DU SOL B.Com 3rd Year Marketing Management Notes Chapter 7 Promotion Decisions

DU SOL B.Com 3rd Year Marketing Management Notes Chapter 7 Promotion Decisions

Question 1.
What do you understand by Promotion? Explain the objectives and importance of promotion ?
Answer:
Meaning Of Promotion:
As we have already discussed in introductory part of this chapter to promotion is basically a communication process, by which the producers of the products or services draw attention of the consumers or prospective consumers towards their products and services. Consumers are informed and reminded about the products and are requested and persuaded to purchase their products.

Such communication may be made either along the product or well in advance of the introduction of product in to the market. Such communication becomes necessary when a new product or service is introduced in the market or an old product is improved or it is simply to increase the sales of the products.

According to Mason & Rath, “Promotion consists of those activities that are designed to bring a company’s goods and services to the favourable attention of customers.” The various tools of promotion by which customers may be informed are personal selling, advertising, sales promotion techniques, and other tools. Then, according to Stanton, “Promotion include, advertising, personal selling, sales promotion and other selling tools.”
Thus, promotion includes every activity which inspires people to buy the goods and services of the company.

Characteristits of Promote: -The main features of promotion are :

  • Customers are informed about the product or services of the company, either at the time of introduction of a new product into the market or when any change C made in the existing product.
  • Customers are reminded of the products and services of the company.
  • Customers are requested of persuaded to purchase the products and services of the company
  • Pro notion include advertising, personal selling and other sales promotion techniques.
  • Promotion activities are performed by the manufacturer. It is the responsible of the producer to get information about the consumers and prospecive-consumers so that the necessary product may be served to meet their demands.

Promotion and Selling –
The term ‘promotion’ is not exactly the same as ‘selling’. But sometimes, these two terms are used as synonyms. Selling is a narrow term which includes only transfer of title from seller to buyer. Promotion, on the other hand, is broader in its outlook and includes a variety of activities used ultimately for increasing sales’ volume.

Objectives of Promotion. The following are the objectives of promotion:
(i) Communication –
As has been pointed out earlier in this chapter that communication is the basis of all marketing efforts. It is the main objective of promotion to inform the consumers or prospective consumers about the availability, features and uses of the products. Information tools are advertising, sales promotion, personal selling and other modes which communicate properly to the consumers .bout the product/services..

(ii) Convincing –
It is not enough merely to communicate. Ideas to be communicated must be convincing so that necessary action (purchase) may follow. In other words, dissemination of information must produce marketing results. For this purpose, sellers should differentiate their own products with those of the competitors by creating brand loyalty. New or outstanding feature of the products should be highlighted in a manner most convincing to consumers.

(iii) To Motivate Consumers –
The next objective of promotion is to motivate the consumers to purchase the product. For this purpose customers should be reminded time and again to purchase the product and services of the company by highlighting the main characteristics of the products with a comparative analysis of competitive products. Demand should be stimulated by creating awareness and interest among customers.

Importance of Promotion in Marketing.
Promotion plays an important role in stimulating demand and sales of the product. Its importance may be gathered from the following facts :

1. The activity of promotion has become important because of the widening of the market. The physical distance between producers and consumers and also the increase in the number of prospective buyers, promotion has gained importance. The producer is now to inform all prospective consumers to capture a major share of the market.

2. In modern times, there is a cut throat competition in every field. New and new products and producers are entering the market and every producer wants to sell his products first. In order to meet the competition, the producer is to make the customers/prospective customers of his products and their outstanding feature along with a comparative view of the competitors products. This helps the consumers to select the right type of product.

3. There are a number of channels of distribution, the producer should not only inform the consumers but he should also inform about the product to the middlemen because they have to present the goods to the middlemen next in the hirearchy and to the consumers. The middlemen should be well versed in the characteristics of the goods.

4. Promotion expenses are the highest of all the marketing expenses. They should be properly and strictly controlled and should be paid due attention.

5. In depression, the importance of promotional activities is greater „ because at such a time, the main problem is that of sales, of goods and services.

Question 2.
Discuss different kinds of promotion.
Answer:
Kinds Of Promotion:
Different kinds of promotion are :
1. Informative Promotion –
All promotions, essentially, are designed to inform the target market about the term’s offerings e.g., term’s products and other incentives attached to the product. Informative promotion is more important in the early stage of product life cycle (e.g., introduction of a new product in the markets). It is a necessary ingredient to create primary demand of the product to make the prospective customers convince to purchase the goods of the company.

This could be done only with the help of communications and such communications are usually information oriented and not sales oriented. This will help the consumers in selecting the products of their choice. The producers at this stage should also highlight the outstanding features of their products in the light of the products of the competitors available in the market.

2. Persuasive Promotion –
The basic purpose of promotion is to persuade people to buy the goods and it is the essence of all promotions. It . is designed to stimulate purchase and to create a positive image in the minds of the people about the product in order to influence the long term buyers’ behaviour. Promotion is never meant for immediate demand creation except on certain occasions. Moreover, when the product enters the growth stage of the life cycle, persuasion becomes the primary goal of any kind of promotion.

3. Reminder Promotion –
This goal is adopted mainly when the product reaches the maturity stage. Insisting and emphasising brand names and product features in competitive term is the control aim of the remainder promotion. It simply serves as a memory-jogger.

4. Buyer-behaviour Modification –
The effect of promotion is measured through the modification of buyer-behaviour modification. The repeated advertisement and constant personal selling methods are designed to achieve this goal.

Question 3.
Explain the relationship of overall marketing strategy to marketing communications. Discuss the five stages in the communications process.
Answer:
Relationship Or Overall Marketing Strategy To Marketing Communications:
Promotional strategy relates to the marketing efforts to make the product actually flow through the marketing channels and to the target market, promotion involves the marketer’s activities in communicating both with the member of the products target market and the middlemen to increase the chances that the planned sequence of sales or ownership transfers actually takes place.

Management combines the four controllables –
product market, distribution promotion and price strategies into marketing strategy. Establishing and maintaining communications with target markets and “interviewing middlemen, through various marketing communication media –
DU SOL B.Com 3rd Year Marketing Management Notes Chapter 7 Promotion Decisions 1
Fig.25.1. Relationship Of Overall Marketing Strategy To Marketing Communication Media.
advertising. personal selling, point of purchase materials, packing and other media like-samples and coupons. The messages sent’ involve various aspects of the overall marketing strategy that management feels might contribute to favourable buying responses on the parts of middlemen and members of target market segment.

However the messages sent emphasise the very important point through new identical to messages received. Successful promotion comes about only through effective communication. Communication gap may be very harmful in the achievement of marketing goals.

Five Stages In The Communication Process:
Communications need, generally a sender (source), a message and a receiver. There must be someone to receive the message otherwise the communication is not complete. So marketer’s promotional message must be received by middlemen or those making up target for success.
The communication process – It consists of five stages :

  1. Source from where the communication is organised.
  2. Encoding. The idea is brought up through the medium of expression for transmission.
  3. Message. The idea from source move to the receiver.
  4. Decoding. idea sent through is expressed to the receiver.
  5. The receiver. The idea is transmitted to the person.

E. Crane has put forth only three stages of communication. They are source, message and receiver.
DU SOL B.Com 3rd Year Marketing Management Notes Chapter 7 Promotion Decisions 2

Fig. 25.2. Stages In The Communication Process.
Here we find Noise and feedback as two elements of communication. Noise is the outer interference with communication and makes it less effective. It may be any short noise that middle with the communication. It may be actual noise of a plane or show of television. Distracting remark may also be counted.

The other element is feedback which is needful for communication. It is needed for. the source of information to determine the effectiveness of the communication feedback tells whether the sent message is the same that is received there. It may be intimated by nod expression of interest or by smile from the listener. Thus management needs feedback of effective communications.

Effective, communication could be broken down by many things. Breakdown means no communication. Error in encoding or decoding justifies for long message. The source says ‘what a nice place ? The receiver thinks to mean ‘very bad place’. Thus background of receiver may mean at times different meaning.

Source Effect –
The effect of the message source on the message received is greater, its credibility help to determine the effectiveness of the message to persuade the receiver to act or changes the attitude. It influences the receiver. The phenomenon is known as source effect. The source has strong influence on the receiver like the message. The more familiar and prestigious a source is the more it is likely to be to influence the receiver with its promotional message.

Question 4.
Discuss various forms of Promotional Activities.
Answer:
Forms Of Promotion:
Personal selling and advertising are the two forms of promotion. They influence cost and market impact. Personal selling is always supported by the backing of advertising. Other forms that support successful implementation of the promotional programmes are point of purchaser display.

(a) Personal Selling –
Personal selling gives right products to right customer. It gives product and service feature as benefit to the buyer and persuades the buyer to buy right thing with right quantity. The sale never takes to estimate that they have been sold the object but the service proved that they arc their things. They have faith in the salesman as a source of product information and advice. It is because of the efforts of salesmen that such products like detergents come to market to retailers by personal efforts.
Hence, it is the most effective and the most costly form of promotion. It has the advantage of personal contact.

(b) Advertising –
It has the impersonal contact and gives message to the receiver. The advertiser uses visual media like newspapers, magazines, radio, television, posters and pamphlets. There is no feedback to know the response from the people. Advertising is directed towards consumers. This leads to more expenses and so the things become a costly affair.

Advertising costs are low per message received as it is witnessed by thousands and if calculated the cost comes to nothing. But it is of impersonal nature. It acquaints the person of the availability of goods so that he may buy at a later time. It makes the selling job easier.

(c) Publicity –
Publicity is a non-personal not paid stimulation of demand of the products or services or business units by planting commercally significant news or editorial comment in the print media or by obtaining c favourable presentation of it upon radio, television or stage.

(d) Public Relations –
Public relation is a broader term. It refers to attempt to create a favourable attitude towards a firm, among employees, shareholders. Suppliers, customers, government and the society at large.

(e) Sales Promotion –
It includes activities other than advertising, personal selling publicity and public relations which are used in promoting sa.es of the product or in persuading the customer to purchase the product. Distribution of samples, premium coupon, point of purchase display, off- price selling etc. are the examples of sales promotion techniques.

Question 5.
What is promotion mix ? Explain the factors which affect the promotional mix of a company.
Answer:
What Is Promotion Mix ?
Promotion mix refers to the combination of various promotional elements viz. advertising, personal selling, publicity and sales promotion techniques used by a business firm to create, maintain and increase demand of the product. It involves an integration of all the above elements of promotion. Usually a firm chooses more than one type of promotional tools and the manager of the firm is to decide how he is going to choose the communication media and blend them into an effective promotion programme.

