This course material is designed and developed by Indira Gandhi National Open

University (IGNOU), New Delhi. OSOU has been permitted to use the material.
 Master Of Commerce
(M.COM)

MCO-5
Marketing Management

Block-6
PROMOTION DECISIONS AND
EMERGING ISSUES
UNIT-16 MARKETING COMMUNICATION
UNIT-17 PERSONAL SELLING AND SALES PROMOTION
UNIT-18 ADVERTISING AND PUBLICITY
UNIT-19 EMERGING ISSUES IN MARKETING
UNIT 16 MARKETING COMMUNICATION

Structure

16.0 Objectives
16.1 Introduction
16.2 Meaning and Importance of Marketing Communication
16.2.1 Functions of Marketing Communication
16.3 The Communication Process
16. 3.1 Elements of Communication Process
16.3.2 Developing Effective Marketing Communication
16.4 The Promotion Mix
16.4.1 Components of Promotion Mix
16.4.2 Factors Affecting the Promotion Mix
16. 5 Promotion Budgeting Methods
16.5.1 Top-down Approaches
16.5.2 Build-up Approaches
16.6 Integrated Marketing Communication
16.6.1 Reasons for Growing Importance of MC
16. 7 Let Us Sum Up
16.8 Key Words
16. 9 Answers to Check Your Progress
16.10 Terminal Questions

16. 0 0BJECTIVES

After studying this unit, you should be able to

 understand the meaning and importance of marketing communication and its role
in the overall marketing program;
 understand the marketing communication process and its various elements that
are necessary in developing effective marketing communication;
 explain the procedure of developing effective marketing communication
 explain the concept and components of promotion mix;
 understand various factors that influence the relative use of various components
of promotion mix;
 describe the different methods used in setting promotion budget; and
 understand the concept of integrated marketing communication (IMC).

16.1 INTRODUCTION

In the present competitive marketing situation every company, in order to carry out
effective marketing, not only has to develop good product, price it competitively,
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make it easily available to the target market but it must also develop effective
marketing communication for disseminating the relevant and pertinent marketing
information about the product availability, features and terms and explain how these
will provide the benefits to the target market. Therefore, every company in order to
survive and grow has to play the role of an effective communicator in the present
competitive environment.

The company's communication responsibility of disseminating marketing information

goes beyond the target market. It has to communicate to its various marketing
intermediaries in its microenvironment. In addition it has also to communicate to its
different external publics such as its shareholders, the financial community, and
independent media and to its internal publics. This means that a company should have
the knowledge of how to market itself to various groups in order to obtain their
confidence and goodwill. In this unit, an attempt is made to describe the meaning and
importance of marketing communication, communication process and its
components, the procedure of developing effective marketing communication, the
concept and components of promotion mix, various factors that influence promotion
mix, the methods of setting promotion budget, and the concept of integrated
marketing communication.

16.2 MEANING AND IMPORTANCE OF MARKETING

COMMUNICATION

Marketing communication plays an important role in a company's overall marketing

program. Marketing communication can be defined as the process of systematic and
scientific way of disseminating the relevant marketing information by a company to
its target market and other publics by using a mix of media. A company through its
marketing communication tries to persuade its target market to purchase its products
and services vis-a-vis its competitors. Since marketing communication aims at
influencing the consumer behaviour in favour of the company's offerings, this is
persuasive in nature. Various persuasive marketing communication tools are more
commonly called 'Promotion' and constitute one of the four Ps of the marketing mix
which was popularized by Jerome McCarthy in 1964. Thus marketing communication
refers to the various promotion tools used by marketers to exchange persuasive
messages and information to its target market and other public.

The study of marketing communication, therefore, is the study of the promotion

function of marketing. It is to be noted that effective marketing function depends to a
great extent on how effectively the company is performing its promotion function.
There are innumerable examples where companies through their effective
communication are able to perform well in the market. For example, in the success of
the following products and services the marketing communication function played a,
significant role: Nirma washing powder, Maggie noodles, Hero Honda motorcycles,

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to mention only a few. In the same way ineffective marketing communication was
responsible for the below average performance of some products despite their good
quality and competitive prices.

With the tremendous increase in the competition in the market place and the variety
of products and brand choice available to the consumers it has become all the more
necessary for the marketers to come out with persuasive marketing messages of the
right kind to the right group of target market.

16.2.1 Functions of Marketing Communication

The following are the major functions of effective marketing communication.

1. Providing Information and Persuasion: Marketing is required to identify
consumer wants and then satisfy these 'wants with the right kind of products at the
right place and at the right price. The purpose of marketing communication is to
convey to customers the relevant and pertinent information about the features of the
product and persuade how it will satisfy consumer needs and wants. For instance, if a
company which is in the marketing of air conditioners is planning to offer off-season
discount, it is essential to communicate to potential customers about the extent of
discount, period during which discount is available, names of the stores where it is
available, etc. If all such information is not communicated to potential customers,
then providing the discount will not be beneficial to either the consumer or to the
company. Marketing communication, therefore, is an essential part of the marketing
program of the company.

2. Providing Information About a New Brand or Brand Extension: Marketing

communication is essential when firms introduce a new brand or extensions of
existing brands. A brand extension is an adaptation of an existing brand to a new
product area. For example, the Lux shampoo is a brand extension of the Lux soap.
When new brands or extensions are brought to market, the marketing communication
process is largely responsible for attracting attention to the new market offering. This
is often accomplished by sales promotion, advertising, and point-of-purchase
displays. These marketing communication tools provide the relevant marketing
information about the new products and brand extensions' features, quality and
availability to the target market.

3. Building and Maintaining Brand Loyalty Among Consumers: Loyalty to a

brand is one of the most important assets a firm can have. Brand loyalty occurs when
a consumer repeatedly purchases the same brand to the exclusion of the competitors'
brands. While the product itself is the most important influence on building and
maintaining brand loyalty, marketing communication plays a key role in the process
as well. Advertising reminds consumers of the values-tangible and intangible-of the
brand. Promotion often provides an extra incentive to consumers to remain brand

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loyal. When a company creates and maintains positive associations with the brand in
the minds of the consumers, the company has developed brand loyalty. Consider a
customer who regularly buys CloseUp toothpaste or Lux Soap. Do marketers of
CloseUp toothpaste or Lux soap advertise to appeal to such customers? The answer is
yes, because even the most loyal customers must be reminded that a product has
served them well over the years and about the features that make the product
attractive. This is more so in an environment where competitors consistently attempt
to attract the customers of competing brands with their own informative and
persuasive messages. Thus, in addition to informing and persuading, another
important purpose of communication is building brand loyalty by reminding the
customers. This is why even the manufacturers of well established brands like
Colgate, Lux, Surf, Nescafe, Lifebuoy, Pepsi, Coca Cola etc., advertise quite
extensively to sustain customers' preferences and loyalty for these brands.

Check Your Progress A

1) What is marketing communication in the context of overall marketing?

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2) Differentiate between brand extension and brand loyalty.
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3) In what way marketing communication strengthens brand loyalty?
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4) State whether the following statements are True or False:
i) A company has to communicate only to its target market.
ii) The 4 Ps of marketing mix has been popularized by Philip Kotler.
iii) Promotion is necessary to build brand loyalty for existing brands.
iv) Promotion provides information for new brands and brand extensions to the
consumers.

16.3 THE COMMUNICATION PROCESS

Communication has been variously defined as the passing of information, the

exchange of ideas, or the process of establishing a commonness or oneness of thought
between a sender and a receiver. These definitions suggest that for communication to

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occur there must be some common thinking between two parties and information
must be passed from one person to another.

The communication process is often very complex. Success depends on such factors
as the nature of the message, the audience's interpretations of it, and the environment
in which it is received. The receiver's perception of the source and the medium used
to transmit the message may also affect the ability to communicate, as do many other
factors. Words, pictures, sounds, and colours may have different meanings to
different audiences. Therefore, marketers must understand the meanings that words
and symbols take on and how they influence consumers' interpretations of products
and messages. Let us now discuss the major elements of communication process
pertain to marketing.

16.3.1 Elements of Communication Process

Over the years, a basic model of the various elements of the communication process
has developed, which is shown in Figure 16.1. It is imperative on the part of the
marketers to understand how communication works if they want to utilize it
effectively. One may notice from this figure that the two elements represent the major
participants or parties involved in the communication process, the sender and the
receiver. Another two are the major communication tools that sender uses to reach
intended receivers, message and channels or media. Thus, communication occurs
when: 1) a sender transmits a message, 2) a receiver receives that message, and 3) the
sender and the receiver have a shared meaning. The communication process itself
involves the four communication functions and processes: encoding, decoding,
response and feedback. The last element, noise refers to any extraneous factors in the
system that can interfere with the process and works against effective communication.

Let us understand each of these elements in the communication process.

1. Sender: It is also called the source. Sender or source, of a communication is the
person or organization that has the information to share with another person or
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 group of persons. The source may be an individual (say, a salesperson or a
celebrity, who appears In a company's advertisement) or a non-personal entity
(such as the company or organization itself).
2. Encoding: The communication process begins when the source or sender selects
words, symbols, pictures and the like, to represent the message that will be
delivered to the receiver(s). This process, known as encoding, involves putting
thoughts, ideas, or information into a symbolic form. The sender's goal is to
encode the message in such a way that it will be easily understood by the
receiver.
3. Message: The encoding process leads to the development of a message that
contains the information or meaning the source hopes to convey. The message
may be verbal or nonverbal, oral or written, or symbolic. Messages must be put
into a transmittable form that is appropriate for the channel of communication
being used.
4. Channel: This is also known is medium. It is the way by which the sender
conveys the message to the receiver. At the broadest level, channels of
communication are of two types, personal and non-personal. Personal channel of
communication are direct interpersonal (face-to-face) contact with target
individuals or groups. For example, in personal selling a salesperson contacts the
customers and directly communicates about the sales message to the prospective
customers. Here, communication flows in both directions and the salesperson
receives immediate and direct feedback. This enables the salesperson to have
greater control over the communication process. Non-personal channel of
communication are those that that carry a message without interpersonal contact
between sender and receiver. Non- personal channels of communication are
generally referred to as the mass media or mass communication, since the
message is sent to many individuals at one time. Non-personal channel of
communication consist of two major types, print and broadcast. Print media
include newspapers, magazines, direct mail, and billboards; broadcast media
include television, and radio.
5. Receiver: The party for whom the message is intended and is an active part of the
communication process. Generally, receivers are the consumers in the target
market or audience who read, hear, and/or see the marketer's message and decode
it.
6. Decoding: Just as the sender encodes the message, the receiver must decode it.
Decoding is the process by which the receiver attempts to convert symbols
conveyed by the sender into a message. Receivers may decode or interpret the
message in different ways because of their individual characteristics, experiences
and backgrounds. For effective communication to occur, the message decoding
process of the receiver must match the encoding of the sender. Simply put, this
means the receiver understands and correctly interprets what the sender is trying
to communicate.

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7. Response: The receiver's set of reactions after seeing, hearing or reading the
message is known as a response. The receiver's response can range from
nonobservable actions such as storing information in memory to immediate
action such as visiting a dealer's shop or purchasing the product. Thus, response
is a set of reactions a receiver has after being exposed to the message.
8. Feedback: It is the communication from a receiver to the sender about how he/
she understood the message and reacted to it. In this reverse flow of
communication, receivers encode their messages and send them to the sender.
The sender must then decode the feedback message. The longer it takes the
sender to receive and decode the feedback, the less valuable it becomes.
Feedback is more direct, more frequent and more immediate when interpersonal
communication (sales personnel) channels are used e.g. salesperson to prospect.
Good salespeople receive feedback directly and immediately from their prospects
and can modify their sales presentations to suit the prospect's requirements. It is
usually indirect, slow and hard to obtain when the communication is through
mass media. In fact it can be obtained only if the sender has made some
arrangement to receive. Sender may have to carry out marketing research to
determine whether the receivers have received the message, how many times,
whether they can recall the message, or not, etc.
9. Noise: Throughout the communication process, the message is subject to
extraneous factors that can distract or interfere with its reception. This unplanned
distortion or interference is known as noise. Noise can affect any or all elements
of the communication process. For example, if there are too many advertisements
of the same product (different brands) in a single newspaper or magazine, it can
create distraction. Noise may also occur because the field of experience of the
sender and receiver do not match. Lack of common ground may result in
improper encoding of the message-using a sign, symbol, or words that are
unfamiliar or have different meaning to the receiver. The more common ground
there is between the sender and the receiver, the less likely it is this type of noise
will occur.
Successful marketing communication is accomplished when the marketer selects an
appropriate source, develops an effective message or appeal that is encoded properly,
and then selects the channel that will best reach the target audience so that the
message can be effectively decoded and delivered.

16.3.2 Developing Effective Marketing Communication

The model of marketing communication process described above shows a number of

key factors that are essential for an effective communication. Firstly, the sender must
know the audience characteristics to which it wants to communicate. Secondly, what
type of response is sought from the audience or what communication objective the
company wants to pursue? Thirdly, the encoding process should take into account
how the target audience decodes them. Fourthly, appropriate media have to be used

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for reaching the audience. Finally, the communicator should be able to measure the
communication results to assess the effectiveness of communication process.

In this sub-section we will discuss various steps in developing effective marketing

communication.
1. Identifying the Target Audience Characteristics: The term target audience
refers to people for whom the marketing communication message is meant; and
includes both present and potential customers. Therefore, to reach such people with a
meaningful message, the sender must identify the target audience and their
characteristics (like age, sex, income, education, occupation, life style, etc.),
attitudes, values, past experience, buying habits and buying decision process. By
understanding the profile of target customers, it becomes easier for the sender to
match the message. The target audience may be individuals, groups, special publics
or the general public. The target audience will heavily affect the communicator's
decisions on what will be said, how it will be said, when it will be said, where it will
be said, and who will say it.
In order to know the audience a company may use one important marketing tool,
which is known as image analysis. Before sending the message a company should
assess its current image, image of its products and the images of its major
competitors. Image analysis will help the company in finding out its strengths and
weakness vis-a-vis its competitors and thus help in developing relevant and
appropriate marketing communication to the target customers.

2. Determining the Response Sought or the Communication Objective: After

haying identified the target audience, the sender decides on what response he is
expecting from the receiver. The marketer may be seeking a cognitive, affective or
behavioral response. Of course, in most cases, the final response is purchase. But
purchase is the result of long process of consumer decision making. The marketing
communicator needs to know where the target audience now stands and to what state
it needs to be moved. The response sought depends on the consumer readiness states.
There are six readiness states. These are awareness, knowledge, liking, preference,
conviction and purchase. These six states are shown in Figure 16.2

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The message developed should be in tune with the consumer readiness state. For
example, if the target audience is totally unaware of the product then the
communicator should build awareness and knowledge. If the target audience knows
the product then the communicator should try to build liking, preference and
conviction. Finally, some section of the target audience might be convinced about the
product, but they have not decided to purchase it. The communicator must lead them
to take the final step i.e. purchase.

3. Designing the Effective Message: After deciding about the type of response
sought from the receiver, the next step for the communicator is to develop an
effective message. The message should be able to attract the receiver's attention,
arouse interest, kindle desire for the product or service, and finally get a desired
action i.e. the actual purchase.
There are four important decisions which marketing communicator has to keep in
mind while designing an effective mat communication message. The important
decision areas relating to message design are: 1) message content (what to say?), 2)
message structure (how to say it logically?), 3) message format (how to say it
symbolically?), and 4) message source (who should say it?). Let us discuss these four
dimensions of message design in somewhat detail.
Message Content: This dimension is related with the key or central idea or the
appeal of a promotional message that will produce the desired response from the
target audience. For instance, the central idea or appeal in the Pepsi TV advertisement
is "Yeh Dil Mange More". When an appeal or central idea is used unchanged over a
long period of time to lend consistency to the series of promotional message: it is
called a Theme. The appeal or theme in most promotional messages relates to product
features or claims about the product.

Marketers use three basic types of appeals in their marketing communication. They
are: i) rational appeals, ii) emotional appeals, and iii) moral appeals.

 Rational appeals show that the product will deliver the claimed benefits. These
appeals relate to a product's quality, economy (price), value or performance. In
fact most consumer durable marketers such as refrigerators, automobiles, air
conditioners, washing machines and other major appliances, and industrial
products, use rational appeals in their promotional messages including
advertising.
 Emotional Appeals attempt to stir up either negative or positive emotions that
may motivate the target audience to purchase the product or brand of the
company. Such appeals use either negative emotions (such as fear, guilt. shame)
or positive emotions (such as love, joy, pride, humor) to stimulate action or
purchase. For example, fear appeal is often used by Life Insurance Corporation
(LIC) to encourage people to insure themselves. Emotional appeals are used for
the fast moving consumer goods (FMCGs), services, and some consumer durable

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 products. Examples include clothing, ready made garments, perfumes, cosmetics,
etc. Horlicks, a health drink uses love appeal in its advertisements.
 Moral Appeals aim to give the audience a sense of what is right and good. They
are often used to support various social causes such as planned family, clean
environment, and equal rights for women, etc. Moral appeals are used seldom as
far as commercial products are concerned.

Message Structure: Message effectiveness depends on structure as well as content.

For example, a communicator may think that one sided arguments or presentations
that praise a product would be more effective than two-sided arguments or
presentations that also mention some of the shortcomings of the product. Yet two-
sided messages may be more appropriate, especially when some negative association
must be overcome. Two-sided messages are found to be more effective in case of
educated audiences and those who initially had a negative feeling towards the
product. The second issue in the context of message structure is the order of the
presentation. The order in which arguments are presented is also an important part of
message structure. It is observed that in case of one-sided message, presenting the
strongest argument first has the advantage of attracting attention and interest. This is
important in newspapers and other media where the audience often does not attend to
the whole message. In case of a two-sided message, if the audience is initially
opposed, the communicator might start with the other side's argument and conclude
with the strongest argument.

Message Format: The communicator must develop a strong message format. For
example, if the message has to be used in a printed advertisement in newspapers or
magazines, the sender has to decide on the type and length of headline, the illustration
(or photograph), the copy (the written part of the advertisement, other than the
headline), colour etc. For radio, the communicator has to choose words, voice
qualities, and vocalization. If the message is to be carried in TV or in person, all of
these elements plus body language (nonverbal actions such as gestures, hand
movements etc) have to be planned. If the message is carried by the product or its
packaging, the communicator has to pay attention to colour, texture, smell, size and
shape.

Message Source: The fact of how the target audience perceives the sender (or
source) can have a great impact on communication effectiveness. Messages delivered
by attractive or popular sources achieve higher attention and recall, which is why
advertisers often use celebrities as spokespersons. In particular, messages delivered
by highly credible sources are more persuasive, so pharmaceutical companies use
doctors to testify their products benefits because doctors command high credibility.
Source credibility refers to the target receivers' perception of the sender's believability
(i.e., how believable is the source or the sender?). Source credibility has an influence

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on how target receivers will evaluate and react to the message. There are three factors
that underly source credibility: expertise, trustworthiness, and likeability.

 Expertise refers to the specialized knowledge which the sender is expected to

have by virtue of his profession, occupation or experience. For example, doctors,
scientists, engineers, professors and other technical experts are rated high on
expertise in their respective areas.
 Trustworthiness is related to how objective and honest the source is perceived
to be. Friends are trusted more than strangers or salespersons, and people who are
not paid to endorse a product are seen as more trustworthy than people who are
paid. In fact trustworthiness is related to expertise. If a well known expert
promotes a product, his/her statements will be trusted more. If a company with an
excellent track record of producing high quality products launches a new product,
its product claims are more likely to be trusted than those of an unknown
company making the same product.
 Likeability describes or reflects the source's general attractiveness to the
audience (receivers). Qualities such as straight-forwardness, humor, naturalness,
good looks (appearance), good voice, etc., make a source more likeable to the
audience.

The source with the highest credibility would be one which has the best combination
of all the three factors described above.

4. Selecting Communication Channels: Once the promotional message has been

designed, the communicator must select efficient communication channels to cany it.
There are two broad types of communication channels through which the message
may reach to the audience. They are personal communication channels and
nonpersonal communication channels.

Personal Communication Channels: Personal communication channels involve two

or more persons communicating directly with each other face to face, person to
audience, over the telephone, or through e-mail. These channels' effectiveness
depends to a great extent on the opportunities of individualizing the presentation and
feedback. For example, Redeffusion.com invites on-line customers to sign up for e-
mail services and recommendations from experts in their choice of various products
available on-line. These channels are of three types: advocate, expert and social
communication channels.

 Advocate Channels consist of company salespeople contacting buyers in the

target market.
 Expert Channels consist of independent experts making statements to target
buyers.

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 Social Channels consists of neighbors, friends, family members, and associates
talking to target buyers. The last channel is also popularly known as word-of-
mouth influence and may wield considerable influence in many product
categories.

Personal influence carries especially great weight in two situations. One is with
products that are expensive, risky or purchased infrequently. The other situation is
where the product suggests something about user's status or taste. In both cases,
consumers will obtain information from others before making a purchase decision.
Companies can take several steps to stimulate personal influence channels to work on
their behalf:
 Identify influential individuals and companies and devote extra efforts to them.
 Create opinion leaders-people whose opinions are sought by others-by supplying
certain people with the product on attractive terms.
 Work through community influentials such as local well known persons and head
of the civic organizations.
 Use influential or believable people in testimonial advertising.
 Develop word-of-mouth referral channels to build business.

Nonpersonal Communication Channels: Nonpersonal communication channels are

media that carry messages without personal contact or feedback. Nonpersonal
communication channels include media, atmospheres, and events.
 Media consist of print media (newspapers, magazines, direct mail), broadcast
media(radi0, television), electronic media (audiotape, videotape, CD-ROM,
DVD, Web page), and display media (billboards, signs, posters). Most
nonpersonal messages come from these media which are normally paid by the
marketers.
 Atmospheres are designed environments that create or reinforce the consumer's
leanings towards product purchase. For example, many restaurants decorate their
dinning halls to attract consumers, advocates or law offices are decorated with
fine rugs, books and furniture to communicate confidence and success,
pharmaceutical companies insist their salespeople to wear specific dress while
making visits to the doctors for creating good impressions.
 Events are occurrences designed to communicate particular messages to target
audiences. Companies through their public relation departments organize press
conferences, grand openings, cultural events, arts exhibitions, and other events to
communicate with specific audiences.

Although personal communication is often more effective, nonpersonal channels

affect personal attitudes and behaviour through a two-step-flow of communication
process. Ideas often flow from radio, print, television, and Internet sources to opinion
leaders and from these to less media involved population groups. This two-step flow
has several implications. First, the influence of nonpersonal channels on public
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opinion is mediated by opinion leaders, people whose opinions are sought or who
carry their opinion to others. Second, the two-step flow shows that people interact
primarily within their own social group and acquire ideas from opinion leaders in
their group. Third, two-step communication suggests that marketers using
nonpersonal channels should direct messages specifically to opinion leaders and let
them carry the message to others.

5. Measuring the Communication Results. After implementing the promotional

program, the marketing communicator must measure its impact on the target
audience. Those who were exposed to the promotional message may be asked
whether they recognize or recall the message, how many times they saw it, what
points they recall, how they felt about the message, and whether they have changed
their attitudes towards the product and the company. The communicator should also
collect behaviour measures of audience response such as how-many people bought
the product, liked it, and talked to others about it. This step is also known as
feedback.

Check Your Progress B

1) List out the various elements of communication process.

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2) What is noise in a communication process?
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3) What factors should be considered in designing communication message?
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4) Differentiate between personal and nonpersonal communication channels in
communication process.
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5) State whether the following statements are True or False:
i) The basic goal of communication is a common understanding of meaning
between the sender and the receiver.

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 ii) The two major tools of communication are response and feedback.
iii) The twp broad types of channels used in communication are encoding and
decoding.
iv) Personal communication channels play more important role in case of costly,
and less frequently purchased products.

16.4 THE PROMOTION MIX

One can take a broad or a narrow view of the tools in the marketing communication.
Marketers use an array of tools for the purpose of communicating and promoting
their products and services. These tools are used in different proportions by a
company at a particular time period. Therefore, blending of these tools is known as
promotion mix or marketing communication mix. We can define promotion mix as
the total array of tools available to the communicator whose major role is persuasive
communication. These are the tools normally classified under promotion. In our
daily life we all are exposed to various tools of promotion by the companies aiming
at communicating one thing or the other to us. For example, at home we are exposed
to various advertisements while reading a newspaper, watching a TV program,
listening to radio or even examining the water, electricity or telephone bills. On our
way to the office or home similar communications are present on bus panels,
roadside hoardings, neon signs, posters and banners, etc. And, while at a retail shop
these take the shape of traffic builders, product displays, etc., all sharing information
relating to a specific product of a company.

16.4.1 Components of Promotion Mix

Each promotional tool has its own unique characteristics and costs. These
promotional tools can be broadly classified as advertising, sales promotion, public
relations and publicity, personal selling, and direct marketing. There is no way that
an individual activity, say advertising, can be managed fully without considering its
relationship with the other elements. Therefore companies normally adopt all these
elements though the relative importance placed on each element of the promotion
mix may differ from company to company. Historically, companies first made a
separate function out of personal selling, followed by advertising, sales promotion,
public relations and publicity, and finally with direct marketing. These major tools of
promotion mix are defined and described briefly in the following.

