Marketing Management

Module – 4
Ms. Archana Vijay

Topics to be covered:

Distribution and Promotion: Roles and purpose of Marketing Channels, Factors Affecting Channel
Choice, Channel Design, Channel Management Decision, Channel Conflict, Designing a physical
Distribution System. Promotions- Marketing communications- Integrated Marketing Communications
(IMC)-communication objectives, steps in developing effective communication. Advertising:
Advertising Objectives, Advertising Budget, Advertising Copy, AIDA model, Traditional Vs Modern
Media- Online and Mobile Advertising, social media for Advertising. Push-pull strategies of promotion.

Distribution Decisions : Meaning

Marketing channels / Distribution channels are sets of interdependent organizations involved
in the process of making a product or service available for use or consumption.
They are the set of pathways a product or service follows after production, resulting in
purchase and use by the final end users.
It connect the manufacturer with the consumer and help in the distribution of goods.

Manufacturer Intermediaries Consumer

Distribution Channels

Success Story of Raymonds due to effective Distribution Channel

Raymonds – The Complete Man
350 outlets at prime locations in India and abroad
Wardrobe solution to man through popular brands like Park Avenue, Parx, Color Plus etc.
Outlet covering 1 million square feet space, offers over 3000 shades and designs.
Park Avenue toiletries and tailoring facilities.
Well designed and well maintained interiors, attractive displays, superb assortment, spacious
movement and well trained sales persons.

Purpose
 Buying – Purchasing a broad assortment of goods from the producer or other channel
members.
 Carrying Inventory – Assuming the risks associated with purchasing and holding an
inventory. Successive storage and movement of goods.
 Selling – Performing activities required for selling goods to consumers or other
channel members.
 Transporting – Arranging for the shipment of goods to the desired destination.
 Financing – Providing funds required to cover the cost of channel activities.
 Promoting – Contributing to national and local advertising and engaging in personal
selling efforts.
 Negotiating – Attempting to determine the final price of goods and the terms of
payment and delivery.

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  Marketing Research (Information) – Providing information regarding the needs of
customers.
 Servicing – Providing a variety of services, such as credit, delivery and returns.

Role played by channel in Value Delivery

 Channels render the vital service of assembling the products and components of
different manufacturers and offering them to the users in suitable assortments that
are convenient. Matching segments of supply with segments of demand.
 Breaks the bulk and caters to the small-size needs of the consumers. Buys all the
items in bags of 50 kg, repacks them in small lots as per the requirements of the
customers.
 Takes care of the various flows involved in distribution (Physical flow of the products,
title/ownership flow, risk flow, negotiation flow, financing/payment flow,
information flow, promotion flow)
 Connects the consumers to the firm.

Levels of Channels
By channel level we mean how many intermediaries are there between the producer
and consumer. Distribution channels are usually of two types, namely zero level
channel or direct marketing channel and indirect marketing channel.

• Direct Marketing Channel or Zero Level Channel

This type of channel has no intermediaries In this distribution system, the goods go
from the producer direct to the consumer. Companies use their own sales force to
reach consumers. Eg. Eureka Forbes which markets water purifiers in Indian market,
Dell Computers.
Producer Consumer

Zero Level Channel

•
Indirect Marketing Channel – These are typical channels in which a third party
is involved in the distribution of products and services of a firm. It can be
classified into following categories :
1. One-Level Channel- In this type of channel there is only one intermediary between
producer and consumer. This intermediary may be a retailer or a distributor. It is used
for specialty products like washing machines, refrigerators, Automobiles etc.

Producer Distributor / Retailer Consumer

 Two-Level Channel – This type of channel has two intermediaries, namely,

wholesaler/distributor and retailer between producer and consumer. It can be seen
in pharmaceuticals, liquor, expensive readymade garments.

Producer Distributor / Wholesaler Retailer Consumer

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 • Three-Level channel – This type of channel has three intermediaries namely
distributor, wholesaler and retailer. This pattern is used for convenience
products like soaps, toothpaste, icecreams, soft drinks etc.

Producer Distributor Wholesaler Retailer Consumer

Following is a list of common types of intermediaries –

 Company Sales Force – Company uses its own sales force for direct marketing. The
manager can assign sales quota for each territory and sells products directly to
consumers.
 Middlemen – Anybody acting as an intermediary between the producer and the
consumer.
 Agent or Broker – Intermediaries with legal authority to market goods and services
and to perform other functions on behalf of the producer are called agents or brokers.
Agents generally work for producers continuously, whereas brokers may be employed
for just any deal. They don’t take the ownership of the product and act as facilitating
party between manufacturer and the end customer.
 Wholesaler – Organizations that buy from producers and sell to retailers and
organizational customers. Primarily deal in bulk purchasing. They stock the inventory.
 Retailer – They purchase goods from wholesalers or from the producer and sell
directly to final customers. They don’t stock the inventory and purchase the stock
which is sufficient to display on the shelf.
 Distributor – These individuals and firms perform several functions, including
inventory management, personal selling and financing. The basic difference between
an agent and distributor is that while agents work on commission basis, distributors
deal on their own account.
 Dealer – It is the same intermediary as distributor. Dealers are those intermediaries
who sell only to final customers not to other intermediaries.
 Value-Added Resellers – They are intermediaries that buy the basic product from
producers and add value to it or modify it and then resell it to final customers. Eg.
Second hand car dealers.
 Merchants – They are intermediaries that assume ownership of the goods they sell
to customers or other intermediaries.
 Carrying and Forwarding Agents – They are people and organizations that assist the
flow of products and information to marketing channels, including transportation,
storage, banking and insurance functions. Eg. Maersk shipping company

