: What type of sales promotions do you feel are most effective and why? This ad represents a demonstration. The promotion encourages consumers to increase their level of interest by offering demonstration of the coffee maker. In recent years, firms have become more creative in the types of promotions used. In recent years, firms have become more creative in the types of promotions used. Ask students: How many of them as children collected promotions in Happy Meals or other children’s products? The Happy Meal for years was McDonald’s most successful product, primarily driven by the children’s desire for the toy inside. Many of the Happy Meal toys have become sought after collectibles. The Beanie Baby promotions a number of years ago were so successful that McDonald’s literally ran out of the featured item for the week within hours of its initial distribution. Answer B; see page 488 Pop-up Beauty Procter & Gamble decided to use a pop-up store in downtown Toronto. The goal was to establish the company as an authority on beauty and to position several brands as everyday beauty aids. The store allowed P&G to interact with thousands of consumers and give them the opportunity to try some of the products. Although only in place for one month, the temporary store received over 12,000 visitors and was deemed a success. Ask students: Do you feel pop up stores are effective? Would this concept work for all products? Pop up stores work because they are novel and often offer the consumer a unique experience. In order to be successful the firm must design a store that is as entertaining as it is focused on selling. It is not an appropriate concept for every product but can be successful if carefully planned and executed. Trade Sales Promotion Tools Far more money is spent on trade channel sales promotions than on consumer sales promotions. Trade channel promotions help convince retailers and wholesalers to stock a new brand, give it eye-level shelf space, and promote it in their flyers and other ads. Trade promotion tools include: • Discounts and Allowances • Co-operative Advertising • Sales Force Training Evaluating Sales Promotions using Marketing Metrics Many sales promotion opportunities undertaken by retailers are initiated by manufacturers. LO4: Personal Selling • The two-way flow of communication between buyers and sellers designed to influence the buyer’s purchase decision. • Personal selling can take place in various situations: face-to-face, video teleconferencing, on the phone, or over the Internet. Many people are shocked to learn how many employees hold sales positions. Your students may have had experience in retail sales and think that all sales jobs are like that. Remind them that though many retail positions exist, professional sales positions involve a more involved skill set and offer much higher rewards. Benefits of a professional selling career • Lifestyle • Job variety • Lucrative • Frontline emissaries for the firm, which makes personal sellers very visible to management Ask students: Do you want to plan your own schedule and decide how much money you will make? These are just two of the many benefits of professional selling. The visibility of sales positions also offers many opportunities for advancement. Answer D; see page 489 Personal Selling and Marketing Strategy Salespeople build strong strategic relationships and gather market research data from customers to ensure efficiency in the supply chain. Ask students: How does the sales force create value for the firm through relationship selling? Through relationship selling the sales force focuses on building long term customer relationships, contributes to building customer loyalty, assists the firm in identifying new opportunities with existing customers. The Value Added by Personal Selling 1. Salespeople Build Relationships • Salespeople are in a unique position to customize messages for specific buyers. • Relationship selling emphasizes a commitment to maintaining the relationship over the long term and investing in opportunities that mutually benefit all parties. • Crucial to the success of CRM programs. 2. Salespeople Education and Provide Advice 3. Salespeople Save Time and Simplify Buying For many products, the sales force educates customers and advises them about the best products/services to meet their needs. Ask students: For what kind of products/services do consumers most need the expertise of salespeople? The sales force also simplifies buying by helping the customer understand and evaluate various choices. LO5: The Personal Selling Process Depending on the sales situation and the buyer’s readiness to purchase, salespeople may not use every step, and the time required for each step varies depending on the situation. This chart introduces the personal selling process, which the following slides cover in depth. It also may be used alone in a shortened lecture. Step One: Generate and Qualify Leads • Leads come from a variety of sources: current customers, networking events, the Internet, or trade shows. • When salespeople telephone or visit potential customers without appointments, they are engaging in cold calls. • Telemarketing is similar to cold calling but only occurs over the telephone. Two ways leads can be generated include cold calling and telemarketing. Group activity: Often the best source of new customers is other people. Imagine you sell investment properties; list the people you know who might provide you with viable customer contacts. How else might you gather a list of potential customers to contact? Now role play a cold calling scenario, in which one group member “calls” the others. What challenges do you face? Would your task have been