Advertising Companies of India

Advertising is a big business in this era in India. Indian Advertising industry has witnessed a prominent globalisation. With the inception of various divisions,the advertising industry has undergone a sea change. Indian consumer's deepening pocket and blooming markets for ad-spends have touched new heights in India. The Indian Advertising Companies are creating stories and brand experiences in a way that engages and involves. The Best Indian sites offers the names of the top Advertising Organizations In India. Here is a list of the top Indian websites and a quick glance at them will help you to get the required knowledge about the websites

Top Advertising Companies Of India:

Ogilvy and Mather: This is one of the leading advertising company in India. This organization believes that devotion to the brand defines the profile of their company. This company has offices across the globe. The objective of the company is to build brands. I t is a subsidiary of WPP Group plc. The headquarter of the company is in New York.

J Walter Thompson India: One of the most popular company in the advertising industry is J Walter Thompson India. Their objective is to make advertising a part of the life of the consumers. This is also world's best advertising brand with about 200 offices in 90 countries. This company is the first one to introduce pioneer careers in ad for women,sex-appeal ads and also produced the first ever sponsored -TV program. Mudra Communication Pvt. Ltd: This is one of the renowned advertising company of India. This advertising organization was founded in the year 1980 at Mumbai. Recently the Ad company declared the addition of public relations,rural marketing,events etc. The head office of the company is in Bombay Area. FCB-Ulka Advertising Ltd: One of the best company in India in the advertising arena is FCB-Ulka Advertising Ltd. In US ,this advertising company ranks third and tenth in the world having about 188 offices in 102 countries. Their aim is to reflect

the needs of the brand and not the personality of the brand. It has about 500 professionals and no prima donnas. Rediffusion-DY&R: This Advertising company of India has made a benchmark in the field of creativity. India's 5th largest advertising company is Rediffusion. This advertising agency offers a wide array of integrated pr services for external and internal communications. The primary strength of the company lies in the media relations. McCann-Erickson India Ltd: The prominent name among the best advertising companies of India is McCann-Erickson India Ltd. They define work in relation to the impact that advertising has on the lives of masses. The testimony of the company in which it firmly believes is the campaign of Coca -cola-'Thanda Matlab Coca Cola'. RK Swamy/BBDO Advertising Ltd: It maintained the record of remaining consistently among the top ten advertising agencies in India. Established in 1973,this advertising reached great heights. This is also India's No.1 research company in the market sector and is fully run by Indians. Brand Equity is an integral part of the company. Grey Worldwide (I) Pvt. Ltd: A significant name in India in the world of advertising agencies is Grey Worldwide (I) Pvt Ltd.The company is primarily based in Mumbai and has offices in Kolkata, Ahmedabad, Bangalore and New Delhi. It is a subsidiary of Grey Worldwide. The company specializes in advertising and marketing services. Leo Burnett India Pvt. Ltd : It has a significant presence in about 96 offices in 10 countries. This advertising agency was awarded the 'Worldwide Agency of the Year' in 2004.They are proficient in explaining how a single image is worth thousand words and can break the barriers of language but not at the cost of the ad's emotional power. Contract Advertising India Ltd: This advertising company of India is one of the leading advertising agencies in India. It is one-to-one customer lifecycle management

advertising agency. It was founded in 1992 and is situated in Mumbai. It offers a wide range of services like online marketing and strategy and many others.

Advertising Agency India - Shifting paradigm India's economic prosperity and maturity has also helped to shape the world of advertising agencies in India, enabling the latter to reach global standards. Advertising has become serious and big business in India, with its worth being estimated at Rs. 13,200-crore, by those in the know. This can only mean one thing that apart from the quality of work, the volume of work too has gone up. A decade back it was still a fledgling industry, with a colonial hang up. Today it has transformed itself into a thoroughbred performer, doing great work both in India and abroad and winning accolades. A prominent globalization has been observed in the operation of the Indian advertising industry as it has learnt to speak in different languages, be it urban rural and even global. The advertising industry in India has gone through a sea change with the inception of various divisions under it to boost its productivity and progress, such as creative department, media planning, direct marketing, public relations, and so on. With blooming markets and an ever-deepening pocket of the Indian consumer, revenues for ad-spends are touching new highs as advertising agencies in India continue their triumphant march towards creating new Indian sensibilities. Technological advancements in the last decade or so have enabled the common man to consume the media of their choice at their convenience and time. This blurring of lines between TV, Internet, mobile phones and other devices has increased media fragmentation and has led to paradigm shifts within the industry. In this part-real-partvirtual world, Advertising And Marketing Services in India are trying to marry the ageold traditions of storytelling and brand experience to the new-age reality of consumer control. Agencies are creating, sharing and managing stories and brand experiences in a manner that involves and engages, rather than interrupts or alienates. All most all Marketing And Advertising agencies in India believe in the concept of 360 degree branding. The services provided by most of these agencies include advertisement for TV, print ads, creating web sites, working on web banners, email marketing, direct marketing, telemarketing, radio promotions, outdoor promotions, tracking retail visibility and communications, designing inputs on packaging, rural communications and PR. It is safe to say that at present a single ad agency provides a host of services from content creation, developing the artwork to radio jingles to monitoring the effectiveness of the advertisements and even inventing new idioms and language to relate to consumers of all pocket shapes and sizes. For more information on Advertising Agencies in India please visit our website www.exchange4media.com

Different Types of Advertising

Here is an article that talks about the different types of advertising. Read on...

Advertising is the promotion of a companys products and services carried out primarily to drive sales of the products and services but also to build a brand identity and communicate changes or new product /services to the customers. Advertising has become an essential element of the corporate world and hence the companies allot a considerable amount of revenues as their advertising budget. There are several reasons for advertising some of which are as follows:

Increasing the sales of the product/service Creating and maintaining a brand identity or brand image. Communicating a change in the existing product line. Introduction of a new product or service. Increasing the buzz-value of the brand or the company.

Thus, several reasons for advertising and similarly there exist various media which can be effectively used for advertising. Based on these criteria there can be several branches of advertising. Mentioned below are the various categories or types of advertising:

Print Advertising Newspapers, Magazines, Brochures, Fliers The print media have always been a popular advertising medium. Advertising products via newspapers or magazines is a common practice. In addition to this, the print media also offers options like promotional brochures and fliers for advertising purposes. Often the newspapers and the magazines sell the advertising space according to the area occupied by the advertisement, the position of the advertisement (front page/middle page), as well as the readership of the publications. For instance an advertisement in a relatively new and less popular newspaper would cost far less than placing an advertisement in a popular newspaper with a high readership. The price of print ads also depend on the supplement in which they appear, for example an advertisement in the glossy supplement costs way higher than that in the newspaper supplement which uses a mediocre quality paper. Outdoor Advertising Billboards, Kiosks, Tradeshows and Events Outdoor advertising is also a very popular form of advertising, which makes use of several tools and techniques to attract the customers outdoors. The most common examples of outdoor advertising are billboards, kiosks, and also several events and tradeshows organized by the company. The billboard advertising is very popular however has to be really terse and catchy in order to grab the attention of the passers by. The kiosks not only provide an easy outlet for the company products but also make for an effective advertising tool to promote the companys products. Organizing several events or sponsoring them makes for an excellent advertising opportunity. The company can organize trade fairs, or even exhibitions for advertising their products. If not this, the company can organize several events that are closely associated with their field. For instance a company that manufactures sports utilities can sponsor a sports tournament to advertise its products. Broadcast advertising Television, Radio and the Internet Broadcast advertising is a very popular advertising medium that constitutes of several branches like television, radio or the Internet. Television advertisements have been very popular ever since they have been introduced. The cost of television advertising often depends on the duration of the advertisement, the time of broadcast (prime time/peak time), and of course the popularity of the television channel on which the advertisement is going to be broadcasted. The radio might have lost its

charm owing to the new age media however the radio remains to be the choice of small-scale advertisers. The radio jingles have been very popular advertising media and have a large impact on the audience, which is evident in the fact that many people still remember and enjoy the popular radio jingles. Covert Advertising Advertising in Movies Covert advertising is a unique kind of advertising in which a product or a particular brand is incorporated in some entertainment and media channels like movies, television shows or even sports. There is no commercial in the entertainment but the brand or the product is subtly( or sometimes evidently) showcased in the entertainment show. Some of the famous examples for this sort of advertising have to be the appearance of brand Nokia which is displayed on Tom Cruises phone in the movie Minority Report, or the use of Cadillac cars in the movie Matrix Reloaded. Surrogate Advertising Advertising Indirectly Surrogate advertising is prominently seen in cases where advertising a particular product is banned by law. Advertisement for products like cigarettes or alcohol which are injurious to heath are prohibited by law in several countries and hence these companies have to come up with several other products that might have the same brand name and indirectly remind people of the cigarettes or beer bottles of the same brand. Common examples include Fosters and Kingfisher beer brands, which are often seen to promote their brand with the help of surrogate advertising. Public Service Advertising Advertising for Social Causes Public service advertising is a technique that makes use of advertising as an effective communication medium to convey socially relevant messaged about important matters and social welfare causes like AIDS, energy conservation, political integrity, deforestation, illiteracy, poverty and so on. David Oglivy who is considered to be one of the pioneers of advertising and marketing concepts had reportedly encouraged the use of advertising field for a social cause. Oglivy once said, "Advertising justifies its existence when used in the public interest - it is much too powerful a tool to use solely for commercial purposes.". Today public service advertising has been increasingly used in a non-commercial fashion in several countries across the world in order to promote various social causes. In USA, the radio and television stations are granted on the basis of a fixed amount of Public service advertisements aired by the channel.