Promotion mix is the name given to the combination of methods used in communicating with customers.
Factors Affecting Promotion Mix. The following factors should be considered while determining the promotion mix .

1. Nature of the Product –
Promotion mix of a firm depends on the nature of product. Different product requires different tools of promotion – in case of industrial goods (plart and machinery, equipment etc.) personal selling is the most effective because a number of pre-sale and after-sale services are required to sell and install the product.

Such products are often made to specifications and the market is well identified on the other hand for consumer goods particularly low-priced convenience goods personal selling and advertisement are the most important tools because the buyers are scattered and number of consumers are innumerable. Mostly, in these goods decisions are taken at the point of purchase and no installation is required.

Moreover, if product is of technical nature or where demonstration of the product is necessary, personal selling should be adopted. Where the products of ordinary nature, advertising will be the most effective tool.

If the frequency of purchase is higher, such as in case of toilet soap or bread etc. (products of daily use). The advertising is the best tool. On the contrary, where frequency is not low personal selling is more effective because the teller may explain the distinguished features of the product in competitive terms.

2. Stage of Product Life Cycle –
Promotion mix changes with the change in the product life cycle. In the introductory stage, where the main aim of promotion is to create primary demand of the product by emphasising products features, utility etc. Therefore, a combination of publicity and advertising is required. During maturity, advertising and personal selling are needed to ensure continued patronage of customers; and to meet competition. During the decline stage, drastic cuts should be made in promotional efforts.

3 Nature of the Market –
Nature of market or the number ar.d location of customers/prospective customers influence the promotion mix to a great extent. If the number of customers are few c .id they are concentrated in a particular area, personal selling is likely to be more effective. But on the contrary, Where number of customers is large and they are scattered widely in different parts of the country, advertising, personal selling and sales promotion all are required to sell the product.

Types of customers e.g., educated, urban and institutional customers require different type of promotion as compared to illiterate, rural and household customers.

4. Availability of Funds –
Availability of funds also affects the promotion mix. If funds available for promotional purposes are large, a mix of all promotion tools may be used simultaneously. But, if there is shortage of funds the firm has to be selective in use of promotional tools. Personal selling is cheaper and is more effective in the short run, it there is already a team of sales men. Advertising is costly but can attract a large number of customers and scattered all over the country.

5. Nature of the Technique –
Each promotion technique has its own advantages and disadvantages and there must be understood before deciding the promotion mix. Advertising is impersonal and mass media of promotion. It is a pervasive medium. Size, colour and sound may be added to make it more effective.

Thus, advertising can be uses for building long term image of the product and for generating quick sales. Personal selling involves face to face presentation and is therefore more effective in eultivaiing relationships and building buyers’ preference. Sales promotion incentives induces buyers to buy now and creates quick response and boost sagging sales. Public relations enjoys high credibility and can be used to supplement other tools.

6. Promotiona’ Strategy –
Strategy of promotion mix push or pull strategy also determines the promotion mix. In a push strategy, the manufacturer induces his own dealers to carry the product and promote it to consumers. Personal selling and trade promotion are most suitable under this strategy. On the other hand, a pull strategy, involves inducing customers to ask dealers to carry the product. Advertising and consumer promotion are more appropriate for full strategy.

7. Readiness of Buyers –
Different tools are effective at different stage of buyers’ readiness. At the awareness stage, advertising and publicity are more effective. At comprehension stage advertising and personal selling. play a greater role. At conviction stage personal selling is more effective. At closing the sales stage, personal selling and sales promotion are effective. Thus, advertising and publicity are more effective in early stage of the buying decision process, Whereas at the later stage, personal selling and sales . promotion are more effective.

Question 6.
Discuss the aims and functions of advertisement with special referece to India,
What do you mean by Advertisement ? Discuss the objects and functions of advertisement.
Answer:
Definition Of Advertisement:
Advertisement is nothing but a paid form of non-personal presentation or promotion of ideas, goods or services by an identified sponsor. It communicates about the product and service put before the consumers and also about the firm which manufactures the product. Advertising, thus, means spreading of information. The message which is presented is called advertisement.

In the present day marketing, advertisement has become an inseparable part of the business marketing activities. Hardly there is a business in the modem world without advertisement. However, the form of advertisement may differ from business to business.

Advertisement has been defined differently by different persons. A few definitions are being reproduced below :
“Advertising is causing to know, to remember, to do,” – Wood

“Advertising is any form of paid non-personal presentation of ideas, goods or services for the purpose of inducing people to buy.” – Weeler

“Advertising is a paid form of non personal presentation of ideas, goods or services by an identified sponsor” – Ricard Buskirk

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

The above definitions clearly reveal the nature of advertisement. This is another powerful element of the promotion mix. Essentially advertising means spreading of information.The word ‘advertisement’ originated from the Latin term ‘advertise’ meaning to turn to.

Thus, firstly, advertising is a paid form of publicity. Secondly it is non-personal. They are directed at ? mass audience and not directly at the individual as is in the case of personal selling. Finally, advertisements are identifiable with their sponsor or originator which is not always the case with publicity or propaganda.

Evolution of Advertising –
There is evidence to suggest that Romans practised advertising. The potentiality of advertising multiplied when the hand press was invented at the end of the 15th century. By Shakespeare’s time the posters had made their appearance and there is evidence to prove that advertising had assumed the function of fostering demand for existing products.

It was in the latter half of the 19th century that mass advertising as we know it today came into being. Mass production became a reality and channels of distribution fad to be developed to cope with the physical movement of goods creating a need for mass communication to inform customers of the choice available to them. This development was accelerated by increasing literacy.

In India advertising as a potent recognised means of sales promotion was accepted only recently. This delay is obviously attributable to late industrialisation in our country. But today India has also emerged into an industrial country which is quite evident from the nature of advertisements that appear regularly in local as well as national papers.

Advertising Objective –
The purpose of advertising is nothing but to sell something – a product, a service or an idea. The real objective of advertising is effective communication between producers and consumers. The following are the main objectives of advertising :

1. Preparing Ground for New Product –
Adverisement may be used for introducing a new product in the market. New product needs introduction because potential customers have never used such product earlier and the advertisement prepares a ground for that new product. Most of the advertisements in cinema-halls, or at radio and television serve this purpose.

2. Creation of Demand –
The main objective of the advertisement is to create a favourable climate for maintaining or improving sales mainly in growth and maturity stages of product life cycle. Customers are to be commonly reminded about the product and the brand. It may induce new customers to buy the product by informing them its qualities since it is possible that some of the customers may change their brands. Thus in other words, advertisement may bring new areas and customers to the company’s product thereby increasing the company’s share in the total market.

3. Facing the Competition –
Another important objective of the advertisement is to face the competition. In other words advertising in modem days is undertaken not only to inform the people about a product, but is used also to maintain and increase the demand of the product by wearing people away from rival products in the market. Under competitive conditions, advertisement helps to build up brand image and brand loyalty and when customers have developed brand loyalty, if becomes difficult for the middlemen to change it.

4. Creating or Enhancing Goodwill –
Large scale advertising is often undertaken with the objective of creating or enhancing the goodwill of the producer company. This, in turn, increases the market receptiveness of the company’s product and helps the salesmen to win customers easily.

5. Informing the Changes to the Customers –
The advertisement is made with the purpose of informing the consuming public the changes made in the existing product or in marketing strategy. Whenever changes are made in the prices, channels of distribution or in the product by way of any improvement in quality, size, weight, brand, packing, etc., they must be informed to the public by the producer through advertisement. Incidentally, such advertisements may be used to maintain or improve sales.

6. Neutralising Competitor’s Advertising –
Advertising is unavoidable to compete with or neutralise competitor’s advertising. When competitors are adopting intensive advertising as their promotional strategy, it is reasonable to follow similar practices to neutralise their effects. In such cases, it is essential for the manufacturer to create a different image of his product. Advertising basically helps to create product differentiation by the particular message it sends and the image it creates.

7. Barring New Entrants –
From the advertiser’s point of view, a strongly built image through long advertising helps to keep new entrants away. The advertisement builds up a certain monopoly are for the product in which new entrants find it difficult to enter. In other words whenever a new entrants plans to make investment in a project in that field he considers the existing market conditions. If he knows that the existing market is dominated by a few producers due to long standing advertisement effects, he may hesitate to make the investment.

In short, advertising aims at benefiting the producer, educating the consumer and supplementing the salesmen. Above all it is a link between the producer and the consumer.

Functions of Advertising. We may group the various functions of advertisement in two : (a) Primary functions, and
(b) Secondary functions.

(a) Primary Functions –
Among Primary functions the following are important :

  • To increase sales of the product by securing greater consumption, attracting new buyers or introducing new uses for a commodity.
  • Persuasion of dealers to stock the goods is one of the functions of advertisement.
  • It helps the dealers (wholesalers and retailers) to sell the advertised product.
  • Advertising is effectively used to increase the per capita use of the commodity by its constant repetition.
  • The receptiveness of a new product or a new model increases if producer has earned a name as a producer of good quality products. This is done by advertisement.
  • Advertisement creates insurance for the manufacturers’ business.
  • The buyer’s dependability on well advertised goods is increased because he knows its quality.
  • Advertisement helps eliminating or lessening seasonal fluctuations.
  • Advertisement creates brand image and brand loyalty.
  • It raises the standard of living of the public by instigating the desire to purchase better and qualitative things.

(b) Secondary Functions –
Such functions include the following ;

  • Advertisement encourages the salesmen and lend them moral support in facing.a difficult customer.
  • Necessary informations are furnished to salesmen, dealers, and customers about the product. The printed word is manufacturers guarantee.
  • It creates a feeling among executives and administrative staff that they are working in a company having public response.
  • The workers of company of a well advertised goods feel themselves secured. It means steady work and consequent prosperity. There is a feeling in the minds of workers that their job is permanent and are likely to be promoted.
  • It helps the company to secure better employees – executives, salesmen and workers.

The above functions of advertisement help the producer, salesmen, dealer, and consumer.

Question 7.
Give classification of Advertisement.
Answer:
Classification Of Advertisement:
Advertisement may be classified as follows :

1. Primary Demand Advertising –
The main aim of such advertising is to create a demand for a new product or product category. This is necessary in the case of a newly developed products or the products which are costly in nature. For example, cars, refrigerators, washing machines, watches, etc. Such advertising is directed towards a class of customers, it is also described as selective demand advertising. It is heavily utilised during the introduction stage of product fife cycle.

2. Product or Institutional Advertising –
Advertising of this kind is of‘window display of satisfaction’. Satisfaction in turn is purely psychological in nature. It is this psychological element that is liked through advertisement. To achieve this desired effects and results, the advertising must carry the ‘brand’ name of the product just to popularise the product.

