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Public Relations, Word-of-Mouth Influence, and Sponsorships Chapter Objectives Appreciate the nature and role of public relations and marketing public relations. Explain the differences between proactive and reactive marketing public relations. Understand the different types of commercial rumors and how to control them. Discuss the importance of word-of-mouth influence. Understand the role of marketing public relations in creating favorable word-of-mouth and building brand buzz and viral marketing. Explain the nature of event sponsorships, including reasons for their growth, factors in selecting appropriate events, and the sponsorship agreement. Understand how and why companies ambush events. Appreciate the importance of measuring sponsorship performance. Recognize the nature, role, and benefits of cause-related marketing. Understand that accountability is a key consideration for cause-oriented as well as event-oriented sponsorships. Chapter Overview This chapter covered three major topics: marketing public relations, word-of-mouth influence (including buzz creation and viral marketing), and sponsorship marketing. An important distinction was made between general public relations (general PR), which deals with overall managerial issues and problems (such as relations with stockholders and employees), and marketing public relations (MPR). MPR consists of proactive MPR and reactive MPR. Proactive MPR is dictated by a company’s marketing objectives and seeks opportunities rather than solves problems. Reactive MPR, conversely, responds to external pressures and typically deals with changes that have negative consequences for an organization. Handling negative publicity and rumors are two areas in which reactive PR is most needed. Opinion leadership and word-of-mouth influence are important elements in facilitating more rapid product adoption and diffusion. Opinion leaders, respected for their product knowledge and opinions, inform other people (followers) about new products and services, provide advice, reduce followers’ perceived risk in purchasing, and confirm decisions that followers have already made. Positive word-of-mouth influence is often critical to new-product success. People tend to talk about new products and services because they gain a feeling of prestige from being the bearer of news. Marketing communicators can take advantage of this prestige factor by stimulating “cheerleaders,” or “brand evangelists,” who will talk favorably about a new product or service. Buzz creation and viral marketing are relatively recent phenomenon as a proactive marketing practice. Firms employ the services of buzz-creation units to generate new product adoption by recruiting the efforts of connected people (influentials, opinion leaders) who will both adopt and talk about new products. Viral marketing can be compared to a social epidemic. Online viral activity is occurring at an increasingly rapid pace with social media and blogs. Sponsorships involve investments in events and causes to achieve various corporate objectives. Event marketing is a form of brand promotion that ties a brand to a meaningful athletic, cultural, social, or other high-interest public activity. Event marketing is growing because it provides companies with alternatives to the cluttered mass media, an ability to target consumers on a local or regional basis, and opportunities for reaching narrow lifestyle groups whose consumption behavior can be tied to the event. The distinctive feature of cause-related marketing (CRM) is that a company’s contribution to a designated cause is linked to customers engaging in revenue-producing exchanges or behaviors with the firm. Cause-related marketing serves corporate interests while helping worthy causes. Chapter Outline Introduction Public relations, or PR, is an organizational activity involved with fostering goodwill between a company and its various publics. PR efforts are aimed at various corporate constituencies, including employees, suppliers, stockholders, governments, the public, labor groups, citizen action groups, and consumers. Table 21.1 lists the many general public relations activities and functions. These include advice and counsel, publications, publicity, relationships with other publics, corporate image advertising, public opinion research, and miscellaneous activities. The focus in this chapter is with the more narrow aspect of public relations involving an organization’s interactions with actual or prospective customers. This is called marketing public relations or MPR. Marketing Public Relations (MPR) versus Advertising The role that PR, or MPR, should play has been debated over the years. Some experts (i.e., Ries and Ries in their book The Fall of Advertising & The Rise of PR) argue that public relations and its major tool, publicity, represent the most important instrument in a marketer’s tool bag, contending that new products can be introduced with little, if any, advertising. Two qualifications to the above claim must be acknowledged: Not all products can rely on publicity for successful introductions as most are not high in uniqueness or visibility, and the news media is not interested in presenting free publicity for these mundane products. Even for unique new products, it is only a matter of time before free publicity no longer is available, so advertising is necessary after the newsworthiness wears off. Proactive versus Reactive MPR MPR can further be delineated as involving both proactive and reactive initiatives. Proactive MPR is dictated by a company’s marketing objectives—is offensively rather than defensively oriented and opportunity seeking rather than problem-solving. Reactive MPR describes the conduct of public relations in response to outside influences that result in negative consequences for the organization; it attempts to repair a company’s reputation, prevent market erosion, and regain lost sales. Proactive MPR Proactive MPR plays a major role in product introductions or product revisions, and, integrated with other promotional devices, gives a product additional exposure, newsworthiness, and credibility. Credibility largely accounts for the effectiveness of proactive MPR. Publicity is a major tool of proactive MPR. The fundamental purpose of marketing-oriented publicity is to enhance brand equity by: facilitating brand awareness, and augmenting brand image by forging in consumers’ minds strong and favorable associations with the brand. Product releases announce new products, provide relevant information about product features and benefits, and tell how additional information can be obtained. Executive-statement releases are news releases that quote CEOs and other corporate executives. They are published in the news section of a publication, which carries a significant degree of credibility. Feature articles are detailed descriptions of products or other newsworthy programs that are written by a PR firm for immediate publication or airing by print or broadcast media or distribution via appropriate Internet sites. Reactive MPR Unanticipated marketplace developments can place an organization in a vulnerable position that demands reactive marketing PR. In general, the most dramatic