Copyright 2013, Pearson Education Global Marketing Communications Decisions II: Sales Promotions &...

Copyright 2013, Pearson Education

Global Marketing Communications Decisions II: Sales Promotions & Personal

SellingChapter 14


Introduction

• In addition to advertising, publicity and PR, the

promotion mix includes:

– Sponsorships– Sales promotion– Direct marketing– Personal selling – Internet– Infomercials

14-22010 Shanghai World Expo Park


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– Price vs. non-price promotions– Consumer vs. trade promotions

14-3


Sales Promotion

• Provide a tangible incentive to buyers

• Reduce the perceived risk associated with purchasing a product

• Provide accountability for communications activity

• Provide method of collecting additional data for database

14-4

Home and Garden shows attract homeowners


Sales Promotion: Global or Local

• In countries with low levels of economic development, low incomes limit the range of promotional tools available

• Market maturity can also 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

14-5


Sampling

• Kikkoman soy sauce launched a sampling program in supermarkets in the U.S.; today the U.S. contributes 85% of profit from international operations 14-6

• Sampling– Provides consumer with

opportunity to try product at no cost

– May be distributed in stores, in the mail, through print media, at events, or door-to-door

Wine tasting in South Africa


Couponing

• Couponing accounts for 70% of consumer promotion spending in the U.S.

• Free-standing inserts, in-pack, on-pack, cross coupons

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• Couponing– Printed certificates entitle the

bearer to a price reduction or some other special consideration for purchasing a particular product


Couponing

14-8


Sales Promotion: Issues and Problems

• Fraud– Pepsi promotion with Apple

• Regulations vary by country• Cultural dispositions to coupons

and other sales promotions– Malaysians see coupon usage as

embarrassing– Islam frowns on gambling so

sweepstakes may not work

14-9


Personal Selling

• Person-to-person communication between a company representative and a prospective buyer

• Focus is to inform and persuade prospect

• Short-term goal: make a sale• Long-term goal: build a

relationship14-10


Personal Selling Hurdles• Political Risks – unstable or corrupt governments

change the rules for the sales team

• Regulatory Hurdles – Governments can set up quotas or tariffs that affect the sales force

• Currency Fluctuations – increase and decrease in local currencies can make certain products unaffordable

• Market Unknowns – lack of knowledge of market conditions, the accepted way of doing business, or positioning of the product may derail the sales team’s efforts

14-11


The Strategic/Consultative Selling Model

14-12

Copyright 2013, Pearson Education14-13

Evolved in response to:• Increased

competition • More complex

products• More

emphasis on customer needs

• Long-term relationships



• Personal Selling Philosophy – commitment to the marketing concept and a willingness to adopt the role of problem solver/partner

• Relationship Strategy – game plan for establishing and maintaining high-quality relationships with prospects/customers

• Product Strategy – plan that can assist the sales representative in selecting and positioning products to satisfy customer needs

14-14



• Customer Strategy – plan that ensures that the sales professional will be maximally responsive to customer needs

• Presentation Strategy – consists of setting objectives for each sales call and establishing a presentation plan to meet those objectives

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The Presentation Plan

• Approach• Presentation• Demonstration• Negotiation• Close• Servicing the sale

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Sales Force Nationality

• Expatriates• Host-country nationals• Third-country nationals• Other options

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Expatriates

• Advantages– Superior product

knowledge– Demonstrated

commitment to service standards

– Train for promotion– Greater HQ control

14-24

• Disadvantages– Higher cost– Higher turnover– Cost for language

and cross-cultural training


Host-Country Nationals

• Advantages– Economical– Superior market knowledge– Language skills– Superior cultural

knowledge– Fast implementation

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• Disadvantages– Needs product training– May be held in low

esteem– Language skills may

not be important– Difficult to ensure

loyalty


Third-Country Nationals

• Advantages– Cultural sensitivity– Language skills– Economical– Allows regional sales

coverage

14-26

• Disadvantages– May face identification

problems– May be blocked for

promotions– Income gaps– Needs product and/or

company training– Loyalty not assured


Other Options

• Sales agents• Exclusive license arrangements• Contract manufacturing or production• Management-only agreements• Joint ventures

14-27


Special Forms of Marketing Communications

• Direct Marketing– Direct mail– Catalogs– Infomercials, teleshopping

• Event Sponsorship– Concerts, sporting events– Product placement in movies

• Internet Communications

14-28


Direct Marketing

• Any communication with a consumer or business recipient that is designed to generate a response in the form of:– An order– Request for further information– A visit to a store or other place of business

14-29


Catalogs

German supermodel Yvonne Catterfeld with Otto Catalog

• Catalog: magazine-style publication that features photographs, illustrations, and extensive information about a company’s products

• U.S. 1/3 of world market, 17 billion mailed in 2008

• EU: Elimination of barriers has led to a boom


Infomercials and Teleshopping

• An infomercial is a form of paid TV in which a particular product is demonstrated, explained, and offered for sale to viewers who call a toll-free number on the screen

• Teleshopping on channels like HSN and QVC is exclusively devoted to demonstration and selling


Interactive Television

• ITV allows viewers to interact with the programming content they are viewing

• In the U.K., more than half of pay-TV subscribers use ITV

• Remote controls have buttons to push to order products shown on screen


Sponsorships

• A company pays a fee to be associated with an event, team, athletic association, or sports facility