Some companies however, have developed brand image of their products. Such as Horlicks, Dalda, Vespa, etc. Thus advertising that stresses on the product is termed as product advertising. When the company tries to sell its product or services through advertising it is referred to as products advertising.

3. Institutional Advertising –
Where the objective of the advertisement is to project the image of the producer (and not of the product), it is known as the institutional advertising. It is designed to enhance the image of the company as of quality producer. Most of the companies have been successful in making an image in the minds of the people by using their names such as D.C.M., Bata, Dunlop, Bombay Dyeing, Bajaj etc.

4. Co-operative Advertising –
When manufacturer, wholesalers and/ or retailers jointly sponsor and share me expenditure on advertising, it takes the form of cooperative advertising. Such advertising would carry the names of all the parties involved. From the point of view of the cusiomers, this is more beneficial as they can get the articles directly from the authorised outlets. For example, the manufacturers of cars, fans, T.V. sets etc. undertake this type of advertising.

5. Selective or Competitive Advertising –
This type of advertising is done to meet the growing competition mainly in growth stage of the life cycle of the product. Here, the goal of advertising is to push the demand of specific product or service. Often, promotion becomes less informative and more emotional during this phase. Advertising may begin to stress subtle differences in brands with emphasis on brand name recall. At this stage, pricing may also be used as a weapon because products of all the competitors are almost similar in quality.

6. Comparative Advertising –
This is a highly controversial trend in competitive market that has developed recently. Such type of advertising does not inform the public only about the features of company’s product, but it stresses on comparative features of two or more specific brands® terms of product or service attributes.

This method is more suitable in maturity stage when similar products are appearing fast in the market constitute a stiff competition. Comparative advertising delivers information, not previously given to consumers. It reveals the intensity of competition in the market.

7. Shortage Advertising –
Actually, there is no need of advertising when product or service is in short supply. A concrete example of this is found in case of petroleum products. They are in short supply and therefore, there is no question of competition and advertising. But, the intelligent marketers have found that advertising is still a viable marketing tool during shortage. This is what is termed as shortage marketing. In such kind of advertising, new promotional objectives may be incorporated such as –
(a) educating the user of more efficient means of utilising die product, thus, reducing the demand;
(b) to reduce customer pressure on the sales force;
(c) improving goodwill; and
(d) making appeal to save resources.

8. Non-Commercial Advertising –
Advertising done by non-commercial entities like trusts, societies, associations etc. is called non-commercial advertising. This is done for soliciting general and financial help. Advertisements for collecting donations for war victims or for victims of natural calamities, sale of tickets for a show etc. are examples of non-commercial advertising.

9. Commercial Advertising –
It is also termed as, “Business Advertising”. It is solely meant for effecting increase in sales. The usual forms of this advertising are :

  • Industrial-Advertising – Exclusively used for selling industrial products.
  • Trade Advertising – Advertising relating re a trade.
  • Professional Advertising – Undertaken by doctors, engineers, C.A., etc.
  • Farm Advertising – For selling farm products such as fertilisers etc. some kind of specialisation is found in all the above forms of advertising. All these forms could be collectively called selective advertising.

(e) Non-Commercial Advertising. These are usually published by charitable institutions to solicit general and for financial help, e.g., collection of funds.

10. Direct or Indirect Action Advertising –
Advertising that stresses and persuades immediate buying of the product is known as direct action advertisement. Advertising for consumer goods may achieve immediate action to a large extent.

As against this, a higher priced item, which is not purchased frequently such as motor car, TV, etc., an indirect action advertising is done with a view to create a favourable attitude towards the manufacturer’s product.

11. Advertising Classified by Nature of Appeal –
Sometimes, advertising is Classified by the nature or type or appeal used or motives towards which advertising is aimed. For this, it may be
(i) rational, and
(ii) emotional.

  • Rational Advertising explains the medicinal quality or the characteristics of the product.
  • Emotional Advertising tries to create an image of the product by investigating the emotional feelings. For example, advertisement of lux-soap explaining how the housewife would look like a glamorous movie star is an emotional advertising.

Question 8.
“The money spent on advertising is an investment and is not wasteful.” Do you agree ? Give reasons for your answer.
Or
“It pays to advertise.” Discuss.
Answer:
Benefits Or Importance Or Significance Of Advertising:
Advertising broadens the knowledge of the consumers. With the aid of advertising consumers find and buy necessary products without much waste of time. This speeds up the sales of commodities, increases the efficiency of labour in distribution, and diminishes the costs of selling. It is an accepted fact that without market stimulus of heavy advertising, consumers might have waited another sixty years for the product evaluation that took place in less than ten years – it took after all over sixty years from the invention of the safety razor before the first acceptable stainless steel blade: appeared in the market. These words are more than enough to testily the potentialities of advertising in the field of modern marketing system. The main benefits of advertising may be narrated as follows :

A. Benefits to Manufacturers:

  • It increases sales volume by creating attraction towards the product and also the profits of the concern.
  • It helps easy introduction of new products into the markets by the same manufacturer.
  • It helps to create an image and reputation not only of the products but also of the advertiser. In this way, it creates goodwill for the manufacturer, and his products.
  • Retail price maintenance is also possible advertising where price appeal is the promotional strategy.
  • It helps to establish a direct contact between manufacturers and consumers.
  • It leads to smoothen the demands of the product It saves the product from seasonal fluctuations by discovering new and new usage of the product.
  • It creates a high responsive market and thereby quickens the turnover that results in lower inventory.
  • Selling cost per unit is reduced because of increased sale volume. Consequently, production overheads are also reduced due to mass production and sale.
  • Advertising gives the employess a feeling of pride in their jobs and to be in the service of such a concern of repute. It, thus inspires the executives and worker to improve their efficiency.
  • Advertising helps the producers in facing the competition successfully by comparative advertising.

B. Benefits to Wholesalers and Retailers:

  • Easy sale of the products is possible since consumers are aware of the product and its quality through advertisement.
  • It increases the rate of the turn-over of the stock because demand is already created by advertisement.
  • It supplements the selling activities. .
  • The reputation created is shared by the wholesalers and retailers alike because they need not spent anything for the advertising of already a well advertised product.
  • It ensures more economical selling because selling overheads are reduced.
  • It enables them to have product information.

C. Benefits to Consumers:

  • Advertising stresses quality and very often prices. This forms an indirect guarantee to the consumers of the quality and price. Furthermore, large scale production assumed by advertising enables the sellers to sell the product at a lower cost.
  • Advertising helps in eliminating the middlemen by establishing direct contacts between producers and consumers. It results in cheaper goods.
  • It helps them to know where and when the products are available. This reduces their shopping time. ”
  • It provides an opportunity to the customers ro compare the merits and demerits of various products of competitors.
  • This is perhaps the only medium through which consumers could fc know the varied and new uses of the product.

It increases the standard of living of the people by giving them information about various products available in the market and encourage them to use new products. In this way, modern advertising is highly informative.

D. Benefits to Salesmen
Salesmanship is incomplete without advertising. Advertising serves as the forerunner of a salesman in the distribution of goods. Sales is benefitted by the advertisement in following ways :

  • Introducing the product becomes quite easy and convenient j because manufacturer has already advertised the goods informing the S consumers about the product and its quality.
  • Advertising prepares necessary ground for a salesman to begin his work effectively. Hence sales efforts are reduced.
  • The contact established with the customer by a salesman is made permanent through effective advertising because a customer is assured of ! the quality and price of the product.
  • The salesman can weigh the effectiveness of advertising when he makes direct contact with the consumers.

E. Benefits to Community or Society:
1. Advertising in general is educative in nature. In the words of the late President Roosevelt of the U.S.A., “Advertising brings to the greatest number of people actual knowledge concerning useful things: it is essentially a form of education and the progress of civilisation depends on education.”

2. Advertising leads to a large-scale production creating more employment opportunities to the public in various jobs directly or indirectly.

3. It initiates a process of creating more wants and their satisfaction and higher standard of living. For example, advertising has made more popular and universal the uses of such inventions as the automobilies, radios, and various household appliances. To quote Sir Winston Churchill, “Advertising nourishes the consuming power of men. It creates wants for a better standard of living It spurts individual exertion and greater production.”

4. Newspapers would not have become so popular and so cheap if there had been no advertisements. The cheap production of newspapers is possible only through the publication of advertisements in them. In other words, it is the advertising revenue that makes the newspapers live. It sustains the press.

5. It assures employment opportunities for the professionals and artists.

6. Advertising does provide a glimpse of a country’s way of life. It is, in fact, a running commentary on the way of living and the behaviour of the people and is also an indicator of some of the future trends in this regard.

7. It encourages healthy competition among manufacturers. Manufacturers bring out new products for the benefit of society.

Question 9.
“Money spent on advertising is wasteful.” Do you agree ? Give reasons for your answer.
Or
“Advertisement is a wasteful luxury in India where we suffer from shortage of everything.” Do you agree with this statement. Explain fully.
Or
“All advertisement is a social waste.” Discuss.
Answer:
Is Advertisement a Waste ?:
Although the benefits of advertising are numerous (as explained in the previous question) it is one aspect of marketing that is subjected to very severe criticisms. The various objections against advertising are listed below Economic Objections

1. Advertising is not productive –
It is true that the advertising does not produce any tangible goods. But all productive work not necessarily results in tangible goods. On the other hand it renders a very valuable service. Services are always intangible. The service rendered by advertising is highly necessary, especially when one has to choose from among the thousands of products which are similar in most respects. Advertising facilities choosing which in turn leads to satisfaction.

2. Advertising forces people to desire and buy things which in fact are not within their means –
It is true that advertising arouses interest for buying. But there is no physical force exerted on customers to buy things. Moreover, cautious people do not fall into “cheap trap” a term very often used to condemn advertising.

3. Advertising simply multiplies the needs –
It just takes business from one concern and gives it to another. For example, people today are acquainted with the use of soap, paste, talcum powder. When a new kind of Telcum powder is introduced, advertising will only help to shift the demand from one product in favour of another. But this is not entirely true. Advertising also helps in the extension of demand and it also help in comparing the two substitutes.

4. Advertising increases the cost of goods –
In a sense it is true because expenses on it form a part of total cost. But here one forgets the benefits desired from it. Moreover, advertising effects saving on the side of distribution costs and production costs.

5. The monopoly argument –
Advertising Usually lays emphasis on brands. This emphasis makes the consumer to become a slave of a particular brand The best answer to this argument is. that it is the age of survival of the fittest. Moreover, all could advertise,so no monopoly effects.

