Promotion Decisions/

The communication process is the steps we take in order to

successfully communicate. Components of the communication process include a
sender, encoding of a message, selecting of a channel of communication, receipt of
the message by the receiver and decoding of the message.

Definition: The Communication is a two-way process wherein the message in the

form of ideas, thoughts, feelings, opinions is transmitted between two or more
persons with the intent of creating a shared understanding.

Communication Process

The communication is a dynamic process that begins with the conceptualizing of

ideas by the sender who then transmits the message through a channel to the
receiver, who in turn gives the feedback in the form of some message or signal
within the given time frame. Thus, there are Seven major elements of
communication process:

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Communication mix

The marketing communication mix, sometimes referred to as the promotion mix,

is a set of five tools that businesses use to communicate with their customers,
prospects and stakeholders. It doesn’t matter how large or small your
organization is, or what kind of products or services you sell, utilizing an
effective marketing communication mix can help you increase your revenue.

Marketing is a broad business function that includes product research and

development, merchandising and distribution processes and pricing, as well as
communication or promotion. The communication mix refers to specific methods
used to promote the company or its products to targeted customers. Some
depictions of the promotional mix include five elements, while others add a sixth –
event sponsorship.

Advertising

Any paid form of non-personal presentation & promotion or ideas, goods or services by an
identified sponsor. To develop advertising program, need to start with identifying the target
market & buyer motives. Consider these 5 decisions

1. Objectives: Can be classified according to whether their aim is to inform (good to

build primary demand), persuade (tool to build selective demand for a particular
brand) or remind (to purchase or that they made a right choice -reinforcement ad.-).
2. Budget: Consumer-packaged-goods firms tend to overspend to insure against not
expending enough, & industrial co. underestimate the power of the co. therefore
under spend on advertising. Need to consider:
o Stage in the product life cycle (established brands have lower ratio)
o Market share & consumer base (high share, less ratio)
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 o Competition & clutter (more competitors, more ad./sales ratio)
o Advertising frequency & product substitutability.
3. Message: 4 steps to develop a creative strategy:
o Message generation: The message should be decided as part of developing the
product concept. In generating advertising messages, agencies use inductive (talking to
customers, dealers, experts & competitors) & deductive (buyers expect one of these types of
reward from a product: rational, sensory, social or ego satisfaction).
o Message evaluation & selection: Advertiser evaluates the alternative messages, good
ad need to be rated on desirability, exclusiveness & believability.
o Message execution: Not only what you say is important, but also how it is said. Some ads
aim to rational positioning & others for emotional positioning. In preparing an ad campaign,
a copy strategy statement should be prepared, describing the objective, content, support &
tone of the desired ad. Creative people must find a style (lifestyle, fantasy, image, musical,
personality symbol, etc.), tone (positive, humor, emotions, etc.), words -memorable-(news,
question, narrative, command, etc.), format (size, color, illustration, etc. People see in order:
picture, headline & last the copy. Many ads aren’t creative because many companies want
comfort (risk averse), not creativity).
4. Media
o Media Selection: involves finding the most cost-effective media to deliver the desired
number of exposures to the target audience. The effect of exposures on audience awareness
depends on the exposures’ reach (# of persons or households exposed to a particular media
schedule at least once), frequency (# of times that the average household is exposed to the
message in a specified period) & impact (the qualitative value of an exposure through a
given medium).
o Media types: Have to consider several variables like: target-audience media habits, product,
message & cost (what counts is the cost-per-thousand exposures rather than the total cost).
New media: Outdoor ad (excellent way to reach important local consumer segments), the
store itself (displays & price tags supplemented by talking shelves), best-selling paperback
books, movie theaters, movie videotapes, monthly bills, etc.

