MBA (Marketing)

Paper 4.12

2. PROMOTIONAL MANAGEMENT

Paper 4.12 : Elective : Group A

2. PROMOTIONAL MANAGEMENT

Unit 1

Organizing for Promotion – Promotional decisions – Social influence on consumer decisions – Overview of decision process – establishing promotional objectives – Setting the promotional budget – techniques used.

Unit 2

Advertising: importance, scope, benefits and criticisms – advertising objectives – advertising appropriations – need methods – advertising agency – functions, client-agency relationships – Indian advertising agencies – Role of persuasion in advertising – Message strategy development and evaluation.

Unit 3

Techniques used in producing advertisement for print, broadcast media – Media planning and selection – Media strategy – Media status in India – Media characteristics – Media research – Measuring advertising effectiveness – Sales promotion – consumer, trade and sales force promotion.

Unit 4

Corporate image building: public relations – role, types of public process – Tools of public relations – publicity – institutional advertising – direct marketing : importance and techniques used – Relevance in the Indian context event marketing.

Unit 5

Promotional programme evaluation – evaluation process – regulations of promotions – legislations, relevance to society – social responsibility – promotion and women – Promotion and children – Ethics in Promotion.

Unit 6

Sales management: Personal selling – characteristics of sales force – sales force management: recruiting, selecting, training, performance appraisal – Territory structuring – Nuances and trends in personal selling.

CONTENTSUnit 1 Page No.

Lesson 1.1. Organising for Promotion

Lesson 1.2. Social influences on consumer decisions

Lesson 1.3. Overview of promotional decision process

Lesson 1.4. Establishing promotional objectives

Lesson 1.5. Setting the promotional budget and types of budgets

Unit 2

Lesson 2.1. Basis of Advertising

Lesson 2.2. Advertising objectives

Lesson 2.3. Advertising appropriations

Lesson 2.4. Advertising agency

Lesson 2.5. Indian advertising agencies

Lesson 2.6. Advertising message strategy development and evaluation

Unit 3

Lesson 3.1. Techniques used in producing advertisement

Lesson 3.2. Media planning and selection

Lesson 3.3. Media strategy

Lesson 3.4. Media status in India

Lesson 3.5. Measuring advertising effectiveness

Lesson 3.6. Sales promotion

Unit 4

Lesson 4.1. Public relations

Lesson 4.2. Tools of public relations

Lesson 4.3. Institutional advertising

Lesson 4.4. Direct marketing

Lesson 4.5. Event management

Unit 5

Lesson 5.1. Promotional programme evaluation

Lesson 5.2. Regulations of promotion

Lesson 5.3. Social responsibility

Lesson 5.4. Ethics in promotion

Unit 6

Lesson 6.1. Personal Selling

Lesson 6.2. Characteristics of sales force

Lesson 6.3. Sales force management

Lesson 6.4. Territory structuring

Lesson 6.5. Nuances and tends in personal selling

References

Model Test Paper

UNIT – 1

LESSON 1.1 ORGANIZING FOR PROMOTION

1.1.1. Introduction

The importance of promotions will reflect in the type of organisation structure one company posses. If it is considered important, the department might have to report directly to the top executive as in figure 1.1 depicted below. If promotions predominantly advertising is considered minor in nature then the organisation structure will look as in fig. 1.2.

Fig. 1.1

As firms becomes more marketing oriented, with greater focus on marketing functions to maximize their profits, the functional areas of advertising, sales, product management and marketing research requires a catalyst that would integrate all these efforts and provide for better marketing planning. Hence as per marketing approach, the advertising department will report to the Vice-president (marketing) as in fig. 1.3.

Top Executive

Sales

Sales Force

ProductionFinance

Promotional/ Marketing

Department

Advertising agency

Sales Support Services

Marketing Research

Top Executive

Sales ProductionFinance

Promotional department

Sales Support Services

Advertising Agency

Sales Force

Fig 1.2

Fig. 1.3

As business organizations grow, the marketing services departments is responsible for media planning and co-ordination of media buying etc. The role of advertising is felt more important as separate department could be seen in the organizational structure in the bigger companies.

1.1.2 The Promotions Mix:

Let as look at the individual components of the promotions mix in more detail. Remember all of the elements are ‘integrated’ to form a specific communications campaign.

1. Personal Selling

Personal Selling is an effective way to manage personal customer relationship. The sales person acts on techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesman are often used to sell cars on home improvements where the margin in high.

2. Sales Promotion

Sales promotion tend to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), and introductory offers (such as buy digital TV and get free installation, and so on. Each sales promotion should be carefully coasted and compared with the next best alternative.

3. Public Relations (PR)

Public Relations is defined as ‘the deliberate, planned and sustained effort to establish and maintain mutual understanding between on organization and its publics’ (Institute of Public Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a disaster. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan.

4. Direct Mail

Direct mail is very highly focused upon targeting consumers based upon a database. As with all marketing, the potential consumer is ‘defined’ based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focused communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors, surgeries as the basis of your mail shot.

Top Executive

Vice President Marketing

Vice President Production

Vice President-Finance

Product Mgmt.

Sales Dept. Sales Force

Marketing Research

Advertising agency

Promotional/Marketing

department

5. Trade Fairs and Exhibitions

Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer. Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events.

6. Advertising

Advertising is a ‘paid for’ communication. It is used to develop attitudes create awareness, and transmit information in order to gain a response from the target market. There are many advertising ‘media’ such as newspapers (local, national, free, trade), magazine and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides).

7. Sponsorship

Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization.

The elements of the promotional mix are then integrated to form a unique, but coherent campaign.

LESSON 1.2

SOCIAL INFLUENCES ON CONSUMER DECISIONS

1.2.1 Introduction:

Consumer buyer behaviour and the resulting purchase decision is strongly influenced by cultural, social, personal and psychological characteristics. An understanding of the influence of these factors is essential for marketers in order to develop suitable marketing mixes to appeal to the target customer. Factors include a consumer culture, subculture and social class. These factors are often inherent in our value and decision processes. Other factors include groups (reference groups, aspirational groups and member groups), family, roles and status. This explains the outside influences of others on our purchase decisions either directly or indirectly. Psychographic and economic factors include such variables as age and lifecycle stage, occupation, economic circumstances, lifestyle (activities, interests, opinions and demographics), personality and self concept. These may explain why our preference often changes as our ‘situation’ changes, factors affecting our purchase decision include motivation (Maslow’s hierarchy of needs), perception, learning, beliefs and attitudes. In this lesson, social factors are taken into account.

Social judgment theory is a psychological theory that describes how an individual reacts to attitudinal statements depending upon the relationship of the statement to the person’s won attitude. The theory proposing that people will observe the actions of others to develop patterns of behaviour is social learning. Social-psychological personality theories are based upon individual differences in how people respond to social situations which are described later. For a purchase to take place, social surroundings where the effects of other people on a consumer in a consumption situation needs to be seen carefully by a marketer. At this stage if a consumer is not properly taken care of, it well lead to social traps which means the psychological phenomenon related to the finding that individuals may respond to short-term reinforces, which can lead to long-term negative outcomes for a group. Socio-cultural Environment plays a great role in the consumer as the firm’s external marketing environment in which social or cultural changes (that is, changes to the value system of society) act to affect the firm’s marketing effort; the changing socio-cultural environment may pose threats or present opportunities. Hence it is important that the companies look for exploiting the socioeconomic variables like factors of a social and economic nature (occupation, income, etc.) which indicate a person’s status a within a community. This will help in reducing the social risk that concern or uncertainty in the buyer’s mind that the purchase of the product under consideration will not be approved of by others.

1.2.2. Social Criticisms of Marketing:

Marketing receives much criticism. Some social critics believe marketing is detrimental to individuals, society as a whole and other business firms. Some of these criticisms include:

Individual Consumers

1. High Prices – Many critics propose that marketing in India causes prices to be higher than they would be otherwise due to the high cost of distribution high advertising and promotion cost and excessive mark-ups.

2. Deceptive practices – Despite being governed by state and central legislations many critics believes marketers use deceptive pricing, promotion and packaging to lead consumers to purchase products they otherwise wouldn’t.

3. High pressure selling – Salespeople are often accused of trying to persuade people to buy products they have no need for through high pressure selling.

4. Unsafe products – Social critics believe products are poorly made and lack the quality required or that they provide little benefit to the consumer.

5. Planned obsolescence – Marketers are accused of having strategies that cause products to become obsolete before they actually need replacing. By holding back additional features and launching them at a later date marketers are encouraging people to repeat purchase.

Society:

1. False wants and too much materialism : marketing urges too much interest in materials possessions, encouraging people to judge others by what they own rather than who they are.

2. Two few social goods – business has been accused of overselling private goods at the expense of public goods causing social problems such as traffic jams.

3. Cultural pollution – the amount of promotional material in society is considered excessive by many critics and equivalent to ‘noise pollution’.

4. Too much political power – many critics believe that business yields too much political power, and the parliament often supports industry’s interest above the publics.

Other Businesses:

Critics also charges that a company’s marketing practices can harm others companies and reduce competition. Three practices are accused of causing this harm: acquisitions of competitors, marketing practices that create barriers to entry and unfair competitive marketing practices.

1.2.3. Social awareness:

Pressure from the general public often arises to control the activities of businesses. Two such movements currently operating are consumerism and environmentalism.

Consumerism: An organized movement of consumers whose aim is to improve the rights and power of buyers in relation to sellers which is the outcome of COPRA. Childhood consumer socialization is the processes by which young people acquire skills, knowledge, and attitudes relevant to their functioning as consumers in the marketplace. Factors that influence the socialization process which include such variables as the consumer’s socioeconomic status, sex, age, social class, and religious background. Consumerism is the movement made up of activities of government, business, independent organizations and concerned consumers that are designed to protect the rights of consumers. Actually, it should start right at the young age when the socialization take place. Socialization agents are the individuals directly involved with a consumer who have influence because of their frequency of contact with the consumer, who have importance to the consumer, or who have control over rewards and punishments given to the consumer.

Environmentalism: An organized movement of concerned citizen and government seeking to protect and improve people’s living environment.

Socially responsible marketing:

Organizations are responding to consumerism and environmentalism in order to better serve their customer needs. Corporate social responsibility is the idea that business has an obligation to help society with its problems by offering resources. Social Marketing is the design, implementation and control of marketing activity intended to promote social causes or ideas within a target group in a society; a form of non-profit marketing.

Social Responsibility in Marketing is the recognition by marketers that the wellbeing of society and customer satisfaction are as important as profit in assessing marketing performance.

Many companies are focusing on the long term performance of the marketing system. This long-term focus is driving the emerging popularity of five principles.

1. Companies are viewing their activities from the customers’ perspective.

2. Companies are seeking real product and marketing improvements rather than unnecessary features.

3. Companies are putting most of their investment into value-building marketing investments rather than activities that merely raise sales in the short term.

4. Companies are redefining their mission from a broad social perspective rather than a narrow product one.

5. Companies are considering a combination of consumer needs and wants, their company’s own requirements, and the consumer and society’s long run interests before making a decision. Society oriented marketers want to design desirable products rather than salutary, pleasing or deficient product.

1.2.4. Role of Ethics:

Ethics is the study of normative judgments concerned with what is morally right and wrong, good and bad. A decision that involves the trade-off of lowering one’s personal values in exchange for increased organizational and personal profits results in ethical dilemma. Ethics matrix is a matrix that identifies when ethical problems may occur. Such a matrix is based upon exchanges of information between consumers and businesses.

Companies need to develop corporate marketing ethics to ensure all their employees act in a manner which is considered moral. Now all guidelines can solve the dilemmas that marketers face. Under societal marketing concept each managers must look beyond the mere legal requirements and develop standards based on personal integrity, corporate conscience and long run consumer welfare. There are several principles that might guide the formulation of marketing ethics codes. These include the principles of consumers and producer freedom, curbing potential harm, meeting basic needs, economic efficiency, innovation, consumer education and information and consumer protection. These principles are based on the idea that a companies goal is not merely to make profits but also to maximum life quality.

The societal marketing concept is similar to the marketing concept, except that it also takes into account society’s well-being. The concept was developed in a time where society began to question if the marketing concept was adequate in the face of worldwide environmental problems, resource shortages, and other concentrate on finding out the needs and wants of their target customers and then deliver these desired satisfaction more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and the society’s well-being. For example recycled tissue paper, pollution-free bikes as claimed by Hero Honda or CFC-free spray cans. It is important to bear in the mind that practicing the societal marketing concept does not means that the company sacrifices profit for the sake of saving society. Companies are in business in make money. Basically, taking care of society’s well-being is good for business, that is the bottom line. Societal marketing managers believe that consumers will respond more favorably to companies which are socially responsible (e.g. The Body Shop with no animal testing, McDonalds for using more environmentally-friendly wrapping), and react unfavorably to companies which they feel are not socially responsible. This gives socially-responsible companies a competitive edge over their competitors.

1.2.5 Public Policy and Consumer Decision making:

Two main issues of the public policy which will influence the buyer behavour are:

(1) Deceptive marketing practices (such as misleading advertising) and

(2) The marketing of dangerous or otherwise harmful products (e.g., tobacco, liquor, Gutka)

The following are some ethical problems that occur in marketing, and the question arises as to which, if any, kind of government intervention is appropriate:

(1) Marketing efforts may encourage excess consumption (e.g., products that consumers cannot afford and do not really need). Note, however, that there are many grey areas—e.g., cosmetics, video games, and even something as politically correct as a coffee house. A special case involves marketing to children, whose parents may be coerced, often out of guilt, to buy questionable items aimed at children.

(2) Resources depletion and waste disposal issues associated with the above consumption. Some European countries have mandated that manufacturers be required to take back packaging materials for their products.

(3) Deceptive marketing practices: Products claim benefits which really do not result form use of the product (as is done by numerous manufacturers of nutritional supplements, Weight loss, Abdominal fat loss, height gain); advertising may be misleading (may not indicate the true cost of a product up front or may contain ‘fine print’ that the consumer is unlikely to see or understand)

(4) Products are unhealthy (e.g., many children’s foods contain executive fat)

Government action is often considered, although it may not always be effective. For example, although the government requires the use of warning labels on some products, manufacturing will often try to “water down” the warnings as much as possible. In many a case the Maximum Retail Prices need to be shown on the pack, but some products got the exemption which is not healthy. Further, the prevalence of warning labels today may desensitize consumers since reading all of them carefully would provide the consumer with information overhead.

Another issue is anti-competitive behaviour. MRTP, FEMA and Antitrust laws as in USA are generally aimed at prohibiting firms from conspiring to “fix’ prices or collectively drop service levels. Antitrust law is, however, a “thorny” area. Consumers may benefit, for example, as some less efficient firms are driven out of business, and may benefit from the efficiencies which may or may not materialize when large firms “gobble up” smaller ones—a defense used as in the Microsoft trial and the fate of the Indian Pharmaceutical industry after the WTO regime.

Lesson 1.3

OVERVIEW OF PROMOTIONAL DECISION PROCESS

1.3.1. Introduction

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

Introductory Inform Publicity/Advertising/Sales force (interm.)/Sales promotion (free samples)

Growth Persuade Differentiate from competitors offering

Maturity Remind Remember advertising, Sales promotion (coupons)

Decline Cut budget

3. Product Characteristics

Complexity: Hw much information must be communicated. The more complex the message, the greater the need to use personal selling.

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 not stands (in the process), and what state they need to be moved to.

Adoption Process

Not-Aware-Advertising/Publicity

Aware-no knowledge Advertising/Publicity

Interest-how do they feel? Personal Selling/Sales Promotion/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

Push-promotes product only to the next institutions down the marketing channel. Stresses personal selling, can use sales promotions and advertising used in conjunction.

Pull-promoters 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)

1.2.3. Promotional Mix:

Organizations combine specific ingredients of the promotional mix to promote a particular product.

All promotional tools (promotional mix):

Advertising

Personal selling

Direct marketing

Public Relations

Sales promotion

Must blend harmoniously into an effective communication strategy, to meet the promotional objectives

Advertising

Paid form of non personal communication about an organization or its products that is transmitted to a target audience through a mass/broadcast medium.

Pros

Flexibility allows you to focus on a small, precisely defined segment (school newspapers) or a mass market (baseball show = Males. 35-50)

Cost effective-reach a large number at a low cost per person, allows the message to be repeated, and can improve public image.

Allows for repeating the message-lets the buyer receive and compare the message of various competitors.

Very expressive, allows for dramatization

Also used to build a long term image of a product.

Trigger quick sales, Sears advertising a weekend sale.

Cons

Absolute $ outlay very high, make a national TV ad. Approx $150,000 local ad. $60,000.30 second spot, Superbowl $1.1m 1995

Rarely provides quick feedback, or necessarily any feedback

Less persuasive than personal selling

Audience does not have to pay attention

Indirect feedback (without interactivity)

Personal Selling:

Occurs through personal communication in an exchange situation

More specific communication aimed at one or more persons.

Effective at building buyers preferences, convictions and actions.

Cost per person is high, most expensive promotional tool.

Greater impact on consumers

Provides immediate feedback

Allows marketers to adjust message quickly to improve communication.

Buyer feels a great need to listen and respond.

Long term commitment is needed to develop a sales force.

Public Relations/Publicity:

News story form about an organization or its products or both (MBA, Philadelphia Inquirer), through mass mass medium at no charge

Sponsor does not pay (generally), may be expected/required to “run advertisements in the media. Can be positive and negative. Pepsi Syringe, Believable

Sales Promotion:

Definition:

Materials that act as a direct inducement, offering added value, or incentive for the product, to resellers, sales persons or consumers. Designed for immediate (short term) increase in product sales, Cirrus…Sweepstakes, cocktail parties rest drives Promotion and the Communication Process.

1.3.3. Nine elements to the communication process.

Sender Chrysler and Receiver Target Market (35-50 aspire BMW/Lexus) are the major parties in the communications process.

Message New Car, Cirrus, comfort of a Lexus and handling of a BMW for less money and the media TV, direct mail , Books Brothers etc are the major communication tools.

Four more major functions:

Encoding-putting thought into symbolic form. Advertising Agencies creating radio commercials, TV commercials, prepare-direct mail process, sales pitch etc.

Decoding-consumer interprets message. Understanding the target market’s perception process is critical.

Response—reaction of the receiver buy or not to buy, take next step down go to the showroom etc.

Feedback—response communicated back to the sender 1-800 #s, increase in sales. Number of customers in show room etc. Better for personal Selling, not advertising.

Last elements is Noise in the system, more noise with non-personal communicaiotn.

Sender needs to know:

What audience they want to reach

What responses they want

How the target audience decodes message

What media will effectively reach the target audience.

1.3.4 Role of Promotion:

To communication with individuals, groups or organizations to directly or indirectly facilitate exchanges by informing and persuading one or more audiences to accept or organization’s products.

Companies must communicate with their customers, this communication should not be left to chance.

Design communications to your specific target audience:

Target Market

Part of Target Market

Different stakeholders of your organization.

LESSON 1.4

ESTABLISHING PROMOTIONAL OBJECTIVES

1.4.1. Introduction

The elements of the promotions mix are integrated to form a coherent campaign. As with all forms of communication, The message from the marketer follows the ‘communications process’ as illustrated above. For example, a radio advert is made for a car manufacturer. The car manufacturer (sender) pays for a specific advert with contains a message specific to a target audience (encoding). It is transmitted during a set of commercials from a radio station (Message / media). The message is decoded by a car radio (decoding) and the target consumer interprets the message (receiver). He or she might visit a leadership or seek further information from a web site (Response). The consumer might buy a car or express an interest or dislike (feedback), This information will inform future elements of an integrated promotional campaign. Perhaps a direct mail campaign would push the consumer to the point of purchase. Noise represent the thousand of marketing communications that a consumer is exposed to everyday, all competing for attention.

Promoting the organisation is – or certainly should be a simple activity. It involves putting across a positive message through the right channels to the right people in the right place at the right time. Its purpose is to establish and maintain a first class relationship with the organization’s important people – users, funders, other community groups, not top mention your own committee, staff and volunteers. If they are well informed about the organisation and with it does and they like the way it does it, then they are more likely to do business with them. Promoting the organization is sometimes referred to as PR (Public Relations) or marketing.

In order to plan and implement a successful promotional plan

Start by analyzing the organisation; both internally and externally.

One needs a full and complete understanding of what’s going on around if one has to go on to publicize successful.

1.4.2. Some Key Question:

Q: What does you organisation believe in? Does your organisation exist to create change i.e. to make the world or your community a better place? If so, in what way(s)?

Q. What is you purpose? E.g. Check what it status in your constitution.

Q. What services do you currently provide? What services, help and support do you offer.

Q. What do people currently think of your organisation? Do you know how people view what you do? Have you asked the opinions of local people, funders, other groups in the area, staff, volunteers, the continue etc?

Q. How well do you provide these services? In particular, what are your strengths and what are your weaknesses?

Q. Do you compete with other organizations to provide the services you offer? If so, why do you compete (e.g. you do it better; you are more total; you have a different philosophy)?

Q. How well do you provide service compared to your competitors?

Answering these questions will give you a fresh perspective on how you need to promote you organization.

Once you know where you are at, you can determine where you want to go and how to get there.

1.4.3. Requirements of Promotional objectives:

When establishing promotional objectives, remember that they should be:

Focused on improvement – the result of any promotional activity should be to create a better understanding of what you do and to improve your relationship with the people you have decided are important.

Clearly defined – that means they should be clear, simple and easy to understand by everyone involved;

Measureable – good objectives are measureable, so that you will know when you have achieved what you set our to achieve;

Attainable – don’t try for the impossible – but don’t play it too safe either. Set objectives which are achievable and stretching;

Tied to specific expectations – make sure the objectives will help you to get where you want to get to – that they fit with your organization’s overall goals and benefit.

Promotion, like every other organizational activity requires time, money and other resources. Establishing a budget is good practice.

In creating the budget it is helpful to answer a number of questions:

Q. How much money is available to spend on the promotional campaign?

Q. who will invest time in the promotional comparing and how much time can each person afford to invest.

Q. What resources will be needed – photographs, printed material, venue, photocopying, fax machine, catering etc?

Q. Which of the above resources do you already have and which resources will you need to purchase, borrow or hire?

Q. Taking account of al the items above (money, people and physical resources), what is the promotional campaign likely to cost?

Q. Does the organization currently have the money, people, time and physical resources necessary to carry out the campaign?

Q. If not, how will you attract the necessary money, people, time and physical resources – or how will you reduce the scope of the campaign to better fit the resources you have?

You need to study your ‘important people’ i.e. those who do/will use your services, provide funds, support or hinder your development. You need to know as much as possible about them – they will almost certainly be the target for your promotional activity.

You need to know as much about them as possible. Not least, so as you can publicize you organization in the right way, through the most appropriate channels – for example, there is little point having an article in the Financial Times of none of your target audience read the Financial Times.

1.4.4. Message objectives:

Here’s the sort of information that you may find useful in collecting information about your organization’s important people.

1. Name, age, sex, personal status, employment status, location (address) preferred communications channels (tv, radio, telephone, fax, e-mail, newspapers, face to face meetings)

2. Current and likely numbers in this group (e.g. how many current service users and how many potential services users are there)?

3. Name, type of organization, size, area of activity, main services provided address/region, area covered (national, local, international).

4. You need to decide clearly the message you wish to convey to your organization’s important people.

Probably, you had a good idea of the message you wanted to send to your audience(s) before you started doing the research in the previous parts of the Organizational Promotion Checklist. It was probably something like “we’re good people, doing our best to provide a great service, in difficult circumstances with not enough resources” …… Maybe it’s worth stopping and thinking in a little more detail before sending this message.

1. First, in the message above there are actually several messages – “we’re good people”; “doing our best”; “providing great service”; “difficult circumstances”; “not enough resources”. Your audience(s) may get confused by several messages at once.

2. Second, in your message you are thinking a bit too much about yourself – how “good people” we are and our problems – “difficult circumstances”, “not enough resources”.

3. To be frank, your audience(s) probably doesn’t really care. What they’re most interested in is what you can do for them.

4. Third, it’s worth doing an honesty check - are you really providing “a great service”? if it’s “good” but not “great”, or if it’s “satisfactory and getting better all the time” then this is probably what you should say Honesty really is the best policy.

1.4.5. Communication channel objectives:

Picking the right communication channel is therefore essential.

Do you write directly to the person?

Talk face to face?

Telephone the person?

Send a fax?

Or do you:

Invite them to an event?

Get your message on the tv/radio/internet/in the national press, local press or through specialist publications e.g. professional magazines?

Small events, large events, conferences, exhibitions, found raising evenings, official launches can all be ideal promotional opportunities.

You create a captive audience – made up of people who have chosen to be with you. Because these events are such attention grabbers, you will want to do everything possible to ensure they go of without a hitch.

1.4.6. Promotional evaluation objectives:

During and at the end of a promotional campaign it is useful to evaluate how well you have done. This allows you to recognize your successes, identify what you would do differently the next time and assess what further promotional activity you need to engage in.

Consider the following points:

What publicity did you achieve?

Was it helpful or unhelpful?

Do the important people to your organisation no know more about your organization in a way that will help them to help you more in the future?

Did you achieve your promotional objectives?

Were you within your promotional budget?

Did you manage to communicate with your selected audience(s)?

Did your key message get across?

How effective were your promotional events in achieving your objectives?

Did your press releases work effectively?

Did any press conferences go according to plan?

Did the media interviews you held, go well and have the desired effect?

LESSON 1.5

SETTING THE PROMOTIONAL BUDGET AND TYPES OF BUDGETS

1.5.1. Break even analysis:

Break even analysis is a vital part of budgeting and is designed to tell management at what level of sales the product, given an assumed price and cost structure, would be expected to break even. i.e. the level at which total sales revenue equals total fixed and variable costs. at the break-even point, no body loses money. Sales above the break-even point produce net profits: a sales level below the break-even point produces a net low. The break-even volume is calculated by the following formula:

In the following figure depicting break even point, variable costs are graphed first. Fixed cost and marketing expenses are then added. The cost-plus or gross margin per cent age or a return on investment percentage in then added in order to calculate the level of units sales which will attain the company’s minimum profit target. At volume VI all fixed and variable cost are covered: at volume V2 all additional marketing expenses have been covered. The break-even volume (BE) is shows as the point at which the minimum target profit is achieved. In a sense break even’ here is a bit of misnomer since, by definition break even is the point at which no profit is made by the company. Let us see the figures as follows:

1.5.2. Budgeting:

While using the break-even analysis, the companies can adopt the return on investment method or the profit orientation method for identifying the budget or advertising appropriation. Companies also resort to utilizing the following methods for appropriation:

Seatter diagram

Time series analysis

Trend analysis

1.5.3. Methods or promotional budgets:

Following are the usual methods of promotional budgeting and is the same as that of the advertising appropriation.

Cost, revenue and profit Total sales revenue

VolumeV1 V2 BE

Unit Sales

Affordable method:

One of the methods to determine advertising appropriation is to find out what the company can afford in a given business situation. It envisages that advertising appropriation is possible only when the company has met all other a priori claims. This method helps in financial discipline. However advertising opportunities are usually overlooked and get neglected because advertising expenses are deemed to is unaffordable.

Percentage of Sales method:

The relationship between the advertising expenses and sales revenue as indicated by a percentage of sales is used in this method. The equation is as follows:

Advertising Appropriation = Rupee sales X percentage

The sales on which advertising appropriation is based may be historical – immediate past year’s or an average of past year’s – or anticipated, or both. Percentage figure, on the other hand, may be arrived at on the basis of management’s historical experience, judgment, or industry practice. For example, a company may appropriate Rs. 1 lakh advertising, which may be 2 percent of the preceding year’s sales of Rs. 50 lakhs.

Fixed sum method:

Advertising appropriation is based on rupee sales, on the physical volume of either past or future sales. It is calculated by multiplying the fixed sum to the number of items sold or to be sold. It is therefore, does not consider prices changes, which are reflected, in the sales revenue.

Percentage of Profit method:

The expense multiplier is related to profits instead of sales, with profit providing even more assurance than sales as a potential reservoir from which advertising funds may be appropriated.

Competitive parity method:

This method envisages determination of advertising appropriation in such a way that a company maintains parity with its competitors’ advertising outlays. Maintenance of competitive parity in the appropriate levels considerably reduces the possibilities of advertising wars among the competitors. Let us take the example of Tea and Coffee industry to analyze this method.

Sales : 2975.48 Crore

Growth : 18.94%

Advertising spend : 111.03 Crore

Growth in ad. Spend : 50.98%

Return on Investment method:

Advertising needs to be considered more as investment on which a certain return in terms of profit ay be expected. Its appropriation level may be determined. When it is determined, advertising competes with other investment alternatives for funds. In order to determine advertising appropriation in this manner, the present worth of the stream of profits generated by advertising should be compared with the cost of the funds.

The Marginal model:

This model developed by Semlow in respect of salesmen may also provide a base on which advertising appropriation may be determined. Semlow’s formula may be applied to advertising as:’ increase the unit of advertising expenditure profitability if the sales margin obtained by the additional units, times the expected gross profit margin of these sales, minus the additional expenditure is greater then zero.’

S (P) – C > 0

Where,

S = sales volume that each additional unit of advertising expenditure will be Expected to produce.

P = the expected profit margin on the sales volume so generated and

C = the total expenditure on the additional unit of the advertisement

Objective and task method:

Advertising objectives are set for the coming budget period and the cost for achieving these objectives are calculated in detail in terms of the tasks to be performed, the total of which indicates the appropriation level. This method involves.

1. Defining adverting objectives as far as possible in quantitative terms

2. Outlining and listing tasks to be performed in achieving objectives and

3. Estimating the cost of performing these tasks

UNIT – 2

LESSON 2.1

BASIC OF ADVERTISING

2.1.1. Definitions of advertising: Advertising is derived from Latin term, ‘advertere’ meaning ‘turn to’. To turn the people towards to or turning the valuable attention towards the products is advertising. The various definitions on the topic are as follows:

American Marketing Association: American Marketing Association defines advertising as “any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor”.

The key words are ‘paid’, ‘non-personal’ and ‘identified’. Advertising differs from the related activity of publicity, a tool of public relations, primarily in that advertising is paid for directly and its sponsorship is almost clearly identified. Advertising can be distinguished from personal selling because it is a non-personal presentation.

Russell and Veril: Advertising is a message paid for by an identified sponsor and delivered through some medium of mass communication. it is persuasive and not neutral. It is considered as the most honest and frank type of propaganda.

Sandage and Frybruger: Defines advertising in two contexts:

1. As a form of communication, advertising is used to promote the sale of a product or service, to influence public opinion, to give political support, to advance a particular cause, or to elicit some other response desired by the advertiser.

2. As a component of the economic system, advertising performs the function of interpreting. The want qualities of goods and services in terms of consumer needs and wants.

William Stanton: Advertising consists of all activities involved in presenting to a group a non-personal; oral or visual openly sponsored message regarding a product, service or idea.

Mason and Rath: Advertising is salesmanship without a personal salesman.

2.1.2. The need for advertising:

Advertising is conventionally thought to be an announcement by a manufacturer of consumer goods, but advertising can take man different forms. However, the objectives and motives of the advertiser are the same – i.e. one wants to inform possible customer of what is on offer and persuade them to buy his goods or accept his point of view. The advertiser uses this to sell on a substantial scale and to people whom he cannot meet individually. There are a number of objectives for a company to use advertising as a tool of promotion.

Infact, consumer goods companies with their and mass market spread across the country need to address each individual only through the use of advertising. Hence the one can bear that in his mind while getting ready to purchase a product. The second objectives is to persuade the people to buy soon and understand the immediate benefits to purchase. The third objectives is to remind people to buy the products during the off-seasonal times for products like-umbrellas, air conditioners, refrigerators etc.

The fourth objective is to convince the people about the quality of goods available and the fifth one is to insist on the long – term purchase keeping faith in after-sales service. It is the effectiveness of these advertisements that the advertiser is concerned with. Advertising must be effective and productive in its selling which is why advertisers tend to use advertising on a large scale.

2.1.3. Importance of Advertising:

2.1.3.1 Importance to the advertisers:

The advertisers get the following benefits directly out of advertising:

a. Mass production: Advertising leads to more sales and subsequently mass production. The manufacturers have been successful in utilizing the benefits of mass production and mass distribution. Mass production helps he company to derive the benefits of technological innovations.

b. Specialization: Advertising furnishes to the producers the necessary information regarding the product development, expertise and advanced knowledge. Hence, it is necessary on the part of he manufacturers to specialize in a particular area rather than generalize themselves. This is possible only through advertising.

c. Competition: By assigning the weightage to advertising, the manufacturers may succeed in overcoming the competition.

d. Projecting image: The attractive and interesting advertisement message throw cascading effect on the behaviour of the potential buyers. So it is through advertising the manufacturers succeed in projecting a fair image of the company.

e. Product mix: Advertising helps the producers while preparing the suitable product mix.

f. Profit: advertising helps the producers in making profits as the over all rise in sale due to advertising.

g. Personal Selling: Personal Selling is easier as advertising effectively preludes it in creating entry into the prospect.

h. Stable Demand: On the basis of advertising, the producers are found successful in maintaining stability in the demand. Thus, advertising helps or creates a steady demand.

2.1.3.2. Importance to the middlemen:

Advertising provides information, what? Where? How? Of the product to the customers. The following are the benefits:

a. Source of Knowledge: Advertising is an authentic source of furnishing valuable information to the potential buyers. The messages or method using the product, composition or ingredients and precaution all become a source of knowledge to the prospects.

b. Helps in buying decisions: Advertising furnishes the detailed information which help the buyer while exercising the decision making process.

c. Best Goods and Services at lower prices: Advertising helps the potential buyers in getting the desired goods and services at the lowest possible prices as it gives knowledge of prices.

2.1.4. Classifications of Advertising:

2.1.4.1. Primary Demand Advertising:

In order to generate demand for generic product or services, which includes that of a brand as well unbranded is termed as primary demand advertising. Hence a primary demand implies the demand for a general product like motorcycles. Such advertising are done by a group of people association etc. when the association of Jute manufacturers advertise, they are trying to create demand for the entire jute industry. This can be also termed as co-operative advertising.

2.1.4.2. Secondary Demand Advertising:

Secondary advertising promotes demand for a particular product. In the above example, advertisements by say a company manufacturing jute products is creating demand for the company alone and can be termed as secondary demand advertising. In the motor cycle industry if Yamaha advertises separately about the brand, then it can be termed as secondary demand advertising.

2.1.4.3. Product Advertising:

When Samsung Company emphasizes the virtues of its washing machine in its advertisements, the company is using product advertising. When Samsung shows only its product or say. Onida brand shows only its brand in the advertisements; it is mainly due to the superiority of the product or known as product reputation advertising.

2.1.4.4. Corporate Advertising:

When a company shows its product mix or product line in its advertisements, it is trying to emphasize on the company itself and hence is known as institutional or corporate advertising. This creates goodwill among the share holders, public and government etc. whenever a company wants to enter the capital market, they usually resort to this route.

2.1.4.5. Direct Action Advertising:

This is otherwise known as ‘hard sell’ advertising. When some company uses in its copy, mailing part or provides a catalogue of products list etc. it is trying to trigger immediate sales and thus termed as direct action advertising. Most of the book publishers use to go through this rout.

2.1.4.6. Indirect Action Advertising:

This is otherwise knows as ‘soft sell’. When some company may not directly ask people to buy and instead mention the unique advantages or the product, they indulge in indirect action advertising. Hero Honda moved away form the fuel efficiency plank to environment friendliness, which indirectly explains the advantages of the product for a long term, oriented purchase.

2.1.4.7. Non-Commercial Advertising:

The advertisements such as support of city cleanliness, solicitation of donations and contributions etc are done on a non-commercial angle and hence such advertisement can be treated as non-commercial advertisements.

2.1.5. Advertising organisation:

The importance of advertising will reflect in the type of organisation structure one company possess. If advertising is considered important, the departments might have to report directly to the top executive as in figure 2.1 depicted below. If advertising is considered minor in nature then the organization structure will look as in fig 2.2.

Fig. 2.1

Fig 2.2

Top Executive

Sales

Sales Force

ProductionFinance

Promotional/ Marketing

Department

Advertising agency

Sales Support Services

Marketing Research

Top Executive

Sales ProductionFinance

Promotional department

Sales Support Services

Advertising Agency

Sales Force

As firms becomes more marketing oriented, with greater focus on marketing functions to maximize their profits, the functional areas of advertising, sales, product management and marketing research requires a catalyst that would integrate all these efforts and provide for better marketing planning. Hence as per marketing approach, the advertising department will report to the Vice-president (marketing) as in fig. 2.3.

Fig. 2.3

As business organizations grow, the marketing services departments is responsible for media planning and co-ordination of media buying etc. The role of advertising is felt more important as separate department could be seen in the organizational structure in the bigger companies.

2.1.6. Forces influences the advertising industry

The Advertiser:

In India, there has been a phenomenal growth in advertising spending. In fact the budgets of the advertising have doubled in two decades time form the seventies. As in any other country, the growth has come from the consumer goods sector. Indian advertisers have become savvy about the advertising strategies, which have in fact lead to proliferation of advertising agencies in India. During the period 1998-99 alone the promotional and advertising budget of the manor FMCG marketers shows tremendous improvement over the previous period. The list of major manufacturers and their spending during the period as given by Advertising and Marketing journal is given below in Fig, 2.4.

No. Manufacturer Advertising Spend (Cr.)

1. Hindustan lever Ltd. 668.95

2. ITC 201.24

3. Dabur India 114.12

4. Tata Tea 73.47

5. Nestle India 108.51

6. Wipro 3.36

7. Larson & Toubro 58.98

8. Maruti Udyog 65.63

9. TVS – Suzuki 42.99

10. Colgate – Palmolive 163.87

11. LML 37.27

Top Executive

Vice President Marketing

Vice President Production

Vice President-Finance

Product Mgmt.

Sales Dept. Sales Force

Marketing Research

Advertising agency

Promotional/Marketing

department

12. Arvid Mills 16.84

13. Whirlpool 30.86

14. Nirma 26.20

15. Cadbury India 39.41

In fact, the growth in media worldwide has forced many of the advertisers to opt for using Internet as a source of advertising tool. The following table 2.5 will provide the break-up of the top advertisers on-line in the U.S. for the period 1998.

Rank Company name Location Advertising spend (in $)

1. Microsoft Washington 34,857,314

2. IBM New York 28,519,554

3. Compaq Computers Texas 16,196,061,

4. General motors Michigan 12,702,895

5. Excite California 12,354,593

6. Infoseek California 9,307,157

7. AT & T New York 9,285,874

8. Hewlett-Packard California 8,090,888

9. Barnes & Noble New York 7,606,733

10. Datck Securities New York 7,604,519

The above tables are a clear indication of the role of the advertiser in the use of advertising as a major weapon in influencing the ultimate customer on his/her purchase decision making. Even the business to business or industrial advertising has gained popularity among the target audience. Many of the industrial manufactures have started to realize the importance of advertising and are even using the services of advertising agencies for this purpose. In fact, multinational companies are responsible for the use of advertising on a large scale as the Indian companies started to follow suit.