1. Advertising: It is defined as any paid form of non-personal communication

through mass media about a product, a service or an idea by an identified sponsor.
Advertising can be used to build up a long term image of a brand (Colgate
advertising) or trigger quick sales (a departmental store's advertisement for sale).
Advertising can reach geographically dispersed buyers efficiently. Certain forms of
advertising (TV advertising) typically require a large budget, whereas other forms

14
(newspaper advertising) can be done on a small budget. The media used could
include magazines, newspapers, radio, television, billboards (hoardings), direct mail,
etc. Sponsors may be non-profit organization (colleges, universities, and institutes),
companies or individuals. Advertising has four distinctive characteristics. These are:
 Public Presentation-unlike personal selling it is a highly public mode of
communication. Its public nature confers a kind of legitimacy to the product.
Because many persons receive the same message, buyers know that their motives
for purchasing the product will be publicly understood.
 Pervasiveness-advertising is a pervasive way of communicating the marketing
messages. It permits the seller to repeat a message many times. It also allows the
buyer to receive and compare messages of other competitors.
 Amplified Expressiveness-it provides opportunities for dramatizing the
company and its brands through the artful use of print, sound, and colour. Over
dramatization sometimes dilutes or distracts from the message.
 Impersonality-advertising despite being public, pervasive, and expressive in
nature can not be as compelling as personal selling and sales promotion. The
audience does not feel obligated to pay attention or respond. Advertising is only
able to carry on a monologue and not a dialogue with the audience.

2. Sales Promotion: It is defined as a variety of short term incentives to encourage

trial or purchase of a product or service. Although sales promotion tools-coupons,
contests, premiums, and the like-are highly diverse, they offer three distinctive
benefits to the consumers. These are:
Communication-attracts consumer attention and provides information that may lead
the consumer to buy the product.
Incentive-incorporates some concessions or inducement that gives value to the
consumer.
Invitation-includes a distinct invitation to engage in the transaction now.

Initially sales promotion was used as an adhoc collection of sales tools to stimulate
short term demand. Now companies are using this promotion tool very often and its
budget has increased over a period of time. Sales promotion plays a vital role in the
introduction and in the maturity stage of a product life cycle. The effects of sales
promotion are often more immediate and measurable than those of advertising. The
purpose of sales promotion many times is to supplement the advertising and personal
selling effort carried by the company.

3. Public Relations and Publicity: It is defined as a variety of programs designed to

promote or protect a company's image or its individual products. The appeal of
public relations and publicity is based on three distinctive qualities:
 High Credibility-news stories and features seems to most readers, to be
authentic and credible than advertisements.

15
 Ability to catch buyers off guard-publicity can reach to many potential buyers
who otherwise avoid salespersons and advertisements. This is because the
message is packaged in a way that gets to the buyers as news rather than sales
directed communication.
 Dramatization-like advertising, publicity has the potential of dramatizing a
company or product.
Public relation and publicity is similar to advertising except that it involves an
unpaid and unsigned message, even though it may use the same mass media as
advertising. Publicity can either be positive (favorable) or negative (unfavorable)
because the message is in the hands of media and not controlled by the company.
Marketers spend a lot of time and effort in getting news items and articles placed in
newspapers and broadcasts so that a favorable image of the company is created.

4. Personal Selling: It is defined as oral presentation in a conversation with one or

more prospective buyers for the purpose of making sales. Personal selling is a
person-to-person dialogue between buyer and seller, where the purpose of this face-
to-face contact is to persuade the buyer to accept a point of view or to convince the
buyer to take a specific course of action. In other words personal selling is a person-
to-person process by which the seller learns about the prospective buyer's wants and
seeks to satisfy them by making a sale. Personal selling has three distinctive qualities
which make it different from other promotion tools. These are:
 Personal Confrontation-it involves an alive, immediate and interactive
relationship between two or more persons. Each party is able to observe at close
hand the characteristics and needs of other party and can make immediate
adjustments. Each party has the potential to help or hurt the other party by his/
her interest or lack of interest.
 Cultivation-it permits all kinds of relationships to spring up, ranging from a
matter-of-fact selling relationship to a deep personal friendship. Salesmanship is
an art and one should use this art to win the customers.
 Response-in contrast with the advertising, personal selling makes the prospective
buyer feel more under obligation to listen to the sales presentation of the
salesperson as he is using up the salesperson's time. The response here is
instantaneous.
5. Direct Marketing: It is the latest addition in the promotion tools a company may
use to communicate the message to the target audience. It can be defined as the use
of mail, telephone, fax, e-mail, or internet to communicate directly with or solicit
response or dialogue from specific customers to prospects. Direct marketing has four
distinct characteristics. They are:
 Nonpublic-the message is normally addressed to a specific person.
 Customized-the message can be prepared to appeal to the addressed individual.
 Up-to-date-the message can be prepared quickly and can be changed according
to the latest situation.
 Interactive-the message can be changed depending on the buyer's response.
16
16.4.2 Factors Affecting the Promotion Mix

Companies consider many factors when developing their promotion mix. All these
factors that influence the promotion mix may be grouped in four categories. These
are: 1) product specific factors 2) customer specific factors, 3) company specific
factors, and 4), and situation specific factors.

1. Product Specific Factors: Product specific factors include: 1) the amount and
complexity of product information to be communicated, 2) the stage of the product in
the product life cycle, and 3) product type and unit price.

 Amount and Complexity of Product Information: Usually emphasis is placed

on advertising to convey simple ideas or to make consumers aware of a product
whose features are easily observed. Advertising is also used for products that are
familiar to consumers. The messages which are simple and easily understandable
are generally conveyed through advertising. Personal selling and sales promotion
are considered more useful to demonstrate complex ideas. For example, in the
case of consumer durables such as mixers, television sets, music systems,
computers, etc., personal contact enables consumers to try the product and ask
questions.
 Stage of the Product in the Product Life Cycle (PLC): During the introduction
stage of a product, the basic promotion objective is to create awareness and
interest in the product. Extensive advertising, sales promotions and publicity help
in reaching potential customers and induce trial purchases. Personal selling is
useful in reaching marketing intermediaries such as wholesalers and retailers. As
competition starts building up during the growth stage, focus of promotion is on
differentiating the product (brand) by showing its advantages over rival brands.
Promotion in this stage becomes more persuasive in order to build up and
maintain brand loyalty and ensure repeat purchase. Since a larger number of
people are trying and using the product, advertising is more economical way of
reaching target customers. As competition becomes more intense in the maturity
stage of the PLC, promotion efforts are at-the highest levels at that stage.
Promotion messages become more persuasive and advertising and sales
promotion gain relative importance over the other elements of the promotion
mix. Promotion is generally reduced to a minimum in the decline stage.
Whatever little promotion is carried out at this stage, it is normally done by
marketing intermediaries.
 Type of Product and Unit Price: There seems to be a relationship between the
promotion and the type of product and the unit price. There is greater emphasis
on advertising for inexpensive, frequently bought consumer products which are
also known as Fast Moving Consumer Goods (FMCGs) such as soaps,
toothpastes, potato wafers, razor blades, etc., whereas more complex products

17
 (industrial products like machines, large generators, etc.) with a higher unit price
require greater personal selling effort.

2. Customer Specific Factors: There are two types of customer specific factors that
affect the use of various elements of promotion mix: These are: 1) Target market
Characteristics, and 2) Type of buying decision.
 Target Market Characteristics : Generally, non-personal promotion tools,
(advertising and public relation and publicity) are more suitable for personal
consumers, and personal selling is relatively more important for business buyers.
As the size of the target market increases, non-personal forms of promotion
become more relevant. However, as the size of the target market increases, the
market becomes more heterogeneous (i.e., it becomes more mixed in terms of
sex, age, income, occupation, life styles, etc.). Thus the marketer needs to
segment his markets and design different promotional messages to appeal to
different market segments.
 Type of Buying Decision: Buying decisions are of two types: routine decisions
and complex buying decisions. Generally, consumers making routine decisions
do not pay much attention to marketing information. If they make routine
purchases of a given brand, promotion focuses on reminding customers that the
brand is better than the other brands. When the decisions are complex, as in the
case of major consumer durables and appliances such as automobiles, TVs,
refrigerators, washing machines, etc., the promotion must contain messages
which are full of relevant information and adapted to the customer's primary
needs and wants. The effect of competitor's promotion might also be considered.
After the purchase the customers should be given assurance that they have
bought the right product, through letters and, therefore, personal visits by
salespeople become very important.

3. Company Specific Factors: There are three types of factors under this category.
They are: I) marketing channel and promotion strategies, 2) brand naming strategy,
and 3) budget considerations.
 Marketing Channel and Promotion Strategy: There are two types of strategies
in terms of the role of the marketing channels and the promotion. Some
marketers place more emphasis on the marketing channels in building the sales
whereas others place more emphasis on the promotion tools for this purpose.
Therefore, they may use predominantly either a push strategy or a pull strategy.
We will discuss these two strategies below.
 Push Versus Pull Strategy: Here the marketer tries to "push" the product
through distribution channels to final consumers. The marketer actively promotes
his product to distribution channels, who in turn actively promote it to final
buyers. In other words, each channel member (including the marketer) directs his
promotional effort to the next channel member in the distribution link. Push
strategy requires a great deal of emphasis on personal selling at the marketer's
18
 level and various types of sales promotion methods directed to company
salespeople and intermediaries. In pull strategy marketer focuses promotional
efforts directly on the final consumers rather than on intermediaries. For instance,
in the case of a consumer product, the objective is to induce customers to ask
retailers for the product, in turn retailers ask wholesalers and wholesalers ask the
company for the product. Consumers thus, "pull" the product through the
marketing channel. A pull strategy involves a high degree of advertising and
various types of sales promotion directed to final buyers. Pull strategy is suitable
when the producer wants to create a strong company image. This requires
complete knowledge about target markets in order to design and develop the right
kind of appeals for such markets. Few companies use either of the strategies. Big
companies use a combination of these two with more emphasis on any one. The
two strategies are compared in the figure 16.3.

Figure 16.3: Comparisons between Push and Pull Strategies

 Brand Naming Strategy: A firm which adopts an individual branding name

strategy relies heavily on promotion to introduce a new product or brand. An
image has to be created for acceptance by both customers and intermediaries. A
combination of personal selling, advertising and sales promotion will be needed
to create the image and establish the brand. Family branding strategy on the other
hand requires relatively lesser effort to introduce a new brand. Possibly with a
little advertising, new brands introduced by Tata, Godrej, Bajaj, Sony, Samsung
or Philips will find ready acceptance, because of the family brand's image.
Consumers may try it because of their satisfaction with other products under the
family brand name.

19
 Budget Considerations: The relative use of various promotion tools also
depends on the availability of funds for promotion. Hence the choice of a
promotional element or elements would depend upon the relative costs of
reaching the target customers with each promotional tool. Personal selling, for
example, is more expensive per contact than advertising. Sales promotion can be
expensive or inexpensive depending on the type of sales promotion tool being
used. Marketers try to optimize the per rupee contribution of promotion through
the use of marginal analysis principle. Therefore, the promotion mix chosen will
depend upon the relative cost and efficiency of each element of the promotion
mix and the amount available with the company for promotions.
4. Situation Specific Factors: There are two situation specific factors which affect
the promotion mix: 1) Company's goodwill and public visibility, and 2) extent of
competition.
 Company's Public Visibility: Some companies are better known to the public
because of their products, their relative position in the industry (i.e., large or
small) and their impact on physical, economic or social life of people. HLL,
Tatas, ITC, Reliance and many others companies not only have household
familiarity but they are also involved in various social and environmental
activities. Such firms generally like to project themselves as being sensitive to
the environment. To achieve this objective, these companies sponsor various
event related with environment, sports, cultural and social activities in the
interest of the general public. For example, Tatas have sponsored Cancer
Research, ITC and MRF sponsor sports events each year. Since a large number
of people are concerned with the actions of such highly visible firms, these firms
spend more money on public relations and publicity, in addition to the money
and effort spent on promoting their products and services.
 Extent of Competition: In a highly competitive situation companies very often
have to match or counter the promotional activities of their competitors to
maintain or increase their market shares. Hence the promotional effort of such
firms is affected and influenced by the activities of their rivals. For example
Bajaj Automobiles used to advertise its brands very seldom in the 1970s and
early 1980s but its advertising increased tremendously with the entry of Japanese
motorcycles in the Indian market. In recent times we have seen the advertising
war between soft drink giants Coca Cola and PepsiCo.

Check Your Progress C

1) What is promotion mix?

………………………………………………………………………………..
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2) Distinguish between personal selling and direct marketing.

20
 ………………………………………………………………………………..
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3) Distinguish between pull and push strategies in the context of promotion.
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………………………………………………………………………………..
4) State whether the following statements are True, or False:
i) Advertising is a two way communication.
ii) One of the characteristics of publicity is dramatization.
iii) Sales promotion is used for short term duration.
iv) Personal selling may lead to long term relationship between a buyer and a
seller.

16.5 PROMOTION BUDGETING METHODS

One of the most difficult marketing decisions is determining how much to spend on
promotion. This question of how much to spend on promotion is a major recurrent
decision faced by the marketers. If too much is spent, resources are wasted; if too
little is spent, opportunities may be lost. In spite of this and despite the large amount
of money being involved, relatively few companies use a logically sound approach to
this problem i.e. how much to spend on promotion.

Industries and companies vary considerably in how much they spend on promotion.
Emerging Issues Within a given industry, there are low- and high-spending
companies. In addition to this there are number of factors which influence the
promotion budgeting decision. The most important of this is the economic and
competitive environment in which the company is operating as this acts to determine
the opportunities for promotion and the role within the marketing program that
promotion might reasonably be expected to play. In addition, the value of the budget
is affected by factors internal to the company such as the age of the product and the
stage reached in the life cycle.

Over a period of time companies have developed a number of methods through

practice and experience. This section reviews some of the more traditional methods of
setting budgets and the relative advantages and disadvantages of each. First, you must
understand two things: (1) many firms employ more than one method, and (2)
budgeting approaches vary according to the size and sophistication of the company.
These methods of budgeting can be broadly divided into top-down and bottom-up
approaches. We will now discuss some of the common methods under these two
approaches.

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16.5.1 Top-down Approaches

Here a budgetary amount is established or set by the top management and then the
funds are passed down to the various departments. Top-down methods include: ( 1)
affordable method, (2) percentage of sales. (3) unit of sales, and (4) competitive
parity method.

1. Affordable Method: This method is also known as all-you-can-afford or funds

available method. Under this method the company determines the amount to be
spent in various areas such as production and operations. Then it allocates what is
left to advertising and promotion, considering this to be amount it can afford. The
task to be performed by the advertising/promotion function is not considered, and
the likelihood of under-or overspending is high, as no guidelines for measuring
the effectiveness of various budgets are established. There are three fundamental
weaknesses of this method. Firstly, it does not encourage the development of
long term planning of promotion expenditure (the amount the company can
afford to spend may vary greatly from year to year and these variations can not
easily be predicted). Secondly, short term promotion opportunities are likely to
be overlooked. Thirdly, this method completely ignores the role of promotion as
an investment. Despite these weaknesses, many companies use the affordable
method-both small and big.
2. Percentage-of-sales Method: Of the numerous approaches to determining the
promotion budget, the concept of percentage-of-sales is the most popular. In its
simplest form percentage-of-sales involves applying a predetermined percentage
figure to the value of sales achieved in the previous financial year. This
percentage figure remains constant for a number of years. Thus if the company
had sales in the previous year of Rs.10 crore and the percentage figure company
has used in the past is 5%, the budget for the current year is Rs. 5,000,000. A
slight variation which has gained acceptance in recent years involves the
percentage being applied not to the previous year's sales, but to a forecast of sales
for the period covered by the budget.

The obvious attraction of the percentage-of-sales is its simplicity. In addition, the

amount of money allocated to promotion will tend to vary with what the
company can afford, and, assuming that competitors tacitly agree to let
promotion expenditures follow a percentage-of-sales, some degree of competitive
stability may result. However, despite these advantages, this method represents a
very mechanical approach to decision making, and is hard to support analytically.
The disadvantages of this method are; First, that circular reasoning is employed
as sales act to determine promotion, rather than the other way round. Second,
because the funds made available will vary as sales fluctuate, there is likely to be
only limited scope for engaging in long term planning of promotion programs.

22
 Third, there is no apparent logical figure which should be employed for setting
promotion budget. In addition, implicit in this method is the fact that once the
percentage figure has been decided it is adhered to rigidly. This inflexibility is
obviously undesirable in the face of changing goals and market conditions and is
likely to lead to short term opportunities being overlooked. Fourth, having used
percentage of sales to determine the budget, there is tendency to allocate the
budget in the same way rather than in a more innovative fashion such as on the
basis of opportunities. Finally, this method does not encourage building the
promotion budget by determining what each product and territory deserves. Thus,
despite its popularity, the percentage-of-sales method has no apparent logical
foundation and, like the affordable method, is unlikely to lead the company to the
profit maximizing outlay.
3. Unit of Sales Method: A variation on the percentage-of-sales method that a
company may use is the unit-of-sales method, which simply allocates a
specified rupee amount of promotion to each unit of a brand sold (or expected
to be sold). This is merely a translation of the percentage-of-sales method into
rupees spent per unit. The budget is then determined by multiplying the
individual unit figure by the forecast of the sales for the forthcoming period.
Thus, if the unit promotion expenditure on a refrigerator is Rs.200 and sales of
80,000 units are forecast, the promotion budget is Rs. 16,000,000. The unit-of-
sales method has the same advantages and disadvantages as that of percentage-
of-sales method.
4. Competitive Parity Method: This is also referred to as share of market/share
of voice method. Some companies set their promotion budget to achieve share-
of- voice parity with competitors. In this method, a company monitors the
amount spent by various significant competitors on promotion and allocates an
equal amount or an amount proportional to (or slightly greater than) the firm's
market share relative to the competition. To use this method it is necessary to
collect data on total sales and total promotion expenditure by all firms in the
market. If, having collected this information, a correlation appears to exist
between promotion expenditure and subsequent sales performance it is
possible to compute approximately how much funds need to be spent on
promotion to achieve any given market share. An illustration of this method is
shown in the Table 16.1 below.

23
On the basis of the figures given in the Table 16.1 the company can conclude that for
every 1% share of the market gained by a specific brand, an expenditure of 2 % of
total industry promotion was required. Therefore, if the company which is
manufacturing Brand B whishes to maintain its 15% market share it must ensure that
its promotion budget is at least 30% of the industry's promotion expenditure.
Knowledge of the existence of any such relationship is obviously of value although in
practice it is likely to occur only in a very stable market in which there is no
aggressive action on the part of any one company.

Two arguments are made in support of the competitive parity method. One is that
competitor's expenditures represent the collective wisdom of the industry. The other
is that maintaining competitive parity prevents promotion wars. Neither argument is
valid. There is no ground for believing that competitors are utilizing their financial
resources in a better way. Company reputation, resources, opportunities, and
objectives differ so much that promotion budgets are hardly a guide. Further more,
there is no evidence that budgets based on competitive parity discourage promotional
wars.

16.5.2 Build up Approaches

The major flaw associated with the top-down methods is that these judgmental
approaches lead to predetermined budget appropriations often not linked to objectives
and the strategies designed to accomplish them. A more effective budgeting strategy
would be to consider the company's communication objectives and budget what is
deemed necessary to attain these objectives. The idea is to build up budget so that
promotional strategies can be implemented to achieve the stated objectives. The most
popular build-up budgeting method is objective and task method, which will be
discussed below.

Objective and Task Method: This method reverses the approach used in the top-
down methods discussed above. Instead of determining the size of the budget and
then allocating it by product and sales area, objective and task method requires the
company to set the budget on the basis of the cost of achieving the promotional

24
objectives. The objective and task method of budgeting uses a build-up approach and
consists of the following steps.
 Establishing Communication Objectives to be Accomplished: These
objectives must be specific, attainable, and measurable, as well as time limited.
For example, a company may wish to create awareness among X percentage of
its target market.
 Determining the Specific Strategies and Tasks Needed to Attain Them:
These tasks may include advertising in various media, sales promotions, and/ or
other elements of the promotion mix, each with its own role to perform.
 Estimate the Costs Associated with Performance of these Strategies and
Tasks: This requires determining the estimated costs associated with the tasks
developed in the previous step. For example, it involves costs for developing
awareness through advertising, trial through sampling, and so forth. The total
budget is based on the accumulation of these costs.
 Reevaluate objectives: If necessary, revise the goals and methods to level the
company can afford in case the costs are too high. The budget setting process of
objective and tasks method is shown in the Figure 16.4.
The major advantage of the objective and task method is that the budget is driven by
the objectives to be attained. The mangers closest to the marketing effort will have
specific strategies and input into the budget setting process. The objective and task
method is the most logical and defensible method for calculating and then allocating a
budget. It is the only budgeting method that specifically relates promotional spending
to the promotional objectives being pursued. It is widely used by major companies.
The major disadvantage of this method is the difficulty of determining which tasks
will be required and the costs associated with each. This process is easier if there is
past experience to use as a guide, with either the existing product or a similar one in
the same product category. But it is especially difficult for new product introductions.
However, the objective and task method offers advantages over methods discussed
earlier but is more difficult to implement when there is no track record for the
product.

25
16.6 INTEGRATED MARKETING COMMUNICATION

Today many companies are taking a new approach to marketing and promotion. They
integrate their advertising efforts with a variety of other communication techniques
such as sales promotion, direct marketing, publicity and public relations (PR), and
event sponsorships. They are also recognizing that advertising and other forms of
promotion are most effective when coordinated with other elements of the marketing
program. Companies are using various marketing communication tools to promote
their products by adopting what is known as Integrated Marketing Communications
Approach to gain a competitive advantage.

Advertising and promotion are an integral part of our social and economic systems. In
our complex society, advertising has evolved into a vital communications system for
both consumers and businesses. Today, consumers have learned to rely on advertising
and other forms of promotion for information they can use in making purchase
decisions. Many companies also recognize the need to integrate their various
marketing communication efforts, such as advertising, direct marketing, sales
promotion, and public relations, to achieve more effective marketing
communications.

Historically speaking for many years, the promotional function in most companies
was dominated by mass media advertising. Companies relied primarily on their
advertising agencies for guidance in nearly all areas of marketing communication.
26
Most marketers did use additional promotional and marketing communication tools,
but sales promotion and direct marketing agencies were generally viewed as auxiliary
services and often used on a per project basis. Public relations agencies were used to
manage the organization's publicity, image, and affairs with relevant publics on an
ongoing basis but were not viewed as integral participants in the marketing
communications process. These companies failed to recognize that the wide range of
marketing and promotional tools must be coordinating to communicate effectively
and present a consistent image to the target markets.

During the 1980s, many companies came to see the need for the integration of their
promotional tools. These firms began moving toward the process of integrated
marketing communication (IMC), which involves coordinating the various
promotional elements and other marketing activities that communicate with a firm's
customers. As marketers embraced the concept of integrated marketing
communications, they began asking their ad agencies to coordinate the use of a
variety of promotional tools rather than relying primarily on advertising alone. Many
agencies responded to the call for synergy among the various promotional tools by
acquiring PR, sales promotion, and direct marketing companies and touting
themselves as IMC agencies that offer one-stop shopping for all of their client's
promotional needs.

A task force from the American Association of Advertising Agencies (the 4As)
developed the first definition of integrated marketing communication (IMC). A
concept of marketing communications planning that recognizes the added value of a
comprehensive plan that evaluates the strategic roles of a variety of communication
disciplines - for example, general advertising, direct response, sales promotion and
public relations - and combines these disciplines to provide clarity, consistency and
maximum communications impact through the seamless integration of discrete
messages.

The 4As definition focuses on the process of using all forms of promotion to achieve
maximum communications impact. Many companies have adopted this perspective of
IMC. They see it as a way to coordinate and manage their marketing communication
programs to ensure that they give customers a consistent message about the company
and /or its brands.

The IMC approach helps companies identify the most appropriate and effective
methods to contact customers as well as other stakeholders such as employees,
suppliers, investors, media, and the general public.

16.6.1 Reasons for Growing Importance of IMC

27
The move toward integrated marketing communications has been called one of the
most significant marketing developments of the 1990s. There are a number of reasons
why marketers are adopting this concept. A fundamental reason is that they
understand the value of integrating the various communication functions rather than
having them autonomously. By coordinating their marketing communication efforts,
companies can avoid duplication, take advantage of synergy among various
communication tools and develop more efficient and effective marketing
communication programs. Advocates of IMC argue that it is one of the easiest ways a
company can maximize the return on its investment in marketing and promotion.

The move to integrated marketing communications also reflects an adaptation by

marketers to a changing environment, particularly with respect to customers,
technology, and media. Major changes have occurred among consumers with respect
to demographics, lifestyles, media use, and buying and shopping patterns. For
example, cable TV has vastly expanded the number, of channels available to
households. Some of these channels offer 24-hour shopping network; other contain 30
or 60 minute direct response appeals known as infomercials, which look more like
TV shows rather than advertisements. Every day more consumers are surfing the
Internet's World Wide Web. Marketers are responding by developing home page
where they can advertise their products and services interactively as well as transact
sales. Television, radio, magazines and newspapers are becoming more fragmented
and reaching smaller and more selective audiences. These factors are prompting many
marketers to look for alternative ways to communicate with their customers.

The integrated marketing communications movement is also being driven by changes

in the ways companies market their products and services. A major reason for the
growing importance of the IMC approach is the on goin4 revolution that is changing
the rules of marketing and role of the traditional advertising agency. Major
characteristics of this marketing revolution include:
 A shifting of marketing rupee from media advertising to other forms of
promotion, particularly consumer and trade - oriented sales promotions. .
 The fragmentation of media markets, which has resulted in less emphasis on
mass media like network TV and more attention to smaller, targeted media
alternatives like direct mail and event sponsorships.
 e A shift in market place power from manufacturers to retailers. The large
retailers are demanding that companies should spend more on sales promotion.
This marketing revolution is affecting everyone involved in the marketing and
promotional process. Companies are recognizing that they must change the ways they
market and promote their products and services. They can no longer be tied to a
specific communication tool (such as media advertising). A successful IMC program
requires that a firm find the light combination of promotional tools and techniques,
defines their role and the extent to which they can or should be used, and coordinate
their activities.

