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BUSINESS MARKETING Module 4

BUSINESS ADVERTISING, SALES PROMOTION & PUBLIC RELATIONS

Faculty : Kerena Anand


The communication mix for industrial goods and services is different from the promotion mix for most consumer goods. This is because of the technical nature of industrial products, the relatively smaller number of industrial buyers, and the complex nature of industrial buying process. Advertising, sales promotion, direct marketing and publicity are mainly used to create awareness, enhance company reputation, disseminate information on products, or generate leads for the sales people. Personal selling is often the most important element of the industrial marketers communication strategy, because of the technical complexity of many industrial products and the extensive negotiating process involved in selling of industrial goods and services. To have an effective communication strategy, advertising, sales promotion, direct marketing and publicity must be coordinated with personal selling efforts. An industrial marketer should carefully consider all the elements of communication or promotional mix in order to develop an effective communication programme. 1. What is the role of advertising in business marketing The relative importance of promotional tools between consumer and industrial markets vary. Consumer products( or services) companies rate advertising, sales promotion, personal selling, direct marketing, publicity and public relations in that order. Industrial goods ( or services) rate personal selling, direct marketing, sales promotion, advertising and publicity and public relations in that order. While advertising is less important than sales calls by sales force ( or personal selling) in industrial markets, it still plays an important role. The functions performed by industrial advertising are: CREATING AWARENESS: Industrial advertising is an effective means to create awareness among potential buyers about the industrial supplier and its products. The industrial buyers who are not aware of the supplier company or its products may refuse to see the supplier companys sales

representative. Besides the sales representative may have to use a lot of time describing the company and its products if the awareness and reputation are not created by advertising. REACHING MEMBERS OF BUYING CENTRE: It may not be possible for sales people to make contacts with all the individuals who are involved in the purchasing decision in an industrial firm. Industrial advertising is an effective means of reaching the inaccessible or unknown buying centre members, such as quality control manager, R & D manager or production engineer. These buying members read trade journals and general business publications and they can be reached through advertising. INCREASING SALES EFFICIENCY AND EFFECTIVENESS: When buyers are more aware of an industrial marketing firm, its products and its reputation through advertisements, sales people are more effective. According to one study, the sales revenue per sales call were substantially higher by 23 percent when personal selling and advertising were combined, compared to the sales revenue per sales call without advertising. This shows that an effective advertising can make personal selling more productive. Besides the cost of reaching large number of industrial buyers through personal contacts of sales persons is much higher than the cost of advertising to reach large portion of the market. EFFICIENT REMINDING: If potential buyers know about the product but are not ready to buy ( capital items like machinery), reminder advertising would be more economical than sales calls. Besides for certain industrial products such as industrial supplies (maintenance items like lamps, tubes, tool box), where there is little or no product differentiation between many industrial products, the buyers are reminded economically through advertising about the firms service capabilities ( example: reliable service or dependability of timely supplies) SALES LEAD GENERATION: Advertisements carrying reply cards or telephone numbers for potential buyers are the effective ways to generate leads for sales representatives. The industrial marketer can generate a list of potential buyers ( called sales leads) after scrutinising the names of all those who responded to the advertisements. 2. What is the media used for industrial advertising? Selection of media in industrial advertising depends on the target audience to be reached, promotional objectives or goals to be achieved, and the expenditure budget allocated for advertising.

The media generally used for industrial advertising are general business publications, trade journals and industrial directories. General Business Publications and Trade Journals/ Publications Trade publications are of two types- horizontal and vertical. Horizontal publications are directed at individuals working in a particular occupation, organisational function, or a particular technology, which cuts across various industries. Purchase advertising and marketing ( A & M) and Modern Material Handling are some of the examples of horizontal publications. Vertical publications are directed at individuals working in a specific industry. Textile trend, Iron and Steel age, chemical week are some of examples of vertical publications which contain articles and advertisements to interest to all the individuals in a specific industry. General Business Publications such as Business India, Business World or Business Today are directed at business professionals across all industries. These publications cover broad range of subjects and have superior editorial quality. General business publications are good media for advertising those products and services which have wide appeal to geographically disperse customers. These publications are also good media for corporate image advertisements to a broad based audience. The advertising cost per page of general business publications are generally much higher compared to the cost per page in trade publications. Also since general business publications are read by individuals from many occupations and industries, it is difficult to reach a specific target audience. Industrial directories( yellow pages) which are buyers guides are useful for advertising and company listing. Many industrial buyers buy these directories as they consider them as a purchasing tool. Industrial directories are published by central and state government and private publishers ( e.g. Tata yellow pages) Some of the leading advertising agencies in India are Hindustan Thompson, Lintas, Clarion, OBM (Ogilvy, Benson and Mather), Pressman, Ulka, Rediffusion and others.