The Advertising agency:

Companies engage the services of an advertising agency to carry out the advertising activities on their behalf. This as such has promoted proliferation of adverting agencies in India. They are mostly located in the metropolitan cities in India. It is estimated that there are over 1500 advert agencies are available. The composition of advertising industry shows that at the top there are only the large agencies, most of which have an international affiliate. There are several medium sized advertising an d hundreds of small agencies whose individual annual billings amount to only a few lakhs. The affiliations of the Indian agencies are given below in fig. 2.6

The major functions of an advertising agency are to offer its professional expertise so that the brands in question can achieve their advertising or marketing objectives. An agency also execute routine account servicing functions there by creating a conducive climate for a clear understanding between the advertiser and the agency on the important issues.

No. Indian Agency International affiliate Gross billings (in Million Rupees)

1. Hindustan Thomson J Walter Thomson 9,148,97

2. Lintas Ammirati Puris 6,256.46

3. O&M O&M Worldwide 3,891.06

4. Ulka FCB 3,486.86

5. Rediffusion DY&R 2,244.60

6. R K Swamy BBDO 1,966.66

7. McCann-Erickson McCann-Erickson 1,743.60

8. Contract J Walter Thomson 1,721.19

9. Chaitra Leo-Curnett 1,488.39

10. Enterprise Lowe 1,239.42

11. Euro RSCG Euro RSCG 911.59

12. Saatchi & Saatchi Saatchi & Saatchi 857.63

13. Madison DMB&B 765.05

14. TBWA Anthem Omnicom 502.22

15. ASP Indian Press Exchange 103.25

Fig. 2.6

Media:

India has been witnessing a boom in the media scenario. From the conventional print media to the latest in Internet, media has been growing and offering varied alternatives to the advertisers and the agency alike. In fact the proliferation of the media has literally got the agencies media planning departments to do overtime. In this section, let us look at the available media options in the Indian market:

The following are the newspapers read extensively in our country:

The Times of India

The Hindustan times

The Hindu

The Indian Express

The New Indian Express

The Malayala manorama

Mathrubhumi

Antanta Bazar Patrika

Sakal etc.,

Magazines:

Femina

Readers Digest

Indian Today

The Week

Vanitha etc.,

Radio like the government owned channels in vernacular languages, Vividh Bharthi, FM channels like Times FM, Midday FM etc.,

Television channels like

Prasar Bharathi corporation which has Doordarshan (English and other vernacular languages)

Following 70 odd private satellite channels of which the prominent are:

Star TV network

Sun TV network

Zee TV network

Asianet channels

Eenadu Television

Sonly TV network

Entertainment Television

ESPN

Vijay TV

Raj TV network

Jaya TV

Lakhshara TV

And host of Foreign channels like CNN, BBC etc.,

Apart from these, the outdoor advertising, Internet advertising have really taken a great leap in our country. Some of the following are notable in the outdoor advertising scenario:

Landmark, a division of Mudra Communications

Lodestar, a division of Ulka

NS publicity agencies

Aaren Ltd.

Zen Communications etc.,

Those in the Internet advertising are:

Reinfusion

Satyam infoway

Host of dot.com companies like:

123 india

khoj

indianfoline

indya

indiatimes

yahoo.in

fabmart

amazon etc.,

Lesson 2.2

ADVERTISING OBJECTIVES

2.2.1 Introduction:

Even before setting the objectives the advertiser and the agency need to understand the reasons why advertising is undertaken and the factors that influence the decision. Hence the considerations may be as follows:

Target market:

The entire marketing programme endeavors to guide the decision of the target market towards purchase of the production or service and the objectives set for advertising should flow from the knowledge of the market use of advertising as a factor in decision making. One should be very clear in understanding such target market, which are receptive to advertising at large.

Product:

The nature of product or service determines sometimes the nature of the consumer decision process. The decision on the emotionality or the rationality in the purchase of the product depends heavily on the types of product. There are following types of products available in the market:

High investment, high risk products

Low investment, low risk products

High investment, low involvement products

High investment, high involvement products

Low investment, high involvement products and

Low investment, low involvement products

Very little decision making is needed for the low involvement products. Here the degree of familiarity with a brand’s name can make the difference. The high investment and low involvement products decision making is often lengthy and the advertising’s role may be to provide knowledge of critical features and benefits.

Competitive advertising:

Whenever aggressive adverting is resorted to by the competitors, there needs to be a direct response from the advertiser to product the market share. Which during the World Cup Cricket in 1996, Coca-Cola thought they got the better edge over Pepsi by becoming the official drink, Pepsi retorted by ‘Nothing official about it’. There is lot of advertisements going on in the Flat TV segment as one after another is vying for the 100% flatness. Sales promotional efforts of Akai and Aiwa were very continuous and it forced the Indian companies to also enter fray in this advertisement tangle.

Other marketing efforts:

Advertising objectives are the offshoot of the marketing objectives which are based on an ongoing assessment of the market situation, competitive intensity, price, position, distribution channels and their incentives etc… Ion setting the objectives, due consideration should be given to the time frame to which these objectives are considered advertising objectives in coherence. The marketing mix inputs are also expected to make their contribution to the achievement of specific objectives. Some advertisements are meant to inform and some to persuade and some to remind about the product. In all these cases, it is important to understand the situations of advertising.

2.2.2 General objectives of advertising:

Advertising can maxmise the demand for products and services. Latent demand, which is within the consumer, is waiting to be brought in each time an advertisement is aired. Advertisements are designed to stimulate the demand. Hence the primary and general objectives is to bring out the demand. Advertising does the job the personal selling by convincing the prospects about the worthiness of the product. Advertising is used to increase the number of units sold. Some products are more sensitive to increased advertising than others; that is demand for some products can stimulate demand advertises other products that are dependent on them. This situation involves the concepts of expandability of

demand, which exists when the use of advertising and/or personal selling will be about an increase in total demand for a product. Advertising can stimulate the demand for any product in the following ways:

1. More usage:

Present users may be persuaded to increase the present rates of product consumption.

2. New uses:

To inform the present users about the new uses for the product.

3. New users:

To increase the demand, more new users can be drawn through advertising.

Another objectives, which needs to be given importance, is the effect of advertising on profits.

If advertising does increase sales, the increase may favorably effect the product costs. If plant capacity is fully utilized and other reductions are employed, the per unit cost of the product will often be lowered.

As manufacturing costs are lowered, profits are increased. Advertising also lower the marketing costs by reducing the transportation and storage expenses per unit of there is increase in sales.

Advertising also forces loss personal selling.

Hence the reduction in production and marketing costs through the use of advertising are tied directly to the role of advertising in increasing the sales volume of the product.

2.2.3 Specific objectives of advertising:

In order that advertising is successful, the theme or key notes idea must be designed to attain specific objectives. The advertising of advertising by specific objectives are:

The advertising effort is integrated with the other marketing mix elements, leading to a consistent and logical marketing plan.

Advertising budget can be determined more accurately.

Top management can appraise advertisements plans and can maintain control over advertising activities.

Some advertisements can be used to elicit direct response from the customers.

In most cases, advertising only tries to induce trials, merchandise offers, introduce new product, model or latest innovation. The objectives of advertising in consumer media may be to increase employee’s pride in the company or it may be to convince middlemen to stock a certain brand. In a short run although an advertisements may fail to achieve its specific objectives, it could still contribute to the creation of a favourable attitude towards the product, which in the long run might result in the achievement of general objectives of sales and profit.

2.2.4 Categories of advertising objectives:

Following are the various categories of advertising objectives:

1. Awareness objectives

2. Comprehension objectives

3. Conviction objectives

4. Action objectives

Let us now see each of the objectives in detail:

Awareness Objectives:

Awareness campaigns create awareness of an existing offering among current target market and also achieving awareness of an existing offering among the target customers. An advertising campaign charged with raising awareness in the market attempts to acquaint the target market with the existence of a product or service. Flence one can see that awareness campaigns with associated with well-established products as well as new products. In the case of established brands like Pepsi, Maruti, the objective is often to keep the name at the top of the customer’s minds. In

the case of high-involvement products, advertising’s major role is that of getting attention to he products. Personal selling and sales promotion is needed in persuasion and ultimate purchase of the said product.

Comprehension objectives:

Product features and benefits can be informed to the customer through advertising. This helps the consumer:

Keep track of the brand and when he purchases the product, the brand will be under consideration for decision making.

This advertising can provide the target audience with the information.

Correct false impressions that an audience may have and

Reinforce beliefs to prevent forgetting.

A product undergoing like Arrow shirts from formal wear to informal wears; they need to educate the consumer about it. Ad campaigns are sometimes called upon to classify what the market place belives about certain products.

Conviction objectives:

Ad campaigns ca be used to shape specific beliefs about a product, the bases for the consumer’s overall opinion or attitude. The primary goal is to transmit information that contribute to but may not solely direct the audience judgments. One such is that of Dawoo-Nexia luxury car, where the comparative advertisements were shown. An ad campaign may have the goal of stimulating or reinforcing the audience’ existing feeling about the product. Audience interest may rise, as the audience receives information not previously available.

Action objectives:

Some advertisements provide for immediate actions from the consumer by inserting reply cards or even giving a phone number etc. An advertiser expects that the content of the campaign alone or perhaps acting as a catalyst for other marketing factors will lead to purchase. Advertising for low-involvement products may be held accountable for sales because brand salectiort depends strongly on brand familiarity enhance by advertising.

1.2.5 Importance of objectives:

Following are the importance of advertising objectives:

Objectives serve as communication and co- ordination device through which the client, the agency and client servicing personnel, creative team communicate.

Objectives provide means through which decision making is taken. If two alternative campaigns are generated, one must be selected.

Objectives help in evaluating a campaign after implementation.

Advertising objectives are useful while planning for a new product, helping the existing product to retain the market and at times increase the market share for the product.

Objectives help in informing the middlemen about the price, quality and also keep them up to date about the advertising campaigns. Normally objectives are set keeping in mind the middlemen also.

Objectives are ultimately intended to contribute to economic growth and social reform. Advertising promotes the marketing system such a way that the economical use of scare resource is emphasized.

Advertising objectives are set in such a way that it increase the welfare of the public, raise the standard of living etc., Advertising informs the public how to maintain public hygiene, educate them by de-marketing of energy and makes the environment free of pollution.

From the importance of setting the advertising objectives, it can be clear that without any objectives, it will be difficult for the advertiser and the agency to formulate, strategies for carrying out their marketing objectives. It is also important that at every stage the objectives need to be kept in mind during the entire advertising campaign.

2.2.6 Models for setting the objectives:

Of the various models propounded through the hierarchy of effects model, which has the following models:

AIDA model

DAGMAR model

Lavidge/Steiner Model

Moriarty’s Domains

Let us look at each model

1. LAIDA model:

2. DAGMAR model:

Developed by Russell Coolly will be discussed in detail in the lesson:

3. Lavudge/Steiner’s Model:

Attention

Interest

Desire

Action

Awareness

Comprehension

Conviction

ActionAwareness

Knowledge

Linking

Preference

Purchase

Conviction

Robert Lavidge and Gary Steiner developed this model which fully depends on the three factors like:

Cognitive (thinking)

Affective (feeling)

Conative (Doing)

4. Moriarty’s Domains:

This model is based on the three factors viz.,

Perception

Education

Persuasion

Russell Colley’s DAGMAR is found to have more acceptance among the management practitioners and academicians at large.

2.2.7 The evolution of DAGMAR:

While writing a book under the sponsorship of the Association of National Advertisers in US, Russell Colley developed DAGAR. He called it DAGMAR based on the abbreviation as Defining Advertising Goals for Measured Advertising Results. This approach is introduced to advertising planning and included a precise method for selecting and quantifying goals and for using these goals to measure performance. An advertising goal is a specific communication task. To be accomplished among a defined audience in a given period of time. Since there were number of challenges to DAGMAR, Colley developed DAGMARII.

2.2.8 Specific goals of DAGMAR:

1 Measurable:

DAGMAR shows the appeal of image to be communicated. Measurement procedure is also included. In case if a company produces cereals, it can think of giving the energy it can produce and also they can ask the consumers to rank the cereals for the energy content.

2 Bench marking:

Bench marking helps in understanding the popularity of the brand. If the people do not know the image of the product, it means the message should make the product-image known to people first, then their interest and desire can be stimulated by the message. DAGMAR shows whether the existing images needs to be altered, reinforced, diffused or sharpened. In fact, the key to DAGMAR is probably the generation of well-conceived benchmarks before advertising goals is determined.

Arousal

Retention

Comprehension

Learning

Behaviour

Attitude

3 Target Audience:

If the goal was to increase awareness, it was essential to know the target audience. The advertiser specifically lays down the segmentation strategy. Hence the relevant communication which is essential for the achievement of goals of the total objectives.

4 Times

The objectives for a one-year period will require the necessary inputs for the achievement of the goals within the period. The results should be available for comparison with the objectives. The need to go for contraction, expansion, or change in the current advertising activities can be understood from the comparison.

5 Written objectives:

The objectives should be written. The basic element, basic shortcomings and misunderstanding are exposed by the written objectives. The written objectives are the guidelines for a competition of the results with the activities of advertising.

2.2.9 Suggestions of DAGMAR:

DAGMAR has given some suggestions for the implementation of objectives and goals. 6M approach was employed for analyzing the product and the market. Following are the 6Ms:

Merchandise

Market

Motives

Message

Media

Measurement

2.2.10 Contributions of DAGMAR:

1 General Contributions:

DAGMAR has provided a systematic control, guidance to creativity and use of behavioural theories.

DAGMAR leads to systematic and control.

It also provides a checklist of campaigns and budget.

Establishes specific goals

It provides guidelines to creative action.

It creates awareness, interest and desire among the consumers

2 Specific Contributions:

It helps in using advertising to close a sale, whether immediate or delayed.

It lists the tasks for making sure the advertising aim at near-term sales by moving the prospect, step by step closer to sale.

It provides a specific method to use advertising for long range consumer franchise.

It also identifies a list of objectives to get end-as advertising benefits.

2.2.11 Challenges to DAGMAR:

DAGMAR has created considerable controversy among the advertisers and researchers. DAGMAR really changed the way that advertising objectives were created the concept of communication objectives; attitude models are developed using this objectives. DAGMAR encouraged people to create objectives so specific and operational that they can be measured. The different kinds of challenges out of the above can be seen as below:

The awareness alone does not effect sales. This argument has gained strength in the eighties since it is now possible to measure advertising effect on short term sale.

The checklist of promotional activities falls short of providing sufficient details to implement the approach.

Even though DAGMAR suggests measurements, how the facts, attitudes awareness etc. are measure has not been practically decided.

It is found that noise affects the system. Variables such as competitive promotion or unplanned publicity can affect an awareness comparison.

Conceptual and research flexibility lacks in this method.

Lesson 2.3

ADVERTISING APPROPRIATIONS

2.3.1 Introduction

Setting advertising budgets has an immediate impact on costs and long-term effect on sales. Consequently, advertising is in many ways an investment in much the same way spending on R&D is, albeit with both a less distant and, at least in a technical sense, a less dramatic breakthrough potential. Like spending on R&D, spending on advertising has a long history and a relatively weak record for measuring effectiveness precisely. A crucial distinction exists between viewing advertising spending as an investment versus an expense. Investments are expected to generate returns over a long period of time. Often, when advertising is used as an expense, the budget is cut near the end of the quarter or fiscal year to achieve a profit target. In contrast, marketing oriented firms view advertising as a long-term investment in the brand. It is averred that consistent investment in advertising for products can lead to a superior market position. The right way to set budgets is to first develop a model that quantitatively estimates the impact of advertising (as well as the rest of the product offering and the impact of competitors and environmental changes) on sales and profits. The optimal spending levels needs to be identified.

2.3.2 Advertising spending plan: This is prepared to decide the media vehicles in which the advertisements need to be shown. Basically it divides the budget among the costs of the media vehicles selected plus production and testing. Production costs vary widely depending upon the use of a celebrity endorser, the length of the ad and the general way of the presentation. Similarly, testing costs vary depending on the sample used, what is asked of the respondents and sampling method. The main point here is that the spending plan should include adequate resources to conduct production and testing the allow for the time needed to accomplish these activities.

ADVERTISING SPENDING PLAN AND BUDGET

Media Category Specific vehicles and frequency

Production and testing budget

Space/Time budget

Total budget

Newspapers

National

Regional

Local

Magazine

National

Regional

Local

TV

Satellite

National

Cable TV

Radio

Outdoor media

Research and monitoring

MONTHLY ADVERTISING SPENDING PLAN

Media Category January February

Ads Cost Ads Cost

Newspapers

National

Regional

Local

Magazine

National

Regional

Local

TV

Satellite

National

Cable TV

Radio

Outdoor media

Research and monitoring

2.3.3 Various Advertising budgets of the Indian companies:

The big spenders in advertising were studied by A&M magazine during the period 1998-99. The top 200 companies surveyed registered a hike of just five percent in sales – from Rs. 1,65,555 Crore in 1997-98 to Rs. 1,74,537 Crore in 1998-99. Advertising spend by these companies however went up by 17 percent over the last year to Rs. 3.941.7 Crore. The advertising expenditure as a percentage of sales grew marginally to 2.3 percent from two percent in the earlier year.

Total companies surveyed : 3,154

Total sales : 7,56,574 Crore

Advertising expenditure : 4,443 Crore

Let us now see the industry wise and company wise breakup for 1998-99.

Advertising by the industries

Industry Sales in

Rs. Crore

Ad. Spend in

Rs. Crore

Air conditioners 1812.01 53.49

Bakery and milking products

1057.95 60.20

Cement 9948.88 76.10

Clocks and watches 577.78 33.85

Cloth 6919.55 51.02

Cocoa products 585.18 45.21

Commercial vehicles 9169.56 42.72

Computer hardware 2157.49 45.65

Computer software 4275.04 53.27

Consumer Electronics 6720.67 267.50

Cosmetics & Toiletries 2238.81 359.69

Cotton & blended yarns 8347.61 27.10

Dairy products 2576.72 144.04

Diversified 41465.01 883.14

Domestic electrical appliances

1832.89 52.30

Drugs and Pharmaceuticals 14226.48 201.24

Liquors 2682.97 101.68

Misc. electrical machinery 8410.58 6.60

Misc. manufactured articles 335.02 14.41

Advertising by companies in 1998-99

Company Ad. Spend

In Rs. Crore

Hindustan lever 668.95

ITC 201.24

Colgate Palmolive 163.87

Nestle India 106.51

Tata Tea 73.47

Wipro 30.36

Larson and Toubro 58.98

Maruti Ydyog 65.63

TVS – Suzuki 42.99

LML 37.27

Talco 35.95

Whirlpool 30.86

Raymond 36.68

Cadbury India 39.41

Advertising by companies in Air Conditioners

Company Ad. Spend

In Rs. Crore

Amtrex Hitachi ---

Blue Star 3.90

Carrier Aircon 4.73

Whirlpool 30.86

Advertising by companies in Cosmetics & Toiletries

Company Ad. Spend

In Rs. Crore

Balsara Hygiene 13.11

Colgate-Palmolive 163.87

Dabur India 114.12

Emami 19.52

Indian Shaving products 10.60

Fem care Pharma 3.18

JK Helene Curtis 3.16

Lakme lever 33.24

Procter & Gamble 31.43

Advertising by companies in Passenger Cars

Company Ad. Spend

In Rs. Crore

Daewoo Moters 24.48

Mahindra & Mahindra 15.83

Maruti Udyog 65.63

Hindustan Motors ---

2.3.4 Consumer goods budgeting:

Before we enter the Nitto gritties of budgeting procedure. Let us look into those companies in the international scenario and national scenario allocating funds for advertising:

List of leading Consumer product advertisers in US:

AT&T telephone services

Ford Cars

Sears Stores

McDonald’s Restaurants

Kellogg’s

Chevrolet cars

Dodge cars

Toyota Cars

MCI telephonic services

Warmer Bros. Movies

List of leading Consumer products Advertisements in Inida

Hindustan lever

Dabur India

ITC

Nestle India

Wipro

Maruti Udyog

TVS-Suzuki

Colgate Palmolive

LML

Arvind Mills

Lipton India

2.3.5 Industrial goods advertising budgeting:

In the US, the industrial companies are utilizing the advertising activity more than the Indian counterparts. Let’s see the list of advertisers.

List of leading Industrial product advertisers in US:

AT&T Corporation

IBM corporation

MCI Communication

Hewlett-Packard

Microsoft

Compaq

Sprint

UPS of America

American Express Company

Digital Equipment Corporation

List of leading product Advertisers in India

Larsen & Toubro

IFB Agro Inds

Telco

Oswal Chemicals and Fertilisers

Escorts

United phosphorous

Birla Corporation

Finloex Cables

Ion Exchange

Brila 3M

2.3.6 Methods of Advertising Appropriation

Affordable method:

On of the methods of determine advertising appropriation is to find out what the company can afford in a given business situation. It envisages that advertising appropriation is possible only when the company has met all other a priori claims. This method helps in financial discipline. However advertising opportunities are usually overlooked and get neglected because advertising expenses are deemed to is unaffordable.

Percentage of Sales method:

The relationship between the advertising expenses and sales revenue as indicated by a percentage of sales is used in this method. The equation is as follows:

The sales on which advertising appropriation is based may be historical – immediate past year’s or an average of past year’s – or anticipated, or both. Percentage figure, on the other hand, may be arrived at on the basis of management’s historical experience, judgment, or industry practice. For example a company may appropriate Rs. 1 lakh advertising, which may be 2 percent of the preceding year’s sales of Rs. 50 lakhs.

Fixed sum method:

Advertising appropriation is based on rupee sales, on the physical volume of either past or future sales. It is calculated by multiplying the fixed sum to the number of items sold or to be sold. It is therefore, does not consider price changes, which are reflected, in the sales revenue.

Percentage of Profit method:

The expense multiplier is related to profits instead of sales, with profit providing even more assurance than sales as a potential reservoir from which advertising funds may be appropriated.

Competitive parity method:

This method envisages determination of advertising appropriation in such a way that a company maintains parity with its competitor’s advertising outlays. Maintenance of competitive parity in the appropriate levels considerably reduces the possibilities of advertising wars among the competitors. Let us take the example of Tea and Coffee industry to analyse4 this method.

It can be seen that this industry every player wants to increase his or her advertising outlay due to intensive competition. Let us take each player in the industry:

Advertising by companies in Tea and Coffee

Advertising Appropriation = Rupee sales X Percentage

Sales : 2975.48 Crore

Growth in sales : 18.94%

Advertising spend : 111.03 Crore

Growth in ad. Spend : 50.98%

Company Ad. Spend

In Rs. Crore

Consolidated coffee 9.84

Nestle India 108.51

Lipton India 21.80

Tata Tea 73.47

Returns on Investment method:

Advertising needs to be considered more as investment on which a certain return in terms of profit may be expected. Its appropriation level may be determined. When it is determined, advertising competes with other investment alternatives for funds. In order to determine advertising appropriation in this manner, the present worth of the stream of profits generated by advertising should be compared with the cost of the funds.

The Marginal model:

This model developed by Semlow in respect of salesmen may also provide a base on which advertising appropriation may be determined. Semlow’s formula may be applied to advertising as: increase the unit of advertising expenditure profitably if the sales margin obtained by the additional units, times the expected gross profit margin of these sales, minus the additional expenditure is greater then zero.

Where

S = sales volume that each additional unit of advertising expenditure will be Expected to produce

P = the expected profit margin on the sales volume so generated and

C = the total expenditure on the additional units of the advertisement

Objectives and tasks method:

Advertising objectives are set for the coming budget period and the cost for achieving these objectives are calculated in detail in terms of the tasks to be performed, the total of which indicates the appropriation level. This method involves:

1. Defining advertising objectives as far as possible in quantitative terms

2. Outlining and listing tasks to be performed in achieving objectives and

3. Estimating the cost of performing these tasks.

Decision calculus:

Computer Decision Support Systems (DSSs) such as ADBUDG help structure budget decision systematically. Managers provide subjective input about, for example, the impact of increasing or decreansing advertising spending by 50 percent. The computer program then estimates consumer response and solve for optimal spending. Although using solely subjective data produces results that are hard to sell to others. DSSs that combine judgment with data have facilitated decision making and promise to be more useful in the futures.

Lesson 2.4

ADVERTISING AGENCY

S (P) – C > 0

2.4.1 Introduction

Advertising agencies are the pivotal point in carrying the information across to the mass. The importance can be felt from the following diagram:

It is hence clear that with the support of the advertiser and the media only the advertising agency can function fruitfully. The earnings of an agency are measured in terms of the gross billings or capitalized billings and he gross income, which they make out of this. The capitalized billings are the total billings, which the advertisers provide to the agency. This in turn needs to be given to the media and part of it like the 15% commission and their creative charges contribute to the gross income.

2.4.2 Role of advertising agencies:

The advertising agencies play a crucial role for the advertiser in the following activities:

Helps in effective planning the formulation of strategies

Helps in building brands

Preparing the marketing mix

Helps in understanding the customer through market research

Enters into the new technologies like the Internet.

Conducts direct marketing, direct selling, event management, sponsorships and promotions for the advertiser.

They undertake public relations, outdoor advertising, constancy, exhibitions and even rural marketing for the advertisers by being multiple service provider.

on late, the advertising agencies have been changing themselves to the requirements of the market place. The reasons why they are changing are:

Companies are demanding complete marketing service from their advertising agencies.

Communicating to the customers using the multiple channels and forms

New areas of advertising, such as the Net, are changing the rules of marketing.

Global owners of Indian agencies are demanding more business and profits.

Clients want to pay the agencies on the basis of performance and nto commissions

The role of the agency towards the media are:

Provide business through advertising in the media

Offer the services as and when media requires

By giving full service which in turn reduces the load of the media In order to cope with the changes in the market place, let us not see how the advertising agencies are changing during the current times.

Advertisers

Media Agency

The traditional functional dispensation which we shall see in the next lesson is making way to cross functional teams.

The focus is shifting from just advertisements to creating a multimedia communication strategy.

The talent pool is being diversified to accommodate technical and analytical skills.

The competition is increasing with consultancies and advertising shops are in the fray.

The 15 percent commission is being replaced by mutually agreed standards of success.

2.4.3 Responsibility of the advertiser:

Every advertiser must first be responsible to his company, his brand and its long-term success. One should perceived advertising as to se4ll in an efficient and cost effective manner and thus must always come first. In all circumstances the advertiser must obey the law of the land and he must make sure that his advertising does so as well. Advertising needs to be, ‘legal, decent, honest and truthful’. Advertisers must also bear in mind the customers. Like the emphasis on environmental issued some times leads a company over claim in a way which may mislead its customers. In this context some companies have been obtaining the improper rating on their fixed deposit scheme and in turn the agencies be part of advertising the same.

2.4.4 Agency compensation:

Mode of payment to be agencies differs based on the work they undertake. March of the agency’s compensation comes in the form of commissions, not from the client, but from the advertising media in which the advertisements appear. These media bill the agency according to the current rates less the 15 percent commission (in case of the outdoor media it is 162/3 percent).if the rate for full page in a magazine were Rs. 1,00,000, the agency would be billed by the magazine with only Rs. 85,000 (in effect the Rs. 15,000 becomes the agency’s commission). Some media provide cash discount also to the agencies. While some agencies to not charge for writing copy and preparing layouts in connection with commissionable advertising. However, there are also many other expenses incurred by the agency in the preparation of advertisements and commercials. They are charged to the client at cost plus a percentage – 17.65% which varies. In the example above, the cost of the mechanical typography, Photostats, films and artwork for the magazine advertisements come to Rs. 10,000 the agency would bill the debates on the agency compensation where one group says the increasing cost of doing business prompts the agency to do away with commission and provide for an honorarium for carrying out the entire activities. Recently in India the services offered by the advertising agencies have bee brought under taxation.

2.4.5 Selection and Evaluation of the agencies: Following criteria needs to be cared while selecting and evaluating the agencies:

The number of staff-creative and administrative

Turnover the growth

Breakdown or turnover between the major accounts

Financial soundness

Terms of business and profitability

Membership in professional organizations

Creativity in advertisements

Agency organisation and leaderships

Mode of operation

Client’s list

Accounts lost and gained in the past two years etc.,

2.4.6 Organisation structure:

A normal advertising agency will have the following organisation structure:

Chief

VP-Client VP-Media ChiefVP-AdminVP-Financial

They will be supported by a group of General Managers, Managers Executives and many of them are in the client services departments. The allied companies report to the chief executive only. Not let us look into the various areas of functions in an advertising agency.

>> Account services:

Agencies appoint Account Executives to liase with the clients. The Accounts Executives need to be sufficiently aware of the client’s needs and desires the can be instructed to the agency’s personnel and should get approval from the clients on the agency’s recommendations to the clients. Creativity and marketing acumen are the needed areas of the client service people. They work closely with the specialists in each field.

>> Media Services:

A media strategy is developed to implement the marketing strategy and a media schedule results out of this strategy which spells times and places in which the advertisements are to appear. Computers are being used extensively for determining which media vehicles are the best for delivering the advertising messaged at the lowers cost consistent with the greater efficiencies. This department is headed by a Media Director who co-ordinate the media buying and scheduling the media.

>> Creative Services:

There are usually two departments, which constitute creative services. One is the copy department and is headed by the Copy-Director. The department needs to write display lines (headlines and sub headlines) and body text. Copywriter may also prepare a rough or visual of the advertisements in addition to writing the copy. The second department is the Art department where the Art Director develops the pictorial element in the advertisement known as artwork. In the case of a television commercial, it is known as the storyboard. In general, art director and assistant artists are responsible for the visualization of artwork, the execution of layouts and story boards, the preparation of mechanical and specification of type.

>> Management and Financial Services:

There is a considerable amount of billing work involved since the agency is involved in deals with numerous media and suppliers. Hence the accounts department functions in this aspect to feed the company of the financial position and dues from the clients etc.

Some agencies apart from the above departments also have ‘New business departments’ where the agency will give the importance to approaching the new clients. Some agencies have new product task force for getting new accounts. Of late many agencies have started providing services like public relations, direct marketing, POP displays etc. some of the add-on services by some Indian advertising agencies are as follows:

2.4.7 Add-on Services

Agency name Services offered

Mudra Communications Horizons (public relations)

Indian Consumer Research Group (MR)

Limelight (Event management)

Landmark (outdoor media)

Mudra international (overseas)

Reach (direct & promotions)

Showcase (exhibitions)

Mudra Videotec (videosoftware)

Ogilvy and Mather (O&M) Direct Response (direct marketing)

Financial and Business Communications

Public Relations

Artistree-Graphic Design studio

FCB-Ulka Futures (financial and corporate)

Cygnus PR

FCB-Ulka Direct (Direct marketing)

Nebula Films (Film production)

Lodestar (Media)

Lesson 2.5

INDIAN ADVERTISING AGENCIES

2.5.1 Evolution of Advertising agencies in India:

Companies engage the services of an advertising agency to carry out the advertising job on their behalf in recent years, advertising agencies have mushroomed in India. Geographically they are mostly located in the metropolitan cities, with a higher concentrator in Mumbai, Delhi and Bangalore. A conservative estimate is that there are over 1500 advertising agencies in India. Many of the late entrants in the advertising business are involved in new advertising activities such as financial advertising, television commercials and retail advertising. The composition of the advertising industry shows that at the top there are only large agencies, most of which are affiliated to international agencies.

During the start of the 1990’s, Indian advertising has been on a roll. For four consecutive years, the pace of the growth kept increasing attaining an unbelievable 49.55 in 1994-95. Advertising growth in 1995-96 was lower at 30.4%. The following year 1996-97 showed a growth on only 22.4%. The year 1997-98 still brought down the growth to about 17.9%. Of the top 16 agencies with a gross income of above Rs. 10 Crore, only three viz., Enterprise, Contract and Saatchi & Saatchi grew by less than 10%. Among the top five, the billings of four shot up by 20%. Mudra is the sole exception with 12.3% growth. The following categories spurred the advertising industry otherwise, which could have been a decline.

No. Category Amount spend on

advertising (Rs. in Crore)

1 Toilet soaps 361

2 Shampoo 288

3 Toothpaste 260

4 Washing powder 231

5 Soft drinks 226

6 Textiles 220

7 Corporate image 148

8 Liquor 140

9 Hair oils 136.8

10 Biscuits 136.2

Source : Business India, June, 1999

Intense competition within the advertising industry has lead to a frequent shift of accounts from one agency to another. In their desperate bid to stay ahead of the others, advertising agencies, by and large, have greatly improved their quality. During 1985-90 at least a dozen advertising agencies have made tie-ups with leading international advertising agencies. This move has evidently helped many agencies to up grade their skills. In the process, they have secured the accounts to multinational companied who often prefer to have one global advertising agency.

2.5.2 Future of Indian Advertising agencies:

The consumer boom coupled with the expansion of the print media and increased television coverage caused an advertising explosion in the country. This made the Indian advertising agencies to be ,more professional. Indian agencies have to be more Indian than western. Indian words and phrases, known as Hinglish are being incorporated more in the recent advertisements. This trend of creativity in Indian languages is likely to continue as it enables advertisers to reach customers in a more effective manner. With the following changes that are envisaged in the future is relates to media, advertising agencies needs to open their eyes and seize the opportunity.

More television channels via cable with higher quality

At least 100 direct to home TV channels

Webcasting of TV channels via Internet

Internet access on television sets, through set-top boxes

Interactive television

Private terrestrial TV stations in few cities.

Hence it is expected that complete solutions will have to be provided by the agencies beginning right from the stage of creation of the ad or spot themse4lves to modifying it for interactivity, adding the e-business element and ultimately, delivering against computer generated orders. Already Rediffusion has entered the interactive platform with their rediff.com which certainly augurs well for the future.

2.5.3 List of Indian Advertising Agencies:

Even through there are more than about 1500 advertising agencies in our country, the following are the leading and renowned agencies as per the A&M survey during 1998.

1. Hindustan Thomson Associated Ltd., Mumbai

2. Lintas India Ltd., Ahmedabad

3. Mudra Communications Ltd., Mumbai

4. O&M Advertising, Mumbai

5. FCB-Ulka, Mumbai

6. Redifussion – DY&R, Mumbai

7. RK Swamy/BBDO, Mumbai

8. McCann-Erickson India Ltd. Delhi

9. Contract Advertising, Mumbai

10. Chaitra Leo burnett Pvt. Ltd. Mumbai

11. Enterprise Nexus Pvt. LTs, Mumbai.

12. ID&W, Mumbai

13. Euro RSCG, Mumbai

14. Triton Communications, Mumbai

15. Saatchi & Saatchi, Mumbai

2.5.4 Major Accounts held:

As per the report of the A&M, the following accounts were handled by the respective agencies during the year 1998. Many accounts were lost and gained by the various agencies due to the intense competition prevailing in the market.

Agency Accounts held during 1998

HTA Standard Chattered Bank

Pepsi

Star TV network

Hewlett-Packard

Godrej

Lintas ITC

Hindustan Lever

Brittannia

Microland

BPL

Nestle

Mudra ITDC

Henkel Spic

Raj TV

Alembic

O&M Metro Goldwin Meyer

Louis Philippe

TVS

UTI

Arvind Mills

Rediffusion-DY&R Canon

Citibank

McDowell

Punjab Tourism

UP Tourism

2.5.5 World renowned agencies:

Some of the leading world-renowned advertising agencies are:

J Walter Thomson

Ammirati Puris Lintas

DDB Needham

Ogilvy and Mather

Foote Cone and Bleding

Dentsu Young and Ribicam

BBDO

Grey international

McCann-Erickson

Bozell

Leo Burnett

The Lowe Group

Euro-RSCG

Saatchi & Saatchi

D’Arey Marcius Benton & Bowles

Bates etc.

2.5.6 Campaigns developed by the foreign agencies:

Euro RSCG:

This advertising agency in USA conceived and developed the advertisement campaign for Intel Corp. Two 30 second advertisement were created for their new processor Pentium III. The campaign opens with the flagging off a car race. It’s an Indy 500 like racetrack, already heated up with zipping racing cares trying to outdo one another. In the midst there is one station wagon. The driver is all set to race but loses out in the end. ‘Can’t do it real life? Do it on the Internet. With the power of the Pentium III processor” and the voice proclaims ‘Don’t just get into the Internet, get into it”, Such spots have become a craze in the Europe and US.

O&M:

They have carried out excellent advertisements but the recent advertisements like that of Allen Solly is a classic example. The brand’s founding proposition had already been made: dress differently. The TV campaign virtually created the Allen Solly values through a person who sets his own standards for other to emulate.

Direct mail, the yellow pages and such would take the first blow of the advent of Internet. In fact in the U.S. Internet advertising spends in 1998 managed to beat publications at $400 million. However, it is predicted that the top agencies would concentrate more on the TV, radio and print advertisements. Many of the top agencies have started to concentrate on the on-line and interactive business is yet to take off in India. Let us now see the top 10 interactive agencies during 1998:

Rank Agency Headquarters Spend in 000$

1 US Web/CKS San Francisco 91000

2 Euro RSCG New York 78500

3 Grey New Tech New York 75000

4 Cambridge Tech Massachusetts 90000

5 Agency.com New York 80000

6 Xceed New York 62000

7 TMP Worldwide New York 50158

8 IXL Atlanta 64800

9 OgilvyOne New York 60000

10 Strategic Interactive Boston 40000

Lesson 2.6

ADVERTISING MESSAGE STRATEGY DEVELOPMENT AND EVALUATION

2.6.1 Introduction:

Following are the determinants of the message component:

Target audience:

The target audience will receive the message and the importance for the advertiser is the group attitude to the product. The developers of the message should understand the target audience thoroughly. They must know what the audience looks like age, income, occupation etc.; they must also appreciated the audience’s general life style and also the decision-making ability of the audience. Demographic and psychographic profile together give the advertiser an understanding of what appeal to be used to the audience if the audience consist of married people, 55 years of age and older, the ad might stress long term financial security and express this index in the context of the retirements selling.

The product:

The product information can be simple, complex with low involvement products where information processing is simple and hence the message can be kept simple and memorable. In the case of high involvement products there is extend decision-making and hence the theme can be more complex. The theme may seek to influence the product and the purchase decisions. Proper presentation of the product the product’s requires comprehension of what it does and how it does. In order to present the product’s attractiveness, a full under understanding of the product must be the foundation for the message.

Competitive positioning:

There is often called as clutter among the media advertisements were the competitor advertisements also feature along with the advertisers. It is hence virtually impossible for the audience to attend to all the messages. Only this unique and useful information gets through the perceptual defences to make an impression. The advertising message should present an image sufficient distinctive to stand out in the consumer’s mind, which can be otherwise known as positioning. Hence, in order that a message in effective, the product idea concept or theme should occupy a unique place in the minds of the consumers. Bajaj dominates the two wheelers, Colgate in the toothpaste segment etc.

2.6.2 Source Credibility:

The advertiser or the sender of the message is the source factor. If the source is perceived favourably by the audience, its message and the communication will be accepted. If the receiver perceived the source as unfavourable, the source will not be accepted by the receiver, however potential and efficient the media and message is. If the perception of the consumers towards the product is favourable, then advertising will be effective. On the other hand, if the company or advertising is more effective it will not be persuasive. There has been plenty of advertising by many companies in India whose credibility is suspect but it can reflect in their ultimate sales.

Celebrity endorsements, testimonial advertising can have profound effect on the audience in the Indian context. When Ganga soap was introduced, it was Gavaskar Rishi Kapoor and Kirna Juneha who endorsed the brand. However Gavaskar was irrelevant in this context and tool away the source effectiveness. Using a celebrity has the positive attitude about the brand. The advantage of the publicity and attention getting power of the celebrity helps the company. “Boost is the secret of my energy” quotes Sachin Tendulkar and the credibility of Sachin will certainly acceptable to the Indian mass. An expert is a better choice if the product is technical in nature. Colgate toothpaste, Fair and Lovely cream and examples. The expert allays fears on the product. Even use of a satisfied customer like Surf Ultra, Rin etc. can improve the credibility.