28
Check Your Progress D

1) What do you mean by top-down and bottom-up approaches in advertising

budgeting?
………………………………………………………………………………..
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2) List out different promotion budgeting methods under top-down approach.
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3) State the steps involved in setting the objective and task promotion budget.
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4) Indicate whether the following statements are True or False:
i) Top-down approaches of promotion budgeting are more popular.
ii) In competitive parity method the collective wisdom of the industry is taken
into consideration.
iii) The objective and task method is the logical method of promotion budgeting.
iv) Through the integrated marketing communication the company can achieve
synergy in communication effort.

16.7 LET US SUM UP

Promotion is one of the four major components of marketing mix. A company has to
play the role of a good communicator. Promotion may be defined as applied
communication used by marketers to exchange persuasive messages and information
between the organization and its various publics.

It includes all the activities designed to stimulate demand. Effective communication

performs three important functions. They are: providing information and persuasion
for the existing and new products, building brand loyalty, and helping consumers in
taking purchase decisions. Thus, promotional strategy is designed to inform, persuade
and remind about the existence and benefits of a product, a service or an idea.

Communication occurs when a sender transmits a message, a receiver receives that

message and the sender and the receiver have a shared meaning. The communication
process consists of nine components: sender, receiver, encoding, decoding, message.

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media, response, feedback, and noise. Marketers must understand the process, of
communicating effectively with their target markets and the factors that are important
in developing effective communication are: 1) identifying the target audience
characteristics, 2) determining the response sought or communication objectives, 3)
designing effective message in terms of content, structure, format, and source 4)
selecting the most efficient communication channels, and 5) measuring the
communication results.

The promotion mix is the careful blending of the five components of promotion i.e.,
advertising, personal selling, sales promotion, public relations and publicity, and
direct marketing for the purpose of achieving communication objectives. Advertising
is defined as any paid form of nonpersonal communication through mass media about
a product by an identified sponsor. Personal selling is a face-to-face direct interaction
between the buyer and the seller, Sales promotion is short term promotional activity
that offers an incentive for a limited time period to increase sales and enhance dealer
effectiveness. Public relations and publicity is a non-personal, non-paid form of mass
communication not identified by a sponsor where the company strives to obtain
favourable media coverage. Direct marketing refers to the use of mail, telephone. fax,
e-mail or Internet to communicate directly with or solicit response or dialogue from
specific customers or prospects.

There are four factors that influence the use and relative emphasis of various
promotional tools. These are: 1) product-specific factors, 2) customer-specific factors,
3) company-specific factors, and 4) situation-specific factors.

Deciding on the promotion budget is one of the most difficult recurrent marketing
decisions. Over the years various companies have developed a number of promotion
budgeting methods through practice and experience. These methods of budgeting can
be broadly divided into top-down and bottom-up approaches. Top-down methods
include: (1) affordable method, (2) percentage of sales, (3) unit of sales, and (4)
competitive parity method. The most popular build-up budgeting method is objective
and task method.

During the 1980s, many companies came to see the need for the integration of their
promotional tools. These firms began moving toward the process of integrated
marketing communication (IMC), which involves coordinating the various
promotional elements and other marketing activities that communicate with a firm's
customers to take advantage of synergy among various communication tools. The
IMC approach helps companies identify the most appropriate and effective methods
to contact customers as well as other stakeholders such as employees, suppliers,
investors, media, and the general public.

16.8 KEY WORDS

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Advertising: It is defined as any paid form of non-personal communication through
mass media about a product, a service or an idea by an identified sponsor.

Atmospheres: These are designed environments that create or reinforce the

consumer's leanings towards product purchase.

Audience: This refers to people for whom the marketing communication message is
meant; and includes both present and potential customers.

Brand Extension: Brand extension is an adaptation of an existing brand to a new

product area.

Brand Loyalty: Brand loyalty occurs when a consumer repeatedly purchases the
same brand to the exclusion of the competitors' brands

Build up Approaches: Promotion budgeting methods where first the objectives are
decided and then the amount of budget is built on the basis of objectives.

Channel or Media: The way by which the sender conveys the message to the
receiver.

Decoding: It is the process by which the receiver attempts to convert symbols

conveyed by the sender into a message.

Direct Marketing: It can be defined as direct communication with carefully targeted

individual consumers to obtain an immediate response.

Emotional Appeals: Appeals that attempt to stir up either negative or positive

emotions that may motivate the target audience to purchase the product or brand of
the company.

Encoding: The process of translating ideas, thoughts, or information into a symbolic

form.

Events: These are occurrences designed to communicate particular messages to target

audiences.

Feedback: It is the communication from a receiver to the sender about how helshe
understood the message and reacted to it.

Integrated Marketing Communication (IMC): The process of using promotional

tools in a unified way so that a synergistic communication effect is created.

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Marketing Communication: The process of systematic and scientific way of
disseminating the relevant marketing information by a company to its target market
and other publics by using a mix of media.

Message Content: This is related with the key or central idea or the appeal of a
promotional message that will produce the desired response from the target audience.

Noise: The unplanned distortion or interference during the communication process.

Nonpersonal Channel of Communication: These are the mass media or mass

communication through which the message is sent to many individuals at one time.

Personal Channel of Communication: These are direct interpersonal (face-to- face)

contact with target individuals or groups.

Personal Selling: It is defined as oral presentation in a conversation with one or more

prospective buyers for the purpose of making sales.

Promotion Mix or Marketing Communication Mix: The careful blending of total

array of promotion tools available to the communicator whose major role is
persuasive communication.

Public Relations and Publicity: It is defined as a variety of programs designed to

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

Pull Strategy: A promotion strategy that calls for spending a lot on advertising and
consumer promotion to build up consumer demand.

Push Strategy: A promotion strategy that calls for using sales force and trade
promotion to push the product through channels.

Rational Appeals: Appeals that show that the product will deliver the claimed
benefits.

Receiver: The party for whom the message is intended.

Response: The receiver's set of reactions after seeing, hearing or reading the
message.

Sales Promotion: It is defined as a variety of short term incentives to encourage trial

or purchase of a product or service.

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Sender: The person or organization that has the information to share with another
person or group of persons.

Top-down Approaches: Promotion budgeting methods where a budgetary amount is

established or set by the top management and then the funds are passed down to the
various departments.

16.9 ANSWERS TO CHECK YOUR PROGRESS

A 4. i) False ii) False iii) True iv) True

B 5. i) True ii) False iii) False iv) True
C 4. i) False ii) True iii) True iv) True
D 4. i) True ii) True iii) True iv) True

16.10 TERMINAL OUESTIONS

1) Describe the importance and the main functions of Marketing Communication.

2) Explain the various elements of communication process giving suitable
examples.
3) What are the various steps that you should undertake for developing an effective
marketing communication?
4) Discuss the factors that affect the promotion mix of a company.
5) Explain the different budgeting methods under top-down approach.
6) Describe the concept of integrated marketing communication and discuss the
reasons of its growing importance.

Note: These questions will help you to understand the unit better. Try to write
answers for them. But do not submit your answers to the university for
assessment. These are for your practice only.

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UNIT 17 PERSONAL SELLING AND SALES
PROMOTION

Structure

17.0 Objectives
17.1 Introduction
17.2 Importance of Personal Selling
17.3 Situations Conducive for Personal Selling
17.4 Types of Selling Jobs
17.5 The Selling Process
17 6 Qualities of a Good Salesperson
17.7 Sales Promotion
17.8 Sales Promotion Objectives
17.9 Sales Promotion Methods
17.10 Let Us Sum Up
1 7.11 Key Words
17.12 Answers to Check Your Progress
17.13 Terminal Questions

17.0 OBJECTIVES

After studying this unit, you should be able to:

 explain the nature and role of personal selling and sales promotion;
 list different types of selling jobs and qualities of a good salesperson;
 describe the steps involved in the selling process;
 discuss the process involved in planning sales promotions; and
 explain the methods of sales promotion.

17.1 INTRODUCTION

In contrast to advertising and publicity, which use impersonal methods of

communication, personal selling makes use of direct personal communications to
influence the target customers. Personal selling is a highly distinctive method of
promotion, and makes use of oral presentation in conversation with existing and
potential customers, for the purpose of making a sale.

It is one of the oldest methods of business promotion. The contributions made by

personal selling in making the promotion function more effective have earned the
distinction of being the most reliable promotion method. Though, it is the most
expensive method of promotion, yet we see an increasing number of firms making

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use of it, and a good number of them realize that they cannot, perhaps, live without it.
Increasing competition, growing sophistication of the buyer and his buying process,
are making personal selling more or less indispensable.

You have already studied that promotion mix consists of four components, viz.,
personal selling, advertising, publicity and sales promotion. This unit discusses in
detail two components i.e., Personal Selling and Sales Promotion.

17.2 IMPORTANCE OF PERSONAL SELLING

The increase in complexity of products has increased the importance of personal

selling. Manufacturers of highly technical products such as computers, electronic
typewriters, digital phones, microwave, kitchen appliances, remote control
equipments, etc. depend more heavily on personal selling than do grocery or toiletry
products manufacturers.

Ever growing competition from domestic and foreign sources have also increased the
importance of sales persons in the marketing effort of a firm. In personal selling
company's sales persons are often referred to as sales representative, salesman or
sales girl. They remain on the company's payroll or work on commission basis or
both, to push the product in the market by positively motivating the prospective
customer through oral presentation or demonstrating the product.

Customers want all sorts of goods and services but inertia may keep them from
buying. Sales efforts stimulate the consumption process by reducing people's inherent
reluctance to make purchase decision. In fact sales persons act as catalyst in the
market place. When the nature of the product is such that the buyer needs special
information in order to use it properly, sales representative acts as a consultant to
consumer, to apprise him of products technicalities and usage.

In case of industrial products, the promotion mix mostly consists of person selling
rather than advertising. Being high value and complex product, personal contact with
the customer is essential to convince him of the product's quality and utility. On the
other hand, consumer product companies use personal selling together with
advertising, to influence prospects to try their brand. But personal selling in this case
cannot substitute for advertising, it can only be used tactically to intensify marketing
effort, mainly because it is expensive.

Personal selling is more effective during product launching stage. For example
McDowell, used personal selling tactics during launching of soft drink "SPRINT in
Delhi. Similarly Eureka Forbes, a manufacturer of appliances which includes vacuum
cleaner and a number of home care appliances, adopted personal selling for its
premium product vacuum cleaners. Since the vacuum cleaner is a high value product

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and the concept was fairly new to the Indian market at the time of its launch,
demonstration was necessary to convince buyers, and personal selling successfully
achieved this. Other Companies e.g. Johnson and Johnson for its product in the so
called 'embarrassment' category, like sanitary napkins or contraceptive used personal
selling successfully.

During the product launching stage companies selling products like Richbru Coffee,
Signal Toothpaste, Surf, Dalda etc. utilised personal selling efforts.

The importance of Personal Selling in the Indian context stands out due to the
following factors:
1) In the absence of the availability of all India media many companies find it
expedient to extensively use personal selling to achieve their promotional
objectives.
2) Companies which cannot afford a large outlay for advertising on a regular basis
also find personal selling a more reliable method.
3) The vast network of our distribution system needs the support of the
manufacturer sales force for market combing as well as development.
4) Low levels of literacy and lack of adequate customer education regarding various
products, make personal selling a very effective method in product adoption
particularly in the rural markets.
5) Orientation of Indian consumers is such that they want the best value for their
money, owing to high marginal value of rupee, which necessitates personal
selling.
The factors discussed above individually or in combination make personal selling an
integral part of the communication mix of the company..

17.3 SITUATIONS CONDUCIVE POR PERSONAL SELLING

In certain marketing situations, personal selling provides an effective and efficient

solution to most of the selling problems. However its economic efficiency relative to
other element of the marketing mix needs to be thoroughly appraised.

Now we will discuss some of the situations when personal selling in a company
becomes more relevant.
1) Product Situation Personal Selling is relatively more effective and economical
in case
a) A product is of a high unit value like photocopying machine, computers etc.
b) A product is in the introductory state of its life cycle and requires creation of
core demand.
c) A product requires personal attention to match specific consumer needs e. g.
insurance policy.
d) A product requires demonstration e. g. Most of the industrial products.

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 e) A product requires after-sales service.

f) A product has no brand loyalty or very poor brand loyalty.

2) Market situation: personal selling situation can be best utilised when:
a) A company is selling to a small number of large-size buyers.
b) A company is in a small-local market or in government or institutional market.
c) Desired middlemen or agents are not available.
d) An indirect channel of distribution is used for selling to merchant-middlemen
only.
3) Company situation :Personal selling is relatively more effective and
economical when
a) The company is not in a position to identify and make use of suitable non-
b) personal communication media.
c) A company cannot afford to have a large and regular advertising outlay.
4) Consumer Behaviour Situation: Personal selling is more effective when:
a) Purchases are valuable but infrequent.
b) Consumer needs instant answers to his questions.
c) Consumer requires persuasion and follow-up in the face of competitive
pressures.

Check Your Progress A

The importance of personal selling varies from industry to industry and company to
company. Explain why this variation occurs. Give examples of industry/companies
which rely primarily on personal selling and give reasons for their doing so.
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17.4 TYPES OF SELLING JOBS

From the foregoing discussion you have learnt that while sales as a function has a
common purpose, that is, to effect sales, the selling situations differ due to interplay
of various factors. These factors are nature of goods sold, type of distribution system
used, nature of demand and the type of sales strategy followed by the firm. These
factors require the sales force to possess different traits and abilities suitable to the
selling situation with which they are associated. To underscore the difference, Robert
N. McCurry in "The Mystique of Super-salesmanship" classifies individual sales
position based on the degree of creativity required into seven categories. These seven
categories are described below:

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1) Merchandise Deliveries: The sales person, whose primary job is to deliver the
product usually against routine orders-popularly called sales and delivery boys.
2) Inside Order-taker: Working inside a store, the primary job of such a sales
person is to service the customer's request or suggest appropriate product to meet
customer wants. Such type of salespersons are popularly called retail salesmen.
3) Outside Order-taker: The salespersons engaged in the task of taking orders
from the resellers. They normally do not use hard selling approach for taking
orders.
4) Missionary Salesperson: The salesperson whose primary job is to educate, give
product detailing, build goodwill or create primary demand for the product.
Strictly speaking, missionary salespersons are not permitted to take orders.
5) Sales Engineer: The salesperson who acts as a technical consultant to the client
and as per the need helps him to design products or production. This type of
salesperson is popularly called Technical Salesperson.
6) Tangible Product Seller: The salesperson whose job is to sell tangible products
such as furniture, appliances, automobiles, etc. The job involves abilities to
persuade and convince the customer.
7) Intangible Product Seller: Here the salesperson is associated with selling
intangible products or services such as advertising services, insurance, education,
etc., the common factor being difficulty in immediate demonstration of the
perceived benefits of the product. This selling job requires perhaps the greatest
degree of a creativity in the salesperson.

Defining the Salesperson's Job: The foregoing classification of the sales position
into seven categories, on the basis of degree of creativity required in the performance
of each job is only general in nature. Depending upon the organisational need, each
company should clearly define what it expects from a salesperson in terms of the
tasks to be performed by him. It should broadly specify how much of salesperson's
time should be spent on developing new accounts versus servicing existing accounts,
large accounts versus small accounts; bulk orders versus small orders; selling
individual products versus selling the product line; selling old products versus selling
new products; etc. Lack of clear definition regarding the selling tasks to be
performed, often results in disproportionate spending of time between the tasks and
the goals. To avoid this type of loss in productivity of the sales force, it is worth
repeating that the job of the salesperson should be defined with sufficient specificity,
so that he can use it as a guideline to keep himself in the right direction.

17.5 THE SELLING PROCESS

Up to this point we were discussing the role of personal selling and the degree of
creativity required in a salesperson to perform his task satisfactorily. Now we will
take a look at the selling process followed for completing a sale. Though the steps in
the selling process discussed below will be applicable to most of the selling situation,

38
what will differ will be the degree of importance given to each step of the process
under different selling situations. The basic steps in the selling process are given in
Figure 17.1. A salesperson must become accomplished at performing the selling
steps. These steps are explained below.

Source: Ralph M. Gaedeke and Dennis H., Tootelian, Marketing Principles and
Applications, 1983. p. 436 (preparation step added)

Step 1
Preparation: Before starting the selling job, a salesperson should make a valuable
investment of time and resources to know the products he will be selling, know the
customers (i.e. customer types, buying motives and buying process) to whom he will
be selling, know the competitors against whom he will be selling, and finally know
the philosophy, policies and range of products of his company. In short, he should be
well equipped with the fundamentals of selling.

Step 2
Prospecting: This step of the selling process deals with locating and preparing a list of
prospective customers. Prospects can be located through (1) identifying the potential
of buying more in the existing customers, (2) recommendations of existing customers,
(3) winning back lost customers, (4) attracting competitor's customers, (5) customers'
information request from advertisement, (6) newspaper announcements, (7) public
records, (8) directories like telephone,-trade association etc., (9) other salesmen, (10)
references from friends, neighbours and business associates, and (11 ) cold canvasing,
that is, going from door-to-door.

39
The located prospects should first be qualified broadly in terms of (i) whether they
want the product and how intense their want is, (ii) whether they have the adequate
purchasing power, and (iii) whether and who possesses the power or authorisation to
purchase and spend the required money. The qualifying of prospects is the process of
separating the prospects from the suspects.

It is worth mentioning here that the ability to prospect is the most essential ability of a
successful salesperson. A good salesperson keeps examining, weeding out the already
tapped prospects and updating his lists of prospects, and remains in constant search of
new prospects.

Step 3
Preapproach: The qualifying process of separating prospects from suspects further
requires that the salesperson should process detailed information relating to the
prospects in terms of existing products consumed, their scale of operation, product
range, their buying size, frequency, budget and the process, etc. In short, obtain
customer orientation. The sources of information for the purpose include company
annual reports, other salespersons, other suppliers to the prospects, census of
manufacturers, professional journals, newspapers and market intelligence. The
availability of the above information in as detailed a manner as possible will help the
salesperson in ranking the prospect in terms of their priority to the company. Good
salespersons use the above information in classifying the prospects in A, B and C
categories in terms of the immediacy of the attention to be given to them.

Step 4
Approach: 'First impression counts'. As such, this step needs to be carefully planned.
This step has two distinct parts. One, of meeting the customer with a positive set of
mind, and the second, making an impact on him. For the former, referrals of reliable
persons known to prospects, calling after fixing an appointment, use of door openers,
help. For the latter the salesperson should equip himself with the key benefit to be
emphasised, samples or new literature to be handed over, etc.

Step 5
Sales Presentation: Through advance information relating to the prospect, every
effort should be made to match the product offered to the needs/problems faced by
the customer. The sales presentation should generally go according to the AIDA-
attention, interest, desire, and action approach. How can this be done? Use of key
benefit or a problem solver, or a unique act of the salesperson results in gaining
attention.

The presentation should proceed in a straightforward manner to help the prospect

know that you understand his problem and that is the reason of your being there. To

40
convince the prospect as early as possible, the salesperson should offer evidence
through demonstration of the product, use of exhibits, models, citing examples of its
successful applications/usage, showing testimonials, etc. The overall approach should
be to build credibility and confidence in the supplying company, its products, and
also in its competence to render specialised type of service to the complete
satisfaction of its customers.

The flexibility of the sales presentations can range from the 'Canned' or previously
prepared presentation, to those allowing the salesperson complete freedom in the
presentation. Though both the extremes, or even the hybrid of the two, have their own
situational suitability, the important point to note is that salesmanship, being a
showmanship function, must arouse active participation of the prospect in the
presentation process. This can be done by introducing some action which would keep
the prospect captivated. One possible way would be a joint review of the problem
faced by the prospect. Another is helping the prospect imagine the projected benefits
of owning the product.

Step 6
Handling Objections: It is in the last phase of the sales presentation step that the
prospects start expressing doubts, or raising objections whether relating to price, need
for more time to think, satisfaction with the existing product/supplier or product
quality claims.

These doubts ok objections should be welcome and they should be answered with
confidence. There is certainly no doubt that the prospect has to be thoroughly
convinced that the product would satisfy his need. The ability of the salesperson of
mind reading of the prospects, enables him to anticipate the prospect's objections and
reactions.

The golden rules for handling objections are: (1) welcome the objection and show
respect to the prospect, and (2) do not argue with the prospect. Even when the
objections raised are half-baked or trivial in nature, the salesperson should handle the
situation tactfully. Even under these circumstances courtesy should not be lost sight
of, and while the discussion is on, the salesperson should start recounting the benefits
of the product agreed upon, and lead the prospect to make a favourable decision. It
should be remembered that handling objections sharpens the selling skills of the
salespersons.

Step 7
Closing the Sale: Closing is that aspect of the selling process in which the salesperson
asks the prospect to buy the product. There is a critical point during each presentation
when the salesperson should ask for the order. Pending the location of . the critical
point, as the objections are being met, the salesperson should help reduce the choice

41
of options, summarise the benefits of buying, and the consequences of not buying,
and if need be, make use of the big idea appeal of buying' 'now' at that moment.

The salesperson should have the ability of catching the buying signals given by the
prospect and should act on them fast. Some such signals are changing the sitting/
standing position and moving closer to the product; reading the instructions on the
product; perusing the testimonials; showing hesitation in being able to afford; asking
for another demonstration, if applicable; checking the warranty or asking questions
relating to warranty terms. These signals, show that the time is ripe to start taking the
order.

Step 8
Post-sale Follow-up: The selling process does not come to an end by writing the
order. A few repetitions reassuring the benefits of the product keep the customer sold.
Follow-up provides an opportunity to ensure that the product is being rightly used,
and if necessary to re-explain the method of using, handling, and storing of the
product when not in use. This builds favourable feelings and nurtures strong buyer-
seller relationships. Post-sale follow-up not only reinforces the customer’s confidence
in the salesperson and his company but also tends to keep competition out. This also
helps generate repeat business and valuable word-of-mouth publicity. The follow-up
is a good source of feedback too.

Let us conclude this section by stating that although the eight steps of the selling
process are essential in spirit, these may not always be followed. This could be partly
because of (i) the selling situation involved, e.g. in the case of insider order-taker or
retail salesperson the first three steps of the selling process are generally not
applicable as the customer walks into the store for buying a product, (ii) the expertise
of the salesperson (such that he can ignore or assume some information), or (iii) the
seller's market of the product where customers generally queue up for the product.

Let us also look at the findings of a study by Robertson and Chase on the subject.
They point out that:

1) The more closely matched the physical, social and personal characteristics of the
customer and salesperson, the more likely is the sale.
2) The more believable and trustworthy the customer perceives a salesperson to be,
the more likely is the sale.
3) The more persuadable a customer is, the more likely is a sale.
4) The more a salesperson can make prospective buyers view themselves
favourably, the more likely a sale is.

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Check Your Progress B

What general procedure should be followed when qualifying prospects? How can the
key prospects for photocopying machines be identified and qualified?
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17.6 QUALITIES OF A GOOD SALESPERSON

Some people say salesmen are born salesmen, while other believe that training can
help in making good salesmen.

Irrespective of these opinions, good salesman has certain qualities and abilities as a
result he is able to perform better than others. In this section we would discuss
qualities of a good salesperson.

Philip Kolter has identified two basic qualities of a good salesperson namely,
empathy and persuasion. But others have listed more. Some of the qualities of a good
salesperson are as follows:
1) Ability to estimate customer's needs and desires: He is alert and quickly
determines what the customer wants and the best way to sell.
2) Ambition: He likes to do a good job and is interested in getting ahead with your
company.
3) Appearance: Appearances mean a lot today and the successful salesman is neat
and organised. He presents himself well in person. Also, he keeps his desk, books
and manuals neat and ready for use.
4) Business Sense: He understands that you are in business to make a profit and
quickly learns the ins-and-outs of your organisation.
5) Courtesy: He reveals a sincere desire to help customers and treats them as guests
even when he visits their places of business.
6) Creativeness: Imagination, vision and the ability to create ideas make your man
dynamic.

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7) Curiosity: He wants to learn all he can about his job, his products and his
customers.
8) Enthusiasm: There is nothing that can drain away a prospect's buying interest
more than a half-dead salesman. Dullness should be left at home. A salesman
must radiate enthusiasm during and after the sales call.
9) Figure Sense: He should have the mathematical ability to figure and fill up order
form correctly and to make the necessary reports.
10) Flexibility: A good salesman is able to adapt himself to a variety of customers.
Each contact may require adapting the sales talk, speech habits and even
appearance.
11) Friendliness: A salesman should be able to make people like him and he must
like to meet people.
12) Handwriting: He must write legibly so that his paper work can be readily
understood by his office people and by his customers.
13) Health: Good health generates energy and energy is needed to sell. Poor health
prevents many salesmen from fulfilling their potentials.
14) Integrity: A salesman must be trusted to do his job well. He cannot help but be
successful when his customers trust him.
15) Interest in his job: He likes selling and working for your company.
16) Knowledge: In some business, an applicant must also have a thorough
knowledge of the highly specialised products or services his employer offers. In
some cases, this knowledge can be gained only by years of experience.
17) Loyalty: He must be able to impress upon his customers the idea that his
company is the best in the business.
18) Mental abilities: He has the intelligence to understand your products and those
of your competitors. He must know how to use words, to understand and direct
people and to remember names and faces. He should also be able to understand
prospective customers and know how to act under varying conditions.
19) Motivation: He must have more than just an interest in selling. Psychologists
have found certain predominant patterns in men who have become really
successful salesmen. They live in the present and not in the future. They do want
power over others and prefer not to work under close supervision.
20) Originality: He is constantly searching for new ideas to be used in selling your
products and will suggest better ways of doing things.
21) Persuasiveness: Very few products of any type actually sell themselves. They
must be sold. Your man must have the ability to get people to agree. There are
situations when persuasiveness may vary keeping in view the consumer's
response.
22) Poise: His maturity is reflected in his behaviour. He should be positive and
confident, energetic and businesslike. He should be able to demonstrate to your
customers that he knows what he is talking about.
23) Self-control: He can handle difficult people and situations calmly.