6. Advertising encourages waste –
People are forced to use the product as fast as possible since new products with improvements are introduced. Purchase of new and improved things necessitates old products to be wasted: Moreover, The, production of any product requires the use of
exhausting natural resources which are to be preserved by planned use. This
is not considered in competitive advertising.

Social Objections :

1. Misrepresentation of facts –
Most of the advertisements contain tall claims and the benefits advertised are not enjoyed in full, Such products are short-lived.

2. Wastage of national resources –
A more serious objection against advertising is that it destroys the utility of goods before it became useless due to change in fashion, improved technology etc. It results in wastage of national wealth.

3. The Press is influenced by the advertisers because they provide the major source of revenue to the existence of newspapers and journals. But this is also not true because pressmen are not slaves of the advertisers. Moreover, they advertise only what the advertiser says and not at their own.

Ethical Objections:

1. Advertising appeals make people to use such articles as might affect their health for example liquors and cigarettes.

2. Consumer deficit –
People with less purchasing power cannot afford to buy articles though the advertisement creates a strong desire to purchase the product. This makes a section of the society remain discontented and frustrated.

Some of these criticism are true but not absolutely correct. Most of them are now redundant since advertising has provided its effectiveness and efficacy in enhancing production and consumption. It is stated that attacks on advertising on the ground of deliberate deficits have largely evaporated because of the efforts of the industry itself in setting standards and regulating its own products. Therefore, it can be said safely that investment in advertising is not a waste.

Legal Restrictions on Sales Promotion and Advertising in India –
The foregoing discussion makes it amply clear that advertising and sales promotion have become well established modes of modern business techniques. However, it should be noted that these techniques are often used to deceive the customers. At present we do not have any legislation preventing deceptive advertisements or sales promotional methods.

The M.R.T.P Act also is silent on these matters perhaps on the assumption that if dealers and manufucturers or producers can be prevented from distorting competition the consumers will get a fair deal. This indirect restriction is neither enough nor will prevent the sellers from giving misleading advertisements or adopting unfair methods of sales promotion.

Advertisements become misleading when things are intentionally omitted or false claims are made. An examination and comparison of various products with their advertisements would easily reveal this fact. For example, it is just untrue to claim that out TV sets would guarantee life-long trouble-free service or our washing soap washes 50% more clothes whitest and safest.

If a consumer is thus falsely induced to buy goods that do not possess the quality ‘ advertised it can only be treated as a false representation. Therefore efforts should be taken to eradicate this kind of fraud against the consumers. The Federal Trade Commission Act 1914 (USA) bans this kind of selling methods to prevent the public from being made victims of false claims of products blatantly advertised even though it may not have an adverse effect on the competition.

In India also, a growing concern is being felt against this kind of deceptive advertisements-Sachar Committee which was appointed to revise the Companies Act and MRTP Act pointed : “The objection taken is not to the advertisement of the product which it may be necessary to do in order to acquaint the public with the articles. What is, however, insisted on is that there is an obligation on the part of the seller that if he advertises, he must speak the truth.”

The Commission has stated in i s report the various devices used for sales promotion method also as deceptive. Prices may be advertised as greatly reduced and cut when-in reality the goods are being sold at seller’s regular prices.

The Sachar Committee has recommended the following acts ot the sellers declared as Unfair Trade Practices.

(i) Misleading advertisements and false representation.
(a) The goods of a particular standard, quality, grade composition, style or model, if not possessing that qualifications.
(b) Representing second hand goods as new goods.

(ii) Offering of gifts or prizes with the intention of not providing them and conducting promotional contests.
The Committee is of the opinion that all the aforesaid unfair trade practices should be punishable as an offence or any person or undertaking ^ indulging in any of these should be liable to be prosecuted before the Commission.

The Consumer Protection Act, 1986 is designed to protect the consumers against deceptive advertising to some extent. This Act has described in the last Chapter.

Question 10.
Describe the types of advertising media. Discuss their merits and demerits.
Or
What can be the possible media of business advertisement ?
Or
Briefly describe the forms of business publicity.
Answer:
Types Of Advertising Media:
An advertising medium is any object or device that carries the advertising message. In general an advertising medhm should be capable of accomplishing three objectives :
(a) It must reach the largest number of people possible.
(b) It must gain their attention.
(c) It must be less expensive.
The character of the medium is largely determined on the objective and factual basis such as whether the coverage of the medium should be national, regional or only local.
DU SOL B.Com 3rd Year Marketing Management Notes Chapter 7 Promotion Decisions 3
TYPES OF MEDIA
There is no dearth of media today. It may be direct or indirect. Direct method of advertising refers to such methods used by the advertiser with which he could establish a direct contact with the prospective consumers. Direct mail is an example of this. Indirect method on the other hand involves the use of a hired agency for spreading the information. Most of the media are indirect in nature, e.g., press publicity, cinema, etc. The various media that are commonly used are given in the schedule and are being explained as under:

1. Press Publicity –
This remains the most popular method of publicity , today. Newspapers and magazines have become a part of the cultural and political life of the people today. Press publicity takes two forms: Newspapers and magazines.
(a) Newspapers –
Newspapers are bought largely for their news value as such they are most appropriate for announcing new- products and new development of existing products. Because of their frequency of publication, they are also well suited to ‘opportunity markets’.

Advantages.
The various advantages may be summed up as follows :

  • They reach each and every nook and comer, so their coverage is high.
  • High frequency enables speedy preparation and publication of advertisement.
  • Newspapers offer a lot of flexibility. According to the convenience ; and necessity of the advertiser, the shape and size of advertisements could be changed.
  • Advertising in newspapers is a cheap method of advertising from – cost point of view.
  • By inserting local advertisements (in local papers) the effectiveness of advertising copy could be tested.
  • Visual appeals could be created.
  • The reputation and the choice of the newspapers is available to the advertiser and their products.

Limitations.

  • Visual effects may not be created in practice as the papers are usually printed on cheap newsprint.
  • The life of newspaper is extremely short, so frequent advertising is required.
  • There is a waste of circulation. The advertisement is carried to places where there is no market existing nor the possibility of creating a new market.This effect can be avoided in local paper advertising, since they have a concentrated coverage of a limited area.
  • Lack of uniformity in advertising requirements, e.g., rate prescribed for popular dailies is high, so advertisements have to be small in size.

The newspaper advertising sponsors the following kinds of advertising:

  • Classified Advertisement –
    Advertisements having common themes such as matrimonial, situations wanted, to let, for sale, etc. are given under group headings. From the cost point of view they are quite cheap.
  • General Advertisements –
    Usual advertisements which are published in different places creating some kind of identity.
  • Teaser Advertisements –
    This is comparatively a new form of advertising. A series of advertisements without any sales message are published consequently over a number of days in the same place in a newspaper. This creates an interest among readers to follow the series until the last advertisement appears. The method is found highly effective.
  • News Type Advertisements –
    From the outward appearnce it would simply look like a news item. At the end of the news the word ‘advertisement’ is added to denote the purpose. Most of the speeches of the Chairmen of companies are given on this basis. Hamdard’s Roohafza and Charminar cigarettes are its other examples.

(b) Magazines –
Another medium under press publicity is magazines and journals. They also offer good facility’ because magazines are read leisurely when the reader is menu dy prepared to receive advertisements.

Magazines from the point of view of the advertisers may be classified as follows :

  • General Magazines –
    The content is meant for general appeal, e.g., Illustrated Weekly, Blitz.
  • Specialised Magazines –
    They cater to a readership with clearly defined specific interest. For example commerce for business people, famine ‘for women.
  • Special issues such as annuals –
    Directories are special types of publications which may or may not have wide coverage of varied interests, e.g., telephone directories.

Merits.

  • Better reproduction of advertisements than newspapers.
  • Larger duration of interest, as magazines are published weekly or monthly.
  • Magazines are highly selective in nature and waste of circulation is avoided.
  • Trade magazines reach specialised groups.
  • Magazine advertising creates prestige, reputation and an image of quality.
  • There is no crowded atmosphere of advertisements as in the case of newspapers.

Limitations.

  • Low flexibility is the chief demerit.
  • Preparation cost of magazine is high and hence advertising cost also would be high.
  • Inelasticity –
    The coverage of the magazine and the coverage of the distribution of goods may synchronise.
  • The advertisement cannot be brought out in times as needed by the „ advertiser Usually the preparation of a magazine takes time and urgent advertising cannot be undertaken.

New forms of printing publicity-
Along with the increased use of . certain articles the printed publicity has come to occupy new horizons, e.g., postal articles such as covers, inland letters, offer good place for advertisements. The match box provides another example.

2. Direct Mail –
This method is direct in its approach and hence referred to as ‘Direct advertising’. But it retains some of the characteristics of press advertising. For instance, here also printed materials are used to spread information. Direct mail may take various forms.
Leaflets, Folders, Booklet, Catalogue.

Features of Direct Mail –

  • The message is directly addressed to the prospective customers.
  • The message could be changed to suit different conditions. As such there is flexibility. (iii) Advertising could be timed according to the wishes of the advertiser,
  • It is economical,
  • The greatest advantage of this method is its capacity to create and maintain personal contact.

The foremost job in such a kind of advertising is the preparation of a mailing list. Such a list should include only, those who are able and likely to respond to the advertisement. The list can be prepared from the following sources .

  • List of present and past customers.
  • List prepared by salesmen.
  • List compiled from directories such as telephone directory, voters list, etc.
  • Government records such as income tax list, birth registration.
  • Records of membership kept by civil and social organisations. The final step is the distribution of the printed message. This can be done by mail, through retail stores, or inside.packages.

Merits.

  • Selectivity is the greatest advantage –
    The advertise could reach any part of the country and have his message conveyed.
  • Ability in creating a personal contact –
    Press advertising is meant for large masses whereas direct mail is intended for the addresses only.
  • The messages that cannot be given through advertisements could be managed by direct mail.

Limitations.

  • It is not cheap, as postal charges are high.
  • The preparation of a proper mailing list is not an easy job.
  • Even the list prepared with utmost care would become obsolete in a short time.
  • It has not provided its supremacy in ail fields.
  • It has proved to be ineffective in case of products which- need personal examination.

However, it is most suitable method in the field of publication of books. Readers Digest and other popular publishing companies adopt this method most effectively.

3. Outdoor Advertising or Mural Advertising –
It is the oldest form c. advertising and remains the most common medium even today. Press
publicity is basically indoor advertising as papers afre generally read indoor. Outdoor advertising projects the message to a large number of pSopIe of . heterogeneous interests. The products that need a wide appeal use this method. Outdoor advertisements are meant for the moving public and provide the advantage of reminding the people frequently of the product. It has the advantage of repetition found in good advertisements.

