The Promotional Strategies

By Prof. Raghavendran V

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Promotional Strategies

The promotional mix for industrial products & services is different from the promotional mix for consumer goods.

This is due to the fact of technical nature of industrial product and relatively smaller in industrial buyers and complex nature of organizational buying process.

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Developing the Industrial Communication

The major steps involved in developing effective communication or promotional programme are:

Determine communication objectives Identify the target audiences Determine the promotional budget Develop the message strategy Select the media Evaluate the promotion’s results Integrate the promotional programme

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Determining the communication objectives

Promotional objectives are formulated based on the firm’s overall corporate and marketing objectives. Once the objectives are established, an industrial firm choose the strategies and actions required to achieve the set objectives.

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Before determining communication objectives, the industrial marketer should find out the communication problems. This can be done by collecting the data ( Through marketing research) on the existing levels of awareness and attitudes of the existing & prospective customers.

Data would help in setting specific communication goal.

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Data collections permits measurement of the quantified communication objectives.

The purpose of the communication programme is to move the potential buyer from unawareness to buying action.3 stages of Buying behavior▪ Buyer’s awareness levels▪ Changes in buyer’s attitudes▪ Buying actions

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Identifying the target Audience

BM must be clear about the target audience. In Industrial Marketing the target market is clearly classified at 2 levels and they are

Firstly, identify the buying organization based on the target segments.

Secondly, identify the attitudes & buying factors used by buying centre (committee) in the organizations

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It is importance to assess the target audience’s current image of the company, its products, and its competitors. This information can be obtained by conducting a market research study to understand the awareness levels and attitudes of the buying centre members. The data will also be useful in developing message strategy and media plan.

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Determine the Promotional Budget

This is most difficult decisions the companies are facing is the questions as to “how much to spend on promotional or what should be the promotional or communications budget”

The promotional budget consist of advertising, sales promotion, direct marketing, and publicity.

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There are four common methods used to set a promotional budget, they areAffordable budgetPercentage of sales methodCompetitive-parity methodObjective-task method

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Affordable Budget Method

Many companies set this type of method on what they think the company can afford.

This method ignores the role of promotional as an investment and its impact on sales volume

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Percentage of Sales Method

This is most common method used in Industrial Marketing to set the expenditure budget for promotion is a specified % of sales, either sales in the previous year or in the current year/ Forecasted sales.

At times a % of sales , an “what are the other competing firms doing” and what can we afford”, thus using all the 3 methods.

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The promotional budget is decided in two steps,

Firstly, total marketing budgetSecondly, the advertising or

promotional budget

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Advantages: The finance managers are satisfied

that the promotional expenses have a close relationship to the sales.

The method considers affordability The parity with competitors is

maintained.Disadvantages:It does not encourage building up

promotional budget by determining what each product and territory deserves.

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Competitive- Parity Method

Fewer companies set their promotional budget by spending the same percentage of the sales on promotion as that of competitors. There are two arguments in this method.

1. Average expenditure of the companies would represent a collective wisdom of the industry.

2. Maintaining the parity with the competitors, it would help to prevent promotional wars.

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Objective and Task Method

In this method, IM develop their promotion budgets by defining promotional objectives, determining the tasks that should performed to achieve the promotional objectives, and estimating the costs of performing the tasks.

The sum of these costs is the proposed promotional budget, this method is relatively logical steps involved.

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AdvantageIt forces firm to think in terms of

objectives/goals & how to achieve those goals.

DisadvantageIt has difficulty of determining in

advance the amount of funds required to achieve these goals

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Developing the Message Strategy

This indicates how to achieve the communication objectives. The message/ Theme/Appeal is developed to determine “what to say” to the target audience so as achieve the desired results.

In BM, the message should be more rational. The rational appeals are developed either from position strategy or by conducting MR studies.

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BM should remember two important points while developing communication messages.

Firstly, Any Industrial Buyers are fairly well informed or knowledgeable.

Secondly, Instead of the message discussing product features, the message should focus on customer benefits

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Selecting the Media

This criteria depends on the target audience to be reached, the statement of the communication objectives, and the promotional budget.