factors underlying the need for reactive MPR are product defects and failures. A Sampling of Celebrated Cases Walmart and Mexican Bribery Scandal Toyota Motor and Accelerator Pedals British Petroleum (BP) and the Gulf Oil Spill Tiger Woods Mattel and Lead Paint Menu Brands and Rat Poisoning ReNu MoistureLoc Lens Cleaner Vioxx and Heart Attacks/Strokes Coke, Pepsi, and Pesticide in India Firestone Tires and Vehicle Rollovers Syringes in Pepsi: A Hoax Perrier Contaminated with Benzene Tylenol and Cyanide Poisoning Crisis Management The lesson to be learned is to respond quickly and positively. Negative publicity is something to be dealt with head-on, not denied. The Special Case of Rumors and Urban Legends Urban legends and rumors capture slightly different phenomena. Urban legends are a form of rumor, but they go beyond rumor by transmitting a story involving the use of irony, conveying subtle messages that are in contradiction of what is literally expressed in the story context. For a review of many types of urban legends, go to www.snopes.com. Commercial rumors are widely circulated but unverified propositions about a product, brand, company, store, or other commercial target. Rumors, which are probably the most difficult problem faced by public relations personnel, spread like wildfire and most always state or imply something very undesirable, and possibly repulsive, about the target of the rumor. Conspiracy rumors involve supposed company policies or practices that are threatening or ideologically undesirable to consumers. Contamination rumors deal with undesirable or harmful product or store features. What Is the Best Way to Handle a Rumor? Some believe that doing nothing is the best way to handle it. Others say to follow an anti-rumor campaign with the following activities: decide on the specific points in the rumor that need to be refuted, emphasize that the rumor is untrue and unfair, pick appropriate media and vehicles for delivering the anti-rumor message, and select a credible spokesperson (i.e., scientist, government official). Word-of Mouth Influence Word-of-mouth influence (WOM) is both complex and difficult to control. It has been estimated that the average American consumer participates in an excess of 120 WOM conversations over the course of a typical week, with conversations focusing most often on products and services such as food and dining, media and entertainment. Strong and Weak Ties All people are in networks of personal relationships—some strong and close (“strong ties”) and some casual and infrequent (“weak ties”). The Role of Opinion Leaders in WOM Dissemination An opinion leader is a person who frequently influences other individuals’ attitudes and behavior, and performs the functions of: informing others about new products, providing advice and reducing the follower’s perceived risk in purchasing a new product, and offering positive feedback to support or confirm decisions that followers have already made. Market mavens have information about many kinds of products, stores, and other facets of markets, and initiate discussions with consumers and respond to requests from others for marketing information. Prevent Negative WOM Consumers seem to place more weight on negative information when making evaluations than on positive information. Marketing communicators can minimize negative word-of-mouth levels by: showing customers that they are responsive to legitimate complaints, providing detailed product warranties and complaint-procedure information on labels or in package inserts, including toll-free numbers or e-mail addresses on packages for complaints and suggestions, and at the retail level, ensuring that employees are well trained and have a positive attitude. Buzz Creation and Viral Marketing Buzz creation is the systematic and organized effort to encourage people to talk favorably about a particular item (a product, service, or specific brand) and to recommend its usage to others who are part of their social network. Viral marketing refers to techniques that use social networks to increase brand awareness or other marketing objectives through a self-replicating, viral process, similar to the spread of a virus. The terms guerilla marketing, viral marketing, diffusion marketing, and street marketing also are used to refer to proactive efforts to spread positive WOM. Some Anecdotal Evidence Several examples are provided. For instance, Microsoft’s Halo3 game is highlighted. Formal Perspectives on Buzz Creation Buzz spreads via networks. Influentials are people who have a large number of contacts, representing the hubs in social networks. Viral Marketing Is Akin to Creating an Epidemic Viral marketing can be compared to an epidemic. The content spreads much like a virus spreads. Table 21.2 shows the top 10 viral ad campaigns. Epidemics in a social context can be accounted for by three straightforward rules: Law of the Few Suggests that it only takes a few well-connected people to start an epidemic (referred to as connectors, influentials, opinion leaders, or market mavens). Stickiness Factor Deals with the nature of the message. Attention-catching and memorable (i.e., “sticky” messages) enable more rapid diffusion, which explains why rumors and urban legends fly through the social system. (Note: Rumors and urban legends are covered in Chapter 19.) Power of Context Circumstances must be right, and luck plays a role in creating “buzz.” Igniting Explosive Self-Generating Demand McKinsey & Company (a management consulting firm) has formulated a set of principles for igniting positive WOM momentum for new brands, which is referred to as explosive self-generated demand, or ESGD. Key principles are: Design the Product to Be Unique or Visible First, they are unique in some respect (i.e., appearance, functionality, etc.). Second, they are highly visible and/or confer status on opinion leaders and connectors. Select and Seed the Vanguard The vanguard is the group that is out in front of the crowd in terms of the speed at which the group adopts the product (e.g., innovators). Ration Supply Scarcity is a powerful force underlying influencers’ effort to persuade because people often want what they can’t have. Use Celebrity Icons Tap the Power of Lists The media disseminate many kinds of lists that are designed to influence consumer behavior and direct action (e.g., U.S. News & World Report’s annual list of top colleges). Nurture the Grass Roots This tactic is based on the idea of getting adopters of a product to convert other people into users. Provide incentives for the adopters to recruit others. Sponsorship Marketing Sponsorship involves two main activities: (1) an exchange between a sponsor [such as a brand] and a sponsee [such as a sporting event] whereby the latter receives a fee and the former obtains the right to associate itself with the activity sponsored and (2) the marketing of the association by the sponsor. Both activities are necessary if the sponsorship fee is to be a meaningful investment. Five factors accounting for the growth of sponsorships: Companies are able to avoid the clutter inherent in advertising media. Helps companies respond to consumers’ changing media habits. Helps companies gain approval of various constituencies, including