Factors affecting Channel Choice

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The marketing manager should decide how many intermediaries he should use for
distributing his products.
 Intensive Distribution – A channel strategy that seeks to make products available in
as many appropriate places as possible. This strategy is used for fast moving consumer
goods and products, which are of high and frequent demand, like food items and daily
use personal care product categories. Pepsi – grocery stores, restaurants, vending
machines and convenience stores. For eg. Titan Watches are available through
different outlets – World of Titan, Time Zone, Value Mart outlets, Sonata stores, Titan
Signet club, Tanishq Boutiques and private multibrand outlets. HUL Products available
in grocery stores, supermarket, hypermarket etc.
 Selective Distribution – A channel strategy that limits availability of products to a few
carefully selected outlets in a given market area. Gain adequate market coverage with
more control and less cost. Eg. Nokia phones available in Nokia priority stores and
other selected stores like Croma, e-zone etc.
 Exclusive Distribution – Only one outlet in a market territory is allowed to carry a
product or a product line. Eg. Avon Cosmetic products are distributed only through
direct distribution channel, Gucci Exclusive store for leather bags, Mochi exclusive
store of footwears.
Market Factors – Analyzing and understanding the target market is the first step in
selecting marketing channels.
 Customer preferences – The channel, which is more preferred by customers.
 Organizational customers – Frequently have buying habits that are different from
those of other customers.
 Geography – Customer location is another important factor, determining the type of
channel to be used. Rural areas (Self Help Group & ITC’s e-choupal)and urban areas
(Network Marketing due to Kitty Party culture).
Product Factors
 Life cycle – A product category’s stage in the life cycle can be an important factor in
selecting a channel, and channels may have to be adjusted over time. Customers
require less support once the product has established itself ( Maturity and Growth
Stage) Eg. Small copier machines were first sold through direct sales force, then

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 through office depots, then mass merchandisers like Target, and now through online
channels.
 Product complexity – Some products are so complicated and require so much support
that producers need to stay closely involved. This indicates either a direct sales force
or a limited number of highly qualified intermediaries. For eg. Scientific equipments,
jet aircraft, nuclear reactors, pharmaceuticals and computers.
Perishable goods – Like Milk products (Short and quick distribution channel)
Bulky Goods (Like machinery, close to manufacturing unit)
Consumer Durables and Expensive products (Big space & financial strength)
 Product Value – Items with low cost and high volume are usually distributed through
large, well established distribution networks, such as grocery wholesalers.
 Product size and weight – A product with significant size and weight can face
restricted distribution channel options.
 Consumer Perception- The perceptions customers have of products and producers
also play a role in channel decision. Eg. Gucci store in UB City Mall.
Producer/ Manufacturer Factor
 Company objective – The overall objective of a company influences its marketing
channel choice. Eg. Maximum market share requires intensive distribution.
 Company resources – Various distribution options require different levels of resources
and investment.
 Desire for control – The need to control various aspects of the marketing process like
pricing, positioning, brand image, customer support and competitive presence
influence a producer’s selection of the channel system.

Channel Design Decisions

 Analysis of Customer’s desired Service output levels – Marketer must understand the
service output levels its target customers want. Channels produce five service outputs.

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 1. Lot size – The number of units the channel permits a typical customer to purchase on
one occasion. A household wants a channel that permits buying a lot size of one.
Wholesalers buy in bulk.
2. Waiting and Delivery time – Average time customers of that channel wait for receipt
of the goods. For electronic items, customers are ready to wait so online channel is a
good option.
3. Spatial Convenience – Expresses the degree to which the marketing channel makes it
easy for the customers to purchase the product. Eg. FMCG products in nearby
localities.
4. Product Variety – Assortment breadth provided by marketing channel. Customers
prefer a greater assortment because more choices increase the chance of finding what
they need.
5. Service backup – Add on services (credit, delivery, installation, repairs) provided by
the channel.

II. Establishing objectives and constraints -

Broad objectives include :
 Availability of product in the target market.
 Smooth movement of the product from the producer to the consumer.
 Cost effective and economic distribution.
 Information communication from the producer to the consumer.
For eg. In case of Lifebuoy, the objective of HUL Is to cover 80% of the rural market –
So Intensive distribution available in every nook and corner of Rural India.
For Louis Phillippe , it has been promoted as a complete and premium wardrobe line
– So exclusive showrooms; ensure availability of the whole line at these outlets.
Channel objectives vary with product characteristics. Perishable products require
more direct marketing. Bulky products such as building materials require channels
that minimize the shipping distance and the amount of handling. Complex machinery
are sold directly by company sales representative.

III. Identifying major channel alternatives – Each channel has its own strengths and
weaknesses. Sales force is expensive but can handle complex products.
1. Types of Intermediaries – For eg. Car perfume manufacturer identifies the following
channel alternatives : Sell its car perfumes to automobile manufacturers.
 Auto dealers
 Retail automotive – equipment dealers
 Mass merchandisers such as Spar or eZone.
 Authorised service centers.
2. Innovative Channel Alternatives – HUL’s Operation Shakti involves Self Help Group
women to distribute the product in rural areas. Avon’s – Chain Marketing, ITC’s e-
choupal
3. Number of Intermediaries – Exclusive Distribution – Gucci
Selective Distribution – Nokia, Intensive distribution – FMCG Products.