Celebrity Advertising Although the audience is getting smarter and smarter and the modern day consumer getting immune to the exaggerated claims made in a majority of advertisements, there exist a section of advertisers that still bank upon celebrities and their popularity for advertising their products. Using celebrities for advertising involves signing up celebrities for advertising campaigns, which consist of all sorts of advertising including, television ads or even print advertisements.

Advertising agencies are outside companies that provide for the marketing and advertising needs of other businesses and organizations. Advertising agencies offer a full range of advertising services and advice based on market studies, popular culture and advanced sales techniques. Because they are independent from the client company, they can be objective about a client's promotional needs. Advertising agencies produce logos, creating effective and attractive color schemes to draw the consumer's attention to their clients' ads. They also prepare slogans and brochures, and write descriptive copy for sales materials. They may produce public service announcements for charitable organizations and social programs as well, and issue press releases for new programs, events, and products. Advertising agencies use assorted forms of media to promote their clients' businesses or organizations, including magazine advertisements, newspaper ads, radio and TV commercials, websites, and even infomercials. Some also plan events, provide booths at conventions, and give away promotional items. The way advertising agencies work is by getting to know their clients' product or service well and determining which demographic provides the best audience for promotion. If a company sells designer handbags, an ad agency would likely try to position the company's TV commercials during women's programming or on a channel geared toward women. The look and tone of an ad campaign is also dependent upon demographics. If the company's target audience is mature adults, design elements should be more traditional than if the target were a younger generation.

There are several associations that advertising agencies may belong to, such as the Ad Council, the American Advertising Federation, the International Association of Business Communicators, and the American Association of Advertising Agencies, or AAAA. When deciding between advertising agencies, it is a good idea to see if they are members of any associations and to check them out with the Better Business Bureau. Also helpful is asking an ad agency for examples of their work. You may find that they are responsible for well-recognized ad campaigns that have helped establish other companies. Such agencies may be expensive and you may have to wait some time to join their list of clients, but an agency that can make your product or service a household name is worth the wait and the cost. Types of Advertising agencies An advertising agency is an independent organization of creative people and business people who specialize in developing and preparing advertising plans, advertisements, and other promotional tools for the advertisers. The agency also arranges for or contracts for purchase of space and time in various media. J. Walter Thompson, Leo Burnett, Ogilvy & Mather, McCann Erickson, Lowe, Saatchi & Saatchi are some of the top international advertising agencies.
Full-Service Advertising Agency

A full-service advertising agency is generally a big size advertising agency having all departments, specialized people heading each department and numbers of subordinates under them. It has almost all major departments like client servicing, account planning, copywriting, art direction, creative studio and production, media planning and buying, accounts etc. All big renowned advertising agencies are generally full-service advertising agencies.

Creative Boutique
Advertising agencies specialized in creative work are commonly known as creative boutiques. These agencies are not responsible for client handling, campaign strategy planning or media planning; they are solely responsible for the creative idea and its execution. Such agencies are relatively small and have only a few creative people like copywriters, art directors, creative heads.

Media Buying Agency

Media buying agencies are specialized in media planning, scheduling and buying. Such agencies are also known as agency of record (AOR). These agencies plan and select media, schedule advertisement release dates and time, and then buy media space/time from the publications/television or radio channels. Nowadays full service advertising agencies have a separate media wing, under a separate name, which operates as a media buying agency alone. Such agencies comprise of only media planning and buying specialized people.

Interactive Agency
Interactive agencies are those advertising agencies which specialize in digital new-age media of advertising communication. Such agencies prepare internet advertisements, sms advertisements, viral advertisements etc. Such advertisements are relatively new, highly interactive, innovative and challenging.

In-house Agency
Some big companies prefer to have their own in-house advertising agencies. Such in-house agencies solely work for the owner company, and not any other client. These agencies apparently look like any other full-service agency, but they work solely for the owner company. Such agencies are relatively small in terms of manpower. These in-house agencies are responsible for all advertising and marketing communication activities of the company. Many big consumer durable companies have in-house agencies.

SETTING ADVERTISING OBJECTIVES

The first step in developing an advertising program is to get the advertising objectives. These objectives must flow from prior decisions on the target market, market positioning and marketing mix. The marketing positioning and marketing mix strategies define the job that advertising must do in the total marketing program. Advertising objectives can be classified as to whether their aim is to inform, persuade or remind. Informative advertising figures heavily in the pioneering stage of a product category, where the objective is to build primary demand. Persuasive advertising has moved into the category of comparison advertising, which seeks to establish the superiority if one brand through specific comparison with one or more other brands in the product class. Reminder advertising is highly important in the nature stage of the product to keep the consumer thinking about the product. A related from of advertising is reinforcement advertising which seeks to assure current purchasers that they have made a right choice.

Advertising Layout Strategy

Proportional guideline:
1. 2. 3. 4. Illustration Headline Copy Logo 65 % 10 % 20 % 5% 100 % of space allocation (20%+ white space)

Illustration In most ads, the illustration is used to attract attention. Large, single illustrations attracted the most attention (advertising recall studies by Starch). Though the headline may be the "stopper", the illustration is the most critical element in the ad's success. It can also visually communicate product benefits and concept, and lead the reader into the headline and copy. Headline The headline is used to attract attention, arouse interest, and make the ad more attractive and readable. However, it should not be over 10 words and more than 15 % of the ad's total area. Copy Style of typeface used in the headline, subhead and copy will impact the mood and readability of the ad. Mixed type should be either very similar or very different. Mixing more than two (or three at most) different typefaces makes an ad busy and confusing. Logo Because we read left to right and top to bottom, the logo or company signature can be strategically placed in the lower right hand corner of an ad. With this position, the logo is the last element we see and most likely remember.

Direct the viewer's eye

from the page's top, down through the center and end at the page's bottom.

The eye sees the illustration first, then we read down from there (David Ogilvy). Headlines located below the illustration pull 10% more readers (research by Simmons).

Emphasis
The optical center of an ad is in the center and two-thirds up from the bottom. This should be the ad's focal point.

Proportional use of space

The proportional use of space in an ad is dependent upon the product and market target. Product ads that try to communicate an image (perfume, jewelry, etc.) will have a greater proportion of illustration and little copy. Conversely, an ad for a technical product will have more copy.

White Space
At least 20 % of an ad should be blank (white space). Ample white space helps gain attention, create contrast, and unify the ad. According to Albert Books, white space is probably the most underestimated element in advertisements.
(defined by D. E. Visuals)

Bleed and borders Bleed

A page without a border is called a bleed because the ink bleeds through the surrounding white border into the trim space. An obvious benefit of this technique is that the ad itself becomes larger. Although most publishers charge extra for bleeds, this cost is often justified by the ads extra impact. A bleed carries the implication of action, freedom and adventure and tends to make the ad more lifelike. In research by Fosdick, nearly half of all high readership ads used bleeds. Conversely, only 14% of low readership ads used this technique.

Borders
In contrast, borders set up continuity, structure, and formality. Borders can isolate the ad from surrounding copy and other ads -forcing you to focus on the ad. However, they tend to make the ad appear smaller.

