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Marketing is the
craft of linking the producers (or potential producers) of a product or
service with customers, both existing and potential. Some form of
marketing arises naturally in all capitalist societies but is not limited
to capitalist societies. Marketing techniques are also applied in
politics, religion, personal affairs, and many other aspects of life.
Marketing methods are informed by many
of the social sciences, particularly psychology, sociology, and economics.
Marketing research underpins these activities. Through advertising, it is
also related to many of the creative arts.
Overview
In popular usage, the term 'marketing' refers to the promotion of
products, especially advertising and branding. However, in professional
usage the term has a wider meaning. It can be divided into four sections,
often called the "four Ps," only one of which is promotion.
They are:
· Product - The Product management
aspect of marketing deals with the specifications of the actual good or
service, and how it relates to the end-user's needs and wants.
· Pricing - This refers to the process
of setting a price for a product, including discounts.
· Promotion - This includes
advertising, sales promotion,publicity, and personal selling, and refers
to the various methods of promoting the product, brand, or company.
· Place or distribution refers to how the product gets to the customer;
for example, point of sale placement or retailing.
These four elements are often referred to as the marketing mix. A marketer
will use these variables to craft a marketing plan. For a marketing plan
to be successful, the mix of the four "p's" must reflect the wants and
desires
of the consumers in the target market. Trying to convince a market segment
to buy something they don't want is extremely expensive and seldom
successful. Marketers depend on marketing research to determine what
consumers want and what they are willing to pay for. Marketers hope that
this process will give them a sustainable competitive advantage. Marketing
management is the practical application of this process.
In marketing products, companies pursue a customer orientation or a
product orientation. A market-oriented company focuses its activities and
products on customer needs. A product-oriented company pursues product
innovation, then tries to attract the market to the product. Although many
people assume that a market-oriented approach is the most logical avenue,
many firms successfully focus on product innovation, such as in research
and development focused companies.
Some aspects of marketing, especially promotion, are the subject of
criticisms. A relatively new form of marketing uses the Internet and is
called internet marketing or more generally e-marketing. It typically trys
to perfect the segmentation strategy used in traditional marketing. It
targets its audience more percisely, and is sometimes called personalized
marketing or one-to-one marketing.
Promotion
It is not enough to have good products sold at attractive prices. To
generate sales and profits, the benefits of products have to be
communicated to customers.
Promotion is, therefore, about companies communicating with customers
Promotion has several possible objectives and many pieces of marketing
promotion aim to achieve several of the following objectives at the same
time:
Inform
Management may need to make their audience aware that their product
exists, and to explain exactly what it does. This is a particularly
important objective for new products
Persuade
An important stage in creating favourable attitudes towards the business
and its brands. Through persuasive promotion, management will seek to
persuade customers and the trade that their brand has benefits that are
superior to competitors
Image creation
Sometimes, promoting a brand image is the only way to create
differentiation in the mind of the consumer (e.g. lager advertising)
Reassurance
Much promotion (particularly advertising) is about reassuring customers
that they have made the right choice and encouraging them to stay loyal to
a brand.
There are a large and growing number of promotional methods that
businesses can use. The main instruments - advertising, direct response
mailing, sales promotion, public relations and direct selling, are often
mixed together as part of the promotional mix. Each has different
strengths.
What is important is that the promotional mix is carefully planned and the
results monitored to ensure that the total promotional cost is controlled.
Promotion is the advancement of rank or position in an organizational
hierarchy system. The opposite is demotion. In Sports leagues of most
countries outside the USA, promotion means the mandated transfer of the
best team(s) of a lower league into a higher league at the end of the
season. An equal number of worst team(s) from the higher league endures
the opposite procedure, relegation. Compared to the American method, this
has the effect of regularly rearranging the leagues according to the
teams' playing strength, and also prevents the games of the not-so-good
teams of each league from becoming boring towards the end of the season.