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o Media vehicles (programs): Media planners calculate the cost-per-thousand persons reached
by a vehicle & rank them. Also need to consider: audience quality, audience attention
probability & editorial quality.
o Media timing: In deciding which types of media to use, the advertiser faces a macro-
scheduling problem (calls for deciding how to schedule the advertising in relation to
seasonal & business-cycle trends) & micro-scheduling problem (calls for allocating
advertising expenditures within a short period to obtain the maximum impact). Timing
pattern should consider 3 factors: buyer turnover, purchase frequency & forgetting rate; the
higher this rate, the more continuous the ad should be. In launching a new product,
advertiser has to choose among ad continuity (scheduling exposures evenly), concentration
(expending all in a single period), flighting (seasonal) & pulsing (continuous ad at low-
weight levels reinforced periodically by waves of heavier activity).
5. Advertising effectiveness: Most of the money is spent by agencies on pre-testing ads,
& much less on post-evaluating their effects. Better to first limit the campaign to one
or a few cities, instead of nationally, to test the ad.
o Communication-effect research: Seeks to determine whether an ad is communicating
effectively, also called copy testing. Pre-testing ad methods: direct rating (asks consumers to
rate alternative ads), portfolio tests (ask consumers to view or listen to several ads, then
asked to recall them) & laboratory tests (use equipment to measure consumers’ physiological
reactions). Post-testing ads: To what extent did the ad increase brand awareness, brand
comprehension, stated brand preference, & so on.
o Sales-effect research: Harder to measure than communication effect. A way to measure it:
share of market / share of voice; one is OK, less than one means they are overspending,
more than one mans money is spent super efficiently & should probably increase its
expenditures. Researchers try to measure the sales impact through analyzing either historical
(correlating past sales to past advertising expenditures using advanced statistical techniques)
or experimental data (company spends more in some territories & less in others)

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Sales Promotion

A diverse collection of incentive tools, mostly short term, designed to stimulate quicker &/or
grater purchase of particular products/services by consumers or the trade. Where advertising
offers a reason to buy, sales promotion offers an incentive to buy. It includes tools for
consumer promotion, trade promotion & business & sales force promotion.

 Rapid growth: A decade ago, ad-to-sales promotion ratio was about 40:60, now is
like 25:75 & growing. This is due to managers need to increase sales (internal) &
some external causes like: the # of brands has increased (seen as similar), competitors
use prom frequently, consumers are more price oriented, etc.
 Purpose of Sales promotion: Sellers use incentive-type promotions to attract new
triers, to reward loyal customers, & to increase the repurchase rates of occasional
users. Price promotions usually build short-term volume that is not maintained, but it
enables manufacturers to adjust to short-term variations in supply & demand.
 Sales promotion objectives: Encouraging purchase, building trial for nonusers,
attracting switchers from competitors, increase inventory in retailers, encourage off-
season buying, support of a new product, etc.
 Sales promotion tools: Distinguished between manufacturer promotions & retailer
promotions to consumers. Sales prom seems most effective when used together with
advertising, & even more with point-of-purchase display.
 Trade-promotion tools: A higher proportion pie is devoted to trade-promotion tools
than to consumer promotion, with media advertising capturing the rest. This is
because trade promotion can persuade the retailer or wholesaler to carry the brand
(shelf space), can persuade the retailer or wholesaler to carry more units, can induce
the retailers to promote the brand by featuring, display, & price reductions, also can
stimulate retailers & their sales clerks to push the product.
 Developing the sales- promotion program: In deciding to use a particular incentive,
marketers have several factors to consider: size of the incentive, conditions for
participation, duration of the prom, distribution vehicle, timing of prom & finally the
total sales-promotion budget.
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  Pre-testing the sales-promotion program: To see if the tools are appropriate, the
incentive size optimal, & the presentation method efficient.
 Evaluating the sales-prom results: Manufactures can use 3 methods to measure
sales-promotion effectiveness: sales data (using scanner sales data), consumer surveys
(who recalled the prom, what they thought about it, how many took advantage of it, &
how the prom affected subsequent brand-choice behavior) & experiments (vary
attributes as incentive value, duration, & distribution media).
 There are other potential costs & problems: Promotions might decrease long-run
brand loyalty, can be more expensive than they appear, there are costs of special
production runs, & certain promotions irritate retailers.