2.6.3 Message approaches:

Following are the classification of the message approaches:

The informative approach:

Here the audience receives an object statement of facts or evidence and evaluative statements are carried out. The emphasis is getting the features of the product across to the consumer. Normally any complex product could be advertised accordingly. The printers who are available in the market follow this approach. This sort of approach will be successful in the audience actively seeks information from the advertiser and the judgment is favourable to them.

The argumentative approach:

Unlike the informative approach, this does evaluate the facts and judgment. This approach takes the receiver through a structural process of recognizing features and then understanding the merits of the features. For example. Aiwa, Akai, Samsung explain and argue in the merits of the product and ask customers why don’t they use the product. Specifically in the case of high involvement products, where the decision making is complex, prior evaluation of the product is not there, and them it is advisable to go for this approach.

The Psychological approach:

This works on the basis that audience are likely to purchase products based on the emotional appeal. This appeal predominantly plays on the mood of the receiver and hence the product attributes take a back seat. This works well in the low involvement product where the interest is low, CRY, Lux soap, Mediclaim policy etc., are example. These are done on the premise that the audience may not be interested in the functional aspects of the product or there is little difference between brands on functionality.

Types of appeals:

Let us look at the basic appeals out of the basic wants as in the following diagram:

No. Eight basic appeals Basic wants from which they are derived

1 Enjoyment of appetizing, satisfying food and drink

Food and drink

2 Comfortable cloths, homes and surroundings

Comfort

3 Doing away with painful things; eliminating dangerous situations

Freedom from fear and danger

4 Winning every race, competitions Superiority

5 Being wanted by the opposite sex Companionship of the opposite sex

6 Providing the best for loved ones Welfare of loved ones

7 Winning friends and influencing people Social approval

8 Enjoying life; living as long as possible Longer life

Basic wants can be used as appeals for practically every type of consumer product. The more obvious products include the following:

1. All personal articles like toilet goods, toothpaste and personal gifts.

2. Articles having luxury use like jewellery, dresses, suits, hats, flowers, ornamental pieces.

3. All foods and beverages

4. Products and services, which promote bodily safety and comfort, like car,. Insurance, disinfectants, insulation and air conditioning.

5. Articles and services, which help to bring longer live, greater happiness like vitamins, aids to digestion, information on nutritional value of foods.

6. Product which help the individual become socially acceptable to the group like the right car, a house, high educational standards, correct language, the latest fashions etc.

Secondary appeals are based on wants one has acquired. They are important in advertising when used in support roles to help strengthen a basic appeal. Secondary appeals are based on logic and reason. Secondary features are of great interest to a buyer, he believes they should be of great interest to prospective customers. The wise advertiser is the one who understands the relative power and influence of the basic and secondary appeals we are the more effective ones and he uses them wherever they can be employed relevantly.

2.6.5 Creative approaches and styles:

This is a central theme, which runs through the entire advertisement. The selection of theme reflects the creative approach and is related to a specific appeal, which may be employed in the formulation of any message regardless of the type of product or service. Every agency has a unique way of approaching the creative work and that is the creative style employed by the agency. Rosser reeves coined the USP. It is known as Unique Selling Proposition and has three major features.

Each advertisement must make a proposition to the consumer

Proposition on that the other players cannot and does not offer

Proposition must be so strong

Innovativeness of Phillips, Eco-friendliness of Hero Honda, Price of Maruti is some of the examples in the use of USP.

Creative themes approach:

Utilitarian approach: The approach deals with the value of the product or service. The product with its functional benefits uses this approach.

Focused approach: This approach deals with a specific market audience segment when an advertisement is specifically prepared to induce the stimulus of a particular group. VIP Odyssey suitcase is an example, which is aimed at the executives.

Informative approach:

This approach deals with imparting information about the product/service. Here the emphasis is only to create awareness. Most of the new products follow this approach.

Non-specific approach:

They are vague and diffuse. Boroline advertisement is one such advertisement which does not straight talk about the product and in turn only in the end they show the brand.

Achievement approach:

This approach shows the advertisement orientation of the company. Recently ISO 9000 certification is advertised by many players and took advantage of this approach.

Descriptive and Projective approach:

This approach is a combination of both information and achievement orientation approach. The message built around the advertiser would go a step further to project the image and the achievement of the advertiser. “We also make steel” is quote by SAIL. Event though they are the major steel manufacturers, they project themselves indirectly that they are involved in other activities like social and economic up gradation of their area.

2.6.6 Creative checks:

Creativity in advertising most assuredly draws on pure writing talents. Successful advertising require knowledge of overall marketing environments and awareness of consumer learning abilities. Hence the advertising copywriter must write with a purpose but with an objectives of achieving the client’s objectives.

The creative person to make sure before writing the advertisement copy must ensure following checks:

Will the intended ad achieve its assigned persuasive tasks and thereby help sell its products?

Is the proposed message in line with the existing or desired advertiser image – in terms, for example, of environmental consistence, product safety, or company dependability and will it be legally and ethically sound?

Is the proposed message on target with regard to audience propositions?

Will the intended ad be able to do its job memorably, believable and convincingly given inherent time or space limitations and is it feasible in terms of production facilities and cost?

2.6.7 Creative strategy:

Creative strategy emphasizes the right type of advertising and draws heavily on the writing talent. The writer should be good at spelling, grammar and punctuation. He should be fully aware of the marketing environment and consumer learning abilities and selective processes. The creative strategy is designed to inform, persuade and remind the consumer. It requires hard work, and open mind and curiosity. Creative strategy should be characterized by conceptual fluency, originality and should separate the source from the content in evaluating the information, no early judgment, more realistic and reality orientation. Prof. Osben has developed seven steps of creative strategy.

Orientation:

It is related to underscoring theme in broad terms. It is nothing but a function of defining the market and message.

Preparation:

This step involves gathering relevant data. The advertisers need to depend on the MR data.

Analysis:

The collected data and information are analyzed to frame creative strategy Quantitative and qualitative data are analyzed based on audience characteristic and market conditions.

Hypothesis framing:

The assumptions are tested and information on the result is achieved Consumer experience of the products determines whether the developed hypothesis should be accepted or rejected.

Idea Generation:

Background information and functional information is ideas are allowed to be invited and would help in formulating appealing message.

Synthesis:

Several ideas and various kinds of information are combined to arrive at new ideas and facts. An analysis of the existing data helps in predicting the future ideas.

Verification:

The formulated message are verified before they are used for advertising purposes.

2.6.8 Copy Development

Elements of an advertisement:

1. Headline:

It is found that five times as many people read the headline as they read the body copy. It is important to have a good general idea, so that the advertiser knows approximately how much space to allow for in the layout. The headline is a vital part of an ad but the danger is that if it is first written the entire copy would be around the headline only. A hardware store has the widest range of tools than anyone in the town and hence his USP can be “The widest range of tools in Town”. This needs to be given in bold typefaces, which immediately attract the consumers.

2. Bullet points:

Bullet points are a series of statements or items in list for usually proceeded by a black dot as . In advertising they are used for highlighting benefits or information of some sort.

3. Flashes:

They are ovals, starburst, rectangles, diamonds and many others. They are often used to show prices or savings, but can be sued to highlight a second major benefit which is not included in the headline. They often overlap illustrations particularly if what they contain relates to the product illustration.

4. Illustrations:

They provide variety in an ad, but they are not essential. The main reason for using illustrations is to give an ambience, demonstrate the product in action, make people interested in the ad an even break up the test.

Photographs are the most common forms of illustration in advertising line drawings using black lines and line and tone illustrations, which use shading.

Line illustrations would be drawn on a sheet of clean white paper, perfectly to the right size, so that they can be pasted straight on to the artwork when the stage in reached.

Captions can be important if the pictures need explanations but should not be included if they merely repeat what is obvious from the illustrations themselves.

5 Body Copy:

It is the actual text of the ad. It is important to know what is being said and how much is being said. If the ad is not going to have any illustrations, then the advertiser should look into the use of imaginative use of headlines, using a clear and interesting typeface, using a variety of typefaces using cross-heads and using the layout completely. A typeface is a particular design of lettering. There are thousands of different typefaces and whole book has been written on the subject of typography. The most common typefaces have serifs, little cross lines, which finish of the letters. Typefaces, which do not have serifs, are called San serifs. The unit of measurement of type sizes is the pint and the most common type if Extra spacing between likes can be called as loading.

6 Logos

A logo is an emblem or device by which a product or company can easily be recognized. A chackra of Air India is an example. It can be very useful in creating an immediate association with the product in the public’s mind. Bottom right corner of a layout is normally meant for logos.

7 Slogans:

A slogan should preferably tell the reader something about the company. A dress shop for example might advertise a range of its product under the headline. “High Fashion at low prices” and the slogans can be “any time fashion” or “service with a smile”. The slogan should leave the reader feeling good about the company.

Designing a layout:

The various elements of the ad must come together to make a harmonious whole, not a lot of separate items. The relative sizes of the element should be decided. Caution must be taken for the headlines which should not overpower the illustration or even the body copy should not squeeze out the main picture should have variety and balance visual balance. The layout should allow the eye to travel through the ad in a logical fashion done which in turn becomes what is figures shows the few such sketches. From the thumbnail sketches, two or three are selected and larger, more detail layout are done which include the headline with words, cross-heads, illustrations, bullet points etc. this final layout will consist of the full advertisements.

Dr. Gallup found that readers preferred the test picture in the following order.

Children

Groups of adults

Sports scenes

Animals

Natural scenery

Psychologist Daniel Starch, in studies of thousands of advertisements in leading magazines, found the following pictures were the top attention-getters.

Picture of five men in Armed services induction line, wearing only shorts

Picture of head and shoulders of six-month old baby

Picture of sailor riding giant sized telephone

Picture of attractive girl/lady

Picture of sleeping child

The following colors in order would be appealing more to the consumers:

Blue

Red

Green

Violet

Orange

Yellow

Copy writing:

Copywriter must know what to include and what to avoid. Copywriter should follow certain tips as follows:

Present facts and arguments; avoid clichés and waffle

Include prices where possible

If the product is better than the competitors, present arguments to prove it.

Don’t use too many superlatives

Endorsements should be highlighted

Avoid puns

If testimonials are added, they should be separated from the rest of the copy.

The opening sentence should be short and attention grabbing. There should be logical flow through the copy the firs sentence should follow from each new point or idea in a logical way. The construction and length of the sentences affect the structure of a copy and the way it flows. Each sentence should carry a single idea. While writing the closing sentence, one should leave the reader with a positive image.

The basic appeals and the possible copy writing could be as follows:

1. Food and drink: A delicious, taste bud adventure in eating

Illustration: Showing chicken or vegetarian food will delicacies

2. Comfort: Sleet… Sleep… Sleep. As you’ve never slept before.

Illustration: Young lady completely relaxed and comfortable under an electric blanket.

3. Freedom from fear and danger: Brakes to trust-quick and quiet

Illustration: Quick stopping car just avoiding running over the boy

4. Superiority:Expect to be started

A good heading for an auto advertisement

5. Companionship of the opposite sex:

Soft little hands-how easily they make a man’s heart turn over

A hand lotion, Illustration shows a man an woman kissing.

6. Longer life:

Let’s go! Straight to the Gate!

An illustration shows a crowed of very happy folk enjoying the fun

UNIT – 3

Lesson 3.1

TECHNIQUES USED IN PRODUCING ADVERTISEMENT

3.1.1 Production of Print advertisements:

The first step in print production is to select one of the three major processes by which advertising material is printed.

The first is letterpress printing where printing is done from a raised surface.

Second is the offset lithography, which prints from a flat surface.

That last is the rotogravure, which allows printing from an etched surface.

It is also important to know the typography, which deals with the style of type and the way in which are copy is set. Typefaces come in related designs called families. The size of type is specified in points (72 to the inch). The depth of the newspaper space is measured in agate lines (14 to the column inch). The chief methods are metal typesetting and photo typesetting.

Photo engravings are to be used if the ads are planned in letterpress publications. The two classes are line plates and halftones (for continuous tone artwork). The screen specified for halftones depends on the smoothness of the printing paper’s surface. In the preparation of a full colored ad, one has to separate set of plates to be printed in the four process inks. For letterpress ads, plates are sent to the publications; for gravure and offset lithography, films are supplied with plates made by the photo platemaker only for proofing purposes. Material for color ads is usually accompanied by progressive proofs, both offset and gravure publications frequently also accept artwork and mechanicals.

3.1.2 Production of TV commercials:

There are two basic segments to developing a TV commercial, the video and the visual part one sees on the TV screen and Audio part which is make-up of spoken words, music and other sounds. The common techniques used in the TV commercials are:

Presenter standing in front, demonstrating

Celebrity like Sachin, Akshay etc.

Close up technique

Customer interview

Vignettes and situations

Product comparisons

Humour

Animations

From among all these techniques, an advertiser should look for the best technique, which suits his product, consumer tastes and preferences and the money available. Writing a TV commercial is very different from writing print advertising. First one must use simple, easy to pronounce, easy to remember words and be brief. The thirty seconds commercial has only twenty-eight seconds audio. In these twenty-eight seconds, the advertiser must be able to solve the prospect’s problems by demonstrating the product’s superiority. In the lest side of the writing paper, the video action is described and on the right audio position including sound effects and music. The copy should be friendly and in a conversational type. The strong copy and sound and strong visuals are vital for an effective commercial. The top frame consists of television screen activities and the bottom frame consists a description of the video and the audio for that sequence. The number of sets of frames varies from each commercial.

The storyboard is a practical step between he raw script and the actual production. It gives the agency, client and production house personnel a common visual starting point for discussion. Upon client approval, the story board goes into production, includes selecting scenes that have been shot, arranging them in their proper order, inserting transitional effects, adding titles, combining sound with picture and delivering the finished commercial. A director is in charge of the shooting. Most commercials are shot on film, the first quality being 35-mm film. 16-mm film is less

costly. All indoor scenes are shot as a group regardless of the final commercial. Close-ups, are generally filmed together in the outdoor shots.

Some of the common camera directions are:

ECU = Extreme close up

CU = Close up shot

MCU = Medium close up shot

MS = Medium shot

LS = Long shot

3.1.3 Producing the Radio Commercial:

The radio writer has the opportunity to develop an entire commercial by himself or herself. In radio, the copywriter enjoys the freedom to perform in he theatre of the listener’s imagination. In order that the radio commercials are effective, it should be simple, clear, believable, create interest and be distinctive. Radio commercials rely very strongly on the strong copy. Radio in fact creates the mental pictures with other techniques. Some of the techniques used are:

Using a straight announcer

Using two announcers alternate sentences or groups of sentences of copy

Using an actor’s voices

Using a song which is pleasant and easily ermenbered

Using a jingle which is normally followed by the music and then announcement

Using customer interview who relate their favourable experience with the product of services

Using humour

Most radio stations accept the words as per the seconds of advertisements as follows:

Words Second

25 10

45 20

65 30

125 60

While producing a radio commercial, the following steps are undertaken:

An agency or advertiser appoints a producer

The producer prepares the cost estimates

The producer select a recording studio

With the aid of the casting director, if one is needed, the producer costs the commercial

If music is to be included, the producer selects a music director and chooses a music

The studio tapes music and sound separately

The studio mixes music and sound with voices and

The producer sees that the master tape is prepared for distribution on either tape or cassettes and transported to stations.

3.1.4 Producing outdoor panels:

Outdoor and transit panel advertising is done mainly to reinforce the message provided through advertising. People merely glance at the posters and billboards; no one stops to read them. Copy must be as short as possible and contain catchy slogan capable of conveying at least one major idea. The copy must be simple, direct and avoid subtlety. They should have high visibility preferably using colour combinations. Logos must be placed alongside the company name. one product, which specializes in the outdoor advertising, is Mysore Sandal soap. 555 cigarettes, Wills Kings are some of the cigarette brands using illuminated displays.

The displays should be in a position to gain the attention of the audience in say eight seconds or even less. There is no upper limit on the length of the picture but the width is restricted to 8 feet. The latest development is the COMPUSIGN, which emulates television in terms of real life pictures real time animation and 3D graphics.

Lesson 3.2

MEDIA PLANNING AND SELECTION

3.2.1 Organizations involved in media planning:

Following are the organizations involved in media planning apart from the advertiser.

Media department:

In small advertising agency, the media department functions primarily in the role of media buyer, where the account executive is largely responsible for media planning. In large agency, planning and buying are left to a department comprising of media director and his associates. These people are expected to be well versed in media and also in the marketing and selling aspects.

Independent media buying service:

Some of these people provide complete media planning and buying service, which are normally utilished by small agencies.

Media representatives:

They prepare sales prese4ntations, conduct research projects on their target profile and structure advertising rates. The media employs them, some media use the services of agents who work for these media.

3.2.2 Structure of a Media Plan:

Media plan is based on the advertising plan where creative strategy is done based on the target market profile. There is a rationale for the media strategy and tactics.

A media plan may contain the following components in its structure:

Summary statement of marketing objectives

Summary statement of the creative strategy

Summary statement of market data

Competitive activity

Statement of media objectives and strategy

Statement of media selection and schedule

3.2.3 Variations in media planning:

Following size campaigns:

Many campaigns call for more than one size of advertisement so that, rather than use one uniform size throughout, one can plan two or more sizes. One can start off with a half page ad and then move to quarter page and revert back to hals page advertisement.

Drip or Burst:

A campaign, which uses ‘drip’ approach, calls for steady advertising over a period on the premise that constant dripping wears away a stone. The burst approach on the other hand concentrates resources into a limited number of weeks to achieve greater impact. A typical burst campaign might consist of four weeks on twelve weeks off, four weeks on, in a repeating pattern.

Combined media:

Going by the ‘Law of diminishing returns’, it is better to look for more than one vehicle to reach the same market and create fresher impact. One can use ‘inter-media’ option, which means within press using publications A, B or C.

Duplication:

It means reaching the same market by different media.

Net extra coverage:

If the marketing aim is to reach as many prospective buyers as possible then we should only try to seek media giving larger readership/viewership.

Opportunities to See (OTS):

The average frequency of target audience seeing the advertisements or the number of potential exposure received by the average reader/viewer/listener is termed OTS.

Frequency distribution:

This will reflect the marketing priorities of the market segment. This will give a more detailed break down of OTS across the target groups in terms of coverage.

Cost per Thousand: (CTP)

The cost of reaching an individual prospect is expressed in terms of Cost per million or cost per thousand and the equation is:

3.2.4 Elements of the media schedule:

Every media schedule contains the four basic elements:

A list of media where the advertisement is to appear

The dates of insertion, posting and timing

Space, time or the units to be used and

The cost of the media

In some cases, circulation figures are also given. Normally the advertiser gives importance for the concepts as reach frequency, continuity and dominance. A typical schedule is shown in the next page:

3.2.5 Patterns of Media Scheduling:

The advertising effort needs to be allocated, in terms of target market and geographical patterns. This process is called media weighting. Timing of advertisements is another dimension. Continuous advertising, where in ads appear regularly through out the time period is covered in the media schedule. One can also employ “flighting’ or “pulsing”. These patterns involve heavy media usage for while, followed by complete abstinence. In addition to budget constraints, seasonal sales, product life cycle, repurchase patterns and competitive advertising patterns may influence the choice of scheduling patterns.

ANIT – HAN ADVERTISING

RA 18, Chettikulangara

TRIVANDRUM 695 001

PRINT MEDIA ESTIMATE

CLIENT: ___________________ Date:_______

Division: _________________

Product: _________________

Publication Description and Unit rate Total cost

India Today Back cover (Colour, Bleed) xxxxxxxxx.xxx

___________________ ___________________ ______________

___________________ ___________________ ______________

___________________ ___________________ ______________

Patterns of publication advertising:

In publication advertising four basic patterns are available. They are:

Even schedule

Placement of advertising of equal size at regularly established intervals

Alternating schedule

Placement of advertising of equal size at alternate intervals

Staggered schedule

Placement of advertising on a longer period of time than a week or month

Step up or step down schedule

Initial burst or gradual building or interest among the consumers

Frequency in media scheduling:

Frequency represents the average number of times a member of the target audience is exposed to the advertising message. Reach and frequency measures are based on estimates of the size of an audience as calculated by independent rating services.

Assuming that a magazine has a circulation 1 million, of which 80,000 subscribers are in a target audience defined as female’s aged 15 to 24. Defined in terms of the target audience, the reach of one insertion in that magazine would be 8,00,000. If an advertiser made one insertion in that magazine in each of the 4 weeks the total reach would be (4 X 8,00,000) or 3.2 million. This 3.2 million can be termed as gross impression number. The effective frequency can be calculated as Average frequency figures may be misleading in many cases thus prompting one to go for effective frequency. Some audience members in reality are heavier readers or viewers then others and so the distribution of frequency of potential exposure is usually unbalanced.

3.2.7 Media costs:

Newspapers:

There are three rate structures in newspapers. They are open rates, contract rates and flat rates. The open rate quoted for a national advertiser goes beyond single insertion. Contract rates are lower than open rates and are offered to those advertisers who plan to run a series of ads in a newspaper over a period, usually of one year. A flat rate is one, which provides for neither frequency nor volume reductions. In a particular edition of a newspapers, the display page ads has a column width of 4.87 cms. Column depth of 57 cms and standard size. The page has a column width of 4.2 cms and 57 cms dept with 9 columns to the page. The appointments panel is 4 cm X 7.78 cms and car panel is 5 cm X 5cm.

Effective frequency: Gross impression / Net coverage

Magazines:

The various sizes of the advertising possibilities in magazines are:

Double spread Bleed 27.0 cm X 38.2 cm

Double spread Non bleed 24.5 cm X 35.8 cm

Double spread recruitment 24.2 cm X 35.3 cm

Half page double spread 12.2 cm X 35.8 cm

Full page bleed 27.3 cm X 19.1 cm

Full page non bleed 24.5 cm X 16.8 cm

Half page (horizontal) 12.2 cm X 16.8 cm

Half page (Vertical) 24.2 cm X 7.8 cm

Double column 24.5 cm X 11.0 cm

Single column 24.5 cm X 5.1 cm

Television

In India, advertisers spend Rs. 12,000 Crore on television advertising. By the turn of the 21 st century, advertising revenue on TV to the tune of Rs. 30,000 Crore. With the advent of satellite TV, the rate structure of the television had been driven by the audience exposure and that can be classified as:

Early morning 7 am – 10 am

Day time 10 am – 4 pm

Fringe time 4 pm - 7 pm

Prime time access 7 pm – 9 pm

Prime time 9 pm – 11 pm

Late night 11 pm – 1 am

Lesson 3.3

MEDIA STRATEGY

3.3.1 Introduction

When one buys media, he or she buys access to an audience a certain number of times. From television to radio, it is time, from newspaper to magazines, it is space. The percentage of readers, listeners, or viewers who pay attention to an ad will depend on how well the ad is executed. For products that rely heavily on advertising, media buying is one of the most crucial steps in the marketing communication process for two reasons.

1. Even the greatest advertising campaign in the World will be worthless if the target audience never sees or hears it.

2. The media budget is frequently the biggest expense in the marketing communication mix, especially for consumer products advertised on television.

There are five key decisions on the media strategy. They are:

WHO? The target audience should be described as accurately as possible on the basis of demographic data. Most media vehicles have specific audience profiles and unless a brand is trying to enter a new market, the audience profile should match that of the brand’s current users.

WHERE? Here the choice of media depends on the geographic area in which the product is distributed and thus available.

WHEN? Some products are seasonal and other have weekly sales peaks. Ads should be scheduled to run with these fluctuations in mind.

HOW? Media choice is generally dictated by the type of creative message marketers want to communicate. For example, if the advertising involved action or demonstration, TV is a logical choice.

To WHAT EXTENT? Marketers must determine how much they will spend in which media vehicle. As part of media planning, the media budget is allocated according to such considerations as media categories, geography and time periods.

3.2.2 Factors involved in choosing the media:

Selectivity

It is the ability of the medium to reach a particular audience based on either on the audience’s geographic location like Kerala, Pondicherry or India or on unique traits like being vegetarian, following certain cultural habits etc., These traits may be demographic or psychographic in nature.

Coverage:

The size or nature of the audience a medium can reach is the coverage. It refers to the degree with which a medium can penetrate a market. This was shown in the advertisement in Daily thanthi showing the maximum coverage in Tamilnadu.

Flexibility:

The case or amount of time required to place an advertisement in a medium.

Cost:

The charge imposed for buying a certain amount of time or space is the cost

Editorial content:

The nature of information or entertainment material that surrounds a buyers’ advertising and how ell it serves to meet the advertiser’s objectives. Those with premium products look for better editorial environment having upmarket image media.

Production quality

The ability of the medium to reproduce the advertising with great fidelity or on the local level, aid clients with the production of their advertising

Permanence:

The ability of the medium to keep advertisement below prospects eyes per within their grasp for an extended period of time.

Trade acceptability:

The degree of acceptance a medium can generate among the advertiser’s immediate retailers, wholesalers and other persons working within an advertiser’s channels of distribution.

Merchandising:

Service offered by most media whereby the medium looks to generate co-operation among inter-media in conjunction with an advertising campaign.

3.3.3 Media objectives:

Since brands have limited budgets, advertising executives must decide how much advertising is needed to create the impact specified by the marketing communication or objectives. In determining the media objectives, there are two primary considerations. Reach and frequency.

Reach: it is the average percent of the target audience exposed to the advertising at least once within a given period of time.

Frequency: it is the average number of time, within that period that an advertising message for the brand is seen by those who have been reached.

In highly competitively product categories, particularly for mature products that are purchased frequently, frequency usually more important. Coke and Nirula’s must keep their brands ‘top of the mind’ among the targeted customers; these image campaigns require a great deal of repetition. On way to maximize reach is to use a variety of media. To maximize frequency on a national level, marketers can stress one medium and increase repetition. On the local level, radio is one of the best frequency – building media because each radio station tends to have loyal listeners especially in the rural markets.

3.3.4 Print media:

There are two media in the category. They are newspaper and magazine. Modern newspapers is amazing medium despite unfounded charges that the newspaper is on the wane. This medium continues to be the primary advertising media in terms of daily readership, advertising revenue and preferred adverting medium by the public. The right hand page of a newspaper commands greater attention that one in the left. A top of the column ad is seen first before the bottom position. Normally, any men’s product gets maximum exposure in the cover page and / or the spot page and in the case of women’s products, the food and the fashion page gets more exposure. Many newspapers offer split run facility. This is a process by which alternate copies of the same newspapers are printed with different ads for the same product. Normally the location of the ads on both the editions is the same. Newspapers do charge extra for this service.

Magazines can be weeklies, fortnightlies and even monthlies. The specially of magazines is that they attract to a particular kind of people in all the regions or communities. Magazines can be classified as pocket size, standard size, flat size and large size. The advertising rates are quoted in units of pages, quarter pages, half pages, cover and back pages and agate lines etc,; these rates are inclusive of the commission of the advertising agencies. Magazines are famous for quality of picture especially colour advertisement.

The American Association for Advertising Agencies has suggested that the advertiser ask the following questions when considering a magazines buy:

Does the magazines reach the type of reader to whom expected to reach?

How does-distribution of circulation compare with the product distribution?

What is the cost of reaching the thousand prospects?

How do readers regard the magazines?

Will the advertisements be in acceptable association?

How co-operative is the publisher in giving good position?

How important are merchandising aids, availability of aids?

How do other magazines compare with the said one on the above comparing points.

3.3.5 Broadcast Media:

The broadcast media comprises of Television, Radio and Internet, Television was introduced in Europe and US in the dawn of the 20th century and made its mark immediately. Radio is the predecessor to the Television. It was introduced in the early 1920’s. Frequency modulation and amplitude modulation have extended its operations to a large section of the population. Radio stations may be classified on the basis of Power, method of transmission and Range. The local, regional and national channel stations are divided on the basis of power. The range of 100 kW, the regional stations operate within a state. Radio offers varied programming for all listeners.

Radio follows network strategy which covers the entire country for advertising. Spot advertising is mainly is based on the quality and clarity of the announcements. The Internet is the latest offshoot based on the developments in technology using the electronic media. It provides immediate access to any browser and at present the Internet is yet to take off in India even though it is prevalent in Europe and US.

3.3.6 Outdoor Media:

Outdoor advertising is the oldest form of communication. it includes posters, paint advertising, mural advertising, spectaculars. Posters are printed matters or lithographed on sheets. They are prepared based on the available structure and locality. The painted advertising is available as bulletins and outdoor planks. They give the dramatic three-dimensional effects. Volume of traffic is the first important factor in choosing an outdoor media. The space position volume (SPV) helps in identifying the location. The length of unobstructed approach, type of traffic placement possibility, immediate environment, size and physical attr4activeness of the outdoor sing and price determines the selections of outdoor media location.

3.3.7 Transit media:

The transit advertising industry is made use of three primary media vehicles with several variations of each. Bus advertising is the most widely used form of transit advertising and actually includes interior and exterior transit advertising. Rail advertising where the trains are used for advertising purposes. The third type if station advertising. Outside displays are of varying types and sizes. The larger is the size, the larges is the number of units. The cost of display is calculated on the basis of the number of display in one unit of advertising. Posters are installed at buses and railway stations.

3.3.8 Secondary media:

1. Direct response advertising:

Any advertising form used in selling goods directly to consumer can be called as direct response advertising. It can be an ad with a coupon in newspaper or magazine. The publications are handed over to the retailer to distribute the mail from door to door.

2. POP displays

This point of purchase displays is placed in retail stores to identify the advertiser or merchandise of a product. To create impulse buying, it provides a last chance to promote the product prior to purchase. This last minute decision making by consumer or the impulse buying makes POP an extremely element in the final sale of the product.

3. Speciality advertising:

Specialities are outright gifts, which are given with a hope to motivate a person to purchase a product. The purchase is not requisite for receiving the specially. The company makes calendars, glassware etc as specialities.

4. Other media:

Cinema advertising is done in cases where local markets can be tapped. This form has become more prominent due to the quality of picture and the mass attraction. Other methods include advertising in yellow pages, exhibitions, and even sponsoring games and sports. Many organisation also participate in religious meetings, prayers, and provide free services at hospitals and educational institutions. Ariel advertising acts as a reminder media.

3.3.9 Strengths and Weaknesses of various media:

Let us look at the strengths and weaknesses of various media like:

Newspapers

Magazines

Radio

Television and

Direct mail

In the following table:

Strengths Weaknesses

Newspapers: Short life span

Local advertising is possible Not target selective

Easy to prepare and inexpensive Teens and lower social economic not reached

Provides time flexibility Readership relatively low

Offers wide reach Poor quality reproduction

Timely

Inserts can be easily used

Magazines

Excellent Colour reproduction Long lead times

Special interest means Low reach

Good targeting Production relatively expensive

Pass along the redress

Long life, credible and prestigious

Radio

Target selective Messages cannot be re-read

Good frequency builder Average station has low reach

Short lead time Background medium low attention level

Free merchandising No illustrations

Relatively low production costs

Television

Combines audio and video Not too selective

Local and national Production expensive

Good reach Long production lead time

Low CPM

Direct mail

Most selective Most expensive per impression

Messages can be in varying range of sizes and configurations

Mailing list not always uptodate

Demands attention and consideration

Bad reputation

Two to four times coupon redemption

Lots of clutter

Can be personalized

Lesson 3.4

MEDIA STATUS IN INDIA

3.4.1 Growth of Newspapers:

In India, more than Rs. 1050 Crore are spent on newspapers and magazines in 1991. Of this the English press got more than 10% of the share. There are more than 25,000 publication now registered in the Registrar of newspapers. They can be classified as:

Daily

Weekly

Morning/Evening

Special interest

Newspapers are classified on the basis of the circulation in a geographical area. They can be classified also on the basis of size. A standard size has about 8 column. Indian Newspapers Society (INS) is the representative organisation of the newspapers, magazines and other press. The INS has prescribed a code of standards to be observed by all the members while accepting advertisements. The society grants accreditation to the advertising agencies and only such agencies are entitled to certain privileges like 15% commission. Those, which are not accredited, shall not get the commission of more than 10%. Industry analysis estimate the total advertising and sales revenues of the top ten publications to be in excess of Rs. 1,500 Crore by 1996. Some of the major publishers have done well over the years and are identifying strategies to segment the market. Let us now see the break-up of print in 1996.

English Dailies Weeklies Monthlies Total (including other media)

No. of publications 70 mn 26 mn 56 mn 177 mn

Circulation/issue 4.2 mn 1.5 mn 2.6 mn 9.3 mn

Indian Languages

No. of publications 324 mn 79 mn 96 mn 539 mn

Circulation/issue 19.6 mn 77 mn 4.6 mn 37.1 mn

3.4.2 Television

In India Television was introduced only during 1965. However colours Television was introduced on 1982. Regional transmission started during 1985 Commercial television was sparked off in the nineties with the advent of Star TV and CNN. Since then satellite television has taken off and at present there are about 70 odd channels being aired. Doordarshan in order to counter the satellite onslaught started five satellite channels like DD1, DD2, DD3 and other channels. Doordarshan started its movie club on 7 th April 1995. There were at that time 50,000 cable homes were available. It is identified that India had more than 60 million cable homes, which is equivalent to the Australian population. The Television audience in our country in cable and satellite television is given below:

Year In million

No. of TV households No. of cable households

1994 42.05 9.7

1995 44.8 11.4

1996 48.3 12.5

1997 52.5 13.9

1998 56.8 15.6

1999 61.2 19.1

The growing popularity of TV as a communication medium has resulted in the TV media sector undergoing a rapid transformation. The Zee channel that started in October 992 catalyzed the industry into a high growth spiral. Zee’s success tempted several other private players to enter the businesses, resulting in overcrowding. Apart from all the Zee channels, other major satellite channels avidly watched by viewers are Star TV, Sony TV, Home TV, BBC and CNN. There are regional language channels, which are major players in their respective territories like Sun TV and Vijay TV, both dominant in the South.

The primary source of income for TV channel operators is advertisements. This revenue is directly co-related with the reach and viewership of a channel. Any channel’s popularity depends on good quality programs, which is the software content. The business requires enormous initial investment in programs and revenues follow only with a time lag after the channel receives a minimum viewer acceptance. At present Doordarshan continues to get majority share as far as advertisement revenues are concerned because of its reach in rural as well as urban India. Satellite channel penetration is higher in urban areas but is gaining in popularity in rural areas also. DD, Zee and DD Metro account for 75% of total ad spend in India. If Sun TV and Star TV is also added then only 10% of ad spend is left for the rest of channels telecast in India.

The number of households with televisions will touch 86mn by 2000, a CAGR of 13%. Of these, cable connections will reach 46mn by 2000 from current levels of 30mn households, recording a CAGR of 30%, 66% of these households will be urban. Penetration in rural areas will grow at a faster rate, albeit on a munch smaller base. Therefore, the sector has latent potential for growth on back of the exponential growth of cable TVs during the last 5 years. Television penetration in India is extremely low as compared to other developing countries like Malaysia, Pakistan etc. The number of channels has increased, implying higher demand for software programs.

Advertisement revenues, which are the barometer of channel popularity, will get disposed over several competing channels. A shakeout is likely in both the channel and cable TV sectors. The biggest beneficiaries will be the content providers or the software houses. They will control the intellectual rights to the key element driving any channel’s popularity. Investors should overweigh this sector, especially those companies, which own program rights like Zee Telefilms and Sri Adhikari Brothers.

The growing popularity of TV as a communication medium has resulted in the TV media sector undergoing a rapid transformation. From the black and white days of state controlled Doordarshan, to the highly colorful tunes of Channel V and MTV, the medium has certainly undertone a phenomenal change. Given is popularity, percentage ad spend has also increased proportionately on this medium.

Entry of new channels pos 1991

Indian telecasting has witnessed entry of new channels to cater to the various needs of Indian audiences. Channels have been launched in English, Hindi as well as other regional languages. Till 1991, the state owned Doordarshan ruled the roost, as other players were not allowed to uplink and broadcast. However channels such as CNN, Star TV and BBC, which were offshore companies, could circumvent these regulations and telecast their programs into India. Cable operators then relayed the same and made it available to the common man through the cable television network.

Like many other countries, the State machinery controlled television. It was used as a propaganda tool for the party in power, with the opposition always at the receiving end. The customer had very little choice. The first steps towards more user choice began during the Asian Games in 1982, which had to be telecast to a wider audience. Doordarshan (DD) used Insat 1B for the telecast and the DD network was launched as a national channel.

The cricked telecast by Channel 9 in 1985 and the Gulf War in the late eighties all played small but important cameos in educating the Indian viewer. With liberalization in 1992 and crumbling tariff barriers televisions (read as color TVs) became more easily available. The media revolution had started.

Currently, the major players include Doordarshan (DD), Owned by the State, it had monopoly over Indian television till 1992. DD still remains the dominant players with a wide reach. It has over 550 transmiters installed all over India and covers over 70mm households. DD Newwork, its main channel ws launched in 1982 during the Asian Games. Given its monopoly, DD’s operations remained stagnant till 1992. DD2 was launched in January 1993 to meet the

challenge of competition and it cover about 14mn households. DD plans to launch regional channels. It also has ambitious overseas plans as well as setting up of pay channels, Direct to Home (DTH), etc.

Zee TV – Zee channel was promoted by Subhash Chandra Goel (Essel Group) and associated to launch a Hindi channel for the Indian sub continent. Zee channel was launched in October 1992. It has become very successful and has grown rapidly in the last four years. As Indian regulations did not allow private channels to uplink from India and set up private television stations for terrestrial viewing, promoters of Zee along with STAR TV (owned by Rupert Murdoch controlled Newscorp) promoted an offshore company, Asia Today (ATL) incorporated in Hong Kong to operate Zee. It has launched other related channels like Music Asia, Zee Cinema and India TV.

Sun TV – Was promoted by the Chennai based Maran family, a close associate of he DMK party of Tamil Nadu. It is very popular in Tamil Nadu and among the Tamil speaking population elsewhere. Its three main channels telecast nusic, movies and entertainment. Recently, it has launched other regional channels in South India.

Home TV – Was originally promoted by Hindustan Times. Due to mounting losses, the North India based Sahara Group has taken a controlling stake in it. The group is planning to invest about Rs. 250mn to revamp its operations. The new launch, which has been delayed, is expected by May, 1999

Shristi – is a Delhi based company engaged in production and post production facilities of programs. They have launched an entertainment channel on Intelsat 704 but is not doing well.

ATN – Promoted by Siddharth Srivastava, it was the first private channel operator to begin operations in August 1992. The management control has since then passed on to the Hindujas as a fallout of the cash losses it suffered. The company is mired in controversies particularly with regard to the screening rights of Hindi movies.

Sony TV – Promoted by Sony, the Japan based consumer electronics company, has become very popular among the masses with the channel now holding more than 10% of prime time viewership.

Vijay TV - UTV and ILFS AIG have taken a majority stake in the company, which is popular in South India, especially Andhra Pradesh. The Mallya controlled UB Group continues to retain 7.5% stake. The new management intends spending over Rs. 500mn to make it a youth oriented entertainment channel.

