Sales promotion is any paid, short-term communication program that adds tangible value to a product or brand. Consumer sales promotions are targeted at ultimate consumers; trade sales promotions are used in business-to-business marketing. Sampling gives prospective customers a chance to try a product or service at no cost. A coupon is a certificate that entitles the bearer to a price reduction or other value-enhancing consideration when purchasing a product or service.
Personal selling is face-to-face communication between a prospective buyer and a company representative. The Strategic/Consultative Selling Model that is widely used in the United States is also being utilized worldwide. The model’s five strategic steps call for developing a personal selling philosophy, a relationship strategy, a product strategy, a customer strategy, and a presentation strategy. The six steps in the presentation plan are: approach; presentation; demonstration; negotiation; close; and servicing the sale. Successful global selling may require adaptation of one or more steps in the presentation plan.
An additional consideration in global selling is the composition of the sales force, which may include expatriates, host country natives, or sales agents. Several others forms of communication can be used in global marketing. These include direct marketing, a measurable system that uses one or more media to start or complete a sale. One-to-one marketing is an updated approach to direct marketing that calls for treating each customer in a distinct way based on his or her previous purchase history or past interactions with the company.
Direct mail, catalogs, infomercials, and teleshopping are some of the direct marketing tools that have been successfully used on a global basis. Global marketers frequently try to place their products in blockbuster movies that will reach global audiences. Sponsorships and product placement are also becoming vital communication tools that can be used on a global basis. OVERVIEW In 2005, China’s Lenovo Group acquired IBM’s personal computer business for $1. 25 billion. The acquisition vaulted China’s top computer company into third place among the world’s PC marketers, behind Dell and Hewlett-Packard.
The crown jewel in the acquisition was the popular ThinkPad, a laptop that features an exceptionally well-designed keyboard. Chief executive Amelio and his marketing team decided to use the Olympics as a vehicle for building awareness about the corporate name and its products. Lenovo paid more than $60 million to become China’s first Olympic sponsor. Lenovo is also the computer provider for the 2008 Beijing Summer Olympics. Sales promotion, direct marketing, and specialized forms of marketing communication such as infomercials and the Internet are also growing in importance.
Of course, personal selling remains an important promotional tool as well. Taken together, the marketing mix elements discussed in this chapter and Chapter 13 can be used to create highly effective integrated promotional campaigns that support global brands. SALES PROMOTION
• What is sales promotion? Sales promotion refers to any paid consumer or trade communication program of limited duration that adds tangible value to a product or brand. In a price promotion, tangible value may take the form of a price reduction, coupon, or mail-in refund.
Nonprice promotions may take the form of free samples, premiums, “buy one, get one free” offers, sweepstakes, and contests. Consumer sales promotions may be designed to make consumers aware of a new product, to stimulate nonusers to sample an existing product, or to increase overall consumer demand. Trade sales promotions are designed to increase product availability in distribution channels. At many companies, expenditures for sales promotion activities have surpassed expenditures for media advertising.
• What are some of the advantages of using sales promotions?
The increasing popularity of sales promotion as a marketing communication tool can be explained in terms of several strengths and advantages:
• Sales promotions provide a tangible incentive to buyers.
• Sales promotions reduce the perceived risk buyers may associate with purchasing.
• Sales promotion provides accountability; the manager in charge of the promotion can immediately track the results of the promotion. As with other aspects of marketing communication, a key issue is whether promotion efforts should be directed by headquarters or left to local country managers.
Four factors have been identified that contribute to more headquarters involvement in the sales promotion effort: cost, complexity, global branding, and transnational trade: 1. As sales promotions command ever-larger budget allocations, headquarters naturally takes a greater interest. 2. The formulation, implementation, and follow-up of a promotion program may require skills that local managers lack. 3. The increasing importance of global brands justifies headquarters involvement to maintain consistency from country to country and ensure that successful local promotion programs are leveraged in other markets. 4.
As mergers and acquisitions lead to increased concentration in the retail industry and as the industry globalizes, retailers will seek coordinated promotional programs from their suppliers. Local managers in the market know the specific local situation. A number of factors must be taken into account when determining the extent to which the promotion must be localized:
• In countries with low levels of economic development, low incomes limit the range of promotional tools available.