easier had you had some introduction to these “customers”? Answer D; see page 493 Step 2: Pre approach • The pre approach occurs prior to meeting the customer for the first time and extends the lead qualification procedure. • The salesperson must establish goals for the meeting to know exactly what he or she wants to accomplish. A qualified lead requires a meeting. As the old saying goes, “You never get a second chance to make a first impression,” so salespeople must prepare carefully. Ask students: What kinds of preparation can help ensure the first meeting goes well? The sales person needs to have investigated the customer’s business and defined how the customer can benefit from the firm’s products/services. If possible the sales person should examine how the customer is currently addressing the needs it is wishing to fulfill. Step 3: Sales Presentation and Overcoming Objections • The presentation takes place during a face-to-face meeting, after complete preparation. • Objections can arise during any stage of the selling process, but they are most likely during the sales presentation. To handle the most difficult part of the sales encounter, salespeople go through extensive training to learn how to deal with objections Step 4: Closing the Sale • Obtain a commitment from the customer to make a purchase. • The sale is the reward for a job well done. The “ABCs” of selling suggest salespeople must “Always Be Closing,” but this difficult process requires far more extensive training than that. Group activity: Continue with the previous activity. Have students practice closing the sale. Step 5: Follow-Up • In relationship selling, the sale is never really over. • Examine post-sale satisfaction according to the five service quality dimensions. • Listen to the customer, and provide fast responses. Salespeople must always remember that the sale is just the beginning of a customer relationship. Ask students: What methods can salespeople use to ensure they follow up effectively with their customers? Does it differ for B2B versus B2C selling situations? Follow up involves ensuring that customers are satisfied with their purchases. The same techniques are used in both B2B and B2C selling. Most firms now have systems to ensure the after the sale communication is established, either by telephone, email, or in person. Aligning the Personal Selling Process with the B2B Buying Process Group activity: Role play a salesperson and a potential customer during the presentation. The customer should express several reservations; as the salesperson, how will you deal with them? Discuss each group’s performance. The B2B process must align closely with the selling process. A seller, for instance, shouldn’t be trying to close a deal when the buyer is just determining the product specifications. Concept Review Generally, the concept questions are designed to achieve a single purpose – to encourage students to test their knowledge and understanding of the theoretical content of the chapter. These questions encourage recall and reflection, which will better prepare students to answer the marketing applications questions based on their understanding of the theory. 1. What is advertising? Answer: Advertising is a paid form of communication, delivered through media from an identifiable source, designed to persuade the receiver to take some action. Advertising has three important distinctions over other IMC tools. First, unlike public relations, advertising is not free. Second, advertising must be carried by some medium such as television, radio, print or the web. Lastly, the source of the message must be known or knowable. 2. What is the AIDA Model? How does the AIDA model facilitate the planning and execution of marketing communications? Answer: The AIDA Model refers to the series of mental stages, or steps, that marketing communications move consumers through. These stages include Attention, Interest, Desire and Action. At each stage, consumers make judgements about whether to move forward to the next step. Also known as the “think, feel, do” model, it helps facilitate the planning and execution of marketing communications since marketers must think about and deal with hurdles in each stage of the model. 3. What are the three primary objectives of advertising? Answer: The three primary objectives are informative, persuasive and reminder advertising. Informative advertising is used to create and build brand awareness and eventually move consumers through the buying process to purchase. Persuasive advertising motivates consumers to take action and is generally used in the growth and maturity stage of the product life cycle. Reminder advertising helps prompt consumers to repurchase products or services and is particularly useful in the maturity stage of the product life cycle. 4. List and explain some of the potential regulatory and ethical issues firms should consider when developing their marketing communications strategy. Answer: Legal and ethical issues include consideration for: • misleading and deceptive advertising practices, e.g. bait and switch tactics • unsafe or misbranded products, e.g. unsafe food, drugs, cosmetics • overstated health claims, e.g. diet-related claims or drug claims to reduce heart disease, high blood pressure, cancer, etc. • bilingual labelling for all pre-packaged products • adhering to the Broadcast Code for Advertising to Children, and in Quebec avoiding advertising to children under the age of 13 • ethics of spending large amounts of money on advertising 5. What is sales promotion? What are the main objectives of sales promotion? Answer: Sales promotions are special incentives or excitement-building programs that encourage consumers to purchase a particular product or service. The main objectives of sales promotion are to build short-term sales and drive purchase. 