'Promotion' includes all of the tools
available to the marketer for 'marketing communication'. Marketing
communications has its own 'promotions mix.' Think of it like a cake mix,
the basic ingredients are always the same. However if we vary the amounts
of one of the ingredients, the final outcome is different. It is the same
with promotions. We can 'integrate' different aspects of the promotions
mix to deliver a unique campaign. The elements of the promotions mix are:
1. Personal Selling
2. Sales Promotion
3. Public Relations
4. Direct Mail
5. Trade Fairs and Exhibitions
6. Advertising
7. Sponsorship
The elements of the promotions mix are integrated to form a coherent
campaign. As with all forms of communication. The message from the
marketer follows the 'communications process' as illustrated above. For
example, a radio advert is made for a car manufacturer. The car
manufacturer (sender) pays for a specific advert with contains a message
specific to a target audience (encoding). It is transmitted during a set
of commercials from a radio station (Message / media). The message is
decoded by a car radio (decoding) and the target consumer interprets the
message (receiver). He or she might visit a dealership or seek further
information from a web site (Response). The consumer might buy a car or
express an interest or dislike (feedback). This information will inform
future elements of an integrated promotional campaign. Perhaps a direct
mail campaign would push the consumer to the point of purchase. Noise
represent the thousand of marketing communications that a consumer is
exposed to everyday, all competing for attention.
The Promotions Mix
All of the elements promotional mix are 'integrated' to form a specific
communications campaign.
1. Personal Selling
Personal Selling is an effective way to manage personal customer
relationships. The sales person acts on behalf of the organization. They
tend to be well trained in the approaches and techniques of personal
selling. However sales people are very expensive and should only be used
where there is a genuine return on investment. For example salesmen are
often used to sell cars or home improvements where the margin is high.
2. Sales Promotion
Sales promotion tend to be thought of as being all promotions apart from
advertising, personal selling, and public relations. For example the BOGOF
promotion, or Buy One Get One Free. Others include couponing, money-off
promotions, competitions, free accessories (such as free blades with a new
razor), introductory offers (such as buy digital TV and get free
installation), and so on. Each sales promotion should be carefully costed
and compared with the next best alternative.
3. Public Relations (PR)
Public Relations is defined as 'the deliberate, planned and sustained
effort to establish and maintain mutual understanding between an
organization and its publics.' It is relatively cheap, but certainly not
cheap. Successful strategies tend to be long-term and plan for all
eventualities. All airlines exploit PR; just watch what happens when there
is a disaster. The pre-planned PR machine clicks in very quickly with a
very effective rehearsed plan.
4. Direct Mail
Direct mail is very highly focussed upon targeting consumers based upon a
database. As with all marketing, the potential consumer is 'defined' based
upon a series of attributes and similarities. Creative agencies work with
marketers to design a highly focussed communication in the form of a
mailing. The mail is sent out to the potential consumers and responses are
carefully monitored. For example, if we are marketing medical text books,
we would use a database of doctors' surgeries as the basis of your mail
shot.
5. Trade Fairs and Exhibitions
Such approaches are very good for making new contacts and renewing old
ones. Companies will seldom sell much at such events. The purpose is to
increase awareness and to encourage trial. They offer the opportunity for
companies to meet with both the trade and the consumer. Expo has recently
finish in Germany with the next one planned for Japan in 2005, despite a
recent decline in interest in such events.
6. Advertising
Advertising is a 'paid for' communication. It is used to develop
attitudes, create awareness, and transmit information in order to gain a
response from the target market. There are many advertising 'media' such
as newspapers (local, national, free, trade), magazines and
journals,television (local, national, terrestrial, satellite) cinema,
outdoor advertising (such as posters, bus sides).
7. Sponsorship
Sponsorship is where an organization pays to be associated with a
particular event, cause or image. Companies will sponsor sports events
such as the Olympics or Formula One. The attributes of the event are then
associated with the sponsoring organization. The elements of the
promotional mix are then integrated to form a unique,
but coherent campaign.
