1

7-Industrial Marketing.

Advertising And Sales Promotion.

2

Communication (Promotion) Mix for Industrial Products/Services.

• The Communication (Promotion) Mix for Industrial Products and Services is different from Promotion Mix for most Consumer Goods.

• This is because of the Technical Nature of Industrial Products, Relatively Smaller Number of Industrial Buyers and the Complex Nature of Organizational Buying Process.

• The Communication Mix consists of Personal Selling, Advertising, Sales Promotion, Direct Marketing, Publicity, and Public Relations.

• Personal Selling is the most Dominant Component of the Industrial Marketing Communication Mix.

• Advertisement, Sales Promotion, Direct Marketing, and Publicity are mainly used to create Awareness, Enhance Company Reputation, Disseminate Information on Products, or Generate Leads for the Sales People.

• Personal Selling is often the most important element in the Industrial Marketer’s Communication Strategy, because of the Technical Complexity of many Industrial Products or Services.

3

Communication (Promotion ) Mix for Industrial Products/Services (Cont’d).

• To have an Effective Communication Strategy, Advertising, Sales Promotion, Direct Marketing, and Publicity must be coordinated with Personal Selling Efforts.

• An Industrial Marketer should carefully consider all the elements of Communication Mix in order to develop an Effective Communication (Promotional) Program.

• The Ability of the Firm to meet the Needs of the Buying Firm is to a Large extent, communicated by Sales Force.

• The Sales Person, with the help of Technical Persons, offers not just a Physical Product, but also Technical Assistance, Ideas, and Suggestions to solve the Industrial Customer’s Problem.

• The Industrial Sales Engineer will assume the Role of a Problem Solver rather than only a Role of a Salesman. He will study the Customer’s Problem in detail and offer the most suitable Product or Service with the intention of Solving the Customer’s Problem instead of only making a Sales.

• Such an Approach will help in Building Long Term Relationship with the Customer, which is very much essential in Industrial Marketing.

4

The Role of Personal Selling.• In Industrial Marketing, Personal Selling through the Company’s Sales

People, Plays a Greater Role than in Consumer Marketing.• Once the Industrial Marketer decides the Target Market Segments, the

Sales Force is deployed to meet the Needs of these Segments.• The Industrial Marketing Strategy is implemented mainly through

Personal Selling Function.• Personal Selling can be defined as an Oral Presentation in a

Conversation with one or more prospective Purchasers for the purpose of making Sales.

• There are Two Major Roles of Personal Selling:1) As a part of Problem Solving Capabilities (as discussed earlier).2) As a part of Communication Mix:• The Sales Rep is responsible for conveying Selling Messages to

Potential as well as Existing Customers.• He should keep them informed about Products and Services.• He should be a good communicator.• He also has the responsibility of securing orders from Customers,

Communicating Market Information on Competition, Market Trends, and so on, in the form of Sales Reports to the Marketing Chief.

5

The Role of Personal Selling (Cont’d).• Personal Selling can be used for many purposes, such as Creating

Product Awareness, Arousing Interest, Developing Product Preferences, Negotiating Prices and Terms, Closing a Sales and Providing Post Sales Reinforcement.

• Personal Selling has certain Distinctive Qualities as under:

1) Personal Confrontation: Personal Selling involves an Alive, Immediate, and Interactive Relationship between two or more persons. Each party is able to observe at close hand the characteristics and Needs of other and make immediate adjustment.

2) Cultivation: You can not only build up matter of fact Selling Relationship, but also Personal Relationship which will be helpful.

3) Response; Personal Selling, in contrast to Advertising, makes the Buyer feel under some obligation for having listened to the Sales Talk. The Buyer has a Greater Need to Attend and Respond.

6

Developing the Industrial Communication Program.

• The Major Steps in Developing an Effective Communication or Promotional Program are:

1) Determine the Communication Objectives.2) Identify the Target Audience.3) Determine the Promotional Budget.4) Develop the Message Strategy.5) Select the Media.6) Evaluate the Promotion’s Results.7) Integrate the Promotional Programs.• 1) Determining the Communication Objectives: Communication Objectives cannot

be formulated in Isolation. They are formulated based on the Firm’s overall Corporate and Marketing Objectives.