IV. Evaluating the major alternatives –

1. Economic Criteria – Estimate how many sales are likely to be generated by a company
sales force.

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  Cost of selling different volume through each channel
 Comparing sales and cost.
2. Control and adaptive criteria – Sales agency poses a control problem. Seeking to
maximize the profit. Agents concentrate on the customer who buy the most, not
necessarily who buy the manufacturer’s goods. It is easy to control in case of exclusive
distribution.Manufacturers seek to choose such distribution channel which will
provide them the flexibility to adapt to any changing marketing environment.
For eg. Apple opened its own exclusive showroom because of control problems only.

Economic Criteria
Sales force
High
Value added
Partners
Distributors
Value added
Retail Outlet

Telemarketing

Internet
Low

Cost per High

Low
Transaction

V. Deciding on Multichannel Model – Companies have to decide whether to go for

multichannel model or single channel model. For eg. Pantaloons has got offline as well
as online channel. Coca Cola is available in Restaurants, Airlines, Bars and Clubs and
supermarkets.
VI. Deciding on the number of tiers and intensity of Distribution – Number of levels
of channel(zero level, one level, two level, three level) and intensity of distribution
(Intensive distribution, exclusive or selective distribution)is being decided.

Channel Management Decisions

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 I. Selecting Channel Members – Company should select channel partners based on
number of years in business, other lines carried, growth and profit record, financial
strength, cooperativeness and service reputation. If the intermediaries are
department stores, the producer should evaluate locations, future growth potential
and type of clientele.
II. Training and motivating Channel Members – A company has to plan and implement
careful training program and Capability building program to improve intermediaries’
performance. For eg. SBI Life Insurance training the agents and SBI Bank employees
to sell the policies.
Producers draw on the following types of power for motivating their channel partners:
Coercive Power – Manufacturer threatens to withdraw a resource or terminate a
relationship if intermediaries fail to cooperate.
Reward Power – Offers an extra benefit for performing specific acts or functions.
Legitimate Power – Requests the behavior that is warranted under the contract.
Referent Power – Manufacturer is so highly respected that intermediaries are proud
to be associated with it. Eg. IBM, HP, Caterpillar etc.
III. Evaluating Channel Members – Producers must periodically evaluate intermediaries’
performance against such standards as sales quota attainment, average inventory
levels, customer delivery time, treatment of damaged and lost goods, and cooperation
in promotional and training programs. Underperformers need to be counseled,
retrained, motivated or terminated.
IV. Modifying Channel design and arrangements – Manufacturers periodically review
and modify channel design and arrangements when the distribution channel is not
working as planned, consumer buying patterns change, the market expands, new
competition arises, innovative distribution channels emerge and the product moves
into the later stages in the PLC.
Eg. Small office copiers were initially marketed through manufacturers direct sales
force, then through office equipment dealers, then mass merchandisers and now
through Internet Markets.
Apple was distributing Laptops initially through Retail Stores but got disappointed by
poor retail presentation by others. Now they are selling the product exclusively
through company stores where there is a full line of Apple products, software and
accessories and Apple specialists providing technical support. They conduct in store
presentations and workshops for tech savvy customers.
Pantaloons opened its online store as well.

Vertical Marketing System (VMS)

It refers to a distribution channel structure in which the producer, wholesalers and
retailers act as a unified system. The major or dominant player called channel captain
owns the others and has so much power that all others cooperate in sales, delivery and
service. He tries to control the behavior of other channel members and resolve conflicts
arising due to independent behavior of channel members to pursue their own goals of
profit maximization. The leader takes the consensus of all the channel partners at the time
of designing, pricing and promoting the product. In the conventional system, all the
channel partners work in isolation with each other and there was no mutual cooperation
amongst them.

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 Members Functions

Manufacturer Design
Make
Wholesaler Brand
Price
Retailer Promote
Buy
Stock
Sell
Display

Horizontal Marketing System (HMS)

In HMS two or more unrelated companies put together resources or programs to exploit an
emerging marketing opportunity. Each company lacks the capital, know –how, production or
marketing resources to venture alone or it is afraid of the risk. The companies might work
with each other on a temporary or permanent basis or create a joint venture company. For
eg. Post offices selling insurance and mutual funds.
Companies like HUL entering a strategic tie-up with Pepsico India for bottling and
distribution of Lipton’s Ready to Drink and other beverages.
Fiat Motors uses distribution network of TATA Motors for the distribution of cars in India.

Multichannel Marketing System

It occurs when a single firm uses two or more marketing channels to reach one or more
customer segments. Eg. Disney sells its DVD’s through five main channels – movie rental
stores, Disney stores, Retail stores such as Target, online retailers such as Amazon.com and
Disney’s own online Disney Stores. Coca Cola sells through Bakery Stores, Airlines,
Restaurants, Bars and Clubs.
Benefits –
 Increased market coverage – More customers are able to shop for the company’s
products in more places.
 Lower Channel cost – Selling by phone is cheaper than selling via personal visits to
small customers.
 More customized selling – Adding a technical sales force to sell more complex
equipment.
Difficulties in multichannel marketing –
 Adding new channels incur costs.
 Introduce conflict and problems with control.
 Two or more channels may end up competing for the same customers.
 New channels may be more independent and make cooperation more difficult.

Channel Conflict
Channel conflict is generated when one channel member’s actions prevent another
channel from achieving its goal.