Advertising - effectiveness?
Judging the effectiveness of advertising
How can the effectiveness of an advert be judged?
The answer depends on what objectives or tasks were set for the advert.
The table below sets out some possible objectives/tasks and how the
effectiveness of the advert might be measured:
Advertising objective How success can be measured Stimulate an increase in
sales - Number of enquiries from advert- Number of enquiries converted
into sales
Remind customers of the existence of a product -
Test customer awareness both before and after the advertising campaign-
Number of enquiries
Inform customers - Test customer awareness- Number of requests for further
information
Build a brand image -Sales-Test customer
awareness of brand recognition and perceived values
Build customer loyalty and relationship - Levels of repeat purchase-Levels
of customer retention
Change customer attitudes - Measure
demographic profile of purchases-Measure type of goods ordered by new
purchasers- Compare with previous data
Advertising-
why and what?
Why and what should a business advertise?
Before undertaking an advertising campaign, marketers should be able to
answer two key questions:
(1) Why are we advertising?
(2) What are we advertising?
On the face of it these seem like two fairly obvious questions. But they
are significant. Advertising can be a very expensive promotional tool. It
is widely believed that much advertising spend is wasted. So careful
consideration about "Why" and "What" can pay dividends.
Why advertise?
The following may be good reasons why a business is advertising:
. To create awareness, customer interest or desire
. To boost sales (moving the demand curve to the right)
. To build brand loyalty (or to maintain it at the existing level)
. To launch a new product
. To change customer attitudes - perhaps trying to move a product more "upmarket"
or to dispel some widely held perceptions about the product
. To support the activities of the distribution channel (e.g. supporting a
"pull" strategy)
. To build the company or brand image
. To reminds and reassure customers
. To offset competitor advertising - businesses may defend market share by
responding to competitors' campaigns with their own advertising
. To boost public standing: companies can boost their public standing with
advertisements that link them with generally approved campaigns such as
care for the environment
. To support the sales force - advertising can make the job of the sales
force easier and more effective by attracting leads from potential
customers and perhaps motivate them by boosting the profile of the
business But some adverts aim to achieve multiple objectives.
What to advertise?
Factors that help answer the "what are we advertising"? focus on what the
advertising message should be. In general, there are really only two kinds
of effective advertising message:
Firstly, does the business/product have a Unique Selling Proposition ("USP")?
A unique selling proposition is a customer benefit that no other product
can claim In reality these are rare, although that does not stop marketers
from claiming them for their products.
Secondly, does the thing that is being advertised "add value" and if so,
how?
For example, advertising for washing powders will focus on the "added
value" created by whitening agents or the fact that a particular
formulation will last longer than the competition (take a look at the
Fairy web site to
see if you can spot the other "added value" features claimed for its
products)
Whatever is advertised, it is important that the
message is:
.Seen
.Read
.Believed
.Remembered
. Action upon by target customers
"Advertising is any paid form of non-personal presentation and promotion
of ideas, goods and services through mass media such as newspapers,
magazines, television or radio by an identified sponsor".
There are five main stages in a well-managed advertising campaign:
Stage 1: Set Advertising Objectives
An advertising objective is a specific communication task to be achieved
with a specific target audience during a specified period of time.
Advertising objectives fall into three main categories:
(a) To inform - e.g. tell customers about a new product
(b) To persuade - e.g. encourage customers to switch to a different brand
(c) To remind - e.g. remind buyers where to find a product
Stage 2: Set the Advertising Budget
Marketers should remember that the role of advertising is to create demand
for a product. The amount spent on advertising should be relevant to the
potential sales impact of the campaign. This, in turn will reflect the
characteristics of the product being advertised.
For example, new products tend to need a larger advertising budget to help
build awareness and to encourage consumers to trial the product. A product
that is highly differentiated may also need more advertising to help set
it
apart from the competition - emphasising the points of difference.
