FUNDAMENTALS OF MARKETING IN NEPAL

CHAPTER NINE: PROMOTION DECISIONS

CHAPTER NINE: PROMOTION DECISIONS

MEANING OF PROMOTION ........................................................................................................................... 2
OBJECTIVES OF PROMOTION .................................................................................................................... 2
PROCESS OF MARKETING COMMUNICATION .......................................................................................... 3
COMPONENTS OF PROMOTION MIX ........................................................................................................ 4
FACTORS AFFECTING DETERMINATION OF PROMOTION MIX ................................................................. 5
ADVERTISING ................................................................................................................................................ 7
CHARACTERISTICS OF ADVERTISING ......................................................................................................... 7
OBJECTIVES/IMPORTANCE OF ADVERTISING ........................................................................................... 8
ADVERTISING MEDIA ................................................................................................................................ 8
SELECTION OF ADVERTISING MEDIA ........................................................................................................ 9
PUBLICITY .................................................................................................................................................... 11
OBJECTIVES OF PUBLICITY....................................................................................................................... 11
TYPES OF PUBLICITY: ............................................................................................................................... 11
PUBLIC RELATIONS ...................................................................................................................................... 12
OBJECTIVES OF PUBLIC RELATIONS ........................................................................................................ 12
NATURE OF PUBLIC RELATIONS .............................................................................................................. 13
SALES PROMOTION ..................................................................................................................................... 14
CHARACTERISTICS OF SALES PROMOTION ............................................................................................. 14
OBJECTIVES OF SALES PROMOTION ....................................................................................................... 14
METHODS OF SALES PROMOTION (Tools) .............................................................................................. 15
PERSONAL SELLING ..................................................................................................................................... 17
OBJECTIVES OF PERSONAL SELLING ........................................................................................................ 17
TYPES OF PERSONAL SELLING ................................................................................................................. 18
PERSONAL SELLING PROCESS FOR INDOOR SALES ................................................................................. 18
PERSONAL SELLING PROCESS TRAVELLING SALES .................................................................................. 19

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 FUNDAMENTALS OF MARKETING IN NEPAL
CHAPTER NINE: PROMOTION DECISIONS

CHAPTER NINE: PROMOTION DECISIONS

MEANING OF PROMOTION
Promotion refers to the applied communication used by marketers to exchange persuasive
messages and information between the firm and its various prospective customers and general
public. The nature of marketing communication is persuasive since it aims at influencing the
consumer behavior in favor of the firm's offering.

Promotion is a highly visible component of the marketing mix. Marketers match the product to the
specific needs and wants of the buyers. They put price on the product and distribute the product in
the target markets. However, marketers may not achieve their objective of profit unless buyers are
communicated about the product, its price and availability. Thus, promotion performs the major
role of communicating to the buyers. It tells the target customers about other Ps of marketing mix.

According to William Stanton, “Promotion is the element in an organization’s marketing mix that
serves to inform, persuade and remind the market of a product and/or the organization selling it, in
hope of influencing the recipients feeling, beliefs or behavior.”

Promotion is the marketing term used to describe all marketing communications activities and
includes advertising, sales promotion, personal selling, publicity and public relations.

OBJECTIVES OF PROMOTION

a. INFORMING:
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.
Hence, promotion disseminates information to target markets and middlemen.

b. PERSUADING:
An important stage in creating favorable attitudes towards the business and its brands is
persuading. Through persuasive promotion, management will seek to persuade customers
and the trade that their brand has benefits that are superior to competitors. This helps
customers to choose from various products in the market.

c. REMINDING:
It is of immense necessity to remind target customers about the products and organizations
because of if the products or organizations go out of sight of the customers then eventually
it will go out of mind as well. Hence, promotion helps to remind customers about a brand.

d. REINFORCING:
Customers may have anxiety over their purchase decision. Hence, much promotion
(particularly advertising) helps to reassure customers that they have made the right choice
and encourage them to stay loyal to a brand.

e. IMAGE BUILDING:
Sometimes, promoting a brand image is the only way to create differentiation in the mind of
the consumer (e.g. lager advertising). Through regular promotion activities, product or
organization can be positioned in the mind of customers which helps to create brand loyalty.

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CHAPTER NINE: PROMOTION DECISIONS

PROCESS OF MARKETING COMMUNICATION

Marketers need to understand the fundamental elements of effective communications.

a. Sender: Sender is the source of message. They must know what audiences they want to
reach and what responses they want to get to effectively disseminate messages.

b. Encoding: Encoding the message is the second step in communication process, which takes
a creative idea and transforms it into attention-getting advertisements designed for various
media (television, radio, magazines, and others). Sender must encode their messages so that
the target audience can decode them.

c. Channel: The messages are transmitted through media that reach the target audience and
develop feedback channels to monitor the responses. Promotion objective determines
media choice.

d. Decoding: Decoding is the process of translating the message into understandable format
by the receiver. Recipient’s knowledge and experience are important for decoding.

e. Receiver: Receiver is the ultimate destination of the message. The target audience may not
receive the intended message for any of three reasons:
a. Selective attention: People are bombarded by hundreds of commercial messages a
day, of which few are consciously notice and only some provoke some reaction.
b. Selective distortion: Receivers will hear what fits into their belief systems.
c. Selective retention: People will retain in long term memory only a small fraction of
the messages that reach them.

f. Feedback: The feedback is the indication of understanding by the message receiver to the
message source. It helps to improve future promotion. In marketing, feedback can be
message recall, more favorable attitude, increased product awareness and increased sales.

g. Noise: It is the unplanned static distortion during the communication process, which results
in the receiver getting a different message than the one the sender sent

For a message to be effective, the sender's encoding process must mesh with the receiver's
decoding process. Thus, the best messages consist of words and other symbols that are familiar to
the receiver. The more the sender's field of experience overlaps with that of the receiver, the more
effective the message is likely to be.