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 Eg. General Motors came into conflict with its dealers in trying to enforce policies on
service, pricing and advertising.
Types of Conflict
 Vertical channel conflict – Conflict between two members at different levels within
the same channel. A manufacturer having a conflict with a distributor is an example
of vertical conflict. For eg. HUL came into conflict with its distributors in Kerala on the
issue of commissions.
 Horizontal channel Conflict – Involves conflict between members at the same level
within the channel. For eg. Bangalore Ford Dealers complained about other Ford
Dealers advertising and pricing too aggressively.
 Multichannel conflict – When the manufacturer has established two or more channels
that sell to the same market. For eg. Companies getting into direct online sales
through Web marketing have also received boycott threats from the established
distributors.

Causes of Channel Conflict

 Goal Incompatibility – Manufacturers may want to achieve rapid market penetration
through a low price policy. Dealers, in contrast, may prefer to work with high margins
and pursue short run profitability.
 Unclear roles and rights –Geographical territory boundaries , credit for sales and
commission, roles performed issues always create conflict. For eg. Nearby territories
of Bangalore coming under which dealer, Transportation expenses borne by whom,
manufacturer or distributor.
 Differences in perception – Manufacturer may be optimistic about the short term
economic slowdown and want dealers to carry higher inventory. Dealers may be
pessimistic and assume that slowdown will last long and are not ready to carry high
inventory.
 Intermediaries’ dependence on the manufacturer – Fortunes of exclusive dealers
such as auto dealers are profoundly affected by the manufacturer’s product and
pricing decisions.

Managing Channel Conflict

Effective conflict management can be done by –
 Adoption of superordinate goals – Channel members come to an agreement on the
fundamental goal they are jointly seeking, whether it is survival, market share, high
quality or customer satisfaction.
 Exchange of employees – GM executives might agree to work for a short time in some
dealerships and some dealership owners might work in GM’s dealer policy
department. Participant will grow to appreciate each other’s point of view.
 Co-optation – An effort by one organization to win the support of the leaders of
another organization by including them in advisory councils, boards of directors and
the like.
eg. Few representatives of the Dealers of GM in the advisory council of GM.
 Diplomacy, Meditation and Arbitration – Diplomacy when each side sends a person
or group to meet with its counterparts to resolve the conflict.
Meditation means resorting to a neutral third party skilled in maintaining the two parties’
interests.

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 Arbitration occurs when the two parties agree to present their arguments to one or more
arbitrators and accept the arbitration decisions.
 Legal recourse – File a lawsuit if nothing works.

Retailing
Includes all activities involved in selling goods or services directly to final consumers for
personal, nonbusiness use. A retailer or retail store is any business enterprise whose sales
volume comes primarily from retailing.
Major Retailer Types
 Specialty Store – Narrow product line with a deep assortment. Eg. Park Avenue Men’s
Clothing Store.
 Department Store – Several product lines-typically clothing, home furnishings and
household goods-with each line operated as a separate department managed by
specialist buyers. Eg. Shoppers Stop, Pantaloons
 Supermarket – Relatively large, low cost, low margin, high volume, self service
operation designed to serve total needs for food, laundry and household products. Eg.
Food World, Food Bazaar, Reliance Fresh etc.
 Convenience Store – Relatively small store located near residential area, open long
hours, seven days a week and carrying a limited line of high-turnover convenience
products at slightly higher prices. Nearby Mom n Pop Stores in the residential area..
 Discount store – Standard merchandise sold at lower prices with lower margins and
higher volumes. Eg. Metro
 Hypermarket – Large sized store and product assortment includes furniture, large and
small appliances, clothing and many other items. Eg. Spar Hypermarket, Walmart
Wholesaling
Includes all the activities in selling goods or services to those who buy for resale or business
use. Buy from manufacturer and sell to retailers.
Functions –
 Selling and promoting – Wholesaler’s sales force helps manufacturers reach many
small business customers at a relatively low cost. Wholesalers have more contacts,
and often buyers trust wholesalers more than they trust a distant manufacturer.
 Buying and assortment building – Wholesalers are able to select items and build the
assortments their customers need, saving the customers considerable work.
 Bulk breaking – Wholesalers achieve savings for their customers through buying in
large carload lots and breaking the bulk into smaller units.
 Warehousing – Wholesalers hold inventories, thereby reducing inventory costs and
risks to suppliers and customers.
 Transportation – Wholesalers can often provide quicker delivery to buyers because
they are closer to the buyers.
 Financing – Wholesalers finance customers by granting credit, and finance suppliers
by ordering early and paying bills on time.
 Risk bearing – Wholesalers absorb some risk by taking title and bearing the cost of
theft, damage, spoilage and obsolescence.
 Market Information – Wholesalers supply information to suppliers and customers
regarding competitor’s activities, new products, price developments and so on.

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  Management services and counseling – Wholesalers often help retailers improve
their operations by training sales clerks, helping with store layouts and displays and
setting up accounting and inventory control systems.

Concept of Communication mix

Marketing Communications
 Marketing communications are the means by which firms attempt to inform, persuade and
remind consumers – directly or indirectly about the products and brands they sell.
 Marketing communications represent the voice of the company and its brands and are means
by which it can establish a dialogue and build relationships with consumers.