3. What is the role of Sales Promotion in Business Marketing?

In Industrial marketing the objectives of sales promotion are gathering business ( or sales) leads, impressing and rewarding customers, and stimulating the sales force to greater effort. The methods used in industrial marketing for sales promotion ( more commonly referred to as business promotion) are a. Trade shows: For some industrial marketing firms, trade shows ( or trade fairs) are the second most important marketing promotional expenditure after personal selling. Industry or trade associations organise annual trade fairs or exhibitions. Companies selling products and services to a particular industry buy space and set up displays or stalls to demonstrate their products at the trade show. The benefits from trade shows are many: i) An opportunity to introduce new products to a large audience in a short duration. ii) Establishing personal contacts with new customers. iii) Establishing contacts and increasing company awareness with key members of decision making units who cannot otherwise be reached. iv) Making direct sales ( by booking orders at the trade fair) v) Display and demonstration of the products vi) Evaluating competitors products. vii) Discovering new suppliers and distributors. viii) Obtaining new product ideas ix) Training for new sales persons x) Generating new sales leads which help sales persons to close sales (ie getting orders) with substantially less number of sales calls. There are however some problems associated with trade shows. Increasing costs of construction and exhibits, personnel travel, lodging and boarding and pre trade show promotion costs, all add up substantially. Which trade shows to participate out of many trade shows that take place every year, how much to spend on each trade show and how to build attractive exhibits are some of the challenges faced by an industrial marketer. To ensure success at trade shows, industrial marketers should have specific objectives such as Overall purpose for participation Creating actual sales Identify potential customers Obtaining sales leads

Gathering competitive intelligence Target audience to be reached

b. Sales Contests: Many industrial marketing firms hold sales contests or incentives for their sales people and dealers. The objective is to motivate their sales force and dealers to improve their sales performance. Those who perform well get cash prizes or gifts or foreign trips. c. Seminars: Some industrial marketers conduct educational or technical seminars for buying organisations about the state of art developments. The benefits of conducting technical seminars are creating favourable image and establishing contacts with technical people who are the members of buying centres or purchase committees in the buying organisations. Audio visual presentations are made by the company technical experts, followed by question and answer session on technical matters. d. Demonstration: The industrial sales persons improve their sales presentation by using demonstration aids. These are flip charts, product photographs, slides, audio and video cassettes, movies ad actual product samples( if it is possible to carry them). The purpose of using the demonstration aids is to improve the buyers attention and interest during the sales presentation. However if the product is bulky or large, the product demonstration is done during the trade shows or exhibitions. e. Catalogues: Printed catalogues are one of the few promotional supports that provide buyer organisation information about a suppliers product lines and product items. Buyer firms rely on catalogues to determine which suppliers make what products or services. From the information available in catalogues, the buyer may prepare a list of potential suppliers for a new purchase and ask these suppliers to submit quotations or bids. f. Promotional letters: These are particularly for products purchased infrequently( heavy machinery) are effective in keeping in touch with the customers. It also facilitates the work of industrial sales persons. Individualised letters when sent to specific customers along with catalogues, advertising reprints and technical data sheets, receive good attention. The task of sending promotional letters are assigned to a special correspondence section. g. Promotional Novelties: These are gift items given by sales person to existing and new customers. Many companies get gift items once in a year bearing companys name and address, and if possible an advertising message. The common gift items are calendars, diaries, ball point pens, leather bags, memo pads and so on.

4. What is the role of publicity and public relations in industrial marketing? Public relations department is located at the corporate headquarters and deals with various categories of people including customers, suppliers shareholders, employees, press, legislators, government officials, and public interest groups. A company is required to manage successful relations with these people in order to build a good image. The public relations department achieves its objectives of managing good relations with the people by performing certain tasks like placing newsworthy information into the media, internal and external communications dealing with legislators (MLAs/ MPs) to promote or defeat a particular bill or regulation, and advising the top management about public issues. Because a Public Relations department is required to deal with a variety of people, it tends to neglect the marketing objectives. Publicity is a form of marketing public relations. Publicity has more credibility and lower cost compared to advertising. 5. What is the role of direct marketing in a business? Industrial marketers are increasingly using direct marketing tools such as direct mail, telemarketing and online marketing channels. Direct mail: mailing promotional letters, product leaflets/catalogues, audiotapes, videotapes to prospective customers. It is however wasteful if the target customers are not clearly defined. Telemarketing: The existing and new customers can easily respond on telephone to get immediate information or to make complaints and suggestions. Telemarketing has helped many industrial marketing firms to reduce the sales force travel costs and to increase the sales volume substantially. Online marketing channels: database search, product support, online shopping and so on. Internet users can send email, access information to search for data and shop for products.