stockholders, employees, and society at large. Relationships forged between a brand and a sponsored event can serve to enhance a brand’s equity, both by increasing consumers’ awareness of the brand and enhancing its image. Enables marketers to target their communication and promotional efforts to specific geographic regions and/or specific demographic and lifestyle groups. Event Sponsorships Event sponsorship is a form of brand promotion that ties a brand to a meaningful athletic, entertainment, cultural, social, or other type of high-interest public activity. Selecting Sponsorship Events Successful event sponsorships require a meaningful fit among the brand, the event, and the target market. Factors to Consider There are several key issues to consider when evaluating whether an event represents a suitable association for a brand: Image matchup—Is the event consistent with the brand image, and will it benefit the image? Target audience fit—Does the event offer a strong likelihood of reaching the desired target audience? Sponsor misidentification—Is this event one that the competition has previously sponsored, and is there a risk in sponsoring the event of being perceived as “me-tooistic” and confusing the target audience about the sponsor’s identity? Clutter—Like every “advertising” medium, an event sponsor typically competes for signage and attention from every other company that sponsors the event. Complement other marcom elements—Does the event complement existing sponsorships and fit with other marcom programs for the brand? Economic viability—Events must be supported with adequate advertising, point-of-purchase, and publicity. Sponsorship Agreements There are several factors to consider when evaluating sponsorship agreements. The sponsors should try to obtain exclusivity. A granting of rights should be clear as to what can and can’t be done with the sponsor’s brand. The benefits to the sponsor should be identified. The sponsor must control the licensing of trademarks. Options to renew, escape clauses, insurance, accommodations for changes in events, payment terms, and publicity should also be included. Creating Custom Events Some firms develop their own events rather than sponsoring existing events. Companies choose to customize their own events to provide a brand total control over the event and to ensure the event is effective. Ambushing Events Ambushing takes place when companies that are not official sponsors of an event undertake marketing efforts to convey the impression that they are. One may question the ethics of this, but the counterargument is that it is a financially prudent way of offsetting a competitor’s effort to obtain an advantage over your company or brand. Measuring Success As always, accountability is the key. Many critics have claimed that sponsorship arrangements often involve little more than managerial ego trips. Measuring whether an event has been successful requires: That the brand marketer specify the objective(s) that the sponsorship is intended to accomplish. There has to be a baseline against which to compare some outcome measures (i.e., prior brand awareness, brand associations, or attitudes). Measure the same variable after the event to determine whether there has been a positive change from the baseline premeasure. The measure most frequently used is a simple headcount of how many people attended the event. The total cost of the event is then divided by the number of attendees to obtain a measure of efficiency. Other measures include tracking sales volume following an event, determining how many hits to the brand’s website occurred post event, and counting the number of samples/coupons that were distributed. Cause Sponsorships Cause-related marketing (CRM) entails alliances that companies form with nonprofit organizations to promote their mutual interests. Most forms of CRM arrangements involve a company contributing to a designated cause every time the customer undertakes some action that supports the company and its brands. Figure 21.1 illustrates KitchenAid’s CRM program. Figure 21.2 illustrates Yoplait’s “Save Lids to Save Lives” CRM program. The Benefits of CRM Enhancing corporate or brand image. Thwarting negative publicity. Generating incremental sales. Increasing brand awareness. Broadening its customer base. Reaching new market segments. Increasing a brand’s retail merchandising activity. The Importance of Fit Selecting an appropriate cause is a matter of fitting the brand to a cause that is naturally related to the brand’s attributes, benefits, or image and also relates closely to the target market’s interests. Accountability Is Critical Brand marketers are obligated to show that their CRM efforts yield sufficient return on investment or achieve other important, nonfinancial objectives. When employing a cause-related marketing effort, a company intends to accomplish marketing goals rather than merely exercising its philanthropic aspirations. Chapter Features Rats in KFC/Taco Bell Restaurant A New York television station reported rats-running-wild in a KFC/Taco Bell store after a tip from a customer. KFC and Taco Bell (chains owned by Yum Brands) issued a statement that the incident is unacceptable but it is isolated to a single restaurant that would be sanitized before it could reopen. Unfortunately, stories, especially video stories have a long life in cyberspace. Shortly after the story appeared on TV more than 1,000 blogs had cited or spread the story along with the TV footage. Prior to the Internet, stories like this would have died quickly and been relatively isolated to a geographic region. Now, negative news about products and stores are quickly and widely disseminated. Despite company claims that this is an isolated event, consumer psychology is such that people generalize the negative scene to all KFC/Taco Bell restaurants. The brand equity is diminished which requires aggressive public relations efforts to be restored. Create a False Blog and Go to Jail Bloggers often say great things about new products and particular brands. The identity and motive of bloggers is not always clear—are they a true customer reporting their experience or a paid company representative? In the U.S., self-regulation is the primary mechanism for controlling false blogs. In the U.K., legislation went into effect in 2008 that made it a criminal offense to represent oneself falsely as a consumer when blogging about brands. Writing positive messages online without making the origin of the message clear is now illegal throughout Europe. Two Cases of Contamination Rumors: Aspartame and Plastic Water Bottles Rumors have spread, for at least a decade, that aspartame is responsible for epidemic health problems. People responsible for circulating this rumor, some of whom are scientists or claim to be, assert that aspartame is responsible for an epidemic of multiple sclerosis, systemic lupus, and other maladies. This urban legend/rumor has been declared false by Snopes.com—an organization that monitors and researches urban legends—based largely on the fact that the legend has been debunked by the American Council on Science and Health, and the U.S. Food and Drug Administration has failed to identify any reliable pattern of symptoms that can be attributed to