IM Chapter 5

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CHAPTER FIVE

PROMOTION STRATEGY IN INTERNATIONAL CONTEXT

 Promotion refers to techniques of communicating information about products.

 Promotion includes a combination of personal selling and/or non-personal selling,

including advertising, sales promotion, public relations/publicity, trade fairs/exhibition/

and others.

Promotional objectives

 Raising awareness of product/service, creating distinctive market presence, increasing

market share;

 Targeting relevant audience (attitudes, interests, opinions, aspirations, demographics

(E.g. Age, gender)); Business to Business (B2B); Business to Consumer (B2C);

segmentation (E.g. First-time buyers) …..

5.1. Complexities and Issues In International Promotion

 All effective marketing communication has four elements: a sender, a message, a

communication channel and a receiver (audience).

 The sender needs to have a clear understanding of the purpose of the message, the

audience to be reached and how this audience will interpret and respond to the message.

 The degree of ‘fit’ between medium and message. For example, a complex and wordy

message would be better for the press than TV…

 Difficulties associated with international promotion are also includes: -

♪ Availability of agencies, media, research facilities;

♪ Control issues - control of agency, campaign, expenditure;

OTHER FACTORS AFFECTING THE COMMUNICATION SITUATION

♪ Language differences

♪ Economic differences

♪ Sociocultural differences

♪ Legal and regulatory conditions

♪ Competitive differences

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♪ Technology

♪ Standardization

5.2. Promotion Tool for International Markets

5.2.1 Personal Selling

Personal selling is two-way, face-to-face, personal communication between a company

representative and a potential customer as well as back to the company. The salesperson's job is

to correctly understand the buyer's needs, match those needs to the company's product(s), and

then persuade the customer to buy. Effective personal selling in a salesperson's home country

requires building a relationship with the customer; global marketing presents additional

challenges because the buyer and seller may come from different national or cultural

backgrounds. It is difficult to overstate the importance of a face-to-face, personal selling effort

for industrial products in global markets.

5.2.2 The International Sales Force Organizational Structure


Structure Factors favoring choice of Advantages Disadvantages
organizational structure

Geographic  Distinct languages or  Clear, simple  Breadth of customers


cultures  Incentive to cultivate  Breadth of products
 Single product line local business and
 Underdeveloped personal ties
markets  Travel expenses

Product ♪ Established ♪ Product knowledge ♪ Travel expenses


market ♪ Overlapping territories or
♪ Broad product customers
lines ♪ Local business and personal
ties
Customer* Broad product lines Market/customer Overlapping territories/products
Knowledge Local business and personal ties
Travel expenses
Combination o Large sales volume o Maximum flexibility o Complexity
o Large/developed o Travel expenses o Sales management
markets o Product/market/geography
o Distinct language overlap
cultures
*By type of industry, size of account, channel of distribution, individual company.
5.2.2 Selling Process

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The selling process is typically divided into several stages: prospecting,

pre-approaching/problem solving, approaching, presenting, handling objections, closing

the sale, and following up. The relative importance of each stage can vary by country or

region. Experienced sales representative know that persistence is one tactic often required to

win an order in the market; however, persistence often means tenacity, as in "don't take 'no' for

an answer."

♪ Prospecting is the process of identifying potential purchasers and assessing their probability

of purchase. Successful prospecting requires problem-solving techniques, which involve

understanding and matching the customer's needs and the company's products in developing

a sales presentation.

♪ The purpose of the pre-approach or problem solving stage is to gather information on a

prospective customer's problem areas and tailor a presentation that demonstrates how the

company's product can solve these specific problems.

♪ The next two steps, the approach and the presentation, involve one or more meetings

between seller and buyer.

In global selling, it is absolutely essential for the salesperson to understand cultural norms and

proper protocol. In some countries, the approach is drawn out as the buyer-gets to know or takes

the measure of the salesperson on a personal level with no mention of the pending deal. In such

instances, the presentation comes only after rapport has been firmly established.