Public Relations (PR)

Involves a variety of programs designed to promote &/or protect a company’s image or its
individual products. Marketing managers & PR do not always talk the same language,
bottom-line oriented vs. preparing & disseminating communications. Many companies are
turning to marketing public relations (MPR), playing a role in: Assisting I the launch of new
products, assisting in repositioning a mature product, building interest in a product category,
influencing specific target groups, defending products that have encountered public
problems, & building e.g. corporate image in a way that projects favorably on its products.
MPR is found to be effective in building awareness & brand knowledge for both new &
established products.

Major decisions in PR

In considering when an how to use MPR, management must:

 Establish the marketing objectives: MPR can contribute to build awareness, build
credibility, stimulate the sales force & dealers, & hold down promotion costs.
 Chose the PR messages & vehicles: The manager. must identify or develop
interesting stories to tell about the product. Here the challenge is to create news rather

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 than find news. Event creation is used by profit & non-profit organizations to develop
a multitude of stories directed at different audiences.
 Implementing the MPR: A great story is easy to place, but most stories are less than
great & might not get past busy editors. Publicity requires extra care when it involves
staging special events.
 Evaluating the MPR results: It is difficult to measure because it is used along with
other promotional tools. The 3 most commonly used measures of MPR effectiveness
are number of exposures (all the media that carried news about the product & a
summary statement), awareness/comprehension/attitude change (how many people
recall hearing the news item? How many told others about it? How many changed
their minds after hearing it?) & sales-&-profit contribution (the most satisfactory
measure, if obtainable)

What is Direct Marketing?

Direct marketing is an advertising strategy that relies on individual distribution of a sales pitch to
potential customers. Mail, email, and texting are among the delivery systems used. It is called
direct marketing because it generally eliminates the middleman such as advertising media

How Direct Marketing Works

Unlike most marketing campaigns, direct marketing campaigns do not rely on advertising in
mass media. Instead, they deliver their sales pitches by mail, by phone, or by email. Although the
numbers of pitches sent can be massive, an attempt is often made to personalize the message,
inserting the recipient's name or city in a prominent place.

The call to action is a common factor in much of direct marketing. The recipient of the message
is urged to immediately respond by calling a toll-free phone number, sending in a reply card, or
clicking on a link in an email promotion. Any response is a positive indicator of a prospective
purchase. This variety of direct marketing is often called direct response marketing.

Targeting in Direct Marketing

The most effective direct marketing campaigns use lists of targeted prospects in order to send
their messages only to the likeliest prospects. The lists might target families who have recently

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had a baby, or new homeowners, or recent retirees with products or services that they are most
likely to need.

Catalogs are a form of direct marketing with a history that dates back to the latter half of the 19th
century. In modern times, catalogs are usually sent only to consumers who have indicated an
interest by a previous purchase of a similar product.

Advantages and Disadvantages of Direct Marketing

A direct marketing pitch that is delivered to the widest possible audience is probably the least
effective. That is, the company may gain a few customers while merely annoying all of the other
recipients. Junk mail, spam email, and texting all are forms of direct marketing that many people
can't get rid of fast enough.

Many companies engage in opt-in or permission marketing, which limits their mailing or
emailing to people who have indicated a willingness to receive it. Lists of opt-in subscribers are
particularly valuable as they indicate a real interest in the products or services being advertised.

Who Uses Direct Marketing

Despite its drawbacks, direct marketing has its appeal, particularly to companies on a shoestring
budget who can't afford to pay for television or internet advertising campaigns.

Direct marketing is the preferred advertising strategy for small local businesses, which can
distribute hundreds of fliers, coupons, or menus for less than it would cost them to place an ad or
make a commercial.

By its nature, the effectiveness of a direct marketing campaign is easier to measure than other
types of advertising. This is because they often contain a call to action. The company an measure
its success by how many consumers make the call, return the card, use the coupon, or click on
the link.