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24) Self-starter: Your man works well without constant supervision and is able to
make decisions on his own.
25) Speech: He can speak clearly and maturely in a natural tone. He can emphasize
sales points with sincerity and friendliness.

Check Your Progress C

State whether following statements are true or false.

i) Personal selling provides marketers with greatest opportunity to adjust a
message to satisfy customers' information needs.
ii) The personal selling process begins with approaching the customer.
iii) An important function of the technical salesperson is to provide advice on the
application of the product.
iv) Missionary salesperson is a position where salesperson builds goodwill and
educates the consumer while taking orders and selling the firm's goods and
services.
v) Getting the order is called closing the sale.

17.7 SALES PROMOTION

Of all the methods of promotion that constitute the promotion mix, sales promotion is
the only method that makes use of incentives to complete the push-pull promotional
strategy of motivating the salesforce, the dealer and consumer in transacting a sale.

There is no single universally accepted definition of sales promotion. One can,

however, gather its essence by perusing a few definitions. Let us look at some of the
popular definitions of sales promotion.

According to American Marketing Association, sales promotion refers to those

activities other than personal selling, advertising and publicity, that stimulate
consumer purchasing and dealer effectiveness, such as display. shows and
exhibitions, demonstrations, and various other non-recurrent selling efforts not in
ordinary routine.

This definition suggests that sales promotion is a catch-all for all those promotion
activities which do not fall cearly into advertising, personal selling or publicity.

Roger A. Strang offers a simpler definition: Sales promotion are short term incentives
to encourage purchase or sale of a product or service.

Yet another definition that seems fairly exhaustive, and hence, will be used in this
unit is the one given by Stanley M. Ulanoff in his Handbook of Sales Promotion.
Stanley defines sales promotion as all the marketing and promotion activities. other

45
than advertising, personal selling, and publicity, that motivate and encourage the
consumer to purchase by means of such inducements as premiums, advertising
specialities, samples, cents-off coupons, sweepstakes, contests, games, trading
stamps, refunds, rebates, exhibits, displays, and demonstrations. It is employed as
well, to motivate retailers, wholesaler; the manufacturer's salesforces to sell through
the use of such incentives as awards or prizes (merchanidise, cash and travel), direct
payments and allowances, cooperative advertising, and trade shows. It offers a direct
inducement to act by providing extra worth over and above what is built into the
product at its normal price. These temporary inducements are offered usually at a
time and place the buying decision is made.

Summing up, sales promotion deals with promotion of sales by the offer of incentives
which are essentially non-recurring in nature. It is also known by the names of Extra-
Purchase-Value (EPV) and Below-the-line selling.

Product group-wise, the major users of sales promotion are: tea, coffee and
beverages, soaps, toiletries, detergents and washing soaps, toothpaste, textiles, food
products and baby foods, household remedies, and consumer durables like fans,
refrigerators, music systems, televisions and household appliances.

Among the various types of sales promotion schemes used, contests at the consumer,
dealer and salesforce levels have made a significant headway.

Why Rapid Growth?

A perusal of the list of the product groups which emerged as the major users of sales
promotion, and from the market feel, it seems clear that a transformation from the
seller's to the buyers' market is taking place and marketing has become more
competitive in these product markets. In addition to increasing competition, other
reasons for rapid growth of sales promotion in India are summarized below:
 sales promotion makes an immediate effect on sales.
 measurement of the effectiveness of sales promotion is easier as against the other
promotional methods.
 channels of distribution are emerging as powerful entities and demand greater
use of incentive5 to get desired results.
 products are becoming standardised and similar, and so need increased support of
non-price factors of which sales promotion is an important one.
 impulse buying is on the increase, and so is the rise in the number of marginal
customers. With virtually no brand loyalty, offer of attractive schemes help
manufacturers to Induce such customers to choose their product.

46
17.8 SALES PROMOTION OBJECTIVES

As a powerful method of sales promotion with a capability to complement and

supplement the advertising function of marketing, sales promotion helps marketers
realise a variety of objectives. These objectives could relate to the promotion of sales
in general, or to a specific activity at a particular level, i. e. consumer, dealer or
salesforce. Some of the commonly attempted objectives are to:
 increase sales (in general, and focusing on new uses, increased usage, upgrading
unit of purchase, winning sales of fading brands etc.)
 make the sale of slow-moving products faster
 stabilise a fluctuating sales pattern
 identify and attract new customers launch a new product quickly
 educate customers regarding product improvements
 reduce the perception of risk associated with the purchase of a product
 motivate dealers to stock and sell more (including complete product line)
 attract dealers to participate in manufacturer's dealer display and sales contests
 obtain more and better shelf space and displays
 bring more customers to dealer stores
 make goods move faster through dealers
 improve manufacturer-dealer relationship
 motivate salesforce to take the achievement higher than targets
 attract salesforce to give desired emphasis on new accounts, latent accounts, new
products, and difficult territories
 reward salesforce for active market surveillance and for rendering superior
customer service
 put power into the sales-presentation
 counter competitors' sales-promotion and marketing efforts
 provide punch to the company's advertising efforts
 build goodwill.

Companies may use anyone or a combination of the above objectives in varying

form to suit the product-market needs of their product. What is of significance is that
the sales promotion objectives set to be accomplished must be integrated with the
promotion and marketing objectives pursued by the company.

17.9 SALES PROMOTION METHODS

Many methods of sales promotion are used by marketers. Depending upon the
creativity level of their sponsors, their variety seems very large. We refer here to
some of the most commonly used methods of sales promotion.

47
As noted above, the accomplishments of the desired promotion and marketing
objectives ultimately depend on the extent of the desired response received from
consumers, dealers and members of the salesforce. Hence various sales promotion
methods are built around these three target groups. Further, in terms of the desired
impact, the variety of sales promotion schemes offered are grouped into two
categories. One, aimed at producing immediate impact, and the other delayed impact
i.e. carrying on the impact over a period of item. Immediate impact schemes are
those schemes where the consumer, dealer or salesperson gets the incentive on first
contact, purchase or on performing a one-time act. On the other hand, under the
delayed impact schemes, the consumer, dealer or salesforce is called upon to comply
with the scheme over a period of time before receiving the full benefit of the scheme.
Price discounts, free samples or large quantity packs are the popular examples of
immediate impact schemes, whereas coupons, trade stamps, and contests are
examples of delayed impact category of sales promotion schemes. Table 17.1
represents the variety of sales promotion schemes directed at the consumer, dealer
and salesforce levels according to their grouping under immediate impact or delayed
impact categories. The meaning and objectives of these schemes are given in Table
17.2.

Table 17.2: Sales Promotion Methods: Meaning and Objectives

Sales Promotions Meaning Objectives
1. Price-off offers Offering product at lower To encourage immediate
than the normal price. sales, attract non-users,
induce new product trial,
48
 counter competition,
inventory clearance at the
retail level, inventory
build-up at the trade level.
2. Quantity-off offers Offering more quantity of To encourage more/longer
the same product at no duration consumption,
extra cost or with a very higher or excess quantity
nominal increase in the movement from the
price of the larger quantity factory, trade up consumer
packs. for higher quantity pack
size.
3. Premium Offer of an article of To encourage purchase,
merchandise as an stimulate loyalty, off-
incentive in order to sell season sales promotion,
product or service. Its induce trial of new
forms are: product, ensures reach of
premium to the consumer.
a) Packaged Premium When the incentive article
is packed (inserted) inside
the package of the product.
b) Banded Premium Where the premium article Sampling new products,
is banded to the package adding speed to slow
of the product say with moving products.
cellotape etc.
c) Over-the-counter When the premium article To counter competition,
(OTC) Premium is neither inserted inside improve inventory
nor banded to the product clearance at the trade
package but is given away level.
to the consumer over the
counter alongwith the
product package.
d) Container Premium When the product itself is As a durable reminder at
placed in an attractive and home.
reusable container which
serves as a gift.
e) Self-liquidating Where the consumer To induce consumer to
Premiums usually is asked to pay a appropriate premium
specified amount to article, reinforce brand
liquidate or offset a part or image, encourage more
full cost of the premium consumption enables
article or the scheme sponsor to offer better
administration costs. quality premium.
f) Personality Where the consumer is To build loyalty and
Premium required to redeem a reward the consumer for
specified proof-of- that to counter
purchase for the premium competitively offers.
article. Proof-of-purchase
may be labels pack tops,
bottle tops, corks, etc.

49
 4. Coupons When the consumer is To encourage product trial,
entitled to redeem a build loyalty, trade-up
specific standard regular users, stimulate re-
certificate for a purchase rate, solicit
product/article free or in inquiries.
part payment. Coupons are
used by both the
manufacturer and the
dealers for sales
promotion. Coupons may
be distributed by mail, by
media advertisements,
door-to-door, inside
product package or by
dealers on purchase.
5. Refund offers Offer of a refund of moneyTo induce trial from
to consumer for mailing inprimary users, motivate
a proof-of-purchase of a several product purchases,
particular product(s). obtain displays at the
retailers, help retailers tie-
in with other products,
switch competing brand
users to sponsor's brand,
loading dealers with
increased stock.
6. Trading stamps Organised by Trading To encourage consumer
Stamp companies or large loyalty to certain retail
retailers. Trading stamps stores.
are a kind of discount
coupons offered to
consumers linked with the
quantum of their purchase.
On enough accumulation
these are redeemable for
various kinds of
merchandise.
7. Consumer contests and Where individuals are To create brand awareness
Lucky draws invited to compete on the and stimulate interest in
basis of creative skills. the brand, acquaint
The latter is based on the consumers with brand
chance or luck factor. usage and benefits, build
traffic at the store
precipitate brand purchase,
obtain consumer feedback,
promote advertising theme
of the company.
8. Dealer stock Display It is type of point-of- To provide product
contests purchase advertising exposure at the point of
which used the show purchase, generate traffic
windows of the dealers for at the store, infuse
50
 providing exposure to the enthusiasm among dealers.
sponsor's products.
Dealers participating
enthusiastically and
creatively are awarded.
9. Dealer Sales contests Where participating To increase sales, buy
dealers are invited to dealers' loyalty, motivate
compete in terms of the dealers' staff to sell more.
sales performance.
10. Discounts Other than normal trade To push more sales to
and cash discounts. trade, early cash recover.
11. Trade Allowances These are temporary price
reductions reimbursement
of expenses incurred by
dealers-in full or in part,
its varied types are as
under.
a) Trade or Buying Offer of price reduction on To load the trade.
allowance purchase of specified
quantity of a product.
b) Buy-back allowance A secondary incentive To encourage trade co-
which offers a certain sum operation and stimulate
of money to trade for each repurchase.
additional unit bought over
and above the deal.
c) Count and recount When a specific amount of To move stocks faster,
allowance money is offered after reward on sale only.
ascertaining the number of
units sold during specified
period.
d) Merchandise (display) An allowance to trade for To create enthusiasm in
allowance providing desired sales trade, improve traffic and
promotion and product exposure at the point-of-
displays. purchase, gain larger space
effort of the trade in the
promotion of sponsor's
product as against the
competitors.
e) Co-operative Wherein a manufacture To gain product and retail
advertising & Promotion shares at an agreed rate the identity motivate dealers
allowance advertising and to promote manufacturer's
promotional cost incurred product, obtain local
by the dealer in the advertising and promotion.
promotion of
manufacturer's product.
12. Dealer gifts Offer of useful articles and To improve dealer
attractive gifts to dealers relations, make impact on
for their personal, family consumer scheme/contest
or office use. offered.

51
I3. Premium or Push When an additional To push a specific product
compensation is offered to or product line.
trade or salesforce for
pushing additionally a
specific product or product
line.
14. Merchandise Deals (13 Where in additional To load dealers with
for 12) quantity of the same or the inventory, expose other
same manufacturer's products of the sponsor,
another product is offered encouraging dealers to sell
to trade. May be offered more and early to realise
jointly by non- competing their incentive.
manufacturers.
15. Point-of-Purchase Those special displays, To attract traffic at retail
(POP) racks, banners, exhibits, store, remind customers,
that are placed in the retail encourage impulse buying,
store to support the sale of ensure additional visibility
a brand. to the advertising
campaign,
*The format of this Table is based on Donald W'Cowell's article on Sales Promotion
and the Marketing of Local Government Recreation and Leisure Services. European
Journal of Marketing, 18,2.

Though ideal for consumer goods, sales promotions are also used for promoting
industrial goods. The difference in the use lies in the types of schemes offered, and in
the frequency of their offer. Sales promotion schemes offered to industrial customers,
besides the usual gifts, price-off coupons and contests, include product
demonstration, training to customer staff, offer of interest-free instalment payment
plan, ready and regular availability of repairs and spares, and posting of trained staff
to assist/ supervise in the working of the equipment in the client's premises, at the
manufacturer's cost. The sales promotion schemes offered at the level of industrial
distributors include: provision of extended credit, and provision of specialised sales/
technical staff at the manufacturer's cost, besides the usual cooperative advertising
and sales promotion, gifts, and organisation of distributors contests. The sales
promotion schemes popularly used to motivate industrial salesforce are: prizes and
awards on special achievements, sales contests, new accounts contests and prompt
service awards.

Check Your Progress D

State whether the following statements are true or false.

i) Sales promotion tends to be used to build up brand loyalty.
ii) The short-term trade promotion used frequently with the introduction of a new
product is a buying allowance.
iii) Consumer sales promotion schemes stimulate trade to carry a product and
promote it aggressively.
52
iv) Sales promotion activities are only appropriate when directed at the salesforce
level.

17.10 LETUSSUMUP

Personal selling is a direct person-to-person selling and promotion method. The

specific role and goals of personal selling vary from firm to firm depending upon
nature of goods marketed, distribution system used, and the sales strategy adopted by
a firm. The changing market environment calls upon the salesforce to transform itself
in order to perform a more creative role.

Based on the degree of creativity required, McCurry classifies the sales positions into
seven types-merchandise deliverer, inside order-taker, outside order-taker, missionary
salesperson, sales engineer, tangible product seller and intangible product seller. To
accomplish the job of making a sale satisfactorily, a salesperson should follow the
basic elements of the selling process. These are: preparation, prospecting,
preapproach, approach, sales presentation, handling objections, closing the sale and
post-sale follow up. An understanding of these elements helps a salesperson in
developing skills necessary for successful selling.

Sales promotion, of late, has emerged as one of the more popular methods of
promotion in the case of consumer goods. Stated simply, sales promotion deals with
offering something extra as an incentive to motivate an early purchase. Sales
promotions can be offered at the level of the consumer, trade and salesforce. Sales
promotion schemes used to attain consumer pull include free samples, price-offs,
premium give aways, coupons and contests. Schemes offered for gaining the push
cover promotional allowances, gifts, discounts, cooperative promotions, contests and
awards. To save a sales promotion programme from getting misfired, it should be
planned and managed in a systematic manner.

Promotion is an important marketing function of each firm. And, rare will be a firm
which makes use of only one promotional method. The commonality in the ultimate
goal of all the promotional methods apart, their limited suitability in influencing only
specific part of the consumer adoption process calls for the need to use the
promotional mix in an integrative manner. Given the complexities in the management
of the promotion function and its vulnerability to failure, it is desired that the function
be managed professionally.

17.11 KEY WORDS

Bounce Back Offer: An additional offer, with an earlier self-liquidating premium

offer on a usually related product.

Canned Presentation: A structured sales presentation made of an inflexible nature.

53
Cold Canvassing: Door to door conviction and sale of products.

Contest: A competition based on skill in which prizes are offered. Sometime also
used for referring to competition based on chance.

Dealer Loader: A premium given to a dealer in return for an order of a specified

value. This could take the form of a merchandise deal, price deal, gifts to dealers, or a
combination of these.

Hostees Gift: A gift given to a housewife who provides for a product demonstration
to be conducted in her home.

Lead: Name of an individual or organisation who might be a prospect.

Point-of-Purchase Promotion (POP): A sales promotion method using window

display and other display materials aimed at attracting customers to store and also
encouraging the retailers to push displayed products.

Price Deal: Short-run price decrease.

Proof of Purchase: A bottle cork, box top, pack flap, label, coupon, cash memo of a
product which qualifies a customer to receive a premium or refund.

Prospecting: The step during which probable customers are found for the product or
service.

Referral Premium: A premium offered to a satisfied customer, who refers the seller
to another person who purchases the product or service. It is also called use-the-user
premium plan.

Trade Promotion: Sales promotion activities directed at the wholesaler and retailer
levels.

Traffic Builder: Low cost premiums offered free as an inducement to visit a store.
Also includes the organization of product demonstration or unique display of
products.

Window Display: A display placed in the window of a retail store facing outside to
attract the attention of the passerby.

17.12 ANSWERS TO CHECK YOUR PROGRESS

C. (i) True (ii) False (iii) True (iv) False (v) True
D. (i) False (ii) True (iii) False (iv) False

54
17.13 TERMINAL QUESTIONS

1) Is personal selling equally relevant in all situations? Discuss with the help of
examples.
2) Discuss the steps involved in the selling process.
3) Explain the qualities required for a good salesperson.
4) What do you understand by the term Sales Promotion? What are the various
objectives which marketers attempt to achieve through sales promotion?
5) Discuss the various sales promotion schemes directed at consumers, giving
suitable examples.
6) Explain the meaning and objectives of trade allowance.

Note: These questions will help you to understand the unit better. Try to write
answers for them. But do not submit your answers to the university for
assessment. These are for your practice only.

55
UNIT 18 ADVERTISING AND PUBLICITY

Structure

18.0 Objectives
18.1 Introduction
18.2 Meaning, Objective and Role of Advertising
18.2.1 The Meaning of Advertising
18.2.2 Objectives of Advertising
18.2.3 The Role of Advertising
18.2.4 Criticism of Advertising
18.2.5 Benefits of Advertising
18.3 Major Institutions in Advertising
18.4 Advertising Process and Decisions
18.4.1 Mission Decision
18.4.2 Money and Budget Decision
18.4.3 Message Decision
18.4.4 Media Decision
18.4.5 Measurement of Effectiveness Decision
18.5 Publicity
18.5.1 Difference between Advertising and Publicity
18.5.2 Advantages and Limitations
18.5.3 Generating Publicity
18.5.4 Public Relation
18.6 Let Us Sum Up
18.7 Key Words
18.8 Answers to Check Your Progress
18.9 Terminal Questions

18.0 OBJECTIVES

After studying this unit, you should be able to:

 define advertising;
 state the objectives of advertising;
 explain various institutions of advertising in India;
 identify various decisions to be 'aken for an advertising program;
 describe various factors that determine the choice of media for advertising;
 define publicity and differentiate it from advertising;
 narrate various means of generating publicity; and
 explain the meaning of public relation

56
18.1 INTRODUCTION

As discussed earlier in the block, promotion mix is the fourth component of

Marketing Mix and plays a significant role in making a marketing program to achieve
its desired goal. The promotion mix includes advertising, sales promotion, publicity
and personal selling. Each of these tools is used in different stages of a brand's life
cycle in different proportions to aid the success of the product offering. You have
already studied Personal Selling and Sales Promotion in the previous unit. We intend
to cover advertising and publicity in this unit of study. You will study what really
advertising means and how different it is from the publicity. You will also learn about
the key decisions you should take as a manager while designing an advertising
program for your firm. We will also cover the issues and role of publicity as a
potential and strategic tool for brand promotion in Indian context.

18.2 MEANING, OBJECTIVE AND ROLE OF ADVERTISING

Advertising is the poetry of marketing. In this section we are going to discuss about
various definitions of advertising, their relevant meaning, objective and function of
advertising.

18.2.1 The Meaning of Advertising

The word advertising has been derived form the Latin word "Advert ere" which
means to turn (the mind) to. Broadly speaking, advertising does turn the attention of
people to a commodity or service. One of the earliest attempts in defining advertising
was as follows:" The dissemination (spreading) of information concerning a product,
service or idea to compel action in accordance with the intent of the advertiser".

This definition could include persuasive selling through personal communication. It

was, therefore, considered necessary to avoid this overlap. The American Marketing
Association defined advertising as "any paid form of non personal persuasion and
promotion of ideas, goods or services, by an identified sponsor". So advertising is a
paid, non personal (mass) communication with an identified sponsor with two distinct
goals of informing( for persuasion and influence) people( communication goal) and
increasing sales (sales goal). Rephrasing this definition we might say that following
are some of the key features of advertising:

1. Advertising is a form of communication for which payment has been made to the
media composite which has carried the communication. When there is no direct
payment or no payment, it is called publicity
2. The communication process is non personal as nobody has personally conveyed
the message i.e there is no personal contact between the sender and the receiver
of the message. When a retail salesman speaks to us in the sales counter, we can

57
 call it as personal selling as there is direct interaction between the receiver
(buyer) and the sender( the salesman)
3. The presentation of the message is for promoting ideas, places, concepts, people,
parties, goods, services, organizations to create awareness and assist in the
process of consumer decision making. The awareness may lead to persuasion and
hence the consumer may be triggered to take a decision about buying the product
or service being advertised.
4. The sponsor is identified the advertisement either in the form of the brand name
or in the form of the company which produces it. This is relevant as the
ownership of message communicated rests with the sender. If the sponsor is not
identified then the objective of the message will be lost as the potential buyer is
not sure where to search for further information in the form of enquiry or to go
for a consumption choice.
The theory of advertising says that most contacts with consumers or end users, which
are individually relatively low in value, must inevitably be handled by indirect means.
Of these the main process used to talk to consumers is advertising. Farris and Buzzell
concluded that advertising/promotion ratios are higher where
 The product is standardized, rather than produced to order
 There are many end users (almost all households)
 The typical purchase amount is small
 Sales are made through channel intermediaries rather than the direct to users

Check Your Progress A

1. Define advertising
2. What are the main features of advertising?
3. Select any five TV advertising campaigns and identify the following in each case
a. Target audience
b. Sponsor
c. The advertising agency
d. Various media through which it comes
e. The message it wants to give to the audience

18.2.2 Objectives of Advertising

Advertising is a method of communication with a specified objective. The objectives

of advertising as explained before are grouped as sales objectives (measured in terms
of increase in sales, increase in market share and return on investment) and
communication objectives. The communication objectives of advertising can be
grouped into the following
 Building awareness (informing): The first task of any advertising is to make the
audience appreciate that the product or service exists and to explain exactly what
it is
58
 Creating favorable attitude (persuasion): The next stage and the one that
preoccupies most advertisers, is to create the favorable attitude to the brand
which will eventually lead the consumers to switch their purchasing pattern
 Maintenance of loyalty ( reinforcement): One of the tasks which is often
forgotten is that of maintaining loyalty of existing customers who will almost
always represent the main source of future sales.
There are various theories of advertising explaining the communication objectives.
We will discuss few important ones here. One of the earliest models of advertising
effectiveness measurement revolves around what communication goals marketers set
for a campaign, known as the AIDA model. It proposes that the effect is the action
into which a potential customer is induced as result of advertising. The sequence
operates in the following fashion in a hierarchical manner within potential customer.

This model highlights the importance of attracting the attention of the prospects and
creating interest through the advertising messages and its presentation. The desire to
obtain advertised goods/services may be generated to various degrees among different
prospects because of advertising. The final stage of action will depend not only on the
determination of the prospect but also on other factors, such as availability, which is a
function of distribution and logistics.

Lavidge and Steiner propound the second model. This gives much importance to the
cognitive evaluations. With an increase in competition and an enhancement in
discerning abilities of potential buyers and users, information would play a greater
role. The persuasive power of advertising could in itself be a function of the
information content. This model takes the competition in to account. This competition
arises between brands of a product and between substitutive product categories also
as perceived by prospects constituting the target audience. The stage of liking
following those of awareness and knowledge may refer to the advertising, thus
emphasizing the creative aspects. Preference for the product or the brand may be the
combined effect of product characteristics and their relevance to the target audience
and of advertising.

59
Rogers propounded the third model, which is known as Innovation -Adoption Model.
This model has relevance to new product introductions and is particularly useful for
adoption of non-commercial services or practices in developing countries. The stages
of evaluation and trial before adoption (or purchase) are considered significant in the
design of advertising program. The decision in favor of making an evaluation is likely
to be influenced by information available from various sources including advertising.
Evaluation constitutes a major step towards the adoption of the product or service.

There are general objectives of advertising that covers goals like encouraging
increased consumption of a product by current users, generating more sales leads,
increasing brand awareness, increasing repeat purchases and supporting the personal
selling efforts. Some of the broad advertising goals are explained below.