Communication Mix
The marketing communications mix consists of eight major modes of communication:
 Advertising – Any paid form of nonpersonal presentation and promotion of ideas, goods or
services by an identified sponsor. It includes the use of such media as newspapers, magazines,
banners, radio, TV etc.
 Sales promotion – A variety of short term incentives to encourage trial or purchase of a
product or service. Eg. Displays, samples, demonstrations, coupons etc constitute sales
promotion.
 Events and experience – Company sponsored activities and programs designed to create daily
or special brand related interactions.
 Public Relations – Include building good relations with the public by obtaining favourable
publicity, building a good corporate image, and handling rumours.
 Direct marketing – Use of mail, telephone, fax, e-mail or Internet to communicate directly
with or solicit response or dialogue from specific customers and prospects.
 Interactive marketing – Online activities and programs designed to engage customers or
prospects and directly or indirectly raise awareness, improve image or elicit sales of products
and services.
 Publicity– People to people oral, written or electronic communication that relate to the merits
or experiences of purchasing or using products or services.
 Personal selling – Face to face interaction with one or more prospective purchasers for the
purpose of making presentations, asking questions and procuring orders by company sales
force and building customer relationships.

Steps in developing Effective Communications

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  Identify target audience – Start with a clear target audience in mind: potential buyers of the
company’s products, current users, deciders or influencers, individuals, groups, particular
publics or the general public. The target audience is a critical influence on the communicator’s
decisions on what to say, how to say it, when to say it, where to say it and whom to say it.
Depends on whether the audience belong to rural or urban areas. Rural population prefers
radio, whereas urban population TV, magazines and online mode.
 Determine objectives –
i) Category need- Establishing a product or service category to satisfy a particular need.
(Electric Car)
ii) Brand awareness – Ability to identify (Brand recognition and Brand recall) the brand
within the category in sufficient detail to make a purchase. (Reva Electric Car)
iii) Brand Attitude – Evaluating the brand with respect to its perceived ability to meet a
currently relevant need.(How Reva is better than other electric Cars)
iv) Brand Purchase intention – Self-instructions to purchase the brand or to take
purchase related action. (Giving Test Drive of Reva)

Models
Stages AIDA Model

Cognitive Stage Attention

Interest
Affective Stage
Desire

Behaviour Stage Action

AIDA Model
The marketer should start by winning the attention of prospective buyers, then create interest
in the product, inspire desire to buy and make the buyer act favorably to purchase.
o Attention – Informative Advertising, Teaser Ad Campaign, Sales Promotion, long
duration Ads
o Interest & Desire – Comparative Advertising, Reminder Advertising, Short duration
Ads
o Action – Free Test Drive, Discounted offers, Free Gifts.

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  Design Message- Formulating the message will require solving four problems :

Who should say it What to say

(Message source) (Message Content)
Design Message

▪
▪ How to say it symbolically How to say it logically
▪ (message format) (message structure)

▪ Message content – Management searches for an appeal, theme, idea, or unique selling
proposition. There are three types of appeals : rational, emotional and moral.
1. Rational appeal – They claim the product will produce certain benefits. Examples are
messages demonstrating quality, economy, value or performance. For eg. Volkswagen –
German Engineering, Best Design (laying stress on benefits of the product.)
2. Emotional appeal – attempt to stir up negative or positive emotions that will motivate
purchase. For eg. Positive emotional appeals (Pears soap will make your skin soft, Emami Fair
and Handsome Cream for Men) and negative appeals such as fear, guilt and shame to get
people to do things (Brush your teeth daily otherwise germs will attack.)
3. Moral appeal – directed to the audience’s sense of what is right and proper. For eg. Pay Tax,
Donating to child care etc.
▪ Message structure – Effectiveness depends on structure as well as content. For eg. A credit-
card co. contacted customers who had not used the card for three months. To one group of
non users it sent a message explaining the benefits of using the card. To another group it sent
a message explaining the losses they could suffer by not using the card. The order in which
arguments are presented is also important.
▪ Message Format – The message format needs to be strong. In a print ad, the communicator
has to decide on headline, copy, illustration and color. For a radio message, the communicator
has to choose words, voice quality and vocalizations. Presenters on television have to pay
attention to facial expressions, gestures, dress posture and hairstyle.
▪ Message source – Messages delivered by attractive or popular sources achieve higher
attention and recall. This is why advertisers often use celebrities as spokespeople. The source
should have expertise, trustworthiness and likability in order to attract the audience.
▪ Select Channels –
1. Personal communication channels – Involve two or more persons communicating directly
with each other face-to-face, person to audience, over the phone or through e-mail. Eg.
Eureka Forbes – face to face selling.
2. Non-Personal communication channels – Include media, atmospheres and events. Media
consist of newspapers, magazines and direct mail, telephone and Web page. Atmospheres
are environments or ambience that create the buyer’s leaning toward product purchase.
Eg. McDonalds Environment is suitable for kids. Events are occurrences designed to
communicate particular messages to target audience. Eg. News conferences, sports
sponsorship etc.

 Establish Budget –
1. Affordable Method – Many companies set the promotion budget at what they think the
company can afford.
2. Percentage of Sales Method – Many companies set promotion expenditures at a specified
percentage of sales or of the sales price.
3. Competitive parity method – Some companies set their promotion budget to achieve the
expenses incurred by competitors.

