John.Wiley.And.Sons.Marketing.Insights.From.A.To.Z.eBook-LiB - phần 9

Whereas advertising is a long-run tool forshaping the market’s attitude toward a brand, sales promotion is ashort-term tool to trigger buyer action.. The growth of sales promotion reflect

ales Promotion

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Sales promotion describes incentives and rewards to get customers tobuy now rather than later Whereas advertising is a long-run tool forshaping the market’s attitude toward a brand, sales promotion is ashort-term tool to trigger buyer action No wonder brand managersincreasingly rely on sales promotion, especially when falling behind

in achieving sales quotas Sales promotions work! Sales promotionsyield faster and more measurable responses in sales than advertisingdoes Today the split between advertising and sales promotion may

be 30–70, the reverse of what it used to be

The growth of sales promotion reflects the higher priority panies are attaching to current sales than to long-term brand build-ing It is a return to transaction marketing (TM) rather thanrelationship marketing (RM)

com-Sales promotion can be directed at retailers, consumers, and thesales force Retailers will work harder if offered price-offs, advertisingand display allowances, and free goods Consumers are more likely tobuy in response to coupons, rebates, price packs, premiums, patron-age awards, contests, product demonstrations, and warranties Thesales force operates more vigorously in response to contests withprizes for superior performance

Because of the variety of sales promotion tools, marketers needexperience in knowing which to use Some large companies have asales promotion specialist who can advise brand managers Or thecompany can engage the services of a specialist sales promotionagency The main need is to not only use promotions but to reviewand record results so that the company can improve its sales promo-tion efficiency over time.

Although most sales promotions increase sales, most losemoney One analyst estimated that only 17 percent of a given set ofsales promotion campaigns were profitable These are the caseswhere the sales promotion brings in new customers to sample theproduct and where they like the new product better than their previ-ous brand But many sales promotions only attract brand switcherslooking for a lower price, who naturally abandon the brand when an-other brand goes on sale Sales promotions are less likely to enticeaway loyal users of other brands

Thus sales promotions work poorest in product markets of highbrand similarity They tend to attract brand switchers who are look-ing for low price or premiums and who won’t be loyal to a brand It

is better to use sales promotions in product markets of high larity where new customers may find that they like your product andits features better than their previous choice

dissimi-Sales promotions tend to be used more by weaker and smallerbrands than stronger brands Smaller brands have fewer funds tospend on advertising, and for a small cost they can get people to atleast try their product

Sales promotions in general should be used sparingly Incessantprices off, coupons, deals, and premiums can devalue the brand inthe consumers’ minds They can lead customers to wait for the nextpromotion instead of buying now

Companies are forced to use more sales promotion than theywant by the trade The trade demands discounts and allowances as

a condition for putting the product on the shelf The trade may

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demand consumer promotions also So many companies have littlechoice but to comply.

Prefer sales promotions that agree or enhance your brand image

and add value Try to use sales promotions with advertising

Adver-tising explains why the customer should buy the product, and salespromotion provides the incentive to buy When used together, adsand sales promotions make a powerful combination

egmentation

In the past, companies such as Sears or Coca-Cola, when asked whotheir customer is, would answer “Everybody.” But a marketer canrarely satisfy everyone in a market Not everyone will like the samecamera, car, cafeteria, or concert Therefore, marketers must start bydividing up the market

Companies that moved away from mass market thinking started

by identifying large market segments Procter & Gamble, in selling its

Duncan Hines cake mix, would define the target market as “marriedwomen between the ages of 35 and 50 with families.” Later compa-

nies moved from large segments to narrower niches Estée Lauder

might design a product for “black American professional women tween the ages of 25 and 35.” Finally, some companies have moved

be-to the ultimate segmentation scheme, segments of one, namely

indi-vidual customers

Today more companies are guilty of undersegmentation thanoversegmentation They imagine more high-potential prospects fortheir offerings than really exist The antidote is to divide the marketinto several levels of potential The first level consists of those cus-tomers who would be the most responsive to the offering Thisgroup should be profiled in terms of their demographic and psycho-graphic characteristics Then a secondary group and a tertiary groupshould be defined The company should then focus its initial selling

on its primary prospects; if they don’t respond, the company eitherhas mis-segmented or its offering is of little interest

Segments can be identified in three ways The traditional

ap-proach is to divide the market into demographic groups, such as

“women between the ages of 35 and 50.” This has the advantage ofease of reaching this group Its disadvantage is that there is no reason

to believe that women in this group have similar needs or readiness

to buy Demographic segmentation is more about identifying a

pop-ulation sector than a poppop-ulation segment.