6. Describe the role of personal selling in industrial marketing?

Personal selling is one of the oldest forms of promotion. It involves the use of a sales force who orally communicates about the companys products or services to the potential buyers with an intention to make a sale. Personal selling is the primary demand stimulating force in the industrial marketers promotional mix. Its role is very dominant in industrial markets because of less number of potential customers present compared to the consumer markets and the large amount of money purchases involved. As the cost per sale through personal selling is too high, industrial marketers have to carefully manage and integrate personal selling into organizations marketing mix. This will also lead to maximize its effectiveness and efficiency. The job of personal selling starts after determining the target segment in the organizations market. The sales force in most of the industrial organizations follow the systems selling approach where they recognize the entire problems faced by their buyers and offer them total solutions rather than just selling the product. This is advantageous to the industrial buyers as all their problems are solved in a single go by one party who would take the responsibility if anything goes wrong. The industrial marketers too have competitive advantage by adopting this strategy. Advantages and Disadvantages of Personal Selling There are various advantages of personal selling that help an organization to promote the products effectively and increase the sales. Some of the advantages are: Personal selling is a one-to-one activity where customers get personal attention. This gives an opportunity to understand the customer needs better and make an effective sale The marketing manager can customize the sales message accordingly depending upon the needs and types of customers As there is two-way communication process in personal selling, the sales team has a good opportunity to respond directly and promptly to any of the customers queries and concerns Personal selling helps in passing on large amounts of technical data or other complex product information to the customers. This indirectly educates the customers and updates them on latest happenings on the industry, company and new products. Personal selling gives the sales force a chance to demonstrate the product effectively and clarify any doubts on the spot

Frequent meetings between sales force and customers provide an opportunity to build long-term relationships. There are certain disadvantages of personal selling like the cost of employing a sales force (recruiting and maintaining) is expensive. In addition to the basic pay package, they need to be offered incentives in order to achieve sales. Other supplementary support to make sales calls like car, travel, mobile phone etc. also adds on to the cost. In addition, a sales person can meet only one customer at a time that makes it a costly affair of reaching a large audience. Personal Selling Process There are different steps that are involved in a selling process and the salesperson has a significant role to play in each of the steps. It is the role of the salesperson that helps the organization to increase its sale and reach its objectives. It therefore becomes important to understand their role during each of the steps in order to further enhance their performance and clinch any deal successfully. Prospecting: Prospecting is the first step in the sales process that refers to identifying a list of potential organizational buyers. There are various sources from which salespeople get the list of prospective buyers. Some of the sources include referrals, directories, commercially-available databases or mail lists, company sales records and in-house databases, public records, trade shows, and a wide variety of other sources. The salespeople have to systematically structure the prospecting activities in order to identify only those potential customers who fit the profile and have genuine interest to buy the product or service. Communicating: This step involves the sales professionals communicating with the organizational buyers and trying to understand their current needs, their current use of products, identifying key decision makers among the buyers, planning and creating a sales presentation to address the identified and likely concerns of the prospect, and setting call objectives. During this phase, the sales people also develop a preliminary overall strategy for the sales process keeping in mind that the strategy may have to be refined as they learn more about their prospects. Handling Objections: The course of objection handling includes the prospective buyers holding, inspecting or testing the product directly. The product is demonstrated by the sales people by means of audio visual presentations such as slide presentations or product videos. It should be the endeavor of the sales person to let the prospect do most of the talking during the presentation. Their responsibility should be restricted to address the needs of the organizational buyers as far as

possible. They should have the ability to convince them by showing that they truly understand them and care about their needs. Selling: Selling is the process of delivering the products or services to the customers satisfaction and receiving the payment after adequately addressing any of their final objections or obstacles. Many sales people are weak and hesitate or lack the confidence to ask for the order. They should know that closing does not involve literally asking for order. They can ask some related questions like what color the buyers like, which model or size they would prefer, when they would like the delivery to happen or what they would lose if they do not place the order now. Depending upon the situation, the salesperson also offers discounts, credit facility to induce the buyer. Servicing: The industrial marketers should provide their customers with efficient service from the point of sale till the goods are delivered and also after the post-sale. Many of the salespeople often overlook the servicing/follow-up aspect which is a very important part of the selling process. It helps to maintain a good and long term relationship with customers and gives supplementary revenue to the organization. After an order is received, it is in the best interest of everyone involved that the salesperson should follow up with the prospect. This ensures that the product was received by the customer in good condition, at right time, with proper installation and at the place as required by the customer. It also ensures whether adequate training on product usage was given to the customer before they handle the delivered product/equipment. The salesperson should confirm through the follow-up whether the entire process was acceptable to the customer. This is a critical step in creating customer satisfaction and building long-term relationships with customers. If the customer experiences any problems during the process, the sales professionals should take the responsibility to intervene and become the advocate of customers to ensure their satisfaction. This has the probability of leading to new needs, additional purchases, and also referrals and testimonials which can be used as sales tools

Management of Salesforce
Sales force is directly responsible Eight general management areas: for generating sales revenue.