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CHAPTER NINE: PROMOTION DECISIONS

COMPONENTS OF PROMOTION MIX

Promotion is the element of marketing mix which uses variety of technique to set up channels of
information and persuasion to sell goods or services or to promote an idea or to enhance the
reputation of an organization. Promotion mix is the particular combination or blend of advertising,
sales promotion, public relations, personal selling and publicity that an advertiser chooses to
employ.

a. Advertising: Any paid form of non-personal presentation and promotion of ideas, goods or
services by an identified sponsor is advertising. The key words are “non-personal” and “paid
by an identified sponsor”. Thus in an advertising, instead of communicating with customers
face to face, companies that advertise ordinarily use a mass media such as television,
newspaper, radio, hoardings etc. These messages when they appear identify clearly the
sponsor who had paid for them.

b. Publicity: Any form of non-paid commercially significant news or editorial comment about
ideas, products, services and institutions is publicity. In general, it increases consumer
awareness of a company, its product, particularly new and innovative products and
marketing practices.

c. Public Relations: any unpaid form of presentation designed to promote favorable attitudes
and opinions toward organization, its policies and products. The tools of public relations are
charitable donations, sponsorship of events, exhibits and displays etc.

a. Sales Promotion: Sales promotion is a direct inducement which offers an extra value and
incentive for the product to the sales force, distributors, or the ultimate consumers. It is
Short-term incentives to encourage the purchase or sale of a product or service.

b. Personal Selling: Unlike advertising, personal selling involves a one to one relationship
with a consumer. It is an oral presentation of tangible and intangible product by a seller to a
prospect for the purpose of completing an exchange. The apparent benefit of personal
selling is that it allows the salesperson to judge reaction of customer to their sales
presentation and thus, give an opportunity to vary the message for better understanding.

Avertising

Personal
Publicity
Selling
Promotion
Mix

Sales Public
Promotion relations

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CHAPTER NINE: PROMOTION DECISIONS

FACTORS AFFECTING DETERMINATION OF PROMOTION MIX

a. Promotion objectives:
Once the target audience has been defined, the marketing communicator must decide what
response is sought. Of course, in many cases, the final response is purchase. But purchase is
the result of a 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. To do this he or she must determine whether or not the customer is ready to buy.
- If most of the target audience is unaware, the communicator tries to build awareness,
perhaps starting with just name recognition. This process can begin with simple
messages that repeat the company or product name.
- The target audience might be aware of the existence of the company or of the product,
but not know much more. It this case, personal selling and advertising are important.
- The target audience might like the product, but not prefer it to others. In this case, the
communicator must try to build consumer preference by promoting the product's
quality, value and other beneficial features.
- A target audience might prefer the product, but not develop a conviction about buying it.
The communicator's job is to build conviction that the product is the best one for the
potential buyer. Advertising, press release, publicity can be tools for this.

b. Nature of product and the target market:

The importance of different promotional tools varies between consumer and business
markets. Consumer goods companies usually put more of their funds into advertising,
followed by sales promotion, personal selling and then public relations. Advertising is
relatively more important in consumer markets because there are a larger number of
buyers, purchases tend to be routine, and emotions play a more important role in the
purchase-decision process. In contrast, industrial-goods companies put most of their funds
into personal selling, followed by sales promotion, advertising and public relations, In
general, personal selling is used more heavily with expensive and risky goods, and in
markets with fewer and larger sellers.

c. Stage of the product life cycle:

The effects of different promotion tools also vary with stages of the product life cycle. In the
introduction stage, advertising and public relations are good for producing high awareness,
and sales promotion is useful in getting early trial. Personal selling efforts must be geared to
persuading the trade to carry the product. In the growth stage, advertising and public
relations continue to be powerful influences, whereas sales promotion can be reduced
because fewer incentives are needed. In the mature stage, sales promotion again becomes
important relative to advertising. Buyers know the brands and advertising is needed only to
remind them of the product. In the decline stage, advertising is kept at a reminder level,
public relations are dropped and salespeople give the product only a little attention. Sales
promotion, however, might continue at a high level in order to stimulate trade and prop up
sales to customers.

d. Size of the promotion budget

Promotion budget is the amount available for the promotion activities. Various promotion
tools require budget for its development and implementation. There are various methods
for the formulation of promotion budget:
- Affordable method: A common 'rule-of-thumb' used by many companies is the affordable
method. They set the promotion budget at the level they think the company can afford.
They start with total revenues; deduct operating expenses and capital outlays and then
devote some portion of the remaining funds to advertising.

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- Percentage of sales method: Marketers set their promotion budget at a certain

percentage of current or forecast sales. It is simple to use and helps managers think
about the relationship between promotion spending, selling price and profit per unit.
The method supposedly creates competitive stability because competing firms tend to
spend about the same percentage of their sales on promotion.
- Competitive parity method: It is method of setting promotion budgets to match
competitors' outlays. Marketer’s watch competitors' advertising or get industry
promotion-spending estimates from publications or trade associations, and then set
budgets based on the industry average.
- Objective and task method: The most logical budget-setting method is the objective-and-
task method, whereby the company sets its promotion budget based on what it wants to
accomplish with promotion. The method entails:
(1) Defining specific objectives;
(2) Determining the tasks needed to achieve these objectives; and
(3) Estimating the costs of performing these tasks.
The sum of these costs is the proposed promotion budget.

e. Promotion mix strategy;

The promotional mix is influenced by whether the company chooses a push or pulls strategy
A push strategy involves 'pushing' the product through distribution channels to final
consumers. The firm directs its marketing activities (primarily personal selling and trade
promotion) towards channel members to induce them to carry the product and to promote
it to final consumers. Using a pull strategy, the producer directs its marketing activities
(primarily advertising and consumer promotion) towards final consumers to induce them to
buy the product. If the pull strategy is effective, consumers will then demand the product
from channel members, which will in turn demand it from producers. Thus under a pull
strategy, consumer demand 'pulls' the product through the channels.