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 4. Objective and Task Model – Objective of a company is being decided, tasks performed to
achieve the objective and then budget is being decided.
 Deciding on the marketing communication mix – Companies must allocate the promotion
budget over the five promotion tools – advertising, sales promotion, public relations and
publicity, sales force and direct marketing.
 Measure Results – Communications directors supply outputs and expenses – Press clipping
counts, numbers of ads placed, media costs. The communications directors try to translate
outputs into intermediate outputs such as reach and frequency, recall and recognition scores,
persuasion changes and cost-per-thousand calculations.
 Managing the Integrated marketing communications process – Many companies rely on one
or two communication tools to achieve their communication aims. IMC plan evaluates the
strategic roles of a variety of communications disciplines – for eg., general advertising, direct
response, sales promotion and public relations and combines these disciplines to provide
clarity, consistency and maximum impact through the seamless integration of discrete
messages.

Advertising : Definition
 Any paid form of non-personal persuasion and promotion of ideas, goods or services by an
identified sponsor.
 Advertising is dissemination or spreading of information, concerning a product, service or idea
to generate an action, in accordance with the intent of the promoter.
 It is either to build brand preference for Coca Cola or to educate people to avoid hard drugs.

Advertising Objectives
 Informative Advertising – Aims to create brand awareness and knowledge of new products
or new features of existing products. Eg. Advertisement of Emami Fair and Handsome Cream
talks about the features of the product.
 Persuasive Advertising – Aims to create liking, preference, conviction and purchase of a
product or service. For eg. Tide used comparative advertising for its attack on Surf Excel (Isse
Safed Kahi Nahi)
 Reminder Advertising – Aims to stimulate repeat purchase of products and services. For eg.
Expensive, four color Coca-Cola ads in magazines are intended to remind people to purchase
Coca-Cola. Namak Ho Tata – Tata Namak
 Reinforcement Advertising – Aims to convince current purchasers that they made the right
choice. Automobile ads often depict satisfied customers enjoying special features of their new
car.

Creative Advertisement Platforms

 The storyline – Story gives us a historical sketch about the product. In TV commercials, an
unseen narrator often narrates a story with a recognized beginning, middle and end. Eg. Asian
Paints – Sunil Babu
 Product use and problem solution – Discussion of a product’s uses, attributes, benefits and
availability. Eg. Olay Total effects help you prevent wrinkles.
The Slice of Life – Shows a typical setting wherein people are shown using the product being
advertised as part of their life. Eg. Fair and Lovely ad showing a lady having the problem of
dark complexion.
 Demonstration advertising – Clear-cut example of a product’s superiority or enhanced
consumer benefit is presented. Eg. Harpic demonstration of washing toilets, Vim Bar
demonstrating washing vessels.
 Comparative advertising – Contrasts one brand with another. Eg. Captain Cook Salt with Tata
Salt, Tide Vs Surf Excel.

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  Testimonial evidence and endorsements – Shows a prominent film star or celebrity, making
a statement, establishing he or she owns, uses or supports the brand advertised. Eg. Pantene
– Shilpa Shetty, Loreal – Aishwarya Rai

Deciding on the Advertising Budget

Methods –
1. Affordable Method
2. Percentage of sales method
3. Competitive parity method
4. Objective and Task Model

Factors affecting Budget decisions :

1. Stage in the PLC – New products typically receive large advertising budgets to build awareness
and to gain consumer trial. Established brands usually are supported with lower advertising
budgets as a ratio to sales.
2. Market share and consumer base – High market share brands usually require less advertising
expenses as a percentage of sales to maintain share. To build share by increasing market size
requires larger expenditures.
3. Competition and clutter – In a market with a large number of competitors and high
advertising spending, a brand must advertise more heavily to be heard.
4. Advertising frequency – The number of repetitions needed to put across the brand’s message
to consumers has an important impact on the advertising budget.
5. Product substitutability – Brands in a commodity class (beer, softdrinks, banks and airlines)
require heavy advertising to establish a differential image.

Measuring effectiveness of Advertisement

Media selection is finding the most cost-effective media to deliver the desired number and
type of exposures to the target audience.
Relationship between product trial rate and audience awareness level
Greater the audience awareness level, higher will be the product trial rate.
Relationship between audience awareness level and exposure reach and frequency
Higher the exposure reach, frequency and impact, greater will be the audience awareness
level.
• Reach – The number of different persons or households exposed to a particular media
schedule at least once during a specified time period.
 Frequency – The number of times within the specified time period that an average person or
household is exposed to the message.
 Impact – The qualitative value of an exposure through a given medium (thus a food ad in
Khana Khazana would have a higher impact than during cricket match.)

Evaluating Advertisement Effectiveness

Communication effect Research – Seeks to determine whether an ad is communicating effectively,
i.e. , its potential effect on awareness, knowledge or preference.
 Portfolio tests –ask consumers to view and/or listen to a portfolio of advertisements , taking
as much time as they need. Consumers are then asked to recall all the ads and their content.
Their recall level indicates and ad’s ability to stand out and to have its message understood
and remembered.
 Direct rating method – asks consumer to rate alternative ads. These ratings are used to
evaluate an ad’s attention, read-through, cognitive, affective and behavior strengths.
 Laboratory tests – use equipment to measure consumer’s psychological reactions-heartbeat,
blood pressure, perspiration – to an ad.

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  Sales-Effect research – Companies are generally interested in finding out whether they are
overspending or underspending on advertising. One approach to answering this question is to
work with the following formulation:
Share of Share of voice Share of mind Share of
expenditures and heart market

 A company’s share of advertising expenditures produces a share of voice that earns a share
of minds and hearts and ultimately a share of market.

Advertising Agency
 The advertisers, or clients are the key participants in the process. They have the products,
services or causes to be marketed, and they provide the funds that pay for advertising and
promotions.
 Many organizations use an advertising agency, an outside firm that specializes in the creation,
production and/or placement of the communications message and that may provide other
services to facilitate the marketing and promotions process.