6. List six different kinds of consumer sales promotion tactics and discuss the advantages and disadvantages of each. Answer: PROMOTION ADVANTAGES DISADVANTAGES Coupons • Encourages retailer support. • Allows for direct tracing of sales. • Has low redemption rates. • Has high cost. Deals • Reduces consumer risk. • Retaliates against competitive action. • May reduce perception of value. Premiums • Increases perception of value. • Consumers buy for premium not product. • Has to be carefully managed. Contests • Generates excitement. • Requires creativity. • Must be monitored. Sweepstakes • Minimises brand switching among existing consumers. • Sales often decline after. Samples • Offers direct involvement. • Has high cost to the firm. Loyalty Programs • Creates loyalty. • Has high cost to the firm. POP Displays • Provides high visibility. • Provides in-store support. • Is difficult to get a good location in the store. • Can be costly to the firm. Rebates • Increases value perception. • Is easily copied by competitors. • May just advance future sales. 7. Describe the different kinds of sales promotion targeted to distribution channel members. Why are these trade channel promotions necessary? Are they ethical? Answer: • Discounts and Allowances - case allowance or discount off each case for ordering a certain quantity • Co-operative Advertising - compensates channel members for money spent on promoting products • Salesforce Training – retailer’s sales staff offer training to ensure they have in-depth product knowledge All are necessary to incentivise retailers to buy and promote products in their stores and are ethical provided they do not violate Competition Bureau regulations. 8. What is personal selling? Describe the steps in the personal selling process. Which stage do you consider to be the most important and why? Answer: Personal selling is the two-way flow of communication between a buyer or buyers and a seller designed to influence the buyer’s purchase decision. There are five steps in the personal selling process: 1. Generate and qualify leads – create a list of potential customers and qualify them (assess their potential) 2. Pre approach – conduct additional research about a customer and develop a plan for meeting with that customer 3. Sales Presentation and Overcoming Objections – in-person meeting where the sales person determines where the customer is in the buying process, asks and answers questions, and overcomes objections 4. Closing the Sale – the sales person must ask for the business and close the deal 5. Follow-up – ensure the customer is satisfied and continue to build an ongoing relationship All stages are important. Without qualified leads, sales reps waste their time calling on customers. Not spending enough time “doing their homework” in the pre approach stage will result in sales reps who don’t understand the customer’s needs and/or industry. During the sales presentation, if sales reps don’t listen well, ask good questions and carefully respond to objections, they will be unable to close the sale. Ongoing relationships can only be built by following up and delivering great service quality. 9. What is sales management? Why sales management is considered a complicated task? Answer: Sales management involves the planning, direction, and control of personal selling activities, including recruiting, selecting, training, motivating, compensating, and evaluating, as they apply to the sales force. It is complicated because it involves determining whether to hire your own sales force or contract with independent agents, recruiting people with appropriate personal traits and abilities, training these people which can be quite expensive, motivating the sales force to perform and determining the best compensation model, and putting measures in place to evaluate their results. 10. What are the main considerations involved in recruiting, training, and compensating salespeople? Answer: Recruiting: to hire the right person, a company must determine what the sales person’s duties will be and what skills and abilities are required to accomplish these duties. Manager and sales experts agree that personality, optimism, resilience, self-motivation and empathy are key traits for success. Training: Companies can choose on-the-job training or role-playing exercises which allow managers to observe trainees and provide feedback, however take time and are expensive. Online training or teleconferencing are less expensive and can still be quite efficient. Compensating: Not all sales reps are motivated purely by money. Some prefer autonomy over high monetary compensation. Managers need to decide whether to use financial rewards such as salary, commission, bonuses and contests or non-financial rewards such as recognition, trips, or time off. Marketing Applications 1. Choose one of the ads featured in this book and note its page number. What are the objectives of this ad? Does the ad have more than one objective? Explain your answer. Instructor’s Notes: Students may select any ad they want, but to determine its possible objectives, they should discuss the product promotion, increased store traffic, entertainment tie-in, event sponsorship, or some form of sales promotion. Example answers: The Burger King ad in this chapter attempts to promote the chain’s food items, get consumers excited about the Star Wars product tie-ins available when a consumer purchases a meal (which helps bring consumers into the stores), and show the company’s sponsorship of events like the “Kings of the Court” basketball competition. 