aspartame usage. Another urban legend/rumor involves plastic water bottles, the claim, in short, is that re-using plastic bottles is dangerous because these bottles contain a potentially carcinogenic element. This is also false based on research of the Food and Drug Administration. Big Brown (the Thoroughbred Racehorse) and UPS Prior to the 2008 Kentucky Derby, IEAH Stables approached United Parcel Service with the proposition that UPS sponsor Big Brown, a large brown thoroughbred racehorse, in the Kentucky Derby. UPS accepted the offer and became the exclusive sponsor of Big Brown, who went on to win the Kentucky Derby. Two weeks later, the horse won the Preakness Stakes race. Three weeks later, Big Brown was expected to become the twelfth racehorse to win America’s Triple Crown. Unfortunately (for Big Brown’s owners), he ran a pathetic race and came in last. Nonetheless, publicity was enormous, as news of Big Brown’s failure to win the Triple Crown spread across all mass media outlets and the Internet. UPS’s modest investment in this sponsorship undoubtedly paid for itself many times over. Volvo and East London’s Starlite Ubran Drive-In Volvo identified a unique way to promote its cars and increase triability without having people come to a dealership. Working with the Starlite Urban Drive-In, Volvo sold tickets to drive-in movies complete with brand new Volvos. Attendees would sit in a pre-parked Volvo car while watching classic films. The stunt gained valuable buzz. You can read more at http://www.starliteurbandrivein.co.uk. PACKAGING, POINT-OF-PURCHASE COMMUNICATIONS, AND SIGNAGE Chapter Objectives Describe the elements underlying the creation of effective packages. Appreciate the role and importance of point-of-purchase (POP) advertising. Review evidence of POP’s role in influencing consumers’ in-store decision making. Examine empirical evidence revealing the effectiveness of POP displays. Appreciate the importance of measuring audience size and demographic characteristics for out-of-home as well as in-store advertising messages. Appreciate the role and importance of on-premise business signage. Review the various forms and functions of on-premise signage. Appreciate the role and importance of out-of-home, or off-premise, advertising. Understand billboard advertising’s strengths and limitations. Chapter Overview This chapter covered four relatively minor yet important forms of marcom communications: packaging; point-of-purchase advertising; on-premise business signage; and out-of-home (off-premise) advertising. The package is perhaps the most important component of the product as a communications device. It reinforces associations established in advertising, breaks through competitive clutter at the point of purchase, and justifies price and value to the consumer. A number of package cues are used for this purpose, including color, design, shape, brand name, physical materials, and product information labeling. Package designs can be evaluated by applying the VIEW model, which contains the elements of visibility, information, emotional appeal, and workability. A concluding section described a five-step process for package design. Major chapter coverage was devoted to POP advertising, as the point of purchase is an ideal time to communicate with consumers. A variety of POP materials—signs, displays, and various in-store media—are used to attract consumers’ attention to particular brands, provide information, affect perceptions, and ultimately influence shopping behavior. POP displays—which are distinguished broadly as permanent, semipermanent, or temporary—perform a variety of useful functions for manufacturers, retailers, and consumers. POPAI’s Consumer Buying Habits Study classified all consumer purchases into four categories: specifically planned, generally planned, substitutes, and unplanned decisions. Research on the effectiveness of displays—such as the joint undertaking by POPAI, Kmart, and Procter & Gamble—provides evidence that displayed brands sometimes enjoy large, triple-digit increases in sales volume during the display period. Both off- and on-premise messages perform important functions and are capable of influencing consumers’ awareness of and perceptions of stores and brands. The different forms of off- and on-premise messages are described and illustrations provided. Primary emphasis is devoted to billboard advertising. Chapter Outline Introduction This chapter examines the communications with consumers that occur at, or near, the point-of-purchase. Specifically, four general forms of marketing communications: packaging, in-store point-of-purchase (POP) messages, on-premise signage, and out-of-home advertisements (e.g., billboards). Packaging A brand’s package is the container that both protects and helps sell the product. The package serves to: draw attention to the brand, break through competitive clutter at the point of purchase, justify price and value to the consumer, signify brand features and benefits, convey emotionality, and ultimately motivate consumer’s brand choices. Packaging Structure Sensation transference is the tendency for consumers to impute characteristics from a package to the brand itself. A package communicates meaning about a brand via its various components: color, design, shape, size, physical materials, and information labeling. The notion underlying good packaging is gestalt; that is, people react to the unified whole—the gestalt—not to the individual parts. The Use of Color in Packaging Packaging colors have the ability to communicate various cognitive and emotional meanings to prospective buyers. Colors affect people emotionally (the following meanings are based on North American culture): Red—active, stimulating, energetic, and vital. Orange—an appetizing color that is often associated with food. Yellow—a good attention getter, a warm color that has a cheerful effect on consumers. Green—connotes abundance, health, calmness, and serenity; also has come to stand for environmentally friendly products and as a cue of reduced-fat, low-fat, and fat-free products. Blue—coolness and refreshment. White—purity, cleanliness, and mildness. Design and Shape Cues in Packaging Design refers to the organization of the elements on a package. An effective design will (1) permit good eye flow, (2) provide the consumer with a point of focus, and (3) convey meaning about the brand’s attributes and benefits. The choice of slope, length, and thickness of lines on a package evokes different feelings. Horizontal lines suggest restfulness and quite, evoking feelings of tranquility. Vertical lines induce feelings of strength, confidence, and even pride. Slanted lines suggest upward movement. Round, curving lines connote femininity. Sharp angular lines connote masculinity. Shape also affects the apparent volume of the container (e.g., taller package will appear to hold a greater volume). Packaging Size Manufacturers offer different-sized containers (1) to satisfy the unique needs of various market segments, (2) to represent different usage situations, and (3) to gain more self space in retail outlets. Physical Materials in Packaging Metal can denote feelings of strength, durability, and coldness. Plastic connotes lightness, cleanliness, or