1. Establish Salesforce objectives

Similar to other promotional objectives Demand oriented or image oriented. Major objective is persuasion, converting consumer interest into sales. Sales objectives; expected to accomplish within a certain period of time. Give direction and purpose and act as a standard for evaluation. Set for total salesforce and each individual salesperson.

2. Organizing the Salesforce


o o

In-house vs. independent agents (manufacturer's sales agents). Organize by: Geographical organisation (simplest, but not suitable if product(s) are complex or customers require specialized knowledge) Customer organisation: Different buyers have different needs Product organisation: Specific knowledge of products is needed Size. Marginal analysis, or determine how many sales calls/year are needed for an organization to effectively serve its customers and divide this total by the average number of sales calls that a person makes annually. Also use subjective judgement.

3. Recruiting and Selecting Salespeople


Need to establish a set of required qualifications before beginning to recruit. Prepare a job description that lists specific tasks the salesperson should perform and analyze traits of the successful salespeople within the organization. May use assessment centers--intense training environment that places candidates in realistic problem settings in which they give priorities to their activities, make and act on decisions. Recruitment should be a continual activity aimed at reaching the best applicants. Applicants that most match the demographics of the target market.

4. Training Sales Personnel


Use formal programs, or Informal on-the-job training. Can be complex or simple. Training should focus on:
o o o

the company products selling techniques.

Aimed at new hires and experienced personnel. Can be held in the field, educational institutions or company facilities.

5. Compensating Sales People


To attract, motivate and retain sales people, that facilitate and encourage good treatment of the customers. Need to understand personalities of sales people. Strive for proper balance of freedom, income and incentives. Need to determine the best level of compensation required, and the best method of calculating it.
o o o

Straight salary straight commission (selling insurance)--single percentage of sales or sliding rate Combination plan

6. Motivating Sales People


Need a systematic approach, must also satisfy non-financial needs:
o o o

Job security Working Conditions Opportunities to succeed

Sales contests increase sales. Symbolic awards--plaques, rings etc. Can also use negative motivational methods for under performers. Due to burn out--even the best need motivating!! Need a motivational program. Spend time with reps, personal attention!! Take interest in them and the sales goals 4. Compensation packet that rewards quality salesmanship and extra effort 5. Recognition of extra effort of sales force 6. Make certain reps. believe in the company 7. Goals must be realistic and achievable and changeable 8. Determine what they want and give it to them 9. Controlling and Evaluating Salesforce performance Rely on information from call reports, customer feedback and invoices. Performance is determined by objectives. May compare with predetermined performance standards or with other sales people working under similar conditions.

7. Deployment of sales force

Setting up or revising sales territories

Determining size of sales force


Group present and potential customers according to their sales potential Suppose the company estimates 500 numbers A class ( large sales potential) and 1000 numbers B class customers (medium sales potential) to be covered by sales people in the entire nation. Customers with small sales potential ( class C) will be looked after by telemarketing people or the companys dealers. Decide time per sales call and desired call frequencies for each customer class Assume that both present and prospective customers require the same time per sales call and the same call frequencies per year as follows. CLASS A: 60 minutes per call X 36 calls a year = 36 hours/ year CLASS B: 30 minutes per call X 12 calls a year= 06 hours/ year Calculate the (total market) workload necessary to cover the entire market Class A: 500 customers X 36 hours/ year = 18000 hours Class B:1000 customers X 06 hours/ year = 6000 hours TOTAL = 24000 hours

Decide the total work time available per sales person Suppose the company decides that sales people should work 40 hours per week , 45 weeks per year ( allowing seven weeks for casual and earned leave and holidays) then each salesperson has 1800 hours/year ( 40 hours/week X 45 weeks per year) for selling , non selling and travelling time.

Divide the total work time available by different activities per sales person Selling activities Non Selling activities Travelling TOTAL 40 percent 30 percent 30 percent 720 hours 540 hours 540 hours

100 percent 1800 hours

Calculate the total number of sales person needed

24000 720

= 33.3 sales people needed

Allocating sales force to the sales territories and customers