Other operators include the foreign global media entities like ESPNM (sports channel), Discovery and National Geographic (Infotainment), AXN (Action), CNN, BBC, Etc.

The Zee channel, that started in October 1992 catalyzed the industry into a high growth spiral. Zee’s success tempted several other private players to either the business, resulting in overcrowding. Hindi channels such as Jain TV, House TV, ATN, Sony Entertainment, NEPC TV as well as Star’s own Hindi channel started operations. Other MNC media entities followed suit.

Apart from all the Zee channels, other major satellite channels avidly watched by viewers are Star TV, Sony TV, Home TV, BBC & CNN. There are other regional language channels which are major players in their respective territories like Sun TV and Vijay TV, both dominant in the South.

Most of the channels that could not become attain popularity rapidly suffered, since their advertisement earnings were not sustainable. The first round of the media wars is over. Management changes, ie original promoters selling out to new managements with deeper pockets, has become the order of the day. Alliances like the famous ESPN Star Sports arrangement also made headlines. Given the global trends of mergers and acquisitions, further consolidations is likely. Alliances and mergers make sense when the partners complement each other, like BBC and Discovery launched Animal Planet, CNBC and ABNI came totehter to launch a business channel called CNBC Asia.

Earlier uplinking was not allowed from India. This law has been recently amended to allow all Indian companies to uplink directly from India. The definition of Indian company ensures that the foreign ownership is restricted to 20%. These companies lease transponders in satellites with a footprint over the Indian sub continent to make available their programs in India.

DTH is a new technology that circumvents the cable operators by directly delivering a bundle of channels to the end user. DTH involves transmission of encoded audio/video signals (Ku band) via satellite. The end user needs an antenna to receive the signals and a decoder (set top box) to unscramble the encrypted signals. DTH services elsewhere in the world are Echostar and Direct TV (USA) and BskyB (Europe). Rupert Murdoch of Star TV fame owns BskyB.

The size of the antenna a DTH will be 1.5-2 ft in diameter, making if easy to install and transport. In conventional cable, since signals are in C band, an 8ft-diameter antenna is needed. The basic difference in the business model is the hardware costs in DTH. In a cable system, the user pays an one time connect fee and monthly rentals, while in DTH he has to invest in hardware, the antenna will cost about Rs. 10-15000 and docoder will cost about Rs. 10000. The Indian viewer might be reluctant to incur such heavy installation costs. quality of telecast in DTH is superior to Cable TV and viewer can receive upto 200 channels.

DTH regulations have been referred to a committee of cabined ministers. A formal announcement on the same is expected shortly. In the meantime, DD has sought to be the exclusive licensee for providing DTH services. The license will be for a period of 15 years, the first 5 being exclusive and in the balance 10, DD will be exposed to competition.

The DTH market in India, according to Star TV reports, is estimated at 0.1mn households. Another issues that will impact valuations will be local program content. In India, given the diversity and differences in tastes, regional content is critical for success. This has been proved by he success of Sun TV in Chennai.

DTH will result in restructuring of the cable television industry. It will become imperative to have cash reserves to withstand the technology threat. Upgradition to fibre optic backbone will become necessary. A fibre optic network will cost about Rs. 0.5mn per km as compared to Rs. 0.1mn per km for coaxial cable. The state is now ripe for consolidation.

In the Broadcasting business, it is only the industry leader who makes sizeable profits. The business is a game of asymmetrical payoffs. For instance, the top 5 channels account for 90% of ad spend.

Urbanization and TV penetration is related. This may be due to the popularity of cable television that has resulted in increased color TV sales. Rural penetration is low, although growing at a fast pace, because of hearth of specific program content to cater to that segment.

Liberalization has resulted in the Indian viewer becoming more aware and conscious. This has resulted in the customer having more choice with the entry of a number of companies in different segments. Competition has resulted in companies increasing their marketing spend significantly.

Popularity of TV media is becoming higher. Increasing TV penetration leads to a reallocation of advertisement budgets with higher allocation for television at the cost of other medium.

TV channel operators user different business models to generate revenues. The critical component of any channel is the quality and type of programs they telecast. This determines their popularity, which is turn determines amount of advertisement revenues they can generate. They can do any one of the following:

Buy programming rights of program software from outside and collect advertisement revenue on their own. This model is followed by Zee TV, wherein they have a separate company in their fold called Zee Television, which develops all the content. The advantage is that re runs of serials / programs becomes very profitable.

Selling time space to the producers for a fixed charge. Producers in turn are free to book advertisements at their own rates (three is an understanding on the time allocated for advertisement) and collect revenue. This is Doordarshan’s basic model in which they sell prime time slots. The rights continue to be vested with the producer. The key factors that drive sector revenues are:

Television penetration: Since the medium is television, increased television penetration will imply higher viewership. This will translate into higher advertisement spend allocation. This will also, imply higher software production and demand for new programs.

Competition from other satellite channels would have an adverse impact on advertisement revenues, as advertisers have more choice in allocating ad budgets.

Government policies can have a big impact on the fortunes of the entire industry. The DTH bill is yet to be passed and if the happens, it will trigger a restructuring of the cable business.

Launching new channels targeted at specific, segments, like regional channels within India or other areas having large pockets of ethnic Indian population would lead to revenue growth. This will entail significant initial outlays.

Depreciation of the rupee would increase revenues as most of the program / software companies export the programs overseas and payments are dollor denominated

Advertisement revenue

As mentioned earlier, this is the primary source of income for TV channels operators. This revenue is directly co-related with the reach and viewership of a channel. Any channel’s popularity depends a good quality programs, which is the software content. The business requires enormous initial investment in programs and revenues follow only with a time lag after the channel receivers a minimum viewer acceptance.

At present Doordarshan continue to get majority share as far as advertisement revenues are concerned because of its reach in rural as well as urban India. Satellite channel penetration is higher in urban areas but is gaining in popularity in rural areas also. Doordarshan dominates with its reach in rural India. However, within six years of its launch, Zee TV has been able gain sizeable proportion of advertisement revenues as a result of its immense popularity among the Indian masses. DD, Zee and DD Metro account for 75% of total ad spend in India. If Sun TV and Star TV is also added, then only 10% of as spend is left for the rest of channels telecast in India. The sector has latent potential for growth on back of the exponential growth of cable TVs during the last 5 years. Television penetration in India is extremely low as compared to other developing countries like Malaysia, Pakistan, etc. The number of channels has increased, implying higher demand for software programs.

Advertisement revenues, which are the barometer of channel popularity, will get dispersed over several competing channels. A shakeout is likely in both the channel and cable TV sectors. The biggest beneficiaries will be the content providers or the software houses. They will control the intellectual rights to the key element driving any channel’s popularity.

Direct-to-Home. Digital Terrestrial Transmission and Conditional Access Cable Delivery have emerged as new delivery mechanisms. Breakthrough in technology would help open up avenues for these channels.

Lesson 3.5

MEASURING ADVERTISING EFFECTIVENESS

3.5.1 Introduction:

The effectiveness of advertising is easily determined by the hdkfgsdf sales for a period during which the ads wee released to the media. The consumer awareness, his knowledge of the product, changes in the buying pattern and attitude would be considered based on the changes in the sales. It is also important that the advertisement is tested before it is released for the campaign. The testing of the same should be carried out at the right time of the advertising process. The advertisement testing which did before it is run may provide indications of what will happen during and after its running. This concept is called pre-testing. Contemporary testing can be done when the test is done during the advertisements. Contemporary testing can be done either qualitatively or quantitatively. One can either choose pre-testing or post-testing depending on what is going to be tests. Pre-testing can be done on the media, message, mark3et, budgets and scheduling and planning. In the case of post-testing it helps in deciding the future advertising objectives and strategy.

3.5.2 Qualitative methods:

Qualitative research describes or analyses a situation or condition without formal measurement variables. Qualitative research is usually exploratory or diagnostic in nature. It involves a small number of people who are not usually samples on a probabilistic basis. The research falls under two categories. The are intensive research and projective research.

Intensive research:

Depth interviews:

Always an unstructured conversation is at the heart of this technique. The interviewer meets with the respondent on a one to one basis for an hour or more. The immediate goal is to get the consumer talking freely about attitudes toward the marketing situation under investigation. There interviews reveal more precisely the feelings of one individual to a large extent than can be determined in a group interview.

Focus group interviews:

A focus group usually consists of five to ten persons on the basis of some important similarity. Usually focus group interviews can be used to generate hypotheses to from preliminary evaluations of product concepts, to create copy and rough advertisements and to develop product concepts and advertising copy. These techniques allow for in-depth information on a specific topic through discussion, which allows an insight into the behaviour and thinking of the individual group members. This technique has found applications in the areas like new product prototype testing, package change, advertising strategy change and advertising copy formulation.

Projective techniques:

When direct questions do not give the desired result, projective techniques can be used. These techniques allow responsible answers to questions more freely than with direct questioning. They are sometimes used alone, without a following survey and advertising decisions are made based on the findings. The other application of projective techniques is to use them as the foundation for a survey questionnaire.

Observational research:

Observations are a common survey techniques that can also be used in qualitative research. This research is used to find the often-hidden impulses that prompt people to buy an expensive car eat ice-creams and wash their cloths with a particular detergent.

3.5.3 Quantitative research:

Quantitative research involves the measurement of specifically identified variables, such as reading scores for a magazine advertisement, number of persons, viewing a television serial etc. numbers are easy to handle store compare and process. The varieties of quantitative measure depend on the following scales:

Ratio scales

Interval scales

Ordinal scales

Nominal scales

The various tests can be classified under pre-testing and post testing. They are explained as follows:

Order of merit test:

The jurors or potential prospects rank the advertisement as per preference. Usually six ad copies can be tests with perfection by this, method. Finally the best ad copy is selected out of consensus.

Paired comparison:

Two copies can be compared by the method. Normally more than six ad copies can also be compared by this method. Every single ad is compared with all others, but only two is considered at one period of time. Scores are recorded on cards and are summed up. The best gets the highest score. The other ads are rated according to their scores after summation. The number of comparisons are made with the help of the following formula:

No. Of comparisons : n(n-1) / 2

Where n is the number of ads to be tested.

Portfolio tests:

In this test dummy ads are mixed with regular ads. A number of dummy ads are put in a portfolio along with the ad copy to be tested. The consumer sample sees the folio. The consumer is then asked about what he has seen in each ad. The ad. giving minimum playback is considered the best. It is them verified whether the adjudged ad is dummy or regular. In case it turns out to be a dummy, the actual ad is improved on the same lines. Another way is to divide the sample into two groups containing dummy as well as actual ads. Experimental group sees portfolio containing dummy as well as actual ads. The control group evaluates only the portfolio without test ads. Recall test is later conducted to assess reaction to test ads.

Direct questioning:

When elaborate questions are prepared to test the attention strength, read through strength, attitude and behaviour strength of the ad, direct questioning helps.

Mock magazines test:

A real magazine is used for the test unlike the portfolio test. It introduces test ads in a magazines to an experimental group to read. The control group is also exposed to the same magazine, but without test ads. Recall tests are conducted to assess the effectiveness of test ads.

Perceptual meaning studies:

Tachistoscope, which uses time exposures to test the ads. Is an instrument, which can be used for this test. The respondents see the ad for a predetermined time, and then are subjected to a recall test to test product, brand, illustration and main copy of the ad.

Trailer tests:

Consumer behaviour can be tested even in real life situations in the shopping places also. Giving discount coupons for purchasing displayed brands induces the consumer. Another group of consumers is invited but is not shown the test ads. The redemption rate of coupons may give the effectiveness of the test ads.

Home projection tests:

A consumers is visited by a group of people with a movie projector. Many questions are asked before and after the projection, which helps in assessing the strong and weak points of the advertisement.

Theatre tests:

Initially a questionnaire is given to the set of audience and later on after showing the test ads is theater, they are asked to fill in another questionnaire.

3.5.4 Other tools used:

Galvanometer:

It measures skin response to advertisement stimuli like perspiration by gland activity through the plan. Perspiration decreases the resistances and faster current passes. The tension is generated. The greater the tension, the more effective the ad is.

Eye movement camera:

It measure the eye movement over the layout of the test ads. The speed, the pause and the movement of the eye is noted which give the ad interest for the consumers.

Pupilometric devices:

The pupil’s dilatation gives the indication of reading and attention. If the pupils are contracted, it shows the dislike from the consumers.

3.5.5 Types of external research:

In addition to conducting and interpreting there own research, advertising practitioners commonly use research conducted by other companies. Customized research is done for one company but the results are not usually available to other companies. Syndicated research is the one which is conducted by a research agency and the results are informed only to those concerned clients who are ready to pay for only. The Operations Research Group is one such example. There are three types of external research, which are undertaken for the benefit of the clients. They are:

Message Research:

Advertisers, who want to know how effective their advertising messages are, have to seek those agencies, which do this research. In one form or another, most measure of message effectiveness are related to recall or recognition on how well people can remember advertisement they have seen. There is a body of research that suggests that recall of advertisement may have only a weak relationship to subsequent purchase of the product. A common way adopted to measure broadcast message recall is to telephone people and asks what they remember about commercial they saw the day before. This is the method adopted extensively by Gallop-MBA in India.

Audience research:

In terms of money and effort taken, audience measurement is the most extensive type of advertising research. Advertisers understandably want to know the size and composition of media vehicles in which they place advertising. They assume that advertising message cannot have a size and hence consider the composition of the audience of a media and spot of audience of specific advertisement. Audience data are collected in several ways, and the method of data collection influence audience estimates. Dairies and interviews rely on respondent’s memories and give researchers more control.

Competitive activity research:

Advertisers find it useful to know the competitive media expenditure because advertiser media strategies are often influenced by their competitors strategies. Advertising agencies and several research companies provides such information.

3.5.6 Problems in external research:

Since it is conducted for may clients, there will be problems of validity and reliability

There can be faulty consumer money which leads to biased and distorted information.

Possibilities of problems from the audience could be:

o Genuine confusion with other advertising

o Deliberate exaggerations

o Eagerness to please the interviewer

o Rate advertisements for those which have not seen.

The cost and the interviewer convenience makes the studies to be limited to urban and suburban areas

Target profile may not be right and will lead to weaker predictive power of the research.

3.5.7 Research agencies in India:

No. Research agency Advertising affiliation

1 Indian Market Research Bureau (IMRB) at Mumbai, Calcutta, Delhi, Chennai and Bangalore

HTA

2 Indian Consumer Research Group (ICRG), Ahmedabad

Mudra

3 Hansa Research Group Pvt. Ltd. Mumbai, Chennai, Calcutta and Delhi

R. K. Swamy / BBDO

4 Research, Mumbai, Calcutta, Delhi, Chennai, Bangalore and Chandigarh

IB & W

5 Triton Pulse, Mumbai, Delhi, Ahmedabad and Bangalore

Triton

6 MARS, Pune and Mumbai XEBEC

7 Impulse advtg & marktg Services, Thane IMPULSE

The above is the list of those advertising research agencies which cater to the needs of their clients. Even though there are other independent agencies, they do not form part of any agencies and conduct the advertising research as and when sought by some companies in order to assess their advertising effectiveness.

3.5.7 Advertising campaigns:

Advertisers can create a single shot ad that stands alone, or they can devise a campaign – a series of thematically related advertisements run in different media over an extended time to intensify message memorability. An advertising campaign pushes essentially the same messages, but with different executions to ensure that the auovence remains involved and the message doesn’t wear out. The Hyundai Santro launches campaign, for example, focused first on the Celebrity status symbol like Shah Rukh Khan and later on they started focusing on their engine capability. As the car moved thorugh the initial sales phase, the campaign’s focus shifted to buyers, their experiences with Santro and the reasons why they were satisfied with the car.

Campaigns are developed using continuity devices such as slogans design formats, typefaces and characters like celebrities, cartoon faces etc. The heart of he good campaign is a continuing emphasis on a strong feature of a good campaign. When the customers of Santro experienced the engine feature in their vehicle, the company used it as a continuing plank to create attraction.

3.5.8 Examples of advertising campaigns:

Adidas:

Adidas chose leading local dailies to kick start their campaign in out country. In-store posters and banners also propagated the promotion. As many as 30,000 consumers in the country participated in the promotional efforts which were supported by the Sachin Tendulkar advertisement which promoted the product on the national basis.

Times of India:

The campaign has a many as five commercials and the railway station and the arch films being the most easily recalled ones. The garage spot is the most attractive campaign. This particular film is all about how an Indian purchases a Maruti 800 as an economical choice and then spends a fortune jazzing up the car with attention – seeking accessories. In effect, the objectives of the campaign is to show that the Times of India are as inspirable from the Indian ethos as are any of the above situations.

Ambassador:

After the market share of Ambassador came down to 4 percent from the earlier 39 percent it commanded during 1985, it decided to augment the car and go for a revised campaign. Spearheaded by Mudra Communications, they decided to concentrate on the following.

o Large point ad showing the ambassador with the new engine

o Positioned on its core values of sturdiness and safety, but the fact that it had more power too was highlighted.

o Test drive was initiated in the ads.

Rivolta:

Rivolta from Maxwell Apparel Industries Ltd. has introduced a range of innerwear to complement the taste and wardrobe of the man on the move’. The focus of their advertising campaign was to modify the man’s attitude towards his underwear and make it a conscious part of his wardrobe. The advertisements were more fashion oriented and at the same time concentrating on the values and lifestyles. It used the base message – “Undress code for men.”

Nivea:

In the past three years Nivea has started rolling out a series of new formulations from the foreign portfolio, under such families as Nivea body and Nivea Visage. Nivea body offers a winter lotion, skin milk and a series of moisturizers. Special products for the oily-skin are also there. In October 1196, Morison launched Nivea Visage, which included a fairness cream, a moisturizing cleansing milk and skin toner. Contract, which was handling the female products, decided to play up Nivea’s ‘touch temptation’ equity, and came u with Discover Touch’ as the key slogan in ads featuring TV presenter Rakshands Khan. The agency felt that touch was a powerful enough idea to be used imaginatively for many years. The account moved to TBWA Anthem in 1998 and the launch of Naïve Bath has brought back some of the imagination prodding sensuality of the hugely successful Malavika Tiwari ads. The soap ad has women with her eyes shut in the bathtub.

Johnson’s Kids:

Johnson’s kids shampoo was launched in 1999 and has a special detangling shampoo has a special international formulation for detangling. This product was actively supported through advertising campaign done by Ammirati Puris Lintas. The basic theme of the advertising is to take the children into a fantasy world. An animated character called Dirty Daku dirties the kids’ hair, which is washed clean with the new product. The ad line is the same for the other Johnson’s kids products: “ Be a star. Be a Johnson’s Kid”.

Lesson 3.6

SALES PROMOTION

3.6.1 Introduction:

Every marketer has to think about sales promotion at one stage or the other of the product life cycle. In modern business world, sales promotion is considered as an important instrument to lubricate the marketing efforts. The marketers have realized that it is not expenditure but it is an investment because it will pay rich dividends. This does not compete with advertising or personal selling. Sales promotion activities are complementary to them. Advertising is frequently used to make sales promotion activities, such as sweepstakes, coupons, premiums etc., known to consumers. Sales people often use sales promotion to help sell their product lines to intermediaries.

According to the American Marketing Association, sales promotion includes all marketing activities, other than personal selling, advertising and publicity, tht stimulate consumer purchasing and dealer effectiveness such as displays shown and expositions, demonstrations and various non-recurrent selling efforts not 1 the ordinary routine. Sales promotional activities are impersonal and usually non-recurring and are directed to ultimate consumer, industrial consumer and middlemen. These activities tend to supplement the advertising and personal selling efforts. Examples of sales promotion are free product samples, premiums and trade shows. For many organisation, including the markets of foods, toys and clothing, store displays are important sales tools. All prospective buyers must be attracted and even persuaded to buy the product. Sales promotion is a vital link between advertising and field selling. It aims at stimulating consumer purchasing at the point of sale and dealers effectiveness at the retail channel of distribution especially because of the competitiveness of retailing.

3.6.2 Objectives of sales promotion:

The goals of sales promotion must confirms to the overall objectives of promotion efforts. There are five broad sales promotional objectives. They are:

Exposure:

The important objective is simply to expose an adequate number of target consumers to the message. Managers must choose promotional media that will reach adequate numbers of target consumers. In planning for exposure, marketers should take the following steps:

1. Define target consumers

2. Determine their number

3. Chose the promotion media

4. Determine the promotion budget needed to acquire the number of exposures.

Attention:

The terms attention refers to the state of focusing one’s mind upon something. Marketers are faced with the need to take steps o make their promotion stand out and say or do something to attract consumer attention.

Comprehension:

To comprehend is to understand, or to receive communicated knowledge. The objective is achieve when consumers interpret the message in the manners intended by the marketer. Consumers often fail to comprehend promotional message when the messages are poorly designed or simply not interested.

Attitude change:

Attitude change involves readiness to respond in a particular way. When the message promises a reward that is strong cleaning power in a detergent, that may target consumers’ value.

Behaviour / Action:

Inducing behaviour or action is especially important in personal selling and sales promotion. Many managers encourages consumers to:

Buy the brand for the first time

Continue to buy the brand

Buy more of the brand

Urge friends to buy the brand

Visit a retail store

See a demonstration of the brand or

Try out the brand

Confirming to the above, in a board way, sales promotion is said to have three objectives. They are:

1. To communicate marketing information to the potential buyers or actual users or retailers

2. To persuade and convince them by exercising persuasive measures and

3. To act as a powerful tool of competition.

3.6.3 Importance of sales promotion:

In recent years, expenditure on sales promotion has been increasing more rapidly then the outlays for advertising. Changes in the marketing environment are exerting upward pressure on the demand for sales promotion. As the number of brands increases, for example, the competitive pressure for display space in retailer store or Stock keeping unit (SKU) intensifies. These forces increase retailer’s demand for more sales promotional efforts from their suppliers.

A good sales promotional programme could alleviate consumer dissatisfaction with respect to retail selling. The trend is away from the use of retail sales people and towards self service also points up the need for sales promotion. Sales promotional devices are often the only promotional materials available in the point of purchase. Advertising media reach potential consumers at their homes and at their places of business. When the time for buying arises, the impact of the advertisements may have worn off (or the prospect may not even have seen the advertisement). However, the sales promotional devices at the point of purchase inform remind and persuade the buyer. People who comprehend the promotional devices are excellent prospects. They are usually in the buying frame of mind, or they would not be three at the purchase point. The importance of sales promotion to manufacturers, middlemen and consumers are explained below:

Sales promotion to consumers:

With the help of promotional efforts, the consumers get latest information regarding the new goods ore services to be initiated or sold in the market.

Consumers get effective incentives in the shape of off-season discount, gifts, samples etc.

Consumers get the opportunity to participate in contests

Upgrade the standard of living of the consumers

Reduction in prices make certain products affordable

Sales promotions to manufactures:

Creates new markets for the product

Helps in contacting and maintaining the actual consumers

Economics of scale comes into picture due to higher productivity and lower prices

Allows them to overcome the competition

Helps in having goodwill from the middlemen

Sales promotion to the middlemen:

Easy to persuade the buyer with minimum effort

Allows them to make profits with minimal costs

Helps to provide incentives to the buyers, resellers etc.

3.6.4 Strengths and Weaknesses of Sales promotion:

Sales promotion is mentioned as a push strategy as compared to advertising which is considered as pull strategy also has its own share of advantages and disadvantages as is seen from the following table:

Strengths Weaknesses

Adds tangible value to product offering

Gives sense of immediacy to purchase

Adds excitement, spectacle

Stimulates trials

Stimulates continuity of purchase or support, repeat purchase

Increases purchase frequency and/or quantity

Balances inventory helps clear overstocks

Motivates trade support

Builds database

Adds involvement/participation

Clutter

Can set false retail price

Can undercut brand name

Cost can be prohibitive if continued

3.6.5 Differences between sales promotion and advertising:

A push promote offers consumes an extra incentive to choose the brand. For new products, a pull promotion is designed to create a demand. One advantage of a pull promotion is that once a brand has developed consumer demand, that demand will last as long as the brand remains competitive. Further more once a brand has created a strong brand franchise, it can spend little on trade promotion. A disadvantage of using push promotion is that most discounts apply to everyone who buys – regular brand users who would have bought the brand with out the discount benefit as well as new buyers.

Advertising differs with sales promotion on the following points:

Sales promotion adds tangible value whereas advertising does net

Advertising does not reduce the risk whereas sale promotion is able to reduce.

Immediate response is possible from sales promotion and advertising effect is considered long term.

Sales promotion is able to add the accountability whereas advertising is not able to.

The continuity of purchase can be seen in sales promotion than advertising.

The purchase frequency is increased in sales promotions due to impulse buying, which is not possible through advertising.

The database of the customers can be built through sales promotion.

The involvement of the trade, sales people is more in sales promotion than that of advertising.

3.6.6 Consumer promotional tools:

Price reductions:

The most common type of consumer sales promotion is a price reduction a sale. Although sale prices can generate tremendous response, they can also have negative effect on a brand’s overall pricing strategy. This was understood by

Bombay Dyeing as they decided to keep their flagship brand. – Vivaldi away from the normal 15% price reduction they undertake. An indirect price reduction is the price pack, which provides the consumer with multiple units priced less per unit than they would be if they were individually priced. The Gillette Company is offering shaving kit adopted this.

Coupons:

A certificate offered by either manufactures or retailers that grants specified savings on specific brands when presented for redemption at the point of purchase. Manufactured sponsored coupons can be redeemed at any outlet distributing the manufacturer brands. Retailer sponsored coupon must be redeemed at the sponsoring retail store or chain.

Sampling:

This allows the consumer to experience the product or service either free or at a reduced price. The primary tool for new-product introductions because it stimulates trial, sampling is also effective for introducing modified products, for dislodging an entrenched market leader, and for demonstrating the brand superiority. Ariel and Pantene are examples.

Refunds and rebates:

A sales promotion that reduces price after the purchase is made in known as a refund or rebate. The marketer promises to return a certain amount of cash or high-value coupons to the consumer who purchases the product. Most refunds and rebates encourage product purchase by a given time, thereby creating a sense of immediacy and limiting the manufacturer’s period of liability.

Contests, Sweepstakes and Games:

The growth of contests and sweepstakes during the 90’s attests to the power of tools that generate excitation by promising ‘something for nothing’. Although contests and sweepstakes are considered low-level motivators because people know that the odds are against them, many companies favour them because they are highly visible inducements to participation and don’t cost as much as coupons.

Premiums and Specialties:

An offer of merchandise, either frees or at a reduced price, for responding in same way is called a premium. Many companies also use premiums to encourage consumers to switch brands or to reward customer loyalty. Premiums can be classified as:

In-pack premiums which are inserted into the package by he manufactures

On-pack premiums which are placed on the outside of the package at the factory

Container premiums which are special packages, such as decorative coffee canisters, that have extended use after the product contents are gone.

Specialties are free gifts or rewards ranging from pencils to cellular telephones. The difference is that the customer doesn’t have to purchase anything to get them.

Merchandising materials:

Every promotion needs communication support if customers are to know it. Such merchandising materials include:

Banners

Signs

Window posters

Shelf strips and tags

Racks

Stack cards

End aisle displays and

Shelf extenders

Tic-ins:

Two products are promoted together.

Cross-promotion:

Sometimes one brand is used as a carrier to promote another, non-competitive brand.

3.6.7 Trade promotions:

The following trade related the manufacturers could follow promotions.

Trade allowances:

To achieve the authorization objective explained above often requires slotting allowances. These are fees paid to a retail chain to stock in its warehouses and make it available in its stores. Originally, slotting allowances were modest sums meant to cover the costs of physically placing the product on the shelves and entering it into the store’s computer ordering system?

Off-invoice allowances are similar to consumer price reductions. They are used periodically by most brands takes the form of free goods – “buy six cases and get on free”. Performance allowances are given when a wholesaler or retailer promises to do or perform some additional activity to help sell or move the brand.

Dealer Loaders:

To help encourage the retailer to put up a special display or POP display for a promotion, the marketer will sometimes design a display to include an attractive item of value to the retailer.

Trade shows:

Manufacturers, suppliers and vendors in a particular industry gather to display and review new product developments at trade shows. Manufactures have exhibits or booths where they can demonstrate the product, provide informations, answer questions and write orders.

3.6.8 Developing the sales promotion schemes:

After deciding the objectives and tools of sales promotion, the marketer has to make a few more decisions to ensure effective results. The following are a few such aspects:

1. Size of incentive:

The marketer has to determine how much incentive should be offered. A certain minimum incentive is necessary if he promotion is to succeed. A higher incentive level will produce more sales response but at a diminishing rate. The marketers may usually decide the quantum of incentives on the basis of effectiveness of part promotion plans.

2. Conditions for participation:

Incentive should not be disturbed to all the prospective buyers’ indiscrimenably. It should be offered only who have the innate desire and attitude to purchase products offered by the company.

3. Distribution Pattern:

The marketer must also decide the mode and media of distribution of incentives. The cost of distribution should not be more than the results that are expected from the promotional efforts.

4. Duration of the promotion:

If the sales promotional period is too short, many prospects will not be able to take advantage, since they may not be repurchasing at that time. With the promotion trends too long, a scheme will lose some of its effects.

5. Timing of the promotion:

The promotion managers have to develop a time schedule for the promotions. The dates must be useful to production, sales and distribution managers. Some unplanned promotions may become necessary. At that time, co-peration of people concerned must be enlisted.

6. Sales promotion budget:

The marketer can choose the promotional tools, the method of implementation in advance. On the basis of such a plan, he can estimate the cost of sales promotion activities. The more popular way is to take a conventional percent age of the total budget to use for sales promotion.

7. Pretesting:

Sales promotion scheme should be pre-tested if possible. The purpose is to determine whether the scheme is appropriate or not. It is also helpful to test the suitability of the size of the incentive in the context of a particular target group.

8. Implementing the promotional schemes:

Companies should establish implementation plans for each promotion covering lead-time and sell off time.

Lead-time the time required to prepare the programme before launching it.

Sell off time begins with the launch and ends when the deal closes.

3.6.9 Evaluation of the sales promotion schemes:

Manufacturers can use various methods to measure the effectiveness of sales promotion schemes. Some of them are:

The most common method is to compare sales before, during and after a promotion. Suppose a company has 6% market share, in the pre-promotion period, which jumps to 10% during the promotion, falls to 5% immediately after and rises to 7% after some time. The promotion evidently attracted new buyers as well as more purchasing by existing customers. After the promotion, the sales fell as consumers worked down their inventories. The long run rise to 7% indicates that the company gained some new users.

Consumer panel data would reveal the kind of people who responded with the promotion and what they did after the promotion. If more information is needed, the consumer surveys can be conducted to learn how many recall the promotions, what they think about it, how many took advantage of it, how it affected their subsequent branded choice behaviour.

Sales promotion can also evaluated through experiments that differ such attributes as incentive value, duration and distribution media.

3.6.10 Various promotions during the World Cup Cricket 1999:

Baron International, the markets of AIWA TV promised the money back if India succeeds in the World Cricket Cut 1999. If the team wins, one gets some Rs. 6,000 back on a TV priced at around Rs. 12,500. Apart from this the company has promised each team player a Mercedes is India wins the cup. This is by far the best sales promotion and had given the company the dividends.

Britannia invested Rs. 10 Crore on its ‘Britannia khao, World Cup jao’ promotion and it created waves in the market. Every product comes with a number of runs (printed on the pack). By collecting 100 runs, one gets a booklet from the retailer. This represents a potential trove for the buyer ranging form complementary packs to match tickers. The company kicks off this sales promotion scheme in February that year well ahead of the programme.

Samsung and Sansui gave away Cup related freebies with every product.

Asian Paints asked the customers to walk into any of their showrooms and pick out the shade of blue that the Indian team wears in the World cup. Winner flew to England to watch the Indian games.

3.6.12 Other sales promotions:

Re. 1 off on a Surf carry bag.

50 gm. Cake of Ponds soap was at one time given free with every purchase of HLL shampoos.

Britannia Quiz Contest

Coke offered a cap on the purchase of 5 Coke bottles

Vicks, Ariel using sampling technique

Tamil magazines providing in pack premium like Amrutanjan cream. Shampoos, Saffrons and soaps.

For every three Peter England shirts bought, one white Peter England was given free.

Pepsi by keeping three digit number in the crown offered the following prizes based on weekly draws:

o Rupees one lakhs if all the three numbers match

o Rupees ten thousand if two numbers match

o One Pepsi free if one number matches

TVS-Suzuki offering to provide the vehicle at Rs. 3000 and later on in installment schemes

LML, allowing trade ins of any make

Akai spearheading the exchange market where the old TV was valued at Rs. 10,000 for a new Akai TV

Nike tying up with Advertising and Marketing for the subscription drive

Castrol and Servo giving away caps, T-shirts etc as freebies

Parle cashing on the Sakthimann serial success with Sakthimann sub-brand products with sales promotional efforts.

Kurl-on mattress offered pillows free in the 5” category

Maruti lowering the prices of its 800, Omini by Rs. 25,000

UNIT – 4

Lesson 4.1

PUBLIC RELATIONS

4.1.1 Introduction

Public relations is the art and science of analyzing trends, predicting their consequences, counseling organization leaders and implementing planned programs of action which will serve both the organizations and the public interest. Public relations includes all forms of planned communications, outwards and inwards, between an organization and its publics for the purpose of establishing and maintain mutual understanding.

Public relation is the means by which an organisation tries to develop a mutual understanding between itself and its public. The economic liberalization policy of 1991 generated much interest among multinationals in the Indian market and induced a host of foreign companies to enter the Indian economy. Whereas the Indian government had hoped that foreign investment would be directed at eh infrastructure market, most of the initial investment came in the service industry. Pepsi and Coca Cola begin warring in India. The ubiquitous McDonald’s and KFC opened outlets in the metropolitan cities such as Bombay, New Delhi, and Bangalore. You could begin ordering Domino’s pizzas or dine in a Pizza Hut in one the metropolitan cities as well! These companies, in keeping with the strategy of catering to the tastes of their customers, made some modifications to their products in consonance with India’s cultural sentiments. For example, the menus at McDonalds’s offered veggie of chicken burgers and spicy bean burgers instead of traditional hamburgers. However, these multinationals had many gaffes that seriously hurt their image in the Indian market. Therein lies the “lessons learned” part of this presentation. But first, a brief description of a few cases:

Cricket introduced by the British, is the most popular sport in India. In 1994, there was an uproar when India’s cricket caption Muhammed Azaruddin (named after the Prophet Muhammad) signed a contract with a famous athletic shoe manufacturer. A section of the media reported that the cricket star had autographed the shoes that he had endorsed (a common phenomenon in the West). Shoes are considered unclean in the Islamic tradition (worshippers are required to remove their shoes before entering a mosque). The Islamic community in India was incensed that a devout Muslim had “sold out” and put the name of the holy prophet on shoes, a blasphemous act. The cricket captain apologized to the Muslim community and tried to explain that he had only signed the contract and not on the shoe itself. Regardless, the damage had been done and many Mulsims continue to be incenses about this issue.

Another corporate gains in the food business was roundly criticized and attacked by an overwhelming majority of Indians for trying to patent the process of extracting pesticides from the neem tree and leaves. The Ayurvedic tradition of Indian medicines has used need for centuries as a medicine, toothbrush and pesticide, among other things. The patenting of such a universal remedy was simply unacceptable to the Indian populace and brought nationalism against colomialism to the fore.

A senior executive of a popular cereal company in his zeal to sell his product and compete with the traditional Indian breakfast, is reported to have stated. “Indian breakfasts are fatty and inferior.” Needless to say, this attracted significant negative attention in the media hurting sales.

Soap operas: Bay Watch and Donahue reruns have been among the popular fare on satellite television, particularly Rupert Murdoch’s STAR TV. This has led to a serious debate about the “debasing” of Indian values. AS a result, foreign media penetration into the Indian market is seriously challenged.

The outlets of a leading fast-food company were ransacked in Bangalore in 1994 because of media reports, generated by the efforts of activities, generated public outcry against these evidences of foreign colonialism and a threat to Indian valued.

These incidents have led to a nationalistic fervor that has slowed the entry of multinationals into the Indian market. The BJP currently leading the federal government, has been vocal against foreign hegemony and destruction of Indian values. It has publicly stated that it is willing to preview foreign investment in India and limit it to the infrastructure industry, thereby reducing the influx of Western “Pop culture” to India. “We want computer chips, not potato chips,” leaders of this party have reportedly stated.

One obvious lesson that one can draw from these cases is the companies and public relations agencies need to be very careful about scanning the environment that they are seeking to enter and design specific communication strategies that will not antagonize their potential publics. Most multinationals hire local public relations professionals to make

their messages and tactics more culturally sensitive to their new markets. Multinational companies and public relations agencies now have access to an increasingly large pool of trained public relations professionals in the Indian market.

4.1.2 Public Relations mix:

Public relations mix:

1. Press kits

2. Speeches,

3. Seminars

4. Annual reports

5. Charitable donations

6. Sponsorships

7. Publications

8. Community relations and

9. Lobbying

4.1.3 PR objectives:

1. Prestige and reputation (change the corporate image)

2. Promotion of products

3. Dealing with issues and opportunities

4. Goodwill of customers

5. Goodwill of employees

6. Overcoming misconceptions

7. Goodwill of suppliers and distributors

8. Goodwill of government

9. Dealing with unfavourable publicity

10. Attracting and keeping good employees

11. Making the company known and understood in new export markets

12. Preparing the stock market for a new share issue

13. Strengthening the company against risk of takeover

14. Supporting t sponsorship scheme

4.1.4 PR transfer Process:

According to Jefkins

From Negative / To Positive

Hostility / Sympathy

Prejudice / Acceptance

Apathy / Interest

Ignorance / Knowledge

4.1.5 PR Decisions:

1. Appreciate the situation

2. Defining objectives

3. Define publics

4. Select media

5. Creating message

6. Select techniques

7. Develop a budget

8. Performance and

9. Evaluation

4.1.6 Characteristics of PR:

1. The message has high credibility

2. No direct media cost

3. Lose control of publication

4. Lose control of content

5. Lose control of timing

4.1.7 PR planning process:

1. State of the problem or aim

2. Do the research

3. Identify the publics

4. Choose appropriated media

5. Monitor the effects

6. Look to the future

7. Maintain financial checks

4.1.8 Qualities of good PR practitioner:

1. An ability to get on with all kinds of people

2. An ability to communicate

3. An ability to organize

4. Personal integrity in both professional and private life

5. Imagination in the creative sense

6. An ability to find out and have access to information

4.1.9 The differences between PR and advertising:

No. Public Relations Advertising

1 Informative Information and persuasive

2 Messages are subdued Advertisements are sometimes designed to have immediate impact on the sales

3 No repetition Repetition

4 Greater credibility Lesser credibility

5 Obligatory newsworthy No such drawback

6 Low costs High costs

4.1.10 Public:

Publics a group of people who detect the same problem or issue, interact either face-to-face or through mediated channels, and behave as through they were one body.

Publics is the range of different bodies which an organisation interacts with

1. Employees

2. Investors

3. Customers

4. Regulators

5. Government

6. The community

7. Pressure groups

8. Competition

9. Suppliers

10. Trade intermediaries

11. The local community

The public is related concept to stakeholders. People/organization is the environment the firm must deal with (Staff, Users, Government bodies, General public, Finance, Suppliers, Trade intermediaries, The local community, Media, Pressure groups)

The categories of publics according to Gruning are:

1. No public – The company has to consequences on the group,

2. Latent public – The group members affected by the issues the company but do not detect it,

3. Aware public – The group members recognize the issues

4. Active public – The group members organize themselves to discuss, do something about the problem.

The PR objectives for different publics:

1. Staff – To maintain and improve levels of motivation throughout the workforce through effective two-way communication (awareness of business plans and achieved targets; appraisals, surveys, informal meeting discussions of career and job problems).