♪ During the presentation, the salesperson must deal with objections. Objections may be of

business or personal nature. A common theme in sales training is the notion of active

listening; naturally, in cross-cultural selling, verbal and nonverbal communication barriers

present special challenges for the salesperson.

♪ When objections are successfully overcome, the salesperson moves on to the close and asks

for the order.

♪ A successful sale does not end there however; the final step of the selling process involves

following up with the customer to ensure his or her ongoing satisfaction with the purchase.

5.3. Exhibitions/Trade Fairs

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A trade fair (TF) or exhibition is a concentrated event at which manufacturers, distributors

and other vendors display their products and/or describe their services to current and

prospective customers, suppliers, other business associates and the press.

Trade fairs can enable a company to reach in a few days a concentrated group of interested

prospects that might otherwise take several months to contact. Potential buyers can examine and

compare the outputs of competing firms in a short period at the same place. They can see the

latest developments and establish immediate contact with potential suppliers. TFs also offer

international firms the opportunity to gather vital information quickly, easily and cheaply. For

example, within a short period a firm can learn a considerable amount about its competitive

environment, which would take much longer and cost much more to get through other sources

(e.g. secondary information).

Whether a marketer should participate in a trade fair depends largely on the type of business

relationship it wants to develop with a particular country. A company looking only for one-off

or short-term sales might find the TF expense prohibitive, but a firm looking for long-term

involvement may find the investment worthwhile.

Trade Show Selection:


♣ Number of International Shows ♣ Emphasis on Show Types
♣ Number of National Shows
♣ Number of Regional Shows

5.3 Public Relations/Publicity

Public relation may be defined as follows:


"A public is any group that has an actual or potential interest in or impact on a company's ability

to achieve its objectives. Public relations (PR) involve a variety of programs designed to

promote and/or protect a company's image or its individual products”.

Public relations are a management tool designed to favorably influence attitudes toward an

organization, its products, and its policies. It is often overlooked form of promotion. In most

organizations this promotional tool is typically a stepchild, relegated far behind personal selling,

advertising, and sales promotion. There are several reasons for management's lack of attention

to public relations.

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Public relation departments perform the following five activities, not all of which support

marketing objectives.

1. Press relation-Presenting news and information about organization in the most positive light.

2. Product publicity- Sponsoring various efforts to publicize specific products.

3. Corporate communication-Promoting understanding of the organization with internal and

external communications.

4. Lobbying-Dealing with legislators and government officials to promote or defeat legislation

and regulation.

5. Counseling- Advising management about public issue and company positions and image.

This includes advising in the event of a product mishap when the public confidence in a

product is shaken.

Public relations personnel also are responsible for fostering goodwill, understanding, and

acceptance among a company’s various constituents and publics.

♣ Publicity is any communication about an organization, its products, or policies through the

media that is not paid for by the organization. Publicity usually takes the form of a news

story appearing in a mass medium or an endorsement provided by an individual, either

informally or in a speech or interview.

Publicity is the non-personal stimulation of demand that is not paid for by a sponsor that has

released news to the media. Advertising and publicity are guile similar in the sense that both

require media for a non-personal presentation of the promotional message. One difference

between the two is that with publicity a company has less control over how the message will be

used by the media. Another difference is that publicity is presumed to be free in the sense that

the media are not paid for the presentation of the message to the public.

The vehicles for gaining good publicity are:


1. Prepare a story (called a news release) and circulate it to the media. The intention is for

the selected newspapers, television stations, or other media to report the information as

news.

2. Feature Articles: Larger manuscripts composed and edited for a particular medium.

3. Press Conferences: Meetings and presentations to invited reporters and editors.

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4. Special Events: Sponsorship of events, teams, or programs of public value.

Publicity can help to accomplish any communication objective. It can be used to announce new

products, publicize new policies, or report financial performance. If the message, person, or

group, or event is viewed by the media as news worthy.