2. Using the steps in the AIDA model, explain why a potential consumer who views Juicy Couture’s advertising may not be ready to go out and purchase a new pair of jeans. Instructor’s Notes: The AIDA model suggests that attention leads to interest, which leads to desire, which leads to action. At each stage, the consumer judges whether to take the next step. Students should take the perspective of a potential consumer and proceed through the scenario presented in the previous question. Example answers: To get consumers to go out and purchase its product, Juicy Couture must deal with hurdles in each stage of the AIDA model: • Attention: Even though a consumer might see the company’s advertisement, it might not catch her attention. • Interest: Once the consumer is aware that the company and product exist, she still might not believe it is worth investigating further. • Desire: The consumer might like the product but need further convincing that she wants it. • Action: If the consumer has interest and desire, it still might take several more exposures to the advertisement to prompt her to take action and make the purchase. A potential consumer who views Juicy Couture’s advertising may not be ready to purchase a new pair of jeans due to the following steps in the AIDA model: 1. Attention: The consumer might not notice or pay attention to the advertisement. 2. Interest: Even if the ad captures attention, it may not generate enough interest in the product. 3. Desire: The consumer might be interested but not feel a strong enough desire for the jeans due to preferences for other brands or styles. 4. Action: Finally, the consumer may lack the motivation to take action and make a purchase, possibly due to budget constraints, lack of urgency, or convenience issues. 3. Suppose Lexus is introducing a new line of light trucks and has already created the advertising campaign. How would you assess the effectiveness of the campaign? Instructor’s Notes: Rather than designing a campaign, students must assess the existing efforts of a company like Lexus. To test its effectiveness, students must assess the campaign before (pretesting), during (tracking), and after (post testing) it has run. Example answers: To determine the effectiveness of Lexus’s new advertising campaign, I would use pretesting to ensure that the various elements work in an integrated fashion and are doing what they are intended to do. Once the advertisement is in circulation or on the air, I would track key performance indicators, such as daily or weekly sales volume, to identify any problems with the message or the medium. After the campaign has stopped running, I would use post testing to evaluate its impact on the target audience and the firm’s brand image and sales. To assess the effectiveness of Lexus's advertising campaign for its new line of light trucks, consider the following steps: 1. Define Objectives: Clearly outline the goals of the campaign, such as increasing brand awareness, generating leads, or driving sales. 2. Track Key Performance Indicators (KPIs): Measure specific KPIs aligned with the campaign objectives. Common KPIs include: • Reach: Number of people exposed to the ads. • Impressions: Total number of times the ads are displayed. • Engagement: Interactions such as likes, shares, comments, and click-through rates. • Conversion Rate: Percentage of users who take the desired action (e.g., filling out a form, requesting more information, making a purchase). 3. Surveys and Feedback: Conduct pre- and post-campaign surveys to gauge changes in brand awareness, perception, and consumer intent. 4. Sales Data Analysis: Compare sales figures before, during, and after the campaign to identify any uplift in sales directly attributable to the advertising efforts. 5. Website Analytics: Monitor website traffic, page views, time spent on the site, and user behavior metrics to understand the campaign's impact on digital engagement. 6. Social Media Metrics: Analyze social media performance by tracking mentions, sentiment, and engagement rates across platforms where the campaign is active. 7. Market Share Analysis: Assess changes in Lexus's market share in the light truck segment to determine if the campaign has effectively captured new customers from competitors. 8. Return on Investment (ROI): Calculate the ROI by comparing the cost of the campaign to the revenue generated as a result of the campaign. 9. Competitor Benchmarking: Compare Lexus's campaign performance against similar campaigns by competitors to evaluate relative success. 10. Focus Groups: Conduct focus groups to gather qualitative insights into consumer reactions and attitudes toward the campaign. By systematically analyzing these aspects, you can gain a comprehensive understanding of the campaign's effectiveness and make data-driven decisions for future marketing efforts. 4. Suppose now that Lexus is planning a sales promotion campaign to augment its advertising campaign for the new line of light trucks. Which push and pull sales promotion tools do you believe would be most effective? Why? Instructor’s Notes: Continuing the Lexus scenario, students should determine which type(s) of sales promotion might be more beneficial in conjunction with its advertising campaign—coupons, deals, premiums, contests, sweepstakes, samples, loyalty programs, POP displays, rebates, or product placements. Example answers: Because of the high-income target consumer segment and the brand image of Lexus, the company should consider using a combination of product placement and premiums. A premium could reinforce the brand image as being one of refined quality, even for a light truck, such as a gourmet picnic basket. For Lexus's sales promotion campaign for the new line of light trucks, the most effective push and pull sales promotion tools would be: Push Promotion Tools 1. Dealer Incentives: Motivate dealers to prioritize selling Lexus trucks through financial bonuses or rebates. • Effectiveness: Encourages dealerships to actively promote and push the new trucks to customers. 