2. Users – To continue to develop a friendly and empathetic image (effective communications of who we are, what we do, where we do it, how we operate)

3. Government – To maintain a high public profile through communication of research findings and success stories (maintenance of a high-profile organizations)

4. General public – To raise awareness of the company through the communication of elements such as achievements, user’s needs and our extensive range of experience and services.

Lesson 4.2

TOOLS OF PUBLIC RELATIONS

4.2.1 Introduction:

Many authors have written a number of tools which are effective in practical sense. It may be different for various parties concerned. However, there are man basic tools which are important for any marketer. They are listed in this lesson.

4.2.2 PR exercises by Legislative assemblies:

We take here the case of a legislative assembly doing the public relations work. All MLA’s have to necessarily provide PR work and it can be seen as follows : It is important for the work done by Members to be communicated to their constituencies and the general public. The Legislative Assembly supports the public information part of a Members’ job through a variety of services.

Members’ Newsletters

Assistance in the Production of Newsletters

Requires for assistance in coordinating newsletters should be made to the Public Relations Officer.

Members should provide their own articles on a computer disk and photos (either colour or black and white)

Upon request, the Public Relations Officer will edit articles and provide formatting assistance.

The Public Relations Officer can arrange production and printing of newsletters. Production of a newsletter requires three week once the final copy is approved.

Translation

The Public Relations Officer can arrange translation of the newsletters. An additional three weeks are required for the production of a newsletter, if translation is needed.

Cost of Newsletters

Cost incurred in the production of newsletters will be charged to the Member’s constituency work expense allowance.

Media relations

Members may be approached at any time by the media, either in person or on the telephone. Accredited media at the Legislative Assembly wear identification badges and their conduct is governed by certain rules set by the Office of the Clerk.

Upon request, the Public Relations Officer will assist and provide training to the Members in dealing with the media.

Press Releases

A member may request assistance form the Public Relations Officer in drafting a press release.

When the Member is satisfied with the text of a press release, the Public Relations Officer distributes the release electronically to all northern and select southern media. Copies are also distributed to all MLAs.

Press Conferences

Members may hold press conferences in the Assembly’s media briefing room. The Public Relations Officer will assist with the administrative arrangements upon request.

Advertisements

Productions of newspapers advertisements may be coordinated through the Public Relations Officer.

Advertisements are charged against the Member’s constituency work expense allowance.

News Items Upon request, the Public Relations Officer can provide electronic transcripts of CBC Mackenzie radio reports to interested Members.

Public Information Material

A range of printed material is available on the operations of the Assembly. A reasonable number of copies of this information are available from the Public Relations Officer.

Legislative Assembly Plans

The public Relations Officer maintains a limited supply of souvenir lapel pins. Each Member is entitled to receive 100 of each pin design at the start of his or her tern for distribution as he or she sees fit.

If a member request additional pins from the Public Relations Officer at any time during his/her term of office, the cost will be deducted from the constituency work expense allowance.

Business Cards

Corporate Services will arrange for the production of Members’ business cards upon request.

Corporate Services will inform Members as to the cost of business cards. The cost of the cards will be deducted from the constituency work expense allowance.

Calendars/Christmas Cards

The public Relations Officer can assist Members in the production of Christmas cards or calendars. The production of Christmas cards or calendars generally requires at least four weeks. All request for assistance must be received by the Public Relations Officer by November 10th. The cost of Christmas cards or calendars will be deducted from the constituency work expense allowance.

Photographs

Upon reasonable advance notice, the Public Relations Officer is available to take photographs of Members during Committee activities, meetings with guests, etc. in the Legislative Assembly building.

The cost of photo processing will be deducted from the constituency work expense allowance.

Audio/Video Transcripts

Members can request audio and video transcripts of the House proceedings of he Legislative Assembly by contracting the Facilities Managers.

4.2.3 PR strategies:

Establishing the company’s stature, expertise and reputation for quality.

“Levelling the playing field” when going up against entrenched competitors.

Facilitating project delivery

Strengthening the company’s own organisation and culture

Getting the media on you side (or at least getting a fair hearing) when crisis strikes.

4.2.4 PR tools according a Consultancy:

1. Feature articles by and about your company help you explain specific projects, industry trends, etc., while positioning your organization as a leader.

2. News releases keep editors and readers up-to-date on positive developments: business news, technological advances, promotions and new hires, and special events.

3. Company profiles present your company’s achievements, capabilities, and leaders in a positive light.

4. Professional seminars and association meetings let you highlight you latest achievements and innovations, share information with colleagues.

5. Business seminars for your customers let you explain new developments, trends, services, and products in detail – in a setting where you call the shots.

6. Trade shows can be a critical sales forum, let you meet face-to-face with purchasing decision-makers.

7. Internet/World Wide Web services help you establish an early presence within this powerful new communications medium.

8. Brochures and flyers, printed or electronic, explain you offering in details.

9. Newsletters provide a valuable, ongoing channel to bring your message to your current and potential customers.

10. Advertising keeps your name visible and supports the publications that reach your customers.

11. Video services let companies take advantages of new opportunities in broadcast and desktop video media.

12. Crisis management arms you with strategies and tools to deal with unexpected and unwelcome developments.

13. Our expert speechwriting puts your message in vigorous, clear form for greatest clarity and impact.

4.2.5 Publicity:

Offer a Donation to a Worthy Cause

One woman (a business coach) gave two scholarships to a local community college that catered to the underprivileged. She included two months of free business – building coaching services for qualified applicants at the school. She set forth the criteria with the help of the college, and decided on how to choose the scholarship winners.

Press releases were sent out and the media went wild. Of course they would – everyone loves to hear about people who are helping out the underdog. She received a lot of free promotion and boosted her image as a community leader, too.

Relate Your Product or Service to a Local or National News Event

Take, or example, two of the troubling problems the media was covering before Sept. 11 : the drastic upswing in unemployment (especially in high-tech fields) and the California energy crisis. If your product or service can somehow offer a solution (even a small one) to one of these two dilemmas, you stand a great chance of getting some publicity.

Perhaps you own a resume service that has an exceptional rate of success for one reason or another. Phrase you release so it helps solve the unemployment crisis (and does not blatantly) promote your business) and you’ll perk up some journalists’ ears.

Get In Line with Seasonal Events

The change in seasons always makes the news. In the summer, you’ll find stories on safe vacation travel or the best airline deals. At the end of the year there is always coverage pertaining to New Year’s Resolutions and how to keep them. Fail is generally a great time for gardening-type businesses to remind everyone to plant now so their yards will look fabulous come springtime.

If your company can offer some viable information pertaining to seasonal events, a press release might be in order. writing a release outlining how your online travel agency always gives clients a “vacation safety” package that has prevent to “save the day” in the past will bring out some interest in the local (and maybe national) media.

Above all, use your imagination. Pay attention to the newspapers, television news and magazines. Notice the types of stories they cover and then write a release that falls in line. You will soon be able to create news where none previously existed and gain some free exposure for yourself in the process.

4.2.6 The Importance of Press Coverage:

The effect of good press coverage is priceless. While it can be extremely difficult to obtain, it is certainly possible and could be the best thing to happen for your company. Solid press coverage could increases awareness of your offerings, help build credibility, create a competitive edge, etc.

Know Your Target Audience

Pick the publications that talk about your service offerings. The more targeted, the better. Unfortunately, a “trend” story in the New York Times in not easy to come by. In additions, find the editors that typically write about your type

of company (size, revenue, etc) A good way to find out is to look at your competitors and see what kind of press they have received and from whom they received it.

Give Them Something New

Remember you’re competing against many folks for a limited amount of space. The bigger the publications, the harder and more competitive it will be to make a placement. Give the editors something interesting or new to nibble on. Give them a story they haven’t heard before. Earning announcements, new employees and new product line announcements aren’t exactly what I would call unique. Innovative marketing tactics, compelling campaign results, community involvement, new methodologies or upcoming events to name a few. Every industry is different so you are on your own in deciding what “different” is. Don’t have anything newsworthy?” make something happen. Throw a party at your office and invite reporters, launch an innovative campaign with an interesting slant towards the media, piggyback off of the news/events of your clients with the goal of getting you both some press (Your clients will love you for it).

Be Persistent, Not Rude

Reporters and editors see so much junk come across their desk, have tight deadlines and are generally very busy people. You need to first make sure you have given them the story and them follow-up (i.e., phone, call, e-mail, etc.) While being persistent in your efforts, avoid being rude or a pain in the butt. If the reporter’s not interested, move on. You don’t want to burn bridges for future story ideas. If you were lucky enough to converse with the editor, whether the story runs or not, you gained an valuable asset; an editorial contact Just because one editor is not interested, there are plenty of others that may love your story idea.

Unfortunately, like many facets of business, successful coverage is often determined by who you know.

1. Writers write about the companies they know;

2. Writers write about the companies that their (thoughtful) readers rave about.

3. Writers write about the companies that don’t tick them off in the process of doing research.

These three rules should be taught in every business class when advertising and public relations are covered. I fear many of you (PR folks) are falling down on the job because so few of you are doing your part to get free press for your companies.

Rule #1 : Tell Writers About Your Company

I happen to know that most of your are terrible at public relations. How do I know? Each week I only hear from about a dozen readers or PR people telling me about their company’s or client’s great products or services. Have you noticed that I’m writing about your competitors and not writing about your company? Has it occurred to you that I’m not writing about you because I don’t know about you?

As an example, last week in E-Commerce Guide, I wrote about seven companies that offer some form of rich media e-mail. I immediately heard from representatives or customers of five more solutions.

In order of increasing influence:

A generic press release from an official PR person

A press release with a personal note telling me why this announcement will be of interest to me, given what I’ve already written on this topic

A personal note telling me that, since I was interested in some specific solutions I’ve written about recently, I may also be interested in what this new company is doing (or doing differently), with a brief explanation of what it does.

A personal note from a satisfied customer saying I should look at the great solution they’ve discovered.

Rule #2: Get Your Customers to Rave (to us) About You

What could be more impressive to a writer than a customer who is so enthusiastic about a product he’s using that he’s sending mail about it? Viral PR – can’t beat that.

Rule #3: Don’t Tick Us Off

Don’t bombard members of the press with attachments until we ask for them, but do have official documents ready should we decide to follow up. Compress images that are included in attachments as much as possible. You don’t know whether the writer works at home via a meager dial-up connection or in an office with a speedy T3.

Press Releases: A Necessary Evil

There are many, many, many outlets that cover news. The hard art is getting your news to these places in timely manner. Using Press Booster, you can select either by industry or by geography where your press release should to. I, personally, don’t tend to over news. But make sure your press releases end up at those outlets that do cover news, because your press releases are their content.

Lesson 4.3

INSTITUTIONAL ADVERTISING

4.3.1 Introduction:

Institutional advertising is done to promote an institution or organization rather than a product or service, in order to create public support and goodwill.” Examples are like donation of computers and equipment to schools in exchange for food labels, grocery receipts, etc. Word of Mouth Advertising is the endorsement of a product or service by an individual who has no affiliation with that product or service other than being a user of it.

Some of the examples of word of mouth advertising are:

Promotion of a product or service on a personal Web page

Mention of a product or service on a newsgroup posting

4.3.2 Sponsorship:

Financial or other support given by an individual, business or organization for something, usually in return for some form of public recognition Two Major Types of Sponsorship are:

Corporate

Nonprofit

Corporate Sponsorship:

“Financial or other material support by a business for something usually in return for some form of public recognition.” Some example are:

Company support for a public television program

Donations of computers by a company to an organization in return for public recognition

Nonprofit Sponsorship:

Financial or other material support by an individual or nonprofit organization fro something, usually in return for public recognition. Some examples are:

Donations of money by individuals or nonprofit organizations in return for public recognition.

4.3.3 Methods of Institutional Advertising:

In the US, the following are effectively used for institutional advertising:

Radio, television, newspaper and outdoor advertising during registration cycles

Targeted by audience demographics

Some campus-based advertising (i.e., Hill Country News-CYP, Oak Hill Gazette-PIN)

Relocation guides/packets to attract newcomers

Minority media also targeted (radio, print)

Targeting Minority Media

ESL spots on KELG radio

KAZI sponsorships

KKLB and other Hispanic stations

Print Testimonials:

o The Villager, Capitol Times, EI Mundo, Arriba, La Prensa, Nokoa

Special schedule for Eastview Campus is sent to 24,000 Eastside homes

Radio and TV buys over-deliver African-American and Hispanic audiences for example, KOBI radio

Lesson 4.4

DIRECT MARKETING

4.4.1 Introduction

Direct marketing is an interactive system of marketing, which uses one on more advertising media to effect a measureable response and/or transaction at any location. Direct marketing is the planned recording, analysis and tracking of customer behavior to develop relational marketing strategies. Direct marketing is a very personal, precise and powerful form of communication. it can use various distribution channels and so it is highly flexible and affords improved creative methods. Because of its precision it is possible to measure the financial implications of specific campaign very accurately.

4.4.2 Benefits of direct marketing:

1. Market information (usage patterns),

2. Measurement tools for marketing activity and improved segmentation

3. Targeting to minimize wastage

4. Target and captive audience

5. Cost-effective

6. High control and accountability

4.4.3 Four C’s of Direct marketing:

1. Customer focused,

2. Cost-effective,

3. Convenient

4. Competitive

4.4.4 Direct marketing media:

1. Direct mail

2. Direct response advertising

3. Press inserts

4. Mail order

5. Electronic media

6. Database marketing

7. Radio

8. Televisions

9. Telemarketing

10. Statement stuffers

11. Take-ones

12. Door-to-door

13. Computerized home shopping

14. Home shopping networks (such as ezee)

4.4.5 Direct measures

1. Cost per response – Cost of Promotion / Number of Responses:

Advantages:

(i) Measures performance of ad in media

(ii) Database building;

Disadvantages:

(i) No volume indicator

(ii) No indicator of conversion

(iii) No value indicator

2. Cost per contract – Cost of Promotion / Number of Contract:

Advantage:

(i) Considers customers vs. respondents

Disadvantages:

(i) No volume indicator

(ii) No value indicator

3. Conversion rate – Number of Contract * 100% / Number of Responses:

Advantages:

(i) Measurement of quality of response

(ii) Indicates performance of fulfillment material

Disadvantages:

(i) No volume indicator

(ii) No value indicator

4. Average contract value – Total Value of Contract / Number of Contracts:

Advantages:

(i) Indications of quality of booking

(ii) Inherent problems of averages: masks high and low figures;

Disadvantage:

No volume indicator

5. Acquisition Cost – Cost of Promotion * 100% / Value of Contract:

Advantages:

(i) Indication of contract’s booking

(ii) Considers value of business;

Disadvantages:

(i) No volume indicator

(ii) No indication of customer lifetime value

(iii) No indication of profitability

6. Rejection rate

7. Conversion rate

4.4.6 Merits of using Direct product profitability:

1. Identify those products that are highly profitable

2. Identify products making loss;

3. Determine cause for loss or low net profit

4. Identify areas where economies of scale can be applied

5. Clearly show all cost involved in getting product from production line to customer

4.4.7 Factors driving the more to international direct mailing:

1. The growth in sophistication of computer and database technology

2. The increasing availability’ of suitable consumer or business listings

3. The growth of international media which can be used for direct response advertising

4. The perceived accountability media which can be used for direct response advertising

5. The perceived accountability – of direct marketing campaigns compared to other communications campaigns

6. The ease with which direct marketing campaigns can be pre tested in order to maximize their effectiveness

7. The improving skills of direct marketing agencies

8. The increasing willingness of the consumer to purchase items directly

9. The increasing use of internationally accepted credit cards

4.4.8 Factors restarting the move to international direct marketing

1. Lack of telephone and postal infrastructure

2. Lack of road and rail penetration to facilitate distribution

3. Lack of suitable media to use to target consumers

4. Lack of consumer and business lists in some countries

5. The threat of increasingly strict legislation concerning the use of consumer information

6. Consumer backlash against what is seen as junk mail

4.4.9 Terms in Direct marketing

Call Center A site that houses a telemarketing operation

Card Deck A cooperative pack of postcards, usually mailed in a clear poly outer, that is used in both consumer and business-to-business direct marketing. The postcard, which either order the product or asks for more information, can be mailed back to the individual advertiser.

Coding Accuracy Support System (CASS) Created by the U.S. Postal Service to ensure the accuracy of software programs used by service bureaus to check address and code mailings for delivery.

Computer Service Bureaus

A company that will maintain lists for list owners. Services may include: updating the list, merge/purge, data overlays and preparing the list for mailing or rentals.

Continuity Program An offer of a series of products to be received in timely intervals. Most often used for books, tapes/CDs and recipe cards.

Cooperative Advertising (Co-Op) Advertising (including direct mail, inserts, stuffers, and card decks) where offers from several different mailers are included.

Cooperative Owner A company that brings different marketers together into a co-op effort. Services may include: printing the individual inserts, combining them and mailing them to reselected lists.

Cooperative Manager

A person/company who sells space in the co-op for the cooperative owner

Cooperative Broker

A person/company who recommends and takes orders for marketers who want to be part of a cooperative effort.

Coupons

A promotional device used by marketers to increase sales or store traffic by offering a discount when the coupon is redeemed.

Currency Exchange

A service that changes money from one currency to another Custom Publisher

Any publishers who will, for a fee, create a publication for a direct markets that is most-often used for self-promotion or as a premium

Customer Relationship Management (CRM)

Providing better communication, offers and services to customers by evaluating your previous interactions with them

Database

A file that is maintained on a computer comprised of pertinent information such as a company’s prospects or customers. The file can serve multiple applications and be manipulated for various purposes. The following definitions apply to databases used for direct marketing purposes:

Database Analysis

Interpreting information within the database in order to gain customer insight and improve marketing efficiency.

Commercial Database Management

Professional management of large compiled databases for list segmentation and rental

Database Modeling

Using statistical techniques in order to predict future customer behavour.

Demographics

Social and economic information about human populations including age, sex, income, education, type of residence, ownership of cars, etc.

Free-Standing Insert (FSI)

A promotional piece that is loosely inserted into a newspaper or magazine

Fulfillment

All activities involved in the processing and servicing of mail, FAX and telephone orders

Literature Fulfillment refers to the sorting and qualifying of leads sending the appropriate information, and, if outsourced, forwarding leads to the marketers for follow-up.

Subscription Fulfillment is a specialized service for periodical publishers. Services include: maintaining the subscriber list, generating invoices and renewals and recording payments.

Product Fulfillment is the storage and shipping of samples and merchandise.

Geocoding

The process of appending latitude and longitude coordinates to a database record so it can be properly placed on a geographical map.

Labels

Paper printed with a name and address that is affixed to a mailing piece and serves as the mailing address vehicle. Different types of labels include: peel-off or pressure-sensitive labels, gummed labels and paper (or Cheshire) labels

Laser Printing

Similar to a photocopy machine, the laser printer uses a laser beam, toner and fuser to “etch” the image onto a photoelectric drum.

Lettershop

A company that will assembler and insert the various printer elements of a direct mail piece, label, sort, tag and deliver the mailings to the post office for mailing. The lettershop will provide the mailer with written proof of delivery to the U.S. Postal Service.

List Broker

A list specialist hire by a mailer to make the necessary arrangements to use other companies’ lists. Brokerage services usually include: research, list selections, recommendations and logistics so that the rented lists arrive at the proper time. The standard commission to a list broker is 20 percent.

List Cleaning

The process of updating a list in order to remove any undeliverable addresses. Other cleaning activities could include removing duplicates, bad debts, names on the DMA Mail Preference Service, Prison ZIPs, etc.

List Maintenance

The ongoing process of keeping a mailing list up-to-date by adding, editing and deleting data

List Manager

Whereas a list broker works for a mailer, the list manager works for the list owner. The primary function is to promote the list to mailers and list brokers for list rental. List managers can be either an internal employee of the list owner, or part of an outside list management company paid a commission by the list owner. Management services usually include: marketing of the list coordinating and controlling rental activity and accounting. The standard commission for a list manager is 10 percent.

List Services

List Overlays

The matching of two or more lists that contain the same names or addresses but where one list adds additional data such as demographics or geographic to the other.

Delivery Sequence File

A computerized file of more than 125 million records containing all the addresses the U.S. Postal Serves throughout the U.S. Each address record features ZIP+4, carrier route, deliver sequence, delivery type and seasonal delivery information that can help mailers maintain accurate and complete address on the lists they own and rent as well as code their mail for walk sequence discounts from the postal service.

Enhancement

Any additional information that can be appended to a list to increase its value to the mailer

Merge-Purge

The process of combining two or more lists into one while, at the same time, identifying and removing any duplicates.

Mail Preference Services (DMA MPA)

The Direct Marketing Association (DMA) offers a service for individuals who want their names removed from mailings lists so they will stop receiving direct mail.

National Change of Address (NCOA)

A service provided by the U.S. Postal Service, through licensed computer service bureaus, that enables mailers to make any necessary address corrections prior to their mailing being dropped. The mailer provides a magnetic tape that is run against the national change of address bank and then is returned to the mailer with all the corrections made.

Net Names

The number of names remaining after a merge-purge eliminates all duplicates.

Psychographics

The qualities or characteristics of individuals which indicate lifestyle, purchasing habits, attitudes and personal values

Seeding

False or “dummy” names are added to a mailing list as a way to check delivery and to uncover any unauthorized list usage.

Mail Monitoring

Mailers track their mail in order to verify content within the direct mail package and to determine the length of delivery time.

Media

Any form of communication that reaches that general public and carries advertising. Direct response media would include: space advertising, direct mail, TV, radio, take-ones, card decks, package inserts, cooperative efforts, on-line shopping services.

Nixies Prices of mail returned as “undeliverable as addressed”

Package Inserts

Any promotional offer included with the shipment of a customer’s order. offers may be from the same mailer shipping the product or other vendors who pay to be included

Postage Paid Reply Service

A service allowing mailers to use a lettershop’s postage-paid permit and have the business-reply mail sent there instead of opening their own account with the USPS.

Pre-Press Services

The various steps necessary, up to final printing, to transform original copy and are into the form required for printing. Services include:

Color Proofing

Proofs made from the separate plates in color process work, showing the sequence of printing and the result after each additional color has been applied.

Digital Color Proofing

An off-press color proof produced from digital data without the need for separation films.

Image Manipulation

Custom alterations of digital images

Imagesetter

A typesetting system that can process both text and images

Scanner

A device that interprets the reflected light from a physical image and digitizes it so it can be stored on a computer. Using a scanner can eliminate the need for human contact with individual documents.

Scanning

Desktop, High-End, Mid-Range Electronic process used to make color and tone-corrected separations of images.

Thermal Dye sublimation

Proof-making process where pigments are vaporized and float to desired proofing stock.

Premium

A free gift offered to a prospect to induce a greater response to the main product or service that is being sold. A premium need not bear any relationship to the product being offered.

Response Booster

Any device, token, premium or sweepstakes that will help raise the response rate.

Sheet-Fed Press

An offset printer that prints on paper which is fed one sheet at a time. Used primarily for short runs or higher – quality printing.

Sorting

The computerized process of reorganizing a list from one sequence to another. For example, a file can be sorted by last name, company name, ZIP code, high donors, multi-buyers, recent buyers, etc.

Take-Ones

Promotional literature found in racks, often at the grocery store

Telemarketing Services

Inbound

Any phone calls that come into a telemarketing call center

Interactive Voice Response (IVR)

The various recorded or digitized text message that can be accessed electronically by using a telephone.

Outbound

Any phone calls made out of a telemarketing call center.

Predictive Dialing

The automatic dialing by a computer of telephone numbers on a preselected list. The system can, with great accuracy, discern an answering machine from a human voice and will instantly connect a respondent to a TSR. If there is no answer or a busy signal, the computer will know to redial later.

Telephone Service Representative (TSR)

Anyone who sells, or services customer over the phone either inbound or outbound.

Telephone Preference Service (DMA TPS)

A service of the Direct Marketing Association for consumers who want to have their names removed from telemarketing lists.

Tokens

An action device; the purpose, of which is to involve the prospect in the offer. It can be anything form a coin, peel-off stamp or a punch-out paper piece that is inserted into the order form.

Variable Imaging Personalization done on a digital press

Voice Response Unit (VRU) Hardware that is connected to the telephone through which Interactive Voice Response messages are generated

Web Press A printing press that is fed by a large roll of paper instead of individual sheets

4.4.10 Revised ICC International Code of Direct Marketing:

Like its predecessor the 1978 Code of Direct Mail, this Code, which was first issued in 1992, is an expression of the business community’s recognition of its social responsibilities in respect of commercial activities and communications. The globalization of the world’s economies, and the intense competition that ensues therefrom, require the international business community to adopt standard rules. The adoption of these self-disciplinary rules is the best way that business leaders have of demonstrating that they are motivated by a sense of social responsibility, particularly in light of the increased liberalization of markets and the emergence of new media.

This edition combines past experience with current thinking based on the concept of direct marketing as a key factor in competition and communication, essential to the market economy. In the view of the ICC, the Code established as for balance between the interests of all parties concerned – producers, distributors and consumers. The ICC considers it to be fundamental and in the interest of society as a whole that business, while observing the principles of fair competition, should be free to choose between different marketing methods.

The Code is designed primarily as an instrument for self-discipline, but it is also intended for use by legal or administrative bodies as a reference document within the framework of applicable laws.

The ICC believes that this new edition of the Code will promote adherence to high standards of direct marketing practice. Being a pointer to the direction of further international harmonization, it will facilitate the free flow of products across frontiers, leading to efficient markets and significant consumer benefits.

Scope of the code

The Code applied to all direct marketing activities in their entirely, whatever their form, medium or content. It should be read in conjunction with the other ICC Codes of Marketing Practice, namely the:

ICC International Code of Advertising Practice

ICC International Code of Environmental Advertising

ICC International Code of Sales Promotion

ICC International Code on Sponsorship

ICC/ESOMAR International Code of Marketing and Social Research Practice.

ICC Revised Guidelines on Advertising and Marketing on the Internet

ICC International Code of Direct Selling

The Code sets standards of ethical conduct to be followed by all concerned with direct marketing, whether as marketers or sellers, distributors, practitioners or other contractors providing services for direct marketing purposes, or media, and is to be applied against the background of the applicable law.

Interpretation

The Code is to be applied in the spirit as well as in the letter, bearing in mind the different degrees of knowledge, experience and discriminatory ability of those to whom direct marketing activities are directed.

Definitions

For the purposes of this Code, direct marketing comprises all communications activities with the intention of offering goods or services or transmitting commercial messages presented in any medium in an medium aimed at informing and/or soliciting a response from the addressee, as well as nay service directly related thereto.

The term consumer refers to any person to whom direct marketing is addressed or who can responsibility be expected to be reached by it.

The term data controller means the person or body responsible for the contents and/or use of the marketing file

The term data subject means any identified or identifiable natural person

The term Internet refers to the public network of computer networks which enables the transmission of information between users, or between users and a place on the network, as well as to all interactive media and electronic networks.

The term marketing list means a data base created or used for direct marketing purposes;

The term offer means any presentation or solicitation of goods or services;

The term operator refers to any person, firm or company other than the seller that provides a direct marketing service for and on behalf of the seller.

The term personal data means any information relating to an identified or identifiable individuals;

The term predictive dialer means an automated dialer which will adjust the rate at which it dials and deliver answered telephone calls immediately to match operator availability.

The term preference service [“Robinson List”] means the administration and operation of a suppression file of consumers who have registered their wish not to receive unsolicited direct marketing approaches, against which marketing lists are matched;

The term premium rate number means a telephone/fax number to which a call is charged at a higher rate than the standard telephone tariff;

The term processing means any operation or set of operations which is applied to personal data.

The term product refers to any goods or services

The term seller refers to any person, firm or company that offers and provides goods and/or services by direct marketing either directly or through an operator;

The term tele-operator means either a seller or an operator using the telephone for direct marketing purposes;

The term third parties means any natural or legal person other than the data subject, the controller and any person authorized to process the data under the controller’s authority or on his behalf.

General requirements

Basic principles

Article 1

All direct marketing activities should be legal, decent, honest and truthful.

Every direct marketing activity should be carried out with a due sense of social responsibility and should conform to principles of fair competition as generally accepted in business. Activities should not appear to condone or incite violence, not to encourage unlawful or reprehensible behaviour.

No activity should be such as to impair public confidence in direct marketing

Honesty

Article 2

All direct marketing activities should deal fairly with consumers. Activities should be so designed and conducted to avoid giving ground for reasonable complaint.

Any factor likely to affect consumer’s decisions should be communicated in such a way and at such a time that the consumers can take it into account before accepting an offer of making any other commitment.

The fulfillment of any obligation arising from a direct marketing activity should be equitable, prompt and efficient.

No direct marketing should be represented to the consumer as being a form of marketing research.

Children and young people

Article 3

Direct marketing activities addressed to children and young people should not exploit their credulity or inexperience. No direct marketing activity should be undertaken which is likely to harm children mentally, morally or physically, or to strain their sense of loyalty vis-à-vis their parents or guardians.

Sellers and operators offering products to children should:

Identify material intended only for adults;

Encourage young children to obtain their parent’s and/or guardian’s permission before the children provide information, and make reasonable efforts to ensure that parental consent has been given;

Provide information to parents and/or guardians about ways to protect their children’s privacy.

Communication of the message

Decendy and suitability

Article 4

Those using direct marketing techniques should take particular care, given the variety of audiences, to ensure that their messages will not be seen as indecent, offensive or inappropriate. Such messages should conform to prevailing standards of decency.

Transparency

Article 5

Whenever information is gathered for direct marketing purposes, this should be made clear to the relevant consumers.

Whenever an offer is made, all the commitments undertaken by the seller, the operator and the consumer should be made clear to consumers, either directly or by reference to sales conditions available to them at the time of the offer.

Print which by its size of other visual characteristics is likely to affect substantially the legibility and clarity of the offer should be avoided.

Wherever appropriate a simple statement of the essential points of the offer should be clearly displayed in the promotional material. The scattering of essential points of the offer throughout promotional materials should be avoided.

Presentation

Article 6

1. The presentation of the product should not contain any written, audio or visual element which directly or by implication is likely to mislead consumers, in particular with regard to such characteristics as nature, composition, method and date of manufacture, range of use, efficiency and performance, quantity, commercial or geographical origin and environmental impact.

When the presentation of an offer includes illustration of products, not included in the offer, or where additional products need to be purchased for the consumer to be able to use the product on offer, this should be made clear in the offer.

2. The terms of any offer made should be clear, so that the consumer may know the exact nature of what is being offered.

3. High-pressure tactics which may be construed as harassment should not be used any advertisements should be framed in strict accordance with the ICC International Code of Advertising Practice.

Comparisons

Article 7

The presentation of an offer containing comparisons should be so designed that the comparison is not likely to mislead, and should comply with the principles of fair competition and with the protection of trade marks.

Points of comparison should be based on facts which can be substantiated and should not be unfairly selected.

Testimonials

Article 8

The presentation of the offer should not contain or refer to any testimonial or endorsement unless it is genuine, verifiable, relevant and based on personal experience or knowledge. Testimonials or endorsements which have become obsolete or misleading through passage of time should not be used.

Guarantees

Article 9

Offers may contain the word “guarantee”, “guaranteed”, “warranty” or “warranted” or words having the same meaning, only if the full terms of the guarantee as well as the remedial action open to the purchaser are clearly set out in the offer, or are available to the purchaser in writing. The name and address of the guarantor and the duration of the guarantee should be clearly stated.

Right of withdrawal

Article 10

1. Where consumers have a right of withdrawal sellers should inform them as to the existence of this right, how they obtain further information of this right, and how to exercise this right.

2. Sellers who undertake to supply products to the consumer on “free examination”, “free trial”, “free approval” and the like should clarify in the offer who will bear the cost of returning such goods and should make the return as simple as possible. Any time restriction for the return should be clearly disclosed.

After-sales service

Article 11

When after-sales services is offered, details of the services should be included in the guarantee or stated elsewhere in the offer. If the consumer accepts the offer, information should be given on how the consumer can activate the service and communicate with the service agent.

Identity of the seller

Article 12

The Identity and details of where the sellers and/or operator may be contracted should be given in the offer, so as to enable the consumer to communicate directly and effectively with them. At the time of delivery of the product, the seller’s full name, address and telephone number should be made available to the consumer.

Unsolicited products

Article 13

Neither the seller not the operator should deliver products for which payment is requested without having first received an instruction for the supply of such products.

Offers that are likely to be mistaken for bills, invoices or similar documents relating to unordered products should not be made

Promotional incentives

Article 14

Direct marketing which utilizes promotional incentives should conform with the relevant provisions of the ICC International Code of Sales Promotion.

Safety and health

Article 15

Information provided with the product should include proper directions for use and full instructions covering health and safety warnings whenever necessary. The required health and safety warnings should be made readily understood by the use of pictures, text or a combination of both.

Goods and, where applicable, samples should be packaged in such a way as to be suitable for delivery to the customer – and possible return – in compliance with valid health and safety norms.

Fulfillment

Article 16

Orders should be fulfilled within 30 days from the date the order is received from the consumer, unless otherwise stipulated in the offer. Sellers or operators should inform the consumer of any undue delay as soon as it becomes known to them. In such cases, any request for cancellation of the order by the consumer should be granted, even when it is not possible to prevent delivery, and the deposit, if any, should be refunded immediately.

Substitution of Products

Article 17

If a product becomes unavailable for reasons beyond the control of the seller or the operator, another product may not be supplied in its place unless the consumer is informed that it is a substitution and unless such replacement product has materially the same or better characteristics and qualities, and is supplied at the same or a lower price. In such a case, an explanation of the substitution and of the right to return the substitute product at the seller’s cost should be given to the consumer.

Return of faulty and damaged products

Article 18

The cost of return of faulty products damaged other than by the consumer is the responsibility of the seller, provided notice is given by the consumer within a reasonable period of time.

Credit and debt collection

Prices and credit terms

Article 19

Whether the offer is on a cash or installment basis, the price and terms of payment should be clearly stated in the offer together with the nature of any additional charges (such as postage, handling, taxes, etc.) and, when possible, the amounts of such charged.

In the case of sales by installment, the credit terms, including the amount of any deposit or payment on account, the number, amount and periodicity of such installments and the total price compared with the cash price, if any, should be clearly shown in the offer.

Any information needed by the consumer to understand the cost interest and terms of any other form of credit should be specified either in the offer or when the credit is offered.

Unless the duration of the offer and the price are clearly stated in the offer prices should be maintained for a reasonable period of time.

Payment and debt collection

Article 20

The procedure for payment and debt collection should be such as to avoid undue inconvenience to the consumer, making due allowance for delays outside the consumer’s control.

Debtors should not be approached in an unreasonable manner and debt collection documents which might be confused with official documents should not be used.

Costs of communications

Premium rates

Article 21

1. When promoting a premium rate number, such as an online message or telephone number, the seller or operator should state that the number is a premium rate and what the rate is, either as cost per minute or as cost per call.

Sellers and operators should take particular care to ensure that the consumer not be kept waiting an unreasonable time in order to fulfill the purpose of the call.

2. When answering a call, a seller or operator should always begin by informing the consumer that it is a premium rate call. This should be done at the time the consumer is about a access the message or online service.

Use of lists and database

Collection of data

Article 22

1. When collecting personal information from individuals, the seller and/or operator should ensure that the data subject is aware of the following:

The identity of the data controller;

The purpose of the collection;

Any intention to transfer the data to third parties

The data subject can be informed of this in the context of the collection, by a separate notice or message, contract, or by adequate collective notices.

2. When it is not possible to inform the data subject at the time of the collection, this should be done as possible thereafter.

Use of data

Article 23

Personal data collected in accordance with this Code shall be:

Collected for specified and legitimate purposes and not used in any manner incompatible with these purposes;

Adequate, relevant and not excessive in relation to the purpose for which they are collected and/or further processed.

Accurate and kept up to date;

Preserved no longer than is required for the purpose for which the data were collected or further processed.

The data controllers should take reasonable steps to ensure that their processors and third parties respect the data protection principles of this Code. Sales agents of the data controller are not considered third parties.

Rights of the data subject

Article 24

Appropriate measures should be taken so as to enable consumers to exercise the following rights:

To opt our from marketing lists:

To require that their data are not made available to third parties;

To rectify incorrect data which are held on them.

Preference services and suppression of data

Article 25

1. Sellers and/or operators should comply with the requests of data subjects that they not receive addressed mail, commercial telephone calls, faxes, e-mails or other addressed online communications by means of a preference service, in-house suppressions file or by other means.

2. Names and other personal information contained in preference service suppression files should be used only to suppress matching information on promotional marketing lists which are to be sued for making unsolicited marketing approaches, Names found in preference service lists should not be rented, sold or exchanged, except for suppression purposes.

3. When faxing or e-mailing or using any other form of online communication to consumers, particular care should be taken to reduce to the minimum any inconvenience likely to be caused by unwanted messages.

Security of processing

Article 26

Data controllers should ensure that they employ adequate security measures, having regard to the sensitivity of the information, to prevent unauthorized access or disclosure of the personal data.

Data controllers should satisfy themselves that any third party and/or processors they employ have adequate security measures.

Transbordertransactions

Article 27

Particular care should be taken to maintain the data protection rights of the data subject when personal data is transferred from the country in which it is collected to another country.

When data controllers have processing conducted for them in another country, they should take all reasonable steps to ensure that adequate security measures are observed and that the data protection principles of this Code are respected. The use of the ICC model contract covering agreements between the originator of the marketing list and the processor or user in another country is recommended.

Unaddressed direct mail

Respecting consumer wishes

Article 28

Where a system has been established to enable consumers to indicate their which not to received unaddressed mail, this should be respected.

The telephone in direct marketing

Content of the call

Article 29

Telephone marketing offers should always comply with the general rules specified in this Code as well as with the following provisions:

1. Outboundcalls

When tele-operators call a consumer, they should promptly:

State the name of the seller they represent;

Unambiguously state the purpose of the call

Politely terminate the call when it is apparent that the receiver of the call is not competent, or does not wish to take the call or is a child (unless the tele-operator receives permission form an appropriate adult to continue).

2. Inbound calls

When tele-operator receive calls from consumers, tele-operators should state the name of the seller they represent.

3. All calls

Before closing the call the tele-operator should ensure that the consumer is informed and aware of the nature of any agreement reached, and of what steps will be taken following the call.

Where a sale is purported to have been made, a minimum requirement is that consumers should be aware of the essential points of the contract which should include as a minimum:

The main characteristics of the goods or services;

Where goods or services are to be supplied permanently or for an ongoing period the minimum duration of the contract.

The price of the goods or services including any additional costs (e.g. delivery costs, taxes to be charged by the seller);

The arrangements for payment, delivery or performance and

Any right of withdrawal that they may exercise.

Where the call leads not to a sale but to a further contract by a seller the tele-operator should inform the consumer of a subsequent contact, and where information supplied by the consumer may be used for any non-obvious purpose the tele-operator should make this fact, and the purpose, clear to the consumer in accordance with article 22.