1. Launch of New Products and Services: In a saturated market, the introduction

of new products and brands can give the seller a tremendous opportunity for
increasing his sales. In the case of innovative products (totally new to the market)
such as Laptop Computers, a great deal of advertising has to be done over an
extended period of time to make people aware of "What the product is" and
"What it does" and "How the customers would find it useful". In addition, the
advertisement also carries information about the availability of the product and
facilities for demonstration/trial etc. Similarly new brands of existing product
categories are also promoted quite aggressively. Two recent examples are the
launching of "Pepsi Blue" soft drink during the cricket world cup and launch of
"Mountain Dew" in subsequent period.
2. Expansion of the Market to Include the New Users: Advertising can be used
to tap a new segment of the market, hitherto left unexplored. For example TV
and Video Camera manufacturers who have been concentrating on domestic
users and professionals can direct their advertising to the government institutions
and large organization for closed circuit TV networks, security systems and
educational purposes. Another way of expanding the consumer base is to
promote new uses of the product. For example, Johnson's baby oil and baby
cream were originally targeted to mothers. The same products have now been
directed towards the adult market for their personal use. Similarly, Milkmaid was
60
 originally promoted as a substitute for milk. It is now being advertised as an
ingredient for making sweet dishes and also as a sandwich spread for children.
3. Announcement of a Product Modification: For such advertising, generally, the
terms "new", "improved", "Excel" etc. are used as prefixes to the brand name.
For example, "Surf Excel" gives the impression of an advanced detergent
powder, although there may be no tangible difference between the earlier brand
and the new one. Sometimes a minor packaging change might be perceived by
the customer as a modified product e.g. "a new refill pack for Nescafe"
4. Announcement of a Special Offer: Because of competition, slack season,
declining sales, etc, advertising is used to make a special offer. For example,
Colgate Dental Cream campaign about 20% extra was to increase volumes
through a sales promotion campaign. Hotels offer special rates during off-
season. Similarly many products like room heaters, fans, air-conditioners, etc,
offer off-seasons discounts to promote sales.
5. To Announce Location of Stockiest and Dealers: To support dealers, to
encourage selling of stocks and to urge action on the part of readers, space may
be taken to list the names and addresses of stockiest and dealers.
6. To Educate Customers: Advertising of this type is "informative" rather than
"persuasive". This technique can be used to inform new users about a well-
established product. It can also be used to educate the people about an improved
product e.g. Pearl Pet odor free jars and bottles. Sometimes societal advertising is
used to educate people on the usefulness or harmful effects of certain products.
For example, campaigns against unsafe sex and AIDS are sponsored by
government and voluntary agencies. Similarly, advertisements discourage the
consumption of liquor and drugs.
7. Reminder Campaigns: This type of advertising is useful for products, which
have a high rate of repeat purchase, or those products, which are bought
frequently e.g. blades, cigarettes, soft drinks, etc. The advertisement is aimed at
reminding the customer to ask for the same brand again. The campaign of "Dil
Maange More" during television breaks of cricket matches is to have a top of
mind recall.
8. To Seek Dealer Cooperation and Motivation: A successful retail trader
depends upon quick turnover so that his capital can be reused as many times as
possible. Dealer support is critical, particularly for those who have limited shelf
space for a wide variety of products. Advertisers send "display" material to
dealers for their shops, apart from helping the retailer with local advertising.
9. To Create Brand Preference: This type of advertising does two things: (i) It
creates a brand image or personality (ii) It tells the target audience why Brand X
is better than Brand Y. In this type of advertisement, the product or brand
acquires a 'personality' associated with the user, which gives the brand a
distinctive 'image'. The second type of advertising also known as 'comparative
advertising' takes the form of comparison between two brands and proves why
one brand is superior to the other.

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10. Other Kind of Advertising Objectives: Advertising also helps to boost the
morale of sales people in the company. It pleases sales people to see large
advertisements of their company and its products, and they often boast about it.
Other uses of advertising could include recruiting staff and attracting investors
through "Public Issue" advertisements announcing the allotment of shares etc.

18.2.3 The Role of Advertising

Advertising plays a great role in marketing. The significance of advertising is felt by

looking at the amount of money that is being spent for promoting products, services,
ideas, concepts and personalities all across the world. It is an all-pervasive fact for
many growing communities. It bears a consequence to both the audience and the user
of the advertised products. The economic and social impact has far-reaching
consequences than the return on investment model used to calculate the value of
advertising in strict economic sense.

There are various products available in the market in different categories and
different brands with varied proposition in the same category. So it is necessary to
provide information to consumers about the products. Advertising plays this
communicator role to the consumers. As the economy becomes more complex and
dimensions of competition undergoes change, advertising's role changes and has a
strategic significance in developed economies. Advertising plays a major role in
connecting the manufacturer to the consumer in providing services and new product
ideas from producers to consumers. Advertising is a reminder to the existing
customers and it aims at cultivating new prospects also. So it is perceived as an
effective medium with the target audience.

The hierarchal structure of need theories propose that consumers do not pursue the
same kind of need at all times and they need persuasion to move from the level of
'need' to a state of 'motive'. Motives are goal directed actions that consumers take.
Advertising plays the role of persuader to the consumers. In modem marketing, the
role of marketing is not confined to only information dissemination function. The
consumer should be aware of the advertiser's persuasive interest no matter how
restrained or informative the message may be.

As more and more consumers start using the product, advertising expands the market
and hence the industry, leading to growth in the over all economic environment. It
also helps in developing new market segments and identifying buyers for new
products. Companies with high research and development costs always expect the
advertising to play a greater role in disseminating the new product information to a
large number of audience so that the investment can be ploughed to the
organization's future operations.

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Advertising plays the role of a motivator and de-motivator also in social advertising.
In the anti smoking campaign and ant1 AIDS campaign it de-motivates people to
have these practices where as in family planning campaigns, advertising motivates
people to take the planned family concept. Therefore, advertising plays the role of a
vehicle to bring desired social changes.

18.2.4 Criticism of Advertising

Advertising is not free from criticism and many people feel that advertising is a
waste of money, which subsequently is transferred to the consumer leading to a high
cost for the advertised product. Following are the criticism of advertising.

1. Most Advertising is in Bad Taste: If advertisements speak the truth, then we

Indians smell worse, suffer from dandruff, colds, indigestion and bad teeth, more
than any other people in the world suffer. Movie advertisements are considered
repulsive by even the most liberal people. Advertisements are noisy, ill timed and
sometimes even stupid.
2. Advertising Insults Consumer Intelligence: When an advertisement claims,
that Brand X tyre gives more mileage; it does not say more mileage than what do.
The claim is indefinite. Most people do not like being talked down to. For
example an advertisement which begins with "Did you know..." is not well
received by many people.
3. Advertising Appeals Mainly to Emotions: It is felt that advertising is less
rational, objective, and more emotional. For example, an advertising appeal for
an After Shave Lotion states that it makes the user more desirable and attractive
to the opposite sex, rather than focusing on the antiseptic value of the lotion or its
price.
4. Advertising is a Source of Discontent: This argument claims that if it were not
for advertising we would be less aware of the material things around us in the
world and would, therefore, feel more content. For example, a person sees an
advertisement for a Yamaha motorcycle. Here his want is not real because it did
not originate within him. It becomes a source of discontent for him, because he
can never be happy with the moped he presently owns.
5. Advertising Influences Media: Since advertiser provide a major source of
revenue for the media, the media are likely to be influenced by the former. This
financial dependence of media on advertisers can curb the freedom and
autonomy of the media. With the result, media will disseminate the kind of
information the business wants to disseminate rather than provide information in
line with public interest.
6. Some other economic objections are as follows:
i) Advertising is not Productive: Advertising does not produce any tangible
goods.

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 ii) Advertising Increases Cost: Since the price of a product also includes the
expenditure on advertising, the consumer tends to pay a higher price.
iii) Advertising Leads to Monopoly: Advertising usually lays emphasis on
brands. This emphasis makes the consumer a slave of a particular brand.
Therefore, existing large producers tend to block new competitors from
entering the market, by creating a high degree of brand loyalty though
advertising.
iv) Advertising Multiplies Needs and Wants: It takes business from one
concern and gives it to another. For example, people today are familiar with
soap, toothpaste, talcum powder. When a new kind of talcum powder is
introduced, advertising will only help to shift demand from one product to
another.

18.2.5 Benefits of Advertising

Advertising has also a brighter side and you as a manager are free to weigh the pros
and cons of advertising before taking a decision for developing a campaign and its
overall impact on the society.
1. Benefits to Producers: Advertising is beneficial to producers in the following
respects:
i) It leads to an increase in sales volume. This increase in sales volume leads to a
higher rate of production, which in turn may lead to economies of scale
resulting in a lower cost per unit. Further, in the absence of advertising, the
company would be spending more money on other expensive means of
promotions such as personal selling and sales promotion.
ii) Advertising helps in easy introduction of products in the market.
iii) It helps to establish direct contact between manufacturers and customers
2. Benefits to the Middlemen: Middlemen, particularly wholesalers and retailers
derive the following benefits from advertising:
i) It is easier for them to sell products because consumers are aware of the
product and its quality through advertising.
ii) The product reputation which is created through advertising is shared by
wholesalers and retailers alike.
iii) It enables wholesalers and retailers to acquire product information.
3. Benefits to Customers: Advertising is beneficial to customers in the following
aspects:
i) Advertising stresses quality and very often prices. This forms an indirect
guarantee to customers. Furthermore large scale production assured by
advertising enables the seller to reduce the production cost and sell the
product at a lower price.
ii) It helps the customers to know where and when the products are available.
This reduces their shopping time.

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 iii) It produces an opportunity to customers to compare the merits and demerits of
various substitute products.
iv) Modem advertisements are highly informative. It is perhaps the only means
through which consumers come to know about varied and new uses of
products.
4. Benefits to the Community: Community as a whole also derives the following
benefits:
i) Advertising leads to large-scale production, thus creating more employment
opportunities. It assures employment opportunities to advertising
professionals i.e. artists, copywriters etc.
ii) It starts a process of creating more wants and their satisfaction, resulting in a
higher standard of living. Advertising has made more popular and universal a
number of inventions such as automobiles, radios, TVs and other household
appliances.
iii) Newspapers would not have become so cheap and popular if there had been
no advertisements. It is the advertising revenue that makes newspapers thrive.
iv) Advertising need not necessarily lead to a monopoly. It is quite possible that
new entrants with better and newer products have a better chance of
acceptance by the consumers.

18.3 MAJOR INSTITUTIONS IN ADVERTISING

There are five parties involved in an advertising process as explained in the Figure
18.4. They are 1)advertiser 2) advertising agency 3) support organization 4) media
and 5) target audience( consumer)

1) Advertisers: These are the persons/organizations who sponsor the campaign.

They may be producers, retailers, wholesalers, service organizations, labor
unions, schools, government, politicians, individuals and many more.
Advertisers, in short, are people or organizations who pay the bills or the money
required for advertising.
2) Advertising Agencies: These are independent business organizations that
develop, prepare and place advertisements in media for clients who want to
communicate to customers about their goods or services. Advertising agencies
offer potential advertisers (clients) a variety of specialized service, which result
in a finished advertisement. Such services include the following
i) Copy Writing: This refers to the written part of a print advertisement,
including the headline, slogan and detailed description of product attributes
wherever required. In broadcast media, the equivalent of this is called script-
writing.
ii) Advertising Art: Refers to illustrations, drawings, photographs or other art
form required in the finished advertisement.

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 iii) Media Buying: Involves specialists who negotiate rates with different media
and gather other relevant information for buying space and/or time in
suitable media.
iv) Client Servicing: An executive of the agency is assigned exclusively for
handling a particular client. He/She is the connecting link between the client
and the creative department in the agency.
v) Other Services: Include research, public relations and merchandising on
behalf of the client
3) Support Organizations: Modem advertising calls for specialists not employed
by either the advertiser (client) or the advertising agency. These consist of
casting specialists, cinematographers, film/tape editors, photographers, music and
sound effect experts. Thus, a lot of outside help is required by the agency to
produce a good advertisement. In addition, research has become a very important
input for most advertising decisions, particularly to find out consumer attitudes,
behaviors and profiles. It may not be possible for the agency or the client to carry
out this function by themselves. Therefore, they hire the services of outside
experts. All such organizations are known as support organizations.
4) Media: Advertising is a non-personal form of communication through paid
media So media plays a crucial role. As such, advertisement needs a channel
through which the message can be conveyed to intended target audience. This
channel is called a medium. Various types of media commonly used are
newspapers, magazines, radio, television, hoarding, cinema slides, moving
vehicles, etc.
5) Consumers: These are the people whom the advertiser is trying to reach with his
message. However the correct term to use would be target audience.

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Check Your Progress B

1. Advertising is said to be a 'force' which moves people up a series of steps

indicating their readiness to buy. List out these steps from the advertising theory
explained in this unit.
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
2. State some of the major objections against advertising.
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
3. Name important parties involved in the business of advertising.
………………………………………………………………………………..

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 ………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
4. State whether the following statement are true or false:
i) Advertising is non paid form of communication.
ii) Advertising is transmitted in mass communication media, not by individual
sales people .
iii) A series of advertisements with a common objective is called a campaign
iv) A Copy refers to the written part of a print advertisement, including the
headline, slogan and detailed description of product attributes wherever
required.
v) Advertising always adds up to the product cost.

18.4 ADVERTISING PROCESS AND DECISIONS

Developing an effective advertising campaign requires a stream of interconnected

decisions on such matters as objective setting, budget setting, media decisions as well
as decisions on strong creative strategy. Following are the decisions that you should
take while designing an advertising programme:
 Mission (Objective) Decision
 Money and Budget Decision
 Message Decision
 Media Decision
 Measurement of Effectiveness Decision

18.4.1 Mission (Objective) Decision

This is the first decision in any advertising campaign. This should emanate from the
over all promotion objective set for the firm. The objectives of advertising are briefly
explained in the beginning of the unit. The sales objectives and communication
objectives are set by the marketer, which lead to the next stage of decision.

18.4.2 Money and Budget Decision

There are various methods of deciding on advertising budget. This decision will be
largely influenced by the objective that we set for the campaign. For example if there
is a new product launch then the advertising campaign will have to be high where as
for launching a repeat campaign one would like to spend less. The most commonly
used advertising budgeting method include
1. Percentage of Sales Volume: The percentage is worked out on the basis of-a
firm's historical budget, industry norms or on the basis of the prevailing market
conditions. If the market has started an upward trend then one percent extra
amount will be put for advertising budget. Following this method without
considering market conditions may create problem. If the firm's market share is
on downward trend then the firm may decide to increase the advertising budget.
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 If the product is in the disinvestment stage, then disinvestment may be an option.
In such a case only marginal advertising budget is sufficient to clear the stock. If
the firm realizes that at the decline stage the competitors are moving out then the
firm can decide to take the leadership position through aggressive advertising.
2. Unit of Sale Method: Consumer durable firms make use of this method as a
variant on sales percentage. While it mostly works out same as a sales
percentage, here the firm puts an amount of advertising expenses on the unit as
add on.

Fig. 18.5: The Advertising Management Process

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3. Competitive Parity Method: Competitive information regarding their sales,
distribution pattern and advertising must be carefully studied by the firm. It will
provide the correlation between the competitive sales and advertising effort.
Depending on the firm's strategy of increasing market share or steadying the
share, decision can be made to have a bigger or smaller budget than competition.
Instead of reacting to competitor advertising results, firms can be proactive in
their approach by planning their own goals of marketing and then the advertising
budget will emerge.
4. Historical Method: In this method last year's advertising budget is adopted for
the year with a view that practically no change has taken place in the market and
market growth is slow, which does not justify any addition to the budget. Last
year's budget could be multiplied by a factor to cover media rate increase.
5. Affordability Method: Some firms believe that advertising is tactical and not
strategic and hence does not need much attention. These kinds of firms follow a
method of affordability and spend what is left after managing the details of the
official expenses involved in paying to the factors of production.
6. Total Group Budget: In case of multi location and multi product line firms , a
total amount is decided for advertising and each strategic business unit receives a
share according to their needs. This method helps the group to segregate some
amount for corporate group advertising for building the image of the
organization.
7. Percentage of Anticipated Turnover: This method is useful in dynamic
markets and budget can be fixed on the estimated demand pattern.
8. Elasticity Method: This method takes into account the seasonality of business
and the periodicity in the purchase cycle of consumers into consideration. This
method takes into consideration the demand and supply situation and is more
used in industrial products.
9. Operational Modeling: Market research gives advertising expenses, market
response and sales per advertising figures and the modeling is done to explain the
budget.
10. Composite Method: This method takes into consideration several factors in
formulating the advertising budget which include indices like firm's past sales,
future sales projection, production capacity, market environment, sales problems,
efficiency level of sales personnel, seasonality of the market, regional
considerations, changing media scenario and changing media impact on the
target market segment, market trends and results of earlier advertising and
marketing program.
11. Objective and Task Method: Marketing people follow this method more often
as this is a scientific method where the advertising goals are explicitly stated and
the cost to achieve the target is also spelt out. Taking each activity like increasing
geographic sales area, increasing market awareness by a certain percentage over
the figure obtained from the brand tracking study, they add up the amounts
needed for each activity. We can illustrate the process as below:

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 i) Establish the Market Share Goal: Let us say the company estimates 50
million potential users and sets a target of attracting 8 percent of the market i.e.
four million users.
ii) Determine the Percentage of the Market that should be Reached by
Advertising: The advertiser hopes to reach 80% (40 million prospects) with the
advertising budget.
iii) Determine the Percentage of Aware Prospects that should be Persuaded to
Try the Brand: The advertiser would be pleased if 25 per cent of aware
prospects (10 million) tried the brand. This is because it estimates that 40% of
all triers or 4 million people would become loyal users. This is called the
Market Goal.
iv) Determine the Number of Advertising Impressions per 1 per cent of Trial
Rate: The advertiser estimates that 40 advertising impressions (exposures) for
every 1 per cent population would bring about a 25% trial rate.
v) Determine the Number of Gross Rating Points that would have to be
Purchased: A Gross Rating point is one exposure to 1 per cent of the target
population. Because the company wants to achieve 40 exposures to 80% of the
population, it will want to buy 3,200 gross rating points
vi) Determine the Necessary Advertising Budget on the Basis of Average Cost
of Buying a Gross Rating Point. To expose 1 per cent of the target population
to one impressions costs an average of Rs. 3277. Therefore, 3,200 gross rating
points would cost Rs. 10,486,400 in the introductory year.

18.4.3 Message Decision

The generation of ideas and the development of the advertising message or concept
make up the creative process. Advertising copy writers, art directors, and other
creative people are responsible for the task of answering two questions "What to say"
and "How to say it". These questions reflect the two basic parts of the creative
strategy. Advertising copywriters, art directors and other creative people are
responsible for answering the above two questions.

What to Say? (Appeal)

The central idea of an advertising message is referred to as the advertising appeal.

The purpose of the advertising appeal is to inform the potential customers what the
product offers and why the product is or should be appealing to them. When the same
advertising appeal is used in several different advertisements to provide continuity in
an advertising campaign, it is called as advertising theme. LG Electronic uses the
theme of health in all its product category to appeal to the customers.

How to Say? (Execution of an Appeal)

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Even when the creative head has an important and meaningful message to relate, its
effect can be lost if it is not presented in the right way and in the right context.
Marketing Research helps in this regard. Consumer research can give leads to the
creative people to develop themes and execution styles. How to say something is
more important than what to say. The characters delivering the message, the
emotional tone, the situation in which the action is executed, all of them combined
should create proper effect on the customers for a desired outcome. How an
advertisement says something is its creative platform or execution format. The media
in which the message will be executed influence the creative platform. By analyzing
the major creative platforms used in advertising, especially television commercials,
we can identify the details of a creative platform that include storyline, product use
and problem solution, slice of life, demonstration, testimonial and spokesperson, life
style, still life, association, montage and jingle
1. The storyline creative platform gives a historical sketch or tells a story about the
product. In television commercials that use storyline creative platform, an unseen
announcer (called voice flying over) often narrates a story with a recognized
beginning, middle and end. Copywriters attempt to make the product the hero in
the storyline.
2. Product Use and Problem Solution is another creative platform. Straightforward
discussion of a product's uses, attributes, benefits or availability is frequently
utilized in advertising. A Unique Selling Proposition (USP) or a combination of
Extra Value Proposition (EVP)is the central focus in such kind of advertisements.
The Pepsodent campaign talks about how the brand can help in gum and teeth
protection. Medicines always advertise on such platforms.
3. The Slice of Life dramatizes a typical setting wherein people use the product
being advertised. Most of these commercials center on a person, household or
business situation. For example Lolitaji of Surf was a revolutionary character
reflecting the Indian middle class housewife. This kind of commercial begins just
before a character discovers an answer to a problem. Whether the trouble is tooth
decay, dandruff, bad breath, over weight, sexual weakness emotions run very
high in these commercials. The product is then introduced and recommended and
the character on the screen gives a try for the product. Just before the end of the
campaign, the story talks about how happy/successful the person is after the use
of the product. For example, Tiku Talsania in the Vicks Action 500 campaign
talks about congestion and then uses the product to get an instant relief.
4. Demonstration IS a creative platform where a clear-cut example of a product's
superiority or enhanced consumer benefit is presented. For example, the latest
campaign of LG television, which shows the extra amount of sound that the new
television can give, compared to others also shows about the demonstration
effect. The Fevicol campaign in which the chicken gives an egg, which cannot be
broken as the chicken, was taking food in the Fevicol pack is a demonstration of
the superior product quality of the brand as an adhesive. Unusual situations or a
bit of fantasy can draw attention to product benefits. Many demonstrations occur

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 in infomercials. These are television commercials, usually thrity minutes long
and have the appearance of a regular programs such as khana khazana or jindegi
hai safar suhana in cable networks. The product or service is repeatedly
demonstrated in the infomercial.
5. Comparative advertising as a platform directly contrasts one brand of a product
with another. This is one form of demonstration advertising. The sponsor's
product is shown as superior to other brands. An advertisement of Rin soap in
comparison with available detergent (like Nirma) is an example. The famous
campaign of Captain Cook salt in comparison to Tata salt is also another
example.
6. Testimonial Evidence and Endorsements show a person, usually a prominent film
or sport personality making a statement establishing that he or she owns, uses or
supports the brand advertised. The idea is that people who identify with the
celebrity will want to be like that person and use the same product. Alternatively,
the advertiser hopes that the audience will see the endorser as an honest person or
role model who will not lend his name to a product unless the product in itself is
good. Amitabh Bachan for Parker Pen, Pepsi, Saharukh Khan for Santro, Top
Ramen smoodles, Pepsi and Sachin Tendulkar for TVS Victor, Pepsi, MRF tires
and many endorse the products. A variation to the testimonial appeal is the use of
the spokesperson. The spokesperson represents the company and addresses the
audience directly urging them to buy the company's products. We have seen this
kind of advertisements in Eureka Forbes Campaign where Nitish Bhardwaj
speaks on behalf of the company to buy its products by enacting the role of a
salesperson.
7. Life style is the most commonly used platform for advertising many durable and
fashion products. It combines scenes and sequences intended to reflect a
particular target market's life style. Soft drink and fast food advertisements as
well as those for many consumer goods frequently show product users m
different inspirational life style patterns.
8. Still Life creative platform shows the product in a visually attractive setting. The
product or package is the focal point of the advertisement. Reminder and
repetitive advertisements often use a still life creative platform because the most
important objective of the message is to reinforce the brand name. Tata Tetley
uses this platform to reflect the special class of its product.
9. The Association creative platform concentrates on an analogy or other
relationship to convey its message. This often borrows interest from another,
more exciting product or situation. Thrilling activities and scenes of marvel are
used as an association with the product. The advertisements of Bajaj scooters and
ThumsUp campaign show such kind of associations. Fantasy is a special
associative creative approach. The advertisements of MRF tires with the
unidentified flying objects for its Zigma Radial tires are examples of use of
fantasy. The fantasy appeal seeks to associate products not merely with a
glamorous setting but with target market's wildest dreams and hopes. This allows

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 the audience to fantasize about themselves in the position of the famous, rich and
adventurous as shown in the advertisements
10. A song or other short verse used in an advertisement as a memory aid is called a
jingle. The famous jingle of Remo Fernandez as “ Yehi hai right choice baby" or
"Only Vimal" are examples of musical jingles used in advertising. Commercial
jingles have a higher memory value as people use to hum it very often.
11. Montage blends a number of situations, demonstrations and other visual effects
in to one commercial. The effect may be one of a swirl of colors or an exiting
array of possibilities associated with the product usage. Travel advertisements of
Goa Tourism Development Corporation can be taken as an example of a
montage. Pepsi's generation next campaign also uses montage as a creative
platform.
12. Humor is also used as an effective creative platform. We have seen campaign of
Dabur hajmola candy, Titan watches and BPL mobile on creative platform with
humor as a potent storyline. Humor in India is not much used as its acceptance in
social setting is not healthy in India.
13. Fear is a critical platform, as managers have to be careful in using fear as a
creative platform. Research suggest that smaller amount of fear in the storyline
does not bring the desired change in the attitude of the people where as excess
use of fear creates a self-defensive mechanism among people and hence reduces
its effectiveness on people. Therefore, a moderate amount of fear is useful. This
is called the "Cap Theory of Fear Research" Life Insurance Corporation,
Insurance companies in general, Anti AIDS campaign use fear as a creative
platform.
14. Sex is also used in advertising as a creative platform. Creative directors were
using sex for advertising products related to sexual power enhancing pills and
other consumer shy products like condoms, pills and inner garments. Of late the
use of sex platform is gaining popularity due to changes in the social setting in
our country and hence we see the advertisements of Tuff shoe, MR Coffee, Lee
Cooper shoe using sex platform. As every society has its own permissibility limit
a manager should be careful while using sex as a platform for advertising.

Other creative platforms include computer graphics and animation, pure product
information and emotional platform. Since we have discussed fear, sex, association
which are constituent of the emotion domain as creative platform , we conclude the
description of the creative platform here.

18.4.4 Media Decision

Media decision involves selection of the communication channel for the message.
The media selection strategy must take into account the message the advertiser
wishes to transmit, the kind of audience he wants to reach, the desired effect and its
nature and the budget to support the media choice. Media choice decision involves
two issues viz. which media or set of media will effectively take the message to the

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audience and what scheduling of media will neither create a hate for the
advertisement and nor will make the audience to forget the message.

The term medium applied to advertising refers to a channel of communication or a

'vehicle' for carrying the advertiser's message to his target audience. The most
brilliant and original advertising ideas will be wasted if they are not presented in the
,. right place, at the right time to the right people at the lowest possible cost. It is
interesting to note that the largest part of advertising expenditure goes towards the
purchase of advertising media, space and time. The success of an advertisement
depends as much on the medium as on the message.

1) Types of Media
Advertising media can be categorized into five broad types: i) Print media, ii)
Broadcast media, iii) Direct media, iv) Outdoor media, and v) Interactive media.
However, within each of these four categories there will be several classes. For
example, print media includes both newspapers and magazines. Under newspapers
we might have such classifications as daily newspapers, weekly newspapers,
morning newspapers, evening newspapers, and so on. In the case of broadcast media
the choice of units is limited to channels or stations. Let us examine various types of
media in detail.

i) Print Media: Print medium comprises newspapers and magazines. The main
difference between newspapers and magazines is the periodicity of their publication.
Newspapers are published daily, whereas magazines are published periodically i.e.,
weekly, fortnightly, monthly, quarterly or biannually. In both cases, however, the
message is conveyed through words in print, sometimes along with pictures or
photographs. Words in print can be made as attractive, appealing and informative as
possible, so also the accompanying picture. But newspapers and magazines have
certain distinct features of their own, which are outlined below.

