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Chapter Fifteen: Advertising, Sales Promotions and Personal Selling Chapter Objectives 1. Describe advertising and the 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 The chapter objectives and roadmap are intended to help students understand the content to be discussed. Opening Vignette: Sexy Sumos When Subaru realized that most consumers thought it was a Korean company, it launched a new campaign featuring Japanese sumo wrestlers. The sumos were featured in unconventional ways, e.g. carwash scene and pin-up poses. The goal was to run ads that showed the Subaru Forester as a fun, sexy SUV and to deliver a strong message about the Japanese heritage of the brand. Sales went up 47% as a result of the campaign. 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. I. The AIDA Model Consists of Attention, Interest, Desire and Action. At each stage, consumers judge whether to take the next step. A. Attention: The sender gains the attention of consumers. B. Interest: Communication increases consumers’ interest and persuades them a product is worth investigating. C. Desire: The IMC message moves the consumer from “I like it” to “I want it.” D. Action: The ultimate goal of any marketing communications is to drive the receiver to action. E. 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. iPod Touch.) 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 spokescharacter 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. Topic One: Advertising Objectives A. Advertising objectives derive from the overall goals of the marketing program. B. 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. A. Informative advertising creates and builds brand awareness. 1. The ultimate goal is moving the consumer through the buying cycle to purchase. 2. It is crucial when consumers have little information about the specific product. B. Persuasive advertising motivates consumers to take action, usually during the growth and early maturity stages of the PLC. C. Reminder advertising prompts repurchases. 1. Effective for products that have gained market acceptance and are in the maturity stage of the lifecycle. 2. 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 I. Focus 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. C. Public service advertising (PSA) centers on public welfare and generally is sponsored by nonprofit institutions, civic groups, religious organizations, trade associations, or political groups. D. 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? Topic Two: Legal and Ethical Issues in Advertising Federal Agencies Regulate Advertising A. The Competition Bureau enforces truth-in-advertising laws and defines deceptive and unfair advertising practices. B. 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. C. Health Canada’s Food and Drug Act regulates food, dietary supplements, drugs, cosmetics, medical devices. D. Advertising Standards Canada is a self-regulatory body that monitors voluntary industry codes. A. Many product categories fall under self-regulatory restrictions or guidelines. B. Puffery is legally exaggerated praise that stops just short of deception. Stealth Marketing A. A strategy used to attract consumers using promotional tactics that deliver sales messages in unconventional ways, often without the target audience knowing that the message has a selling intent. B. Viral marketing encourages people to pass along marketing messages to other potential consumers; no current regulations pertain to viral marketing campaigns. 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 16.1: Product (RED) Topic Three: Sales Promotion I. Sales Promotions Include Various Types: Consumer and Trade. 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. II. Consumer Sales Promotion Tools. A. Pop-up stores exist for a limited time and focus on new or limited edition products. 1. May be offered by a retailer, manufacturer, or service providers. 2. Give consumers a chance to interact with the brand. 3. Build brand awareness. B. Cross-promoting occurs when two or more firms join together to reach a specific target market. 1. The products must appeal to the same target market. 2. 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 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. III. Trade Sales Promotion Tools. Evaluating Sales Promotions using Marketing Metrics Many sales promotion opportunities undertaken by retailers are initiated by manufacturers. Topic Four: The Scope and Nature of Personal Selling Define Personal Selling. A. The two-way flow of communication between buyers and sellers designed to influence the buyer’s purchase decision. B. 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. A. Lifestyle. B. Job variety. C. Lucrative. D. 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 Personal Selling and Marketing Strategy I. Personal Selling Enhances Customer Relationships. A. Salespeople are in a unique position to customize messages for specific buyers. B. Relationship selling emphasizes a commitment to maintaining the relationship over the long term and investing in opportunities that mutually benefit all parties. C. Crucial to the success of CRM programs. II. Personal Selling Enhances the Supply Chain. A. Builds strong strategic relationships. B. Gathers 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 Salespeople Educate and Provide Advice. Salespeople Save Consumers 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. Topic Five: 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 graph 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. A. Leads come from a variety of sources: current customers, networking events, the Internet, or trade shows. B. When salespeople telephone or visit potential customers without appointments, they are engaging in cold calls. C. 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 Step 2: Preapproach. A. The preapproach occurs prior to meeting the customer for the first time and extends the lead qualification procedure. B. 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. A. The presentation takes place during a face-to-face meeting, after complete preparation. B. 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: Close the Sale. A. Obtain a commitment from the customer to make a purchase. B. 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. A. In relationship selling, the sale is never really over. B. Examine post-sale satisfaction according to the five service quality dimensions. C. 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. The Impact of Technology and the Internet on Personal Selling I. Salespeople Have Instant Access to Customers. II. Customer Research Is Easier to Perform. III. Sales Training Is More Effective, Easier, and Less Expensive. IV. Customers Gain Better Access to Information. V. Customers Can Self-Serve. Ask students: How has greatly expanded access to information in the modern world improved salespeople’s ability to deliver value? Managing the Sales Force Sales management involves the planning, direction, and control of personal selling activities, including recruiting, selecting, training, motivating, compensating, and evaluating the sales force. Determine the Sales Force Structure A. A company sales force versus manufacturers’ representatives 1. A company sales force consists of employees of the selling company. 2. Manufacturers’ representatives sell a manufacturer’s product on an extended contract basis but are not employees of the manufacturer. a. Compensated by commission. b. Do not take ownership or physical possession of merchandise. 3. Larger firms with more established product lines typically use company sales forces. 4. Smaller or newer firms often use manufacturers’ reps. Recruit and Select Salespeople A. Personality. B. Optimism. C. Resilience. D. Self-motivation. E. Empathy. Train the Sales Force A. Selling and negotiation techniques. B. Product/service knowledge. C. Technologies used in the selling process. D. Time and territory management. E. Company policies and procedures. Motivate and Compensate Salespeople. Financial rewards 1. Salary: A fixed sum of money paid at regular intervals. 2. Bonus: Payments made at management’s discretion when the salesperson attains certain goals. 3. Sales contest: Short-term incentive designed to elicit a specific response from the sales force. Nonfinancial rewards 1. High symbolic value. 2. Free trips or days off are effective rewards. Evaluate Salespeople. A. Rewards must be tied to performance. B. Measures can be either objective or subjective. Sales management plans, directs, and controls personal selling activities, from recruitment to evaluation. Are salespeople born, or can they be trained? The answer may be a bit of both. Some people possess certain personality elements that suggest their success, but even they need a lot of training. Ask students: Are you a “born salesperson”? What about you suits you for a sales position, and what would you need to work on if you were hired in sales? Instructor Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9780071320382, 9780070984929