Setting the advertising budget is not easy - how can a business predict
the right amount to spend. Which parts of the advertising campaign will
work best and which will have relatively little effect? Often businesses
use "rules-of-thumb" (e.g. advertising/sales ratio) as a guide to set the
budget.
Stage 3: Determine the key Advertising Messages
Spending a lot on advertising does not guarantee success. Research
suggests that the clarity of the advertising message is often more
important than the amount spent. The advertising message must be carefully
targeted to
impact the target customer audience. A successful advertising message
should have the following characteristics:
(a) Meaningful - customers should find the message relevant
(b) Distinctive - capture the customer's attention
(c) Believable - a difficult task, since research suggests most consumers
doubt the truth of advertising in general
Stage 4: Decide which Advertising Media to Use
There are a variety of advertising media from which to chose. A campaign
may use one or more of the media alternatives. The key factors in choosing
the right media include:
(a) Reach - what proportion of the target customers will be exposed to the
advertising?
(b) Frequency - how many times will the target customer be exposed to the
advertising message?
(c) Media Impact - where, if the target customer sees the message - will
it have most impact? For example does an advert promoting holidays for
elderly people have more impact on Television (if so, when and which
channels) or in a national newspaper or perhaps a magazine focused on this
segment of the population?
Another key decision in relation to advertising media relates to the
timing of the campaign. Some products are particularly suited to seasonal
campaigns on television (e.g. Christmas hampers) whereas for other
products,
a regular advertising campaign throughout the year in media such as
newspapers and specialist magazines (e.g. cottage holidays in the Lake
District) is more appropriate.
Stage 5: Evaluate the results of the Advertising
Campaign
The evaluation of an advertising campaign should focus on two key areas:
(1) The Communication Effects - is the intended message being communicated
effectively and to the intended audience?
(2) The Sales Effects - has the campaign generated the intended sales
growth. This second area is much more difficult to measure
Factors that determine the type of promotional tools used Each of the
above components of the promotional mix has strengths and weaknesses.
There are several factors that should be taken into account in deciding
which, and how much of each tool to use in a promotional marketing
campaign:
(1) Resource availability and the cost of each promotional tool
Advertising (particularly on television and in the national newspapers can
be very expensive). The overall resource budget for the promotional
campaign will often determine which tools the business can afford to use.
(2) Market size and concentration
If a market size is small and the number of potential buyers is small,
then personal selling may be the most cost-effective promotional tool.A
good example of this would be businesses selling software systems designed
for supermarket retailers. On the other hand, where markets are
geographically disperse or, where there are substantial numbers of
potential customers, advertising is usually the most effective.
(3) Customer information needs
Some potential customers need to be provided with detailed, complex
information to help them evaluate a purchase (e.g. buyers of equipment for
nuclear power stations, or health service managers investing in the latest
medical technology). In this situation, personal selling is almost always
required - often using selling teams rather than just one individual.
By contrast, few consumers need much information about products such as
baked beans or bread. Promotional tools such as brand advertising and
sales promotion are much more effective in this case.
Sales
Sales, or the activity of selling,
forms an integral part of commercial activity. As a practical
implementation of marketing, it often forms a separate grouping in a
corporate structure, employing separate specialist operatives known as
salesmen (singular: salesman or salesperson).
It is not too extreme to say that virtually every good or service enjoyed
by a resident of the planet (except for those created by an individual for
their own use) comes to that individual through the efforts of a
"salesman."
Some medium of exchange is usually employed to transfer the ownership of
the item (money, land, livestock, beads, slaves etc) have all been media
of exchange in various cultures at various times. The successful
communication
of the necessary information that encourages an individual to make a
purchase is the responsibility of the sales person or the sales engine
(e.g. internet, vending machine etc). Because of the natural reluctance of
human
beings to part company with something they currently own in exchange for
something that MIGHT make their life better, the role of the salesman is
often linked with excessive behavior and overstatement of product
characteristics.