Newspapers: Published in different languages, newspapers are widely and regularly

read by the educated public. Reading newspaper is the daily habit of many people in
cities and towns and some literate people in the villages. Many have also become
accustomed to advertisements in newspapers and look for them as sources of
information. The circulation of some of the national dailies in India runs into several
million. Newspapers published in regional languages have also wide circulation,
sometimes in more than one state. Thus, as a medium of advertising, newspapers
reach a very large number of people. Secondly, newspaper advertising is relatively
cheaper than other media like radio and television. The space to be used can be
decided in accordance with the need and cost involved. 'Thirdly, newspapers provide
the facility of repeating the 4 message every day, if necessary. Besides, in case of
urgency there is scope for inserting an advertisement without much loss of time.
Finally, it is possible to select a particular newspaper suitable for the audience in

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view. For national coverage, a newspaper which has nationwide circulation can be
selected. For regional coverage, a newspaper published in that regional language can
be selected. Since newspapers are read by the general public, they may be used as
suitable media for goods of mass consumption. Many people read the newspapers in
the morning and put them aside afterwards. So, the life of the advertisement in a
newspaper is short.

Magazines: Magazines are also called periodicals as they are published at periodical
intervals - weekly, fortnightly, monthly and so on. Different types of magazines are
published for different categories of readers. For example, there are popular general
magazines containing features articles, news and stories e.g. India Today, Frontline,
Dhann Yug, etc.

There are magazines for children (e.g. Target, Chandamama, etc.) which include
stories of their interest. There are magazines like Business India, Fortune,
Commerce, etc., for businessmen arid executives. Similarly, there are sports
magazines (e.g., Sports Week, Sports Star, etc.) women's magazines (e.g. Femina,
Women's Era), professional magazines (e.g. Indian Journal of Marketing, Indian
Medical Journal, etc.), film magazines (e.g. Star & Style, Filmfare, etc.) and so on.

From the point of view of circulation, magazine are not as widely read as
newspapers. On the other hand each magazine has a distinct category of readers.
Since magazines are generally read over a period of time, they have longer life than
newspapers. Thus, advertisers use magazines as a medium selectively depending on
the audience to be reached. For example, medical books, drugs, surgical equipment,
medical instruments, etc., are generally advertised in medical journals.
Manufacturers of office equipment, computers, etc., advertise their products in
business magazines, trade journals, and so on. On the whole, the cost of advertising
in magazines is relatively cheaper compared to other media like radio and TV.

ii) Broadcast Media: Broadcasting as a medium of advertising has become very

popular and important. Broadcast media includes Radio and Television. Radio is
simply an audio medium while TV is an audio-visual medium.

Radio broadcasting as a medium of advertising has become increasingly popular in

India due to the availability of radio sets at prices which people of low income can
also afford. In India radio sets are owned by a large number of population. Thus,
advertisement appeals can reach the general public in different parts of the country
very conveniently through radio broadcasts. In India advertisements are broadcast by
the All India Radio (Vividh Bharti Programme) in specified channels. Radio Pakistan
and Radio Ceylon also broadcast the advertisements for Indian population. As a mass
medium, radio broadcasting is well suited for various consumer goods having a mass
appeal such as movies, electric fans, refrigerators, sewing machines, leather goods,

76
travelling bags, etc. The advantage of radio advertising is that, being an audio
medium, it does not require education to receive the message. The listners need not
be literates. Besides, the mesage which is orally communicated may be more
impressive than the message in print. The limitations of radio advertising are: 1) it is
more expensive than press advertising, 2) the life of the advertisement is very short,
and 3) it is difficult to remember the message in detail.

Television as a medium of mass communication has significantly increased in India

over the last 15 years. But its importance as a medium of advertising has grown with
the use of satellite transmission and establishment of more relay stations to cover the
remote parts of the country. Individuals who cannot afford to buy TV sets are able to
watch TV programmes in community centres and public places. Use of television for
advertising is increasing in recent times due to its extensive coverage and the impact
of visual communication on the viewers. Its combination of sound, vision and
movement permits the use of advertisement to demonstrate the product and its
advantages. For this reason this medium is more effective than the press and radio.
The major limitation of this medium is the heavy cost of advertising, particularly for
advertisement before or after popular programme, known as prime time. Hence, only
the large enterprises are in a position to make use of this medium. Another limitation
is that the duration of a commercial advertisement is only for a few seconds. Also
viewers often find it difficult to assimilate a large number of advertisements within a
short span of time.

iii) Direct Media: Direct response advertising is a type of interactive promotion that
solicits a direct response from the prospect (target audience) without intervention of
a third party. It is a two way communication between the advertiser and the target
audience. Direct advertising media are the channels through which advertisers
communicate directly with the target audience. Major direct media are direct mail
and advertising specialties.

Direct Mail: Sending personalized letters by post to the prospective customers is a

method of advertising, which often pays. These communications are mostly in the
form of circulars and sometimes accompanied by catalogues or price lists. The idea
behind mailing circulars is to approach the customers directly with the advertising
message and to arouse his interest in the product or service with detailed explanation
in a convincing manner. A mailing list is thus prepared and the letter is carefully
drafted with personalized wordings. The message having a personal touch is
expected to be more effective. The information may be elaborated and hence likely
to be more convincing. Addressed to individuals by name, the message can draw the
attention of the customer without distraction from competing advertising.

Direct mail is not a suitable medium for advertising products meant for public use on
a mass-scale. It is best suited for products where the people to be contacted can be

77
easily identified. For example, a company manufacturing or distributing
pharmaceutical products (medicines) may easily identify the doctors or chemists for
direct communication of information relating to the products. Similarly, a book
publishing company may conveniently identify university teachers and send circular
letters to promote the sale of its publications. But, for promoting the sale of (say)
toilet soap or wrist watches, or pen, direct mail is not a suitable means of advertising.
It would be expensive and time consuming to undertake direct mailing of circular
letters to innumerable consumers of such products who are widely scattered. A
booklet, pamphlets, catalogues, etc. sent by post to prospective customers also come
under direct mail.

Advertising Specialties: These are free gifts like diaries, key-rings, purses, paper
weights, pens, calendars, T-shirts, etc., imprinted with a message along with the
advertiser's name and address. Since they bear the name of the advertiser, they serve
as reminders. This medium gives a personal touch. But this is expensive and difficult
to implement on large scale.

There are some other direct media like directory advertising and sponsored
magazines. Directory advertising includes advertising in Yellow Pages in telephone
directory and specific trade or association directories. In the case of corporation
sponsored magazines, the advertiser owns the magazine. For example, Air India and
Indian Airlines both have their own in-flight magazines for passengers. Similarly,
many hotels publish their own magazines for circulation to a specialized group of
readers and hotel guests.

iv) Outdoor Media: Outdoor media of advertising refers tq the media used to reach
people when they are out of doors or traveling rather than at home or in the office.
Pamphlets, posters, hoardings (billboards), neon signs, and electronic displays come
under the category of outdoor media. Pamphlets (printed handbills) are quite often
used as a medium of advertising for sales promotion in a local area Pamphlets are
distributed among passersby at street crossings, railway stations or bus terminals,
roadside market places, etc. Posters (message printed on paper) are generally fixed
on walls, roadside pillars, lampposts. Posters are also fixed inside public transport
vehicles like trams, buses and railway coaches. In these cases, space is provided on
payment. Neon signs and electronic displays are usually installed on rooftops or busy
streets crossings to draw the attention of people. These are visible only in the night.
Hoardings (billboards) refer to large boards carrying the message, sometimes with
life size pictures, and installed at public places. Hoardings are specially designed to
draw the attention of the public. As the size of the hoardings is normally large,
advertisements are visible from a distance.

Outdoor media like pamphlets, posters, neon signs, electronic displays and hoardings
have different degrees of attention value. Pamphlets have temporary impact on the

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people who receive them when they are passing by and often have other matters in
their mind. Posters have the disadvantage that only those who look at them may
notice the.ir existence. Besides, posters in public places are likely to have a short
existence either due to superimposition of other posters or their removal by other
posturing agents.

Neon signs and electrical displays normally attract more public attention but these
are effective only during the night time. Hoardings have the maximum attention
value due to the big size and installation at prominent locations. The cost of
hoardings is quite high due to the heavy initial expenditure required for its
preparation and installation. The rent to be paid for locating it at a public place is
also quite high. Neon sings and electric displays involve fairly high initial costs for
preparation and installation. It also involves considerable recurring expenditure for
use of neon gas or electrical energy besides rent to be paid for location at public
places. Posters fixed on walls or pillars may be initially less expensive. Posters fixed
on the space provided in public transport (buses and railways coaches) involve
payment of periodic charges. However all outdoor media are largely less expensive
than radio and television advertising.

Apart from the media discussed above, there are several other types of media used
for outdoor advertising. Some such media are slide projection in cinema houses,
films, exhibitions, display in show-cases, etc. Projection of slides in the cinema
theatre before and during the film show is one of the cheaper means of advertising.
Projection of short-films before the commencement of feature film is a relatively
more expensive medium of advertising. But it has the advantages similar to that of
television advertising. Moreover these short films are usually of longer duration
(about 5 minutes) than TV commercials. However, only local people present in the
theatre view slides or films during the show time.

Exhibitions also provide opportunities for advertising goods. Consumer goods can be
displayed and the use of industrial goods like machinery can be demonstrated in the
exhibition. The limitation of exhibition is that their duration is restricted to specified
period. Showcases displaying goods are located in public places like railway stations,
airports, bus terminals, etc. to attract the attention of the public. Rent is payable for
the space.

v) Interactive Media: Nowadays more and more people are using the computers and
interactive media to gather information and entertain themselves. This invites us to
look at internet as a potential media for communication and product information
dissemination. interactive media allows an individual to seek information, ask
questions and get answers without the assistance of human beings.

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A company website is one of the most common forms of internet advertising.
Consumers can find answers to frequently asked questions from the website which is
normally done by a salesperson. A company web site is an ideal way to reach
consumers who want details about specific products, as interactive media can
provide large amount of information. The problems of interactive media can be
categorized as how to build traffic to the site, how to get the traffic stay longer at the
site and how to get the viewers to return to the site again for the content.

One of the ways to build traffic is to advertise on other popular and well-trafficked
websites. Advertising Banners (go to site www.vahoo.com to see an advertising
banner) is another form of Internet advertising. The company purchases the space on
a search engine or on the commercial website of an information provider like
ndtv.com or email facility provider like yahoo or hotmail. A typical objective for a
banner ad is to increase brand name recognition. Banners can go beyond achieving
brand awareness because they are hypertext links to the advertiser's website. The
advantage of such an advertisement is that the audience has self selected the topic, so
the marketer's message reaches the involved, highly targeted market.

Pop-up boxes are a refined version of banner advertising A visitor to a particular

website might find that window providing information for subscription pop ups after
the web page loads. The viewer typically has to close the window or enter a response
to the advertisement.

Streaming Media is multimedia content such as audio, video that can be accessed
on the internet without being downloaded first. Software like Real player and Apple's
Qucik Time allows the internet users to access multimedia content such as audio and
video streams. When visitors to a site use such software to view a program or an
advertisement, they are said to be viewing streaming media. Streaming ads are more
effective than banners and pop ups. Today three dimensional computer generated
video can create photo realistic results, which, users can either watch linearly or
interact with it. Interactive animated environment will take internet advertising to a
different sphere in coming future. Streaming media advertisements will become
more prevalent with the availability of higher bandwidth on broadband technology.
Broadband technology allows the transfer of data over internet at high speeds
creating a virtual reality.

Computer software programs like Smart Agents or Intelligent Agents find

information without the user's having to do any searching function. They store that
information-sometimes that entire websites, complete with images and links on the
user's computer for later viewing. These kind of smart agents that leans the
consumer's preferences and searches out information is making advertising on the
internet and other interactive media more targeted and effective.

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Email as an Advertising Medium: The use of email advertising as a promotional
medium is gaining prominence after advent of internet technology and ecommerce.
This media has the advantage of personification, speed and interactivity. Advertising
via email is very similar to traditional direct mail advertising. Data mining and data
base management are extremely important as they allow the marketers to create
customer profiles and tailor message and products to them. Use of email makes it
easier for the marketer to measure the effectiveness of the medium. A major
disadvantage of email advertising is that the receiver may not read it because he or
she considers it spam, which is the term, used for unsolicited and unwanted email. If
the company sends too many emails, it may decrease the value of the information
and customer may start avoiding the information. Effective marketers have started
sending emails to people who allow them to do so voluntarily through a process
called as Permissive Marketing.

2) Media Scheduling
The media schedule is a time schedule identifying the exact media to be used and the
dates on which advertisements are to appear. Media planners select not only the
general media category but also the specific media vehicles. Selecting specific media
vehicles requires advertisers to consider reach, frequency and timing of the media.

Reach is the percentage of people exposed to an advertisement in a specified

medium selected for advertising. This is an important factor for determining the
media use. The advertiser aspiring to reach the maximum audience also has to make
cost comparisons. The major element of the media selection is deciding about the
cost per reach per medium. For example in medium A the tariff is Rs 2001 per
column centimeters and in B it is Rs 2501. If the circulation of the medium A is
50,000 and medium B is 70,000; the readership ratio (readers per one print) is 1 :2.5
and 1: 1.5 respectively for both the medium then the advertising manager has to
calculate the cost per reach for an impression of 15 centimeter by 2-column
advertisement ( 30 Col. Cms.). The cost for both the medium will be Rs 200* 30= Rs
60001 and Rs 250*30=Rs7500 and the reach will be 50,000*2.5=112500 and
70,000*1.5= 105000 respectively. Now the cost per reach will be
Rs6000/112500=5.33 paisa per person and Rs 750011 05000= 7.14 paisa per person
respectively. Therefore, the decision is to go for Medium A than B though B has
higher circulation Hence the cost per reach is a criteria for deciding a particular
media.

Frequency is another factor with cost implications, which highlights the nature and
size of repetition. This is the number of times the advertisement should come in a
specified period. It reflects the an average number of times an average individual is
expected to be exposed to an advertiser's message. The trade off for an advertiser is
between the reach and frequency. If one wants to increase the reach, within a given

81
budget, he has to trade off with the frequency. In repetitive advertisements the
frequency is more whereas the size of the advertisement is normally small.

However, cost is a significant factor but in large number of cases, strategic and
qualitative issues are also given importance. For example, a factor like the quality of
the reach is a deciding factor over the cost factor. The vernacular media is always
chosen ahead of the English language media due to the coverage. An English
newspaper may have a wider circulation but a vernacular media is a better choice
when one has to decide an entry in to the rural market. Factors like editorial climate,
printing quality, reputation of the media, size of the media and coverage of locality
are qualitative factors having significance on media decisions.

Media Timing is another complex issue. The decisions on spacing of the

advertisements on equal proportions through out the year, higher on off season or
peak seasons, concentration in a particular newspaper or areas, use of irregular
intervals and mix of media are to be taken while planning for the media timings.
With a vast geographic, psychographic and demographic variations in a country like
India, decisions on media timing has a higher relevance in deciding the effectiveness
of advertising campaigns.

The characteristics of advertising media vary greatly and these variations play an
important role in the marketing manger's choice of media. The advertising objectives
determine which media will have the highest impact. Then the choices regarding the
reach, frequency and impact are taken.

18.4.4 Measurement of Effectiveness Decision

The last decision in the advertising process is about the methods to test the
effectiveness of advertising. This is necessary because there is a huge cost involved
in advertising. If a company launches a campaign and it is not effective then all the
money is wasted. Furthermore, there is also an opportunity cost involved in
advertising. A successful campaign would have generated additional sales, which
one has to lose because of poor campaign, and it provides a scope for the competing
brand to win over the customers in the absence of a good advertising campaign.
Therefore, managers should test the 'effectiveness of the communication message
before launching the campaign. Similarly, it is also important to study the impact of a
campaign on customers so that in the next rerun, remedial measures if any can be
taken and changes can be made to the communication message through a modified
campaign. Advertising research can be divided in to two categories (I) the pretesting
methods and (2) post testing methods.

Pretesting Methods: Marketers are hesitant to spend a huge sum on advertising

campaign without testing the effect of the advertisement. Pretesting helps managers
to know the likely response of the designed advertisement on audience. The purpose

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of advertising is to limit or at best to eliminate the risk of failure. Pretesting can be
conducted from the beginning of conception of an advertisement until the final
advertisement is ready for release. The basic appeal or the concept around which the
advertisement is built can be tested. Then the key constituent of the body copy
including the headline, slogan, body text can also be tested. These can be shown to
the sample audience and its appeal and believability of the claim can be gauged.
Focus group discussions with audience and experiments can be done for testing the
likely affect of a planned campaig.3. Most commonly used method is a consumer
jury test where a consumer panel is asked about their impression on the campaign.

Similarly, many advertisers test the print advertisement through a portfolio test. In a
portfolio method, the real advertisement to be tested is shown with a series of
dummy and competitor advertisements and the respondents give their liking on these
advertisements. There are various laboratory methods like psycho-galvanometer, eye
camera, pupil meter etc used for this purpose. Rough or near finalized television
commercials are shown in consumer homes through a method called in home
projector test or in specially equipped buses or trailers parked in shopping malls
(called trailer tests). After showing the trailer researchers use a consumer survey or
personal interview to obtain viewer's reaction. Pretesting attempts to evaluate the
effectiveness of an advertisement before that advertisement is placed in the mass
media.

Posttesting Methods: Once an advertisement has been run in the chosen media
schedule, post testing is done to determine whether the advertisement has met the
objectives set by management. Posttests measure brand awareness through a measure
of TOMA (Top of the mind awareness), changes in attitude towards the brand or/
and number of inquiries generated about the product after the advertisements.
Advertisers must gain attention of buyers and get them to remember the names of the
brands or the stores in which the brand can be found. Many posttests are designed to
evaluate recognition and recall. Well known advertisers also need to test the
capability of a particular campaign in reinforcing the previously established good
images.

Recall test can take different forms. In an unaided test, the interviewer does not give
any clue as to the brand whereas in an aided recall test product category clues are
given to derive the brand name. Aided recall tests are not a strong method of \
measuring attention and memory as unaided recall test. Advertisers are also
interested in related recall-the ability of a person who has seen the advertisement to
repeat or playback, specific sales messages or images. These types of tests allow the
researcher to measure the level of achievement of the advertising goal set forth for
the purpose.

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Measuring changes in attitude towards a product is more difficult as it demands the
measurement of attitude before exposure and after exposure. So a two part before
and after study is done in these situations.

Measuring inquiries about the product in a traditional media can be done through a
retailer survey. Advertisers of organizational products frequently compare the
numbers of inquiry generated by different magazine advertisements to measure
advertising effectiveness. Many advertisers have a toll free number to call for
enquiry and it is a good measure of the advertising impact. In case of web and
internet advertising, web traffic analysis software can inform about the site traffic,
the pages viewed, number of FAQs attended and inquiries generated through the
email route to the company. When sales volume is the primary concern, test
marketing research and laboratory experiments are designed to simulate sales
behavior though an increase in sales cannot be solely attributed to advertising alone.

Check Your Progress C

1. Explain the various copy appeals available to an advertiser.

2. What are the various interactive media? What advantage they have over the
traditional media?
3. State whether the following statements are True or False.
i) Media selection is the problem of finding the most cost effective media to
deliver the desired number of exposures to the target audience.
ii) Computer software programs like Smart Agents or Intelligent Agents find
information without the user's having to do any searching function
iii) A banner ad is to increase brand name recognition in web media
iv) Outdoor media of advertising refers to the media used to reach people when
they are out of doors or traveling rather than at home or in the office
v) A song or other short verse used in an advertisement as a memory aid is called
a Montage.

18.5 PUBLICITY

We have discussed the elements of promotion mix that includes advertising, sales
promotion, personal selling and now we will discuss the issues related to Publicity
which is gaining prominence in India as well as in global corporate scenario.

Publicity is defined as the non-personal stimulation of demand for a product, service

or business unit by planting commercially significant news about it in a published
medium or obtaining favorable presentation of it on radio, television or stage that is
not paid for by the sponsor. The salient features of this definition include

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1) Non-Personal/Mass Media: Like advertising, publicity also reaches a very large
number of people at the same time (hence non-personal) through mass media
such as newspapers, radio, TV, etc.
2) Commercially Significant News: This is one of the features that distinguishes
publicity from advertising. When information about a product or company is
considered newsworthy, mass media tend to communicate that information free
of cost. Since most publicity appears in the form of news items or articles
originating from the media, rather than the advertiser, it has higher
credibility(believability).
3) No Sponsor: Since the information originates from the media, there is no
sponsor, that means the messages are unsigned. This is another point of
difference between advertising and publicity
4) Not Paid For: Since sponsor is not identified in publicity and the information is
not disseminated at his behest, he does not pay for it. This is the third feature that
differentiates publicity from advertising.
5) Purpose: In some situations, where publicity is properly planned, it may lead to
the creation or reinforcement of a favorable impression about the company and
its products in the minds of people receiving the message. This may lead to a
favorable attitude towards the product or company and, thus, leads to increased
demand for the product.

The recent success of Maruti's public offer oversubscription is a case in point where
publicity was extensively used by the firm for creating investors goodwill. Similarly,
Reliance Infocom used publicity as a support for advertising blitz for launching their
Reliance Mobile business.

Negative publicity can damage the company or product's image, resulting in reduced
demand for the product. For instance, a great deal of adverse publicity was generated
when different media condemned the Union Carbide's negligence in Bhopal gas
tragedy through articles and editorials. Similarly Sterilte industries takeover bid of
Balco created negative publicity in Indian corporate world.

18.5.1 Difference between Advertising and Publicity

The main points of difference are indicated in Table 18.1. A careful reading of the
table will help you to distinguish between the two types of promotion.

Publicity is quite similar to advertising except that it involves an unsigned and unpaid
message even though it may use the same mass media as advertising does.

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 Table 18.1: Difference between Advertising and Publicity
Factors Advertising Publicity
1. Payment The sponsoring Since the message is
organization has to pay for designed and printed by
media space and/or time media, the company does
not have to pay for it
2. Sponsor Has a clearly identified No sponsor is identified.
sponsor which may be The message originates
either the company or from the media sources
brand name
3. Content The company has total The Company has no
control over content and control over content and
coverage of the message coverage, although it may
have initiate media interest
and supplied the necessary
information
4. Schedule The company can schedule The company cannot
repetition of the message schedule repetition
as many times as required messages
5. Intent The message is meant to Presented as news, is
create, maintain and hence less persuasive. May
enhance a favorable create a favorable or
impression about the unfavorable impression
company and product
6. Credibility Low to moderate High

18.5.2 Advantages and Limitations of Publicity

Publicity when managed properly can yield better results in building the corporate
image and saving the organization at the crises. Publicity has advantages and
disadvantages as per the following.

Advantages: Publicity offers several advantages as a promotional tool.

1) It may reach people who do not ordinarily pay any attention to advertising, sales
promotion or sales people.
2) It has greater credibility than advertising because it appears in the context of
editorials or articles.
3) It is relatively inexpensive and provides coverage that would cost lakhs of
rupees.
4) It can build up interest in a product category. Some companies and trade
associations have used publicity and public relations to rebuild interest in
commodities like "eggs" and "milk".

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Limitations:

1) Advertisers have very little control over what media editors do with the publicity
material that advertisers prepare.
2) Media people disregard material that they do not consider newsworthy - subject
matter that is untimely, uninteresting or not accurate.
3) Even if the material is found newsworthy, the advertiser has no control over how
media people edit the content or schedule the appearance etc.

18.5.3 Generating Publicity

Information offered by public relations department often takes the form of news
release and press conference. Publicity can be generated by distributing news
releases, organizing press conferences, appearances and through company websites.

News Releases: Marketers may spend considerable time and efforts in getting news
releases and interviews with company spokesman placed in news papers and
television channels to promote favorable corporate organizational release. News
release is a brief written statement describing a newsworthy aspect of the product.
Well-executed news releases are written in a form that a newspaper, magazine or
news channel editor can easily incorporate in to a news story. Photographs, video
tapes and films are often distributed to the media to accompany news releases.

Press Conference: It is another form of publicity that can create goodwill and
positive relations between an organization and the public. When an organization plans
to make a specific announcement, it may schedule a press conference so that
company officials can make a statement and reporters can ask questions.

Appearances: Talk shows are known for inviting people who promote their products,
corporate credibility -and services. The entertainment business is one of the most
extensive users of publicity. Performers' appearances are well-planned approach to
strategic marketing for the entertainment product. Shows like 'Movers and Shakers',
'Aap ki Adalat' and 'Kiss main kitna Dum" are examples when celebrities come and
speak about their new films and serials.

Company Website: Many organizations provide considerable amount of accurate

information on company's products, services and operations on their website. Internet
visitors may find the information pertinent about the organization covering the :
organization's mission, vision statements, investor relations, financial statements and
other company news on the web.

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Feature Articles: These are longer and prepared for specific publication, such as the
ones that appear in Economic Times and other business publications. These generally
relate to the company's achievements, expansion and diversification plans.

18.5.4 Public Relation

Publicity and public relations are not the same and there should not be any confusion
in understanding them. Public relations is a broader term that refers to all the means
of enhancing organizational image and communicating product and corporate
information in the eyes of larger universe that may include customers, shareholders,
financers, government, media, local public, environmental pressure groups, consumer
rightist activists and internal public or employees . One of the key jobs for the public
relation manager is to handle a crisis. Crisis management is aimed at disseminating
information during emergency, accidents and chaotic situations within and around
organizations. Company officials should make themselves available for press briefing
in order to explain the measures taken to control the problem or else a negative
coverage to the incident may fuel speculation leading to loss of corporate image.
People on the line of crisis management should be involved in the press briefings as
they can explain the real situations and measures already taken to arrest the problem.
Public relation manager is like a watchdog who always keeps the corporate image
safe from the attack from unknown quarters.