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CHAPTER NINE: PROMOTION DECISIONS

ADVERTISING
Advertising is bringing a product (or service) to the attention of potential and current customers.
Advertising is focused on one particular product or service. Thus, an advertising plan for one
product might be very different than that for another product. Advertising is typically done with
signs, brochures, commercials, direct mailings or e-mail messages, personal contact, etc.
Advertising is any paid form of non-personal presentation and promotion of ideas, goods or
services through mass media such as newspapers, magazines, television or radio by an identified
sponsor.
Advertising is used by many organizations to communicate specific messages about themselves,
their products and services, or their modes of behavior to a predefined target audience, in order to
stimulate a response from the audience. The response may be perceptual in nature: for example, the
consumer develops specific views or opinions about the product or brand, or these feelings are
altered by the ads. The response could be behavioral: for instance, the consumer buys the product
or increases the amount that he or she buys. Advertisers that sponsor advertisements include not
only business firms, but also non-profit and social institutions such as charities, museums and
religious organizations that promote causes to various target publics.

Advertising can be classified as under:

- Consumer and Trade Advertising: Consumer advertising is intended for the ultimate customers,
however trade advertising is intended for the various entities that influence consumer
availability, such as distributors, wholesalers, retailers, brokers.
- Product and Institutional Advertising: Product advertising is the art of building and maintaining
product awareness with potential buyers and institutional advertising is the promotional
message aimed at creating an image, enhancing reputation, building goodwill, or advocating an
idea or the philosophy of an organization, instead of sales promotion.
- Primary Demand and Selective Demand Advertising: Promotion for commodious or generic
products is primary demand advertising and promotion strategy aimed at selective exposure of
a product to its specific market through messages that are consistent with the attitudes, beliefs
and expectations of the target customers is selective demand advertising.
- Local, National and International Advertising: It is an advertising done on various levels of
geographical coverage.

CHARACTERISTICS OF ADVERTISING
a. Advertising involves cost:
Advertising involves cost in various stages. For the development, production, presentation on
various media and administration, marketers need to pay. The cost is borne by company whose
product/services or institutions are advertised.
b. Advertising has a message:
Advertising tries to provide various messages to target customers related to product, organization
or services. These messages are encoded by sender and decoded by the receiver. These messages
are transmitted through various media.
c. Advertising is non-personal:
Advertising is a means of mass communication and does not involves face to face communication.
The sender’s physical presence is not required as media is used for the transmission of message.
d. Advertising is sponsored:
Advertising is paid form of communication hence its expenses are borne by the sender and the
sponsor is identifiable.
e. Advertising promotes products:
Advertising is used to promote products (ideas, services, places, peoples, goods, organizations etc).
f. Advertising has objectives:
Advertising is done with the objective of reminding, informing, persuading, reinforcing and building
image of the products or sponsor.

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OBJECTIVES/IMPORTANCE OF ADVERTISING
An advertising objective is a specific communication task to be accomplished with a specific target
audience during a specific period of time.

- Information: Advertising is used to inform consumers about a new product or feature and to
build primary demand. It helps to develop initial identity. The aim of advertising is to tell
market about new product, suggest new uses for a product, inform market of a price change,
explain how the product works, and correct false impressions.
- Persuasion: Advertising is used to build selective demand for a brand by persuading
consumers that it offers the best quality for their money. It encourages customers to make
trial purchase. The aim of advertising is to create liking, preference, conviction and purchase
of a product or services.
- Reinforcement: Advertising helps to reduce buyer’s fears and encourage switching brands.
It helps for creating brand loyalty as well. The aim is to convince current purchasers that they
made the right choice.
- Image building: Advertising can be used to build image of the organization as well. It helps
to create goodwill in the perception of the customers.
- Competition: Advertising helps to face competition. It helps to distinguish own product with
the competitors’.
- Market Share: Advertising informs customers about product/services to target which
persuade to buy the products which helps to maintain market share. New segment may also
opt to trial purchases.
- Help other promotion tools: Advertising helps in effective implementation of other
promotion tools like sales promotion, personal selling by informing customer about their
products.

ADVERTISING MEDIA
Advertising media is the channel for transmission of advertising messages. The advertisers’ one of
the major tasks is to choose media to carry intended message. There is a huge variety of media
available through which a business can conduct an advertising campaign. However, the effect of
exposures on audience awareness depends on the exposures’ reach, frequency and impact. Reach
is the number of different person or households exposed to a particular media schedule at least
once during a specified time period. Frequency is the number of time within the specified period
that an average person or household is exposed to the message. And impact is the qualitative value
of an exposure through a given medium.
Media planners make their choice among media categories by considering the target audience
media habits, product characteristics, message characteristics and cost.

a. PRINT MEDIA: It is a medium that disseminates printed matter. It includes:

- Newspaper: It is circulated daily, weekly or monthly. It covers all types of news, ideas,
opinions, current affairs and others. It has high believability and broadly accepted. It can
be used for printing advertisement and other information about product or
organization. However, its life span is very short up to the next circulation only. For
example; “The Kathmandu Post”, “The Himalayan Times”, “Kantipur” etc.

- Journals and Magazines: It is targeted for specific groups or readers and circulated in
some time intervals. “The Business Age”, “The Boss”, “Himal” etc are example of journals
and magazines. The advertisement and news coverage regarding products and
organization can be placed in such magazines and journals.

- Others: The others print media like yellow pages, brochures, newsletters, catalog, direct
mail etc are also used for marketing purpose. It is less costly and has wide coverage.