Because the primary function of sales is to find and close leads, turning
propective customers into actual ones.
From a marketing point of view, selling is one of the methods of promotion
used by marketers. Other promotional techniques include advertising, sales
promotion, publicity, and public relations.
Moral strictures applied to marketeers often apply even more vigorously to
those in sales. People selling second-hand cars, real estate or
encyclopedias (of the non-Wikipedia variety) often come in for particular
disdain. The propensity of certain types of salespeople to treat customers
badly can be attributed to greed, ignorance and game theory. Game theory
says that if you play a zero-sum interaction only once without iteration,
treating your customer as an adversary is the optimal strategy for your
success. However a cooperative strategy such as tit-for-tat is best if
ongoing dealings and interactions are expected. This insight is behind
so-called consultative sales techniques
Forms of selling include:
· Direct Sales - involving face-to-face contact
retail or consumer
door-to-door or travelling
business-to-business
Indirect - human-mediated but with direct contact
telephone or telesales
mail-order
Electronic
web B2B, B2C
EDI
Agency-based
consignment
multi-level
sales agents (real estate, manufacturing)
Sales promotion
A good definition of sales promotion would be as follows:
"An activity designed to boost the sales of a product or service. It may
include an advertising campaign, increased PR activity, a free-sample
campaign, offering free gifts or trading stamps, arranging demonstrations
or exhibitions, setting up competitions with attractive prizes, temporary
price reductions, door-to-door calling, telemarketing, personal letters on
other methods".
More than any other element of the promotional mix, sales promotion is
about "action". It is about stimulating customers to buy a product. It is
not designed to be informative - a role which advertising is much better
suited to.
Sales promotion is commonly referred to as "Below the Line" promotion.
Sales promotion can be directed at:
. The ultimate consumer (a "pull strategy" encouraging purchase)
. The distribution channel (a "push strategy" encouraging the channels to
stock the product). This is usually known as "selling into the trade"
In marketing, sales promotion is one of the four aspects of promotion.
(The other three parts of the promotional mix are advertising, personal
selling, and publicity/public relations.) Sales promotions are
non-personal promotional efforts that are designed to have an immediate
impact on sales. Sales promotion is media and non-media marketing
communications employed for a pre-determined, limited time to increase
consumer demand, stimulate market
demand or improve product availability. Examples include:
· coupons
· discounts and sales
· contests
· point of purchase displays
· rebates
· gifts and incentive items
Sales promotions can be directed at
either the customer, sales staff, or distribution channel members (such as
retailers). Sales promotions targeted at the consumer are called consumer
sales promotions. Sales promotions
targeted at retailers and wholesalers are called trade sales promotions.
Some sale promotions, particularly ones with unusual methods, are
considered gimmicks by many.Consumer sales promotion techniques
· Price deal: A temporary reduction in the price; this includes a happy
hour
· Cents-off deal: Offers a brand at a lower price. Price reduction may be
a percentage marked on the package.
· Price-pack deal: The packaging offers a consumer a certain percentage
more of the product for the same price (eg: 25% more free).
· Coupons: coupons have become a standard mechanism for sales promotions.
· Free-standing tnsert (FSI): A coupon booklet is inserted into the local
newspaper for delivery.
· On-shelf couponing: Coupons are present at the shelf where the product
is available.
· Checkout dispensers: On checkout the customer is given a coupon based on
products purchased.
· On-line couponing: Coupons are available on line. Consumers print them
out and take them to the store.
· Rebates: Consumers are offered money back if the receipt and barcode are
mailed to the producer.
· Contests/sweepstakes/games: The consumer is automatically entered into
the event by purchasing the product.
· Point-of-sale displays:
Aisle interrupter: A sign the juts into the aisle from the shelf.