2. Point-of-Purchase Displays: Enhance showroom visibility with attractive displays. • Effectiveness: Captures customer attention and interest at the point of sale. Pull Promotion Tools 1. Consumer Rebates: Offer financial rebates to buyers. • Effectiveness: Makes the trucks more affordable and appealing, driving immediate purchases. 2. Test Drive Incentives: Provide rewards for taking a test drive. • Effectiveness: Increases dealership visits and allows potential buyers to experience the trucks firsthand, boosting conversion rates. 5. How would the Lexus sales promotion differ if it was geared to a business organisation with a fleet of company owned trucks? Instructor’s Notes: Students should recognize that sales promotions designed to attract businesses need to be different from consumer sales promotions. They should determine that is this case, deals and loyalty programs are the most appropriate. Example answers: Since Lexus is selling to businesses who want to buy a fleet of company owned trucks, it would be inappropriate to consider coupons, premiums, contests, sweepstakes, samples, point of purchase displays, or rebates. Lexus should choose either deals or loyalty programs. An example of a deal might be a short-term price reduction or special financing rate to encourage businesses to purchase within a specified timeframe. A loyalty program offering incentives to businesses that make multiple purchases over a long period of time could help retain customers. If the Lexus sales promotion was geared toward a business organization with a fleet of company-owned trucks, the approach would differ by focusing on the following: Push Promotion Tools 1. Bulk Purchase Discounts: Offer significant discounts for bulk purchases of trucks. • Effectiveness: Reduces overall cost, making it more attractive for businesses to invest in a fleet. 2. Extended Warranties and Maintenance Packages: Provide enhanced warranties and maintenance services. • Effectiveness: Ensures long-term reliability and reduces maintenance costs, appealing to business concerns about total cost of ownership. Pull Promotion Tools 1. Financing Options: Offer flexible and attractive financing terms. • Effectiveness: Eases the financial burden on businesses, facilitating larger purchases. 2. Fleet Management Solutions: Include advanced fleet management software and support. • Effectiveness: Adds value by improving operational efficiency, making the deal more attractive to business buyers. 6. Choose an ad that you believe unreasonably overstates what the product or service can do. (If you can’t think of a real ad, make one up.) Explain whether the ad is actually deceptive or just puffery. How would your answer change if you lived in France? Instructor’s Notes: Student must determine for themselves to what degree advertisements might be classified as deceptive. They must note that, regardless of their answer for themselves, the ad would be illegal in the EU, including France. Example answers: Advertisements for Bow flex unreasonably overstate what the product can do for consumers. Although they might come close to deception, they seem like a better example of puffery. Some people legitimately might use the weight machine to get slimmer and add muscle, but their results are probably unusual and may be due to other factors, such as restricted diets or personal trainers. The advertisement suggests consumers can “Get the results you want in only 20 minutes a day, 3 days a week,” which reasonable people should recognize is impossible. However, if the advertisement aired in France, it would definitely be considered deceptive, because scientific evidence would not support the claim and it therefore sends a false impression to consumers. Ad Example: "XYZ Hair Growth Serum: Grow 5 inches of hair in just 7 days!" Analysis: • Deceptive or Puffery: The ad is deceptive because it makes a specific, measurable claim (5 inches in 7 days) that is scientifically improbable and likely unachievable for most users. • In the U.S.: This claim would be considered deceptive advertising and subject to regulation and potential penalties by the Federal Trade Commission (FTC) for false advertising. • In France: French advertising laws, governed by the ARPP (Autorité de Régulation Profession Nelle de la Publicité), are strict about misleading claims. This ad would similarly be deemed deceptive, and advertisers could face fines and be required to withdraw the ad. The emphasis on truthfulness and consumer protection is strong in both jurisdictions, but enforcement mechanisms and penalties may vary. 7. You are invited to your 6-year-old niece’s birthday party and bring her a new superhero doll being advertised on television. She’s thrilled when she unwraps the gift but is in tears a short time later because her new doll is broken. She explains that on TV, the doll flies and does karate kicks, but when she tried to play with the doll this way, it broke. You decide to call the manufacturer, and a representative tells you he is sorry your niece is so upset but that the ad clearly states the doll does not fly. The next time you see the televised ad, you notice very small print at the bottom that states the doll does not fly. You decide to write a letter to the Advertising Standards Council (ASC) about this practice. What information should you include in