• Market maturity can be different from country to country.
• Local perceptions of a particular promotional tool or program can vary. Local regulations may rule out use of a particular promotion in certain countries. Trade structure in the retailing industry can affect the use of sales promotions. Sampling Sampling is a sales promotion technique that provides potential customers with the opportunity to try a product or service at no cost. Disadvantages associated with sampling: cost of sampling and difficulties in assessing the contribution a sampling program makes. Many companies utilize event marketing and sponsorships to distribute samples at concerts, sports events, or special events.
Compared with other forms of marketing communication, sampling is more likely to result in actual trial of the product. Couponing A coupon is a printed certificate that entitles the bearer to a price reduction or some other special consideration for purchasing a particular product or service. Nearly 90 percent of all coupons are distributed in a printed ride-along vehicle known as a free-standing insert (FSI). Sunday papers carry the vast majority of FSIs. On-pack coupons are attached to, or part of, the product package; they can frequently be redeemed immediately at check out. In-pack coupons are placed inside the package.
Cross coupons are distributed with one product but redeemable for a different product. For example, a toothpaste coupon might be distributed with a toothbrush. Sales Promotion: Issues and Problems In the case of coupons, retailers must bundle the redeemed coupons together and ship them to a processing point. Many times, coupons are not validated at the point of purchase; fraudulent redemption costs marketers hundreds of millions of dollars each year. In some emerging markets, sales promotion efforts can raise eyebrows if companies appear to be exploiting regulatory loopholes and lack of consumer esistance to intrusion. Sales promotion in Europe is highly regulated. PERSONAL SELLING Personal selling is person-to-person communication between a company representative and a prospective buyer. The seller’s communication effort is focused on informing and persuading the prospect, with the short-term goal of making a sale and with a longer-term goal of building a relationship with that buyer. Because selling provides a two-way communication channel, it is especially important in marketing industrial products that may be expensive and technologically complex.
It is difficult to overstate the importance of a face-to-face, personal selling effort for industrial products in global markets. Personal selling is a popular marketing communication tool in countries with various restrictions on advertising. Personal selling is used frequently in countries where low wage rates allow large local sales forces to be hired. The challenge to companies that wish to pursue low-cost personal selling overseas is to establish and maintain acceptable quality among members of the sales team.
The old saying, “You get what you pay for” has come to haunt more than one company that has undertaken global expansion. The issue is whether the country team should consist of in-country nationals or expatriates (also known as expats); that is, employees who are sent from their home countries to work abroad. Environmental issues and challenges that may have an impact include:
• Political risks. Unstable or corrupt governments can completely change the rules for the sales team.
• Regulatory hurdles. Governments sometimes set up quota systems or impose tariffs that affect entering foreign sales forces. Currency fluctuations. There have been many instances where a company’s sales effort has been derailed not by ineffectiveness or lack of market opportunity, but by fluctuating currency values.
• Market unknowns. When a company enters a new region of the world, its selling strategy may unravel because of a lack of knowledge of market conditions, the accepted way of doing business, or the positioning of its in-country competitors. The Strategic/Consultative Selling Model First, a sales representative must develop a personal selling philosophy.
This requires a commitment to the marketing concept and a willingness to adopt the role of problem solver or partner in helping customers. The second step is to develop a relationship strategy, which is a game plan for establishing and maintaining high-quality relationships with prospects and customers. This step connects sales personnel directly to the concept of relationship marketing, an approach that stresses the importance of developing long-term partnerships with customers. The third step is the development of a product strategy.
This results in a plan that can assist the sales representative in selecting and positioning products that will satisfy customer needs. Next is the customer strategy, a plan that ensures that the sales professional will be maximally responsive to customer needs. The customer strategy step also includes building a prospect base, consisting of current customers as well as potential customers (or leads). A qualified lead is someone whose probability of wanting to buy the product is high. The final step, the actual face-to-face selling situation, requires a presentation strategy.