Dangler: A sign that sways when a consumer walks by it.
Dump bin: A bin full of products dumped inside.
Glorifier: A small stage that elevates a product above other products.
Wobbler: A sign that jiggles.
Lipstick Board: A board on which messages are written in crayon.
Necker: A coupon placed on the 'neck' of a bottle.
YES unit: "your extra salesperson" is a pull-out fact sheet.
Trade sales promotion techniques
· Trade allowances: short term incentive offered to induce a retailer to
stock up on a product.
· Dealer loader: An incentive given to induce a retailer to purchase and
display a product.
· Trade contest: A contest to reward retailers that sell the most product.
· Point-of-purchase displays: Extra sales tools given to retailers to
boost sales.
· Training programs: dealer employees are trained in selling the product.
· Push money: also known as "spiffs". An extra commission paid to retailer
employees to push products.
Methods of sales promotion
There are many consumer sales promotional techniques available, summarized
in the table below:
Price promotions
Price promotions are also commonly known as" price discounting"
These offer either
(1) A discount to the normal selling price of a product, or
(2) More of the product at the normal price.
Increased sales gained from price promotions are at the expense of a loss
in profit - so these promotions must be used with care.
A producer must also guard against the possible negative effect of
discounting on a brand's reputation
Coupons
Coupons are another, very versatile, way of offering a discount. Consider
the following examples of the use of coupons:
- On a pack to encourage repeat purchase
- In coupon books sent out in newspapers allowing customers to redeem the
coupon at a retailer
- A cut-out coupon as part of an advert
- On the back of till receipts
The key objective with a coupon promotion is to maximise the redemption
rate - this is the proportion of customers actually using the coupon.One
problem with coupons is that they may simply encourage customers to buy
what they would have bought anyway. Another problem occurs when retailers
do not hold sufficient stocks of the promoted product - causing customer
disappointment.
Use of coupon promotions is, therefore, often best for new products or
perhaps to encourage sales of existing products that are slowing down.
Gift with purchase
The "gift with purchase" is a very common promotional technique. It is
also known as a "premium promotion" in that the customer gets something in
addition to the main purchase. This type of promotion is widely used for:
- Subscription-based products (e.g. magazines)
- Consumer luxuries (e.g. perfumes)
Competitions and prizes
Another popular promotion tool with many variants. Most competition and
prize promotions are subject to legal restrictions.
Money refunds
Here, a customer receives a money refund after submitting a proof of
purchase to the manufacturer.These schemes are often viewed with some
suspicion by customers - particularly if the method of obtaining a refund
looks unusual or onerous.
Frequent user / loyalty incentives
Repeat purchases may be stimulated by frequent user incentives. Perhaps
the best examples of this are the many frequent flyer or user schemes used
by airlines, train companies, car hire companies etc.
Point-of-sale displays
Research into customer buying behaviour in retail stores suggests that a
significant proportion of purchases results from promotions that customers
see in the store. Attractive, informative and well-positioned
point-of-sale
displays are, therefore, very important part of the sales promotional
activity in retail outlets.
Promotion Strategy
An analysis of a product's performance takes into account both surface
indications and underlying problems facing the brand. In-depth situation
analyses and strategy development can help determine the incentive needed,
the type of promotion likely to have the greatest appeal, and the media
required to reach the desired audience.
Items to consider:
1. Customer Attitudes and Buying Behaviors
Determine who your customers are demographically and psychographically
-personal characteristics, age group, location, ethnicity, income,
etc.Establish what about your brand attracts them and how they make their
buying
decisions.
2. Brand Strategy
Consider your level of dominance in the product category. How will sales
promotion factor into performance? What are the strengths and time period
before returns are realized?
3. Competitive Strategy
Evaluate past performance, both ours and your competitors', and determine
what activities, levels of spending and time periods produced the best
results.
4. Advertising Strategy
How do you currently promote your product in your existing markets? Which
media best suits your needs?