UNIT-4

Introduction to Sales Promotion

Sales promotion describes promotional methods using special short-term techniques to persuade members of a target market to respond or undertake certain activity. As a reward, marketers offer something of value to those responding generally in the form of lower cost of ownership for a purchased product (e.g., lower purchase price, money back) or the inclusion of additional value-added material (e.g., something more for the same price). Sales promotions are often confused with advertising. For instance, a television advertisement mentioning a contest awarding winners with a free trip to a Caribbean island may give the contest the appearance of advertising. While the delivery of the marketers message through television media is certainly labeled as advertising, what is contained in the message, namely the contest, is considered a sales promotion. The factors that distinguish between the two promotional approaches are: 1. whether the promotion involves a short-term value proposition (e.g., the contest is only offered for a limited period of time), and 2. the customer must perform some activity in order to be eligible to receive the value proposition (e.g., customer must enter contest). The inclusion of a timing constraint and an activity requirement are hallmarks of sales promotion. Sales promotions are used by a wide range of organizations in both the consumer and business markets, though the frequency and spending levels are much greater for consumer products marketers. One estimate by the Promotion Marketing Association suggests that in the US alone spending on sales promotion exceeds that of advertising.

Objectives of Sales Promotion

Sales promotion is a tool used to achieve most of the five major promotional objectives: Building Product Awareness Several sales promotion techniques are highly effective in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction. Additionally, as part of the effort to build product awareness, several sales promotion techniques possess the added advantage of capturing customer information at the time of exposure to the promotion. In this way sales promotion can act as an effective customer information gathering tool (i.e., sales lead generation), which can then be used as part of follow-up marketing efforts.

Creating Interest Marketers find that sales promotions are very effective in creating interest in a product. In fact, creating interest is often considered the most important use of sales promotion. In the retail industry an appealing sales promotions can significantly increase customer traffic to retail outlets. Internet marketers can use similar approaches to bolster the number of website visitors.

Another important way to create interest is to move customers to experience a product. Several sales promotion techniques offer the opportunity for customers to try products for free or at low cost. Providing Information Generally sales promotion techniques are designed to move customers to some action and are rarely simply informational in nature. However, some sales promotions do offer customers access to product information. For instance, a promotion may allow customers to try a fee-based online service for free for several days. This free access may include receiving product information via email. Stimulating Demand Next to building initial product awareness, the most important use of sales promotion is to build demand by convincing customers to make a purchase. Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to stimulate sales. Reinforcing the Brand Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty. Many companies, including airlines and retail stores, reward good or preferred customers with special promotions, such as email special deals and surprise price reductions at the cash register.

Classification (or) Types of Sales Promotion

Sales promotion can be classified based on the primary target audience to whom the promotion is directed. These include:

Consumer Market Directed - Possibly the most well-known methods of sales promotion are those intended to appeal to the final consumer. Consumers are exposed to sales promotions nearly everyday, and as discussed later, many buyers are conditioned to look for sales promotions prior to making purchase decisions. Trade Market Directed Marketers use sales promotions to target all customers including partners within their channel of distribution. Trade promotions are initially used to entice channel members to carry a marketers products and, once products are stocked, marketers utilize promotions to strengthen the channel relationship. Business-to-Business Market Directed A small, but important, sub-set of sales promotions are targeted to the business-to-business market. While these promotions may not carry the glamour associated with consumer or trade promotions, B-to-B promotions are used in many industries.

Sales Promotion Trends: Customers Expectations

Marketers who employ sales promotion as a key component in their promotional strategy should be aware of how the climate for these types of promotions is changing. For instance, the onslaught of sales promotion activity over the last several decades has eroded the value of the short-term requirement to act on sales promotions. Many

customers are conditioned to expect a promotion at the time of purchase otherwise they may withhold or even alter their purchase if a promotion is not present. For instance, food shoppers are inundated on a weekly basis with such a wide variety of sales promotions that their loyalty to certain products has been replaced by their loyalty to current value items (i.e., products with a sales promotion). For marketers the challenge is to balance the advantages short-term promotions offer versus the potential to erode loyalty to the product.

Sales Promotion Trends: Electronic Delivery

Sales promotions are delivered to customers in many ways such as by mail, in-person or within print media. However, the Internet and mobile technologies, such as cellphones, present marketers with a number of new delivery options. For examples, the combination of mobile devices and geographic positioning technology will soon permit marketers to target promotions to a customers physical location. This will allow retailers and other businesses to issue sales promotions, such as electronic coupons, to a customers mobile device when they are near the location where the coupon can be used.

Sales Promotion Trends: Tracking

As we discussed in our coverage of advertising, tracking customers response to marketers promotional activity is critical for measuring success of an advertisement. In sales promotion, tracking is also used. For instance, grocery retailers, whose customers are in possession of loyalty cards, have the ability to match customer sales data to coupon use. This information can then be sold to coupon marketers who may use the information to get a better picture of the buying patterns of those responding to the coupon.

Sales Promotion Trends: Internet Communication

For many years consumers typically became aware of sales promotions in passive ways. That is, most customers obtained promotions not through an active search but by being a recipient of a marketers promotion activity (e.g., received coupons in the mail). The Internet is changing how customers obtain promotions. In addition to websites that offer access to coupons, there are a large number of community forum sites where members share details about how to obtain good deals which often include information on how or where to find a sales promotion. Monitoring these sites may offer marketers insight into how customers feel about certain promotions and may even suggest ideas for future sales promotions

Sales Promotion Trends: Clutter

In the same way an advertisement competes with other ads for customers attention, so to do sales promotions. This is particularly an issue with inserted coupon promotions that may be included in mailing or printed media along with numerous other offerings. The challenge facing marketers is to find creative ways to separate their promotions from those offered by their competitors.

Consumer Sales Promotions

Consumer sales promotions encompass a variety of short-term promotional techniques designed to induce customers to respond in some way. The most popular consumer sales promotions are directly associated with product purchasing. These promotions are intended to enhance the value of a product purchase by either reducing the overall cost of the product (i.e., get same product but for less money) or by adding more benefit to the regular purchase price (i.e., get more for the money). While tying a promotion to an immediate purchase is a major use of consumer sales promotion, it is not the only one. As we noted above, promotion techniques can be used to achieve other objectives such as building brand loyalty or creating product awareness. Consequently, a marketers promotional toolbox contains a large variety of consumer promotions. The following 11 types of consumer sales promotions: 1. Coupons 2. Rebates 3. Promotional Pricing 4. Trade-In 5. Loyalty Programs 6. Sampling and Free Trials 7. Free Product 8. Premiums 9. Contests and Sweepstakes 10. Demonstrations 11. Personal Appearances

The Concept behind Sales Promotion

The term Sales Promotion broadly refers to all those promotional activities which are undertaken to stimulate interest, trial or purchase of a product by the end user or other intermediaries in between. Besides advertising and personal selling, all other activities undertaken to promote a product can be classified under sales promotion! According to the Institute of Sales Promotion, "Sales Promotion comprises that range of techniques used to attain sales or marketing objectives in a cost effective manner by

adding value to a product or service either to intermediaries or end users, normally but not exclusively within a defined time period." Almost every Company uses Sales Promotion techniques at some stage of the product life cycle since sales promotion techniques provide a strong incentive to BUY! Generally, there are 3 modes of Sales Promotion Consumer oriented Sales force oriented Retailer oriented Advantages of Sales Promotion - Importance to Consumers Increased Buying Confidence - Distribution of free samples is probably the fastest and best way through which manufacturers can push consumers to try a product. Once satisfied with the quality of the sample product, consumers become more confident about buying a new product. Reduced Rates - During promotional campaigns, companies offer their products at discounted rates. Consumers like to make use of such occasions to buy larger quantities of such products. Advantages for Producers and Manufacturers Entering New Markets - Sales Promotion campaigns enable manufacturers to capture new markets. Controlled Expenses & Measurable Results - Producers have direct control over sales promotion campaigns and this enable them to make sure that there are no undue wastages in the process! Increased Sales - Sales promotion techniques have favourable effect on the sales of products. Companies enjoy increased demands for their products while such campaigns are running. Advantages for the Sales Force Sales promotion campaigns makes the job of the sales team much easier. Thanks to the offers and sales, customers are positively inclined towards buying a particular product. Some of the commonly used Sales Promotion tools include Free Samples, Coupons, Lucky draws, games and contests, Cash Refund offers, Free Trials, Tie In Promotion, Point of Purchase Displays etc