Check Your Progress D

1. In what ways is advertising (i) similar to and (ii) different from publicity?
i) Advertising is similar to Publicity
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
ii) Advertising is different from Publicity
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
2. Given here under are four situations. Which of these can be classified as
advertisements, publicity, or neither?
i) A’ visits a computer dealer’s showroom. The dealer explains the benefits of Brand
X over Brand Y.
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..

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ii) Sales executive of a leading 5 star hotel visits the General Manager of a large
agency and talks about the wide range of services offered by the hotel.
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
iii) A customer walks into a general merchant's shop and while buying 'Lux' soap
discovers that she can get a stainless steel spoon free if she buys 'Hamam' soap.
Therefore, she bought 'Haman' soap.
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
iv) A toothpaste manufacturing company advertisement claims its brand whitens
teeth. Some days later, a report from a Dental Surgeons' Conference was published in
a newspaper stating that there is no ingredient in toothpaste that whitens teeth.
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
3. Explain how public relation can help in crisis situations of a firm ?
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
4. How can a manger create a positive image by using the publicity? Explain this
with three recent examples.
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..

18.6 LET US SUM UP

Advertising is the paid form of non-personal communication from an identified

sponsor using mass media to persuade or influence an audience. Good Advertising
must: a) generate attention b) be believable, c) be easily understood, and d) be
remembered. The three fundamental objectives of advertising are: i) to inform, ii) to
persuade, and iii) to remind the target audience. From these three basic objectives
emerge other generalized objectives, such as: 1) announce a new product, 2) expand
the market to new buyers, 3) announce product modifications, 4) make a special offer,
5) announce location of stockiest and dealers, 6) educate customers, 7) remind users,
8) please stockiest, and 9) create brand preference. One of the major objectives of

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advertising is to change the attitude of a person in a way that moves him closer to the
product being advertised. It is important for the advertiser to know how to move
people to a higher state of readiness to buy along the Hierarchy of Effects.

Advertising plays a greater role in bringing changes in society and providing new
product information to the customers. It also enhances productivity due to mass scale
consumption. However, there are many objections to advertising. It is said that
advertising increases prices, insults consumer intelligence, is a source of discontent,
tends to he monopolistic, and multiplies needs and wants of people.

Advertising can be seen as a five party business consisting of 1) advertisers, 2)

advertising agencies, 3) support organizations, 4) media, and 5) consumers. The
advertising management process consists of five major decisions. These are the
decisions about the mission or objective of the campaign, budget decision, message
decision, media decision and method of measurement of advertising effectiveness. A
budget decision involves various methods like percentage of sales method,
affordability method, competitive parity method, percentage of turnover method,
modeling method and objective and task method. The message decision involves
decision regarding the theme and appeal of advertising, the execution of an
advertisement.

A medium in advertising refers to the channel or vehicle for carrying the advertiser's
message to his target audience. The media mix consists of 1) print media (newspapers
and magazines), 2) broadcast media (radio and TV), 3) direct media (advertising
specialties, directories, corporations sponsored magazines, direct mail, etc.), 4)
outdoor media (hoardings, billboards, etc.) and 5) interactive media (internet, email,
search engines, pops, banners and video streams).

Publicity is the news carried in mass media about an organization and its products,
policies, personnel or actions; it can originate with the media or the advertiser and is
published or aired at no charge to the organization for media space or time. Publicity
is quite similar to advertising except that it involves an unsigned and unpaid message;
even though it uses the same mass media as advertising. Some of the major tools used
in publicity are news release, feature articles, press conference, appearances, and
audiovisual material.

Public relation has a wider coverage as it covers all the stakeholders with an objective
of creating positive goodwill for the corporation. A proactive public relations strategy
is always preferred to a reactive strategy in situations of crisis within and around the
organization as it can give the hard facts and strategies followed by the corporation in
arresting the crisis.

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18.7 KEY WORDS

Advertising: It is a paid, non-personal (mass) communication with an identified

sponsor with two distinct goals of informing (for persuasion and influence) people
(communication goal) and increasing sales (sales goal)

Audience Selectivity: A medium's relative ability to reach an audience whose

members are alike.

Advertising Media: Refers to channels of communication or vehicles for carrying

the advertiser's message to the target audience.

Broadcast Media: Consists of media such as radio and television, where messages
are sent through Carrier Waves.

Copy Writing: This refers to the written part of a print advertisement, including the
headline, slogan and detailed description of product attributes wherever required. In
broadcast media, the equivalent of this is called script writing.

Demonstration: It is a creative platform where a clear-cut example of a product's

superiority or enhanced consumer benefit is presented.

Direct Advertising Media: Channels through which advertisers communicate

directly with the target audience.

Frequency: The number of times a member of the target audience is exposed to a

message within a given time period.

Geographic Selectivity: The medium's relative ability to reach people in selected

geographical areas.

Gross Rating Point: It is one exposure to 1 per cent of the target population

Montage: It blends a number of situations, demonstrations and other visual effects in

to one commercial

Publicity: It is defined as the non-personal stimulation of demand for a product,

service or business unit by planting commercially significant news about it in a
published medium or obtaining favorable presentation of it upon radio, television or
stage that is not paid for by the sponsor

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Reach: the number of individuals or households exposed to a given medium
(message) at least once during a given time period.

Streaming Media: It is multimedia content such as audio, video that can be accessed
on the internet without being downloaded first

Target audience: All the people for whom the advertising message is meant. It
includes both present and potential customers.

18.8 ANSWERS TO CHECK YOUR PROGRESS

B 4 i) False ii) True iii) True iv) True v) False

C 3 i) True ii) True iii) True iv) True v) False
D2 i) This is neither advertising nor publicity because the communication is
one- to- one (i.e. personal) and there is no mass media.
ii) Once again this is a one-to-one personal selling situation, hence it is
neither advertising nor publicity.
iii) This is a case of sales promotion. It is neither advertising nor publicity.
iv) Since a non-personal, the media (no payment involved) communicate
unsigned message, voluntarily; it is publicity (negative, because it refutes
the advertiser's claim).

18.9 TERMINAL OUESTIONS

1) What is advertising? How it is different from publicity?

2) 'No single medium is ideal in all respects'. Discuss.
3) What advertising media will you select for each of the following and why?
i. Local temple
ii. Essel World
iii. Reliance Infocom
iv. McDowel No 1 whisky
4) What products are suited for Mass advertising, Direct advertising and
Interactive advertising?
5) What is publicity? Explain various tools of publicity.
6) Explain the advantages and limitations of publicity.

Note: These questions will help you to understand the unit better. Try to write
answers for them. But do not submit your answers to the university for
assessment. These are for your practice only.

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UNIT 19 EMERGING ISSUES IN MARKETING

Structure

19.0 Objectives
19.1 Introduction
19.2 Relationship Marketing
19.3 Marketing of services
19.3.1 Categories of Service Mix
19.3.2 Marketing Strategies for Service Firms
19.4 Marketing on the Internet
19.4.1 Meaning and Features
19.4.2 Developing an Internet Program
19.4.3 Advantages and Limitations of Internet Marketing
19.5 Green Marketing
19.5.1 Meaning and Importance
19.5.2 Problems Associated with Green Marketing
19.6 Social Marketing
19.7 Rural Marketing
19.7.1 Importance of Rural Marketing .
19.7.2 Nature of Transactions in Rural Marketing
19.7.3 Marketing Challenges in Rural Marketing
19.8 Let Us Sum Up
19.9 Key Words
19.10 Answers to Check Your Progress
19.11 Terminal Questions

19.0 OBJECTIVES

After studying this unit, you should be-able to:

 explain the meaning, importance, elements and benefits of relationship
marketing;
 narrate the importance, various categories of service mix and marketing
strategies for service firms;
 explain the concept and various issues related to Internet marketing;
 describe the concept, importance and problems of green marketing;
 narrate the concept and components of marketing mix for social marketing; and
 explain the importance and challenges of rural marketing in Indian context.

19.1 INTRODUCTION

In Unit 1 you have studied that the marketing process consists of four steps: (1)
analyzing the marketing opportunities, (2) selecting target markets, (3) developing the
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marketing mix, and (4) implementing and controlling. From Unit 2 to 18 you have
already studied all aspects relating to these four steps. However, as a marketing
executive e you may come across certain terminology and issues which are not
discussed in the previous units. For instance, you may come across the concept of
Relationship Marketing, which speaks about establishing long-term relationships with
the stakeholders. How Internet technology is used for marketing? How different it is
to market products or services in the rural markets? How different it is to market the
ideas or concepts like Eradication of Polio, AIDS Control, Population Control, etc., to
the general publics? Some such issues are addressed in this Unit. In specific, this unit
is intended to introduce you to a variety of emerging concepts such as Relationship
Marketing, Services Marketing, Internet Marketing, Green Marketing, Social
Marketing and Rural Marketing.

19.2 RELATIONSHIP MARKETING

Basic purpose of marketing is to create strong and lasting relationships with a core
group of customers by making them feel good about how the company does business
with them and by giving them some kind of personal connection to the business.
Marketers accomplish this by promising and delivering high-quality products and
services at fair prices to the other parties over time.

Relationship marketing builds strong economic, technical and social ties among the
stakeholders. It cuts down on transaction costs and time. In most successful cases,
transactions move from being negotiated each time to being a matter of routine. The
ultimate outcome of relationship marketing is the building of a unique company asset
called a marketing network. A marketing network consists of the company and its
supporting stakeholders (customers, employees, suppliers, distributors, retailers, ad
agencies, and others) with whom it has built mutually profitable business
relationships. Increasingly, the competition is not between companies but between
marketing networks, with the price going to the company that has built the better
network. The cardinal principle is simple: Build an effective network of relationships
with key stakeholders, and profits will follow.

Many firms have established relationship-marketing programs to foster usage loyalty

and 21 commitment to their company's products and services. A review of the
composition of 66 consumer relationship-marketing programs revealed three elements
shared by more than 50 percent of the programs. They are: (I) fostering ongoing
communication with customers (73% of the programs), (2) furnishing loyalty by
building extras like upgrades and other peaks (68% of the programs), and (3)
stimulating a sense of belonging by providing a "club membership" format (50% of
the programs). Like personal relationships between individuals who are willing to do
favor for each other, "relationship" marketers offer loyal customers special services,
discounts, increased communications, and attention beyond the core product or

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service, without expecting an immediate payback. However, they hope that, over
time, they will reap the advantages of sustained and increasing transactions with a
core group of loyal customers.

Companies in a wide variety of product and service categories are practicing

relationship marketing, in the recent years. Many companies call their relationship
programs a club and some even charge a fee to join. Membership in a club may serve
as a means to convey to customers the notions of permanence and exclusivity
inherent in a "committed relationship". Members of these clubs receive on a regular
basis journals and newsletters, gifts, and variety of other materials. Airlines and major
hotel chains, in particular, use relationship-marketing techniques by awarding points
to frequent customers that can be used to obtain additional goods or services from the
company.

Ultimately, it is to a firm's advantage to develop long-term relationship with existing

customers, because it is easier and less expensive to make an additional sale to an
existing customer than to make a new sale to a new customer. However, the effort
involved for the firm in developing and maintaining a customer relationship must be
weighed against the expected long-term benefits. Marketers must determine the
"lifetime value" of a customer to ensure that the costs of obtaining, servicing, and
communicating with the customers do not exceed the potential profits. Some of the
possible benefits of a successful relationship marketing program are repeat purchases,
"extra" loyalty of the consumers, goodwill, positive word-of-mouth, lower
promotional costs for the firm, and so on.

Elements of Relationship Marketing: The relationship-marketing program

incorporates the following three key elements:
a) Identifying and building marketing databases of potential and present
customers: In relationship marketing, the customer database is a very important
strategic asset for manufacturers as the brand itself. Advertisers need to use mass
media and more targeted media channels as ways of prospecting for customers.
Once potential customers have been identified, advertisers must capture their
names and information on their lifestyles in a database for future
communications. It is important to keep in mind that not all consumers are
appropriate target for relationship marketing, and not all targets are customers.
Consequently, the initial database must be carefully refined and segmented.
Designed and developed properly, the marketing database will allow companies
to expand their internal capabilities to include relationship marketing. Marketing
research will play a crucial role in developing these databases. Most of these
databases can be build using secondary data.
b) Deliver differentiated messages to targeted households: Advertisers must
develop the ability to communicate with a defined audience of the existing and
potential users of their products. The media choices they make must therefore

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 offer the ability not only to broadcast the message to the entire circulation or
audience, but also to target precisely defined demographic segments. For
advertisers, more precise targeting means greater impact. Mass circulation
magazines are responding to advertisers' needs with selective binding and
personalized inkjet printing. Broadcast media are also relinquishing their
positions as passive media. Telemarketing innovations will allow broadcast
media to become increasingly interactive. At the same time, addressability will
become an important factor in both cable and broadcast.
c) Track the relationship to make media expenditures more effective and more
measurable: Common wisdom has it that half of all advertising amount is
wasted; the difficulty is knowing which half. The media innovations will allow
advertisers to pinpoint what works and what doesn't. Consequently, relationship
marketing's most important effect will be a shift in the way decisions are made
about where to advertise. Traditionally, decisions have been based on various ex
ante measures of exposure, such as cost-per-thousand, audience, or circulation. In
the future, however, decisions will be made on ex post factors, such as : evidence
of penetration of the required target audience or even evidence of sales results. In
this new environment, the basis of measurement changes and emphasis will shift
from cost-per-thousand to the value of reaching a target market. Advertisers must
evaluate the cost of gaining and maintaining a customer relationship over several
years. Once again, marketing research will play a significant role in this phase of
relationship marketing program. Tracking usually will be done by survey
research. The various statistical tools necessary to process the information in the
database may be used.
Role of Sales Force in Relationship Marketing: Companies are asking their sales
force to practice relationship marketing. In relationship marketing a sales
representative sells a long-term partnership in which both parties collaborate on
identifying needs and developing, maintaining, and updating products and services
customized to fulfill them. The modem sales person is attempting to establish a long-
term, symbiotic relationship with clients, working with them as a solution provider.
One of the most valuable electronic tools for the sales representative is the company
Web site, and one of its most useful applications is as a prospecting tool. Company
Web sites can help define the firm's relationships with individual accounts and
identify those whose business warrants a personal sales call.

Relationship Marketing in Direct Marketing: Given the huge amount of

competition in the given field, some catalogue retailers are trying to engage in
relationship marketing by including in their catalogues editorial content that they
think will make them "human" to their customers. For example, some cookware
catalogue includes recipes and menus; some clothing catalogues include such
information as how silk fabric is produced or how cashmere sweaters are made.
There is also some evidence that relationship marketing is helping catalogue retailers
overcome the perception that catalogue prices are higher than store prices.

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Relationship marketing is also being practiced by manufacturers and service
providers.

Relationship Marketing in Retailing: Today's best retailers realize it is in their

interest to engage in relationship retailing whereby they seek to establish and
maintain long-term bonds with customers rather than activities where by each sales
transaction is a completely new encounter with them. This means the retailers must
concentrate on the total retail experience, monitor satisfaction with customer service
and stay in touch with customers to be effective. In relationship retailing, a firm has
to keep two points in mind. Firstly, because it is harder to lure new customers than to
make existing ones happy, a win-win approach should be enacted. For the retailer to
"win" in the long run (attract shoppers, make sales, earn profits), the customer must
also "win" in the long run (receive good value, be treated with respect, feel welcome
by the retailer). Otherwise, the retailer loses (shoppers patronize competitors) and
customers lose (by having to spend time and money to learn about other retailers).
Secondly, due to advances in computer technology it is now much easier to develop
a customer database with information on their attributes and past shopping
behaviour. Thus, ongoing customer contact can be better, more frequent and more
focused.

Benefits of Relationship Marketing: When a relationship-marketing program is

properly implemented, the firm will begin to focus as much on managing its
customers as on managing its products. At the same time, companies should realize
that while there is a strong and warranted move toward relationship marketing, it is
not effective in all situations. Barbara Jackson (1985) argues that relationship
marketing is not effective in all situations but is extremely effective in the right
situations. She sees transaction marketing as more appropriate with customers who
have a short time horizon and low switching costs, such as buyers of commodities.
Relationship marketing pays off handsomely with customers who have long time
horizons and high switching costs, such as buyers of office automation systems. The
customer for a major system carefully researches competing suppliers and chooses
one from whom it can expect good long-term service and state-of-the-art technology.
Both the customer and the supplier invest a lot of money and time in the relationship.
Anderson and Narus ( 1991 ) believe that transaction versus relationship marketing is
not so much an issue of the type of industry as of the particular customer's wishes.
Some customers value a high service bundle and will stay with that supplier for a
long time. Other customers want to cut their costs and will switch suppliers for lower
costs. In this case, the company can still retain the customer by agreeing to reduce
the price, provided the customer is willing to accept fewer services. This customer
would be treated on a transaction basis rather than on a relationship-building basis.

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19.3 MARKETING OF SERVICES

You have already studied about services in Unit 7 in Block 3 of this course. You will
study some more details about services marketing in this section.

Marketing theory and practice developed initially in connection with physical

products such as soaps, cars, and other tangible products. However, in the recent
years there has been a phenomenal growth of services. This trend we find world
wide. More than 50% Gross Domestic Product (GDP) is being generated by services
and more than 70% employment in services. More and more tangible or physical
products now contain a service component, both to meet the needs of the targeted
customer segment and to create a distinctive differentiation for competitive reasons.
Many manufactured goods are supported by services such as warranties or
guarantees.

There are a large number of companies who are mainly in the service business.
Service industries vary greatly in terms of services they provide and their size. In the
present world of information era, many service industries such as banking and other
financial services are not only the mainstay of economy but also dominating Internet
and e-commerce.

19.3.1 Categories of Service Mix

A company may often include some services. The service component may be major
or minor of the total offering. Five categories of offerings can be distinguished.

a) Pure Tangible Good only: The offering is only tangible goods such as
toothpaste, soap, etc., but no services accompanying the product.
b) Tangible Good with Accompanying Service: The offering consists of a
tangible good accompanied by one or more service. Maruti Udyog, for example,
offers repairs, maintenance, warranty fulfillment, frees service up to a period or
kilometers, and other services along with its cars. For more technologically
sophisticated durable products, the sales depend on accompanying services.
Examples include computers, TVs, washing machines and many other durable
goods. Industrial goods particularly Capital goods also require certain types of
services along with the tangible product.
c) Hybrid: The offering consists of equal parts of goods and services. For example,
people go the restaurants both for food and service.
d) Major Service with Accompanying Minor Goods and Services: Here the
offering is predominantly in the form of a service. Here consumer primarily goes
for the quality of service but may give importance to accompanying minor goods
and services. For example, Airlines not only provide the transportation as the

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 major service, but also provide food, drinks, magazine and other facilities as
accompanying minor goods and services.
e) Pure Services: The offering consists primarily of service and no or very
insignificant accompanying minor goods or services. For example, insurance,
banking, psychotherapy, baby-sitting, hair cutting, etc.
Because of this varying nature of goods-to-service mix, it is difficult to generalize
services without further distinctions. Services can be classified or distinguished as
follows:
i) Equipment based services (e.g. Automatic car washing, repair etc.) and People
based services (e.g. accounting services, banking, etc).
ii) Services requiring presence of clients (e.g. surgery, hair cutting, etc) and services
not requiring presence of clients (e.g. banking, broking, etc.).
iii) Services meeting personal needs ( e.g. telephone, credit cards, etc) and services
meeting business needs (e.g. technical consultancy, call centre services, etc).
iv) Service providers with profit oriented objectives and service providers with non-
profit oriented objectives.
v) Service enterprises under private sector and service enterprises under public
sector.

19.3.2 Marketing Strategies for Service Firms

Service firms started using marketing tools very late. Traditional 4Ps work well for
tangible goods, but additional elements required. These additional Ps are (i) physical
evidence, (ii) processes, and (iii) people. Because most services are provided by
people, the selection, training and motivation of employees can make a huge
difference in customer satisfaction. Companies also try to demonstrate their services
quality through physical evidence. Example hostel, banks with atmospherics can
show quality of service.

Service firms can choose among different processes to deliver their services. For
example, installation of ATM by banks, Teller system, etc. In view of the
complexity, service marketing requires not only external marketing, but also internal
and interactive marketing. External marketing describes the normal work to prepare,
price, distribute and promote the service to customers. Internal marketing describes
the work to train and motivate employees to serve customers well. The interactive
marketing describes the employees' skills in serving the clients /customers.

Check Your Progress – A

1. What do you mean by relationship marketing?
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..

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2. What is the difference between marketing and relationship marketing?
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
3. List out various categories of service mix.
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
………………………………………………………………………………..
4. State whether the following statements are true or false:
i) Relationship marketing ignores consumer satisfaction.
ii) Relationship marketing is not relevant in retail marketing.
iii) In relationship marketing, the firm focuses as much on managing its
customers as on managing its products.
iv) Elements of marketing mix for services are different from tangible products.
v) Services can be stored and consumed later whenever needed.

19.4 MARKETING ON THE INTERNET

19.4.1 Meaning and Features

The hottest medium going right now seems to be the Internet. The economist points
out that no communication medium or electronic technology has ever grown as
quickly, not even fax machines and PCs. Some think everyone has discovered this
new medium and its opportunities are limitless, others are not inclined to agree. We
will discuss this new medium, its advantages and disadvantages.

The Internet is a worldwide means of exchanging information and communicating

through a series of interconnected computers. Started as a U.S Defense Department
project, the Internet or information superhighway, is now accessible to anyone with a
computer and a modem.

The following are the some of the features of the Internet:

Feature Use
Electronic mail (e-mail) Allows users to send electronic mail
anywhere in the world
Usenet Discussion groups, newsgroups, and
electronic bulletin boards, similar to
those offered by online services.
File transfer protocol (ftp) or hypertext The ability to transfer of files from one
transfer protocol (http) mainframe computer to another.
Client server Allows for the transfer of files from one

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 mainframe computer to another.
Gopher A document retrieval system used to
search for information
Wide area information server(WAIS) Enables one to use keywords in specific
database and retrieve full text
information.
World Wide Web(WWW) Does much the same thing as gopher and
WAIS, but combines sound, graphic
images, video and hypertext on single
page.
While the Internet offers a variety of services to users, the most powerful and
popular is the World Wide Web (WWW), commonly referred to as the Web. In fact,
many use the terms Internet and World Wide Web synonymously. For marketers, a
number of Internet features offer potential, but it is the Web that has developed as the
commercial component First, however, it would be useful to examine some of the
Internet terminology.

19.4.2 Developing an Internet Program

Like other media, using the Internet wisely also requires development of a plan. This
plan should consider target audiences (users of the Net) as well as specific objectives
and strategies and a way to measure effectiveness.

Web Participants: The Web, like other media, has both advertisers and potential
customers. Unfortunately the actual degree of use and profiles of these groups is
extremely difficult to determine

 Advertisers: Estimates of ad spending on the Web in the first half of 1996 vary,
but most sources place this figure in the $66 to $71 million range, indicating
triple-digit growth from the same period in 1995. AT&T, Master Card, American
Airlines, MCI, and the Internet Shopping Network were some of the top
advertisers, though many consumer and business-to-business companies
participated. A variety of providers of Internet services have also surfaced.
Traditional ad agencies have developed Internet advertising departments. New
agencies that provide only Internet advertising assistance and website developers
are also appearing in increasing numbers
 Users: An even harder profile to develop is that of the users of Internet. Again,
the estimated number of users constitutes a broad range, from as few as 18
million to over 90 million in the U.S and from 50million to 110 million
worldwide. Demographic profiles also vary, though most studies agree that the
heaviest users of Net are in their 30s and have above-average education and
income. Males log on more frequently than females, and a disproportionate

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 number of Web surfers are technology oriented, spending more than average
amounts of time on the computer.
While the exact profiles of advertisers and users of the Web may be difficult to
obtain, most marketers remain optimistic about the potential for communicating with
and selling to consumers.

Web Objectives: The Web offers marketers an excellent opportunity to sell their
products directly to the consumers. Thus, one of the primary objectives of
advertising on the Internet is to generate sales directly. Advertisers on the Internet
may have additional objectives in mind, including the following:
 The website is an excellent place to provide in-depth information about a
company's products and/or services.
 Advertising on the Web can be useful in creating awareness of an organization in
general as well as its specific product and service offerings,
 The Web has been used by marketers to gain audience profile information to
determine their preferences, buying habits, and so on.
 The website may be designed to project the image an organization or company
wishes to have.
 Some websites offer electronic coupons to attempt to stimulate trial of their
offering.
 The Web has the capabilities to move customers and prospects through
successive stages of the buying process.

Web Strategies: Web advertising may take place through the use of display banners
and the establishment of a website that provides mare extensive information about
the company or organization. Some of these are used to stimulate sales directly,
while others serve other communications objectives. Procter and Gamble is
increasing its ad expenditure in this area, and both McDonald's and Disney have
established websites to reach the children's market. Having a website does not, in
itself, guarantee a successful communications programme.

While the website can be valuable in providing information and even in making the
sale, consumers must first be attracted to the site. A number of companies are now
experimenting with a strategy of "web casting"-pushing out site information to Web
users rather than waiting for them to find the site on their own.