5.4 Sales Promotion

Sales promotions refer to a collection of short-term incentive tools that lead to quicker and/or

larger sales of a particular product by consumers or the trade. Sales promotion refers to any

consumer or trade program of limited duration that adds tangible value to a product or brand.

The main objectives of sales promotion activities are as under:

1. Providing Information 5. Developing Preferences and Conviction of


2. To stimulate nonusers to sample a product Buyers
3. Increase in Sales 6. To Keep Memory Alive
4. Reducing Seasonal Decline
Sales promotion laws and usage vary around the world but may consist of any of the following

two kinds of promotions:

1. Consumer promotions that target end-users (e.g., coupons, sweepstakes, and rebates)
A. Sampling
Sampling involves a variety of procedures whereby consumers are given some quantity of a
product for no charge to induce trial.
B. Couponing
Coupons are certificate that gives buyers a saving when they purchase a specified product
mailed, enclosed in other products or attached to them, or inserted in magazine and
newspaper ads.
C. Premiums (Gifts)
A premium is an offer of an item of merchandise or services either free or at a low price
that is an extra incentive for purchasers.
D. Contests and Sweepstakes
♪ A contest is a promotion where consumers compete for prizes or money on the basis of
skills or ability. The winner is predetermined by some criteria.
♪ A sweepstakes is a promotion where winners are determined purely by chance; it cannot
require a proof of purchase as a condition for entry. E.g. Game.

E. Cash Refund Offer (Rebates)

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Refunds (also known as rebates) are offers by the manufacturer to return a portion of the
product purchase price, usually after the consumer supplies some proof of purchase.
F. Price Packs (Rupees-Off Deals)
Offers to consumers of savings off the regular price of a product, flagged on the label or
package.
2. Trade promotions that are aimed at distributors (e.g., volume discounts, advertising

allowances).

A. Contests and Incentives


Contests or special incentives are often targeted at the sales personnel of the wholesalers,
distributors/dealers, or retailers.
B. Trade Allowances
A discount or deal offered to retailers or wholesalers to encourage them to stock, promote,
or display the manufacturer’s products. Types of allowances offered to retailers include
buying allowances and promotional or display allowances.
C. Sales Training Programs
Sales training programs for reseller personnel.
D. Trade Shows
A forum where manufacturers can display their products to current as well as prospective
buyers.
E. Free Goods
Offers of extra units or packs of merchandise to intermediaries who buy a certain quantity or
who feature a certain flavor or size.
For the most part sales promotion activities are of a relatively short-run duration that adds

tangible value to the product or brand. The tangible value created by the sales promotion may

come in various forms, such as price reduction or a “buy one, get one free” offer. The success of

a sales promotion may depend on local adaptation. Major constraints are imposed by local laws,

which may not permit premiums or free gifts to be given.

5.5 Advertising In The Global Situations

Meaning

"Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or

services by an identified sponsor."

The international advertiser must ensure appropriate campaigns for each market and also to get

coordination among the various national programs.

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There are eight decision areas in international advertising:(1) Advertising

objectives (2) selecting the agency (or agencies), (3) choosing the message, (4) selecting the

media, (5) determining the budget, (6) evaluating advertising effectiveness, (7) organizing for

advertising, and (8) deciding whether to engage in cooperative adverting abroad.

1. Advertising objectives

It can be classified according to whether their aim is to inform, persuade, or remind:

a) Informative advertising: figures heavily in the pioneer stage of a product life category, where

all objectives is to build primary demand.

b) Persuasive advertising: becomes important in the competitive stage, where a company's

objective is to build selective demand for a particular brand. Some persuasive advertising

has moved into the category of comparative advertising, which seeks to establish the

superiority of one round through specific compression of one or more attributes with one or

more brands in the product class.

c) Reminder Advertising: is highly important with mature products. A related form of

advertising is reinforcement advertising, which seeks to assure current purchasers that they

have made the right choice.