Merits of Outdoor Advertising:

  • Outdoor advertising is capable of gaining more attention. .
  • It offers great selectivity. It could be used locally, regionally or even nationally.
  • Flexibility is present.
  • It is semi-permanent. Once the board is exhibited it could be kept there for quite a long time.
  • It is very good medium to stress brand names and package identity.
  • Coverage is greater. Every moving person comes in contact.
  • Low cost.

Limitations.

  • It has been brief. Detailed explanation is not possible.
  • It has also’presenting value. The exact effect created on prospects is very difficult to measure.
  • It could be used only as a supplementary form to other kinds of advertising.

Kinds of Outdoor Publicity:

  • Mural Advertising –
    It refers to posters which are often pasted on walls. Advertising for a moVie is done in this way.
  • Advertising Boards –
    These are also posters but are kept at certain fixed places especially at joints where people frequently assemble. Bus stops, railway stations, etc. offer good places for this kind of advertising.
  • Vehicular Advertising –
    This refers to moving advertisements. The advertisements on moving vehicles such as buses and trains offer examples of this. This type of advertising has very large circulation and is considered to be very effective.
  • Electric Displays, Neon Signs –
    This is the newest and most attractive form of outdoor display. It attracts attention easily and acts as a memoriser when it is dark all around.
  • Sky Advertising (sky writing) –
    Notices and advertisement such as printed baloons etc. are distributed from aeroplanes usually near the circus tents, a huge baloon is floated from which a board hangs down depicting the name of the circus.
  • Saadwkbmen –
    They are hired persons who move in a procession with boards and notices and also playing musical instruments to attract the attention of the public. The cinema theatres usually arrange this kind cf advertising when a new picture is released.

4. Miscelleneous Advertising –
(a) Audovisual.

  • Film advertising,
  • Documentary film,
  • Straight advertising films, and
  • Sponsored Advertising Films.

All these have their own merits. Their coverage is very wide. Appeal is made to all sections of the people. They are able to explain tnd demonstrate the use of product which make the product more appealing and acceptable.

These audio-visual methods have their own limitations. The production cost of a film is very high. Sometimes there are restrictions against screening of films, e.g., there is censoring. A film can be shown only to the people who came to the theatre. Thus large section of people are outside the scope of such advertising. Besides, for screening films cooperation of theatres is inevitable.Crowding of such advertisement films, which is very common now, makes ti e audience feel bored.

Screen slides –
Slides covering advertisements are usual today. They u e shown in almost all the picture houses during the show. Radio advertising, television, exhibitions also offer good media of advertising.

(b) Point of Purchase Advertising –
This is a direct method because the advertising process is either undertaken by the manufacturer direct or through the dealer. There are various forms commonly known as ‘store display’. It is also a powerful medium. It is observed that the point of purchase is the exact point where the prospects are reminded finally about the product. The various means adopted are :

  • Window Display –
    The articles are displayed inside a glass window which is decorated attractively. The price of the product is also attached to the product. This is done through price tags. ‘Come and have it’ is maxim behind this method of advertising.
  • Counter Display –
    Products are displayed inside the shop. The attention of the real buyers who step into the shop is directed towards the articles displayed.
  • Special Displays and Shows –
    Putting special displays of several products in selected stores is a good promotional device.
  • Show Rooms –
    In case of certain products, personal inspection is an important prerequisite. Mixers, washing machines, etc. are always purchased only after a close look at the product. This is the reason why manufacturers keep show rooms at a huge expenditure. The location of the show room is very important. It should be easily accessible.
  • Exhibitions and fairs.

(c) Speciality Advertising –
It is usual practice now with the manufacturers to provide free of cost various articles of low value to the existing and prospective customers such as diaries, calendars, ball pens, cigarette cases, paper weights; etc. bearing brief advertisement

Question 11.
What factors should be taken into account while selecting suitable media of advertisement ?
Answer:
Selection Of Suitable Media:
We have discussed various media of advertising in the previous quesuon. A businessman has to select a particular or some particular media ‘ of advertisement for its product. The success or failure of a businessman largely depends on the media of advertisement he selected. Therefore, a due case should be taken in selecting the media. While matching the right media, the following points should be considered :

1. Nature of the Product-
Nature of the product determines the media of advertisement. Consumer products, like tooth paste, cold drinks,’ ‘soaps etc. which are used widely by masses need wide coverage through radio, television, newspapers, general magazines etc. on the other hand, industrial products iike raw materials, machinery, tools etc. need focussed coverage and can better be advertised through trade, technical and professional journals or mail advertising.

2. Nature and Size of the Market –
The number, geographic location and purchasing power of potential customers also affect the choice of media of advertising. If the number of customers are large and scattered throughout the country, newspaper general magazine, radio and television will be effective media. On the other hand, if number of potential customers is very small, direct mail advertising may be adapted.

Where product is to be sold only in the local market, outdoor display such as advertising boards, wall painting, loudspeakers. cinema slides etc. will be suitable. If product is to be sold throughout the country, press advertising or advertising through radio and television will be more effective.

3. Objectives of Advertising –
Object of advertisement will also influence the decision of selection of media. If the object is to create, maintain and increase demand of the product or to provide maximum, possible exposure to the product a combination of several media such as press, outdoor advertising, direct mail advertising or advertising through radio and television may be adopted. Prize contests and exhibitions are used more profitably to maintain sales and build goodwill of the firm. Where object is to recruit employees or to sell some property or auction sales etc., press may be the best media of advertising.

4. Cost of Advertising Media –
Funds available for advertising and the cost of the medium per prospect are important considerations. The cost and the number of people covered are different for different media. The cost of advertising per prospect may be calculated by dividing the total cost incurred by the total number of prospects covered. The ability of bearing the cost of advertising also varies from enterprise to enterprise. Thus, in selecting media cost of advertising and the capacity of the enterprise to bear the cost should be taken into account.

5. Circulation of Media –
When the message is to be conveyed to a large number of people, newspaper, radio and television and other media having wide coverage should be used, But when message is to be conveyed only to a limited number of people, magazines, direct mail and other media having limited circulation may be used.

6. Nature and Status of Customers or Type of Audience –
The class of people to whom the message is to-be addressed is very significant in media selections. If the customers are illiterate and poor, audio visual methods like radio and television film slides should be used. If the customers, for example, are educated and well-to-do, newspapers, magazines, outdoor displays and direct mail may be used. In selecting media, economic status, religious customs and feelings and attitudes etc. of customers should taken due consideration.

7. Media used by Competitors –
In selecting advertising media for the product, an enterprise must consider the advertisement media policy used by the competitors or the producers of substitutes.

The above factors’ have bearing on the selection of an advertising media. However, in practice a business firm does not depend solely on a single medium of advertising. A combination of several media are used simultaneously to meet the competition and penetrate into the market to create brand loyalty. A comparative evaluation of the effectiveness of different media and their cost should be made to choose the best combination of advertising media.

Question 12.
Discuss the role of an advertising agency. What are the advantages of using an advertising agency ?
Answer:
Advertising Agency:
An advertising agency is an organisation whose business consists in the acquisition as a principle of the right to use space or time in advertising “ media and the administration on behalf of-the advertisers of advertising appropriations made by them. It is organised to render advice and creative services for its clients. It doe? not sell any tangible products, it sells creative talents and its past experience. Thus it is an organisation specially created for rendering services in advertising.

Manufacturers, though responsible for selling, cannot look after all the promotional activities especially under the principle of specialisation. Organisations with adequate financial resources may set up a separate’ department for this purpose. But such an arrangement would be beyond the reach of medium or small scale producers.

The only solution, then, would be to hire some specialised people. Advertising is one such field where manufacturers have two options to. conduct their advertising for themselves or to hand over the job to a specialist, viz., an Advertising Agency. The agency that undertakes the specialised job of advertising for and on behalf of others is called an advertising agency.

Such agencies have specialised Skills and experience that a manufacturer could not duplicate except at a considerable expense. Of late even large firms have started depending on advertising agencies simply because they are ‘in the market’. Advertising today is a complicated affair and its success primarily depends upon constant research, e.g., advertisement research, media research, etc.

In the beginning, advertisement agents were mere agents and their main job was to sell space in a medium. But today they have achieved such a pivotal position in the marketing process that they sometimes called ‘marketing agents’. With ever increasing competition, advertising agents have extended the range of services they couldrender. This is evident from the chart given below, which explains the multifarious activities undertaken by such agents.
DU SOL B.Com 3rd Year Marketing Management Notes Chapter 7 Promotion Decisions 4
Fig. Activities Of Advertising Agencies
Selection of Advertising Agency –
The selection of an advertising agency is by no means an easy task. The advertiser decides to use an agency mainly because he wants additional talent to help him plan and carry out an advertising programme. The problem of selection obviously is one of evaluating the skills and capacities of an agency. There is no standard yardstick to measure the efficiency of such an agency. The following points are generally kept in mind while choosing an advertising agency :

  1. Financial soundness.
  2. General reputation.
  3. Facilities and abilities available.
  4. Size and adequacy of the staff.
  5. Basis of remuneration.
  6. Relationship they maintain with advertiser.
  7. Products advertised.
  8. Availability, and
  9. Relation with media-owners.

Whatever be the basis of selection, once an agency is selected the relationship between the advertiser and the agency should be cordial. In fact the success of an advertising programme depends much on the mutual trust, confidence and understanding that exist between the two. The advertising agency should not be mere ‘yes man’ of the advertiser but should be capable of giving him objective advice.

Advantages Of Using An Advertising Agency:

  • For small advertisers it is more profitable to use services of an agency than to keep a separate publicity department.
  • Being a specialised organisation it can offer expert advice.
  • Because of the close association with media owners it can obtain space at competitive rates.
  • An advertising agency provides employment opportunities to artists and similar skilled people.
  • Besides advertising services, it offers help in other marketing activities such as marketing research, test marketing, etc.

Must every one advertise ? Members belonging to a profession such as solicitors, Advocates, Physicians, Auditors and the like are not allowed to advertise. The restriction is based on a matter of custom and professional- etiquette as also in accordance with the rules and regulations.

Question 13.
What is Scientific Advertising ? Discuss the various phases of scientific advertising.
Answer:
Scientific Advertising:
Meaning of Scientific Advertising.
Advertising is a necessary evil in the modern business world. A business without advertisement cannot be thought of. The advertisement aims at creating and maintaining the demand of the company so an advertising programme should be prepared very carefully so that it can fulfil its purposes fully. So, scientific method ‘ should also be used to make the advertisement quite effective and attractive to those for whom it is meant. Thus the case of introduction of the scientific method in the formulation and execution of advertising programmes is too obvious to be over-empasised.