cheapness. Soft material is associated with femininity. Foil can connote high-quality or prestige. Wood can connote masculinity. Evaluating the Package: The VIEW Model V = Visibility Signifies the ability of a package to attract attention at the point of purchase. The package should stand out on the shelf yet not be so garish that it detracts from a brand’s image. I = Information Deals with various forms of product information such as product usage instructions, claimed benefits, slogans, and supplementary information. E = Emotional Appeal Concerned with the ability of a package to evoke a desired feeling or mood. W = Workability Refers to how a package functions rather than how it communicates. Figure 22.1 illustrates workability. Quantifying the VIEW Components Each VIEW component is rated, first, in terms of its importance in determining the suitability of a proposed new package and then with respect to how well the new package performs on each component, its evaluation score. Figure 22.2 gives a hypothetical illustration of the quantification of the VIEW Model. Designing a Package Figure 22.3 provides the five-step package design process. Step 1: Specify Brand-Positioning Objectives Step 2: Conduct a Product Category Analysis Step 3: Perform a Competitive Analysis Step 4: Identify Salient Brand Attributes or Benefits Step 5: Determine Communication Priorities Point-of-Purchase (POP) Communications The point of purchase, or store environment, provides brands marketers with a final opportunity to affect consumer behavior. The Spectrum of POP Materials Point-of-purchase materials have four categories: Permanent displays—intended for use for six months or more. Semipermanent displays—have an intended lifespan of less than six but more than two months. Temporary displays—designed for fewer than two months’ usage. In-store media—include advertising and promotion materials (e.g., in-store radio and TV advertising, shopping cart advertisements, shelf advertisements (called shelf talkers), floor graphics, coupon dispensers, and other in-store material) that are executed at the retail level by a third-party company. Figure 22.4 illustrates a permanent display. Figure 22.5 illustrates a semi-permanent display. Figure 22.6 illustrates a temporary display. Figure 22.7 illustrates a floor advertisement. What Does POP Accomplish? Accomplishments for Manufacturers POP keeps the company’s name and the brand name before consumers and reinforces a brand’s image and calls attention to sales promotions and stimulates impulse purchasing. Service to Retailers POP attracts consumers’ attention, increases interest in shopping, extends the amount of time spent in the store, and performs a critical merchandising function in aiding retailers in using available space to the best advantage. Value to Consumers POP delivers useful information and simplifies the shopping process, sets particular brands apart from similar items and simplifies the selection process, serves to inform consumers of new products and brands, and sometimes consumers are overwhelmed with excessive POP stimuli. POP’s Influence on Consumer Behavior POP materials influence consumers in four ways. Informing Informing consumers is POP’s most basic communications function. Reminding The reminding function that is served by POP displays is based on the encoding specificity principle. This principle states that information recall is enhanced when the context in which people attempt to retrieve information is the same or similar to the context in which they originally encoded it. Encouraging Effective POP materials influence product and brand choices at the point of purchase and can encourage impulse buying. Merchandising Merchandising refers to the efficient use of retail space. Evidence of In-Store Decision Making Research has shown that a high proportion of retail purchases are unplanned, especially in supermarkets, drugstores, and mass merchandise outlets. Unplanned purchasing means that many product and brand choice decisions are made while the consumer is in the store rather than beforehand. The POPAI Consumer Buying Habits Study This study confirms that in-store media, signage, and displays heavily influence consumers’ purchase decisions. Researchers interviewed shoppers both before they began their shopping (entry interviews) and after they had completed their shopping trips (exit interviews). By comparing shoppers’ planned purchases and actual purchases, it was possible to classify purchases into one of four types of purchase behaviors: Specifically planned—represents purchases of a brand that the consumer had indicated an intention to buy. Twenty-four percent of supermarket purchases were of this type. Generally planned—purchases for which the shopper indicated an interest to buy a particular product but had no specific brand in mind. Fifteen percent of supermarket purchases were of this type. Substitute purchases—purchases where the shopper does not buy the product or brand he or she indicated in the entry interview, and 6 percent of supermarket and 3 percent of mass-merchandise purchases were of this type. Unplanned purchases—purchases for which the consumer had no prior purchase intent, and 76 percent of supermarket purchases were of this type. The in-store decision rate is the summation of generally planned, substitute, and unplanned purchases, and this study found that approximately 7.6 out of 10 purchases decisions are influenced by in-store factors. Table 22.1 shows the results from the study. Table 22.2 reveals the product categories with the highest and lowest in-store decision rates. Factors Influencing In-Store Decision Making – generally, the larger the shopping trip, the more aisles shopped, the larger the household size and the more deal prone the shoppers were, the more likely was unplanned purchasing. Brand Lift – this index indicates how in-store POP materials affect the likelihood that customers will buy a product that they had not specifically planned to buy. For example, an index of 47.67 for a product indicates that shoppers are nearly 48 times more likely to make in-store purchase decisions for these products when advertised with displays than if there were no displays. Table 22.3 shows the product categories with the highest average brand lifts. Evidence of Display Effectiveness POPAI/Kmart/P&G Study The study investigated the impact that displays have on sales of P&G brands in six product categories. Table 22.4 shows the results. POPAI/Warner-Lambert Studies Two additional studies extended this research. Two brands tested included: The Benylin Study – Benylin cough syrup. The POPAI/Warner-Lambert Listerine Study – Listerine mouthwash. Latest POPAI Research The most recent study uses EEG and eye-tracking data collections to determine which displays make it into shoppers’ line of sight. The Use and Nonuse of POP Materials Although POP materials can be very effective, perhaps as much as 40 to 50 percent of all POP materials supplied by manufacturers are never used by retailers. Reasons Why POP Materials Go Unused Five major reasons explain why retailers choose not to use POP materials: There are no incentives for a retailer to use certain POP materials because they are inappropriately designed and do not satisfy