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b. VISUAL MEDIA: It is a medium that disseminate message through outdoor advertising which is
visible to eyes.
- Billboards (Hording): It is board with printed ads that is placed in central locations or on
the top of the buildings. Computerized screen printing has improves their quality. It is
very useful for those products which are banned from TV or radio.
- Outdoor Displays: It includes wall painting, posters, banners and sky writing. In present
days, electric displays are also used.
- Indoor Displays: It includes point of purchase displays, window displays which helps to
attract attention of customers.

c. AUDIO MEDIA: It is a medium that use sounds to attract customer’s attention. It uses various
kinds of music, drama, sound effects and others.
- Radio: It is one of the popular means for advertising. At present, there are numbers of
FM stations which has plays vital role for the development of local advertising.
- Audio tapes and CDs: While selling music CDs of singers/composers advertisement of
the company is also inserted in between.
- Telephone: It is useful when you need to interact with the customers personally.
However this media is expensive and has limited use.

d. AUDIO VISUAL MEDIA: It is a medium which combines sound, motion and visual effects. It is
one of the most popular and effective media which helps in effective presentation of products to
the customers.
- Television: It is one of the most powerful media for advertising in this 21 st Century. Due
to availability of cheap TV sets, almost every household own it, which has provided wide
coverage. Use of TV for advertisement can appeal customers for the use of the products.
However, this media is one of the expensive media as well.
- Others: At present, with the inception of multiplex, use of cinema to provide advertising
has increased before the start of film show and during half time.

e. INTERNET: It is one of the most sought media in 21st Century. It connects people around the
globe in a click. Hence, this medium which includes website emails etc which can be used for
direct communication with subjected target market. It saves time and cost as well however it
reaches is limited in developing countries.

SELECTION OF ADVERTISING MEDIA

There are various advertising medium however to make the message more convincing and effective,
the selection of right media is very pivotal. Media selection is finding the most cost-effective media
to deliver the desired number and type of exposures to the target audience. Hence, here are few
factors that affect the selection of advertising media.

1. ADVERTISING OBJECTIVES: An advertising objective is a specific communication task and

achievement level to be accomplished with a specific audience in a specific period of time.
The advertising objectives must flow from prior decisions on target market, market
positioning and marketing mix. The advertising objective should emerge from a thorough
analysis of the current marketing situation. If the product class is mature, the company is
the market leader, and brand usage is low, the proper objective should be to stimulate more
usage. If the product class is new, the company is not the market leader, but the brand is
superior to the leader, then the proper objective is to convince the market of the brand’s
superiority. The advertising objectives can be classified according to whether their aim is to
inform, persuade, remind or reinforce.

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2. NATURE OF PRODUCT: The type of product the company deals also affects the media
selection. If the product is FMCG (Fast Moving Consumer Goods) type, the national level
advertising is required for which newspaper, television, radio are more effective. However,
for industrial products, internet, brochure are more effective. Further, for the product which
required demonstration, TV and exhibition can be more effective. Similarly, items that are
relatively small part of the buyer’s budget do not require salesperson to pursue and close
the sale, however, if the product is expensive, technically complex and requires after sales
services, a promotion mix of personal selling ad direct marketing is more suitable and
productive.

3. COST OF MEDIA: The selection of advertising media is also affected by advertising budget
since all media has cost ranging from low to high. Although advertising is treated as a
current expense, part of it is really an investment that builds up an intangible asset called
brand equity. There are various factors that need to be considered while setting advertising
budget like stage in the product life cycle, market share, customer base, competition,
advertising frequency and product substitutability.

4. COVERAGE OF MEDIA: The different types of advertising media have different kind of
coverage or audience reach. Some media may not be available in certain places. Hence,
depending upon the requirement of the coverage, like selective, exclusive or intensive, the
advertising media need to be selected.

5. NATURE OF MESSGAE: There may be various kinds of messages the company desired to
convey to its targeted customers. Some messages may require visual presentation; some
may need printed story, for some only audio can do. Hence, nature of message selected also
affect the media selection.

6. IMPACT OF MEDIA: This is the most important factor. It is the qualitative value of an
exposure through a given medium. Every advertisement should leave some kind of impact
to the target customers which will fulfill advertising objectives. Some advertisement may
leave communication impact in term of awareness, reminding and reinforcing and other
may leave sales impact in terms of persuading to purchases.

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PUBLICITY
Publicity is communication in news story form about the organization and its product that is
transmitted through the mass media. Organizations usually have little control over the message in
the media, at least, not as they do in advertising. Regarding publicity, reporters and writers decide
what will be said. Examples: Newspaper and magazine articles/reports, TVs and radio
presentations, charitable contributions, speeches, issue advertising, and seminars.

The main objective of publicity is not sales promotion, but creation of an image through editorial or
'independent source' commentary. While the publicist can control the content of the story, he or she
may not have any control over its placement or interpretation by the media. Publicity is not forced
on the audience. Its credibility is higher than advertising. Public most of the time believes news
rather than advertisement. It is one of the parts of public relation.

OBJECTIVES OF PUBLICITY
a. Announce new products: Use of media can be done while introducing new products. Since
public depends more on media than advertisement, publicity can be effective tools to
encourage trial purchase and provide information to the potential customers. Even print
media carry special columns to announce new products.

b. Build interest in established products: The target customers can be more interested after
hearing comments or news regarding that product. It can also help to remind customers
about the established products.

c. Announce policies and performance: Since news are reliable, any changes in policies and
performance can be communicated to interest groups through publicity.

d. Announce technological development: Any technological development may attract media

persons to write news about this which eventually helps to promote corporate image of
technological leadership. All interested consumers also becomes aware about new
technology.

e. Counter negative publicity: Publicity is mostly used to counter negative rumors and helps
to defend products that have encountered public problems.