Sales Force

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A "sales force" is a group within a company that conducts sales. Salesforce.com is a cloud-based CRM
system that allows salespeople to track their sales, support people to track their cases, and the entire
company's employees to collaborate with each other

 Sales Volume: bring in as many customers as possible. Sales volume by selected

segments or price/margin mix is also viable ways to set objectives and is employed by
many hospitality members.

 Up selling and second-chance selling: Hospitality companies apply up selling by

upgrading price and profit margins by selling higher-priced products such as suites.
Second chance selling encourages sales people to increase the productivity of existing
resources. For example, sell airport limousine pickup to the customers who had booked
the rooms at the hotel.

 Market share or market penetration: The management of most hotels is concerned

primarily with measures such as occupancy, average room rate, yield, and customer mix.
The corporate marketing department of a chain is, however, likely to be concerned about
market share. It requires the sales person to become accountable for clearly defined
performance standards such as percentage of market share.

 Product specific objectives: May be set to increase responsibility for improved sales
volume for specific product lines. For example, a sales force may be asked to sell more
suites, higher-margin coffee breaks, holiday packages, honeymoon packages, or other
product lines.

Sales force structure and size

Structure of your sales force to maximize sales and profits. Establishing the right size is vital so
that sales are maximized without sacrificing profit. Sales force structure is critical to the success
of the sales organization, as a compromised structure can have a Sales Force
Definition: The division of a business that's responsible for selling products or services

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Sales force
Evaluating your current sales force is an important step in the process of deciding whether and
how to grow your sales team. If your existing sales force is fine and will be more than adequate
to fuel future growth, you can keep the number of people the same and simply add some
additional training or perhaps a revamped compensation package. On the other hand, your sales
force may need to grow by a few heads, or you may choose to stay the same size but have
different people filling the sales positions.

Step one in evaluating your sales force is to decide what you want it to do for you. For some
companies that do most of their selling through mail order or the Internet, a sales force is strictly
an option. In this case, you may expect your sales force to handle only the larger accounts,
leaving the smaller orders to customer service personnel and order-takers. For other companies,
however, the salesperson is the most visible-and perhaps the only--outward manifestation of the
company seen by customers. This type of salesperson carries a heavy load. He or she has to
uphold the company's image, hold the customers' hands, interface with delivery and repair
departments at headquarters, and, of course, get the sale.

It won't require a lot of thought for you to come up with a good description of what you want
your sales force to do. Make sure you're not evaluating your sales force based on some other
company's needs. For instance, if your salespeople are primarily charged with following up on
leads generated by your advertising, don't penalize them if they aren't making a lot of cold calls.
Once you decide what jobs your sales force is intended for, simply check their performance
against the requirements. The key measure when it comes to evaluating a sales force is sales
productivity.

The simplest measure of sales productivity is the dollar amount of sales per salesperson. That's
easy enough to figure out: Just divide the volume of sales by the number of salespeople on staff.
That will give you an average sales productivity figure and let you know how the average
salesperson in your organization is doing. More useful, though, is to know how each individual
salesperson is doing compared to the average. You may have a handful of relatively productive

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people who are carrying the load for a raft of underperformers. This is the kind of information
you'll need to know to decide whether to make a change.

Be warned, though: Sales productivity may involve more than simply generating dollars of sales.
Your sales force may be moving a lot of product now but costing you sales later by alienating
customers with poor service. They may be making promises you can't deliver on, overburdening
your production and shipping departments. They may be selling a lot of the wrong products
(items with low margins or high support costs) while ignoring your more profitable lines. Check
to see if certain salespeople have large numbers of returns or tend to sell to customers who don't
pass credit checks. These salespeople could be costing you more than they are worth.

Adding salespeople can result in steadily increasing sales. This can free you up to spend time and
energy on other tasks. Hiring salespeople could also hurt sales, erode profits, damage valuable
customer relationships, and destroy your image in the marketplace. The difference between these
two scenarios is the difference between hiring the right salespeople and the wrong ones.

Salespeople are not just the people responsible for building your bottom line. They're also your
front-line troops, the ones with the most daily contact with your customers. With those caveats in
mind, it's important to not only grow your sales force, but to grow it properly.

