Another strategic decision in the area of promotion concerns the allocation of effort among the three different methods of promotion. Advertising refers to nonpersonal communication transmitted through the mass media (radio, television, print, outdoors, and mail). The communication is identified with a sponsor who compensates the media for the transmission. Personal selling refers to face-toface interaction with the customer.
Unlike advertising, personal selling involves communication in both directions, from the source to the destination and back. All other forms of communication with the customer other than those included in advertising and personal selling constitute sales promotion. Thus, coupons, samples, demonstrations, exhibits, premiums, sweepstakes, trade allowances, sales and dealer incentives, cents-off packs, rebates, and point-of-purchase material are all sales promotion devices. A variety of new ways have been developed to communicate with customers. These include telemarketing (i.e., telephone selling) and demonstration centers (i.e., specially designed showrooms to allow customers to observe and try out complex industrial equipment). The discussion in this article will be limited to the three traditional methods of promotion. In some cases, the three types of promotion may be largely interchangeable; however, they should be blended judiciously to complement each other for a balanced promotional perspective. Illustrated below is the manner in which a chemical company mixed advertising with personal selling and sales promotion to achieve optimum promotional performance: An advertising campaign aimed at customer industries, employees, and plant communities carried the theme, “The little chemical giant.” It appeared in Adhesive Age, American Paint & Coating Journal, Chemical & Engineering News, Chemical Marketing Reporter, Chemical Purchasing, Chemical Week, Modern Plastics, and Plastics World. Sales promotion and personal selling were supported by publicity. Editorial tours of the company’s new plants, programs to develop employee understanding and involvement in the expansion, and briefings for local people in towns and cities where USIC [the company] had facilities provided a catalyst for publicity. Personal selling was aggressive and provided direct communication about the firm’s continued service. USIC reassured producers of ethyl alcohol, vinyl acetate monomer, and polyethylene that “we will not lose personal touch with our customers.”
Development of an optimum promotion mix is by no means easy. Companies often use haphazard, seat-of-the-pants procedures to determine the respective roles of advertising, personal selling, and sales promotion in a product/market situation. Decisions about the promotional mix are often diffused among many decision makers, impeding the formation of a unified promotion strategy. Personal selling plans are sometimes divorced from the planning of advertising and sales promotion. Frequently, decision makers are not adequately aware of the objectives and broad strategies of the overall product program that the promotion plan is designed to implement. Sales and market share goals tend to be constant, regardless of decreases or increases in promotional expenditures. Thus they are unrealistic as guides and directives for planning, as criteria for promotional effectiveness, or even as a fair basis for application of the judgment of decision makers. Briefly, the present state of the art in the administration of the promotion function is such that cause-and-effect relationships as well as other basic insights are not sufficiently understood to permit knowledgeable forecasts of what to expect from alternate courses of action. Even identifying feasible alternatives can prove difficult.
Product Factors. Factors in this category relate principally to the way in which a product is bought, consumed, and perceived by the customer. For industrial goods, especially technical products, personal selling is more significant than advertising because these goods usually need to be inspected and compared before being bought. Salespeople can explain the workings of a product and provide on-the-spot answers to customer queries. For customer goods such as cosmetics and processed foods, advertising is of primary importance. In addition, advertising plays a dominant role for products that provide an opportunity for differentiation and for those being purchased with emotional motives. The perceived risk of a purchase decision is another variable here. Generally speaking, the more risk a buyer perceives to be associated with buying a particular product, the higher the importance of personal selling over advertising. A buyer generally desires specific information on a product when the perceived risk is high. This necessitates an emphasis on personal selling. Durable goods are bought less frequently than nondurables and usually require a heavy commitment of resources. These characteristics make personal selling of greater significance for durable goods than advertising. However, because many durable goods are sold through franchised dealerships, the influence of each type of promotion should be determined in light of the additional push it would provide in moving the product. Finally, products purchased in small quantities are presumably purchased frequently and require routine decision making. For these products, advertising should be preferable to personal selling. Such products are often of low value; therefore, a profitable business in these products can only be conducted on volume. This underlines the importance of advertising in this case.
Market Factors. The first market factor is the position of a product in its life cycle. The creation of primary demand, hitherto nonexistent, is the primary task during the introductory stage; therefore, a great promotion effort is needed to explain a new product to potential customers. For consumer goods in the introductory stage, the major thrust is on heavy advertising supported by missionary selling to help distributors move the product. In addition, different devices of sales promotion (e.g., sampling, couponing, free demonstrations) are employed to entice the customer to try the product. In the case of industrial products, personal selling alone is useful during this period. During the growth phase, there is increasing demand, which means enough business for all competitors. In the case of consumer goods, however, the promotional effort shifts to reliance on advertising. Industrial goods, on the other hand, begin to be advertised as the market broadens. However, they continue to require a personal selling effort. In the maturity phase, competition becomes intense, and advertising, along with sales promotion, is required to differentiate the product (a consumer good) from competitive brands and to provide an incentive to the customer to buy a particular product. Industrial goods during maturity call for intensive personal selling. During the decline phase, the promotional effort does not vary much initially from that during the maturity phase except that the intensity of promotion declines. Later, as price competition becomes keen and demand continues to decline, overall promotional perspectives are reduced. For a given product class, if market share is high, both advertising and personal selling are used. If the market share is low, the emphasis is placed on either personal selling or advertising. This is because high market share seems to indicate that the company does business in more than one segment and uses multiple channels of distribution. Thus, both personal selling and advertising are used to promote the product. Where market share is low, the perspectives of the business are limited, and either advertising or personal selling will suffice, depending on the nature of the product. If the industry is concentrated among a few firms, advertising has additional significance for two reasons: (a) heavy advertising may help discourage other firms from entering the field, and (b) heavy advertising sustains a desired position for the product in the market. Heavy advertising constitutes an implied warranty of product performance and perhaps decreases the uncertainty consumers associate with new products. In this way, new competition is discouraged and existing positions are reinforced. Intensity of competition tends to affect promotional blending in the same way that market share does. When competition is keen, all three types of promotion are needed to sustain a product’s position in the market. This is because promotion is needed to inform, remind, and persuade customers to buy the product.