The selection depends on whether the advertiser wishes to penetrate a particular industry or various industries

The selection depends on the circulation & cost of advertising space. The different communication/ Promotional tools/ P Media that used in BM are…

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Communication/ P Tools & P Media Used

Promotional Tools

Advertising

Sales Promotion

Public Relations & Publicity

Direct Marketing

Personal Selling

Promotional Media, AndPromotional Supports

•Print media•General Business•Trade journals•Industrial directories

•Trade Shows•Exhibitions•Catalogues•Sales Contests•Promotional Novelties•Seminars•Demonstration•Promotional Letters•Entertainment

•Charitable donations•Adopting villages•Community relations•News item in press

•Direct Mail•Telemarketing•On-line Marketing channels

•Sales calls•Sales presentation•Team selling•Relationship marketing

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Effectiveness of P Media

Ranking

Promotional Media Index of Effectiveness

1 Personal Selling 100

2 Catalogues, Specifications Sheets 46

3 Direct Mail 39

4 Advertising 38

5 Trade Shows and Exhibitions 35

6 Samples, demonstrations 34

7 Publicity & Public relations 31

8 Customer entertainment 26

9 Promotional gift ( Novelties) 24

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Evaluating the Promotion’s Results

After selecting and Implementing the promotional plan it is necessary for the industrial marketer to evaluate its impact on the target audience. An evaluation is needed before and post promotional plan is implemented.

MR conducted after Promotional plan to position to themselves in favorable, indifferent or unfavorable.

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The major mistakes in practice are 1. Failure to quantify the promotional

objectives into measurable goals 2. Not to plan evaluation.

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Integrating the Promotional Programme

Many Companies have recognized the importance of integrating the promotional plan and are adopting the concept of Integrating marketing communications (IMC)

The basic objective is to provide clarity, consistency, maximum impact, and cost-effectiveness to the company's communication plan. To achieve this objective the following are suggested…

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The company should appoint the head of communication

The company should build a database by measuring the results 0f the promotional plan in relation to the communication goals, cost effectiveness of P Media, and message consistency.

Conduct the training for all the persons handling various tools so that they think of integrating.

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Role of Advertizing in IM

AdvertrizingSales PromotionPersonnal SellingDirect SellingPublicity & PR

Relative Spending

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Functions Performed by Industrial Advertizing:

Functions by Industrial Advertizing are considered, there are many valid reasons to advertise industrial product or services. They are:

a. Creating Awarenessb. Reaching Members of Buying Centrec. Increasing sales Efficiency & Effectivenessd. Efficient Remindinge. Sales Lead Generationf. Support Distribution Channel Membersg. Sales Growth during Recession

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Media Used for Industrial Advertizing

Selection of Media in IM depends on the target audience to be reached, P Objectives/Goals to be achieved, expenditure budget allocated for advertizing budget or cost is measured by the following formula.

Cost /Thousand= Cost/ Page _______

Circulation in Thousand

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The Media generally used for Industrial advertizing are General business publications▪ Horizontal Publications▪ Vertical Publications

Trade journals and Industrial directories.

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The Role of Sales Promotion, Public Relations, Publicity & Direct Marketing In BM

Sales Promotion: the objectives in BM are to gather leads, impressing, rewarding customers & stimulating the sales force to greater effort. The methods used in IM for Sales Promotion.

Trade Shows Sales Contests Seminars Demonstration Catalogues Promotional Letters Entertainment Promotional Novelties

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Role of Direct Marketing: Direct Mail Telemarketing Online Marketing ChannelsRole of Publicity & Public RelationsThey typically located at head

Quarters deals various categories of people.

Publicity is more credible and low cost compare to advertising.

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Assignment Time: To be submitted by 4th Oct’ 2011

1. Elaborate the importance of promotional mix in Industrial Marketing?

2. Explain in detail of all promotional budgets.3. Brief out media selection in IM with table.4. Explain the role of Advertizing in IM.5. Brief out the responsibility of Sales

Promotion, Public Relations & Direct Marketing in BM.

6. Consider any Business Marketing organization of your choice and develop and effective programme for the company.

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End of the Module 7By Prof. Raghavendran V