Types of Ad Agencies
 Full-Service Agencies
 Creative Boutiques
 Media Specialist Companies
 Online and Offline Agencies
 In-house and Out-house ad Agencies
 Full-Service Agencies – Offers its clients a full range of marketing, communications and
promotions services, including planning, creating and producing the advertising; performing
research; and selecting media.
A full-service agency may also offer nonadvertising services such as strategic market planning, sales
promotions, direct marketing and interactive capabilities; package design; and public relations and
publicity.
 Creative Boutiques – These are small ad agencies that provide only creative services.
These specialized agencies have creative personnel such as writers and artists on staff but do not
have media, research or account planning capabilities.
Creative boutiques have developed in response to some companies desires to use only the creative
services of an outside agency while maintaining control of other marketing communication functions
internally.
An example of a successful creative boutique in India is Vyas Gianneti Creative, which is a Mumbai
based agency whose clients include Aditya Birla Group, TATA Group, Taj Hotels etc.
 Media Specialist Companies – Companies that specialize in the buying of media, particularly
radio and television time.
Media buying services have found a niche by specialising in the analysis and purchase of advertising
time and space.
Agencies and clients usually develop their own media strategies and hire the buying service to execute
them.
Some media buying services do help advertisers plan their media strategies.
Eg. Initiative is one of the largest media specialist companies.

Promotion

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Sales promotion consists of a diverse collection of incentive tools, mostly short term, designed to
stimulate quicker and/or greater purchase of particular products/services by consumers or the trade.
Where advertising offers a reason to buy, sales promotion offers an incentive to buy.

Kinds of Promotion
 Consumer Sales Promotion – Different types of sales promotion methods used to encourage
the consumers to purchase one brand over another, to purchase a particular brand more
often, and to purchase in larger quantities.
Consumer Promotion Tools
 Samples – Offer of a free amount of a product or service delivered door to door, sent in the
mall or attached to another product. Eg. Free Sample of Maggi Pasta with Noodles, Sachet of
Navratan Kool Kool.
 Coupons – Certificates entitling the bearer to a stated saving on the purchase of a specific
product.eg. Discount coupon, Free gift coupon.
 Cash Refund offers – Provide a price reduction after purchase.
 Price Packs – Offers to consumers of savings off the regular price of a product, flagged on the
label or package. Eg. Buy one get one free, Toothbrush and Toothpaste bundled together.
 Premiums (Gifts) – Merchandise offered at a relatively low cost or free as an incentive to
purchase a particular product. Eg. Reusable container, Lux Gold Coin.
 Prizes (Gifts) – Offers of the chance to win cash, trips or merchandise as a result of purchasing
something. Eg. Lux offering London trip and Dinner with Aish and Abhishek.
 Patronage awards – Value in cash or in other forms that are proportional to one’s patronage
of a certain vendor. Eg. Airlines offer frequent flyer plans- points for miles travelled that can
be turned in for free airline trips.
 Free Trials – Invite prospective purchasers to try the product without cost. Eg. Free test drives
by automobiles.
 Product Warranties – Promises by sellers that the product will not malfunction for a particular
period. Eg. 3 Years Warranty of Car Battery by GM.

Trade Promotion Tools

Manufacturers use a combination of push and pull strategies to accomplish both retail and
consumer purchasing. Trade promotions are directed at wholesalers, retailers and other
intermediaries.
 Price-Off – A straight discount off the list price on each case purchased during a stated time
period. Eg. Rs. 20 off if you purchase before 20th.
 Allowance – An amount offered in return for the retailer’s agreeing to feature the
manufacturer’s products in some way. Eg. An advertising allowance compensates retailers for
advertising the manufacturer’s product.
 Free goods – Offers of extra cases of merchandise to intermediaries who buy a certain
quantity or who feature a certain flavor or size. Eg. Calendars, paper weight, pen carrying
company name.

Business and Sales Force Promotion Tools

These tools are used to gather business leads, impress and reward customers and motivate the sales
force to greater effort.
 Trade shows and conventions – Industry associations organize annual trade shows and
conventions. Participating vendors expect several benefits, including generating new sales
leads, maintaining customer contacts, introducing new products, meeting new customers and
selling more to present customers.
 Sales Contests – Induce the sales force or dealers to increase their sales results over a stated
period, with prizes (money, trips, gifts or points)going to those who succeed.

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  Specialty Advertising – Consists of useful, low cost items like ballpoint pens, calendars, key
chains etc. bearing the company’s name and address that salespeople give to prospects and
customers.

Push and Pull Promotion Strategies

PUSH STRATEGY
Manufacturer’s Personal Channel’s Personal
Selling Selling,

Manufacturer Retailers and Consumer

Wholesaler Advertising and Sales
And Trade Promotion
Promotion

PULL STRATEGY
Demand Demand
Manufacturer Retailers and Consumers
Wholesaler

Consumer Advertising and Sales Promotion

Push Strategy
A push strategy (product push) involves pushing the product through distribution channels
(Wholesalers and Retailers) to final consumers. The manufacturer directs all marketing
activities, especially personal selling and trade promotion toward channel members to induce
them to carry the product in large quantities and to promote it to the final consumers. The
product is pushed through the channel towards customers.
Push strategy is appropriate where there is low brand loyalty in a category, brand choice is
made in the store, the product is an impulse item and product benefits are well understood.