TYPES OF PUBLICITY:
a. Personal communication: The personal communication with journalists either through
organizing press conferences or giving speeches at various trade shows or sales meetings by
executive can be one of the types of publicity.

b. News releases: News are more credible than advertisement, hence news releases relating
to new products, improved performance, technological advancement, event sponsorship etc
can be used for publicity.

c. Features articles: Sometime journalist may include company’s name and product in their
articles which helps to create positive image of the company. These types of articles can
either be written by journalists on their own or on the deliberate request of the company.

d. Publications: Publications like annual report, newsletters, magazines can be another tools
for publicity which provides information regarding the organization, its policies, activities to
target customers.

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PUBLIC RELATIONS
Public relations have often been treated as a minor element in the promotion mix, but the wise
company takes concrete steps to manage successful relations with its key publics. A public is any
group that has an actual or potential interest in or impact on a company’s ability to achieve its
objectives. That’s why, most companies have a public relations department that monitors the
attitudes of the organization’s publics and distributes information and communications to build
goodwill.

Public relations include ongoing activities to ensure the overall company has a strong public image.
Public relations activities include helping the public to understand the company and its products.
Often, public relations are conducted through the media that is, newspapers, television, magazines,
etc. As noted above, public relations are often considered as one of the primary activities included in
promotions.

As per Philip Kotler, “Public relations involve a variety of programs designed to promote or protect
a company’s image or its individual products.’

PR, or public relations, refers to the building of relationships between an organization and its
various interest groups or audiences. Those audiences could include, depending on the type,
mission and size of the organization; internal audiences such as employees, board of trustees,
stockholders and volunteers; and external audiences such as customers, potential customers,
donors, job applicants, legislators, elected officials and voters. PR often builds awareness of a brand
and lays the groundwork for marketing.

OBJECTIVES OF PUBLIC RELATIONS

a. Announce new products: Public relations activities like press release, promotional
incentives, news releases etc helps in announcement of new products. All the related publics
get aware and increase interest in new products through these activities.

b. Build interest in established products: Most of the time, due to lack of promotion, the
customers may have forgotten about existing established products. Hence, to stimulate their
interest and increase their loyalty, activities like event sponsorship, social activities, plant
tours etc are carried forward.

c. Announce policies and performance: The news releases or press releases can be one of
the effective tools to announce changed policies and performance.

d. Announce technological development: Any kind of new technological development can be

communicated to the customers through public relations activities through either media
relations or public service activities. It helps to make customer aware of these changes in
effective way.

e. Counter negative publicity: Marketers must be skillful at managing crises, such as the
Real-Juice incident in Kathmandu over allegedly contaminated juice by supporting
community activities, press releases, event sponsorship, plant tours etc. Further, PR
departments sped time counseling top management to adopt positive programs and to
eliminate questionable practices so that negative publicity does not arise in the first place.

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NATURE OF PUBLIC RELATIONS

A. MEDIA RELATIONS:
a. Personal Communication: Company executives must field questions from the
media or give talks at trade associations or sales meetings, and these appearances
can build the company’s image.

b. News Releases: One of the major tasks of PR professionals is to find or create

favorable news about the company, its products, and its people, and get the media to
accept press releases and attend press conference.

c. Feature Articles: Sometime company can also asked journalists to include the
company products or image in feature articles. It can be based on news relating to
the organization.

d. Publications: Companies rely extensively on published materials to reach and

influence their target markets. These include annual reports, brochures, company
newsletters and magazines, and audiovisual materials.

B. PUBLIC SERVICE ACTIVITIES:

a. Sponsorship of Events: Companies can promote their brands and corporate name
by sponsoring sport and cultural events and highly regarded causes. It can also build
goodwill by contributing money and time to good causes.

b. Lobbying: Companies sometime should negotiate with legislators and government

officials regarding legislations and regulation to promote interest of organization
and product.

c. Exhibits and Displays: Companies can also arrange various events like trade shows,
exhibits, contests and competitions and anniversaries that will reach the target
publics.

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SALES PROMOTION
Sales promotion is any initiative undertaken by an organization to promote an increase in sales,
usage or trial of a product or service (i.e. initiatives that are not covered by the other elements of
the marketing communications or promotions mix). It consists of a diverse collection of incentive
tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or
services by consumers or the trade. Advertising offers a reason to buy, however sales promotion
offers an incentive to buy. Some sales promotions are aimed at consumers. Others are targeted at
intermediaries (such as agents and wholesalers) or at the firm’s sales force.

CHARACTERISTICS OF SALES PROMOTION

a. Short Term: Sales promotion is the process of persuading a potential customer to buy the
product. Sales promotion is designed to be used as a short-term tactic to boost sales – it is
not really designed to build long-term customer loyalty.

b. Incentives: Sales promotion includes several communications activities that attempt to

provide added value or incentives to consumers, wholesalers, retailers, or other
organizational customers to stimulate immediate sales. These efforts can attempt to
stimulate product interest, trial, or purchase. Examples of devices used in sales promotion
include coupons, samples, premiums, point-of-purchase (POP) displays, contests & rebates.

c. Quicker response: The response from target market after the sales promotion activities
should be generated immediately since it is meant to do that. It should excite customers or
encourage them to purchase or try the product now. The higher sales and higher sales
volume should be the result of the program.

d. Target audience: Sales promotions can be directed at 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 wholesale are called trade sales promotions. Some sale promotions, particularly ones
with unusual methods, are considered gimmicks by many.