Online Promotional Tools: Feedback Forms What better way to find out what people think of your company than to solicit their opinion. Using customer feedback you can improve your site and provide better service to your customers. Using feedback forms also shows your customers that you are interested in what they have to say, and provides an opportunity to build relationships with them. For instance, you may send out an email thanking a particular customer for bringing an issue to your attention and follow-up with a coupon to show your appreciation. The disadvantage with a feedback form is the type of information people provide or the questions they may ask. If customers cannot find answers on your site, they may resort to using the feedback form. To receive targeted feedback, it is useful to develop an online form for customers to complete that leads them through the feedback process. Book marking A good way to encourage customers to visit your site is to ask them to bookmark it. Through bookmarking, they have easy access to your site and do not have to remember your sites exact URL to visit. Bookmarking a site is particularly beneficial for web surfers who like to follow links. It enables them to go back and take a more in-depth look at what you have to offer when they need to. Content Content is a strong driver for encouraging repeat visits by customers, particularly when it is fresh, timely, and gives customers a reason to visit regularly. For example, perhaps you have a Tip of the Day or a regular visit by an expert well-known in your field of business who provides online advice. Content that is useful for your visitors and will enable them to leave with new knowledge will attract them to your site, and encourage them to check back regularly. Daily Give-Away/Coupons/Contests Sites that offer regular promotions such as a give-away, coupons and contests are in a solid position to capture a regular audience. While the promotion acts as the driver that attracts customers to visit initially, it provides an opportunity to showcase new products and services, and deliver important news about your company. For instance, you may initiate a give-away that is a printer, but also take the opportunity to tell your customers about a printer sale next week. Your promotional tool has not only lured customers to your site, but it has also increased the likelihood of getting a sale. Offering various promotions also enables you to obtain customer information that you can use in future marketing campaigns. Surveys Surveys provide an effective avenue through which to gather important customer data that will help you to improve your business and plan for the future. To encourage visitors to complete the survey, you can provide an incentive such as an opportunity to win a prize.

Awards/Testimonials Including awards and testimonials on your site will provide credibility to your business. They will also provide a foundation for you to build rapport and trust with your customers, who will be more willing to visit a site they can trust. Online Chat Online chat mechanisms provide a forum where customers can come together and share their experiences with each other and you. This interactive tool allows you direct access to customer opinions where you can gauge trends and determine their views on the industry. Tours Online tours provide you with an opportunity to showcase particular products and services, and highlight their key benefits. For instance, you may have a CRM product that you would like to promote. What better way to show how it works than to provide a tour of the product - making what could be a potentially complex product look simple and easy to use.

Online and Offline Promotional Techniques:

Article Submissions Submitting articles you write to targeted resource portals will broaden your reach and position you as an expert in your field of business. If people identify with you and find your articles useful, they are likely to visit your site and take an interest in your products and services. Newsletters As a low cost promotional tool, a newsletter enables you to build rapport and strengthen your relationship with customers. The key to success is to focus less on self-promotion and focus more on providing information that is newsworthy and valuable. To effectively communicate with prospective and current customers release the newsletter regularly and provide customers with an opportunity to unsubscribe. Press Releases When you have important news to share about your business, sending a press release, by email, mail or fax, to editors and public relations newswires, will give you direct access to customers most interested in your message and increase your exposure. For instance, if you have a technology related site you may focus on journalists who cover the Internet. You can also target your release to specific industries. Banner Advertising If you want to increase your companys brand awareness, implementing a banner ad campaign is an effective advertising method. Banner ads are an effective direct marketing tool that can increase site traffic if they are creative and include a call-to-action.

Advertise on sites that your customers would visit, and ensure you provide the best possible offer you can. Sponsorships Sponsorships are an effective way to develop greater brand impact because you can capitalize from an existing community and associate your brand with fresh content. By customizing your sponsorships to specific areas or for specific messages, you can create an excellent platform to communicate your products and services. Link Strategies Linking strategies provide an effective way for customers to learn about your company through other sites related to your subject. The key to developing an effective link program is to identify sites that are not direct competitors but have a similar target market as you. It is also necessary to find a balance between the amount of traffic that exits your site through a link and the number of people who visit your site through a link on another site. Building links from other sites to your site also increases your sites relevancy to search engines. Newsgroups Joining a newsgroup will enable you to build your reputation, identify trends in your industry, and evaluate the needs of potential customers. To get in close contact with potential customers, it is necessary to research groups that target your prospective customer base and spend time identifying what kind of behavior is acceptable in the group. Netiquette is very important when you are a member of a newsgroup. The best way to give your business exposure without appearing like you are only there to market yourself is to use a signature file, which references your contact information Email Marketing With people spending so much time on email, there is an enormous opportunity to market to them and build solid customer relationships. Email marketing has emerged to become one of the most profitable and economical ways to manage customer relationships, presenting marketers with many opportunities and benefits. Its benefits include the following: low cost vehicle; access to a targeted and qualified audience; fast, efficient and effective; offers personalized communication; easy to track and evaluate; increases sales, awareness, and traffic. Search Engine Optimization Effectively submitting your site in search engines will enable you to acquire top placement in search engine results and increase the likelihood that people will link into your site during search queries. The trick is to identify effective methods to optimize your placement. The criteria search engines and directories use to determine which sites rank highly varies. Some, like Google, use link popularity in their ranking mechanisms. Others measure click popularity, gauge the number of times key words are used throughout a site, or favor sites that are updated regularly. Therefore, it is important to learn about the various search engines and identify the ones that are best suited for your site.

Affiliate Marketing With an affiliate program you offer affiliates an incentive to perform a particular outcome. This outcome may be to generate customer leads for your business, increase clicks to your site or improve sales - from a banner ad, text link, graphic or other means such as a newsletter. The incentive is usually a fee, provided as a flat rate or percentage depending on your affiliate program objectives. Web Site Promotion Services There are web site promotion services that will assist you in marketing your site. While these types of services can be helpful, they do not guarantee results and can be quite expensive. It is necessary to do your research before working with a company - check their reviews and contact references if necessary. Collateral Material Ensure your Web and email address are on all collateral materials including any promotional items you give away, such as mouse pads. This will give customers an easy way to contact you and increase your brand awareness. Trade Shows Attending trade shows is an effective way to increase awareness of your business to a targeted audience and provide you with direct access to potential customers, who can get hands-on knowledge about your business and its products or services. Attending a trade show will also enable you to identify trends in the industry and provide you with information about your competitors. Furthermore, you can give away products with your web site address and encourage customers to complete forms for prizes, providing you with valuable customer data. Launch Events An event that introduces new products and services is an effective way to generate excitement and develop relationships with potential customers. For instance, you can obtain customers contact information so you can follow-up after the event with promotions or introduce new products and services. As well, inviting prominent guests to the event as speakers or supporters will generate interest in the media, which can result in free publicity and bring greater exposure to your business. The kind of promotional tools and techniques you implement depends on a variety of factors including your online objectives, customers, products and services, marketing budget, and competition.

What Are the Functions of Sales Promotion? 1. Sales promotion is one aspect of the marketing mix. Sales promotion is a short-term marketing strategy designed to achieve a specific purpose. Sales promotion differs from advertising in that its intent is to create a sense of urgency to encourage immediate action as opposed to building sales or a brand over a long period of time. Sales promotion may take the form of a temporary price reduction or a campaign to introduce an item. 2. Production Differentiation Use of sales promotion techniques helps to differentiate your products from those of your competitors. This is especially beneficial is your products offer essentially the same features and benefits as others on the market. A method often used to make products stand out is to offer them at a slightly reduced price for a short period of time. 3. Attract Customers Sales promotions are used to attract customers during periods of slow sales. For example, if you offer a seasonal product such as barbecue grills, by running a promotion in the middle of winter where the price is reduced by 50 percent may encourage people to buy a grill at a time where it might not otherwise cross their mind. 4. Increasing Market Share Sales promotions can lead to an increase in market share for the manufacturer. The promotion will likely increase your sales by taking away sales from your competitors. As a result, your market share will increase while your competitors' share decreases. 5. New Product Introduction Retailers can use sales promotions to introduce a new product. By offering the new item at a reduced price and placing a "new item" sign in front of it, they can persuade customers to give the new product a try. At the same time they can discontinue a slow-moving item in the same category by marking it down and placing a "reduced for quick sale" sign in front of it. This technique has the effect of keeping the category fresh while freeing up needed shelf space. 6. Inventory Control Sales promotion can help retailers limit out-of-stock situations by allowing them to purchase large quantities at a reduced price. This can be especially advantageous to the retailer for items that are popular sellers that can be difficult to keep on the shelf.