Audience Measurement on the Internet: At least part of the problem in defining the
Internet user is due to the infancy of this medium. In all media, audience
measurement providers have become involved only after the medium has achieved a
significant role in the marketplace. As Internet providers develop their offerings,
audience data will improve. Several sources of audience information are now
available or soon will be. Among them the following are some instances:

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 Nielsen Media Research and Commerce Net conduct surveys to determine Web
demographics and usage characteristics.
 IntelliQuest conducts surveys of Web users to provide demographic, lifestyle, .
and usage information.
 PC-Meter, a metering service, measures how much time computer users spend at
their machines, what software and online services they access, and how long they
spend online. It also provides demographic data.
 Audit Bureau of Circulations, a print agency, is developing a product called
WebFacts to certify Web counts.
 Simmons Market Research Bureau provides viewership profiles of the Internet
and other interactive media.
No specific criteria for setting advertising rates or measuring effectiveness of the
Web have been agreed on by all advertisers. Since ad rates are determined in part by
potential exposures, advertisers have demanded information regarding the potential
number of viewers of their banners and websites. However, since there are no
accurate figures on viewers, many companies have reservations at this costing
method. They argue that the number of people who see a banner is irrelevant and that
rates should be based on the number of visitors to a site.

19.4.3 Advantages and Limitations of Internet Marketing

Advantages: A number of advantages of advertising on the web can be cited as

follows:
 Target Marketing: A major advantage of the web is the ability to target very
specific groups of individuals with a minimum of waste coverage.
 Message Tailoring: As a result of precise targeting, messages can be designed to
appeal to the specific needs and wants of the target audience. Interactive
Capabilities: The interactive nature of the Web leads to a higher degree of
customer involvement. Information Access: Once users visit the website, they
can gamer a wealth of information regarding product specifications, purchase
information, and more.
 Sales Potential: Because this is a direct-response medium, the ability to generate
sales is high.
 Creativity: Proper design of a website can lead to repeat visits and generate
interest in the company as well as its products and services. Banners and websites
can be changed frequently to stimulate interest.
 Market Potential: As household penetration of PCs increases and awareness as
well as interest in the Net continue to grow, the market potential will continue to
increase.

Limitations: The following are some of the limitations of Internet marketing:

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 Measurement Problems: Due to the novelty of this medium, sophisticated and
universally adopted measures of audience and effectiveness have not yet been
established.
 Audience Characteristics: It is difficult to measure exact characteristics of Web
users.
 Web Snarl: A major complaint associated with the Web is the time required to
access information. As more and more people enter the web, this problem will
get worse. There are already indications of high dropout rates due to the slowness
of the Net.
 Clutter: As the number of ads proliferates, the likelihood of one ad being noticed
drops. E-mail is already experiencing floods of marketing related
communications.
 Costs: Many advertisers believe the Web is an effective medium for high-ticket
items but less efficient for lower-priced consumer products like soups and
candies. Relatively high costs of advertising and delivery limit the Web's appeal.

19.5 GREEN MARKETING

One business area where environmental issues have received a great deal of
discussion in the popular and professional press is marketing. Terms like "Green
Marketing" and "Environmental Marketing" appear frequently in the popular press.
Many governments around the world have become so concerned about green
marketing activities that they have attempted to regulate them.

19.5.1 Meaning and Importance

Unfortunately, a majority of people believe that green marketing refers solely to the
promotion or advertising of products with environmental friendly characteristics.
Green marketing incorporates a broad range of activities, including product
modification, changes to the production process, packaging changes, as well as
modifying advertising. Yet defining green marketing is not a simple task. Indeed the
terminology used in this area has varied, it includes: Green Marketing,
Environmental . Marketing and Ecological Marketing. Green marketing came into
prominence in the late 1980s and early 1990s.

Green Marketing or Environmental Marketing or Ecological Marketing consists of

all activities designed to generate and facilitate any exchanges intended to satisfy
human needs or wants, such that the satisfaction of these needs and wants occurs
with minimal detrimental impact on the natural environment. This definition
incorporates much of the traditional components of the marketing definition that is
"All activities designed to generate and facilitate any exchanges intended to satisfy
human needs or wants." Therefore it ensures that the interests of the organization and
all i& consumers are protected, as voluntary exchange will not take place unless both
the buyer and seller mutually benefit. The above definition also includes the
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protection of the natural environment, by attempting to minimize the detrimental
impact this exchange has on the environment.

Importance of Green Marketing: The question of why the importance of green

marketing has increased is quite simple. Mankind has limited resources on the earth,
with which she/he must attempt to provide for the worlds' unlimited wants. In market
societies where there is "freedom of choice", it has generally been accepted that
individuals and organizations have the right to attempt to have their wants satisfied.
As firms face limited natural resources, they must develop new or alternative ways of
satisfying these unlimited wants. Ultimately green marketing looks at how marketing
activities utilize these limited resources, while satisfying consumers wants (both of
individuals and industry), as well as achieving the selling organization's objectives.

There are several reasons for increased use of Green Marketing by firms. Following
are the five possible reasons:
1) Opportunities: It appears that all types of consumers, both individual and
industrial are becoming more concerned and aware about the natural
environment. In a 1992 study of 16 countries, more than 50% of consumers in
each country (other than Singapore), indicated they were concerned about the
environment. Given these figures, it can be assumed that firms marketing goods
with environmental characteristics will have a competitive advantage over firms
marketing non-environmentally responsible alternatives. There are numerous
examples of firms who have strived to become more environmentally
responsible, In an attempt to better satisfy their consumer needs.
2) Social Responsibility: Many films are beginning to realize that they are
members of the wider community and therefore must behave in an
environmentally responsible fashion. This translates into firms that believe they
must achieve environmental objectives as well as profit related objectives. This
results in environmental issues being integrated into the firm's corporate culture.
Firms in this situation can take two perspectives;
 They can use the fact that they are environmentally responsible as a
marketing tool.
 They can become responsible without promoting this fact.
3) Governmental Pressure: As with all marketing related activities, governments
want to "protect" consumers and society; this protection has significant green
marketing implications. Governmental regulations relating to environmental
marketing are designed to protect consumers in several ways:
 Reduce production of harmful goods or by-products;
 Modify consumer and industry's use and/or consumption of harmful goods;
 Ensure that all types of consumers have the ability to evaluate the
environmental composition of goods.
Governments establish regulations designed to control the amount of hazardous
wastes produced by firms. Many by-products of production are controlled through
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 the issuing of various environmental licenses, thus modifying organizational
behavior.
4) Competitive Pressure: Another major force in the environmental marketing area
has been firms' desire to maintain their competitive position. In many cases firms
observe competitors promoting their environmental behaviors and attempt to
emulate this behavior. In some instances this competitive pressure has caused an
entire industry to modify and thus reduce its detrimental environmental behavior.
For example, it could be argued that Xerox's "Revive 100% Recycled paper" was
introduced a few years ago in an attempt to address the introduction of recycled
photocopier paper by other manufacturers.
5) Cost or Profit Issues: Firms may also use green marketing in an attempt to
address cost or profit related issues. Disposing of environmentally harmful by-
products, such as polychlorinated biphenyl (PCB) contaminated oil are becoming
increasingly costly and in some cases difficult. Therefore, firms that can reduce
harmful wastes may incur substantial cost savings. When attempting to minimize
waste, firms are often forced to re-examine their production processes. In these
cases they often develop more effective production processes that not only
reduce waste, but reduce the nee& for some raw materials. This serves as a
double cost savings, since both waste and raw material are reduced.

19.5.2 Problems Associated with Green Marketing

There may be n number of potential problems that a firm may face in case of adopting
green marketing approach. One of the main problems is that firms using green
marketing must ensure that their activities are not misleading to consumers or
industry, and do not breach any of the regulations or laws dealing with environmental
marketing.

Another problem firms face is that those who modify their products due to increased
consumer concern must contend with the fact that consumers' perceptions are
sometimes not correct.

When firms attempt to become socially responsible, they may face the risk that the
environmentally responsible action of today will be found to be harmful in the future.
Given the limited scientific knowledge at any point in time, it may be impossible for a
firm to be certain they have made the correct environmental decision.

While governmental regulation is designed to give consumers the opportunity to

make better decisions or to motivate them to be more environmentally responsible,
there is difficulty in establishing policies that will address all environmental issues.

The push to reduce costs or increase profits may not force firms to address the
important issue of environmental degradation. End-of-pipe solutions may not actually

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reduce the waste but rather shift it around. While this may be beneficial, it does not
necessarily address the larger environmental problem, though it may minimize its
short term affects. Ultimately most waste produced will enter the waste stream,
therefore to be environmentally responsible organizations should attempt to minimize
their waste, rather than find "appropriate" uses for it.

19.6 SOCIAL MARKETING

Social Marketing is "the application of marketing technologies developed in the

commercial sector to the solution of social problems where the bottom line is
behaviour change. " It involves: "the analysis, planning, execution and evaluation of
programs designed to influence the voluntary behaviour of target audiences to
improve their personal welfare and that of society."

This definition highlights the fact that social marketers differ from other marketers in
that they take a prescriptive, focused ethical stance toward what the outcomes of their
efforts should be. Social marketers constrain themselves to trying to influence
behaviours that contribute to individual and collective welfare. Specification of what
constitutes that individual and collective welfare is usually derived from the
professional standards and norms of the arena of impact.

The concept of social marketing emerged in the 1970s, when Philip Kotler and Gerald
Zaltman realized that the same marketing principles that were being used to sell
products to consumers could be used to "sell" ideas, attitudes and behaviors. Kotler
and Andreasen defined social marketing as "differing from other areas of marketing
only with respect to the objectives of the marketer and his or her organization. Social
marketing seeks to influence social behaviors not to benefit the marketer, but to
benefit the target audience and the general society." This technique has been used
extensively in international health programs, especially for contraceptives and oral
rehydration therapy (ORT), and is being used with increasing frequency in many
countries of the world including India for such diverse topics as drug abuse, heart
disease, equality of female child, prohibition of liquor, national integration, planned
small families and organ donation. The key to a successful social marketing campaign
is learning.

The following 4Ps of Marketing are equally relevant in Social Marketing also:

1) Product: The social marketing "product" is not necessarily a physical offering. A

continuum of products exist, ranging from tangible, physical products, to
services, practices and finally, more intangible ideas. In order to have a viable
product, people must first perceive that they have a genuine problem, and that the
product offering is a good solution for that problem. The role of research here is

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 to discover the consumers' perceptions of the problem and the product, and to
determine how important they feel it is to take action against the problem.
2) Price: "Price" refers to what the consumers must do in order to obtain the social
marketing product. This cost may be monetary, or it may instead require the
consumer to give up intangibles, such as time or effort, or to risk embarrassment
and disapproval. If the costs outweigh the benefits for an individual, the
perceived value of the offering will be low and it will be unlikely to be adopted.
However, if the benefits are perceived as greater than their costs, chances of trial
and adoption of the product is much greater.
3) Place: "Place" describes the way that the product reaches the consumers. For a
tangible product, this refers to the distribution system-including the warehouse,
transport, sales force, retail outlets where it is sold, or places where it is given out
for free. For an intangible product, place is less clear-cut, but refers to decisions
about the channels through which consumers are reached with information or
training. This may include doctors' clinics, shopping malls, mass media vehicles
or in-home demonstrations. Another element of place is deciding how to ensure
accessibility of the offering and quality of the service delivery. By determining
the activities and habits of the target audience, as well as their experience and
satisfaction with the existing delivery system, researchers can pinpoint the most
ideal means of distribution for the offering.
4) Promotion: Finally, the 4th "P" is promotion. Because of its visibility, this
element is often mistakenly thought of as comprising the whole of social
marketing. Promotion consists of the integrated use of advertising, public
relations, promotions, media advocacy, personal selling and entertainment
vehicles. The focus is on creating and sustaining demand for the product.
Research is crucial to determine the most effective and efficient vehicles to reach
the target audience and increase demand. The primary research findings
themselves can also be used to gain publicity for the program at media events and
in news stories.
Additional 3Ps of Social Marketing are the following:
5) Publics: Social marketers often have many different audiences that their program
has to address in order to be successful. "Publics" refers to both the external and
internal groups involved in the program. External publics include the target
audience, secondary audiences, policymakers and gatekeepers, while the internal
publics are those who are involved in some way with either approval or
implementation of the program.
6) Partnership: Social issues are often so complex that one agency can't make a
dent by itself. There is a need to team up with other organizations in the
community to really be effective. You need to figure out which organizations
have similar goals to yours (not necessarily the same goals) and identify ways
you can work together.
7) Policy: Social marketing programs can do well in motivating individual behavior
change, but that is difficult to sustain unless the environment they're in supports

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 that change for the long run. Often, policy change is needed, and media advocacy
programs can be an effective complement to a social marketing program.

19.7 RURAL MARKETING

19.7.1 Importance of Rural Marketing

The underlying reasons for undertaking specific efforts to understand marketing
practices and to evolve a suitable framework for developing appropriate marketing
strategy for the rural India have their basis in two major developments. The first is
that on account of rising purchasing power in the rural India, corporate sector is
discovering the huge potential that must be realized by focusing marketing efforts in
the rural segment. The second reason is that rural markets and the rural consumers are
different enough to demand differential marketing effort and it is important for you to
be able to understand these differences as well as the marketing implications that flow
from them. The infrastructure and the marketing institution that characterise the rural
markets are very different from the urban setting which the marketers are used to.
There is therefore an immense opportunity for the marketer to create innovative and
creative solutions to tap the rural potential.

The other reason for studying rural marketing as a specific course emanates from the
knowledge that the rural consumer on account of his socio-economic and lifestyle
profile presents a differential challenge to the marketer. The reference points used by
the rural consumer are different from those used by his urban counterparts. Ability of
rural consumer to discriminate between alternatives may be different and his value
assignment behaviour has been shown to be different. We today do not really have an
adequate body of knowledge to understand all aspects of rural buying behaviour, and
application of appropriately modified research methods has only recently started
being made.

Another development which has focused marketer attention now on to the rural
markets is that slowly but surely the infrastructural scenario in the rural India is
changing. A look at the successive plan outlays will demonstrate the attention that the
policy makers are now directing at Rural Development. The plan outlays have
progressively escalated from Rs. 14,000 crores in the Seventh Plan to a mammoth
90,000 crores in the Tenth Plan. This resource allocation is expected to be invested in
the road network, communication linkages, power, health and educational services,
making incremental changes to the rural lifestyles. Added to all this, has been the
growth in institutional credit for agriculture in rural India, a sector typically
dependent on unorganized credit services. There was a 250% increase in institutional
credit for agriculture between 1995 and 2000, and a total of 24 million kisan credit
cards have been issued since the inception of the scheme in 1998,

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Let us look at some interesting facts about the rural India which were presented as
part of the background paper at the FICCI Conference Rural Marketing and
Communication on 24th April 2003, by Pradeep Kashyap, President, Marketing and
Research Team, New Delhi. Consider the following:
 The number of transient rural supermarkets in India (haats) is around 470,000,
which is more than the total number of retail chain outlets in the US (35,000).
 The Life Insurance Corporation of India in the year 2001-02, sold 55% of its
policies in rural India.
 The 24 million kisan credit cards issued in the rural sector far outstrip the 17.7
million credit+debit cards issued in the urban sector. The amount of money
sanctioned under the KCC scheme is a phenomenal Rs. 52,000 crores.
 The consumption of electricity by the agriculture sector went up from 17.6% of
the total consumption in 1980-8 1 to 29.2% in 199 1-2000. During the same
period the industry share has dropped from 58.4% to 34.8%.
These indicators show a definite trend towards growth of markets, and indicate
towards the potential of rural India.

19.7.2 Nature of Transactions in Rural Marketing

The rural market may mean many things to many people. For quite sometime, rural
markets were synonymous with agricultural marketing or agriculture input marketing.
If you try to visualize the diversity of transactions that fall under the definition of
marketing or related activities, you would be able to identify a number of classes of
transactions. To name some.

 Rural markets involve transactions of agriculture produce and agribusiness

products including dairy products, produced in the rural areas but sold all over,
including rural and urban markets.
 Rural markets involve transactions in non-agricultural products, made in villages
but sold in primarily urban locations. Handspun cloth, handblock printed fabric,
handicraft items, paintings and other local or heritage craft are included in this
class of transactions.
 Rural markets involve goods and services produced and created in the villages
and sold and consumed largely within the village as part of the sustained self
sufficient rural economy. These include products like earthenware pots and pans,
local carpentary and tailoring; services like hairdressing and transportation as
well as local products produced and consumed locally.
 Rural markets also involve sale and consumption of goods made by organized
industry, in both urban and rural sectors.

19.7.3 Marketing Challenges in Rural Marketing

That rural markets for a large number of FMCGs and some consumer durables,
represent the new land of opportunity cannot be denied. Yet our lack of complete
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understanding of the challenges presented by the rural market has acted as a barrier
inhibiting quite few companies from venturing into these terrains. Yet, the companies
that have taken time and effort to understand the needs and aspirations of the rural
markets have met with great success and some corporate giants like HLL and Colgate
Palmolive show a large share of their market (52 and 47.% respectively) is now
contributed by rural India.

Arvind Mills, finding that even the cheapest ready to wear jeans were outside the
paying capacity of most rural youth, introduced their ready to stitch Ruf and Tuf jeans
kit at Rs.195 against the ready to wear range of Rs. 250 to 300 at the lowest level.
Like all efforts at market building, Arvind Mills had to take specific initiatives and
make investment to create primary demand. Local retailers in locations with 5000+
population were stocked with the product, training was provided to village tailors and
special accessories enabling them to stitch heavy duty denim were also supplied.
Demand crossed a million kits in the first two months and a sales figure of five
million kits was crossed in eighteen months. The issue here is one of patience, of
identifying roadblocks and devising solution to overcome them.

Let us here take an overview of these challenges confronting a marketer as he

approaches the rural markets.
1) Getting to Know the Rural Consumer: The marketers' (barring a few)
understanding of the rural consumer is, for all intents and purposes, limited. Most
of their experiences have been earned in urban contexts which, as you have seen
are vastly removed from the rural ones. The economy, lifestyle, languages
spoken, awareness levels regarding alternative choices, exposure to media,
reference groups, family decision making, value perception, impact of culture
and social mores are all very different. To add to the complexity, the urban rural
divide is not uniform, the differentials between urban and rural become
pronounced as the remoteness from urban locations rises. Heterogeneity in
dispersion of rural population and lifestyle across the country and between states
add to the marketer's problems of appropriately segmenting the markets on a
realistic assessment of buying motivations and buyer behaviour involved.
2) Accessing the Rural Consumers - the Distribution Dynamics: Distribution in
rural India is considered a tough challenge to overcome, on account of 700
million + people spread in 600,000 + villages and that too unevenly. Less than
half the villages are connected through motorable, all weather roads. The rural
retail institutions are fairly widespread, though the product choices made
available are few. Most marketers have reckoned, that for the FMCG sector
direct supply to feeder towns (population 20,000+) would be quite adequate, as
each of the distributors in turn, could service a supply network of more than a
hundred outlets in about fifty locations which can then cover majority of villages
with 2,000+ population. You must appreciate that while these villages
(2,00O+population) number only 85,000, they account for upto forty percent of

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 population and account for above sixty percent of the total rural consumption.
The problem of access is for reaching the balance 60% of the population
adequately. Marketers also contend that the rural consumption is at a certain level
today partly because access to desired products and services is low. Utilizing the
traditional outlets of haats and melas effectively, finding customized local
solutions, employing mobile vans for transportation cum sales purposes, are
some answers that marketers have chosen to employ.
3) Product and Pricing Choices: The rural consumer is an astute consumer and a
discerning buyer, partly because of the various demands on a limited
discretionary income. Marketers therefore need to understand that their product
mixes for the rural marketers would need to be judiciously planned in views of
the rural reality.
Smaller packs and stocking units have been imaginatively used by some markets.
Packaging has to be responsive to the rural preference for colour and size while
branding needs to be strongly associative. The plight of the marketer is
compounded by the blitz of spurious brands that flood the rural market in the
FMCG sector, taking advantage of the lack of exposure of rural consumers.
Product and brand recognition therefore, become a critical challenge. Marketers
also recognize that a majority of branded products are facing an introduction and
early growth stage of PLC in the rural market so their product strategies in
comparison to the urban efforts would need to vary.
Pricing in the rural market has now successfully overcome the myth that only
cheaper, stripped down variants will sell well in these markets. Rural consumers
certainly, like their urban counterparts, want value for money but may not have
buying capacity to buy larger units at a given purchase occasion. Adaptation of
pricing strategy, promotional pricing and price bundling are some of the ways
marketers have applied to their advantage.
4) Promotion in Rural India: Electronic media covers only 29% households in
this segment, making the most used media vehicles (print and audiovisual) have a
limited application as promotional media. The villagers' sources of information
about products and brands are limited, key influences are exerted by word of
mouth, opinion leaders and existing users. The limited information sources
inhibit the rural confidence in buying new products and marketers have a key
challenge in building up trust and reassurance. In order to communicate
effectively in rural markets, marketers would need to have a clear understanding
of rural aspirations, fears, perceptions and role models. Traditional institution of
haats and melas have not been adequately utilized by markets but their potential
as platforms for promotions is being fast realized.

Check Your Progress B

1) Differentiate between social marketing and green marketing.

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 ………………………………………………………………………………..
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2) List out the challenges faced by marketers in rural marketing in India.
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3) State the 7 Ps of social marketing.
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4) What is Internet marketing?
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19.8 LETUSSUMUP

This Unit discussed a wide range of emerging concepts like Relationship Marketing,
Internet Marketing, Social Marketing, Green Marketing, Rural Marketing, etc.

Relationship marketing builds strong economic, technical and social ties among the
stakeholders. It cuts down on transaction costs and time. In most successful cases,
transactions move from being negotiated each time to being a matter of routine. The
ultimate outcome of relationship marketing is the building of a unique company asset
called a marketing network, which consists of the company and its supporting
stakeholders (customers, employees, suppliers, distributors, retailers, ad agencies, and
others) with whom it has built mutually profitable business relationships.
increasingly, the competition is not between companies but between marketing
networks. The cardinal principle is simple: Build an effective network of relationships
with key stakeholders, and profits will follow.

Marketing theory and practice was developed initially for marketing physical
products such as soaps, cars, and other tangible products. However, in the recent
years there has been a phenomenal growth of services. This trend we find worldwide.
More than 50% Gross Domestic Product (GDP).is being generated by services and
more than 70% employment in services. More and more tangible or physical products
now contain a service component, both to meet the needs of the targeted customer
segment and to create a distinctive differentiation for competitive reasons. Many
manufactured goods are supported by services such as warranties or guarantees.

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There are a large number of companies who are mainly in the service business.
Besides the traditional 4Ps (Product, Price, Promotion and Physical distribution),
additional 3Ps are relevant in marketing of services. These additional 3 Ps are: (i)
Physical evidence, (ii) Processes and (iii) People.

The Internet is a worldwide means of exchanging information and communicating

through a series of interconnected computers. Started as a U.S Defense Department
project, the Internet, or information superhighway is now accessible to anyone with a
computer and a modem. While the Internet offers a variety of services to users, the
most powerful and popular is the World Wide Web (WWW), commonly referred to
as the Web. In fact, many use the terms Internet and World Wide Web
synonymously. For marketers, a number of Internet features offer potential, but it is
the Web that has developed as the commercial component.

Green Marketing or Environmental Marketing or Ecological Marketing consists of all

activities designed to generate and facilitate any exchanges intended to satisfy human
needs or wants, such that the satisfaction of these needs and wants occurs, with
minimal detrimental impact on the natural environment. As firms face limited natural
resources, they must develop new or alternative ways of satisfying these unlimited
wants. That is where green marketing looks at how marketing activities utilize these
limited resources, while satisfying consumers wants. There are several reasons for the
popularity of green marketing such as better market opportunities, social
responsibility, government pressure, competitive pressure, cost or profit issues, etc.

Social marketing is the application of marketing technologies developed in the

commercial sector to the solution of social problems where the bottom line is
behaviour change. It involves the analysis, planning, execution and evaluation of
programmes designed to influence the voluntary behaviour of target audiences to
improve their personal welfare and that of society. Along with the traditional 4 Ps of
marketing (i.e., Product, Price, Promotion and Physical distribution), marketing mix
for social marketing comprises of additional 3 Ps viz., Publics, Partnership and
Policy.

In India, 70% of population live in rural areas. There is a huge rural market in India,
which is distinctively different from urban markets. For marketing of goods and
services to rural markets, differential marketing efforts are required. Most of the
FMCGs and large number of consumer durable companies realised the potential
demand in rural markets, and designing specific marketing efforts to tap the rural
demand.

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19.9 KEY WORDS

Green Marketing: This is also referred to as Environmental Marketing or Ecological

Marketing. Green Marketing consists of all activities designed to generate and
facilitate any exchange intended to satisfy human needs or wants, such that the
satisfaction of those needs and wants occur with minimal detrimental impact on the
natural environment.

Relationalship Marketing: The process of creating, maintaining and enhancing

strong value laden relationships with customers and other stakeholders.

Services: Intangible and separately identifiable activities which provide satisfaction,

and which are not necessarily tied to the sale of a product or another service.

Social Marketing: Designing, implementing and controlling of programmes seeking

to increase the acceptability of a social idea, cause or practice among a target group.

19.10 ANSWERS TO CHECK YOUR PROGRESS

A 4 (i) False (ii) False (iii) True (iv) True (v) False

19.11 TERMINAL QUESTIONS

1) Write short notes on the following:

a) Relationship marketing
b) Social marketing
c) Green marketing
2) What is a Service? In what respects it is different from a Product? Suggest some
marketing strategies for service firms.
3) How marketing on Internet is different? State the advantages and limitations of
marketing on Internet.
4) Differentiate between social marketing and consumer marketing. Explain the
components of social marketing. Mix.
5) "Rural market in India otter huge opportunities and throw challenges to
marketers". Discuss.
6) Explain the concept of relationship marketing. Explain the main elements of
relationship marketing.
7) Differentiate between green marketing and social marketing. Explain various
problems associated with green marketing.
Note: These questions will help you to understand the unit better. Try to write
answers for them. But do not submit your answers to the university for
assessment. These are for your practice only.

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