• Once the Objectives are finalized, an Industrial Organization chooses the Strategies and Actions (or Tactics) required to achieve the objectives.

• Before determining Communication Objectives, Industrial Marketer should find out Communication Problems. This can be done by collecting data on existing levels of awareness, and attitudes existing and prospective customers.

• Such data would help in setting specific Communication Goal. Besides, data collection permits measurement of Quantified Communication Objectives before and after Promotional Program is implemented.

7

Developing the Industrial Communication Program (Cont’d).

• The purpose of Communication Program (or Plan) is to move the Potential Buyer from unawareness to Buying Action. For the purpose of determining Communication Objectives, we must look at 3 Stages of Buyer Behavior:

i) Buyer’s Awareness Level.ii) Changes in Buyer’s Attitudes andiii) Buying Action.• These Stages of Behavior are described by different Models like

Response Hierarchy Models. (Ex: AIDA Model etc).• The Marketers know that making Customers aware of the Company and

its Product is not enough for Buying Action. Favorable Attitudes should be developed leading to Buying Action.

• A Mix of Media is required to achieve certain Communication Objective. If the Objective is to create Awareness among prospective Customers, Advertisement in Business Magazines or Journals or Direct Mail may be appropriate Media.

• If the Objective is to create preference for Company’s Products over competing Products, the Communication Mix would rely more on Personal Selling through the Company’s Sales Force, Participation in Trade Shows or Exhibitions.

8

Developing the Industrial Communication Program (Cont’d).

2) Identifying the Target Audience: An Industrial Marketer must be clear about the Target Audience. In Industrial Marketing, the Target Audience is Identified at Two Levels.

• First, Identify the Buying Organizations based on the Target Market Segments.

• The Second Level is the Identification of the Attitudes and Buying Factors used by the Buying Centre Members in the Organizations Identified at the First Level.

• It is important to assess the Target Audiences’ Current Image of the Company, its Products and its Competitors. The Company Management should then Propose a Desired Image in contrast to its Current Image.

• This Information can be obtained by conducting a Market Research Study to understand the Awareness Levels and the Attitudes of the Buying Centre Members towards the Company and its Products in relation to Competitors. The Data will be also useful in developing message Strategy and Media Plan.

9

Developing the Industrial Communication Plan (Cont’d).

3) Determining the Promotional Budget: One of the most difficult Decisions the Companies are facing is the Question as to how much to spend on Promotion or what should be the Promotional Budget.

• The Promotional Budgets in Industrial Marketing consisting of Advertising, Sales Promotion, Direct Marketing, and Publicity are not large enough in comparison with Consumer Marketing Companies.

• There are Four Common Methods used to set Promotional Budget. These are i) Affordable Method. ii) Percentage of Sales Method iii) Competitive Parity Method. iv) Objective Task Method.

• Affordable Method: Many companies set Promotional Budget on what they think the Company can afford.

• Percentage of Sales Method: Most Industrial Companies allocate One Percent of Sales (Either Sales in the Previous year or Budgeted or Forecasted Sales for the Current year. Some Companies allocate 10% of Total Budgeted Marketing Expenses for the Current year.

• Competitive Parity Method: Some Industrial Companies set their Promotional Budgets by allocating the same Percentage of the Sales as that of their Major Competitor.

• Objective and Task Method of Promotional Budget: In this method, Industrial Marketers develop their Promotional Budget by defining the Promotional Objectives, determining the Tasks that should be performed to achieve the promotional Objectives, and Estimating the Costs of performing the Tasks. The Sum of these costs is the Proposed Promotional Budget.

• The Most Commonly used methods in Industrial Marketing are Percentage of Sales Method and Competitive Parity Method.

10

Developing the Industrial Communication Program (Cont’d).