The presentation plan that is at the heart of the presentation strategy is divided into six stages: approach, presentation, demonstration, negotiation, closing, and servicing the sale. Below are the six stages: The first step, approach, is the sales representative’s initial contact with the customer or prospect. In the presentation step, the prospect’s needs are assessed and matched to the company’s products. Next is the sales demonstration, during which the salesperson has the opportunity to tailor the communication effort to the customer and alternately tell and show how the product can meet the customer’s needs.
During the presentation, the prospect may express concerns or objections about the product itself, the price, or some other aspect of the sale. Dealing with objections in an international setting is a learned art. A common theme in sales training is the concept of active listening; in global sales, verbal and nonverbal communication barriers of the type discussed in Chapter 4 present special challenges. Negotiation is required to ensure that both the customer and the salesperson come away from the presentation as winners.
Having completed the negotiation step, the sales representative is able to move on to the close and thus asks for the order. The final step is the servicing the sale. A successful sale does not end when the order is written. Sales Force Nationality The composition of the sales force in terms of nationality includes expatriate salespersons, host country nationals, or third- sales personnel. The staffing decision is contingent on several factors, including management’s orientation, the technological sophistication of the product, and the stage of economic development exhibited by the target country.
A company with an ethnocentric orientation prefers expatriates and adopts a standardized approach. (See Table 14-3) [pic] Polycentric companies selling in developed countries use expatriates for hi-tech products; a host-country sales force is used for low-tech products. In less developed countries, host-country nationals should be used for hi- products and local agents for low-tech products. Wide diversity of sales force nationality is found in regiocentric companies. Except for high-tech products in developed countries, third-country nationals are used in all situations.
There are advantages and disadvantages of each nationality type:
• Advantages: Expatriates possess a high level of product knowledge, a demonstrated commitment to service standards, training for promotion, and greater headquarters control.
• Disadvantages: Expatriates are very expensive, turnover is high, language and cross-cultural training are costly. An alternative is to build a sales force with host-country personnel:
• Advantages: economical, superior market knowledge, language skills, and superior knowledge of local culture, and implementation is quicker. Disadvantages: needs product training, may be held in low esteem, language skills may not be important, and it is difficult to ensure loyalty. A third option is to hire third country nationals.
• Advantages: cultural sensitivity, language skills, economical, allows regional sales coverage.
• Disadvantages: identity problems, blocked for promotions, income gaps, needs product and/or company training, loyalty not assured. Companies attempt to establish a hybrid sales force comprised of a balanced mix of expatriates and in-country nationals.
The operative word is balanced, as there remains the potential for conflict between the two groups. This is the most expensive proposition since relocation of expats and extensive training of in-country nationals is required. But short term costs are deemed necessary to do business and conduct personal selling overseas. A fourth option is to use sales agents who work under contract. It makes sense to set up one or more agents to gain entry to a selected country or region. In a remote area where there is a lack of revenue, agents are retained on a permanent level (e. g. U. S. , Asian and European companies with an Africa- sales presence use agents). Agents are much less expensive than full-time employees and understand the market. If success is achieved, agents can be replaced by employee-based teams; if the market is not financially viable, it is less costly to withdraw from an agent-oriented territory. The challenge of control is greater since agents have other sources of income. A company that employs sales agents has to determine what to provide in terms of product and strategic training because a competitor may lure agents away.
Companies need a monitoring system within agent territories. Other international personal selling approaches:
• Exclusive license arrangements: a firm pays commissions to an in-country company’s sales force to conduct personal selling.
• Management-only agreements: a corporation manages a foreign sales force in a mode similar to franchising.
• Joint ventures: Since many countries place restrictions on foreign ownership, partnerships allow a company to obtain a personal sales capability and a customer base. SPECIAL FORMS OF MARKETING COMMUNICATIONS: DIRECT MARKETING, SUPPORT MEDIA, EVENT SPONSORSHIP, AND PRODUCT PLACEMENT
Direct marketing is any communication with a consumer or business recipient that is designed to generate a response in the form of an order, a request for further information, and/or a visit to a store or other place of business. Companies use direct mail, telemarketing, television, print, and other media to generate responses and build databases filled with purchase histories and other information about customers. By contrast, mass marketing communications are typically aimed at broad segments of consumers.