Pull Strategy
Using a Pull Strategy (demand pull) the manufacturer directs all marketing activities especially
advertising and consumer promotion toward the final consumers to induce them to buy the
product.
If the pull strategy is implemented properly, consumers will demand the product from channel
members, who will in turn demand it from the manufacturers. Consumer’s demand pulls the
product through the channels. It is appropriate when there is high brand loyalty and high
involvement in the category, people perceive difference between brands and people choose
the brand before they go to the store.

Examples – HUL ( Push Strategy)

P&G (Pull Strategy)
Coca Cola, Intel, Pepsi and Nike skillfully employ both push and pull strategies.

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M-Commerce (Telemarketing)
Use of telephone and call centers to attract prospects, sell to existing customers and provide service
by taking orders and answering questions.
Inbound Telemarketing – Receiving calls from customers.
Outbound Telemarketing – Initiating calls to prospects and customers.
These are of four types –
 Telesales – Taking orders from catalogs or ads and doing outbound calling.
 Telecoverage – Calling customers to maintain and nurture key account relationships.
 Teleprospecting – Generating and qualifying new leads.
 Customer service and technical support – Answering technical questions and providing after
sales service.

Traditional Vs. Modern Media

1. Where traditional media generally offers a wider audience pool, social
media allows for more targeted distribution

If you’re pitching correctly, your earned media hits should be reaching a more narrow target
audience. However, even the best of pitches distributed to the best of media outlets are still
going to hit a broader audience than you originally set out to target.

Social media on the other hand, gives media persons the opportunity to really target their
messages, selecting everything from the demographics and geography of an audience to the
time of day the post will go live.

2. Social media is immediate, while traditional can be delayed due to press

times

Traditional media tends to have a longer timeline than social media. Not only can press times
slow you down, pieces for traditional media tend to take longer to put together

Social media posts are generally shorter, usually meaning they take less time to put together,
and can be published immediately.

3. Traditional media pieces are more final, where social media is dynamic

For the most part, once a story is published on a traditional form of media, it’s final.

If you’re lucky, the reporter you worked with on a story may be willing to make changes after
the fact to an online piece, but if your story hit newsstands or went live on television or radio,
chances are it’s too late.

Because social media is a form of owned media, you have the control to make updates
whenever you need to.

Social media have the freedom to issue retractions, edit posts after they’re pushed live or
even delete messages entirely. And since social media happens immediately, there is
absolutely no delay between the time a change is needed and when it reaches audiences.

4. Social media offers more control over the message than traditional media

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Similar to the above, where the PR pro controls the publication date and time of a social media
post, social media also offers greater control over the message.

Although you can’t control how the public will respond once the message is out there, you do
have the opportunity to control what is said in the first place.

5. Social media is a two-way conversation, and traditional is one-way

The typical flow of a traditional piece looks a lot like this: the media pitches the story, the
reporter publishes the story and the public reads the story.

The cycle ends there, until it begins again.

With social media, the public has the opportunity to voice their opinions, and public does it!

Online Advertising

Online advertising, also known as online marketing, Internet advertising, digital advertising or web
advertising, is a form of advertising that uses the Internet to promote products and services to
audiences and platform users. Online advertising includes email marketing, search engine
marketing (SEM), social media marketing, many types of display advertising (including web
banner advertising), and mobile advertising. Advertisements are increasingly being delivered via
automated software systems operating across multiple websites, media services and platforms,
known as programmatic advertising.
Like other advertising media, online advertising frequently involves a publisher, who integrates
advertisements into its online content, and an advertiser, who provides the advertisements to be
displayed on the publisher's content. Other potential participants include advertising agencies that
help generate and place the ad copy, an ad server which technologically delivers the ad and tracks
statistics, and advertising affiliates who do independent promotional work for the advertiser.
Display ads
Online banner advertising began in the early 1990s as page owners sought additional revenue streams
to support their content. Commercial online service Prodigy displayed banners at the bottom of the
screen to promote Sears products. The first clickable web ad was sold by Global Network Navigator in
1993 to a Silicon Valley law firm.
Search ads
GoTo.com (renamed Overture in 2001, and acquired by Yahoo! in 2003) created the first search
advertising keyword auction in 1998. Google launched its "AdWords" (now renamed Google Ads)
search advertising program in 2000 and introduced quality-based ranking allocation in 2002, which
sorts search advertisements by a combination of bid price and searchers' likeliness to click on the ads.
Social Media Advertising
Social media advertising is an offshoot of digital marketing where paid ad campaigns are run on social
media platforms to reach target audiences. Marketers and advertisers can promote their brands and
inspire sales through the social channels that users frequently use.
The most widely used platforms for social media advertising include Facebook, Twitter, LinkedIn,
Instagram, Pinterest, Snapchat, TikTok, and YouTube. Different social networks serve different
audience segments. For example, Pinterest may not be the best choice for a B2B business or a fast-
moving consumer goods (FMCG) brand may not drive a successful awareness campaign on LinkedIn.
Choosing the right social media platforms will help you determine the budget, ad format(s), and tailor
the campaign messaging for individual platforms.

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Social media advertising distinguishes itself from traditional advertising with sophisticated targeting
capabilities. Traditional advertising adopts the carpet-bombing approach, wherein brands deliver ads
to the maximum people possible, regardless of whether they’re interested or not. Social media, on
the contrary, enables brands to connect with the ideal buyers based on their geographic,
demographic, psychographic, and behavioral characteristics/traits.

Thank You

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