5. Trade Environment
What are your distributors' attitudes towards the brand? Your
competitors'?
6. Other External Factors
What resources are available and what unpredictable factors may influence
a product's availability or pricing (e.g.: weather, raw materials)
Promotion Tactics
The three basic elements of a sales promotion are:
1. The offer
2. Media for communicating the offer to the target audience
3. The creative "hook," message or theme that moves the audience toward
the desired response.
Many promotion techniques are currently available and new ones are
constantly evolving: In selecting a technique, a marketer must consider
its suitability, compatibility with the brand's objectives, and budget
parameters. Promotional tactics that Partners & Levit often recommends
include:
Consumer Tactics
1. Coupons
These short-term price incentives induce consumers to purchase a product.
They not only save the consumer money, but they are effective ways of
introducing new products to the public, too. Thus, coupons stimulate trial
and conversion, retain current users, and serve as a selling device.
2. Sweepstakes
Sweepstakes are promotions wherein winners are determined by a random
drawing in some chance event. The participants exercise no control. Sweeps
generate awareness and involvement with a brand. The most cost effective
sweepstakes prize is travel, which has a substantially higher perceived
value than its cost.
3. Sampling
Sampling allows the customer to decide for himself or herself whether or
not a product satisfies a need. If the results are favorable, there are
often product inventories available for purchase.
4. Mail-in offers/rebates
Mail-in offers are a delayed incentive. They appear in two general
categories: Cash or coupon refunds and premium offers. Consumers purchase
a product and send away in order to receive the reward.
Refund Offers require the consumer to mail in certain proofs-of-purchase
in return for a set amount of cash or coupons. This encourages purchase
continuity and brand trial.
Premium Offers offer free or discounted merchandise as an incentive for
the customer to purchase more.
The genuine benefit to the marketer is a low redemption rate.
5. Group Promotions
There are usually three elements to group promotions: The offer, the
unifying theme and joint advertising support. When participating in-group
promotions, overall costs are often lower. However, more time and planning
must go into development. It is important to develop a logical and
unifying theme, preferably one simple and to the point.
Business-to-Business Tactics
1. Merchandising allowances
Think of merchandising allowances as "fees for favoritism". There may be
monetary or prize rewards such as travel, gifts, or discounts that are
given to retail stores or wholesalers for featuring a product. In a way,
we are
purchasing real estate-shelf space, displays, features-for our product.
2. Contests
B-B contests are geared toward distributors, brokers, retailers, etc. For
example, company may establish a contest for its distributors. These
contests help push sales along by offering personal rewards for added
performance. An example of this can be seen with salespeople. The most
effective sales person may win cash, prizes, or exciting trips.
3. Performance allowances (i.e. advertising allowance)
This monetary fund is set aside to subsidize the advertising initiatives
of resellers. Most times, these advertisements target a local audience or
smaller population. For example, Xerox may have a national advertising
campaign, which includes television commercials and magazine
advertisements. However, a small-town distributor may advertise Xerox
machines in a weekly flyer on its own. Xerox would then reward the
distributor for their efforts by offsetting a portion of the distributor's
prior year's advertising costs based on the distributor's total product
purchases.
4. Dealer Incentives
Getting a dealer to sell your product instead of your competitor's is
difficult. Both we and our competitor may occupy the same niche and offer
similar benefits. Perhaps our competitor has an edge over us, whether it
be
in brand popularity, pricing, or customer loyalty. Offering dealer
incentives is one way to help secure our position. Rewarding the dealer
with bonuses or prizes encourages them to choose our product and sell it
enthusiastically.
Written By : Disanta Ojah
disanta@rediffamil.com |
Writer
Profile
an MBA from a popular
management
institute of Delhi. A marketing guy with knowledge of IT done summer
training from KINETIC ENGG. LTD. experience as marketing
executive in Crossroad Help Line Service .
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