One-to-one marketing calls for treating different customers differently based on their previous purchase history or past interactions with the company.
• Define the four steps in one-to-one marketing. Peppers and Rogers describe the four steps in one-to-one marketing as follows: 1. Identify customers and accumulate detailed information about them. 2. Differentiate customers and rank them in terms of their value to the company. 3. Interact with customers to develop more cost efficient forms of interaction 4. Customize the product or service offered to the customer.
Rainer Hengst of Deutsche Post offers the following guidelines for U. S. -based direct marketers that wish to go global:
• The world is full of people who are not Americans. Treat them differently.
• Like politics, all marketing is local.
• Although there may be a EU, but there is no such thing as a “European. “
• Pick your target, focus on one country, and do your homework.
• Customers need to be able to return products locally. Direct Mail Direct mail uses the postal service as a vehicle for delivering a personally addressed offer to a prospect targeted by the marketer.
Direct mail is popular with banks, insurance companies, and other financial services providers. The United States is home to a well-developed mailing list industry. The availability of good lists and the sheer size of the market are important factors in explaining why Americans receive more direct mail than anyone else. Compared with the United States, list availability in Europe and Japan is much more limited. Catalogs A catalog is a magazine-style publication that features photographs, illustrations, and extensive information about a company’s products.
Catalogs have a long and illustrious history as a direct marketing tool in both Europe and the United States. U. S. -based catalog marketers include JC Penney, Lands’ End, L. L. Bean, The Sharper Image, and Victoria’s Secret. Historically, catalogers in the United States benefited from the ability to ship goods from one coast to the other, crossing multiple state boundaries with relatively few regulatory hurdles. Prior to the advent of the single market, catalog sales in Europe were hindered by the fact that mail order products passing through customs at national borders were subject to value-added taxes (VAT).
Today, the single market means that mail order goods can move freely throughout the EU without incurring VAT charges. Since January 1993, VAT exemptions have been extended to goods bound to the European Free Trade Area countries (Norway, Iceland, Switzerland, and Liechtenstein). In Japan, the domestic catalog industry is well developed. Infomercials, Teleshopping, and Interactive Television An infomercial is a form of paid television programming in which a particular product is demonstrated, explained, and offered for sale to viewers who call a toll-free number shown on the screen.
With teleshopping, home-shopping channels such as QVC and the Home Shopping Network (HSN) take the infomercial concept one step further; the round-the-clock programming is exclusively dedicated to product demonstration and selling. Industry observers expect the popularity of home shopping will increase during the next few years as interactive television (ITV or t-commerce) technology is introduced into more households. ITV allows television viewers to interact with the programming content that they are viewing. Support Media
Support media include transit and billboard advertising. In most parts of the world, outdoor advertising is growing at a faster rate than the overall advertising market. As countries add mass transportation systems and build and improve their highway infrastructures, advertisers are utilizing more indoor and outdoor posters and billboards to reach the buying public. Sponsorship Sponsorship is an increasingly popular form of marketing communications whereby a company pays a fee to have its name associated with a particular event, team or athletic association, or sports facility.
Sponsorship combines elements of public relations and sales promotion. Sponsorship can be used in countries where regulations limit the extent to which a company can use advertising or other forms of marketing communication. Product Placement: Motion Pictures, Television Shows, and Public Figures
• Why has product placement become such a big deal in motion pictures and television shows? Product placement is the arranging for a company’s products and brand names to appear in popular television programs, movies, and other types of performances.
Marketers can also lend or donate products to celebrities or other public figures; the products get publicity when the celebrity appears in public using the product. For the premiere of Superman Returns in 2006, Atkinson arranged for 35 Audis to chauffer Kevin Spacey and other stars to the event. In the case of television placement, the blurring of advertising and programming content comes as companies increasingly question the effectiveness of traditional advertising. Sometimes called branded entertainment, the effective integration of products and brands with entertainment can be seen on the monster TV hit “American Idol. ”