Scientific advertising may, in simple terms, be defined as properly ‘ planned advertising based upon a serious delibration of all factors that have a bearing upon its success. It involves the use of the logical method or reasoning method as against the various unscientific methods. Scientific advertising implies the development and the use of a fact finding approach to the formulation and execution of an advertising programme.

Before the scientific approach can be applied to the preparation of an advertising programme, the purpose of advertising should be clearly stated.
It is, then, to this end that facts have to be collected about the consumer desires, their location and purchasing power and the ability of given commodities to satisfy their wants. It should be followed by financial planning for advertising and the selection of the media of advertising. Execution will then follow the pattern set out in the advertising plan. In the last, its performance should be evaluation.

Phases of Scientific Advertising.
The programme of scientifically’ planned advertising will generally fall into the following phases :

1. Advertisibility of Products –
All products need not to be advertised. Some products have good market still without advertisement and some others require advertisement. Thus, in the first phase advertisibility of products should be established and for this purpose, preliminary demand, buying motives of the customers, inherent qualities of the product, nature of the product, cost of advertisement and the bearing capacity of the advertising cost by the product etc. should be studied.

2. Preliminary Investigations –
The next phase in scientific advertising is preliminary investigations to collect the necessary data vital to an understanding of the market to which the advertising campaign Is directed, it will involve the following steps :
(a) Market Identification –
Advertising can be really effective if the advertiser knows definitely whom it shall be directed to! In other words markets should be identified. The market is usually defined as a group of buyers, actual or prospective, for a product or service. Some markets are well defined while in some other cases, a considerable amount of research is required to define the market.

The market so identified will influence the choice of advertising media and type of copy. Thus the market analysis should know out the customs of the market, demand of the product, nature of the product (whether it is meant for grown ups or children, students, women or men), traditions and climatic conditions of the market may also be studied.

(b) Product Analysis –
An advertisement may be proved successful in the market only when the characteristics of the product can satisfy the needs and requirements of the customers for whom it is meant. So, product analysis is necessary. Sandage defines product analysis as “the process of subjecting goods to careful scrutiny to determine the degree to which they have been or might be moulded to fit the mind of the buyer.” Such analysis should consider the class into which the commodity falls (necessaiy or luxury, producer’s or consumer’s goods), all possible uses for the product, construction and quality, character of package, the common unit of sale, and price, etc.

(c) Consumer Research or Motivation Research –
In modem marketing consumer is the king and there is wide gulf between him and the producers who seek to serve him. This gulf can be bridged through consumer research and the other two steps stated above. Such research will study the facts, needs and desires of the consumers.

According to Hepner “Motivation research tries to discover the relation between behaviour and underlying innermental processes such as drives, desires, emotions, impluses attitudes, avoidances and preferences.” Thus the producer need not make wild guesses about the consumer instincts but should confidently proceeds on the firm : ground provided by the information collected through motivation research.

3. Preparation’ of advertising Budget –
Having completed the preliminary investigations, the next step is the preparation of advertising budget, i.e., to appropriate the amount for advertisement taking into consideration :

  • size and financial position of the advertiser,
  • degree of competition in the market,
  • scope or area of the expected market,
  • revals’ appropriations for the purpose,
  • clearly defined objectives of the firm, etc.

4. Media Planning –
The media of advertisement must be selected on a careful considerations of:

  • the effectiveness of the various alternative media in approaching the customers,
  • its cost, and
  • the length of the sales message, etc. Advice from experts can also be sought.

5. Execution –
The actual execution of the advertising programme should be in conformity with the plan formulated for the purpose on the basis of research and investigation. The various variable which influence’the success of any advertising programme include the copy appeal, illustration, size, colour, etc. These must be entrusted to experts, (advertising agencies) for they require skilful handling.

6. Evaluation of Results –
The last step in a programme of scientific advertising will be to evaluate the efficacy or effectiveness of advertising according to the plans. There are various tests to evaluate the effectiveness. An advertisement will be deemed to be successful if :

  • Prospective customers have been effected,
  • There is a considerable increase in the sale volume, and
  • It succeeds in changing the habits and behaviours of the customers to extent desired. Such results rpay be used in formulating further advertising programme in future.

Question 14.
How can you increase the effectiveness of an advertisement ?
Or
What qualities should be possessed by a good advertisement copy ?
Or
What points would you consider while preparing a good copy of advertisement ? ,
Or
What points would you consider while preparing a good copy of advertisement ?
Answer:
Increasing The Effectiveness Of Advertisement:
The success of advertisement depends very much upon the copy of advertisement. All the planning, research and expense would go waste if proper care is hot taken in preparing a copy that will achieve the purpose of advertising. The main aim of the advertisement is to attract the customer and create an urge in his mind to have that product and if the advertisement does not fulfil this objective, the expense on advertisement is quite useless. So, the advertisement copy should be drafted very carefully.

The person who drafts the advertisement copy must in the first instance, be thoroughly acquainted with the mental process and in the second place, the imaginative enough to think of words and patterns whicli would produce the desired effect on the prospect.

Essential Qualities of a Good Advertising Copy -A good copy of advertisement should possess the following characteristics or values :

  1. Attention Value,
  2. Suggestive Value,
  3. Memorising Value,
  4. Conviction Value,
  5. Sentimental Appeal Value,
  6. Educational Value,
  7. Instinsive Value.

1. Attention Value –
An advertisement copy must attract the attention of the potential consumers and if it fails in this mission, the whole money and efforts go vyaste, for, everything else follows this. So, it is necessaiy that the advertisement copy must have display value. The copy should be drafted, planned, and displayed so ingeniously that it may compel even the most casual reader to notice it and read it with interest. It should be designed in such an attractive manner that it catches the eye of even the lasiest person. Various devices can be used to make the copy attractive such as :

  • use of pictures, photographs or sketch to reveal a great deal about the product;
  • use of display types, e., appropriate heading in attractive types;
  • attractive borders etc; can also be used to separate an advertisement copy from the rest of the setting and to compel the reader to focus his attention on it; price quotation being advertised, is quite low, the display should be an appropriate place in the copy;
  • reply coupons inserted in an advertisement is another way of attracting the attention of the readers.

2. Suggestive Value –
Having attracted the attention of the reader, the next quality of an advertisement should be to offer suggestion about the use and the utility of the product that may remain in his mind even when he has forgotten where he really saw the advertisement. This, can be done best if crisp and pointed but simple slogans and suggestions are devised to derive home to the reader the utility of the product in everyday situation. The repeated use of suggestion, a, command or slogan can do the trick. Coffee is advertised, for example, with the slogan : ‘Tired ? Give yourself a cup of coffee. It is so satisfying.

3. Memorising Value –
The copy of advertisement should be so drafted and laid out that product will stick to the memory of the individual reader. Repetition of advertisement is, of course, an effective method of creating memorising value for the copy. Use of trade mark or brand name may have a memorising value and it should be repeated very oftenly. Lux, Dalda, Aspro, Ponds, Vim, Surf, etc. have become household words*hrough repeated advertisements of memorising value.

4. Conviction Value –
An advertisement copy can prove effective and achieve the desired end when the suggestion contained in it is backed by .convincing arguments. To create the conviction value, the advertiser must avoid the two extremes – it should neither be a plain notice nor should it use flowery and high flower language.

An ideal copy should make a direct appeal to reason by emphasising the outstanding features of the product so that the consumer acting on the advertisement may go in for it with confidence and firm belief in its utility and superiority over competitive products. Examples of copies emphasizing conviction value may be found in advertisement by manufacturers of Colgate dental cream “Stop bad breath with Colgate while you fight tooth decay all day” or Anacin relieves pain, reduces fever calms nerves and fights depression.

5. Sentimental Value –
Sentiments reflect the personal feelings and attitudes of individuals towards various things. They indicate reactions of a person in favour or against a particular products. The advertiser should make a sincere attempt to make an appeal to the sentiments of as many prospects as possible. It is more important in case where advertisement is directed towards the educated and cultured sections of the community. For example ‘Be Indian, Buy Indian’ appeal to the national sentiment.

6. Educational Value –
A good copy of advertisement educates the general public about the uses of the new products or the new uses of the same product. It will certainly increase the demand of the product. Thus, it may be creating new habits among people by offering new tempting products to them. It also helps creating new markets. Thus a good copy of advertisement must possess the educative value. For example, methods for preparing palatable food with Dalda.

7. Instinctive Appeal Value –
There are certain instincts which are the mainsprings of human thoughts and actions. All that one thinks does has its roots in one instinct or the other. Instincts are the underlying forces which compel the men to act in certain ways. A good copy advertisement must possess this value so that the people are induced, persuaded and motivated to think well of a product and to take to its use. Generally speaking, the following are the basic instincts of the consumers :

(a) Self preservation Instinct –
Many of pur thoughts and actions are inspired by our anxiety to preserve our person, our wealth, our family and our belonging. The sale of products like medicine, clothes, etc. may be promoted by appeal to this anxiety. Insurance^ similarly advertised to appeal to this instinct.

(b) Hoarding Instinct –
Banking institutions, insurance companies or the Government Savings Organisation must make an appeal to the hoarding instinct. Slogans like ‘Up and Up, Go your Savings’ may be asked for this purpose.

(c) Parental Instinct –
The parental instinct takes the form of love and affection for the children. Those who deal in children’s requirement like toys, baby foods, etc. play upon the motherly feelings of women or the parental sentiment of men through their advertisement copies.

(d) Instinct for Self-display -An advertisement copy drafted for dresses, readymade men and women’s clothing, etc. must be directed towards the aesthetic sense of the people by showing happy and likeable people in dresses that are being advertised.

(e) Something for nothing Instinct –
Everybody has an instinct to get something without paying for it. This fesire is present more or less in everybody. An advertisement copy that contains the offer of a prize or a gift
is likely to temp quite a many of the customers. This instinct is widely,used by lottery ticket sellers and other traders.

Thus, the above qualities should be incorporated in an advertisement copy to make it an ideal advertisement. Such an advertisement copy can increase the effectiveness of the advertisement.

Question 11.
What are the more common producers in use for determining the size of an advertising budget ?
Or
Compare and contrast the different approaches to determine the size of the advertising budget.
Answer:
Advertising Budget Or Appropriation:
An advertisement budget or appropriation is referred to as an organised plan made out for expenditure of money on advertisement. The advertising man has to consider several factors before deciding the amount to be spent on advertisement. Such variables are population or income trend analysis, the economic situation and competitive behaviour, product improvement, sales force, etc.