OBJECTIVES OF SALES PROMOTION

1. OBJECTIVES FOR CONSUMER PROMOTION

a. Encourage greater purchase volume: Sales promotion devices are most often used to
induce the existing customers of a firm to buy more. Product development, offering three
products at the cost of two, discount coupons, are some of the sales promotion devices used
by firms to motivate the existing buyers to buy more of a specific product.
b. Attract new customers: Sales promotion measures also play an important role in attracting
new customers for an organization. Usually, new customers are those persons that are won
away from other firms. Samples, gifts, prizes, etc. are used to encourage consumers to try a
new brand or shift their support to new dealers.
c. Introduce new products: Sales promotion is often used to motivate prospective consumers
to try new products and services. Free samples, trade discounts, cash discounts are basically
sales promotion measures.

2. OBJECTIVES FOR TRADE PROMOTION

a. Carry and push new brands: Dealers are also induced to introduce new products and
services in the market. Usually, free samples are provided through dealers during such
introduction. Similarly, discounts in cash or goods may also be offered to dealers to stock
new products or deal with new services.

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CHAPTER NINE: PROMOTION DECISIONS

b. Increase inventories: Dealers like wholesalers and retailers usually deal with a variety of
goods. Their selling activity becomes easier when the manufacturer supplements their
efforts by sales promotion measures. When a product or service is well supported by sales
promotion, dealers are automatically induced to have more of such items.
c. Attract new channel members: The addition of newer channel members is the most to
increase the market coverage. The trade promotion tools like free goods, credit facilities
attract new members which will help in intense distribution.
d. Offset competitive promotion: Most of the companies undertake sales promotion
activities in order to remain in the competitive market. Therefore, in the modern
competitive world no firm can escape the responsibility of undertaking sales promotion
activities.
e. Better store displays: Sales promotion activities like reward for best displays will
encourage channel members to provide more shelf space in their store and better displays
strategies.

3. OBJECTIVES FOR SALES FORCE PROMOTION

a. Motivate sales force: Sales promotion activities supports the efforts of sales force to
persuade the customers which also motivates them to make off-seasons sales.
b. Support new products: Sales promotion often attracts brand switchers, who are primarily
looking for low price, good value or premiums. It helps to educate customers about product
improvement or introduction.

METHODS OF SALES PROMOTION (Tools)

A. CONSUMER PROMOTION METHODS

a. Free samples: Samples offer a free amount of product or services delivered door to door,
sent in the mail, picked up in a store, attached to another product, or featured in an
advertising offer. Distributing free samples introduces a new product to the market to
generate demand. Samples should be small, but they must be large enough to provide
customers with an adequate experience of your product.
b. Coupons: Coupons are certificates entitling the bearer to a stated saving on the purchase of
a specific product. They are distributed by mail, published in newspapers and magazines or
delivered in person. Coupon distribution pulls customers in and encourages them to buy
within a specific period.
c. Rebates: Rebates provide a price reduction after purchase rather than at the retail shop;
consumer sends a specified proof of purchase to the manufacturer who refunds part of the
purchase price.
d. Premium (gifts): It is goods or services offered at a relatively low cost or free as an
incentive to purchase a particular product. A with-pack premium accompanies the product
inside or on the package. A free in the mail premium is mailed to consumers who send in
proof of purchase.
e. Price off: The product is offered at a reduced price for purchasing particulars products. A
reduced price pack is a single package sold at a reduced price (such as 2 for price of 1). A
banded pack is two related products banded together (such as toothbrush and toothpaste).
f. Contest and prizes: Prizes such as chance to win cash, trips or merchandise as a result of
purchasing something.
g. Displays and demonstration: It takes place in the point of purchase or sale which attracts
customers for impulse buying.

B. TRADE PROMOTION METHODS

a. Free Goods: It includes offering extra cases of merchandise to intermediaries who buy a
certain quantity or who feature a certain flavor or size. It induces channel members to hold
more of inventories.

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CHAPTER NINE: PROMOTION DECISIONS

b. Allowances: It is an amount offered in return for the retailer’s agreeing to feature the
manufacturer’s products in some way. A display allowance compensates them for carrying a
special product display. An advertising allowance compensates retailers for advertising the
manufacturer’s product.
c. Price off: It is a straight discount off the list price on each case purchased during a stated
time period or quantity.
d. Sales Contest: It aims at inducing the dealers to increase their sales results over a stated
period, with prizes (money, trips, and gifts) going to those who succeed.
e. Trade shows and conventions: It is mostly organized by industry associations where
attendance can range from few hundreds to thousands. Participating vendors expect several
benefits including generating new sales leads, maintaining customer contacts, introducing
new products, meeting new customers, selling more to present customers, and educating
customers with publications, videos, and other audiovisual materials.
f. Gift items: These are also known as specialty advertising. It consists of useful, low-cost
items bearing the company’s name and address, and sometimes an advertising message that
sales person give to prospects and customers. Common items are ballpoint pens, calendars,
key chains, flashlights, memo pads etc.
g. Credit facilities: The credit facilities provided by manufacturers also encourage channel
members to carry new products and greater inventories.

C. SALES FORCE PROMOTION METHODS

a. Bonus and commissions: It is cash rewards provided to sales force to increase sales over
specified volumes. It encourages them to put extra efforts to sales goods and services.
b. Promotional kits: It facilitates selling. It includes kits which include catalogues, brochures
and other information about the product. Other goods or models are also provided for
demonstration to the customers.
c. Sales contests: It aims at inducing the sales force to increase their sales results over a
stated period, with prizes (money, trips, and gifts) going to those who succeed. The
conditions for the contest should be made clear to all to avoid any kinds of disputes in a way.
d. Gift items: It includes various goods like ball pens, calendars, key chains, and memo pads
etc which are provided to the sales force which can be either used by themselves or can
provide to customers to establish relationships. It also facilitates personal selling.
e. Trade shows and conventions: It also encourage sales force because they can come into
contact of numbers of potential customers in one place which provides them time to
interact personally saving their travel time.