What Are the Benefits of a Sales Promotion? Manufacturers and retailers offer sales promotions for specific purposes, such as to increase sales, promote brand loyalty or introduce a new product. They usually last a short time and use promotional vehicles such as advertising or product demonstration. The main goal of a sales promotion is to induce the customer to take a desired action. 1. New Product Exposure For manufacturers, sales promotion helps introduce a new product to the marketplace and create buzz among potential buyers. Merchants also benefit from the interest by seeing an increase in store traffic. For online marketers, promoting new products such as an e-book can attract more visitors to their website. 2. Providing Information In addition to making consumers aware of a product, a sales promotion can also provide useful information. This can be an effective tool when introducing a new product. Customers may receive a free trial period along with information about the product and how it works. In this way, companies can get customers to try new products by removing any apprehension. 3. Increasing Sales A promotion can stimulate product sales. Manufacturers commonly reduce the price of a product for a limited time to induce customers to make a purchase. In the short term this can increase the number of units sold, which can lead to increased market share in the long run if the customer permanently switches from a competitor's brand. 4. Brand Loyalty Sales promotions can also be used to increase brand awareness and loyalty. Clubs or special memberships provide consumers discounts or promotions for continued use. Many airlines offer frequent-flier programs where customers eventually receive free or discounted flights. 5. Impulse Sales Sales promotions can generate impulse sales. A customer may not be aware of a product until she enters a store and sees a sign advertising a sale price. Impulse sales also result from in-store demonstrations, such as giving away free samples of a food item.

Advertising & Sales Promotion Strategies

Advertising and sales promotion strategies are used by product manufacturers as a means of getting consumers to take a specific action, such as purchasing a product. Promotional strategies are typically short-term in nature, trying to get consumers to act quickly before the promotion expires. Advertising is often used in conjunction with a sales promotion as a means to get the promotional message out to the consumer.

Push Strategy
A push strategy occurs when sellers of a product are offered incentives to promote the product or purchase additional quantities. For example, a ketchup manufacturer may offer a grocery retailer a discount or cases of free products if the grocer agrees to advertise the product in its weekly flier. The grocer may also agree to allocate display space in the store.

Pull Strategy
With a pull strategy, the target is the consumer as opposed to the seller. An example of a pull strategy is when a company develops an advertising campaign to launch a new product. This can create consumer demand for the product, which will force a retail outlet to stock it. Other methods include placing coupons in the newspaper or mailing free samples to households.

Combination Strategy
A combination strategy occurs when the push and pull methods are used simultaneously for maximum promotional effect. In addition to providing incentives for a seller to promote a product, a manufacturer will also launch an advertising campaign to entice consumers to purchase the product.

Brand Reinforcement

 A brand reinforcement strategy is used as a way to build customer loyalty, which leads to repeat sales. One common brand reinforcement strategy is the offering of a club membership where members can get discounts for purchases, as well as perks like free merchandise or being eligible for special sales that are not available to the general public.

Building Demand
Sales promotion strategy can involve increasing or building demand for a product. By advertising a special limited offer, such as offering 20 percent off the purchase price if you buy before a certain date, it can create a sense of urgency in consumers, who then give the product a try. Another way to build demand is to use advertising to show how your product fills a need in a way that your competition's product does not.

Sales Promotion Strategies

Sales promotion - Sales promotions are short-term incentives to encourage the purchase or sale of a product or service. 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, pointof-purchase (POP) displays, contests, rebates, and sweepstakes. Sales Promotion Strategies There are three types of sales promotion strategies: Push, Pull, or a combination of the two. A push strategy involves convincing trade intermediary channel members to "push" the product through the distribution channels to the ultimate consumer via promotions and personal selling efforts. The company promotes the product through a reseller who in turn promotes it to yet another reseller or the final consumer. Trade-promotion objectives are to persuade retailers or wholesalers to carry a brand, give a brand shelf space, promote a brand in advertising, and/or push a brand to final consumers. Typical tactics employed in push strategy are: allowances, buy-back guarantees, free trials, contests, specialty advertising items, discounts, displays, and premiums.

A pull strategy attempts to get consumers to "pull" the product from the manufacturer through the marketing channel. The company focuses its marketing communications efforts on consumers in the hope that it stimulates interest and demand for the product at the end-user level. This strategy is often employed if distributors are reluctant to carry a product because it gets as many consumers as possible to go to retail outlets and

request the product, thus pulling it through the channel. Consumerpromotion objectives are to entice consumers to try a new product, lure customers away from competitors products, get consumers to "load up" on a mature product, hold & reward loyal customers, and build consumer relationships. Typical tactics employed in pull strategy are: samples, coupons, cash refunds and rebates, premiums, advertising specialties, loyalty programs/patronage rewards, contests, sweepstakes, games, and point-of-purchase (POP) displays. Car dealers often provide a good example of a combination strategy. If you pay attention to car dealers' advertising, you will often hear them speak of cash-back offers and dealer incentives.

Role of Promotion
Definition: To communicate with individuals, groups or organizations to directly or indirectly facilitate exchanges by informing and persuading one or more audiences to accept an organization's products. -Companies must communicate with their customers, this communication should not be left to chance. Design communication to your specific target audience:

Target Market Part of Target Market Different stakeholders of your organization.

Selecting Promotional Tools

A marketer must do the following while planning and sending communications to a target audience:
1. Identify the Audience

Individuals, groups, special publics or the general public. Intermediaries vs Consumer 2. Identify the Stage of Product Life Cycle o Introductory Inform Publicity/Advertising/Sales force (interm.)/Sales promotion (free samples)

Growth Persuade Differentiate from competitors offering o Maturity Remind Reminder advertising, Sales promotion (coupons) o Decline Cut budget 3. Product Characteristics o Complexity How much information must be communicated. The more complex the message, the greater the need to use personal selling. o Risk Greater risk, greater need for personal selling 4. Stages of Buying Decision In many cases the final response sought is purchase, but purchase is the result of a long process of consumer decision making. Need to know where the target audience now stands (in the process), and what state they need to be moved to.
o

Adoption Process
o o o o o o

Not Aware--Advertising/Publicity Aware--no knowledge Advertising/Publicity Interest--how do they feel? Personal Selling/SalesPromotion/Advertising Evaluation--should they try? sales promotion/personal selling Trial--test drive/sales promotion Adoption--do they purchase? Reminder/reinforce--advertising

Communication programs goal must lead consumers to take the final step.
5. Channel Strategies

-Push Vs Pull Policy o Push-promotes product only to the next institutions down the marketing channel. Stresses personal selling, can use sales promotions and advertising used in conjunction. o Pull-promotes directly to consumers, intention is to create a strong consumer demand, primarily advertising and sales promotion. Since consumers are persuaded to seek products in retail stores, retailers will in turn go to wholesalers etc (use channels overhead)

Nature of Sales Promotion Encompasses all promotional activities and materials other than personal selling, advertising and publicity. Grown dramatically in the last ten years due to short term focus on profits. Funds are usually earmarked for advertising are transferred to sales promotion. Often used in conjunction with other promotional efforts.

Scope and importance of sales promotion:

o o o

323 billion coupons were distributed 1993 nationally annually (3,200/household), only 2.3% are redeemed. 9000 trade shows containing 10 exhibits or more/year. New York auto show attracts more than a million people per year. $15-20 billion/year spent on point of purchase material in stores.

Why??
o o o o o

companies are looking to get a competitive edge quick returns are possible for short term profits more consumers are looking for promotions before purchase channel members putting pressure on mf. for promotions advances in tech. make SP easier (ie coupon redemption)

Sales Promotion Opportunities and Limitations

o o o o o o o

Increase in sales by providing extra incentive to purchase. May focus on resellers (push), consumers (pull) or both. Objectives must be consistent with promotional objectives and overall company objectives. Balance between short term sales increase and long term need for desired reputation and brand image. Attract customer traffic and maintain brand/company loyalty. Reminder functions-calendars, T Shirts, match books etc. Impulse purchases increased by displays Contests generate excitement esp. with high payoffs.

Limitations

o o o o

Consumers may just wait for the incentives May diminish image of the firm, represent decline in the product quality. Reduces profit margins, customers may stock up during the promotion. Shift focus away from the product itself to secondary factors, therefore no product differential advantage.