your letter? Instructor’s Notes: While students might refer to the federal Competition Bureau, which enforces laws that relate to misleading advertising and deceptive marketing practices, the ASC is a self-regulatory body that monitors voluntary industry codes. Advertising to children is primarily regulated by the ASC’s Broadcast Code for Advertising to Children. Students should list the type of information the agency might need if it were to follow up on a claim of deceptive advertising. Example answers: I would include the name of the product being advertised; the nature of the advertisement, including the deceptive impression made by the animation; and the fact that the fine print is so small—and largely lost on children anyway—that consumers may believe that the product is capable of more than it is actually is. In your letter to the Advertising Standards Council (ASC), include the following information: 1. Description of the Ad: Detail the content of the televised ad, highlighting the scenes showing the doll flying and doing karate kicks. 2. Misleading Nature: Explain how the ad's depiction misleads children into believing the doll can perform these actions. 3. Fine Print Disclaimer: Point out the disclaimer in very small print stating the doll does not fly and how it is insufficiently prominent. 4. Personal Incident: Describe your niece's disappointment and the doll breaking due to the misleading portrayal. 5. Request for Action: Urge the ASC to investigate the ad and consider stricter regulations on clearly depicting a toy's capabilities to prevent such misleading practices. 8. “Salespeople just make products cost more.” Agree or disagree with this statement and discuss why you’ve taken that position. Instructor’s Notes: This question challenges students to consider the degree to which they think salespeople provide enough value to justify their costs. Depending on the types of products or services students considers, they might agree or disagree; for standardized, commodity-like products, they might believe salespeople do not add that much value, but for unique, big-ticket, or complex items, they should argue that salespeople provide value by educating and guiding the consumer. Example answers: In many situations, salespeople provide a valuable function for both the business and the consumer. On the business side, they help get the word out about the company and its products in a very face-to-face, human way. On the consumer side, they educate consumers about the product or service and help them make the best possible choices based on the consumers’ individual circumstances. For commodity products, salespeople might not add much value, but for products that are complicated or new, they translate value from the business to the consumer. Disagree: Salespeople do not just make products cost more; they add value that can justify the cost. 1. Expertise and Guidance: Salespeople provide valuable information and recommendations tailored to customer needs, enhancing the buying experience. 2. Customer Support: They offer after-sales support, helping with installation, troubleshooting, and warranties, which adds to the product's value. 3. Building Relationships: They build relationships and trust, which can lead to repeat business and customer loyalty. 4. Customization: Salespeople can offer customization options and bundled deals that meet specific customer requirements, making the product more attractive. While there might be a commission or markup, the overall value and service provided often outweigh the additional cost. 9. Choose an industry or a specific company that you would like to work for as a salesperson. How would you generate and qualify leads? Instructor’s Notes: Even if they are not interested specifically in a sales career, students should provide a possible company and discuss their possible customers, as well as how they would assess the potential of those customers. Example answers: If I would like to work for a firm like IBM, particularly because it tends to focus on relationship building and selling. To generate and qualify leads, I might attend technology conferences and trade shows to network and meet potential clients. By talking to these clients, I could gather information about their current situation and possible IT needs. With that information, I could follow up with further research to discover more about that company’s size, strategic direction, profit levels, and any other information that might tell me whether it is a good prospect for a sales call. Industry: Technology (e.g., Salesforce) Generating Leads: 1. Networking: Attend industry conferences, trade shows, and local business events to connect with potential clients. 2. Social Media: Use LinkedIn to connect with decision-makers and join relevant groups. 3. Content Marketing: Publish insightful articles and case studies on industry trends and solutions. 4. Referrals: Encourage satisfied clients to refer others. 5. Cold Calling/Emailing: Reach out to businesses that fit the target customer profile. 6. Partnerships: Collaborate with complementary businesses to access their customer base. Qualifying Leads: 1. Needs Assessment: Determine if the lead has a genuine need for the product. 2. Budget: Assess if the lead has the financial capability to make a purchase. 3. Authority: Confirm the lead has decision-making power. 4. Timeline: Understand the lead's timeline for making a purchase. 5. Fit: Ensure the product fits the lead’s specific needs and business model. By focusing on these methods, you can efficiently generate and qualify leads, maximizing sales opportunities. 