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CHAPTER NINE: PROMOTION DECISIONS

PERSONAL SELLING
Personal selling consists of executing sales through salespersons. It involves a two way
communication process between the seller and the potential buyer. It is a very effective form of
communication, particularly when the buyer needs full explanation of the product’s attributes,
utilities and other associated benefits. Many marketing firms hesitate to use personal selling on
account of the heavy expenses involved in maintaining a large sales-force. Nevertheless, personal
selling has several merits and it is extensively used during the introduction of a new product in a
market. It is an ancient art. Executive salespersons have more than instinct; they are trained in
methods of analysis and customer management.

Personal selling is the most effective tool at later stages of the buying process, particularly in
building up buyer preference, conviction, and action. Personal selling has three distinctive qualities:
- Personal confrontation: Personal selling involves an immediate and interactive
relationship between two or more persons. Each party is able to observe the other’s
reactions.
- Cultivation: Personal selling permits all kinds of relationships to spring up, ranging
from a matter of fact selling relationship to a deep personal friendship.
- Responses: Personal selling makes the buyer feel under some obligation for having
listened to the sales talk.

OBJECTIVES OF PERSONAL SELLING

a. Two way communication: Personal selling is the interpersonal arm of the promotion mix.
Advertising consists of one-way, non-personal communication with target consumer groups.
In contrast, personal selling involves two-way personal communication between
salespeople and individual customers - whether face-to-face, by telephone, through video
conferences or by other means. As such, personal selling can be more effective than
advertising in more complex selling situations. Salespeople can probe customers to learn
more about their problems. They can adjust the marketing offer to fit the special needs of
each customer and can negotiate terms of sale.

b. Persuasion: The salesperson can be flexible to adapt to various situations. They can tailor
their presentations to fit buyer’s characteristics. Hence, the customers can be persuaded by
handling the situations sparingly, by making them feel important and valued. Personal
selling can also persuades the middlemen to carry the brand.

c. Relationship building; Today, most salespeople are well-educated; Well-trained

professionals who work to build and maintain long-term relationships with customers. They
build relationships by listening to their customers, assessing customer needs and organizing
the company's efforts to solve customer problems. Beyond winning new customers and
making sales, it will help the company to create long-term, profitable relationships with
customers.

d. Non-selling functions: Besides selling goods, personal selling also helps in other non-
selling functions like collecting and recording information about customers and market
situation, handle customer complaints, provide post sales services, build image of the
organization etc.

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 FUNDAMENTALS OF MARKETING IN NEPAL
CHAPTER NINE: PROMOTION DECISIONS

TYPES OF PERSONAL SELLING

A. ACCORDING TO LOCATION
a. Indoor Personal Selling: Salesperson who service the company’s customers and
prospect from their offices via telephone or visits from prospective customers is called
inside sales force. They are intended to perform indoor personal selling. To reduce time
demands on their outside sales forces, many firms have increased the size of their inside
sales team, which includes technical support people, sales assistants and telemarketers.
Technical support people provide technical information and answers to customers'
questions. Sales assistants provide clerical back-up for outside salespeople. They call
ahead and confirm appointments, conduct credit checks, follow up on deliveries and
answer customers' queries when salespeople cannot be reached. Telemarketers use the
phone to find new leads and qualify prospects for the field sales force or to sell and
service accounts directly.

b. Outdoor Personal Selling: Salesperson who travels to call on customers is called

outside sales force. They are intended to perform outdoor personal selling. They work in
the field. Outside sales take place either at the prospective client's residence or place of
business or in a third-party location.

c. Indoor and Outdoor Personal Selling: In many types of financial, consulting, market
research, engineering, construction, and equipment sales categories personal selling
may be both inside and out. In the consulting industry the manager likely to oversee a
contract is likely to be the leading salesperson for the job. In such situations buyers may
call on the seller and vice-versa depending on the circumstances.

B. ACCORDING TO EMPLOYER
a. Manufacturer’s Salesperson: They are the representative of manufacturer. They work
mostly in field and deals with middlemen.

b. Wholesalers’ Salesperson: They are the representative of wholesaler. They also work
outdoor for collecting orders and dealing with retailers.

c. Retailers Salesperson: They are the representative of retailers. They deals with final
customers and work either indoor or outdoor depending upon nature of products and
work.

PERSONAL SELLING PROCESS FOR INDOOR SALES

Draw
Attention Presentation Close Sales

Ascertain Handle
Needs Objections

1. Draw Attention: For indoor sales, the first and foremost task is to attract customers to visit
the store or business site. This can be done either by providing invitation to the customers
or pursuing customers to visit by decorating the site in attractive way or by providing
advertisements in various means. The salesperson should know how to greet the buyer to
get the relationship off to a good start. He/She should show courtesy and attention to the
buyer. The opening line should be positive.

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CHAPTER NINE: PROMOTION DECISIONS

2. Ascertain Needs: After drawing the attention of the prospect, salesperson should listen
patiently to the need of the customers. The sales experience is not about the sales associate,
it is about the customer. It is a courtship ritual to determine if the customer values the goods
or services enough to invest in them by making a purchase. There is only one way to find out
what the customer values, wants or needs and that is to listen intensely.

3. Presentation: The salesperson now tells the product story to the buyer, following the AIDA
formula of gaining attention, holding interest, arousing desire and obtaining action. The
salesperson uses a features, advantages, benefits and value approach. Equal weight should be
provided to all. Too often, salesperson spends too much time dwelling on product features and
not enough stressing the offering’s benefits and value. Sales presentation can be improved with
demonstration aids such as booklets, flip charts, slides, movies, audio- and videocassettes,
product samples, and computer based simulations.