Sales Promotion Methods

Consumer Sales Promotion Techniques -encourage/stimulate customers to patronize a specific retail store or to try a specific product. Coupons: Usually reduce the purchase price or offered as cash. Need to state the offer clearly and make it easy to recognize. Handout...Awash in Coupons... Looks at the volume of coupons (323 bn) and the poor redemption rate (less than 3%). Looks at more innovative media to deliver coupons (currently over 80% are delivered via the Sunday paper)....in store by the products, as customers exit the store based on purchases...discussed delivering coupons to customers as they enter the store, using a card that swipes to indicate past purchases. Past buying behavior is the best predictor of future buying patterns!! Also discussed that they may be delivered via TV, in conjunction with an advertisement. Users only redeem coupons they would ordinarily purchase. 75% of the coupons are redeemed by consumers who would buy the brand already. Stores/marketers are honoring competitors coupons etc. Stores often don't have enough of the couponed item in stock.

Demonstrations:

Excellent attention getters. Labor costs are usually high. Frequent User Incentives: Major airlines, helps foster customer loyalty to a specific company. Credit card companies. Trading stamps-Co-ops back in England, foster retail loyalty. Blockbuster's new credit card offers company products based on card usage. Cindy Crawford "Why wait for whats coming to you" Co-Branded with immediate rewards...this is what is very appealing about this card...immediate reward, as opposed to having to build up points for an air flight etc. Airlines have had to raise the threshold of their award programs 35,000 from 20,000, 2 free round trip tickets due to $3+trillion liabilities Long Distance telephone also offer free air miles, >$25/mo = airmiles Frequent User cards are used to collect information for companies enabling them to better target their customers. Point of Purchase Display: Outside signs, window displays, counter pieces, display racks. 90% of retailers believe that point of purchase materials sell products. Essential for product introductions. Also with 2/3 of purchasing decisions made in the store, they are important. Free Samples: Stimulate trial of product. Increase sales volume at the early stage of the product life cycle and obtain desirable distribution. Most expensive sales promotion technique. Not appropriate for mature products and slow turnover products.

Handout...With Sampling there is too a free lunch Discusses the pros and cons of free sampling.

Money Refunds/Rebates: Submit proof of purchase and mail specific refund, usually need multiple purchase for refund. Helps promote trial use, due to the complexity of the refund, it has little impact. Customers have a poor perception of rebate offered products. Used extensively in the Auto and Computer industry. Premium Items: Offered free or at minimum cost as a bonus. Used to attract competitors customers, different sizes of established products. Gas stations give free glasses--basics buy!! McDonalds premium items are considered collectors items by some! Flintstones program last year with McDonalds. Burger King with the Lion King movie Last summer the following tie-in premium programs.

Casper with Pepsi, Pizza Hut, Choice Hotels Congo with Taco Bell Batman Forever with McDonalds, Kelloggs, Six Flags, Sears Pocahontas with Chrysler, Nestle,General Mills, Burger King Mighty Morphin with McDonalds

Cents-off Offer: Strong incentive for trying a product-very similar to coupons, but are a part of the package. Consumer Contests and Sweepstakes: Consumers compete based on their analytical or creative skills. Must be accurate or you will anger customers/retailers. Sweepstakes are prohibited in some states.

Trade Sales Promotion Techniques

Push Policy emphasizes promotions focused on the next intermediary. Trade Sales Promotion Techniques-stimulate wholesalers and retailers to carry products and to market them aggressively. Producers use sales promotion techniques to encourage resellers to carry their products and to promote them more effectively. Allowances and Discounts: Merchandise...reimburse for extra retail support, i.e. advertising, shelf space Case...discount on cases ordered in specific period. Finance...Paying for financial costs/losses associated with consumer sales promotions. Cooperative Advertising: Manufacturer agrees to pay a certain amount of retailers media. Training of Sales Staff

Online sales promotion

Online sales promotion or internet sales promotion represents those internet marketing activities, other than online personal selling, online advertising, and online publicity, which stimulate consumer purchasing and dealer effectiveness, and are conducted for a limited period of time. The major forms of online sales promotion include contests, premiums, sampling, e-coupons, price-offs, two-for-one offers, and allowances. For example, when you visit some e-commerce sites of many software companies, they allow users to sample digital products prior to purchase by providing free downloads of demo software that normally expire after 30 to 60 days. At that time, the user can then choose to purchase the full product if they wish. Another example is that subscriber-only ecoupons can be used to encourage customers to sign up for e-newsletters, with the newsletter helping to increase sales and build your customer database. Both of these illustrations are examples of online sales promotion. In what way is online sales promotion and online advertising different? Online advertising deals with advertising your businesses on online media sites owned and controlled by others. While, online sales promotion involve using tools and methods controlled by you, such as e-coupons, samplings, contest and sweepstakes, to inform and persuade your customers and prospects to make a purchase or subscription. There is no question that a major reason for using online sales promotion is their unique advantage in achieving online communication goals. Functions of online sales Promotion Due to the hybrid nature of online sales promotion, it is difficult to define its basic function. Thus, one major function of online sales promotion is to develop buyer awareness and influence attitudes through trial using sampling method. Sampling is one major function of online sales promotion that is used to develop buyer awareness and influence attitudes through trial or sample use. This function of online sales promotion is particularly important in the introduction of new products, new services, or product variations, and explains why an online sales promotion is so often an element of a new products introductory online promotional campaign. Another function of online sales promotion is the organizing of contests and sweepstakes on your website to attract visitors and keep them returning. Contests generally require some level of skill, while sweepstakes involve a pure chance draw for the winner. The concept of using online sales promotion to influence buyer awareness and attitudes is not one that is widely articulated by most web business owners. Through discounts, premiums, e-coupons, sampling, and contests there is an added effort that will cause customers and prospects to act. In this role, online sales promotions are a short-run sales stimulant. Hopefully, of course, sales derived in this manner will have some long-run benefits as a result of product or service exposure.

Outsourcing - What is Outsourcing? So, what is outsourcing? Outsourcing is contracting with another company or person to do a particular function. Almost every organization outsources in some way. Typically, the function being outsourced is considered non-core to the business. An insurance company, for example, might outsource its janitorial and landscaping operations to firms that specialize in those types of work since they are not related to insurance or strategic to the business. The outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers. Although outsourcing has been around as long as work specialization has existed, in recent history, companies began employing the outsourcing model to carry out narrow functions, such as payroll, billing and data entry. Those processes could be done more efficiently, and therefore more cost-effectively, by other companies with specialized tools and facilities and specially trained personnel. Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as benefits management. But some organizations outsource whole operations. The most common forms are information technology outsourcing (ITO) and business process outsourcing (BPO). Business process outsourcing encompasses call center outsourcing, human resources outsourcing (HRO), finance and accounting outsourcing, and claims processing outsourcing. These outsourcing deals involve multi-year contracts that can run into hundreds of millions of dollars. Frequently, the people performing the work internally for the client firm are transferred and become employees for the service provider. Dominant outsourcing service providers in the information technology outsourcing and business process outsourcing fields include IBM, EDS, CSC, HP, ACS, Accenture and Capgemini. Some nimble companies that are short on time and money, such as start-up software publishers, apply multisourcing -- using both internal and service provider staff -- in order to speed up the time to launch. They hire a multitude of outsourcing service providers to handle almost all aspects of a new project, from product design, to software coding, to testing, to localization, and even to marketing and sales. The process of outsourcing generally encompasses four stages: 1) strategic thinking, to develop the organization's philosophy about the role of outsourcing in its activities; 2) evaluation and selection, to decide on the appropriate outsourcing projects and potential locations for the work to be done and service providers to do it; 3) contract development, to work out the legal, pricing and service level agreement (SLA) terms; and 4) outsourcing management or governance, to refine the ongoing working relationship between the client and outsourcing service providers. In all cases, outsourcing success depends on three factors: executive-level support in the client organization for the outsourcing mission; ample communication to affected employees; and the client's ability to manage its service providers. The outsourcing

professionals in charge of the work on both the client and provider sides need a combination of skills in such areas as negotiation, communication, project management, the ability to understand the terms and conditions of the contracts and service level agreements (SLAs), and, above all, the willingness to be flexible as business needs change. The challenges of outsourcing become especially acute when the work is being done in a different country (offshored), since that involves language, cultural and time zone differences.

Types of Reliability
You learned in the Theory of Reliability that it's not possible to calculate reliability exactly. Instead, we have to estimate reliability, and this is always an imperfect endeavor. Here, I want to introduce the major reliability estimators and talk about their strengths and weaknesses. There are four general classes of reliability estimates, each of which estimates reliability in a different way. They are:

Inter-Rater or Inter-Observer Reliability Used to assess the degree to which different raters/observers give consistent estimates of the same phenomenon. Test-Retest Reliability Used to assess the consistency of a measure from one time to another. Parallel-Forms Reliability Used to assess the consistency of the results of two tests constructed in the same way from the same content domain. Internal Consistency Reliability Used to assess the consistency of results across items within a test.