The second approach is to segment the market into need groups,

such as “women who want to save time in shopping for food.” This

is a clear need that can be met by a number of solutions, such as a permarket taking telephone orders or Web orders that would be de-livered to the home The hope would be to identify demographic orpsychographic characteristics of such women, such as being morehighly educated or having a higher income

su-The third approach is to segment the market by behavior groups,

such as “women who order their food from Peapod and other homedelivery groups.” This group is defined by their actual behavior, notjust needs, and the analyst can then search for common characteris-tics that they may have

Once you identify a distinct segment, the question is whether itshould be managed within the existing organization or deserves to

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be set up as a separate business In the latter case, Nirmalya Kumar

calls it a strategic segment For example, food companies such as Kraft

and Unilever focus primarily on their retail sales and only secondarily

on food service systems But food service requires different ties, packages, and selling systems It is a strategic segment andshould be run independently of the food retailing group and manageits own strategy and requirements

quanti-elling

“Everyone lives by selling something,”noted the novelist RobertLouis Stevenson People are selling either a product, a service, aplace, an idea, information, or themselves

Cynics view selling is a form of civilized warfare fought withwords, ideas, and disciplined thinking And they view marketing as

an effort to add an element of dignity to what is otherwise a vulgarbrawl

There are many images of selling The YTS school says that ing consists of “yell, tell, and sell.” The S&P school says selling is

sell-“spray and pray,” The LGD school says that selling is “lunch, golf,and dinner.” And the salesperson is described as a “talking brochure.”There is the well-known story of the Stanley Works in which a

consultant told the tool company, “You are not in the business ofselling drills You are in the business of selling holes.” Don’t sell fea-tures Sell benefits, outcomes, and value.

Some individuals are gifted salespeople They can sell tors to Eskimos, fur coats to Hawaiians, sand to Arabs, all at a profit,and then repurchase them at a discount

refrigera-Good salespeople remember that they are born with two earsand one mouth This reminds them that they should be doing twice

as much listening as talking If you want to lose the sale, make a pitch

to the customer

Some salespeople can be painful bores Woody Allen lamented:

“There are worse things in life than death Have you ever spent

an evening with an insurance salesman?”

Salespeople must get used to being rejected Dennis Tamcsin of

Northwestern Mutual Life Insurance observed: “We have

some-thing in this industry called the 10-3-1 ratio This means that for every 10 calls a salesperson makes, he will only get to make a presentation to three, and if he’s got a good success rate, he’ll make one sale We need people who won’t shrink from that kind

The comedian George Burns had his own opinion about what

makes a successful salesperson: “The most important thing in

rela-tionship selling is honesty and integrity If you can fake them, you’ve got it made.”

Here is a story that illustrates the difference between great people and average salespeople

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This illustrates that effective marketing involves careful researchinto the market opportunity and the preparation of financial esti-mates based on the proposed strategy indicating whether the returnswould meet or exceed the company’s financial objectives.

In the past, a gifted salesperson was one who could

“commu-A Hong Kong shoe manufacturer wondered whether a marketexisted for his shoes on a remote South Pacific island He sent

an order taker to the island who, upon a cursory examination,

wired back: “The people here do not wear shoes There is nomarket.” Not convinced, the Hong Kong manufacturer sent a

salesperson to the island This salesperson wired back: “The

people here don’t wear shoes There is a tremendous market.”Afraid that this salesrep was being carried away by the sight

of so many shoeless feet, the manufacturer sent a third

per-son, a marketer This marketing professional interviewed the

tribal chief and several natives and wired back:

“The people here don’t wear shoes As a result their feet aresore and bruised I have shown the chief how shoes wouldhelp his people avoid foot problems He is enthusiastic He es-timates the 70 percent of his people will buy the shoes at $10 apair We probably can sell 5,000 pairs of shoes in the first year.Our cost of bringing the shoes to the island and setting up dis-tribution would amount to $6 a pair We will clear $20,000 in thefirst year, which, given our investment, will give us a rate of re-turn on our investment (ROI) of 20 percent, which exceeds ournormal ROI of 15 percent This is not to mention the high value

of our future earnings by entering this market I recommendthat we go ahead.”

nicate value.” But as products have become more similar, eachcompetitive salesperson delivers essentially the same message Sothe new need is for the salesperson who can “create value” byhelping the customer make or save more money Salespeople mustmove from persuading to consulting This can take the form ofproviding technical help, solving a difficult problem for the cus-tomer, or even helping the customer change its whole way of do-ing business.

ervice

In an age of increasing product commoditization, service quality isone of the most promising sources of differentiation and distinc-tion Giving good service is the essence of practicing a customerorientation

Yet many companies view service as a pain, a cost, as something

to minimize Companies rarely make it easy for customers to makeinquiries, submit suggestions, or lodge complaints They see provid-ing service as a duty and an overhead, not as an opportunity and amarketing tool

Every business is a service business You are not a chemicalcompany You are a chemical services business Theodore Levitt

said: “There is no such things as service industries There are

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only industries whose service components are greater or less than those of other industries Everybody is in service.”