the retailer’s needs. Some displays take up too much space for the amount of sales generated. Some materials are too unwieldy, too difficult to set up, too flimsy, or have other construction defects. They lack eye appeal. Retailers are concerned that displays and other POP materials simply serve to increase sales of a particular manufacturer’s brand during the display period, but the retailer’s sales and profits for the entire product category are not improved. Encouraging Retailers to Use POP Materials In order to encourage retailers to use POP materials they must be designed so that they are: The right size and format, Compatible with the store decor, User friendly—that is, easy for the retailer to attach, erect, or otherwise use, Sent to stores when they are needed, Properly coordinated with other aspects of the marketing communications program, and Attractive, convenient, and useful for consumers. Measuring In-Store Advertising’s Audience In recent years, the Point 0f Purchase Advertising International (POPAI) trade association has undertaken a major initiative to develop a means of measuring in-store advertising media. A procedure has been devised for acquiring standard diagnostics (reach, frequency, gross ratings, etc.) for in-store media. The initiative is called PRISM (Pioneering Research for an In-Store Metric). On-Premise Business Signage On-premise signs (i.e., those located on or near retail stores) are considered the most cost-effective and efficient form of communication available to retail businesses. They provide new customers with their first knowledge or first impression of the company. Types of On-Premise Signs Freestanding signs—monument signs, pole signs, A-frame (a.k.a. sandwich-board) signs, portable signs, inflatable signs, and other forms of signs that are unattached to a retail building. Building-mounted signs—projecting signs, wall signs, roof signs, banners, murals, and canopy or awning signs. Figure 22.8 and 22.9 illustrates signs. The ABCs of On-Premise Signs An effective sign should minimally perform the following functions: Attract new customers; Brand the retail site in consumers’ minds; Create impulse purchases. Conspicuity involves those signage characteristics that enable walkers or drivers and their passengers to distinguish a sign from its surrounding environment. Requires that a sign be of sufficient size and the information on it be clear, concise, legible, and distinguishable from competing signage. Seek Expert Assistance This section has merely touched on the topic of on-premise signage, and it cannot be overemphasized how important signage is to retail success. Seek assistance of professionals when making such determinations as where best to locate a sign, how large it should be, and what colors and graphics are best employed. Out-of-Home (Off-Premise) Advertising Out-of-home, or outdoor, advertising is the oldest form of advertising with origins dating back thousands of years. Outdoor encompasses a variety of delivery modes: billboards, bus shelters and street furniture (e.g., benches), giant inflatables, transit advertising, shopping-mall displays, campus kiosk, bicycle racks, skywriting, and so on. One commonality is that the advertising is seen by consumers outside of their homes. Outdoor advertising is regarded as a supplementary advertising medium and accounts for a small percent of total advertising expenditures. Billboard advertising is the major outdoor medium. Name recognition is the primary objective. Forms of Billboard Ads The major forms of billboard advertising are: Poster Panels These billboards are what we regularly see alongside highways. Posters are silk screened or lithographed and then pasted in sheets to the billboard. Space is typically billed on a monthly basis. Posters can be either 8-sheet or 30-sheet. Bulletins These are hand painted directly on the billboard by artists and refreshed every several months. Typically purchased for one- to three- year periods with the objective of achieving a consistent presence in heavily traveled locations. Digital Billboards Biggest new development in billboard advertising, anticipating 4,000 electronic billboards in the U.S. within a decade. Specialty Billboards Billboards represent different artistic and graphical techniques to present advertising messages in an especially engaging and creative way. Figure 22.10 and 22.11 provide illustrations. Buying Billboard Advertising Plants, companies that own billboards, are located in all major markets. Agents are used to facilitate buying outdoor space at locations throughout the country. A showing is the percent of the population that is theoretically exposed to an advertiser’s message. Showings are quoted in increments of 25 and are designated as #25 and so on. A showing of “#50” means in theory that 50 percent of the market is expected to pass a given billboard on any given day. Recently, poster space has been sold on the basis of gross rating points (GRPs), which represent the percentage and frequency of an audience being reached by an advertising vehicle. Outdoor GRPs are based on the daily duplicated audience as a percentage of the total potential market. Also sold in blocks of 25, with 100 and 50 being the two levels purchased most. Billboard Advertising’s Strengths and Limitations Strengths Broad reach and high frequency levels—effective in reaching virtually all segments of the population with a high number of exposures. Geographic flexibility—advertising can be strategically positioned to supplement other advertising efforts in select geographic areas where advertising support is most needed. Low cost per thousand (CPM)—it’s the least expensive advertising medium on a CPM basis. Brand identification is substantial—the ability to use large representations offers marketers excellent opportunities for brand and package identification. Last reminder before purchasing. Limitations Nonselectivity—while it can be geared to general groups of consumers in a geographic area, it cannot pinpoint specific market segments (e.g., professional African American men between the ages of 25 and 39). Short exposure time—messages that have to be read are less effective than predominantly visual ones. Environmental concerns—governments have placed limitations on outdoor advertising. Changeable message signs (i.e., billboards that vary the message on a schedule of every 4 to 10 seconds) have also been cited as potentially hazardous. Measuring Billboard Audience Size and Characteristics There is no equivalent measurable audience data available for the out-of-home advertising industry as there is for broadcast and print media. Historically, this industry has relied on traffic data collected by the Traffic Audit Bureau that indicates how many people pass by an outdoor site but no information about the audience characteristics (e.g., demographic data). Relatively few national advertisers spend large percentages of their budgets on OOH advertising due to the lack of audience measurement. Nielsen Personal Outdoor Devices (Npods) Nielsen Media Research is using Npods (for Nielsen Personal Outdoor Devices) that use global positioning satellite technology (GPS) to track individuals’ movements from the time they leave their homes until they return. A Case