4) Developing the Message Strategy: The Message Strategy indicates how to achieve the Communication Objectives. The Message ( or Theme or Appeal) is developed to determine “what to say” to the Target Audience so as to achieve the desired results.

• In Industrial Marketing, the most common way of developing the Message or Appeal is through Rational Appeal, unlike Household Consumers, where Emotional or Moral Appeals are sometimes used. Industrial Buyers are more Responsive to Rational Appeals.

• The Marketing Research Studies find out Problem Solving Benefits or the Satisfaction of Needs sought by Target Audience. The Examples of these Benefits would be Product's Superior Quality, Versatility (i.e. complete range of Products), Economy, or Faster Delivery Time.

• Industrial Marketers should remember Two important points while developing Communication Messages:

• First, Typical Industrial Buyers are fairly well informed/Knowledgeable.• Secondly, instead of the Message discussing Product Features, the

Message should Focus on Customer Benefits.

11

Developing the Industrial Communication Program (Cont’d).

5) Selecting the Media: Selection of appropriate Media depends on the Target Audience to be reached, the Statement of the Communication Objective and the Promotional Budget.

• The Media Selection also depends on whether the Advertiser wishes to Penetrate a Particular Industry or Cut Across Various Industries. For Example, a Manufacturer of Textile Machinery can select Textile Journals which are directed to the Textile Industry, for the Advertisement of its Products.

• Selection of Media also depends on the circulation and the Cost of Advertising Space.

• The Different Communication or Promotional Tools, Promotional Media, and Supports that are used in Industrial Marketing are shown in the next slide.

12

13

Industrial Marketers’ Ranking on the Effectiveness of Promotional Media.

• Some Rankings were evolved in a Study which asked Industrial Marketers to Evaluate the Effectiveness of Media. These are presented in the Table below.

• These Rankings are based on the Opinions of Industrial Marketers rather than an Objective Measurement of Media Effectiveness or a measure of Actual Money Allocations.

14

Rankings of Promotional Media Based on the Money Spent by Industrial Marketers.

• In another Study by Business Marketing Magazine, the Rankings of Promotional Media based on the Money Spent by Industrial Marketers were as follows:

1) Direct Marketing, consisting of Direct Mail and Telemarketing.

2) Trade Shows, including Show Costs, Exhibitor Travel & Entertainment.

3) Incentives, including Business or Trade Promotion Incentives.

4) Advertising, including Business or Trade Publications, Directories, Yellow Pages, and others.

5) Sales Promotion, including Catalogues, Promotional Novelties (or Gifts), Audio Visual Presentations, Dealer Contest, and so on.

6) Public Relations, including Publicity.

• Within the same Industry, the Companies differ considerably while selecting Media or Allocating their Promotional Budget.

15

Evaluating the Promotion’s Results.• After Implementing the Promotional Plan, it is necessary for the Industrial

Marketer to Evaluate its Impact on the Target Audience.• An Evaluation is done by measuring the Awareness , Attitude and Actual

Purchase before and after Promotional Plan is implemented.• The Evaluation Task becomes easier if the Data on Awareness, Attitude, and

Purchase have been collected by conducting a Market Research Study before the Promotional Plan is implemented.

• The Market Research Study conducted after the Promotional Plan is Implemented, involves asking the Target Audience, whether they are Aware of the Company’s Products, whether they Recall Promotional Message, their Previous and Current Attitudes (Favorable, Indifferent or Unfavorable), whether and in How Much Quantity they have purchased the Company’s Products during the period.

• The Major Mistakes in Practice are that of Failure to Quantify the Promotional Objectives into Measurable Goals and not to plan the Evaluation.

• In both cases, the Industrial Marketer is unable to Learn from Experience and hence, may continue to Repeat the Mistakes in Future.

16

Integrating the Promotional Program.

• Many Companies are Adopting the Concept of Integrated Marketing Communications (IMC).

• The Basic Objective in Integrating the various Communication Tools is to Provide Clarity, Consistency, Maximum Impact, and Cost Effectiveness to the Company’s Communication Plan.