“Businesses planned for service are apt to succeed; nesses planned for profit are apt to fail,”observed American edu-cator Nicholas Murray Butler

busi-What service level should a company deliver? Good service isnot enough Nobody talks about good service Sam Walton,

founder of Wal-Mart, set a higher goal: “Our goal as a company

is to have customer service that is not just the best, but endary.” The three Fs of service marketing are be fast, flexible,and friendly

leg-What is poor service? There are stories that tell of a hotel inSpain that advertises that it will accept service complaints at the frontdesk only from 9 to 11 A.M each day And there is a store in Englandwhose sign reads, “We offer quality, service, and low price Chooseany two.”

There are two ways to get a service reputation: One is to be thebest at service; the other is to be the worst at service

Ellsworth Statler, who founded the Statler hotels, trained his

people with the dictum: “In all minor discussions between

Statler employees and Statler guests, the employee is dead wrong.”

You can check on the service quality of your organization by coming a customer for a day Phone your company as if you are acustomer and put some questions to the employee Go into one ofyour stores and try to buy your product Call about returning a prod-uct or complaining about it and see how the employee handles it.You are bound to be disappointed

be-Check the smile index of your employees Remember, “A smile

is the shortest distance between two people.”(Victor Borge)

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Companies are constantly invited by various groups to sponsorevents, activities, and worthwhile causes Companies also activelyseek venues where they can get their names before the public For ex-ample, Coca-Cola has been a long-term participating sponsor ofOlympic Games, World Cups, Super Bowls, and Academy Awards

By shelling out large sums of money, Coca-Cola hopes to gain

favor-able public attention and also treat its associates to big-time events.

Companies will put out good money to place their names on

physical facilities such as buildings, universities, and stadiums to keep

their names in the public’s eye Sometimes this backfires; Houstonhad to find a new name for Enron Field

Companies can sponsor an important cause (such as better

eat-ing, more exercise, regular doctor appointments, saying no to drugs)

in what is called “cause-related marketing.” By partnering with acause that many people believe in, the company can enhance its cor-porate reputation, raise brand awareness, increase customer loyalty,build sales, and increase favorable press coverage.55

Companies are increasingly borrowing the auras of celebrities to

add radiance to their own names Celebrities bring high attention tothe brand, add to its credibility, and offer reassurance Not surprisingly,

singers, actors, and sports figures stand ready to sell their auras.Reebok has acquired the aura of Venus Williams ($40 million contract)and Nike has acquired Tiger Woods’ aura ($100 million contract).But be careful PepsiCo borrowed the auras of Michael Jackson,Mike Tyson, and Madonna, all of which backfired And Hertz bor-rowed O J Simpson’s aura, only to regret it.

Sponsorship can turn out to be either an expense or an ment If the money doesn’t generate increased sales or corporate eq-uity, then it is an expense Companies that want to make theexpenditure an investment have to be much more careful in decidingwhat to sponsor

invest-The question is what does a company gain from putting itsname on a stadium, a Formula One racing car, a golf tournament,

or an art show? Does it help the company sell more stuff? Mostcompanies haven’t really thought through their sponsorships Infact, they often start a sponsorship that they continue indefinitelybecause of inertia or from their fear of being criticized for droppingthe sponsorship

If your company is going to sponsor something, make sure that

it is a reasonable and relevant match to your target market and type

of product/service A good example is Timex’s sponsorship of theIronman Triathlon to convey that its watches “take a licking andkeep on ticking.” On the other hand, it wouldn’t make sense forNestlé’s baby food division to sponsor a nursing home event

Make sure that you decide on the objectives you are trying toachieve with the sponsorship The money must have a positive impact

on awareness, image, or customer loyalty that somehow turns intomore sales Ask how much your sales will have to increase to justifythe cost After each sponsorship, do a postaudit of whether itachieves the objectives Granted, it is difficult to measure the value acompany receives from many of its sponsorship dollars If you findthat it didn’t contribute much value, write it off as philanthropy.56