To start with, understand that there may not be any truly bad salespeople. There may just be
good salespeople in the wrong positions. To hire the right salesperson for the job, you have to
understand and be able to describe what the job is. That means clarifying whether this sales
position is intended to immediately generate sales or perhaps develop contacts for a sales cycle
that may stretch into months or years. Do you want someone who is a closer or one who takes
more of a consultative approach? Matching your company's sales needs and selling style to your
new hires is the first step in getting good salespeople.

Few salespeople are motivated by altruism, and misunderstanding your company's compensation
package is one of the main reasons for sales staff dissatisfaction and turnover. For all potential
new hires, explain precisely what the compensation plan is. In addition, clarify the territory, your
performance expectations, any training you will offer, and any sales tools you will provide. You
should also provide candidates with a thumbnail description of the market and the competition.

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Then you will know that you have explained the opportunity accurately to anyone who is
interested.

Don't stop by describing your needs. Imagine the ideal salesperson for the job, including his or
her personality, experience, energy level, reputation and abilities. You may not find someone
exactly like that, but if you don't know what you want, the odds of making a bad hiring decision
are high.

Only now should you actually start looking for salespeople. But before dashing out a three-line
ad and calling the classified department of your local newspaper, consider some other options:

 Look internally. You may have technical, support, operations or administrative people who
would and could successfully move into sales. Post the ad on a bulletin board and see what
happens.
 Ask for employee referrals. Chances are your existing employees know the kind of people who
would be happy working for you. They may be able to suggest some people for you to contact.
 Network with suppliers, customers, colleagues, advisors and social contacts. This can be
cheaper, faster and more reliable than advertising to the general public.
 Check with professional associations. They may have job lines to help members find
employees.
 Try online advertising. The speed, freshness and searchability of online job banks make them
attractive options for both candidates and employers.
 Check with your local college. You may be able to hire a recent graduate who is enthusiastic,
effective and less expensive than a seasoned professional.
 Contact headhunters. Headhunters specializing in sales personnel aren't cheap, but when labor
markets are tight, it may be worth the cost to find a solid salesperson.
 Consider using temporary and staffing services. Temporary and staffing services can provide
you with sales and marketing personnel on a temporary, temp-to-perm, or permanent direct-hire
basis..

Methods of Determining Sales Force Size

There are some methods to decide on sales force size.

1. Equalized Workload Method:

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 For this method, the workload means the calls the salesmen have to make. The method depends
on total workload (i.e., calls). Here, salesmen’s duties, functions, or activities are said as ‘calls.’
A call may include a number functions like pre-approach, approach, and sales presentation,
abjection handling, and closing sales

However, a call can be defined by the company as per its requirements or expectations.

The method can be applied only if a company is in position to decide on:

(1) Different groups of customers based on size of purchase,

(2) Number of calls required by the different groups of customers, and

3) Average number of calls a salesman can make in a year.

Sales force compensation

Sales-force compensation is number one problem confronting every sales

management. Compensation, here, stands for the monetary and nonmonetary reward
given by the firm to, its sales-force in return for the services rendered. Though,
compensation stands for contractual payments, there can be non-contractual and ad-
hoc payments.

If sales-force recruitment and the training create and develop the manpower needs, the
compensation aspect cares for its maintenance in the organization for longer period.

Sales force Compensation“

The incentive plan needs to align the salesperson’s activities with the firm’s
objectives.”[1] Toward that end, an effective plan may be based on the past (growth), the present
(comparison with others), or the future (percentage of goal achieved)

The purpose of the sales force compensation metric is to determine the mix of salary, bonus,
and commission that will maximize sales generated by the sales force. When designing a
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compensation plan for a sales force, managers face four key considerations: level of pay, mix
between salary and incentive, measures of performance, and performance-payout relationships.
The level of pay, or compensation, is the amount that a company plans to pay a salesperson over
the course of a year. This can be viewed as a range, because its total will vary with bonuses or
commissions

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