• Combines elements of PR and sales promotion• Draws media attention


Product Placement

• Arranging to have the company’s products and brand names appear in TV shows, movies, and other types of entertainment

• Marketers also lend or donate products to celebrities and other public figures


Looking Ahead to Chapter 15

• Strategic Elements of Competitive Advantage

Global Marketing

Global EditionWarren J. Keegan Mark C. Green

Strategic Elements of Competitive AdvantageChapter 16Copyright 2013, Pearson Education

Global Marketing

Warren J. Keegan Mark C. Green

Global Marketing

Warren J. Keegan Mark C. Green

Strategic Elements of Competitive AdvantageChapter 16


Introduction

• This chapter looks at:

– Factors that shape competition

– Competitive advantage at the industry and national levels


Industry Analysis: Forces Influencing Competition

• Industry – group of firms that produce products that are close substitutes for each other

• Michael Porteridentifies five forces that influence competition


Porter’s Force 1: Threat of New Entrants

• New entrants mean downward pressure on prices and reduced profitability

• Barriers to entry determines the extent of threat of new industry entrants


Threat of New Entrants:Barriers to Entry

• Economies of Scale – Refers to the decline in per-unit product costs as the

absolute volume of production per period increases• Product differentiation

– The extent of a product’s perceived uniqueness• Capital requirements

– Required investment for manufacturing, R&D, advertising, field sales and service, etc.

• Switching costs– Costs related to making a change in suppliers or

products


Porter’s Force 2: Threat of Substitute Products

• Availability of substitute products places limits on the prices market leaders can charge

• High prices induce buyers to switch to the substitute


Porter’s Force 3: Bargaining Power of Buyers

• Buyers=manufacturers and retailers, not consumers

• Buyers seek to pay the lowest possible price• Buyers have leverage over suppliers when:

– They purchase in large quantities (enhances supplier dependence on buyer)

– Suppliers’ products are commodities– Product represents significant portion of buyer’s

costs– Buyer is willing and able to achieve backward

integration


Bargaining Power of Buyers


Porter’s Force 4: Bargaining Power of Suppliers

• When suppliers have leverage, they can raise prices high enough to affect the profitability of their customers

• Leverage accrues when– Suppliers are large and few in number– Supplier’s products are critical inputs, are highly

differentiated, or carry switching costs– Few substitutes exist– Suppliers are willing and able to sell product themselves



Porter’s Force 5: Rivalry Among Competitors

• Refers to all actions taken by firms in the industry to improve their positions and gain advantage over each other– Price competition– Advertising battles– Product positioning– Differentiation


Competitive Advantage

• Achieved when there is a match between a firm’s distinctive competencies and the factors critical for success within its industry

• Broad market strategies– Cost Leadership—low price– Product Differentiation—premium price

• Narrow market strategies– Cost Focus—low price– Focused Differentiation—premium price


Cost Leadership

• Based on a firm’s position as the industry’s low-cost producer

• Must construct the most efficient facilities• Must obtain the largest market share so that its per

unit cost is the lowest in the industry• Only works if barriers exist that prevent competitors

from achieving the same low costs


Cost Leadership


Product Differentiation

• Product that has an actual or perceived uniqueness in a broad market has a differentiation advantage

• Extremely effective for defending market position

• Extremely effective for obtaining above-average financial returns; unique products command a premium price


Product differentiation


Cost Focus

• Firm’s lower cost position enables it to offer a narrow target market and lower prices than the competition

• Sustainability is the central issue for this strategy– Works if competitors define their target market

more broadly– Works if competitors cannot define the segment

even more narrowly


Cost Focus


Focused Differentiation

• The product not only has actual uniqueness but it also has a very narrow target market

• Results from a better understanding of customer’s wants and desires

• Ex.: High-end audio equipment


Global Competition and National Competitive Advantage


Factor Conditions

• Human Resources – the quantity of workers available, skills possessed by those workers, wage levels, and work ethic

• Physical Resources – the availability, quantity, quality, and cost of land, water, minerals, and other natural resources

• Knowledge Resources – the availability within a nation of a significant population having scientific, technical, and market-related knowledge


Factor Conditions• Capital Resources – the

availability, amount, cost, and types of capital available; also includes savings rate, interest rates, tax laws, and government deficit

• Infrastructure Resources – this includes a nation’s banking, healthcare, transportation, and communication systems


Demand Conditions

• Composition of Home Demand – determines how firms perceive, interpret, and respond to buyer needs

• Size and Pattern of Growth of Home Demand – large home markets offer opportunities to achieve economies of scale and learning in familiar, comfortable markets


Related and Supporting Industries

• The advantage that a nation gains by being home to internationally competitive industries in fields that are related to, or in direct support of, other industries


Firm Strategy, Structure, and Rivalry

• Domestic rivalry in a single national market is a powerful influence on competitive advantage– The absence of significant domestic rivalry can lead to

complacency in the home firms and eventually cause them to become noncompetitive in the world markets

Differences in management styles, organizational skills, and strategic perspectives also create advantages and disadvantages for firms competing in different types of industries


Firm Strategy, Structure, and Rivalry

• Capital markets and attitudes toward investments are important components of the national environments

• Chance events are occurrences that are beyond control; they create major discontinuities

• Government is also an influence on determinants by virtue of its roles as a consumer, policy maker, and commerce regulator


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