10. You have taken a summer job in the windows and doors department of a large home improvement store. During your sales training, you learn about the products, how to address customers’ needs, why the lifetime value of the customer concept is so important to a store like this, and how sell the customer the best product to fit their needs, regardless of price point. One day, your manager informs you that you are to recommend Smith Windows to every window customer, even though these windows are more expensive and do not provide superior benefits except in limited circumstances. The manager is insistent that you recommend Smith. Not knowing what else to do, you recommend Smith Windows to customers who would have been better served by lower cost windows. The manager rewards you with a sales award. Later, the manager tells you that he received an all-expenses-paid cruise for his family from Smith Windows. What, if anything, should you do with this information? Instructor’s Notes: This scenario forces students to question to what degree this situation might violate their ethical standards. Using the ethical decision-making framework, students can determine an appropriate course of action. Example answers: In applying the ethical decision-making framework: • “Have you thought broadly of any ethical issues associated with the decision to be made?” The manager’s direction bothered me from the start, so I have thought about my concerns in terms of recommending an inferior product to my customers, which may negatively affect their opinion of my company. In addition, the manager appears to have taken a bribe and involved me in this unethical action by giving me an award for going along with it. • “Have you involved as many possible people who might have a right to offer input into or have actual involvement in making this decision and action plan?” At this point, though other salespeople know about the manager’s direction to sell only Smith Windows, only I know that he received a cruise for doing so. Neither my company nor my customers know about the details. • “Does this decision respect the rights and dignity of the stakeholders?” No, because I basically am being asked to lie to customers, and customers are getting lied to. • “Does this decision produce the most good and the least harm to the relevant stakeholders?” This scheme harms almost all stakeholders except my manager. Customers pay too much for an inferior product, the company could suffer damage to its reputation, and as an employee, I have been put in a very awkward and uncomfortable position. • “Does this decision uphold relevant conventional moral rules?” Conventional standards against bribery and lying suggest the community at large would absolutely not approve. More particularly, my company says it wants to offer customers the best value, so it also does not meet the specific standards demanded by this firm. • “Can you live with this decision alternative?” The only alternative I can live with is to make sure the manager rectifies the situation and ensure it never happens again. Based on my answers, I would approach my manager with my concerns. If he does not agree to solve the problem, I would take my concerns to his manager so that the firm can determine whether such activity is endemic to the entire sales team or specific to this one manager. You should report the situation to higher management or the store's ethics hotline. Here's why: 1. Unethical Practice: Recommending higher-cost windows that don't meet customer needs is unethical and could damage the store's reputation. 2. Conflict of Interest: The manager's acceptance of an all-expenses-paid cruise from Smith Windows indicates a conflict of interest and possible violation of company policies. 3. Customer Trust: Prioritizing customer needs and maintaining their trust is crucial for long-term business success. Reporting this behavior ensures that ethical standards are upheld and customer interests are protected. Net Savvy 1. Go to the website for Concerned Children’s Advertisers (www.cca-kids.ca/) an agency that produces and delivers social messaging campaigns on issues of challenge in children's lives. Click on the About Us tab and examine the history and activities of CCA. How does the role they play in responsible advertising complement the formal regulation of other agencies? Now look under the News tab. Choose one of the PSAs and discuss how these ads are used to deliver CCA’s message. Instructor’s Notes: To help students understand what kind of groups exist for children’s advertising; this exercise encourages them to explore the website of one such group, CCA. Example answers: • CCA’s mission involves working in partnership with government, educators, parents and other experts to be an authoritative voice of responsible children's advertising and communications in Canada. It produces public service announcements and delivers its message in classrooms and community centres and to parents and health care workers, which complements more formal government regulations. CCA is actively involved in upholding responsible advertising practices in Canada. • One PSA called “Tell Someone” focuses on Bullying Prevention and delivers the message that the best defence against bullying is enlisting the help of a trusted adult. Role in Responsible Advertising Concerned Children's Advertisers (CCA) complements formal regulation by: 1. Filling Gaps: CCA addresses social issues in children’s lives that might not be fully covered by formal regulations. 2. Educational Focus: They create educational PSAs that promote positive behaviors and values, enhancing the overall impact of advertising on children. 