Study of Billboard Effectiveness One company undertook a creative campaign to demonstrate the effectiveness of billboard advertising. The campaign was for a fictitious brand of bottled water named Outhouse Springs and used potty-type humor (e.g., “America’s First Recycled Water”; “Originally in Cans…Now in Bottles”; “L-M-N-O-…”; “It’s #1, Not #2”). By week three, 67 percent of a large sample of consumers indicated awareness of the brand; 77 percent had neutral or favorable perceptions of this brand; and 85 percent indicated an intention to purchase the product. Figure 22.13 illustrates. Other Forms of OOH Advertising OOH advertising includes various forms of transit advertising (ads on buses, taxis, and trucks), advertising on bus shelters and other “street furniture,” and various miscellaneous forms of outdoor advertising. Figure 22.14 shows transit advertising. Figure 22.15 illustrates a full-wrap bus ad. Figure 22.16 illustrates a bus bench ad. Chapter Features Mobile Grocery Shopping Stop & Shop, a progressive supermarket chain in New England, experimented with intelligent shopping carts, referred to as “Shopping Buddy.” Each cart was equipped with a wireless touch-screen computer with a laser scanner to enable shoppers to check prices and then to scan purchased products. The cart maintained a running total of spending and enabled a rapid self-checkout. The Shopping Buddy evolved into a device called Easy Shop. In 2011, Modiv Mobile introduced a mobile shopping app for smartphones. The app helps shoppers plus cuts down on labor costs at checkouts for grocery store retailers. The Growth of In-Store TV In addition to the major networks that carry paid advertising, now there is another major network for carrying television commercials, the in store TV networks. In-store TV reaches consumers while they are shopping in stores. The ads are placed by national advertisers who hope to reach consumers as close as possible to the point at which they make purchasing decisions. Spots cost anywhere from $50,000 to $300,000 per four-week period. Advertisers have learned that it is best to customize ads for in-store TV rather than run identical ads shown on conventional television. Billboard Advertising Trends in BRIC Countries Brazil, Russia, India, and China—the so-called BRIC countries—are rapidly changing and economically advancing. Billboard advertising in these countries is changing alongside other economic transformations. In São Paulo Brazil, the city imposed an outright ban on billboards, neon signs, and electronic panels. Rio de Janeiro is considering implementing a similar ban, though it won’t prevent advertising on “street furniture” such as bus shelters, newsstands, and public toilets. In Russia, Moscow’s many billboards have been downsized and others have been removed from prominent historic buildings as city leaders consider restricting outdoor ads. In China, Beijing leaders have imposed restrictions on the use of billboards and other forms of outdoor advertising because they are directed at the city’s affluent class, and in keeping with the China’s socialistic ideals the desire is to curtail appeals to self-indulgence and luxury. By contrast, in India the use of billboards is booming as it is an outstanding medium for reaching consumers of all income levels in India. Some interesting developments in outdoor advertising in India include an outdoor advertising company that has developed a mobile billboard truck that parks, raises a billboard 20 feet on a pole, and then rotates the ad message to face passing traffic. The trucks move to locations where they will be seen by the most prospective purchasers of the advertised brands at any particular time. PERSONAL SELLING Chapter Objectives Discuss personal selling’s role in the promotional mix and IMC. Explain the advantages and disadvantages of personal selling, attitudes toward careers in this field, and some attractive features of personal selling. Describe selling activities, duties, and types of selling jobs. Discuss and apply the seven basic steps in personal selling. Explain the determinants of salesperson performance and effectiveness. Describe the characteristics of excellence in selling. Chapter Overview This chapter presents a broad array of ideas about the nature of personal selling. Personal selling’s role in the promotion mix includes educating customers, encouraging product usage and marketing assistance, and providing after-sale service and support to the buyer. A partner-oriented selling mind-set is in operation in most successful firms today. These firms realize that their success rests with their customers’ successes. Hence, modern partner-oriented philosophy makes customer satisfaction its highest priority. Modern selling practice is based on the following principles: trust and mutual agreement must exist between buyer and seller; getting the order is only the first step—after-sales service is what counts; and professionalism and integrity are essential in a salesperson. Personal selling is a broad field consisting of a variety of different types of sales jobs entailing different activities, including: making sales presentations, working with orders, servicing the product and the account, managing information, participating in conferences and meetings, training, entertaining, traveling, and working with distributors. Sales jobs include trade selling, missionary selling, technical selling, new-business selling, retail selling, and telemarketing. Most sales positions involve a process explained in the seven basic steps of personal selling: (1) prospecting and qualifying, (2) the preapproach, (3) the approach, (4) the sales presentation, (5) handling objections, (6) the close, and (7) the follow-up. A contingency model of the selling process is presented to explain that salesperson performance and effectiveness are dependent on a variety of factors, including resources of the salesperson, characteristics of the customer’s buying task, and the salesperson–customer relationship. Specific determinants of salesperson performance include (1) aptitude, (2) skill level, (3) motivational level, (4) role perceptions, (5) personal characteristics, and (6) adaptability. A final section examines excellence in selling. Twelve basic characteristics of excellence include the first impression a salesperson makes, his or her depth of knowledge, breadth of knowledge, adaptability, sensitivity, enthusiasm, self-esteem, extended focus, sense of humor, creativity, risk taking, and sense of honesty and ethics. Chapter Outline Introduction A good sales force that embodies positive qualities is crucial to corporate success. Personal selling is the last promotion-mix element covered in the text. Personal Selling Personal selling is a form of person-to-person communication in which a salesperson works with prospective buyers in attempting to determine their purchase needs to provide a match with his or her company’s products or services. The most important feature of the definition is person-to-person interaction. Personal Selling’s Role in the Promotion Mix and IMC Personal selling’s primary purposes include educating customers, offering product usage and marketing assistance, and providing after-sales service and support to