The advertising man must realise that advertising w is really mass psychology and he should have basic information and available statistical data so that he may reduce the guess work involved in the art of ‘ getting the product accepted in the minds of the people. For this purpose, he has to determine the right proportion of media, the proper sequence of contact and the right type of copy message.For this purpose, the cost factor should be the deciding factor. A planned cost analysis of different media of advertisement and its effectiveness should be considered while preparing the advertisement budget.

Budgeting Methods:
The following methods are more commonly used or suggest in determining the size of the advertising budget:

  1. Availability of funds or affordable approach.
  2. Percentage of Sales methods.
  3. Return on Investment method.
  4. Competitive parity methods.
  5. Objective and Task method.
  6. Market share approach.
  7. Arbitrary allocation.
  8. Fixed sum per unit method.

We shall discuss these methods in the following pages :

1. Availability of Funds or Affordable Method –
In this method, the company considers what funds are available or what it can afford for advertising. A small business concern therefore, cannot spend much on advertisement because its capacity to spend is limited.

This method is not a very scientific method. Availability of funds is the only criterion for deciding the amount to be spent on advertisement. The need, importance, nature of advertisement and other factors are totally ignored.

The right approach is that advertising appropriation should be in terms of what advertising is expected to do for the company. Sometimes, if this approach is followed, good marketing opportunities are left out because of short of funds. It is,therefore, very difficult to plan a long term advertising programme or to appropriate the available funds among different products in different market segments.

2. Percentage of Sales Methods –
Under this method, the amount to be appropriated is arrived at as a fixed percentage of the sales. Preceding year’s sale figure or estimated sale figure of the current year may be taken as a base for calculating the percentage. The total amount may be calculated for different products and may be aggregated or may be calculated oh combined total sales of all products. The amount may be appropriated territorywise or customerwise.

The arguments advanced in favour of this method are :

  • The advertisement expenditure does not remain fixed. If fluctuates direct with the sales.
  • The advertising cost, sale price and profit per unit are closely
    correlated and considered by the management in preparing the budget.

This is very common method used in India. But this method also is not scientific though it is simple.
The dangers of this method are :

  • This method is defective because sale under this method is the cause of advertisement and not the result of advertisement.
  • The danger of such a method is very obvious if we consider the case when sales are declining. In such a case the amount on advertisement at a fixed percentage would be declined when in fact advertising appropriation should perhaps be increased to arrest the decline in sales.
  • Again this method would be inappropriate when a new product is introduced in the market. Introducing a new product requires heavy initial advertising expenditure although the sales in the. initial period may be small.
  • No long-term advertising programme can be prepared because expenditure fluctuates with the sales.
  • There is no scientific method for determining the fixed percentage.

3. Return on Investment Method –
In this method, advertising expenditure is considered as an investment which is no doubt correct as the return one gets from advertising is generally spread over a period of time. The advertising budget is then prepared by taking into consideration the increased profits generated by an increase in sales and goodwill through the advertising.

Thus return on investment method is no doubt a scientific way of approaching the problem. However, as indicated, since the return is very often spread over a period of time, it may be difficult to arrive at an appropriate figure on the oasis of this method.

4. Competitive Parity Method –
Another method of appropriating the amount for advertising is to consider the amount spent by the competitive firms on the advertisement.
This method is not appropriate because it is based on the assumption that competitors are on the right track and the marketing problems and strategies of competitors are similar to that of the company. But, it is never true because the objectives of the firm, objective of the advertisement, resources, opportunities are never similar to each other.

5. Objective and Task Method –
Probably the task approach is the best approach. It fixes the advertising appropriation on the basis of what the advertising campaign is required to achieve. Keeping in view the sale of the products for each area the amount of advertisement is fixed of or each segment of the markets and then it is aggregated for the firm. This method, therefore considers carefully the advertising objectives prescribed and then determines what is necessary in terms of the type of media, frequency of advertising etc. with a view to accomplish these objectives effectively.

This method is suitable when a new product is introduced in the market. The cost factor is not considered under this approach.

It is thus very clear from the study of different methods of appropriating the amount for advertisement that no one method is perfectly scientific. Fixing the amount for advertisement is not an exact science. It requires a mixture of knowledge, assumptions, experience and hopes. In preparing the advertising budget, cooperation of all other managers must also be sought so that advertisement objectives may be achieved effectively.

6. Market Share Approach-
Most of the firm estimate their demands on the basis of market share. The same method may be adopted for allocating funds for advertising purposes. Under this method, advertising budgets are prepared, so that money spent on advertising would retain a given market share or obtain a certain target share. It the firm is satisfied with it current
market share, it may decide to spend the same amount, as it spent last year.
This method has following drawbacks –

  • It completely ignores quality and creativity.
  • The amount appropriated on this basis may be quite insufficient if a new product is to be introduced in the market. It is impossible to create product awareness with high initial investment.
  • Similarly, the element of competition is not considered under this . approach. Without higher allocation, eVen the existing market share v cannot be retained if competition is severe.

7. Arbitrary Allocation –
This is quite unscientific method. There is no basis for the allocation of funds for advertisement purpose. An arbitrary amount is fixed for this purpose. Mostly retailers with local status adopt this method. They advertise, as and when they wish,

8. Fixed Sum Per unit Method –
Under this method, a fixed sum per unit of sales rather than a fixed percentage on sales, is appropriated for advertising purpose. The appropriation is based on the units sold either in a previous period or on a forecast of unit sales in future period. The amount of advertising, under this method, will remain unchanged even if the sale price per unit changes. This method is generally used for industrial products and consumer durable products.

We have discussed above the various bases for the appropriation of advertising expenditure. There is no one method which can be said to be appropriate in all cases. In deciding the promotional expenses, various factors like sales volume, sales price, objective of the advertisement, product life cycle, media to be used, customers to be served etc. should be taken into account.

Question 16.
Why should management evaluate advertising effectiveness ?
Explain the different methods of eyaluatibn of advertising effectiveness.
Answer:
Causes For Evaluation Of Advertising Effectiveness:
Today, we are living in competition age. In industries, there is a cut throat competition. To succeed in this type of cornpetition and to grab a large market share, it has become necessary for every business and industrial enterprise to advertise its goods and service vigorously. A large sum is spent every year on advertising. Therefore, it becomes imperative for the management to evaluate the effectiveness of the advertising compaign. The evaluation of advertising effectiveness is necessary because of the fol lowing reasons:

1. Achievement of Advertising Objective –
By evaluation of advertising effectiveness management wants to know whether the advertising campaign has succeeded in achieving the advertising objectives. The objectives of advertisement may be :

  • To increase the goodwill of the enterprise.
  • To increase the sales of the enterprise, and
  • To make the consumers aware of the products of the enterprise end the enterprise itself. If these objectives have been achieved, the campaign may be said to be effective.

2. Heavy Expenditure on Advertisement –
Advertising is very expensive these days and every enterprise spends a lot on advertising. Evaluation of advertising effectiveness will justify this heavy expenditure on advertising.

3. Control cn Advertising Expenditure –
Promotion budget determines the amount to be spent ~n promotion including advertising. It must be within limits so that it may not have any adverse effect on the price of the product. Evaluation of advertising effectiveness helps keep advertising expenditure within limits.

4. To Study Comparative Usefulness of Various Advertising Media –
There are so many media of advertisement. An enterprise make advertisement through more than one medium. Which media is most useful and effective may be known only after evaluation of advertising effectiveness.

Various Methods of Advertising Effectiveness –
The advertising effectiveness can be evaluated by any of the following methods :

1. Sales Research –
Main object of the advertising is to increase the sales of the enterprise. So, the effectiveness of the advertising campaign can be evaluated with the increase in sales. If the sales of the enterprise inciease as desired due to advertisement. The advertisement is said to be effective otherwise, it is ineffective.

Under this system, two cities, with almost equal sales, art selected. Advertisement programme is launched in one of the two cities. After e ‘ertain period, the sales of the two cities are compared. If the sales of the city in which advertisement campaign was launched, it can be assumed that the advertisement programme has been effective.

2. Memory Test –
Memory test are meant to evaluate the ni.mory and attention value of consumers. There aie two methods of memory test –

(i) Recognition Test –
Under this method, advertising, copies of some newspapers and magazines are shown to the consumers. While showing these copies, some questions are asked from the consumers regarding advertisement. If the replies to these questions are in favour of advertisement, it is considered to be effective.

(ii) Re-call Test –
Under this method, advertising copies are not shown to the consumers. Their advertising memory is tested with the help of some questions regarding product and advertising message for the product of the company. If answers to these questions are in favour of company’s product, advertisement may be considered to be effective.

3. Awareness Test –
This test is meant to evaluate the advertising effectiveness in regard to the newly introduced product. Under this method, some consumers are selected and asked some questions about brand, trade mark etc. of the product and its advertisement. If the answer is favourable, tne advertisement may be considered to be effective. The test is conducted only to know whether the public know something about the product or brand etc.

4. Opinion Research –
Under this method some consumers are selected and asked to express their opinion about the company’s advertising programme. If their opinion is in favour of the advertisement, the advertisement will be considered to be effective.

5. Association Test –
Under this test, common sentence or slogan of the advertisement message is repeated before some selected consumers. Such sentence is incomplete and consumers are to complete it. Here also, these selected consumers are asked to complete the incomplete sentence. If die ensumers complete the sentence correctly the advertisement is assumed to t/w effective.

6. Electronic Devices –
Some electronic devices have recently been developed to evaluate the effectiveness of the advertisement programme. Some important devices are – Electronic Scale Techestrocope etc.

Question 17.
What is sales promotion ? What are its main objectives ?
or
What do you mean by Sales Promotion ? What are the objectives of Sales Promotion ? What is the importance of promotional activities in marketing ?
Answer:
Definition Of Sales Promotion:
According to William J. Stanton, “Sales promotion is an exercise in information, persuasion and influence.” Philip Kotler defines it, “I romotion encompasses all the tools in the marketing mix whose major role is persuasive communication.” American Marketing Association has defined it as “These marketing activities, other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness such as display shows and exhibitions, demonstrations and various non-recurrent selling efforts not in the ordinary routine.”

In course of time various activities came into vogue, designed particularly to help easy sale of goods. These activities commonly known as ‘promotional activities’ are in management terminology, named as ‘Promotional mix.They include all these activities which are undertaken to promote the sale of products ultimately. These activities are sometimes referred to as “Promotional Blend”.

The above definitions conclude that sales promotion activities encompass all activities (except advertising, personal seliing’and publicity) which aim at increasing the sales volume. The following characteristic of sales promotion may be summarised as follows :

  • Sales promotion does not include advertisement, personal selling and publicity.
  • Sales promotion activities are not regular activities. These are purely temporary and are performed at certain times such as display, free samples, exhibitions, demonstration etc. ’
  • It makes advertisement and personal selling more effective.
  • Sales promotion encourages dealers, distributors and consumers.