• To Achieve this Objective, Following Points are Suggested:

1) The Company should appoint a Head of Communication.

2) The Company should build a Data Base by Measuring the Results of the Promotional Plan in relation to the Communication Goals, the Cost Effectiveness of Promotional Media, and the Message Consistency.

3) Conduct Training Programs for all the persons handling various Communication Tools so that they think of Integrating the Promotional/Communication Progra.

17

The Role of Advertising in Industrial Marketing.• The relative Importance of Promotional Tools between Consumer and Industrial

Markets vary, as shown in the figure below. Consumer Product Companies Rate Advertising, Sales Promotion, Personal Selling, Direct Marketing, Publicity and Public Relations in that order.

• Industrial Goods (or Services) Companies Rate Personal Selling, Direct Marketing, Sales Promotion, Advertising, Publicity and Public Relationship (PR) in that order.

18

Media Used For Industrial Advertising.

1) Trade Publications a) Horizontal Publications b) Vertical Publications.

• Horizontal Publications: These are directed at Individuals working in a Particular Occupation, Organizational Function or a Particular Technology, which cuts across various Industries. Ex: Purchases, A&M, Modern Material Handling etc.

• Vertical Publications: These are directed at Individuals working in a Specific Industry. Ex: Textile Trend, Iron & Steel, Chemical Work etc.

2) General Publications: Ex: Business India, Business Today, Business World, Business and Economy, 4Ps of Marketing etc.

3) Industrial Directories: Ex: Tata Yellow Pages etc.• Advertising Agencies in Industrial Marketing:• Hindustan Thompson, Lintas, Clarion, OBM (Ogilvy, Benson &

Mather), Pressman, Ulka, Rediffusion, etc are some leading Industrial Advertising Companies in India.

19

Essential Ingredients of Successful Industrial Advertising.

• Given below are Essential Ingredients of Successful Industrial Advertising:

1) It has a High Degree of Visual Magnetism.

2) It Selects the Right Target Audience.

3) It Invites the Reader into the Scene.

4) It Promises a Reward.

5) It Backs up the Promise.

6) It Presents the Selling Proposition in a Logical Sequence.

7) It Talks “Person to Person”

8) It is Easy to Read.

9) It Emphasizes the Service, not the Source.

10) It Reflects the Company’s Character.

11) It Highlights the Benefits to Customer.

20

The Importance of Sales Promotion.• In Industrial Marketing, the Objectives of Sales Promotion are Gathering

Business (Sales) Leads, Impressing and Rewarding Customers and Stimulating the Sales Force to Greater Effort.

• The Methods used in Industrial Marketing for Sales or Business Promotion are:

1) Trade Shows/Trade Fairs/Exhibitions.2) Sales Contests.3) Seminars.4) Demonstrations.5) Catalogues.6) Promotional Novelties (Gift Articles).• Publicity & Public Relations: Publicity has more Credibility and Lower

Cost (or sometimes No Cost) compared to Advertising.• In Industrial Marketing, the Major Tool used in Publicity is in terms of

Contributing Articles from Company’s Technical Personnel and Placing it in Trade Journals.

• Public Relations Department is Located at Corporate Head Quarters and Deals with various categories of People like Customers, Suppliers, Shareholders, Employees, Press, Government Officials, MPs, MLAs, Legislators, Public Interest Groups etc.

21

Role of Direct Marketing.• Direct Marketing has come up in recent years. Industrial

Marketers are increasingly using Direct Marketing Tools such as Direct Mail, Telemarketing and Online Marketing.

• Direct Marketing Attempts to Achieve Direct Sales without using Intermediary between the Company and its Customers.

• To reduce the Marketing Costs Industrial Marketers first use Direct Marketing Tools like Direct Mail and Telemarketing to Identify and Create Interest in Potential Customers or New Customers, before Sales Persons visit them.

• On-Line Marketing Channels;• There are two Types of On-Line Marketing Channels:

1) Commercial On-Line Channels.

2) The Internet.