Internal Consistency Reliability

In internal consistency reliability estimation we use our single measurement instrument administered to a group of people on one occasion to estimate reliability. In effect we judge the reliability of the instrument by estimating how well the items that reflect the same construct yield similar results. We are looking at how consistent the results are for different items for the same construct within the measure. There are a wide variety of internal consistency measures that can be used.

Let's discuss each of these in turn.

Inter-Rater or Inter-Observer Reliability

Whenever you use humans as a part of your measurement procedure, you have to worry about whether the results you get are reliable or consistent. People are notorious for their inconsistency. We are easily distractible. We get tired of doing repetitive tasks. We daydream. We misinterpret. So how do we determine whether two observers are being consistent in their observations? You probably should establish inter-rater reliability outside of the context of the measurement in your study. After all, if you use data from your study to establish reliability, and you find that reliability is low, you're kind of stuck. Probably it's best to do this as a side study or pilot study. And, if your study goes on for a long time, you may want to reestablish inter-rater reliability from time to time to assure that your raters aren't changing. There are two major ways to actually estimate inter-rater reliability. If your measurement consists of categories -- the raters are checking off which category each observation falls in -- you can calculate the percent of agreement between the raters. For instance, let's say you had 100 observations that were being rated by two raters. For each observation, the rater could check one of three categories. Imagine that on 86 of the 100 observations the raters checked the same category. In this case, the percent of agreement would be 86%. OK, it's a crude measure, but it does give an idea of how much agreement exists, and it works no matter how many categories are used for each observation. The other major way to estimate inter-rater reliability is appropriate when the measure is a continuous one. There, all you need to do is calculate the correlation between the ratings of the two observers. For instance, they might be rating the overall level of activity in a classroom on a 1-to-7 scale. You could have them give their rating at regular time intervals (e.g., every 30 seconds). The correlation between these ratings would give you an estimate of the reliability or consistency between the raters. You might think of this type of reliability as "calibrating" the observers. There are other things you could do to encourage reliability between observers, even if you don't estimate it. For instance, I used to work in a psychiatric unit where every morning a nurse had to do a ten-item rating of each patient on the unit. Of course, we couldn't count on the same nurse being present every day, so we had to find a way to assure that any of the nurses would give comparable ratings. The way we did it was to hold weekly "calibration" meetings where we would have all of the nurses ratings for several patients and discuss why they chose the specific values they did. If there were disagreements, the nurses would discuss them and attempt to come up with rules for deciding when they would give

a "3" or a "4" for a rating on a specific item. Although this was not an estimate of reliability, it probably went a long way toward improving the reliability between raters.

Test-Retest Reliability
We estimate test-retest reliability when we administer the same test to the same sample on two different occasions. This approach assumes that there is no substantial change in the construct being measured between the two occasions. The amount of time allowed between measures is critical. We know that if we measure the same thing twice that the correlation between the two observations will depend in part by how much time elapses between the two measurement occasions. The shorter the time gap, the higher the correlation; the longer the time gap, the lower the correlation. This is because the two observations are related over time -- the closer in time we get the more similar the factors that contribute to error. Since this correlation is the test-retest estimate of reliability, you can obtain considerably different estimates depending on the interval.

Parallel-Forms Reliability
In parallel forms reliability you first have to create two parallel forms. One way to accomplish this is to create a large set of questions that address the same construct and then randomly divide the questions into two sets. You administer both instruments to the same sample of people. The correlation between the two parallel forms is the estimate of reliability. One major problem with this approach is that you have to be able to generate lots of items that reflect the same construct. This is often no easy feat. Furthermore, this approach makes the assumption that the randomly divided halves are parallel or equivalent. Even by chance this will sometimes not be the case. The parallel forms approach is very similar to the split-half reliability described below. The major difference is that parallel forms are constructed so that the two forms can be used independent of each other and considered equivalent measures. For instance, we might be concerned about a testing threat to internal validity. If we use Form A for the pretest and Form B for the posttest, we minimize that problem. it would even be better if we randomly assign individuals to receive Form A or B on the pretest and then switch them on the posttest. With split-half reliability we have an instrument that we wish to use as a single measurement instrument and only develop randomly split halves for purposes of estimating reliability.

Internal Consistency Reliability

In internal consistency reliability estimation we use our single measurement instrument administered to a group of people on one occasion to estimate reliability. In effect we judge the reliability of the instrument by estimating how well the items that reflect the same construct yield similar results. We are looking at how consistent the results are for different items for the same construct within the measure. There are a wide variety of internal consistency measures that can be used. Average Inter-item Correlation The average inter-item correlation uses all of the items on our instrument that are designed to measure the same construct. We first compute the correlation between each pair of items, as illustrated in the figure. For example, if we have six items we will have 15 different item pairings (i.e., 15 correlations). The average interitem correlation is simply the average or mean of all these correlations. In the example, we find an average inter-item correlation of .90 with the individual correlations ranging from .84 to .95.

Average Itemtotal Correlation

This approach also uses the inter-item correlations. In addition, we compute a total score for the six items and use that as a seventh variable in the analysis. The figure shows the six item-to-total correlations at the bottom of the correlation matrix. They range from .82 to .88 in this sample analysis, with the average of these at .85.

Split-Half Reliability In split-half reliability we randomly divide all items that purport to measure the same construct into two sets. We administer the entire instrument to a sample of people and calculate the total score for each randomly divided half. the split-half reliability estimate, as shown in the figure, is simply the correlation between these two total scores. In the example it is .87.

Cronbach's Alpha () Imagine that we compute one split-half reliability and then randomly divide the items into another set of split halves and recompute, and keep doing this until we have computed all possible split half estimates of reliability. Cronbach's Alpha is

mathematically equivalent to the average of all possible split-half estimates, although that's not how we compute it. Notice that when I say we compute all possible split-half estimates, I don't mean that each time we go an measure a new sample! That would take forever. Instead, we calculate all split-half estimates from the same sample. Because we measured all of our sample on each of the six items, all we have to do is have the computer analysis do the random subsets of items and compute the resulting correlations. The figure shows several of the split-half estimates for our six item example and lists them as SH with a subscript. Just keep in mind that although Cronbach's Alpha is equivalent to the average of all possible split half correlations we would never actually calculate it that way. Some clever mathematician (Cronbach, I presume!) figured out a way to get the mathematical equivalent a lot more quickly.

Comparison of Reliability Estimators

Each of the reliability estimators has certain advantages and disadvantages. Inter-rater reliability is one of the best ways to estimate reliability when your measure is an observation. However, it requires multiple raters or observers. As an alternative, you could look at the correlation of ratings of the same single observer repeated on two different occasions. For example, let's say you collected videotapes of child-mother interactions and had a rater code the videos for how often the mother smiled at the child. To establish inter-rater reliability you could take a sample of videos and have two raters code them independently. To estimate test-retest reliability you could have a single rater code the same videos on two different occasions. You might use the inter-rater approach especially if you were interested in using a team of raters and you wanted to establish that they yielded consistent results. If you get a suitably high inter-rater reliability you could then justify allowing them to work independently on coding different videos. You might use the test-retest approach when you only have a single rater and don't want to train any others. On the other hand, in some studies it is reasonable to do both to help establish the reliability of the raters or observers. The parallel forms estimator is typically only used in situations where you intend to use the two forms as alternate measures of the same thing. Both the parallel forms and all of the internal consistency estimators have one major constraint -- you have to have multiple

items designed to measure the same construct. This is relatively easy to achieve in certain contexts like achievement testing (it's easy, for instance, to construct lots of similar addition problems for a math test), but for more complex or subjective constructs this can be a real challenge. If you do have lots of items, Cronbach's Alpha tends to be the most frequently used estimate of internal consistency. The test-retest estimator is especially feasible in most experimental and quasiexperimental designs that use a no-treatment control group. In these designs you always have a control group that is measured on two occasions (pretest and posttest). the main problem with this approach is that you don't have any information about reliability until you collect the posttest and, if the reliability estimate is low, you're pretty much sunk. Each of the reliability estimators will give a different value for reliability. In general, the test-retest and inter-rater reliability estimates will be lower in value than the parallel forms and internal consistency ones because they involve measuring at different times or with different raters. Since reliability estimates are often used in statistical analyses of quasi-experimental designs (e.g., the analysis of the nonequivalent group design), the fact that different estimates can differ considerably makes the analysis even more complex.