4. Handle objections: Customers typically pose objections during the presentation or when
asked for the order. The objections can be related to price, delivery schedule or certain
product or company characteristics, unpleasant associations created by the sales
representative, reluctance to giving up something. To handle these objections, the
salesperson should maintain a positive approach; asks the buyer to clarify the objection,
questions the buyer in a way that the buyer has to answer his or her own objection, or turns
the objection into a reason for buying. Handling and overcoming objections is a part of the
broader skills of negotiation.

5. Closing sale: Now the sales person attempts to close the sale. Some salespersons do not get
to this stage or do not do it well. They lack confidence or feel uncomfortable about asking for
the order or do not recognize the right psychological moment. Salesperson need to know
how to recognize closing signs from the buyer, including physical actions, statements or
comments, and questions. The salesperson might offer the buyer specific inducements to
close, such as a special price, an extra quantity or a token gift.

PERSONAL SELLING PROCESS TRAVELLING SALES

Meet Follow
Prospecting Objection up
Approach

Pre- Presentation Closing

Approach sale

1. Prospecting: Prospecting is all about finding prospects, or potential new customers.

Prospects should be 'qualified,' which means that they need to be assessed to see if there is
business potential, otherwise you could be wasting your time. Hence, it refers to locating or
searching out prospective buyers who have the need for the product and the ability to buy it.
Potential customers may be spotted through observation, enquiry and analysis of records of
existing customers. Social contacts, business associations and dealers can be helpful in the
identification of potential buyers.

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CHAPTER NINE: PROMOTION DECISIONS

2. Pre-Approach: This stage involves the collecting of as much relevant information as

possible prior to the sales presentation. The pre-approach investigation is carried out on
new customers but also on regular customers. Systematic collection of information requires
a decision about applicability, usefulness and how to organize the information for easy
access and effective use. Before calling on the prospects, the salesperson should fully learn
their number, needs, habits, spending capacity, motives, etc. Such knowledge helps in
selecting the right sales appeal.

3. Approach: After such learning, the salesperson should approach the customer in a polite
and dignified way. He should introduce himself and his product to the customer. He should
greet the customer with a smile and make him feel at home. He should introduce himself
and his product to the customer. In case he is busy with some other customer, he should
assure the new customer that he would be attended very soon. The salesperson has to be
very careful in his approach as the first impression is the last impression.
The salesperson should always focus on the benefits for the customer. This is done by using
the product's features and advantages. This is known as the FAB technique (Features,
Advantages and Benefits).
Features: Refers to the physical characteristics such as size, taste etc.
Advantages: Refers to the performance provided by the physical characteristics, for
example, it does not stain.
Benefits: Refers to the benefits for the prospect. For example: saves you 20% on
replacement cost.

4. Presentation: After the prospects interest has been grasped, the sales presentation is
delivered. This involves a "persuasive vocal and visual explanation of a business
proposition". It should be done in a relaxed atmosphere to encourage the prospect to share
information in order to establish requirements. Some small talk may be necessary to reduce
tension but the purpose always remains business. The salesperson has to present the
product and describe its features in brief. The presentation should be matched with the
attitude of the prospect so that the salesman can continuously hold his attention and create
interest in the product. In order to maintain customer's interest and to arouse his desire, the
sales-person must display and demonstrate the product. He has to explain the utility and
distinctive qualities of the product so that the prospect realizes the need for the product to
satisfy his wants. The trial close is a part of the presentation and is an important step in the
selling process. It is also known as a temperature question i.e. technique to establish the
attitude of the prospect towards the presentation and the product.

5. Meet Objections: Objections are often indications of interest by the prospect and should
not be viewed with suspicion by salespeople. The prospect is in fact requesting additional
information to help him to justify a decision to buy. The prospect may not be fully convinced
and the issues raised are thus very important. It also assists the salesperson to establish
exactly what is on the prospect's mind. A sale cannot be achieved simply by creating interest
and desire. Every customer wants to make the best bargain for the money he is spending.
Presentation and demonstration of the product are likely to create doubts and questions in
his mind. The salesman should clear all doubts and objections without entering into a
controversy and without losing his temper. Testimonials, money-back guarantee, tact and
patience are popular means of winning over hesitant buyers. The salesman should convince
the customer that he is making the best use of his money by purchasing the product. For this
purpose, the salesman should prove the superiority of his product over the competitive
products. He should not lose patience if the customer puts too many queries and takes time
in arriving at any decision. If the customer does not buy even after meeting rejections, the
salesman should let him go without showing temper. He must believe in the universal rule
that the customer is always right.

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CHAPTER NINE: PROMOTION DECISIONS

6. Closing Sale: Many salespeople fear the closing of a sale. Closing a sale is only the
confirmation of an understanding. Fear will disappear if the salesperson truly believes that
the prospect will enjoy benefits after the purchase of the product. This is the climax or
critical point in the personal selling process. Completing the sale seems to be an easy task
but inappropriate handling of the customer can result in loss of sale. The salesman should
not force the deal but let the customer feel that he has made the final decision. He should
guide the customer in making the choice without imposing his own view. Some adjustment
in price or other concession may sometimes be necessary for a successful closing. The
salesman should show the same interest in the customer which he exhibited during
approach stage. Sales should be closed in a cordial manner so that the customer feels
inclined to visit the shop again. In closing the sale, the article should be packed properly and
handed over to the customer with speed and accuracy. Once the customer has purchased the
article, the salesman should show and suggest an allied product. For instance, he may
suggest socks, ties, handkerchiefs, vests, etc., to a customer purchasing a shirt. This is known
as additional sales and requires great skill and tact.

7. Follow up: The sale does not complete the selling process. Follow-up activities are very
important and are useful for the establishment of long-term business relationships. These
activities include installation of the products, checking and ensuring its smooth
performance, maintenance and after-sale service. It helps to secure repeat sales, identify
additional prospects and to evaluate salesman's effectiveness.

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CASPIAN VALLEY COLLEGE