Reasonable hours

Article 30

Outbound calls should, unless expressly otherwise requested, only be made during hours which are generally regarded as reasonable for the recipient.

Right to written confirmation

Article 31

Where an order has been placed following a call, the consumer has the right, in good time and at the latest at the time of deliver of the goods or at the commencement of the delivery of the services, to confirmation in writing or durable format of he detailed terms of the contract. Confirmation should include at least the information specified in article 10 (right of withdrawal) and 12 (identity of the seller) as well as any other information specified in article 4 to 22 of this Code, as and where appropriate.

Monitoring of conversations

Article 32

The monitoring including taping, of telephone conversations made for telephone marketing purposes should be conducted only with appropriate safeguards, in order to verify the content of the call, to confirms a commence transaction, for training purposes and or quality control. Marketers should ensure that the tele-operator is aware of monitoring; that where practicable, the consumer is also aware of the possibility of monitoring; and that any taped recorded conversations are not played to a public audience without the knowledge of both parties.

Unlisted numbers

Article 33

Consumers with an unlisted number should not knowingly be contracted for direct marketing purposes, other when the number was supplied by the consumer to the sellers or operators.

Use of automatic dialing equipment

Article 34

1. Where a predictive dialer is used, when a tele-operator is unavailable to take the call generated by the dialer, the equipment should abandon the call and release the line in not more than one second.

2. Where other automatic dialing equipment is used, it may be used to contact a consumer only where the call is initially introduced by a tele-operator or where the consumer has previously agreed to receive such calls without tele-operator.

3. Neither predictive dialer not any other automatic dialing equipment may be used unless the equipment immediately disconnects when the consumer hangs up. Dialing equipment should release each time before connecting to another number.

Inline communications

Article 35

Sellers and/or operators should respect the role of particular news groups, forums or bulletin boards as public meeting places which may have rules and standards as to acceptable commercial behaviour.

Sellers and/or operators are encouraged to post their preiveacy policy statement online. Where such privacy policy statements exist, they should be easy to find easy to use and comprehensible.

Sellers and/or operators should make a suppression mechanism available to users who do not wish to receive future online commercial solicitations. Unsolicited online addressed commercial messages should be clearly identified as such and should clearly identify the seller and or operator.

Responsibility, substantiation and implementation

Responsibility

Article 36

1. The prime responsibility for all aspect of direct marketing activities, whatever their kind or content, always rests with the seller.

2. Those taking part in the planning, creation or execution of any direct marketing activity have a degree of responsibility commensurate with their position for ensuring the observance of the Code.

3. Thus in addition to the sellers the Code should be duly observed by:

Operators or data controllers, or their subcontractors, who contribute to the activity or communications;

Publishers, medium-owners or contractors who publish, transmit or distribute the offer or any other communication.

Rules apply to entirety of direct marketing communication

Article 37

The rules of this Code embrace the direct marketing communication in its entire content and form, including testimonials, statements and visual presentations originating from other sources. The fact that the content or form of the direct marketing communication originates wholly or in part from other sources is not an excuse for non-observance of the rules.

Respect of self regulatory decisions

Article 38

No seller, operator, publisher, medium-owner or contractor should be party to the implementation of any direct marketing activity or to the publication or distribution of any communication which they know to have been found unacceptable by the appropriate self-regulatory body or available dispute-resolution mechanisms.

Effects of subsequent redress for contravention

Article 39

While subsequent correction and appropriate redress according to available dispute-resolution systems for a contravention of the Code are desirable, they cannot excuse the original contravention of the Code.

Substantiation

Article 40

Substantiation of verifiable facts needed to establish compliance of the direct marketing activity with the Code should be available and to be produced when called for by any appropriate self-regulatory body.

Implementation

Article 41

This Code is to be applied nationally and internationally, and should be the basis for the decisions by bodies set up for the purpose of self-regulation.

Any request for interpretation of the principles contained in this Code should be submitted to the ICC Code Interpretation Panel.

Lesson 4.5

EVENT MANAGEMENT

4.5.1 Introduction

Events can exert important cultural, commercial and technological impacts on surrounding areas. The management of events involves a diverse range of organizations within the hospitality/tourism industry and may also involve a broad range of other stakeholders. Event management one of the hottest buzzwords in software, sounds great. Being able to detect, report and solve exceptions in processes before they spiral out of band is a goal to which all manufacturers can aspire. But very few manufactures are using software that promise to help them do that.

Supporters of event management say a clear case can be made for the business value of software packages that promise to smooth out a business’ bumps before they wallop its shock absorbers. Skeptics, on the other hand, view event management as merely the current hype from software vendors. In their eyes, these new software packages – often called “supply-chain event management (SCEM) – are the latest in a line of enterprise systems that promise more than they actually deliver.

Undeniably, a key factor spurring the adoption of event management is the increase in variability that has become a fact of life for many manufacturers. Few in industry would dispute the idea that what you don’t know about your operations – and your suppliers – can hurt you. While exception management in the past was largely handled manually – assuming that the problem was detected before it got out of hand – these new software packages can be configured to embrace a particular company’s alarm thresholds and either recommends solutions or automatically enacts standard fixes.

4.5.2 Example:

One manufacture that is trying event-management technology is CGR Valley Products Inc., which is using a software package called Moves from Intentia Americas, Schaumberg, III. According to Steve, Bartlett, production control manager at the privately held Greensboro, N.C., firm, which fabricates all kinds of rubber products, the company had no way of seeing trouble in the making on the plant floor. Orders that were likely to ship late,. Or those for which materials were unavailable, plugged along without anyone realizing anything was wrong until it was often too late. CGR, which builds some 8,000 different items including many custom parts, found the flexibility of the system’s Advanced Production Planning module attractive.

And CGR is not alone. Generally, manufacturers that are using event management think it’s great. For example, Rob van Herk, IT manager at Luxn, a Sunnyvale, Calif., manufacturer of fiber optic equipment, makes a simple yet persuassivbe case for the technology Luxn, which uses Categoric Software’s event management package, employs the system to help it adjust to changes in the business Another manufacturer weighing in on the plus side of event management is Belden Brick Co. The brick maker, which churns out about 500 million bricks per year at 11 plants, uses Interbiza’BizWorks software.

At Belden Brick, based in Canton, Ohio, event management comes into play when BizWorks notifies sales managers when certain thresholds are exceeded, such as order levels or size of orders. Of course, many manufacturers are benefiting from a form of event management when they implement automated replenishment of inventory. When inventory on a certain part falls too low, an order is placed to fill the shortfall.

Now some event management software vendors want to extend this capability to other parts of the company. For example, when the status of a major account is noticed to be going south in a hurry, the sales director – or even the CEO – would not only receive notification, but certain actions could be initiated as a result. For instance, a meeting could be requested with the customer or prospective client.

4.5.3 Some aspects of Event management:

Pre-Conference Management

Program budgets

Collateral materials development

Housing and program registration

Themes development

Meeting specification preparation

Menu and program design

Production

Stage design and construction

Theme-event production

Multimedia production

Concert sound system design and rental

Video processing / Large screen projection

Equipment specs and recommendations

On Site Logistics

Facility interface and coordination

Program handout materials

On-site registration

Meeting room set-up

On-site catering events

Master Account audit

Exhibit Management

Exhibitor requirements

Program management and promotion

Floor plans and traffic flow

Exhibit load-in and move out

Destination Management

Creative venues and tours

Airport receptions

Motor coach and limousine services

Speakers and entertainment

Post Program

Master Account reconciliation

Post-event reporting

4.5.4 Event management software in USA:

Event management, one of the hottest buzzwords in software, sounds great. Being able to detect, report and solve exceptions in processes before they spiral out of hand is a goal to which all manufacturers can aspire. But very few manufacturers are using software that promises to help them do that.

Supporters of event management say a clear case can be made for the business value of software packages that promise to smooth out a business bumps before they wallop its shock absorbers. Skeptics, on the other hand, view event management as merely the current hype from software vendors. In their eyes, these new software packages – often called “supply-chain event management” (SCEM) – are the latest in a line of enterprise system that promise more than they actually deliver.

Undeniably, a key factor spurring the adoption of event management is the increase in variability that has become a fact of life for many manufacturers.

Few in industry would dispute the idea that what your don’t know about your operations – and your suppliers – can hurt you. While exception management in the past was largely handled manually – assuming that the problem was detected before it got out of hand – these new software packages can be configured to embrace a particular company’s alarm thresholds and either recommends solutions or automatically enacts standard fixes, react.

Luxn, which uses Categoric Software’s event-management package employs the system to help it adjust to changes in the business. Another manufacturer weighing in on the plus side of event management is Balden Brick Co. The brick maker, which churns out about 500 million bricks per year at 11 plants, uses Interbiz’ BizWorks software. Of course, many manufacturers are benefiting from a form of event management when they implement automated replenishment of inventory. When inventory on a certain part falls too low, an order is place to fill the shortfall.

Now some event management software vendors want to extend this capability to other parts of the company. For example, when the status of a major account is noticed to be going south in a hurry, the sales director or even the CEO – would not only receive notification, but certain actions could be initiated as a result. For instance, a meeting could be requested with the customer or prospective client.

4.5.5 Event Planning:

The event manager should know a great deal about the audience. The manager may proceed to learn about the audience’s attitudes and expectations and how they relate to and ultimately affect the goals and objectives of the event. The purpose of the event can often be widely varied and complex with ultimate goal that include explanation, motivation and even inspiration. A far more complete profile of audience attitudes and expectations is warranted to accomplish the goal of educating and persuading people.

Events have to be planned in advance by a least 18 months, so that notice can be given to all concerned. Sometimes, one has to garner troops from different parts of the world and it is hence important that planning is mandatory. Usually monetary advance is drawn early so to cover the initial expenses. Interaction with agencies indicate:

That the budget of the company plays a vital role in the event management.

Communicating regularly with people to update them on plans and getting their opinions on key decisions.

Higher degree of delegation will result in good adherence to the time schedule and activity planning.

The feedback on the various parameters involved in making the event a success.

4.5.6 Factors for success:

Detailed planning will bring in success if implemented properly. Few factors can really make the difference between a just another meeting and a memorable one.

Location: An ill-suited location may get reflected on the quality of the event. Even the best event may be viewed as sub-standard.

Environment: participants prefer a different one from their routine. This will help in re-charging themselves

Technology: Better technology brings in higher expectations. The level of presentation sophistication keeps mounting.

Logistics: Though it has bearing on the location, internal logistics systems should help the participants to focus on their attention in the event.

4.5.7 The checklist for event planning:

Why run this event?

Is the:

Purpose of the event clarified and agreed;

Target audience identified and agreed;

Key message to the audience established and agreed;

Event’s organizing team established;

Event budget established;

Amount of resources required identified, costed and allocated.

Site requirements

Is the:

Location central and convenient;

Public transportation adequate

Hotel / facility requirements

Is the:

Price within budget;

Location good;

Place clean and attractive;

Meeting room appropriate;

Dining and function space adequate;

Space to put on exhibition sufficient;

Audio visual equipment and support as you need it to be;

Food and service appropriate

Registration of attendees organized;

Registrations of attendees organized;

Number of staff available appropriate to service your event

Hotel/facility contact

Who is:

The manager?

The banqueting / catering manager?

The service manager?

The sales manager?

The person you contact in a crisis?

The key person to handle complaints?

Attendance

Who are the target audience?

How are they to be contacted?

How will they confirm their attendance?

Will you need to register people as they attend?

Will you need name badges?

Will you provide a delegate list?

Transportation

How will people get there?

What will get in the way of people getting there – road works etc

Dates

What precisely is the date of the event?

What precisely is the time of the event?

Is the room/facility available (including set-up and clean-up time)?

Has booking been confirmed?

Is there a charge for late cancellation?

Guests speakers and visitors

Who are the guest speakers and visitors?

How will they be invited?

How will they confirm if they are going to attend?

How do they get to the venue?

Do they require to be paid?

If so, how and when?

Who will send a letter of thanks?

Do you require details from them e.g. their experience, job role, proper title etc?

Registration

Do you require a registration desk?

Approximate time required

Registration list

Registration badges

Personnel to handle

Number of tables and chairs

Paper, pencils, pens, pins, signs

Water jugs and glasses

Lighting

Bulletin boards

Audio visual equipment

Requirements

Childcare facilities

Access for people with disabilities

Points to check just before the start of the event

Personnel – understanding of procedure

Necessary information on registration cards, badges

Programmes and other materials

Registration desk established

Registration list available

Directional signs posted

Location of tables

Seating in place

Waste baskets

Points to check after the banquet

Removal of organizational property

Check with hotel/venue to ensure everything is in order

UNIT – 5

Lesson 5.1

PROMOTIONAL PROGRAMME EVALUATION

5.1.1 Introduction:

For some time those seeking to measure promotions have talked about efficiency and effectiveness. Efficiency is a measure of the average cost of trade spend. To relate this to a single promotion, the promotional costs would be expressed as a percentage of the sales on that promotion. Individual promotional efficiencies would be related to the overall promotional program efficiency in terms of the frequency with which that promotion is repeated. To use an example, if a single promotion has an efficiency cost of 20% to sales, and the frequency is such that 30% of the total sales in a period are on a promotion, then the overall efficiency will be 6% of sales.

Effectiveness on the other hand would seem to relate to any gain in sales achieved by the promotion, and be measured in terms of the costs to achieve that gain. A simple theoretical model using real world price/volume relationships indicates that efficiency and effectiveness can have a minimum point – that there are optimum price points. It also indicates that both measures reach a minimum at about the same price point. This suggests that if you optimize effectiveness you will optimize efficiency at the same time.

5.1.2 BEST model:

If effectiveness and efficiency are independent, there are four possible states for a product on a promotion. This is shown below in the BEST model:

Ballistic

Hi Effect/Low Effic

Superb

Hi Effect/Low Effic

Terrible

Hi Effect/Low Effic

Economical

Hi Effect/Low Effic

B Ballistic - Effective but not Efficient

E Economical - Efficient but not Effective

S Superb- Effective and Efficient

T Terrible- Neither Effective nor Efficient

There are a number of implications in this BEST model. A promotion that is low in efficiency can be run, but obviously with less frequency than another promotion that has a higher efficiency. It is also possible for an individual retailer to charge far more than their stores are able to deliver, thus causing all their promotions to be lower in efficiency and lower in effectiveness than for other retailers. One can also identify products which are Terrible. Irrespective of where they are run, or what promotional vehicles or price points are used. Economical are products which carry trade spending costs easily-often being high volume lines, but which do not respond significantly to price promotions. They can be combined with a few Ballistic.

These are products which are expensive to promote generally, as they are low volume lines, but which show significant increases in sales. Superb are often all too few – particularly as retailers drive up trade spend costs. the only challenge to Superb is to ensure any trade promotions in this area do not destroy the brand. In our trade

dominated promotional environment, account managers need to be carefully directed, as their primary goal is to drive volume and control trade spend. If marketing do not set strict guide lines, who can blame them for over promoting products that perform.

5.1.3 Methods of promotion evaluation:

Surprising as it may seem, very few marketing promotions are assessed to professional standards. Recording the objectives and comparing the results is not as easy as it may seem. This brief guide to promotion assessment best practice concerns both effectiveness (whether the promotion achieved the desired goals) and efficiency (the financial return on the promotion) and covers:

Why assessment matters

Why assessment does not usually happen

The crucial stage for assessment

Why payment by results is becoming an important discipline for both clients and agencies.

Do’s and don’ts for payment by results

A checklist to assess your current system.

This best practice concerns only promotions supplied externally by agencies, not price or other promotions devised internally. These promotions may involve all kinds of communications and incentive devices, including price and direct marketing across all business sectors, not just consumer goods. They mostly aim for an immediate effect on trial and/or sales.

Why promotional assessment matters

Client and agency have a marketing partnership seeking to achieve the same marketplace goals; only then will draw down their separate benefits.

Quantifying objectives helps clarify what client and agency are seeking.

Clients are increasingly pressed on accountability.

Both effectiveness and efficiency are enhanced by knowing which promotions worked best, and why.

Agreed assessment requires the measurement methodology also to be agreed.

Better information improves budgeting overall and allocating budgets to components of mix.

It enables the knowledge gained from the promotional experience to be passed on.

Why assessment does not usually happen

Many promotions are seen as low budget items of low interest to top management.

Lack of relevant research data.

Isolating results from the rest of the marketing mix and attributable to the promotion is difficult and time consuming.

Too many different, even conflicting, objectives for each promotion.

Drive to get the next job done, and move the game on.

Short marketing job tenures. Junior marketers move on too quickly to make evaluation worthwhile for them.

Competitive orientation (filling the promotional slot keeps others out, never mind how useful it is).

Large companies suffer from data deluge: more information than they can convert to actionable learning.

Lack of clarity about agency and client roles and relationship.

The crucial stages for assessment

Does the agency know what it is supposed to be doing?

Too many creative presentations are rejected by clients who failed as brief the agency properly in the first place.

The wider marketing context and overall competitive situation

No-nos (things the promotion must not do)

Brand positioning statement.

The promotion requirement. The agency should thoroughly understand what the promotion should achieve, as distinct from how to do it (the agency’s job)

How will we recognize “success”? A very small number of goals, ideally just one, should be quantified. If there are more than one, an importance ranking well help the overall assessment.

Most promotional assessment fails because the goal posts were moved but no one kept a record. Jointly revisit and record the goals just before the promotion runs.

How did we do?

Comparing results with targets. These comparisons ideally require three kind of data separation:

Baseline (what would otherwise have happened) from the promotional uplift)

Isolating the promotion from the rest of the marketing mix.

Separating the target segment from the rest of the business1.

In practice companies rarely have the data and the time to do all this analysis.

Unless it is a pilot, one would not invest more than about 10% of the promotional budget in its assessment. Client and agency should agree ahead of time what separations will be made and whether that will done by collecting hard data or mutual best guessing. With experience, combining the agency and client estimates is a valuable way of establishing a shared view of the objectives and the results even when hard data is limited.

Did the promotion make money?

If profit is a key objective, it should be one of the goals. Even when that is not primary, good practice requires marketers to compare the efficiency of each promotion with previous comparable experience so that the financial experience is understood. Note however that the financial return should be reported in the context of any change in brand equity. In other words any short-term profit on the promotion may be offset by the loss on the marketing asset (brand equity), or vice versa. Where efficiency is not part of the agency brief (profitability is often confidential), this part of the evaluation is likely to be internal for the client only.

A checklist to assess current system

The primary items are at the top of this list followed by technical factors. If any of these terms are unfamiliar, please see the full White Paper on the SPCA Website. After reviewing the 13 factors, decide how important each is for your type of business. For example, the pipeline between marketer and end consumer is not important for those selling direct. If that applies to you, weight L as zero. Weights should be assigned such that they add up to 77%.

Then score each of the factors out of ten for how good it is relative to best practice (=10). After multiplying by the weights and addition the total will give you the score out of 100. Whether 70%, for example, is good depends on your expectations and how good your competitors are. Firms may wish to use this methodology as a benchmarking tool.

The table above deals only with effectiveness. Clients should also rate their system for the extent to which efficiency is evaluated even though that may not be shared with the agency. And when estimating the profit effects, any change in the marketing asset (brand equity) should also be taken into account.

5.1.4 Scoring own Promotion assessment

A. The briefing process (context and promotion)

B. Setting baselines and incremental uplifts (goods)

C. Revising B pre-promotion

D. Mutual agency/client post-promotion evaluation

E. Capturing (recording) the learning

F. Payment by results

Technical adjustment:

G. Environment/market size

H. Seasonality

I. Expected competitive (re) actions

J. Distribution – channels, # outlets (comp stores)

K. Pricing

L. Inventories (pipeline effects)

M. Other significant marketing mix

Lesson 5.2

REGULATIONS OF PROMOTIONS

5.2.1 Introduction:

A recent report issued by the Global Information Infrastructure Commission (GIIC) admits that the term ‘consumer protection’ has taken on a variety of meanings in electronic commerce; one of the top areas of focus is now ‘truth in advertising’ and ‘transparency in marketing’. In the electronic marketplace, people lack face-to-face interaction, they cannot hold or test a product before they buy and have to rely solely on the information presented online. Providing accurate information is essential to generate trust, says GIIC’s exhaustive report, which points out the development in various countries. Direct marketers, including online sellers, have to inform customers about nine transactional issues, namely, the sales price and shipping charges, the payment terms, delivery information, merchandise-return policy, the seller’s name, address and phone number and the name of a contact person. India needs self-regulation. Many Indian sites have privacy and copyright policies, but advertising bodies like the ASCI (Advertising Standards Council of India) or the AAAI (Advertising Agencies Association of India) need to address self-regulation issues. Formal legislation is still awaited.

5.2.2 Organizations involved in setting regulations:

5.2.2.1 AAAI:

The AAAI is a national organisation of advertising agencies, formed to promote their interests so that they continue to make an essential and ever-increasing contribution to the nation, by working towards set objectives.

Established: 1945

Executive Committee 2000-2001

Designation Person Company

President Mr Ramesh Narayan Canco Advertising Pvt. Ltd.

Vice President & Reg. Convenor (W)

Mr. Rajiv Agarwal Nexus Equity Advertising Pvt Ltd.

Hon. Secretary Mr. Dara Acidwala Raka Advertising Marketing Pvt. Ltd.

Hon. Treasurer Mr. Nagesh Alai Interface Communications Ltd.

Mr. Sam Balsara Madison Communications Pvt. Ltd.

Reg. Convenor (E) Mr. Madhukar Kamath Bates India Ltd.

Mr. Anil Kapoor FCB-Ulka Advertising Ltd.

Prem Mehta Lintas India Ltd.

Reg. Convenor (N) Mr. Madhukar Kamath Bates India Ltd.

Mr. Anil Kapoor FCB-Ulka Advertising Ltd.

Mr. Prem Mehta Lintas India Ltd.

Reg. Convenor (N) Mr. Sorab Mistry McCann-Erickson (India) Ltd.

Immediate –Past President

Mr. Arun Nanda Rediffusion DY & R Ltd.

Mr. Krishan Premnary Prem Associates Advertising Marketing

Mr. Gautam Rakshit Advertising Avenues

Mr. H V Subramaniam Capital Advertising Pvt Ltd.

Reg. Convenor (s) Mr. Srinivasan Swamy R.K. Swamy/BBDO Advertising Ltd.

Membership

Total members 87

5.2.2.2 ASCI:

ASCI is committed to its Code for Self-Regulation in Advertising. It is a commitment to honest advertising and to fair competition in the marketplace. It stands for the protection of the legitimate interests of consumers and all concerned with advertising. Governed by a 16 member board of Governors from advertisers, agencies, media and other advertising services, the individual member firms being leaders in their respective industries or services.

Established : 1985

Board of governors 2000-2001

Designation Person Company

Chairman Mr. Sam Balsara Madison Communications

Vice-Chairman Ms. Urmila Jain Aaren Advetising

Honorary Treasurer Mr. Goutam Rakshit Advertising Avenues

Mr. Arun Adhikari Hindustan Lever

Mr. C.R. Irani The Statesman

Mr. Ravi Kant TELCO

Mr. Bharat Kapadia Chitralekha Group

Dr.(Ms.) V.V. Manerikar J.B.I.M.S.

Ms. Zia Mody Advocate

Mr. Bharat V Patel Procter and Gamble

Mr. R.A. Podar The Tobacco Institute of India

Mr. Conrad Saldanha Rediffusion DY&R

Mr. Derrick Samuel Colgate Palmolive (I) Ltd.

Mr. Ram Sehgal Contract dvertising

Mr. Dorab Sopariwala Telesis Mgmt. Services

Mr. R K Singh Zee Telefilms Limited

Membership

Total members 251

Advertisers 121

Press/Media 36

Ad Agency 72

Allied Professions 22

5.2.2.3 IBF:

The IBF is a national organisation of television broadcasters, airtime sellers and other entities in the field of television, set up to promote the television industry, so that it can make an essential and ever increasing contribution to the nation by working towards a set of objectives.

Established : 1999

Board of Directors 1999-2000

Designation Person Company

President R R Shah Prasar Bharti

Vice-President Kiran Karnik Discovery Communications India

Treasurer Kunal Dasgupta SET India Pvt. Ltd.

Alex Kuruvilla MTV India Pvt. Ltd.

Anshuman Mishra Turner International

G. Krishan TV Today

Harish Thawani Nimbus Communications Ltd.

Manu Sawhney ESPN Software India Ltd.

Mark Young BBC Worldwide

Peter Mukerjea STAR TV – News Television

Pratik Basu Buena Vista Television

R Basu Boradcast Worldwide (P) Ltd.

R K Singh Zee TV

Ronnie Screwvala UTV

Membership

Total members 27

5.2.3 Cyber advertising regulations:

The Consumer Guidance Society of India has released its list of recommendations for cyber retailers. Some of the recommendations are as follows:

1. Consumers must be provided with details of the retailer’s identity and physical location.

2. Consumers should be made aware of the full name of the company they are dealing with as this may not always be the same as their web-address. This is important in view of the recent spate of domain name squatting.

3. Web-sites should make it clear to the consumer which countries they deliver to, before the order process is embarked upon. Price information should be transparent.

4. If web sites are marketing globally, it is important that web-sites have a facility to incorporate the delivery charges in the total price as also currency conversion.

5. Cyber retailers must design sites to ensure that purchasers are shown the terms and conditions before confirming their order or are offered a link to click on the terms and conditions, suggests the report.

CI firmly believes that the law governing Internet transactions should be the law of the consumer’s home country to ensure familiarity with the procedures. If a cyber retailer specifies that the law governing transactions on its web site will be that of its own country, this must be highlighted to the consumers.

In addition, the consumer must have the right to pursue a dispute within his own country. Jurisdiction remains an issue for settling cross-border disputes in cyber shopping. But a Web Assurance Bureau set up in the US in 1995 attempts to serve as a mechanism for consumers to resolve disputes between cyber shoppers and sellers, the latter have to register with it for a fee.

CI adds that the ordering process must be unambiguous and permit forthwith cancellation of orders. In order to complete the contract, the consumer should be sent an acknowledgement or confirmation of the order.

As regards return of goods, CI suggests that the consumers must have the right to return goods within a specified time limit sans any reason. This policy must be displayed on the web site including information about any costs which may have to be incurred by the consumer. In India, consumers protection laws or even self-regulatory guidelines relating to cyber shopping have yet to evolve.

5.2.4 Cyberlaw Amendments:

To make eBusiness possible several amendments have been made to several legislations:

1. Indian Evidence Act, 1972 – enabling it to accept eRecords as evidence.

2. Indian Penal Code, 1860 – enabling punishment of forgery of documents.

3. General Clauses Act, 1897 – including eDocuments within the scope of documents.

4. RBI Act., 1934 – promote, establish and permit banking companies, financial institutions to carry out efund transfer system.

5. Bankers Book Evidence Act, 1891 – which includes records kept in electronic form,

5.2.5. Drugs and Magic Remedies (Objectionable Advertisement) Act:

This Act makes advertising of sex tonics and sex stimulants, abortion, contraception, uterine tonics and menstrual disorder regulators a cognizable offences. It also prohibits advertisements about diagnosis, cure, mitigation or prevention of 54 diseases and disorders listed in the Act such as cancer, diabetes, epilepsy, leucoderma, paralysis, sexual importance etc. The bill-boards in Delhi the local train railway compartments in Bombay, advertisement pages of news papers and glossy and not so glossy magazines, and now the electronic media, however, mock and law-making and law-enforcing agencies in the face.

Lesson 5.3

SOCIAL RESPONSIBILITY

5.3.1 Introduction:

While there is not single, commonly accepted definition of corporate social responsibility, or CSR, it generally refers to business decision-making linked to ethical values, compliance with legal requirements, and respect for people, communities and the environment. For purposes of this report, CSR is defined as operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business. CSR is seen by leadership companies as more than a collection of discrete practices or occasional gestures, or initiatives motivated by marketing, public relations or other business benefits. Rather, it is viewed as a comprehensive set of policies, practices and programs that are integrated throughout business operations and decision-making processes that are supported and rewarded by top management.

Over the past decade, a growing number of companies have recognized the business benefits of CRS policies and practices. Their experiences are bolstered by a growing body of empirical studies which demonstrate that CSR has a positive impact on business economic performance, and is not harmful to shareholder value, companies also have been encouraged to adopt or expand CSR efforts as the result of pressures from customers, suppliers, employees, communities, investors, activist organizations and other stakeholders. As a result CSR has grown dramatically in recent years, with companies of all sizes and sectors developing innovative strategies.

5.3.2 Example of CSR:

Pitts Modern School, Gomia

Pitts Modern School, named after its founder, Sir Cyril A Pitts, former Chairman, ICI India Limited, was inaugurated on November 1, 1967. From a humble beginning with just 50 students and 6 staff, the school has come of age and today has 1700 students and 80 staff on its rolls. Affiliated to the Central Board of Secondary Education, the school imparts teaching in both English and Hindi medium in two separate streams, from KG to Class XII. At the “Plus 2” level subjects of study include Science, Commerce, Humanities, Computer Education, Informatics, Entrepreneurship, Business Studies, etc.

Standards attained by the students are comparable to the best in the country. Pass percentages have been good all along, around 90%, with several scoring 100% marks in Maths and Physics. Quite a few of its students get admission in prominent institutions like IITs, BIT, ISM, and other Engineering and Medical Colleges each year. A Governing Body, namely the Gomia School Society, under the Chairmanship of the Bishop of Chhotanagpur, controls the management of the School. Indian Explosives Limited provides the building and other infrastructural facilities. The Company also provides educational scholarships to meritorious and economically weak students.

Ardeer Hospital Trust

Ardeer Hospital was set up in 1959 almost simultaneous to the start up of the Indian Explosive Limited factory at Gomia, and was named to commemorate the ICI explosive factory at Ardeer in the UK which played a parental role in setting up the setting up the facilities at Gomia.

In October 1996 this 35-bedded hospital was converted in to an autonomous body named, Ardeer Hospital Trust and thrown open to both company employees as well as the general public. Presently it has a strength of 4 doctors and 30 staff.

The facilities include a well provided pharmacy, pathological lab, Radiology & ECG Units, Physiotherapy clinic, operations theatre for general surgical/gynecological procedures, Intensive Coronary Care Unit, etc. In addition, specialist visits are arranged at regular intervals for ENT, Eye and, Dental treatment. The average daily attendance in the outdoor patients section is 225 and bed occupancy rate 50-60%.

As a community service, some of the deserving patients are given free treatment.

5.2.3 Benefits of social responsible promotions:

The value of corporate social responsibility can be measured in a variety of ways, based on both quantitative and qualitative data. Companies have experienced a range of bottom-line benefits, including.

Improved Financial Performance: Business and investment communities have long debated whether there is a real connection between socially responsible business practices and positive financial performance. Several academic studies have shown such a correlation.

o A 1999 study, cited in Business and Society Review, showed that 300 large corporations found that companies which made a public commitment to rely on their ethics codes outperformed companies that did not to so by two to three times, as measured by market value added.

o A 1997 DePaul University study found that companies with a defined corporate commitment to ethical principles do better financially (based on annual sales/revenues) than companies that do not.

o A recent longitudinal Harvard University study found that “stakeholder-balanced” companies showed four times the growth rate and eight times the employment growth when compared to companies that are shareholder-only focused.

o Similarly, a study by the University of Southwestern, Louisiana entitled “The Effect of Published Reports of Unethical Conduct on Stock Prices” showed that publicity about unethical corporate behaviour lowers stock prices for a minimum of six months.

Reduced Operating Costs: Some CSR initiatives, particularly environmentally-oriented and workplace initiatives can reduce costs dramatically by cutting waste and inefficiencies or improving productivity. For example, many initiatives aimed at reducing emissions of gases that contribute to global climate change also increase energy efficiency, reducing utility bills. Many recycling initiatives also out waste-disposal costs and generate income by selling recycled materials. In the human resources arena, work-life programs that result in reduced absenteeism and increased retention of employees often save companies money through increased productivity by a reduction in hiring and training costs.

Enhanced Brand Image and Reputation : Customers often are drawn to brands and companies considered have good reputations in CSR-related areas. A company considered socially responsible can benefit both from its enhanced reputation with the public, as well as its reputation within the business community, increasing a company’s ability to attract capital and trading partners. For example, a 1997 study by two Boston College management professors found that excellent employee, customer and community relations are more important than strong shareholder returns in earning corporations a place on Fortune magazine’s annual “Most Admired Companies” Ltd.

Increased Sales and Customer Loyalty: A number of studies have suggested a large and growing market for the products and services of companies perceived to be socially responsible. While businesses must first satisfy customer’s key buying criteria – such as price, quality, appearance, taste, availability, safety and convenience – studies also show a growing desire to buy based on other values-based criteria, such as “sweatshop-free” and child-labor-free clothing, smaller environmental impact, and absence of genetically-modified materials or ingredients.

o A 1999 landmark study was conducted by Environics International Ltd., in cooperation with The Prince of Wales Business Leaders Forum, and The Conference Board, Named the “Millennium Poll” it surveyed 25,000 citizens in 23 countries regarding corporate social responsibility. It revealed that:

o 90% of people surveyed want companies to focus on more than profitability.

o 60% of respondents said that they form an impression of a company based on its social responsibility (defined as regard for people, communities, and the environment)

o 40% responded negatively to, or said they talked negatively about, companies that they perceived as not being socially responsible.

o 17% of respondents reported that they had actually avoided the products of companies they perceived as not being socially responsible.

o The 1999 Cone/Roper Related Trends Report determined that American consumers and employees solidly and consistently supported charitable cause related activities and that companies see benefits to their brand and organization’s reputation, image, and bottom line. The report is the only longitudinal analysis of rapidly evolving cause marketing trends in the United States.

o A 1997 study by Walker Research found that when price and quality are equal, 76 percent of consumers would switch brands or retailers if a company is associated with a good cause. A 1998 survey of marketing directors at 170 leading UK companies found that 34 percent of the directors believe that lining marketing to charities can enhance their brands.

Increased Productivity and Quality: Company efforts that result in improved working conditions, lesser environmental impact, or greater employee involvement in decision-making often lead to increased productivity and reduced error rate. For example, companies that improve working conditions and labor practices among their offshore suppliers often experience a decrease in defective or unsalable merchandise. A study of 35 large employers conducted by the Medstat Group and the American Productivity and Quality Center found that health benefit programs can increase productivity and decrease company costs related to absenteeism, turnover, disability and health-care claims by 30 percent.

Increased Ability to Attract and Retain Employees: Companies perceived to have strong CSR commitments often find it easier to recruit employees, particularly in tight labor markets. Retention levels may be higher, too, resulting in a reduction in turnover and associated recruitment and training costs. Tight labor markets-as well as the trend toward multiple jobs for shorter periods of time-are challenging companies to develop ways to generate a return on the considerable resources invested in recruiting hiring, and training talent.

o A 1997 study of 2,100 MBA students conducted by Net Impact found that slightly more than half said they would accept a lower salary to work for a socially responsible company. Studies also have shown that companies appearing on one of the many published “best places to work” lists have hither profit margins, rates of growth, and job-creation.

o The World Resources Institute (WRI) and the Initiative for Social Innovation through Business (ISIB), a program of the Aspen Institute, collaborate on research and reports to demonstrate how businesses can discover sources of competitive advantage in social and environmental stewardship. Two publications thus far, “Grey Pinstripes with Green Ties: MBA Programs Where the Environment Matters” (1998) and “Beyond Grey Pinstripes Preparing MBAs for Social and Environmental Stewardship”, (1999) look at business needs and the competitive advantage of business managers engaging in social and environmental stewardship. The reports are also designed as tools for business school faculty, students, administrators and alumni who want to build their school’s programs. According to these reports, graduates evaluating salaries, job responsibilities, and opportunities for advancement are also looking for the “right” corporate culture, one that incorporates challenges, options, and values.

Reduced Regulatory Oversight: Companies that demonstrate they are engaging in practices that satisfy and go beyond regulatory compliance requirements are being given less security and more free reign by both national and local government entities. In the U.S., for example, federal and state agencies overseeing environmental and workplace regulations have formal programs that recognize and reward companies that have taken proactive measures to reduce adverse environmental, health and safety impacts. In many cases, such companies are subject to fewer inspections and paperwork, and may be given preference or “fast-track” treatment when applying for operating permits, zoning variances or other forms of governmental permission. The U.S. Federal Sentencing Guidelines allow penalties and fines against corporations to be reduced or even eliminated if a company can show it has taken “good corporate citizenship” actions and has an effective ethics program in place.

Access to Capital : The Social Investment Forum report that, in the U.S. in 1999, there is more than $2 trillion in assets under management in portfolios that use screens linked to ethics, the environment, and corporate social responsibility. The figure has grown from $6.39 billion in 1995, to $1.185 trillion in 1997, to $2.16 trillion in 1999. The 1999 portfolio amount accounts for nearly 13 percent of the $16.3 trillion in investment assets under professional management in the U.S. given these numbers, it is clear that companies addressing ethical, social, and environmental responsibilities have rapidly growing access to capital that might not otherwise have been available.

5.3.4 Trends in social responsibility:

The growth of corporate social responsibility as an issues in modern society stems from a wide range of events and trends. The trends outlined below are receiving increased coverage by the media and on the Internet.

Changing Expectations of Stakeholders Regarding Business: The public and various stakeholders have come to expect more of business, according to several studies. Increasingly, they are looking to the private sector to help with myriad complex and pressing social and economic issues. There is a growing ability and sophistication of activist groups to target corporations they perceive as not being socially responsible, through actions such as public demonstrations, shareholders resolutions, and even “dental of service” attacks on company websites. These efforts emphasize the issue of accountability to stakeholders when doing business.

Shrinking Role of Government: In many countries, national and local governments have taken a more hands-off approach to regulating business, due to the globalization of commerce and shrinking resources. As a result, companies – and multinational companies in particular – are relying less on government for guidance, instead adopting their own policies to govern such matters as environmental performance, working conditions and ethical marketing practices.

Increased customer interest: the growing interest CSR comes both from business-to-business customers well as consumers. In the former, there is a significant move by matfdgdf companies, governments, universities and other institutions to align fgkjdgdf purchasing decisions with social criteria, particularly those related companies’ environmental and human rights performance. In the latter merous studies correlated consumer purchasing preferences with ethical and socially responsible business conduct, though it is unclear the extent to which these sentiments translate into actual changes in purchasing patterns. A study by Environics, The Conference Board, and the Price of Wales Business Leadership Forum in 1999 did find that surveyed 25,000 citizens in 23 countries regarding corporate social responsibility. It revealed that 17% of 25,000 survey respondents reported that they had actually avoided the profits of companies they perceived as not being socially responsible (see “Business Importance” section of this report for related statistics) There is a growing number of organization that help consumers and business with their purchasing decisions by rating companies and product or publishing lists of products to seek out or avoid based on social criteria, such as a company’s environmental performance, labor practices or community – involvement record.

Supply Chain Responsibility: As stakeholders take a growing interest in companies’ corporate social responsibility, many companies are finding that they are responsible not only for their own CSR performance, but for that of the companies “upstream” and “downstream” – that is a company’s suppliers as well as its customers and even its customers’ customers. The result is that some companies are imposing codes of conduct on both their suppliers and customers to ensure that other companies’ policies or practices do not reflect unfavorably on them. This has a cascading effect along the entire supply chain, encouraging suppliers to adopt socially responsible business practices.