2. Selecting the Agency

Many marketing functions are performed within the company. With advertising, the firm almost

always relies on expertise from the advertising agency. Agency selection is usually the first

advertising decision the marketer has to make. Two major alternatives are open: (1) an

international agency with domestic and overseas offices or (2) local agencies in each national

market.

3. Choosing the Advertising Message

A major decision for the international marketer is whether the firm should use national or

international advertising appealsa localized or standardized approach. The goal in either case

is to fit the market. Although people’s basic needs and desires are the same around the world,

the way these desires are satisfied may vary from country to country. Because it is impossible to

know each market intimately, help must be obtained from the local subsidiary or distributor and

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the local advertising agency. The firm may, in fact, completely decentralize responsibility so

that each national operation prepares its own advertising.

4. Selecting the Media

Media is a vehicle through which an advertiser communicates their message to likely customers

or prospects with a view to influencing them in terms of the advertising objectives. The appeal

and the target audience determine the message and the choice of media.

The following are the media generally used for advertising purposes:
o Television o Direct mail o Rural media
o Radio o Outdoor o Stadium
o Newspapers o Screen (Cinema) o Media Mix
o Magazines o Directories
Advertisers need to make decisions at each of three successive levels to determine which
specific advertising media to use: -
Ü Which type of media will be used? Newspaper, television, radio, magazine, or direct mail?

What about the less prominent media of billboards, and yellow pages?

Ü Which category of the selected medium will be used? Television has network and cable.

Magazines include general interest and special interest categories. And there are national as

well as local newspaper.

Ü Which specific media vehicles will be used? An advertiser that decides first on radio and

then on local stations must determine which stations to use each city.

Media selection involves finding the most cost effective media to deliver the desired number of
exposure to the target audience.
Here are some general factors that will influence media choice: -

a. Objective of the advertisement


b. Audience Coverage
c. Requirements of the message
d. Media Cost
5. Setting the International Advertising Budget
Among the controversial aspects of advertising is determining the proper method for setting the

advertising budget. This is a problem domestically as it is internationally. Yet because the

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international advertiser must try to find an optimum outlay for a number of markets, the

problem is more complex on the international level.

Firms have developed practical guidelines to determine advertising budget.

a. Percentage-of-sales Approach. An easy method for setting the advertising appropriation in


a country is based on percentage of sales. This method has the advantage of relating
advertising to the volume of sales in a country.
b. Competitive-parity Approach. Matching competitor’s advertising outlaysthe competitive-
parity approach –is used by some companies.
c. Objective-andTask Approach. The weaknesses of the above approaches have led some
advertisers to the objective-and-task method, which begins by determining the advertising
objectives, expressed in terms of sales, brand awareness, or something else, then
ascertaining the tasks needed to attain these objectives, and finally estimating the costs of
performing these tasks.
6. Evaluating International Advertising Effectiveness

Testing advertising effectiveness is even more difficult in international markets than in the

domestic market. Because marketers have less contact with foreign markets, their ability to

investigate advertising effectiveness is limited. Many firms use sales results as the measure of

advertising effectiveness.

7. Organizing for International Advertising

The firm has basically three organizational alternatives:

1) It can centralize all decision making for international advertising at headquarters; (2) it can

decentralize the decision making to foreign markets; or (3) it can use some blend of these two

alternatives. Of course, the question of organizing for international advertising cannot be

separated from the company’s overall organization for international business. The firm is

unlikely to be highly centralized for one function and decentralized for another.

8. Using Cooperative Advertising

A firm that sells through licensees or distributors can choose one of three ways to advertise in

its foreign markets: (1) It can handle such adverting itself; (2) it can cooperate with the local

distributor; or (3) it can try to encourage the distributor or licensee to do such advertising by

itself. The last alternative is not really feasible, so the choice is primarily between going it

alone or cooperating.

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