Objectives of Sales Promotion Activities.
Promotional activities serve the following purposes :

1. Providing Information –
The producer generally provides the information regarding the quality, uses, different uses of the products and the price etc. to the customers while introducing the poduct.

2. Increase in Sales –
The main purpose of all promotional activities is to increase the sales of the products of the company. Promotional activities increase the sales by changing the elasticity of demand of the product through various techniques, i.e., by distributing samples, free gifts, purchase premium?, discounts, etc. Such activities make the product popular.

3. Reducing Seasonal Decline –
In slack season, the promotional activities help in ITU, maintaining the sales of the product Customers and middlemen are offered attractive discounts and free gifts along with their products to induce the persons to purchase their products.

4. To Keep the Memory Alive –
One of the objectives of the sales promotion is to keep the memory of the product aliv; in the minds of the present customers. Though this work is done by advertisement but other promotional activities help achieve this objective.

5. To Induce Middlemen to Purchase More –
The middlemen – wholesalers and retailers – are induced to Durchase mere stock by offering more facilities such as credit facilities, higher trade and cash discount and free gifts etc.

6. Other Objectives –
The other objectives of sales promotion are –

  • To face the competition successfully.
  • To change the marketing strategies and policies keeping in view the strategies and policies of the competitors.

Importance of Promotional Activities:
‘Nothing happens until somebody sells something’. The sales promotion activities help in promoting the sales of the concern effectively. More.and more promotional activities at required to induce the consumers to purchase more and more products and thus they produce the demand. In today’s competitive world, promotional activities play an important role which can be judged from the following facts :

1. For Selling the goods in Imperfect Markets –
Every market is imperfect market, in the imperfect market conditions, the product cannot be sold easily only on the basis of price differentiation. It is the promotional activity that provides information about the differences, characteristics and the multiuses of the products of various competitors in the market. The customer is attracted to purchase the goods on the basis of such information. Thus promotional activities are necessary for selling the product successfully.

2. Distance between Producers and Consumers –
Due to prevalent market condition n.ass selling is quite impossible without promotional activities. The distance between producers and consumer has so widened in present days that to get them acquainted with the product, promotional activities are necessary.

3. Intense Competition –
The intense competition has necessitated the sales promotion activities. When one manufacturer increases his promotional spending and adopts aggressive strategy in creating a brand image, others are also forced to follow the suit. This leads virtually a ‘promotion-war’. It actually leads to price reduction of standard goods.

4. increased Standard of Living and Employment Opportunities –
Large scale production is the theme of the day. Sales promotion is always the result of large scale production. Buf this could be achieved only with appropriate methods of large scale selling. Large scale selling is possible only with the help of promotional activities.

In this way promotional activities increase the standard of living by providing the better goods at a lower rates (due to large scale production and selling). As the promotional activities cannot be performed without the help of an effective sales force and the specialists in the field, employment opportunities are open for a large number of people.

5. Increased Trade Pressures –
The growth of large scale retailers, su;h as super markets, chain stores, etc., has brought greater pressure on manufacturers for support and allowance. So, in order to aid the retailers and also to ensure their share of shelf space many manufacturers have taken to sales promotion activities.

6. Effective Sales Support –
Basically sales promotion policies supplement the efforts of personal and impersonal salesmanship (Advertising). It is found that good sales promotion materials make the salesman’s effort more productive. Activities reduce his time spent in prospecting and reduce the turndowns.

7. Increased Speed of Product Acceptance –
Most of the sales promotion devices (such as contests, premium coupons, etc.).can be used faster than the other promotion methods such as advertisement.

Limitations:
The sales promotion activities are subjected to following limitations :

  • There is a feeling that such seasonal sales promotional activities are mainly intended to sell sub-standad product.
  • The second criticism is that such discounts are not real, since the prices of the products are already inflated.
  • These activities are shortlived, so the results realised are also shortlived. As soon as these activities offering of various concessions, free gifts etc. are withdrawn, the demand also goes down rapidly.

Question 18.
Define Sales Promotion. Describe various methods of Sales Promotion.
[Note – For meaning of Sales promotion, please refer Q. 17 of this chapter.]
Answer:
Sales Promotion Methods Or Devices Or Tools:
The various sales promotion devices (other than advertising, personal selling and publicity) or tools or methods can be classified as follows :
A. Consumer Promotions.
B. Trade Promotions or Middlemen Promotions.
C. Sales force Promotions.

A. Consumer Promotions –
Sales promotion directed at consumers may be done with a view to increase the products rate of using among existing consumers or to attract new consumers to the company’s product. It may also be undertaken to retaliate the competitors’ sales promotion or other activities. Such promotional devices may be :

(i) Free Distribution of Samples –
It involves free distribution of samples to ultimate consumers. The samples may be distributed door to door, or may be offered in a retail store, or with the purchase of any particular product. These samples may also be given to professionals to recommend. This helps the consumer to verify the real quality of the product. This is suitable for introducing a new product of daily use.

(ii) Coupons –
A coupon is a certificate that entitles the consumer to a specified saving on the purchase of a specified product. These coupons are usually issued by the manufacturers through the retailers or in most of the cases, they arc kept inside the package. The consumer may get a discount of the value stated on the coupon at the time of purchase. The retallers are reimbursed the value of coupons by the manufacturers.

(iii) Premiums or Bonus Offers –
An offer of a certain amount of product at no cost of consumers who buy a stated amount of a product or a special pack thereof is called premium offer or bonus offer. This method is very popular now-a-days in view of the acute competition. Premium may be kept inside the pack or in the form of reusable container.

(iv) Money Refund Offer –
This offer is generally stated in media advertising that the manufacturer wili return the price if the product is not to the satisfaction of the consumer within a stated period. For example Bull- worker exerciser is promoted this way.

(v) Price off or Temporary Price Reduction –
This involves an offer to consumers of a certain amount of money off the regular price of a
product. This is done to attract consumers of other brands to It is product. This offer is generally made on some specific occasions or festivals such as Diwali or Id etc. or when a substitute or competing product enters the market.

(vi) Contests or Sweepstakes –
At times, contests are arranged with a view to attract new users to the company’s product. An opportunity under this device is given to consumer to contest with a chance to win cash prizes, free air trips or goods. It is an indirect manner of introducing a new product. In such contests, consumers are asked to replay very simple question in a form available on purchase of the company’s product.

(vii) Bonus Stamps –
Such bonus stamps are issued to the consumers by the retailers or manufacturer in proportion to their purchases. The consumer goes on collecting stamps until he has sufficient quantity to obtain a desired merchandise in exchange of the stamps.

(viii) Demonstrations –
A new brand is promoted rh is way. The demonstrations are arranged in store, at fairs and exhibitions, festivals or even on a door to door basis with a view to encourage the people to purchase it. These are most often employed for household appliances and new beverages. Demonstrators are employed by the company for this purpose.

(ix) Draw –
Under this system, every purchaser making a purchase of certain specified amount is offered a coupon during a certain period. After the expiry of the period a draw is mode and attractive prizes are given to the winners.

(x) Cheap Bargain or Self Liquidating Premium –
Under this method, the consumer is offered another product at a cheaper rate along with the purchase of company’s product. For example, a plastic bucket of 5 litre at Rs. 5 only with the purchase of one kg. pack of ‘Surf.

(xi) After Sale Service –
Under this method, the producer gives a guarantee to the consumers to maintain the product for a certain specified period. It is called warranty. If, during this period, consumer feels any problem, he may get the defect removed at no cost. It develops faith among the consumers about the quality of the product.

B. Trade or Middlemen or Dealers Promotion –
When products a.re sold through middlemen (wholesalers or retailers or both), the manufacturer offers these middlemen certain promotion to induce them to keep larger stock of the manufacturer’s product. Such promotion are :

(i) Buying Allowance Discount –
The buying allowance or discount is offered to the dealer to induce him to buy the manufacturer’s product. Such discount may be either deducted on invoice price or on cash paid. Such allowance or discount may be giver, at a fixed percentage on each minimum quantity of product purchased during a stated period of time. It increases the profits of the dealer.

(ii) Buy-back Allowance –
This method of promotion is practised to prevent a post deal sales decline. Under this method, the manufacturer offers a certain amount of money for additional new purchases based oh the quantity of purchases made on the first trade deal.

(iii) Display and Advertising Allowance –
The allowance is offered to the dealer to display the manufacturer’s product. The allowance is given on the basis of space provided to display the manufacturer’s product in the shop.

(iv) Dealer-listed Promotion –
Under this method dealer name and address is given on the advertisement and other publicity material as calendars, diaries, etc. This type of promotion performs the twin functions of consumer educations and convincing of retailers in the need for cooperation in the promotion.

(v) Push Money or PM’s –
This is an incentive payment in cash or in kinds to the retailer or salesman to push the sale at a fixed rate for each article sold.

(vi) Sales Contests –
It is device used to stimulate and motivate distributors, dealers and their sales staff. They are offered cash prizes for those who will win the sale contest, i.e,, who will make the highest sales of the company’s product. In view of the winning chance, sellers participate in the contest.

(vii) Free Gifts –
Under this method, producer gives free gifts to the dealer on the basis of quantity of product purchased by him.

(viii) Advertising Materials –
The advertising materials such as calendars, new year diaries, literature, sign boards, packing bags, posters etc. ire supplied by the producer of the product to the dealer or middlemen for advertisement.

(ix) Credit Facility –
The producers allow credit to their dealers, based on the quantity purchased by them. This enables them to purchase bulk quantity.

C. Sales Force Promotions –
Personal selling by far is the most important method of sales promotion. To make it highly effective, sales force promotion schemes are felt necessary. The tools for sales force promotions are :

(i) Bonus to Sales Force-
A quota of sale is fixed for each salesman during a fixed stated period. Bonus is offered on sales in excess of the quota , fixed. In order to get the higher premium the salesman will try to sell more quantities of goods.

(ii) Sales Fore; Contest –
Sales force contests are announced to
stimulate company salesmen to redouble their interest and efforts over a stated period with prices to be the top performer.

(iii) Sales Meetings, Salesmen’s Conventions and Conferences –
These are conducted by the manufacturers for the purpose of educating, inspiring and rewarding the salesmen. New products and new selling techniques are described and discussed in such meetings.

The various devices discuss

ed above have been shown in the following chart :
DU SOL B.Com 3rd Year Marketing Management Notes Chapter 7 Promotion Decisions 5

DU SOL B.Com Programme 3rd Year Marketing Management Notes

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