Outsourcing
Outsourcing or sub-servicing often refers to the process of contracting to a third-party. [1] While outsourcing may be viewed as a component to the growing division of labor encompassing all societies, the term did not enter the English-speaking lexicon until the 1980s. Since the 1980s, transnational corporations have increased subcontracting across national boundaries. In the United States, outsourcing is a popular political issue.

Overview
A precise definition of outsourcing has yet to be agreed upon. Thus, the term is used inconsistently. However, outsourcing is often viewed as involving the contracting out of a business function - commonly one previously performed in-house - to an external provider.[2] In this sense, two organizations may enter a contractual agreement involving an exchange of services and payments. Of recent concern is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as offshoring or offshore

outsourcing (which are odd terms because doing business with another country does not mean you have to go offshore[3][4][5][6][7]) In addition, several related terms have emerged to grasp various aspects of the complex relationship between economic organizations or networks, such as nearshoring, multisourcing[8][9] and strategic outsourcing.[10] Almost any conceivable business practice can be outsourced for any number of stated reasons. The implications of outsourcing objectively and subjectively vary across time and space.

[edit] Reasons
Organizations that outsource are seeking to realize benefits or address the following issues:[11][12][13][14]

Cost savings The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, renegotiation, cost re-structuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.[15] Focus on Core Business Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specialised IT services companies. Cost restructuring Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable. Improve quality Achieve a steep change in quality through contracting out the service with a new service level agreement. Knowledge Access to intellectual property and wider experience and knowledge.[16] Contract Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.[17] Operational expertise Access to operational best practice that would be too difficult or time consuming to develop in-house. Access to talent Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.[3][18] Capacity management An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier. Catalyst for change An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process. Enhance capacity for innovation Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.[19][20] Reduce time to market The acceleration of the development or production of a product through the additional capability brought by the supplier.[21]

Commodification The trend of standardizing business processes, IT Services, and application services which enable to buy at the right price, allows businesses access to services which were only available to large corporations. Risk management An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.[22] Venture Capital Some countries match government funds venture capital with private venture capital for start-ups that start businesses in their country.[23] Tax Benefit Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country. Scalability The outsourced company will usually be prepared to manage a temporary or permanent increase or decrease in production. Creating leisure time Individuals may wish to outsource their work in order to optimise their work-leisure balance.[24]

[edit] Specific examples of corporate outsourcing There are situations when a firm may consider outsourcing some of its R&D work to a contract research organizations or universities. In this context, the two most populous countries in the world, China and India, provide huge pools from which to find talent. Both countries produce over 200,000 engineers and science graduates each year. Moreover both countries are low cost sourcing countries. Outsourcing in the information technology field has two meanings.[25] One is to commission the development of an application to another organization, usually a company that specializes in the development of this type of application. The other is to hire the services of another company to manage all or parts of the services that otherwise would be rendered by an IT unit of the organization. The latter concept might not include development of new applications.

The Advantages and Disadvantages of Outsourcing

Organizations who are interested in outsourcing are often curious to know more about advantages and disadvantages of offshoring. By gaining insight about both the good and bad of outsourcing, organizations can decide if outsourcing is right for them. Most organization jump headlong into outsourcing, without actually finding out if outsourcing is good for their business. Before outsourcing, ensure that you are aware about the pros and cons of outsourcing. The advantages and disadvantages of outsourcing can help your organization decide if outsourcing is right for your business. The following is a list of the advantages and disadvantages of outsourcing:

The Advantages of Outsourcing

Outsourcing your non-core activities will give you more time to concentrate on your core business processes Offshoring can give you access to professional, expert and highquality services With outsourcing your organization can experience increased efficiency and productivity in non-core business processes Outsourcing can help you streamline your business operations Offshore outsourcing can help you save on time, effort, manpower, operating costs and training costs amongst others Outsourcing can make your organization more flexible to change You can experience an increased control of your business with outsourcing Your organization can save on investing in the latest technology, software and infrastructure as your outsourcing partner would be investing in these Outsourcing can give you assurance that your business processes are being carried out efficiently, proficiently and within a fast turnaround time Offshoring can help your organization save on capital expenditures By outsourcing, your company can save on management problems as your offshore partner will be managing the team who does your work By outsourcing, you can cater to the new and challenging demands of your customers Outsourcing can help your organization to free up its cash flow Sharing your business risks is possible with outsourcing Outsourcing can give your business a competitive advantage as you will be able to increase productivity in all the areas of your business Outsourcing can help your organization to cut is operational costs to more than half If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all

this and more. In outsourcing, the advantages of outsourcing are more than the disadvantages of outsourcing. The pros of outsourcing have driven more organization to step into offshoring and experience the benefits that it has to offer.

The Disadvantages of Outsourcing

At times, it is more cost-effective to conduct a particular business process, rather than outsourcing it While outsourcing services such as payroll processing services and tax preparation services, your outsourcing provider will be able to see your companys confidential information and hence there is a threat to security and confidentiality in outsourcing When you begin to outsource your business processes, you might find it difficult to manage the offshore provider when compared to managing processes within your organization Offshoring can create potential redundancies for your organization In case, your offshore service provider becomes bankrupt or goes out of business, your organization will have to immediately move your business processes in-house or find another outsourcing provider The employees in your organization might not like the idea of you outsourcing your processes and they might express lack of interest or lack of quality at work Your outsourcing provider might not be only providing services for your organization. Since your provider might be catering to the needs of several companies, there might be not be complete devotion to you and your company By outsourcing, you might forget to cater to the needs of your valuable customers as your focus will be on the business process that is outsourced In outsourcing, you may lose your control over the process that is outsourced Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred while signing a contract between

companies. You might also have to spend a lot of time and effort in getting the contract signed With outsourcing, your organization might suffer from a lack of customer focus There can be several disadvantages in outsourcing, such as, renewing contracts, misunderstanding of the contract, lack of communication, poor quality and delayed services amongst others. The disadvantages of offshoring give organizations an opportunity to think about what they are stepping into. However the disadvantages of outsourcing are less than the advantages of offshore outsourcing. When outsourcing, you might not experience any of these disadvantages of offshoring, if you find a reliable outsourcing partner. Before outsourcing take the interests of your customers and employees into consideration and then make an informed decision. If your organization is genuinely interested in outsourcing, let not the disadvantages of outsourcing stop you.

Criteria for selecting an outsourcing vendor

In an outsourcing deal, buyers want to achieve superior quality service at lower cost and minimum involvement. On the other hand, outsourcing the work to an external agency exposes the customer to risks of the work being delivered poorly. In such a scenario, selection of a vendor for outsourcing is a difficult task, which becomes even more complex while selecting an offshore vendor. Customers generally follow the criteria mentioned below for selecting an outsourcing supplier: Quality commitment: The vendor should be quality focused. Cost: The vendor should have prices that enable the customer sufficient cost saving. Additional resources and capabilities: The vendor should have resources and capabilities that are not available to the customer internally. Prior work: The vendor should have experience working with other organizations and should have delivered satisfactorily to them. Checking with the references help the customer understand the vendors capabilities properly. Contract terms: The terms of contract should offer flexibility to the client to modify the requirements or terminate the contract easily, if required. Confidentiality: How secure is the customers data at the vendor site? The vendor should have well-defined security policies in place. In addition to these criteria, other parameters such as location, reporting methodologies, vendor processes, financial stability of the vendor and cultural similarity play a vital role in deciding the supplier.

Levels of outsourcing
Outsourcing has moved from tactical to strategic level and companies have started pursuing outsourcing as an important business strategy. Companies generally use the following three levels of outsourcing: Project level: Discrete aspects of a project are outsourced Program level: Different projects in a program are outsourced Division level: The entire operation of a division is outsourced There are various factors that govern the decision to outsource at a particular level by a customer. These factors include: Critical nature of the work: If the work is critical to a companys core business, the company will prefer to outsource as little as possible and in discrete parts. Faith of the customer in a vendor: The higher the faith a customer has in its vendor, the more it will outsource. In some cases, it will outsource even the operations of an entire division. Cost advantage: Cost efficiency is an important deciding criterion, with larger work being outsourced if cost savings are large. Proven track record of the vendor: A proven track record of the supplier inculcates a feeling of trust and the customer prefers to outsource larger work to the vendor.