Growing Investor Pressure: The growth of socially resoponsible investing has accelerated in recent years, with investor groups increasingly pressuring companies on social issues. According to the Social Investment Forum, since 1997, total assets under managemnet in screened portfolios for socially concerned investors rose 183 percent, from $529 billion on $1,497 billion in 1999. During that same period, assets in socially screened mutual funds grew by 60 percent to $154 billion, and assets in screened separate accounts grew 210 percent to $1,343 billion. Many of these investors are using the shareholder resolution process to pressure companies to change policies and increase disclosure on a wide range of CSR issues, including environmental responsibility, workplace policies, community involvement, human rights practices, ethical decision-making and corporate governance. Activist groups are also buying shares in targeted companies to give them access to annual meetings and the shareholder resolution process.

More Competitive Labour Markets: in a tight labor market, many workers, - especially professional, technical or highly skilled employees – are looking beyond paychecks and benefits to seek employees whose philosophies and operating practices align with their own beliefs. For example, some companies have found that having “family – friendly” policies or being identified as an employer of choice have given them a competitive advantage in attracting and retaining employees. at the same time, companies are finding they need to turn to nontraditional labor pools – including economically disadvantaged, non-English-speaking, and physically or mentally challenged individuals – to meet current and future demands for both skilled and entry-level employees.

Demands for Increased Disclosure: Customers, investors, regulators, community groups, environmental activists, trading partners and others are asking companies for more and more detailed information about their social performance. In response, leadership companies are responding with a variety of reports and/or social audits that describe and disclose their social performance on one or several fronts: As part of this move toward greater disclosure, many companies are putting increasingly detailed information about their social and environmental performance – even when it may be negative – onto their publicly accessible websites.

New and Emerging Issues: Recent years have seen a growth in the breadth of topics consider under the “corporate social responsibility” umbrella. Included among these are corporate governance issues, such as how boards of directors are chosen and compensated: religious freedom in the workplace; “cyber ethics” issues of access to and privacy linked to information technology, both for consumers and employees; consumer concern over the use of genetically modified organisms in agriculture; and the new demands brought about by the increased interest in environmental sustainability.

5.3.5 External standards in CSR:

While there are many external standards that cover one of more aspects of corporate social responsibility, only a handful covers the full spectrum of issues. They include:

The Global Reporting Initiative (GRI) was established in 1997 with the mission of designing globally applicable guidelines for preparing enterprise-level sustainability reports including both social and environmental indicators. The GRI is convened by CERES (Coalition for Environmentally Responsible Economies) and incorporates the active participation of corporations, non-governmental organizations, international organizations/Unite Nations agencies, consultants, accountancy organizations, business associations, universities, and other stakeholders from around the world. In 1999, GRI released Exposure Draft Guidelines for comment and pilot testing.

The Global Sullivan Principles: Introduced in 1999, the Global Sullivan Principles expand upon the original Sullivan Principles, which were developed by The Reverend Leon H. Sullivan in 1977 as a voluntary code of conduct for companies who were doing business in apartheid South Africa. According to Rev. Sullivan, “The objectives of he Global Sullivan Principles are to support economic, social and political justice by companies where they do business; to support human rights and to encourage equal opportunity at all levels of employment, including racial and gender diversity on decision making committees and boards; to train and advance disadvantaged workers for technical, supervisory and management opportunities; and to assist with greater tolerance and understanding among peoples; thereby, helping to improve the quality of life for communities, workers and children with dignity and equality.”

Social Accountability 8000 is a standard that specifies requirements for social accountability to enable a company to develop, maintain, and enforce policies and procedures in order to manage those issues which it can control or influence; and demonstrate to interested parties that policies, procedures and practices are in conformity with the requirements of this standard. The requirements of this standard apply regardless of geographic location, industry sector, or company size. The standard was developed by the Council on Economic Priorities Accreditation Agency. It covers standards and monitoring programs for child labor, forced labor, disciplinary practices, nondiscrimination, wages and benefits, working hours, health and safety, freedom of association and collective bargaining, and management systems.

The Caux Round Table (CRT) promotes principled business leadership and the belief that business has a crucial role in identifying and promoting sustainable and equitable solutions to key global issues affecting the physical, social and economic environments, the CRT is comprised of senior business leaders from Europe, Japan and North America. It is based in Caux, Switzerland. The CRT has produced “Principles for Business”, a document which seeks to express a worldwide standard for ethical and responsible corporate behavior for dialogue and action by business and leaders worldwide. The principles include the social impact of company operations on the local community, a respect for rules and ethics, support for multilateral trade agreements that promote the “judicious liberation of trade,” respect for the environment and “avoidance of illicit operation, including bribery, money laundering, and other corrupt practices.

The Interfaith Center on Corporate Responsibility (ICCR) has published “Principles for Global Corporate Responsibility”. Which is not a standard but a “collective distillation of the issues of concern” to religious-oriented institutional investors developed by groups in the U.S., Canada, and the U.K. ICCR is comprised of

more than 275 religious institutions that use their investments to promote social change. The principles cover the entire spectrum of SCR issues, including workplace, community, the environment, human rights, ethics, suppliers and consumers. The principles are published as a reference tool that companies (and investors) can sue to benchmark of monitor their own policies, to those of the companies in which they invest.

The Sunshine Standards for Corporate Reporting to Stakeholders proposed in 1996 by the Washington, D.C. – based Stakeholder Alliance – an association of individuals and organizations from environmental consumer and religious organizations – are described as “the information that corporations should routinely provide in an annual “Corporate Report to Stakeholders.” The standards cover a very wide spectrum of information, from “customer information needs” (related to actions against the corporation, product contents), “employee information needs” (job security, health and safety risks, equal opportunity employment data, employee grievances), “community information needs” (company ownership, financial data, environmental impact, taxes paid, job creating data, investments, contributions), and “society’s information needs” (trade with hostile nations, major government contracts, fines levied against the company.

The Keidanren Charter for Good Corporate Behaviour comes from Keidanren, the Japanese Federations of Economic Organizations, a nationwide business association whose membership includes more than 1,000 of Japan’s leading corporations and more than 100 industry groups. The 10 – point charter states that “Corporations, in addition to being economic entities engaged in the pursuit of profit through fair competition, must be useful to society as a whole.” Keidanren members agree to follow the spirit of the charter as “the criterion of their corporate behavior.”

5.3.6 Implementation of social responsibility:

Each company differs in how it implements corporate social responsibility. The differences depend on such factors as the company’s size, sector, culture and the commitment of its leadership. Some companies focus on a single area – the environment, for example, or community economic development –while other aim to integrate a CSR vision into all aspects of their operations. Below are some key strategies companies can use when implementing CSR policies and practices. Greater detail for many of these items can be found in additional Reports on this website.

Mission Vision and Values Statements: If CSR is to be regarded as an intergral part of business decision-making, it merits a prominent place in a company’s core mission, vision and values documents. These are simple but important statements that succinctly state a company’s goals and aspirations. They also provide insight into a company’s values, culture and strategies for achieving its aims. The mission or vision of a socially responsible business frequently references a purpose beyond “making a profit” or “being the best,” and specifies that it will engage in ethical businesses practices, and seek to create value for a variety of stakeholders, including shareholders/owners, employees, customers, vendors, communities and the natural environments.

Cultural Values: Many companies now understand that corporate social responsibility cannot flourish in an environment where innovation and independent thinking are not welcome. In a similar vein, there must also be a commitment to close the between what the company says it stands for and the reality of its actual performance. Goals and aspirations should be ambitious, but care should be exercised so the company says what it means and means what it says. A 1999 Arthur Andersen report found that having an ethics and compliance program that employees perceive to exist only to protect the reputation of top management may be more harmful than having no program at all.

Corporate Governance: Many companies have established ethics and/or social responsibility committees of their boards to review strategic plans, assess progress and offer guidance about emerging issues of importance. Some boards that do not have there committees have the full board consider issues of corporate social responsibility. In addition to having committees and boards, some companies have adopted guidelines governing their own policies and practices around such issues as board diversity, terms, and compensation.

Executive Management Responsibility: Some companies have a senior officer with CSR as a responsibility. The participation of this individual in critical company decisions ensures that CSR considerations are taken into account. In other cases, senior managers collectively consider the interests of key stakeholders before important decisions are made.

Strategic Planning: A number of companies are beginning to incorporate CSR into their long-term planning processes, identifying specific goals and measures of progress or requiring CSR impact statements for any major company proposals.

General Accountability: In some companies, in addition to the efforts to establish corporate and divisional social responsibility goals, there are similar attempts to address these issues in the job descriptions and performance objectives of as many managers and employees as possible – for example, by incorporating diversity goals in managers’ hiring practices. This helps everyone understand how each person can contribute to the company’s overall efforts to be more socially responsible.

Communications, Education and Training: Many companies now recognize that employees cannot be held accountable for responsible behaviour if they are not aware of its importance and provided with the information and tools they need to act appropriately in carrying out their job requirements. These companies publicize the importance of corporate social responsibility internally, include it as a subject in management training programs, and provide manages and employees with decision-making processes that help them achieve responsible outcomes. Many companies are using innovative web-based training technologies to educate and train their workforce and suppliers.

Employee Recognition and Rewards: Most companies understand that employees tend to engage in behavior that is recognized and rewarded and avoid behavior that is penalized. The system of recruiting, hiring, promoting, compensating and publicly honoring employees all can be designed to promote corporate social responsibility.

Social and Environmental Auditing and Reporting: A growing number of companies have come to understand the value of assessing their social and environmental performance on a regular basis. From the informal query “how are we doing?” to scheduled surveys to the formal audit process conducted by outside experts, companies are seeking information about how they are viewed and how they are progressing in meeting the expectation of investors, employees, customers, business partners and community influential on a range of corporate social responsibility issues.

Use of Influence: Some socially responsible companies recognize that they can play a leadership role in influencing the behaviour of others, from business partners to industry colleagues to neighboring businesses. They understand that ultimately it is in everyone’s best interest to have as many companies as possible honoring the requirements and expectations of corporate social responsibility.

5.3.7 Examples of Social Responsibility:

The Co-operative Bank, plc has a long history as one of the most innovative banks in the United Kingdom, and more recently it has gained a reputation as a leader in corporate social responsibility. Among other programs and practices, the company is recognized for its

(1) Strong ethical investment policy statement;

(2) Social auditing practices; and

(3) Ethical marketing strategies.

The bank’s 14-point ethical investment policy outlines the company’s position on socially responsible investing, including its decisions not to finance weapon, deals to oppressive governments, and not to invest in companies involved in tobacco, the fur trade, animal testing or exploitative factory farming. The company has also been a pioneer in the area of stakeholder relations and social reporting, producing a “Partnership Report” each year since 1997 that measure impact and identify improvements the company could make in social responsibility areas such as customer satisfaction, ecological sustainability, workplace practices, community involvement and ethics. Through its ethical marketing campaign, Co-operative Bank advocates for various issues, such as the concept of fair trade and living wages, environmental protection, the acceptance of diversity and bans n the financing of landmines. (Small/Midsize Company, Financial Services, United Kingdom)

Natura Cosmeticos, based in Brazil, is recognized as a leader in corporate social responsibility in Latin America for its commitment to the communities in which it operates, for creating an empowering workplace, and for its support of human rights issues locally. The company’s mission statement details its dedications to promoting “well being/being well” through its cosmetics business, and Natura has a separate department specifically charged with creating, identifying, and developing social responsibility programs. The company has a focus on creating partnerships with schools, government organizations, and non-profit to enhance the quality of children’s lives and the public education system in the regions in which it operates. For example, the company has formed a partnership with the Abrinq Foundation for Child’s Rights that entails

(1) Mobilizing its network of consultants and suppliers who spend volunteer time to design, produce and sell products the sale of which the partnership child labor program.

(2) Including an anti-child labor clause in its supplier agreements;

(3) Placing a child-friendly seals on its products and

(4) Advocating with other companies around issues such as the Brazilian Child and Adolescent Bill of Rights

Natura’s employees, suppliers and consultants are provided with opportunities to perform volunteer community service, and the company makes its facilities, management expertise, and administrative capabilities available to numerous non-profit organizations. The company also demonstrates its commitment to environmental sustainability through its use of refillable packaging (Large Company, Personal Care/Cosmetics, Brazil)

Starbucks Coffee Co.., a Seattle-WA based company, has established a wide range of initiatives that benefit employees, communities and the environment, while simultaneously achieving rapid financial growth. The company has a comprehensive set of policies outlining its commitment to numerous stakeholders and issues. These include separate statements of

(1) Mission and guiding principles, which briefly outlines the company’s six guiding principles related to social responsibility issues;

(2) Environmental mission, which outlines how it will fulfill its commitment to environmental leader-ship;

(3) Beliefs, a longer document that outlines the company’s beliefs in a number of areas, including human rights, diversity, and the environment;

(4) Coffee mission, which details how it plans to demonstrate responsible leadership within the coffee industry;

(5) Long-term goals, which elaborates on how the company will fulfill the commitment articulated in its coffee mission; and

(6) Specific corporate social responsibility-related objectives, reviewed and evaluated annually.

The company has also been widely recognized and praised for its generous employee benefits and its commitment, unusual in the industry, to provide full benefits to both full and part-time employees, Part-time employees also are eligible to participate in Starbucks’ “Future roast 401(k)” savings and “Bean Stock” stock-purchase plans. Starbucks also has a number of programs of help benefit communities in which the company has stores, as well as in the developing economies where its coffee is grown, harvested and processed. In the human rights arena, Starbucks has taken a leadership role by being the first coffee company to adopt a “framework for a code of conduct” and to actively work with partners, vendors, importers, and distributors of coffee; other coffee companies; and non-profit organizations to improve the quality of life for workers globally. Starbucks also has made efforts to reduce its environmental impacts. In 1997, it formed a partnership with a division of the Environmental Defense Fund to develop environmentally preferable disposable coffee cups and promote increased use of reusable cups by customers. (Large Company, Food, United States.)

5.3.8 Corporate commitment:

There sample statements of corporate commitment to social responsibility are included in this section.

Citizens’ Bank of Canada: “The concept of Corporate Responsibility is the cornerstone of our operations. And as such, it affects and is reflected in everything we do. Every decision we make. Every actions we take.

“It is reflected in the banking products we develop, and how they can be used in positive ways. It involved the relationship we have with our employees and the kind of workplace and culture we are creating together. It defines the partnership we have with our members, and how we encourage members to have a voice in our operations and the direction we take – what issues we support, what actions we take to address them.

“It relates to human values; social issues, the environment, creating communities that are economically and socially vibrant, and building a more sustainable society and economy. And it refers to how we use or resources as a bank to effect positive social change.

“Our focus is on four ‘affinity’ areas that concern us and our members.

“Environment

“Economic Self Reliance

“Human Rights

“Families

“We are in the business of banking, and one of our first responsibilities is indeed to be financially successful. But we are also in the business of change. Even though we’re not new to the financial industry, and our parent company was a pioneer in promoting ethical business practices and social change through its role as a credit union, we are a new bank. We’re building our commitment as we grow, by combining our visions and values with those of our members.” ) Small/Midsize, Financial Services, Canada)

Kellogg Statement of Social Responsibility: “Social responsibility is an integral part of our heritage. We are committed to be, and be recognized as an economic, intellectual, and social asset in each community, region and country in which we operate. To meet this commitment we will:

“Produce quality products and market them in a responsible manner

“Encourage Kellogg people to participate in community programs and invest company resources, human and financial, in organizations that benefit the people in our communities.

“Ensure our facilities, working environments, and employment practices reflect good citizenship.

“Conduct our business in a manner which protect the environment and demonstrates good stewardship of our world’s natural resources.” (Large, Food, United States)

S.C. Johnson: Statement of Beliefs: “We believe that the fundamental vitality and strength of our worldwide company lies in our people.

“We believe in earning the enduring goodwill of consumers and users of our products and service.

“We believe in being a responsible leader within the free market economy.

“We believe in contributing to the well-being of the countries and communities where we conduct business.

“We believe in improving international understanding.” (Large, Consumer Products, United States)

Unit – 6

Lesson 6.1

PERSONAL SELLING

6.1.1 Introduction:

Sales management is considered crucial in those industries where personal selling is given the most important part in the promotional mix. Sales management needs to be carried out with conviction otherwise there will be lot of manpower turnover from companies. There are a lot of differences sales management has as compared to other promotional mix elements. Personal selling is a two-way flow of communication between a potential buyer and a sales person that is designed to identify the customer’s needs, match those needs to one of the company’s products and convince the customer to buy the product. Hence it is very comprehensive in nature.

6.1.2 Strengths and Weaknesses of Personal Selling:

Personal selling’s greatest strength is its personal touch. Of all the marketing communication functions, personal selling involves the most human contach and interaction, qualities that are indispensable to building lasting relationship between buyers and sellers. A related strength is the flexibility of personal sales thereby making necessary changes in the specific needs of each potential customer, highlighting the characteristics of a product that are most likely to meet those needs. Personal selling is most likely to persuade some one to buy a product than other promotional tools. The one-to-one situations facilitates instant feedback with the result that the sales person can address customer’s objections.

Salespeople are part of the corporate team, and their relationships with other ares and functions within their own company are important factors affecting the company’s image and ultimately the sales. A weakness of personal selling is that one person can sometimes spoil a relationship between a company and one or more of its customers. Because the salesperson is the company’s main representative to customers, anything this person dies that is out of line will reflect negatively on the entire company. Another weakness is that if a salesperson leaves the company to work for a competitor, he or she takes along all the company’s selling strategies, important accounts and also other inside information. Personal selling is very costly due to the labour intensiveness. A highly qualified professional sales person calling on corporate headquarters and selling high-tech products or large volume products can make only a few calls a day because customers are rarely geographically close. Consumers often complain about high pressure and dishonestly among sales people, an image that competent sales people are continually trying to dispel.

6.1.3 Selling and Marketing:

Marketing is identifying the need for a product and filling up the need. Selling is conversion of a commodity into cash. For some experts, selling is considered a subset of marketing. Since marketing is a comprehensive term, selling has to adhere to the compulsions of the nuances in marketing. Today’s sales people are typically more than just order takers. They take active responsibility for managing a component of their employer’s business. To be successful, they need to be relatively sophisticated business professionals, which requires an understanding of fundamental marketing principles. These sales people take a proactive role in developing and implementing marketing activities within their own territory. Sometimes, the sales people have to undertake marketing research for the purposes of the company’s requirements. Hence the knowledge of comprehensive principles are required. They in fact have to conduct the following:

Conduct customer surveys on new product and services

Coordinate small focus group sessions with customers to gain opinions on existing service or desired service enhancements

Monitor the performance of the various products and lines

Routing the findings to the company

6.1.4 Relevance of selling to the modern marketers:

In today’s highly competitive market place, customers expect more from companies. That can be offered only directly through the use of sales management. Since the customers expect more information and expertise, there needs to be a one-to-one interaction. Through selling, all the questions and other problems which the customer have can be answered with full satisfaction. This makes selling an unique tool as compared to advertising, sales promotion etc. Another aspect is that the customers require a honest and just answer. The value for money (VFM) can be provided only through the use of personal selling with effectiveness.

The broad strategy for the marketer is organizing the firm to meet consumer needs. The sales force is one of the practical weapons that the chief marketing executive, who can be the managing director, can use to achieve the objectives. In most firms the bulk of the presentation effort is carried out by the sales force, and thus it is often buy far the most important tactical weapon. In a situation where products and prices are becoming increasingly similar and the sales force is the weapon, its efficiency is absolutely critical to the success of the whole enterprise. In fact, in many markets it can be said that the difference between competitors lies in relative quality of their sales force. The company with the best planned, selected, trained, motivated and controlled sales force will inevitably gain dominance in the market. To a large extent, once the sales person has been recruited and gives basic training his success will depend on the field sales manager who controls that sales person.

Lesson 6.2

CHARACTERISTICS OF SALES FORCE

6.2.1 Introduction:

The sales people require to have certain unique skills and traits that force them to face the harsh realities of the market. The most important personality traits for sales people are empathy and focus, ego-drive, optimism and attitude toward responsibility. There is a need to have personal introspection before venturing into selling. An introvert can hardly be able to sell anything. It is hence important that the individual is outgoing, gregarious and also an extrovert, talkative person. In this lesson we shall learn about all these aspects of a sales personality.

6.2.2 Personality traits:

Empathy and Focus:

Empathy is the ability to share a perspective, to feel what others are feeling. Successful sales people tend to exhibit high levels of empathy and focus. Focus is a salesperson’s goal orientation. People who posses a high degree of focus tend to be self-oriented or inwardly focused. People who are empathetic will tend to react with concern for those other than themselves. Highly empathetic people can be described as other-oriented or outwardly focused. When people are more empathetic, their concern for the needs of others tend to interfere with their ability to drive towards personal goals. People who are too focused are considered to be very aggressive:

Ego-drive:

Sales people should posses high levels of ego-drive. A low level of ego-drive is often an indication of unclear goals. Ego-drive is measured by the ability to influence others and the strength of the desire to succeed. Each sales person should have a clear goal setting and have vision in how to achieve the goals set by them.

Optimism:

People who believe in positive outlook are the one who succeed. Eliminating negative self-talk and ensuring the use of positive self-talk will result in increased optimism.

Appearance and Manners:

A professional salesman must appear well groomed and must radiate confidence. One has to consider the positive manners.

Communication skill:

Communication includes both talking and listening. The customer’s reaction to all the actions by the sales person, including talking and listening, will be reflected in his facial expression and body language. Hence the profession of selling requires the individual to have excellent communications skill to impress the client/prospect.

Knowledge:

A salesman sells through personal contact. The sales person needs to have good knowledge on various accounts. They are:

Knowledge of Trade:

The sales person should have knowledge of:

The suppliers

The middlemen characteristics

The characteristics of consumers

Buying and selling norms

Physical distribution of goods/services

Product Knowledge:

A professional salesman is expected to be a master of his own products. The product basket includes both the existing and new ones. The knowledge on the new and breakthrough products is a must since the customers and trade are interested in it. The technical details in case complex products, indications and contraindications in case of pharmaceutical products needs to be at the finger tip of the sales person.

Knowledge of the competition:

The sales person should be aware of the direct and indirect competitive products to his own. The details about the competitor activity on the local basis and also the probable competitive intelligence need to be communicated to the head office. The unorganized activity in the market also needs to be informed.

Knowledge of Territory:

The salesman is expected to develop the given territory in terms of product promotion and business. The span of knowledge will include the following areas:

The consumer population

Number and location of retail outlets/other traders etc.

Area and population of each town in the territory

Demographic and Psychographic profile of the population in general

Structure of the trade bo

Details of statutory levels applicable in the territory

Transportation facilities available in the area

Knowledge of company:

The salespersons should be thorough with his knowledge about the company, the nature of the company, the names of the top people especially those in his department, earlier incumbents etc. When a customer asks about the turnover of the company, be must be aware of it. The factory locations, the details of middlemen, the specific aspects of the company should be known to him.

Loyalty:

There is one thing missing in many of the present day sales people loyalty. What is seen in the market is that if another competitor is in a position to offer higher salary, the sales person just jumps fences. Loyal employees especially the sales people have been given a good career prospects by the companies.

Need for achievement:

All successful salespeople are achievers. By the very nature of their extrovertness, they tend to perform much better than say, an employee in the shopfloor. The companies need to understand the proper compensation plans to make an urge for the personnel to outperform others.

Interest:

The sales people need to show interest in the surroundings. They should be able to understand and articulate the aspects about the happenings within the company and also that happening in the environment. Since the sales person needs to repeatedly meet the same people, innovation is needed in all aspects which can come only form the amount of interest he shows.

6.2.3 Self management skills:

Time management

It is found that there is a clear relationship between effective time management and sales success. Salespeople are called upon to the effective at managing multiple projects, responsibilities and deadlines. This needs time management. Keeping track of appointments, using effective transportation modes, knowing the limitations, doing self introspection are essential to keep time management.

Professional Development:

All sales people needs to strive for the highest possible professional standards. There is a ethical code of conduct which people have to follow. According to David Bachelor, following are the key elements of ethical behaviour:

Declaring conflicts of interest

Maintaining confidentiality

Honouring the commitments and

Dealing fairly with competitors

They should also try to update themselves on the requirements of the profession. It is also important that they subscribe to the leading sales and marketing journals and update them for their career purposes. Keeping fit and being health conscious is another aspect.

Lesson 6.3

SALES FORCE MANAGEMENT

6.3.1 Sales force objectives:

Sales objectives must be based on the character of the company’s target markets and the company’s desired position in these markets. Companies typically set objectives for their sales force. For example, a computer sales person is responsible for selling, installing and upgrading customer computer equipments. Sales representatives perform one or more of the following tasks for their companies:

Prospecting

Targeting

Communication

Selling

Administration

Information gathering and

Allocating

Considering these, sales representatives work with customers in several ways:

Sales representative to buyer: A sales representative discusses issues with a prospect or customer in person or over the phone.

Conference selling: Sales representative brings company resource people to discuss a major problem.

Seminar selling: A company team conducts an educational seminar for the customer company.

Once the company decides on a desirable selling approach, it can use either a direct or contractual sales force.

Direct : it consists of full-time or part-time paid employees who work exclusively for the company. This includes inside sales personnel who conduct business from their office using the telephone and receiving visits from prospects and field sales personnel, who travel and visit customers.

Contractual: This consists of manufacturer’s sales agents or brokers, who are paid a commission based on their sales.

The entire process of recruiting, selecting, training and appraising the sales force is depicted in this lesson.

6.3.2 Sales force structures:

The sales force strategy will have implications for structuring the sales force. If the company sells many products to many types of customers, it might need a product or market sales force structure. If the company sells one product line to one end – using industry with customers in many locations, the company would use a territorial sales force structure.

Territorial structure:

In this case each representative is allotted a specific territory. The advantages of this structure are:

1. It results in a clear definition of the sales representatives responsibilities.

2. Territorial responsibility increases the sales representatives selling effectiveness, incentives and personal life.

3. Travel expenses are relatively small as the representative travels within a small geographical area.

Product structure:

This is needed where the products are technically complex, highly unrelated or very numerous. Kodak uses different sales force for its film products and industrial products. Cipla uses different executives stationed at one area to cater to different products.

Market structure:

Here a company’s sales force can often specialize in industry or customer lines. Separate sales force can be set up for different industries and even different companies or customers. Say a book publisher can set up sales force for retail trade and as well have another one for institutional sales.

Complex salesforce:

When a company sells a wide range of products to many types of customers over a broad geographical area, it can often combine several principal of sales structures. Sales force can be specialized by territory-product, territory-market, product-market etc. A sales representative then report to one or more line managers and staff managers.

6.3.3 Number and size of sales force:

Once the company decided about its sales force strategy and structure, it is ready to consider sales force size. Increasing the number of sales representatives will increase both the sales and cost. Some of the methods of sales force size are:

Work load method:

Here the company establishes the number of customers it wants to reach, then it can use a work load method to establish sales force size. This method consists of the following steps:

Customers are grouped into size classes according to their sales volume.

The desirable cal frequencies are established for each class

The total work load is achieved by multiplying the number of accounts in each class by the call frequency.

The average number of calls a sales representative can make per year is determined.

The number of sales representatives needed is determined by dividing the total annual calls required by the average annual calls made by a sales representative.

Incremental method:

In this method, a company will start generating a cost-volume (revenue) equation for hiring the sales force. The number will be added, say at 15th sales representative, if the equation is positive, it is better to add him to the line. However at one point, the equation will become negative which shows clearly that adding any more representative is a loss for the company.

Budgetary method:

The company’s financial resources will often circumscribe the number of sales people that are required. The steps involved in the process are

1. Determine the personal selling budget

2. Determine the full costs of maintain one sales person in the field

3. Calculate the number of sales personnel permitted by dividing item 1 by item 2.

Breakdown method:

This technique uses the following steps:

1. Determine the company’s potential sales volume for its entire market area.

2. Determine the minimum sales volume to support one sales person.

3. Calculate the number of sales personnel by dividing item 1 by item 2

Thus the number of sales personnel a company employs in the field derives from the fundamental considerations as:

The number of prospective customers for the company’s products

The sales potential of each of these prospective customers

The geographical concentration or dispersion of these customers and

The financial resources available to the company

6.3.4 Sources of recruits:

The major sources of recruiting sales representative are:

1. Internal applications

2. Advertising

a. National newspapers

b. Local newspapers

c. Trade journals

d. Commercial television

e. Radio

3. Manpower Consultants

4. Employment agencies

5. Educational establishments

a. Universities

b. Engineering/technical institutions

6. Professional bodies etc.

Internal applications:

Selecting from within ensures that there is career path to follow for all staff. By selecting internal candidates, the time between selection and taking up the position will be shorter. This process helps since the recruitment is an expensive process. Companies like TVS has the policy of looking for people within when recruiting for sales function. Many public sector undertakings also employ this method to felicitate those acquiring higher qualification from within.

Advertising:

Many sales positions are being advertising in the national dailies. The major news papers are bringing out columns separately meant for job opportunities.

1. The Hindu : Opportunities every Wednesday

2. The New Indian Express : The Options column every Sunday, Tuesday etc.

3. The Times of India : Ascent every Monday

Overseas Opportunities every Sunday

Similarly, Sales positions are found in the following major journals:

1. The business World

2. The Business India

3. The Business Today

4. Advertising and Marketing etc.

The local details are resorted to mainly in case of sales representatives where the emphasis is on walk in interview. The movement towards this medium has been caused by its lower costs. many trade journals are being used of late. This journal since being read by competitors is intended to get their employees. even specific television channels like DD Metro, TMG, CNBC etc are concentrating on this market.

Manpower Consultants:

These consultants are being used mainly since the small and medium companies lack the necessary expertise to select properly. The good selection consultant are unbiased professionals, which means that they bring both clear heads and

considerable expertise to the aid of the client. This source can be utilized when the incumbent sales manager needs to be changed. This source can be a confidential one.

Employment agencies:

Companies can use the services of the private and public employment agencies. This source can be used in cases of local sales people. The employment agencies posses a lot of manpower inventory from where the necessary source can be identified. This source more used in cases of government and government owned sales organisation.

Educational institutions:

Companies which want fresh talent right from the colleges can resort to this mode. The major advantage of this method is that fresh, hardworking, career oriented candidates can be obtained. The cost of this source is sometimes very prohibitive. However, considering the short run benefits of this method, it is found to be more used by many companies.

Professional bodies:

In India there are many associations, societies which are able to offer the manpower in the area of selling. Some institutions like National Institute of Sales (NIS) conducts professional sales program and equip the students ready to take charge of the rigors in the corporate world. There are many management associations which offer their services to the corporate. Professional bodies like All India Management Association (AIMA), conducts tests to consider eligibility to be managers. This can be useful to screen the suspects.

6.3.5 Non formal methods of recruitments:

There are plenty of non-formal methods of recruitment that are possible for a recruiter. They are :

1. Television channels:

There are plenty of satellite channels that are available for a recruiter which the prospects will be watching at specified times:

o BBC World

o CNBC India

o TMG enter

o Doordarshan Metro and National Channels

o Aaj Tak news channel etc.

2. Internet sites:

o Naukri.com

o jobsDB.com

o Prizedjobs.com

o Jobstreet.com

o And other similar portals are available for this purpose.

Most of these sites are interactive in nature. Whenever a new job is added to its database and it matches with a job seekers resume, an email is sent out to the registered user. It also provides a clipboard where one can keep track of advertisements and of any resume request sent from prospective employers.

3. Special editions of newspapers/magazine:

In some cases, publishers bring out special editors where the cost of insertion might be high but at the same time, it will provide the needed response from the market. Whenever the campus students are passing out many magazines bring out columns, editors which provide higher mileage for the recruiter.

6.3.6 Developments in the advertising area:

Following are the developments in the advertising circuit over the years which help the advertiser:

1. The emergence of specialized trade journals and magazines like Express Pharma pulse, IT magazine, PC quest, Hotelier & Caterer, Auto India, Retailing magazines etc., has helped the recruiter to zoom down to the right candidates.

2. Many business magazines are offering recruitment services for the benefit of the advertiser.

3. The evolution of Inter net has opened the opportunities section with confidentiality being maintained. Portals like Naukri.com, jobsDB.com, Indiafo.com, rediff.com, mafoi.com etc are offering placement services.

4. The outdoor media has also become useful to conduct walk in interviews by advertising for a single day.

5. Telephonic interchange, teleconferencing, videoconferencing have become another source for attracting overseas talent at a low cost.

6. The developments of e-mail have helped the companies to write separately to the prospective candidates. By sourcing the information bank of say Rediff.com, companies can sent in mail to who they think will fit into their position.

6.3.7 Selection methods:

Application blank:

The application form also reveal about the person who is applying. Some applicants may have inadequate educational backgrounds.

Designing an effective application form and preparing a short list should focus the following format:

1. Personal

a. Name

b. Address and telephone number

c. Sex

d. Martial status

e. Children and

f. Date of birth and age

2. Education:

a. Schooling

b. Higher education

c. Other qualifications

d. Specialized training

e. Membership of professional bodies

3. Employment History:

a. Companies worked for

b. Dates of employment

c. Positions, duties and responsibility held

d. Other services which are equivalent

4. Other interests:

a. Sports

b. Hobbies

c. Membership of societies/clubs

The advantages of the application form are:

a. Give the information in the order the interviewer wants

b. Helps in comparing different candidates

c. Prepare the candidate in an order to present himself

d. Allows the candidates to present their thoughts in a sequential manner

Having eliminated a number of applicants on the basis of the application from on initial or final shortlist will be drawn up depending on whether the interviewing procedure involves two stages only or only one stage. Reference may be sought for short listed candidates.

Personality Tests:

A selection procedure measure the personality characteristics of applicants that are related to future job performance. Personality tests typically measures one or more of fie personality dimensions: extroversion, emotional stability, agreeableness, conscientiousness, and openness to experience.

1. Since there is not a correct answer to personality tests, the scoring of the procedure could be questioned.

2. Recent litigation has suggested that some items for these types of tests may be too intrusive (Soroka v. Dayton Hudson, 1991)

3. This technique lacks face validity. In other words, it would be difficult to show how individual questions on certain personality measures are job related even if the overall personality scale is a valid predicator of job performance.

4. Hooke and Krauss (1971) administered three (3) tests to sergeant candidates; the Minnesota Multiphasic Personality Inventory, the Allport-Vemon-Lindzey Study of Values, and the Gough Adjective Check List. These tests did not differentiate candidates rated as good sergeant materials from those rates as poorer candidates. The researchers concluded that the groups may have been so similar that these tests were not sensitive enough to differentiate them.

Types of Personality Tests:

1. Personal Inventory: An interpersonal assessment instrument which consists of 50 positive and 50 negative adjective from Gough’s Adjective Check List. The subject is to select 30 which are most descriptive of the target group or person in question. This instrument was specifically designed to tap affective reactions and may be used in either assessing attitudes toward others or as a self-concept scale.

2. Personality adjective checklist: A comprehensive, objective measure of eight personality styles (which are closely aligned with DSM-III-R Axis II constructs). These eight personality styles are: introversive, inhibited, cooperative, sociable, confident, forceful, respectful, and sensitive. This instrument is designed for use with non psychiatric patients and normal adults who read minimally at the eighth grade level. Test reports are computer-generated and are intended for use by qualified professionals only. Interpretive statements are based on empirical data and theoretical inference. They are considered probabilistic in nature and cannot be considered definitive.

3. Cross cultural adaptive inventory : Self-scoring six-point rating scale is a training instrument designed to provide feedback to individuals about their potential for cross-cultural effectiveness. It is most effective when used as part of a training program. It can also be used as a team – building tool for culturally diverse work groups and as a counseling tool for people in the process of cross-cultural adjustment. The inventory contains 50 items, distributed among 4 subscales: emotional resilience, flexibility/openness, perceptual acuity, personal autonomy. Materials

4. California multicultural inventory: Multipurpose questionnaire designed to assess normal personality characteristics important in everyday life that individuals make use of to understand, classify, and predict their own behaviours and that of others. In this revision, two new scales, empathy and independence, have been added; semantic changes were made in 29 items; and 18 items were eliminated. The inventory is applicable for use in a variety of settings, including business and industry, schools and colleges, clinics and

counseling agencies, and for cross cultural and other research. May be used to advise employees/applicants about their vocational plans.

Cognitive Ability Tests:

Employee Aptitude Survey:

A battery of employment tests designed to meet the practical requirements of a personnel office. Consists of 10 cognitive, perceptual, and psychomotor ability tests. Nine of the 10 tests have 5-minute time limits. The remaining test requires two to ten minutes of testing time. Is a tool for personnel selection and a useful diagnostic tool for vocational guidance and career counseling. For situations in which it is desirable to retest an individual on an alternate form, special retest norms are provided for interpreting retest scores.

Test 1 – Verbal Comprehension: Each item consists of one word in capital letters followed by four words in small letters. The respondent is to choose the word in small letters that means about the same as the word in capital letters. Scoring is the number right minus 1/3 the number wrong.

Test 2 – Numerical Ability: A battery of three tests: integers, decimal fractions and common fractions, each is timed separately. Designed to measure skill in the four basic operations of addition, subtraction, multiplication and division:

Test 3 – Visual pursuit: Designed to measure the ability to make rapid scanning movements of the eyes without being distracted by other irrelevant visual stimulation. Involves the visual tracing of lines through an entailed network.

Test 4 – Visual speed and accuracy: The test consists of two columns of numbers; the respondent decides whether the number in the first column in exactly the same as the number in the second.

Test 5 – Space Visualization: Designed to measure the ability to visualize forms in space and to manipulate these forms or objects mentally. The test takes is shown a group of numbered, piled blocks and must determine, for a specifically numbered block, how many other blocks touch it.

Test 6 – Numerical Reasoning: Designed to measure the ability to analyze logical relationships and to see the underlying principles of such relationships. This is also known as the process of inductive reasoning – making generalizations from specific instances. The test taker is given a series of number and determines what the next number will be Scoring is the number right minus ¼ number wrong.

Test 7 – Verbal reasoning: Deigned to measure the ability to analyze verbally stated facts and to make valid judgment on the basis of the logical implications of such facts; and thus, the ability to analyze available information in order to make practical decisions. Scoring is the number of right answers minus ½ the wrong answers.

Test 8 – Word fluency: Designed to measure the ability to express oneself rapidly, easily and with flexibility. Word fluency involved the speed and freedom of work usage as opposed to understanding verbal meanings. People who measure high in this ability are particularly good at expressing themselves and in finding the right word at the right time. The test takes is given a letter of the alphabet and asked to write as many words as possible that begin with that letter.

Test 9 – Manual speed accuracy: Designed to measure the ability to make rapid and precise movements with the hands and fingers. Also measures, according to the authors, the temperamental willingness to perform highly repetitive, routine and monotonous work. The test taker is to put a pencil dot in as many circles as he or she can in five minutes, without letting the dots touch the sides of the small circles.

Test 10 – Symbolic reasoning: Designed to measures the ability to think and reason abstractly, using symbols rather than words or numbers; to manipulate abstract symbols mentally; and to make judgments and decisions which are logical and valid. Each problem contains a statement and a conclusion and uses certain symbols such as the equal sign and mathematical symbols for greater than and smaller than, etc. The test taker determines whether the conclusion is definitely true, definitely false, or impossible to determine on the basis of the statement. Scoring is the number of right answers minus ½ wrong answers.