buyers. Personal selling is uniquely capable due to the person-to-person interaction that characterizes it. It offers advantages: It contributes to a high level of customer attention. It enables salespeople to customize the message to each customer. It yields immediate feedback due to the two-way communication. Salespeople can communicate a larger amount of technical and complex information. There is a greater ability to demonstrate a product’s functioning and performance characteristics. It is useful for developing long-term relations. It also has disadvantages: It is more costly than other forms of promotion. It is less efficient than other forms. Attitudes Toward Selling Historically selling has been held in low esteem. This has been changing for the positive over time. Table 23.1 compares the results of three studies showing student attitudes toward selling. Attractive Features of Personal Selling Sales jobs offer freedom of action, variety and challenge, opportunities for advancement, and desirable financial and nonfinancial rewards. Modern Selling Philosophy Antiquated selling is seller-oriented. Modern selling is partner-oriented. It focuses on these principles: The sales process is built on a foundation of trust and mutual agreement. A customer-driven atmosphere is essential to long-term growth. Sales representatives should act as if they were on the customer’s payroll. Getting the order is only the first step; after-sales service is what counts. In selling, as in medicine, prescription before diagnosis is malpractice. Salesperson professionalism and integrity are essential. Selling Activities and Types of Personal-Selling Jobs All sales jobs are not the same. There are six types of selling jobs. Selling Activities There are 10 activities common to nearly all sales jobs: Selling function Working with others Servicing the product Information management Conferences/meetings Training/recruiting Entertaining Out-of-town travel Working with distributors Types of Sales Jobs The following six categories encompass the major types of sales jobs. Trade Selling Sales reps who build sales volume by providing customers with promotional assistance in the form of advertising and sales promotion; focus on servicing of accounts. Missionary Selling Employees of manufacturers who sell through their direct customers; for example, pharmaceutical sales. Technical Selling Sales people in industries requiring advanced training in the field such as engineering. New-Business Selling Prospecting for new business. Retail Selling Retail store sales. Inside Sales Salespeople help with price quotes and other forms of support. The Basic Steps in Personal Selling All forms of personal selling can be presented by a common set of steps or phases that are performed in the process of making a sale. Step 1: Prospecting and Qualifying This step involves identifying potential buyers who have the need, willingness, ability, and authority to buy. Once identified, the prospects are qualified to ensure they fit the basic criteria. Step 2: Preapproach The salesperson arranges a meeting and provides prospect with initial information. The goal is to learn about the prospect. Step 3: Approach In this step, the salesperson spends time with the prospect. The approach may utilize a referral, giving a small gift, offering some benefit, asking questions, or providing samples. Step 4: Sales presentation The presentation is the fundamental selling activity. Sales reps are taught the SPIN method to developing relationships with prospects. Situation questions – explore prospect’s present situation Problem questions – examine challenges the prospect faces Implication questions – ask about consequences of problems Need-payoff questions – ask about value of proposed solution The salesperson seeks to have a high impact. High impact selling has four fundamental tenets. Salespeople should have something important to say. Salespeople must remember that prospects buy for their own reasons, not the salespersons’ reasons. People do not want to be sold; they want to buy. Buying is an emotional response. Step 5: Handling objections Salespeople handle objections to the sale. This might be done by disputing the objection, conceding to it, or addressing it later. Figure 23.1 shows a dialog in which a salesperson handles objections. Step 6: The Close In this step, the salesperson seeks to get a commitment from the prospect. Step 7: The Follow-Up In this step, the salesperson follows up and seeks to minimize any post-purchase anxiety felt by the buyer. Follow-up is important for developing a long-term relationship. Salesperson Performance and Effectiveness No single factor can adequately explain salesperson performance. Salesperson effectiveness is contingent on a host of factors. Figure 23.2 depicts the effectiveness of selling behaviors. Performance depends upon the salesperson’s own resources, the nature of the customer’s buying task, the customer-salesperson relationship, and interactions among these three previous factors. Specific Determinants of Salesperson Performance Figure 23.3 illustrates determinants of salesperson performance. Aptitude Skill Level Motivational Level Role Perceptions Personal Characteristics Adaptability Excellence in Selling High performing salespeople represent the interests of both their own company and their clients (two-way advocacy), exemplify professionalism, committed to selling, and actively plan and develop success strategies. Specific Characteristics of High-Performance There are specific characteristics that are reflected in the salesperson’s job behavior and personal features. These include: The First Impression Depth of Knowledge Breadth of Knowledge Adaptability Sensitivity Enthusiasm Self-Esteem Extended Focus Sense of Humor Creativity Taking Risks Sense of Honesty and Ethics Chapter Features What Qualities Are Liked and Disliked in a Salesperson? Pharmaceutical reps have come from a soft sell background. They focus on the physician’s needs. A survey of national purchasing agents looked at what qualities buyers value most and least in salespeople. Reliability scored highest. Selling Japanese Style Modern selling philosophy and practice are not the same thing. There may be conflicts. Japanese salespeople’s style may be better suited to the six principles of modern selling. This is because respect is the foundation of Japanese selling. The Japanese style is sometimes called “wet” because it is flexible and caring. In Japan, non-financial incentives are used to recognize and reward salespeople. Salesforce.com Salesforce.com is a company which provides state-of-the-art cloud computing and solutions for the sales industry. It offers one-stop shopping for numerous sales software and application tools. It charges between $5 and $250 per month for services including tracking sales opportunities, lead scoring, sales campaigns, mass emailing and more. National Business Machines Case This feature illustrates a sales call and provides several case questions for discussion. It can be used to highlight the steps in selling. Instructor Manual for Advertising Promotion and Other Aspects of Integrated Marketing Communications Craig J. Andrews, Terence A. Shimp 9781111580216, 9788131528242, 9781133191421, 9781337282659