3. Advocacy and Awareness: CCA advocates for best practices in children’s advertising and collaborates with other agencies to ensure responsible messaging. PSA Example PSA Chosen: "Safe Online Sharing" How It Delivers CCA’s Message: • Educational Content: The PSA educates children about the importance of privacy and safety while sharing information online. • Engaging Format: Uses relatable scenarios and age-appropriate language to effectively communicate the risks and safety tips. • Positive Messaging: Promotes responsible online behavior and empowers children with knowledge to protect themselves. These PSAs support CCA’s mission by providing valuable guidance and fostering safe practices among children. 2. Go to couponsaver.com (www.couponsurfer.com) and identify five of the products featured. How effective are coupons for selling these products? Why? What are the benefits to the seller of using couponsaver.com over other integrated marketing communication options? How do you think couponsaver.com makes money? Instructor’s Notes: This exercise pushes students to roam around the coupon save website, explore links that interest them, and think about who might use this form of sales promotion. Example answers: • Coupons on the home page included Diet Pepsi and Amp Energy Drink, both products that I am interested in buying. Coupons were also available for Cheerios, Yoplait Yogurt and Office Depot products. Since I am on a limited budget, being able to print coupons for products is an incentive to buy them. • Sellers can reach a much broader target market using the coupon surfer site and provide a cost effective way to increase brand awareness, site traffic and sales since consumers who visit the site do so with an intention to buy. • Coupon Surfer offers private label, co-branding, and partner programs designed to increase traffic to a company’s website and the revenue stream. Companies like American Express, AVON, Dell, General Mills, Kodak, Office Depot, People Magazine, PETsMART, Pfizer, Reebok, Safeway, Staples, Time Inc., and Wal-Mart are listed as clients and pay to use the service as well as likely buy reports since Coupon Surfer tracks and monitors consumer response by geographic or demographic data, which would be valuable information for these companies. Five Featured Products on Couponsaver.com 1. Grocery Items (e.g., cereal, snacks) 2. Household Products (e.g., cleaning supplies) 3. Personal Care Products (e.g., shampoo, toothpaste) 4. Restaurant Discounts (e.g., meal deals, dining vouchers) 5. Retail Apparel (e.g., clothing, accessories) Effectiveness of Coupons • Increased Sales: Coupons can drive immediate purchases by providing cost savings, attracting budget-conscious consumers. • Customer Attraction: They can draw new customers who might not have otherwise tried the product. • Loyalty: Coupons encourage repeat purchases and brand loyalty by rewarding frequent buyers. Benefits to Sellers • Targeted Exposure: Couponsaver.com offers targeted distribution to potential buyers actively seeking discounts. • Cost-Effective Marketing: It provides a low-cost way to reach a broad audience compared to other advertising methods. • Performance Tracking: Allows sellers to track coupon usage and measure campaign effectiveness. Revenue Model Couponsaver.com likely makes money through: • Merchant Fees: Charging businesses a fee to list their coupons and offers. • Advertising: Selling advertising space on the site or through promotional partnerships. • Affiliate Commissions: Earning commissions from sales generated through the coupons listed on their platform. End-of-Chapter Case Making Mastercard Priceless Questions: 1. Why was the original Priceless campaign such a success? Answer: Mastercard’s Priceless campaign was designed to persuade shoppers to keep their MasterCard at the top of their wallets. The campaign was targeted towards customers to create positive “self-assessment feelings.” The campaign was so successful because it resonated with customers. In addition, the Priceless campaign also linked retailers into the ads creating a symbiotic marketing campaign among well-known brand names, creating more brand awareness and positive associations with MasterCard. 2. Why has MasterCard started to use “Priceless” more actively in its ¬messaging? Answer: According to MasterCard’s chief marketing officer, the goal of continuing the Priceless campaign is to “transform consumers’ perception of the card from simply part of prices moments to being the force that enables such experiences.” The Priceless campaign, today, is designed to place MasterCard at the center of life’s memorable, “priceless”, events. Video Activities Video: Ford: Social Advertising Learning Objective: LO1 Advertising Objectives Description: Ford's objective was to create awareness of the Fiesta through informative advertising. It used social media and the internet to get its message to consumers and have them submit videos of their experience with the Fiesta. Key Words: non-traditional marketing, social media, informative advertising Activity: Have students create a list of recent social media campaigns that invited consumers to submit videos. Ask them to discuss what incentives the companies used to convince consumers to do this task, e.g. valuable prizes, a percentage of product sales for a year (Dorito’s Guru Contest), recognition, etc. Ask how many students have created videos and participated in social media campaigns. How did the experience of creating a video change their attitude toward the brand? Did they spread word of mouth about the brand to their friends via Facebook, Twitter and other social media platforms? Solution Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9781259030659, 9781259104312
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