Progressive Matrices, Advanced Sets 1 and II: A nonverbal test designed for use as an aid in assessing mental ability. Requires the examinee to solve problems presented in abstract figures and designs. Scores are said to correlate well with comprehensive intelligence tests. Sec II provides a means of assessing all the analytical and integral operations involved in the higher thought processes and differentiates between people of superior intellectual ability.

Kaufman Brief Intelligence Test: Brief individually administered measure of verbal and nonverbal intelligence for people aged 4 – 90. Developed specifically for screening purposes and for those situations where it would be difficult to do a more in depth assessment. Norms are provided for all ages. Composed of two subtest, vocabulary and matrices. Vocabulary measures verbal, school-related skills by assessing word knowledge and verbal concept formation. Matrices measures nonverbal skills and ability to solve new problems. Items in matrices subtest involve pictures and designs.

2. Short-term Memory Tests: A form of cognitive ability test that are exemplified by short-term memory tasks such as forward digit span and serial rote learning, which do not require mental manipulation of inputs in order to provide an output. Short-term memory tests lack face validity in predicting job performance.

3 Information Processing Tests : Selection tests that have the same information processing requirements that occur on the job. In other words, the tests are tailored for each particular job. There is some evidence that adverse impact is reduced.

6.3.8 Selection Process by Indian companies:

Companies concentrate on mass recruitment process. The companies selections process consist of five screening methods:

1. Resume of Job application:

They normally look for the percentage of marks obtained by the candidates.

They look for the specific qualifications

The personnel department first reviews all applications to ensure that applications meet the above two aspects for the position and also is indicated on the job announcement. The companies experts then review the job relevant qualifications (experience and education of all qualified applicants) to identify those who are best qualified for the position. Only the best applicants are invited to continue in the selection process.

2. Written examination or Aptitude test:

The candidate should spend between 1 to 3 hours during this examination. The exam will be based on skills related to the job and may consists of multiple choice, true of false, fill in the blanks or essay writing.

3. Technical tests:

This test is conducted in order to measure ability and skill in performing job related duties. The testing area depends on their position.

4. Oral Board interview:

This interview will be conducted by a panel of subject experts. The questions are standardized most often situational and always job related. In this interview, the candidate are expected to describe their educations, work experience and training. Each, candidate will be interviewed for 20 to 30 minutes depending on the need.

5. Training:

The selected candidates from the interview are asked to proceed for three months training. this period is called probationary period. During this period, the company extricates the persons who do not obey the managers. The candidates are trained on the company profile, their job etc.

Infosys:

This company is the first one to be listed in NASSCOM. For Infosys, the international sales team is selected as follows:

The sales executive should have 2-6 years experience in sales and marketing, particularly in IT industry.

Their responsibility is to develop market for Infosys.

The selection procedure involves.

o Group discussion

o Interview

Finally the selected candidates will be subjected to psychological tests. Infosys offers merit based career advancement, international exposure and a highly competitive compensation which include ESOP (Employee Stock Options Plan).

Ashok Leyland:

Every year, Ashok Leyland recruits over 100 trainees, mostly engineers from various campuses across the country. These graduate engineering / management trainees are put through one year’s rigorous, multi-functional training at the Management Development Centre and operating divisions before being absorbed in a regular assignment. These recruitments happen through the campuses only.

6.3.9 Basic aspects of training:

Training is learning that is provided in order to improve performance on the present sales job. Training concept is a summary describing how the required training is to be accomplished in terms of type of training, presentation environment, presentation techniques, presentation media, pipeline, location, and other considerations. In order to do that, first of all the components of job must be known. What a person does at work to satisfy an employer’s needs and expectations in exchange for pay. A job consists of responsibilities, duties, and tasks that are defined and can be accomplished, measured, and rated. It is used as an employment tool for classifying work and for selecting employees. The job analysis consists of breaking down the complexity of a person’s job into logical parts such as duties and tasks. It identifies and organizes the knowledge, skills, and attitudes required to perform the job correctly. This is accomplished by gathering task activities and requirements by observation, interviews, or other recording system.

Training needs assessment:

The purpose for which the training is conducted and the basis needs to be clear. The training needs are understood first by knowing the needs analysis. It is a method used to determine training needs by reviewing work tasks, identifying performance factors and objectives, and defining training objectives and recommendations. Needs assessment is systematic study that incorporates data and opinions from varied sources in order to create, install and evaluate educational and informational products and services. The effort commences as a result of a “hand-off” from performance analysis. Also known as training needs assessment needs analysis, front end analysis, task and subject matter analysis etc. The needs assessment starts with problem identification process that looks at the difference between “what is” and “what should be” for a particular situation. A systematic study that incorporates data and opinions from varied sources in order to create, install and evaluate educational and informational products and services. The effort commences as a result of a “hand-off” from performance analysis. Also known as training needs assessment needs analysis, front and analysis, task and subject matter analysis.

The proficiency of the sales trainee is the ability to perform a specific behavior (e.g., task, learning objectives) to the established performance standard in order to demonstrate mastery of the behavior. The this stage the task needs a special mention. A task is the smallest essential part of a job. A unit of work activity that is a logical and necessary action in the performance of a job. It can be described in simple terms. Has an identifiable start and end point and results in a measurable accomplishment or product. The task analysis involves the systematic process of identifying specific tasks to be trained; and a detailed analysis of each of those tasks. Task analysis information can be used as the foundation fro developi8ng instructional objectives, identifying and selecting appropriate instructional strategies, sequencing instructional content, identifying and selecting appropriate instructional media, and designing performance evaluation tools. It is always done in the context of a specific job. It facilitates training program design by providing a description of the fundamental elements of a job.

Steps in Training needs assessment:

1. Needs analysis: The purpose of this phase is to identify priority needs for one or more members of the workforce, and to determine training/learning objectives to meet these needs. The needs are stated as accurately and as realistically as possible in terms of performance requirements.

2. Designing Learning Training Products: The purpose of this phase is to select and develop learning activities and necessary materials to achieve the performance level specific in the preceding phase.

3. Pilot Testing the Learning/Training Product: The purpose of this phase is to pilot test the content and methodology of the design. Any changes required may be made to ensure that training will be both effective and efficient in meeting the learning/training objectives.

4. Implementing Training: The purpose of this phase is to provide the training defined, developed and pilot testes as it is required.

5. Evaluating Learning / Training: The purpose of this phase is to determine whether the learning activities as defined and developed, meets the needs of the individual / organization effectively. This is done by evaluating the results of training in terms of work performance and payoffs.

6.3.10 Method of training:

Some of the commonly used training methods are:

Just-in-time training (JITT):

A method of providing training when it is needed. Its advantages are:

Eliminates the need for refresher training due to subject knowledge loss experienced if training precedes, over an extended period of time (prevents decay if the learner cannot use the material upon returning to the job).

Prevents training being wasted on people who leave the job before the training they received is used on the job.

Allows the learners to receive training when they need it… not weeks or months later.

On-the-job-training (OJT):

Formal training for learning the skills and knowledge to perform a job that takes place in the actual work environment.

Case study:

A printed description of a problem situation that contains enough detail to enable the learners to recommend a solution. The learners encounter a real-life situation under the guidance of a in instructor or computer in order to achieve an instructional objectives. Control of the discussion comes through by the amount of the detail provided.

Computer-based training (CBT):

Interactive instructional experience between a computer and a learner in which the computer provides the majority of the stimulus and the learner responds, resulting in progress toward increased skills or knowledge. Has a more complicated branching program of mediation an answering than CAI. Now an all-encompassing term used to describe any computer-delivered training including CD-ROM and the World Wide Web. Some people still use the term CBT to refer only to old-time text-only training.

Multimedia training:

An instructional system that incorporates all or various instructional methods and media. It describes any application that uses multiple media (graphics, text, animation, audio, video) but multimedia is primarily thought of as any application that uses high-bandwidth media (audio and video) and is most often delivered on CD-ROM.

Performance-oriented training:

Training in which learning is accomplished through performance of the tasks or supporting learning objectives under specific conditions until an established standard is met.

Simulation:

Any representation or imitation of reality. An instructional strategy used to teach problem solving, procedures, or operations by immersing learners in situations resembling reality. The learners actions can be analyzed, feedback about specific errors provided, and performance can be scored. They provide safe environment for users to practice real-world skills. They can be especially important in situations where real errors would be too dangerous or too expensive.

Web based instruction (WBI):

Web-based Instruction is delivered over public or private computer networks and displayed by a Web browser. WBI is available is many formats and several terms are linked to it; on-line courseware, distance education on-line, etc. WBI is not downloaded CBT. But rather on-demand training stored in a server and accessed across a network. WBI can be updated very rapidly, and access to the training controlled by the training provider.

6.3.11 Principles of performance appraisal:

1. Goals should be set and agreed upon by both the manager and the employee. Everything written should be shared and shown, since secrecy breeds suspicion, an suspicion destroys a counselling and continuous relationship.

2. Metrics for measuring the employee’s success in meeting those goals should be clearly articulated.

3. The goals themselves should be flexible enough to reflect changing conditions in the economy and the workplace.

4. Employees should be able to think of their managers as coaches who are there not to pass judgement, but to help them achieve success.

5. The appraisal report should be finalized in the presence of the subordinate.

6. The subordinate should contribute a major part to the appraisal. Self-appraisal is particularly effective in improving the weak areas since he-she identified them. In the case of career progression, managers tend to see a subordinate’s future in terms of other people in the department and how particularly, the manager’s won progression developed.

7. There should not be any emotional component involved in the appraisal.

6.3.12 Process of performance appraisal:

The appraiser’s preparations for the process include:

1. Reviewing the period’s results.

2. Studying the last appraisal results.

3. Checking the appraisee’s personal file and job description

4. Talking to any-other managers concerned and

5. Completing the outline copy of appraisal

The appraisal interview should take the following lines:

1. As both appraiser and appraisee have completed the form, the interview is not the appraiser telling the appraisee what the company thinks of him but a discussion about the points of agreements and a negotiation about the points of variance.

2. The appraiser should try to keep the appraisee talking and concentrate on listening.

3. When the evidence has been brought to light, they can then go on to diagnose the problem areas. It is vital that the diagnosis concentrates on things which can be improved, not on basic character traits.

4. When the problem areas have been dealt with, an agreed appraisal can be written and signed by both the parties.

5. It is now possible to move on to the most vital stage, which is to agree it plan of action to overcome the problems. This plan should be time targeted. In the event of agreement not being possible the appraisee should have the right to a further interview, with the appaiser’s superior.

6.3.13 Difficulties in performance appraisal:

For the appraiser, it has become an uninteresting and boring annual event.

The appraiser normally is not prepared due to his other commitments, ill trained in this activity and de-motivated before it starts.

The appraisee is also usually ill prepared and experts a sort of life sentence.

The appraisal sometimes are held in wrong environment and wrong atmosphere.

Lesson 6.4

TERRITORY STRUCTURING

6.4.1 Introduction:

To achieve the sales goals effective design and good management of the resources that is territory is necessary. This lesson will deal with the design an management of a sales territory. Territories are established in order to focus efforts. Sales people need to have some focus to their efforts to avoid wasted time a energy. Thus is a necessity for efficient resource use.

6.4.2 Purpose of sales territories:

1. Shared territories: Every business defines sales territories in some fashion. Usually several sales persons of the same company work in a given geographic area. Some firms use this shared territory strategy to deliberately cause competition among their own sales representative.

2. Exclusive territories: the rationale for exclusive territories is that all prospects can be covered in an orderly an efficient manner. The risk of duplication of effort is virtually eliminated. The customer may be better served because each sales person will be responsible an reap the rewards of happy customers and all that means in terms of repeat business. This type generally thought to encourage more loyalty from the sales person toward to company.

3. Territory planning: Everyone involved must understand the plan and thus aid in its implementation. By the same token the plan should provide direction an reduce the tendency to drift without working toward a desirable objective. To be useful, it must be written in simple plain language. Such issues as market penetration, geographic concentration, sales blitzes, new account emphasis, and product strategy, among other factors, will affect how the territory is divided.

4. Return on Assets Managed: Some companies study the sales function and set performance criteria in terms of ROAM. It refers to two types of items, first it can mean the actual assets needed to support the sales effort, particularly inventories and accounts receivable. Second, it can refer to the customers within the territory, who are after all the most valuable resource for which the sales person is responsible. Determining these criteria before hiring or reassigning salespeople will aid in the deployment process itself. Specifically defining the area served is a start. Focusing on the geographic limits, the sales manages should write down the area for which he is responsible. In some case it the top management who defined the target area for the company. Even if it has not this is necessary and obvious starting point.

5. Sales forecast: Once the area to be served in defined the next step is relatively easy. From the sales forecast for the following year and the estimates projected for future years, the sales manager should be able to determine how many sales people will be required to attain the projections. This involves analyzing the sales forecast in terms of the number of sales persons needed to make the predicted sales. One of the considerations is the commission level expected for each sales person. The sales manager should also decide how many territories will be required. Again it is a function of the forecast. In fact, a complete and scientific forecast, in-depth and well documented, will be the best spring board form which the sales managers can build the territory design for profitable sales.

6.4.3 Territory Design parameters:

Each aspect will tough on both the positive and negative aspects as a basis for decision.

1. Company objectives: Company objectives should set the tone for all efforts, particularly those involved in external communication, or marketing. Sales must take not and focus on achieving the results desired by the top management. The sales people, when faced with a lack of clear cut objectives, will either waste time and effort or sell unprofitable items, or items that management is not committed to supporting. This will establish an almost adversarial relation with the management. A clear understanding of the company objective as the basis for designing the sales territory is an absolute must.

2. Market share: Company objectives should be defined in terms of market share objectives. Some companies put more sales people to one area. This is for long term strategic reasons. The sales function will be responsible for implementing that plan. Many times, a company will decide to concentrate on building its market share. Usually management will decide that share building is important enough to justify effectively

subsidizing the sales force. Profitability may be sacrificed in the interest of market share, to meet the longer term objectives.

3. Blitz tactics: Each sales person will make a predetermined number calls on prospects, typically without any detailed call planning or other preparation. The purpose of blitz is to make personal contact with all possible prospects to determine the levels of interest in a territory for the firm’s goods or services. This can be used for a variety of reasons, three of which are most common. This can be sued for a variety of reasons, three of which are most common. First, The firm may seek to establish itself is a territory where it has not represented or where it wants to introduce a new product or service to the target customers. Second the blitz tactic can be employed on a rotating basis, reassigning the sales people from one territory to another in some sequence determined by the management. And finally, firms will sometimes use the tactic to temporarily overwhen a competitor covering the same territory.

4. New accounts: The purpose of new account strategies is generally to build a base of long tern customer relationships. For that the territories are designed to encourage the sales people to establish new customers, in conjunction with the compensation program. The territory design will focus on non-customers, or targets for new customers and all but ignore any existing customers in the territory. Territories that are designed with any of these company objectives exclusively in mind tend to be unrealistic and unmanageable. Some of these designs are strictly for short-term results.

5. Geography: Designing a sales territory on the basis of geography is the most common method. It frequently is the only basis for the sales territory definition. Geography is used in combination with one or more other considerations. But geography though convenient usually ignores the subtleties of the market place. Another disadvantage of using geography as the sole basis is the inherent lack of sensitivity to population bases. That is no two sales territories can be truly equally divided. It is impossible to design territories that are inherently equal especially on the basis go geography.

One aspect of geographic division is topography. Two adjacent areas do not have the equally efficient infrastructures. No two areas will be the same. It may be different in terms of the nature of potential business clients. On paper the numbers look the same, but the strategies necessary for selling larger entities are significantly different from those of smaller customers.

6. Customers list based: Some companies start at the simplest point of all, the existing customers. In terms of building a stable customer base designing the territories along customers lists probably will be most effective. But sometimes this will be done at the expense of time management considerations. However, using a customer list will ensure that customers continue to be the focal point of all activities.

7. S I C code division: Particularly in business to business sales, the use of SIC codes or Standard Industrial Classification, to organize territories is extremely efficient. Since all business are put into categories the sales manager can easily assign a territory on the basis of business types. Here, a system is built for tracking sales by customer types. SIC code territory design brings with it organized data from which sales people can organize their own efforts, including direct mail campaigns. It also provides a basis for measuring effectiveness and segment penetration.

8. Population : Many territories are designed almost on the basis of population, that is the type of population. But using the gross population is very easy, so many sales managers use this method only. Population in combination with almost any other factor may be valid, but it is rarely effective as a sole criterion for territory design.

9. Pincodes: Nearly as simple as population based design is pincode design. Pincodes are based roughly on a type of population, entities receiving mail in a contiguous area, usually with some geographic rationale. But any system that simple will not adequately describe the challenges and the opportunities of a given territory. Cold numbers do not reflect the nature of the addresses. Pincodes could also be highly concentrated.

10. Corporate nature: The impact of corporate culture on sales territory design is relatively simple. If the corporate traditions and commitment are to extremely service oriented sales, the implication is that the sales person cannot handle as many accounts as would be the case in a firm that is more production oriented. The sales manager may have difficulty quantifying the impact of corporate culture on the territory design.

11. Organizational culture: There could be two ways by which the sales functions’s organizational structure could affect the territory design. In other words, the line, staff, or line staff structures could possibly contribute to smaller of larger territories for each sales person. The impact of the type of structure must be taken into account with the territory design. One concern will be the amount of time and effort extended on internal communications. Another will be the positive aspect of support staff, which will allow for a greater number of customers per sales person than in a line structure.

12. Sales people availability : The last major consideration in designing sales territories is the supply of sales persons available. This supply may be affected by number of considerations, including sufficient funding to hire an tern the particular employees needed in a given situation. Selling relatively inexpensive supply type may open a wide field of potential sales people capable of an interested in doing the job. The number of sales people will certainly affect the design of the sales territory. A realistic assessment of the job market could suggested alternative strategies. One should tighter segmentation so that the targeted segment received adequate service.

6.4.4 Territory management plans:

Once the territory has been designed the challenge becomes one of managing. For that there must be a plan.

Management by objective:

Though relatively new concept it is important that the territory manager clearly understand the company objective for the territory. The objectives set by the top management should be put into quantitative form. They may be broken down by line or service items. At any rate, the target should be well defined and understood by those responsible.

The evaluation of territory management plan should be based on entirely on performance in relation to objectives. In the final analysis, the territory management plan must be judged according to the results from its implementations. A plan that is well thought of an well written but nto implemented does no good.

Resulting methods:

One of the duties each sales manager must require of the sales force is to draw on a map of their territory and the order of locations they visit in a given period of time. That period may be day, week or month depending on the number of actual sales visits. The goal is to end up with a map with which the sales person and sales manager can trace routing patterns. Some of the common patterns used in routing are:

Straight line routing:

This is nothing more than starting form the office and going straight out to one or more locations and coming straight back. This pattern is common for sales people who are not making very many calls.

Star routing:

Here the sales persons are going from the office to visit one customer at a time. Generally, that is not efficient, and it if often means that they are driving by customers and prospects, only to go back out later to see them.

Circle routing:

In some cases, this may efficient. The danger of the circle method is that the sales people may be missing opportunities within or outside the circle. Often, the circle may not change in size.

Daisy routing:

The routing takes on the appearance of a stylized daisy. Usually this routing is an indication that a salesperson does not stay out in the field, instead making frequent returns to the office.

Hotchpotch routing:

In this routing, a sales person is reaching the ultimate point in the territory and the returns back as per hid wish. Those requiring over night stay would be completed first.

Miscellaneous routing:

Like the daisy; this pattern is usually an indication of unnecessary visits to the office, or some other location, an is extremely inefficient because the salesperson is visiting only a small number of prospects and customers at the outer edge.

X X X X

X

X X

O

X

X

XX

X

X

XX

X

Daisy routing method

XX

XX

X

X

X

X

Star routing method

xx

xx

x

xx x

o

Circle routing method

x

xx

x

x

o

x

Miscellaneous routing method

x

6.4.5 Need for restructuring:

A sales mangers is often confronted by problems of poor sales in a territory, dealer service complaints etc. This often happens due to the lack of vision on the part of management to plan and structure a territory. When a company decided to appoint a Regional Sales Manager (RSM), say in the western region of the country comprising of Gujarat, Maharashtra, Goa and Madhyapradesh, considering the major influence of the nature of the product, the organisatoin should allow the RSM to decide on the geographical market he is going to serve. The RSM usually goes by the division of state and appoints Area Sales Manager, District Sales Managers and Sales Executive but they in turn should concentrate on the finer aspects of sales volume, territory potential, dealer availability, competitive activity etc. and can further divide the state say, Gujarat as Kutch and Saurashtra, Northern and Western Gujarat and South Gujarat. If need be he could further have a smaller market based on the market volume and the above considerations. This will help the RSM to identify clearly the potential for immediate growth possibility in the region.

6.4.6 Restructuring exercise:

Once the RSM has decided to go by the above directions, he can think of restructuring the market as follows:

1. The territory say, South Gujarat must provide motivation for the sales executive on a daily basis based on the increasing volume of sales as he starts working.

2. The RSM should be able to point out the good routing plans and a system for a sales executive to organize his work and allocate his/her time fruitfully.

3. The RSM should be able to grasp the important accounts in the territory with the help of Area Sales Manager and should be able to give the sales executive a start from where at later stages he must maintain optimum accounts during the depression stages.

4. The RSM should be able to identify the grey areas in his market and inform the sales executive the potential and the extent of business which could be obtained.

5. The territory should be structured so that it can be easily supervised regularly and headquarter cities for the sales executives should be selected for territories where the best living conditions exist for the sales executive’s expenses. Usually many companies does not provide the sales executive his home town as headquarters. At time this leads to homesickness syndrome and would reduce the productivity of the executive. Of late it is found that the sales executives are able to perform better when they are with families and has prompted many companies to revert back to home town headquarters.

6. The territory must be a profitable one for the company. The territory must justify the need for a sales executive. Companies can entrust the job of calculating the territory cost analysis and future flow to the RSMs.

7. The territory must be structured in a manner that the morale of the sales executive is not dented. Unrealistic targets by the companies will only demoralize the executive.

8. If competition gains in a territory, it would be time the RSM thought of realigning the territory and possibly select one or more sales executive but not at the cost of the existing sales executives. He should be informed of the necessity of additional manpower in the territory. In some cases the sales executive would not really understand the potential in the market but would be continuously selling over the target. In such cases, the additional requirements creeps in.

x

x x

xo

Hotchporch routing method

9. It is always said that communications plays a vital role in the relationship among the sales people. The changes and developments in the zone, region and in relation to each territory must be continuously to the sales executive to have a feel of other markets.

10. It is also important that the sales executive must be continuously monitored and feedback should be taken from them on proper formats. This will only enhance the understanding of the territory and result in better gains.

11. Each of the sales executives must be informed in advance if his territory is going to be divided. In such a case, the important factor to be kept in mind by the RSM is that by dividing the territory, the sales executive is not going to have a loss in his pay or the accounts.

6.4.7 New Markets:

If the company is very new to the market, where they are getting into areas with products that have been not sold there before, then the company should look out for:

1. The boundary in the territory

2. The spill over effects

3. Possible large and small accounts

4. Prospects listing

5. Estimated territory potential and travel coverage considerations for sales executive.

This can be resorted to by the company with the morale and coverage of sales executives are poor, profitability is declining and a general disparity in salesman’s earnings and sales volume between territories. The launching of new products at this juncture will make a lot of difference in the performance of sales executive and other promotional mix elements must be stepped up to meet the expectations of the territory.

If the company employs and finds overtime that volume and potential are too low for the number of sales executives, possible realignment and the territory by shrewdly getting larger volume with less executives is the answ3er for which the company must understand the buying power index of the consumers and the ability index of the sales person. It is imperative that planning and structuring a territory, continuous evaluation of the sales executives and judgment on the commitment of keeping the right person for each particular job is important. It is clearly vested with the RSM that the structured territories must be concentrated and growth must be made for the profitability of the company.

Lesson 6.5

NUANCES AND TRENDS IN PERSONAL SELLING

6.5.1 Introduction:

In many industries , there are varied roles of the sales force based on its dependence on the promotional mix. In companies specializing in industrial marketing, there is very reliance of sales force as compared to other methods. However, in the case of Fast Moving Consumer Goods (FMCG), there is equal importance given to personal selling and other elements. In this lesson, let us look at the various roles of sales force in different industries.

6.5.2 Role in Pharmaceutical industry:

Sales Manager:

1. Coverage of territory in the designated areas.

2. Evaluation and recommendation of area/district managers for self development for training, increments, promotion of other motivational actions.

3. Conducts cyclical meetings

4. Monitors sales targets and achievements

5. Plans refresher programmes

6. Interviews candidates for the post of area or district managers and medical representatives.

7. Develops supply of products to government and municipal hospital and institutions

8. Travel planning as per need and to keep it minimum

9. Plans clinical trials and gets them published.

10. Attends complaints form doctors, hospitals and form trade and

11. Attends seminars and participate in exhibitions etc.

Medical Representatives:

1. Achieve sales targets on a daily/weekly basis

2. Makes company products available at stockiest and chemists

3. Creates sales for company’s products through promotions amongst doctors, hospitals etc.

4. Increase sales volume of company’s products progressively

5. Improves products standing in market.

6. Locates the right prescribers

7. Creates favourable corporate image for the company in his areas.

8. Forwards market information, does market survey and communications competitors activities to head office and

9. Communicates all activities to area or district managers regularly.

6.5.3 Paint industry:

The following activities are considered to be carried out by the sales force in the paint industry:

1. Sales volume generations

2. Contributing proper proportion of each product in the total sales volume

3. Helping to attain market share planned

4. Contributing to the profits

5. Keeping selling expense levels low

6. Identifying new accounts and achieving business growth

7. Appointment of new dealers and expansion of channel

8. Achieving prescribed portion of cash and credit sales.

9. Collection of outstanding

10. Pre-sale and after sale service

11. Training of dealers and customers

12. Assistance in sales promotional measures and

13. Gathering and reporting market intelligence.

6.5.4 Consumer Durable industry:

1. To do the entire selling job

2. To service existing accounts, maintains contacts with present customers, takes orders

3. To search out and obtain new customers

4. To provide technical advice and assistance to customers

5. To provide advice and assistance to middlemen’s sales personnel on management problems.

6. To train the middlemen’s sales personnel.

6.5.5 Selling tasks in all industries:

Apart from selling, the sales person has to perform many other tasks, such that the percentage of calling time is only about 33 percent. The potential customers have to be first identified from databases/company sources/primary information available. The sales person has to plan on which prospect needs to be called with what priority. Then, the sales person has to decide how to approach a customer. Thus the selling techniques have to be constantly followed up. In additions, the sales person’s company will request administrative work such as providing all kinds of data on customers, reporting activities, participating in sales meeting and conferences and visiting trade shows as seen earlier. In order to constantly improve the competence, the sales person has to take part in product as well as sales training. the following figure shows what percentage of working time a sales person spends on the various activities according to market surveys:

Based on the above, the executives have to perform one or more of the following tasks for their companies:

Prospecting: To find new prospective customers who can contribute to the growing sales

Targeting: Deciding how to allocate the scarce time among prospects and customers

Communicating: Skillfully communicating information about the company’s products and services

Selling: Knowing the art of salesmanship approaching, presenting answering objections and closing sales.

Servicing: Providing various services to the customers – consulting on their problems, rendering technical assistance etc.

Information gathering: Conducting market research and intelligence work

Allocating: Deciding which customers to allocate scarce product during shortages.

6.5.6 Roles of sales people in large and small targets:

According to Roger Smith, the target customer of prospect size plays a vital role in the role to be rendered by the sales force. The following are the strategies to be followed for the various categories.

Small size customers:

1. Frequent re-contact

2. Personalized service and support

3. Customer education

4. Extensive travel

5. High margin

6. Complex customer needs

Large size customers:

1. Reinforcement of advertising and sales promotion

2. Reliance on support staff

3. Differentiated service

4. Few callbacks

5. Little post-sale activity

6.5.7 Classification of sales roles:

A company can classify the sales roles according to the following three types:

By the type of customer

By the type of employer and

By the sales objectives

By the type of customer:

1. Industrial representative

2. Institutional or governmental sales agent and

3. Trade sales representative

By the type of employer:

1. Manufacturer’s representative

2. Wholesaler’s representative

3. Manufacturer’s agent

4. Sales broker

5. Retail sales person

By the sales objectives:

1. Order getter: a sales person who use active, persuasive tactics

2. Order taker: a sales person who just attends to the order and do not use persuasion

3. Detailer: a person who only passes on information to the person who acts as an order giver.

4. After-seller: a person who does after sale activities to the buyer

6.5.8 Martin Bressler on role of sales manager:

Martin Bressler, Professor of marketing and chair of the business division at Thomas College, Waterville, Maine suggests the following ten-commandments to identify the role of the sales manager:

1. Know they market. Every market is different. The needs, wants and tastes of consumers vary among different areas. Both demographics and lifestyle factors play a key role in determining what your market area demands in products and services.

2. Develop realistic sales forecasts. Sales forecasting should be based on research not management hunches. Shifts in populations and changes in income levels and consumer tastes are just a few items to look into before forecasting.

3. Provide salespeople with quotas. Sales quotas should be tailored to the individual and should be realistic but challenging. Establish a quota for each salesperson based on territory, sales experience, and sales trends.

4. Hire the right employees. start by determining your hiring objectives. How many and what types of salespeople to do you need? Proper hiring will reduce employee turnover and training, making your customers more confident in your company and products. Research suggests that the cost of replacing a salesperson easily can run 2 ½ times his or her first-year salary.

5. Provide training. Begin with a formal orientation to the company. Studies indicate the companies with formal orientation programs experience turnover rates that are as much as 40% lower than those without a formal program. Training on products and services needs to be ongoing. Products change, but so do the needs and wants of consumers.

6. Motivate they sales force. Effectives compensation plans should encourage salespeople to higher levels of performance without having negative consequences for customers, such as prompting salespeople to focus too heavily on the sale that they forget the after-sale service. Motivating employees through coaching and evaluation is also important. Salespeople respond to non monetary rewards such as recognition and praise.

7. Provide supervision. Sales managers need to actively supervise the sale force, not by driving them with a whip, but by acting as the coach, cheerleader, and promoter. Supervision also means monitoring performance and providing salespeople with feedback in a positive manner.

8. Develop a strategic plan. Strategic planning is necessary for the company to define and meet performance objectives. Planning forces management to identify and evaluate alternatives. In addition, a planning improves results.

9. Evaluate thy sales force. Employees need feedback to improve. Likewise, sales managers need a system to evaluate the effectiveness of their sales strategy. Evaluation may identify training needs or exceptional performance.

10. Conduct a sales and marketing analysis. Analyzing sales costs is an important activity. For example, you may determine that 80% of sales come from 20% of your product line. You also might find that a smaller sales volume can sometimes product a higher profit.

Effective sales managers also need to be effective leaders, complete with:

1. Administrative skills, not only to do the routine paperwork. But also for hiring, training, evaluation, market research and budgeting

2. Entrepreneurial skills. Innovation, risk-taking and the willingness to take responsibility.

3. Interpersonal relationship skills. Sales managers must be able to delegate and tech, establish and maintain harmony, and be objectives, diplomatic, and enthusiastic.

4. Conflict resolution skills. Good sales managers must be able to satisfy both the personal and corporate aims of everyone involved like customers, salespeople, and top management.

5. The ability to manage at a distance. Many a times sales manages work with an outside sales force. They must be able to provide direction to people in the field, often a difficult task.

6.5.9 Future industries where sales persons will have role to play:

Global competitiveness is a big deal. Strategy seer Michael E. Porter, in the course of a 1994-visit to India, hinted that bicycles, gems and jewellery, and software were the industries where India could hope to be globally competitive. Seven years later, at a time when Porter’s theory of competitiveness is universally acknowledged to be die-hard old economy, things are different. Still, India, does boast some factor-advantaged (already mentioned in the recipe for the cocktail at the beginning of this composition). From these, to a listing of 10 industries where India can hope to be globally competitive in the future, is a small exercise in conjecture.

Agriculture And Agri-Products:

In a country obsessed with food security, even talking about exporting food is blasphemy. But with one bumper crop after another of staple foodgrain, the country is literally bursting at the seams with grain. And with countries like Brazil, which have traditionally been significant contributors to the global trade in fruits and agri-products, forsaking these in favour of more ‘industrial’ trade, there’s an opportunity waiting to be tapped. Choke-points like the unavailability of cold-storages and poor logistics could nip this opportunity in the bud, but with a huge surplus of labour in agriculture, becoming an global player in the trade of foodstuffs seems to be the only way for India to go.

Bio-Informatics:

With its varied Flora and Fauna (and even races), India has a smorgasbord of genes. And with software hotshops mushrooming in every spare garage, we certainly boast enough it skill to map these genes (after all, it’s just another exercise in coding).

Textiles:

Government involvement has rendered the textile and garment industry anemic, but with the easy availability of cotton and man-made fibres and textile machinery, coupled with a huge domestic market, India has what it takes to be a textile superpower. Design-capabilities could restrict this pole status to mid-value items, but who says that’s a bad thing.

Drug Development:

Pharma is one industry with strong fundamentals in India: a large domestic market, an attractive export market, enough technical manpower, and a large pool of research scientists. These will come in handy while procuring the USFDA (the US Federal Drug Administration) approval for new drugs – a process that involves length documentation and strict quality control. Once India recognizes product patents (Year 2005), the country will become in attractive destination for global pharma majors that wish to outsource bulk-drug development.

Entertainment:

Four things will make the Indian entertainment biz globally competitive: an assembly line churning out beauty queens, a growing Indian diaspora, hungry for home-made stuff, a global audience increasingly open to Asian entertainment (witness the international success of Crouching Tiger, Hidden Dragon), and a huge domestic market for anything form Bhangra-rap to Indian jazz.

IT Services:

India’s competitiveness in this area isn’t likely to wane. Competition from countries like Vietnam and Philippines, and declining it –spends in the US (spends grew by 8 per cent in 2001) are unlikely to have a long-term impact on the industry. Spends are likely to grow by 15 per cent in 2002 in the US, and Indian software biggies will try and establish beach-heads-some have already done so – in Japan and Europe. Still, unlike the US, Europe is a multi – cultural market, worse, it doesn’t boast any large customers like the US does.

Healthcare

As a country, India enjoys tremendous advantages in the area of healthcare; from a surfeit of good doctors to the low-cost of surgery. First-world dwellers paranoid about infections could turn their noses up at Indian hospitals at first, but over time, costs will win out; the Delhi-based Indraprastha Apollo Hospital conducts a normal by-pass surgery for Rs. 1,34,505 ($2,862). The cost of a similar operation in the US would be as high as $12,000.

Aluminium:

With aluminium in the running for the material of the millennium honour. India, with its huge reserves of bauxite could be sitting on a gold, er… sorry, aluminium, mine. Most Indian companies operating in this domain have integrated their operations; from the mining of bauxite to the smelting of aluminium. Hindalco, for instance, is among the lowest – cost producers of aluminium in the world.

Forging:

The manufacture of forgings and castings is labour-intensive; environmental concerns are forcing forge shops in the first world to down their shutters, and India does have a tact –record of sorts in the business.

Dairy Products:

The co-operative model has worked will in the dairy business in India, making it perhaps the most organized among all food businesses in the country. Dairy products from India compete with those from Europe and Australia in the Middle East markets. With a little more aggression on the marketing from and some innovation in product development, companies operating in this area could well create a niche for themselves in the global market.

6.5.10 Trends in sales management:

Many of the sales managers seem to be under the impression that to be efficient one has to:

Get to work before anyone else

Rush around at work, making decisions, putting fires out

Maintain a ‘busy busy busy’ image

Constantly do battle with a desk and filing trays overflowing with paperwork (important)

Be the person who puts all the lights out, even after the cleaning ladies have gone home.

Go home to bulging briefcase every night.

Influence of technology:

Considering that today although a sales executive can connect his PDA or notebook to the cell phone via a cable or infra-red port, downloading his e-mail becomes a Herculean task given the slow connectivity and frequently disrupted connections. In a few years-may be just 1 or 2 on the go Indian sales managers could be connected all the time. Along with ‘always on’, Bluetooth technology will enable a constellation of e-devices to ‘talk’ to each other wirelessly. When the e-executive moves between work and home, his bubble-the network around him-will automatically reconfigure itself. Thanks to Bluetooth, the communicator will instantly sense the devices around it. At home, it’s the audio/video players or the television, mp3 music servers or internet appliances. And even the e-enabled microwave oven or the fridge. At work, it would sense the secure corporate servers, PDAs or software that can schedule meetings. Internet Petrocol (IP) enabled phones would automatically switch from being a mobile to the local office system. The notebook too would connect automatically to a wireless LAN that offers everything from video-conferencing to multi-player gaming. High-speed wireless broadband will allow executives to send video messages from telephones. By 2005, the executive will be supported by a combination of wireless and wireline broadband smart networks.

In the next level of technological progression, executives, will have PANs. Thses personal area networks will do away with the paraphernalia that connects one device to another.

Exit: wires, plugs, batteries, and adaptors.

Enter: (thanks to the magic of Bluetooth, every device will have a common platform) a chip and an antenna that offer data rates of around I mbps-that’s 10 times faster than today’s speeds.

At home, a sales executive could use his notebook. While commuting, he might have a communicator in his pocket. In office, he may log on to his PC. But all thse devices will have multiple functionalities. Already there are cellphones that can seamlessly switch from GSM 900 to other frequency bands, offering enhance international roaming. These phones use infrared technology with an in-built. PC card, which enables instant connection to the entire hardware ensemble, including laptops, palm tops, and e-enabled devices. Plus, they can be used to send and receive faxes and short messages, connect to the internet as well as to LANs. Soon they’ll have high-resolution color displays, high-speed mobile e-mail and multimedia capabilities like full color video clips. Manufacturers like Palm Computing are unveiling the next generation of operating systems which could transform simple organizers into multi-purpose hand-held computers. Savvy corporate are extending their reach through the power of WAP technology, which creates a universal open standard for delivering internet- based data to wireless devices. WAP enables virtually any service-oriented company to give in-the-field executives access to key information when and where they need it. Soon field executives will use their WAP connected mobile phones to log the details of each completed assignment and use it to retrieve their next job assignment. Technologies like WAP also create a seamless migration pathway to advanced network solutions such as GPRs, wideband CDMA, and other third-generation (3G) technologies.

Already clothing manufacturers like Levi Strauss are testing the market for wearable ‘computers’ or communication devices, which are essentially garments with chips embedded in them. Watch-makers may take the lead in making it happen. According to a study done at the Massachusetts Institute of Technology (MIT), most consumer electronic gadgets-from the compact disc players and fax machines to pagers and audio journal-will ultimately be wearable.

Model Question Paper

Paper 3: Elective: Group A

2. Promotional Management

Time: 3 hours Maximum Marks: 100

PART – A (5 x 8 = 40)

Answer any Five Questions

All questions carried equal marks

1. What are the characteristics of promotional management?

2. What are the advertising objectives?

3. Mention the evolution of satellite TV in India.

4. What is publicity?

5. Write a note on event planning.

6. What legal aspects are important for advertising industry?

7. What are the trade related sales promotions?

8. What is territory restructuring?

PART – B (4 x 15 = 60)

Answer any Four Questions

All questions carried equal marks

Question No.15 is Compulsory

9. Explain the social influence on promotional decisions.

10. Describe the various promotional budgeting methods.

11. Explain the factors influencing media selection.

12. With examples, explain the tools used in evaluating advertising effectiveness.

13. Describe the tools or PR

14. Explain the training methods used for sales force management.