On the other hand, if competitive activity is limited, the major function of promotion is to inform and perhaps remind customers about the product. Thus, either advertising or personal selling is emphasized. Hypothetically, advertising is more suited for products that have relatively latent demand. This is because advertising investment should open up new opportunities in the long run, and if the carryover effect is counted, expenditure per sales dollar would be more beneficial. If demand is limited and new demand is not expected to be created, advertising outlay would be uneconomical. Thus, future potential becomes a significant factor in determining the role of advertising.
Customer Factors. One of the major dimensions used to differentiate businesses is whether products are marketed for household consumption or for organizational use. There are several significant differences in the way products are marketed to these two customer groups, and these differences exert considerable influence on the type of promotion that should be used. In the case of household customers, it is relatively easy to identify the decision maker for a particular product; therefore, advertising is more desirable. Also, the self-service nature of many consumer-product sales makes personal selling relatively unimportant. Finally, household customers do not ordinarily go through a formal buying process using objective criteria as organizational customers do. This again makes advertising more useful for reaching household customers. Essentially the same reasons make personal selling more relevant in promoting a product among organizational customers. The number of customers and their geographic concentration also influence promotional blending. For a small customer base, especially if it is geographically concentrated, advertising does not make as much sense as it does in cases where customers are widely scattered and represent a significant mass. Caution is needed here because some advertising may always be necessary for consumer goods, no matter what the market perspectives are. Thus, these statements provide only a conceptual framework and should not be interpreted as exact yes/no criteria. Budget Factors. Ideally, the budget should be based on the promotional tasks to be performed. However, intuitively and traditionally, companies place an upper limit on the amount that they spend on promotion. Such limits may influence the type of promotion that may be undertaken in two ways. First, a financially weak company is constrained in undertaking certain types of promotion. For example, television advertising necessitates a heavy commitment of resources. Second, in many companies the advertising budget is, by tradition, linked to revenues as a percentage. This method of allocation continues to be used so that expected revenues indicate how much may be spent on advertising in the future. The allocated funds, then, automatically determine the role of advertising.
Development of an optimum promotion mix is by no means easy. Companies often use haphazard, seat-of-the-pants procedures to determine the respective roles of advertising, personal selling, and sales promotion in a product/market situation. Decisions about the promotional mix are often diffused among many decision makers, impeding the formation of a unified promotion strategy. Personal selling plans are sometimes divorced from the planning of advertising and sales promotion. Frequently, decision makers are not adequately aware of the objectives and broad strategies of the overall product program that the promotion plan is designed to implement. Sales and market share goals tend to be constant, regardless of decreases or increases in promotional expenditures. Thus they are unrealistic as guides and directives for planning, as criteria for promotional effectiveness, or even as a fair basis for application of the judgment of decision makers. Briefly, the present state of the art in the administration of the promotion function is such that cause-and-effect relationships as well as other basic insights are not sufficiently understood to permit knowledgeable forecasts of what to expect from alternate courses of action. Even identifying feasible alternatives can prove difficult.
Product Factors. Factors in this category relate principally to the way in which a product is bought, consumed, and perceived by the customer. For industrial goods, especially technical products, personal selling is more significant than advertising because these goods usually need to be inspected and compared before being bought. Salespeople can explain the workings of a product and provide on-the-spot answers to customer queries. For customer goods such as cosmetics and processed foods, advertising is of primary importance. In addition, advertising plays a dominant role for products that provide an opportunity for differentiation and for those being purchased with emotional motives. The perceived risk of a purchase decision is another variable here. Generally speaking, the more risk a buyer perceives to be associated with buying a particular product, the higher the importance of personal selling over advertising. A buyer generally desires specific information on a product when the perceived risk is high. This necessitates an emphasis on personal selling. Durable goods are bought less frequently than nondurables and usually require a heavy commitment of resources. These characteristics make personal selling of greater significance for durable goods than advertising. However, because many durable goods are sold through franchised dealerships, the influence of each type of promotion should be determined in light of the additional push it would provide in moving the product. Finally, products purchased in small quantities are presumably purchased frequently and require routine decision making. For these products, advertising should be preferable to personal selling. Such products are often of low value; therefore, a profitable business in these products can only be conducted on volume. This underlines the importance of advertising in this case.
Market Factors. The first market factor is the position of a product in its life cycle. The creation of primary demand, hitherto nonexistent, is the primary task during the introductory stage; therefore, a great promotion effort is needed to explain a new product to potential customers. For consumer goods in the introductory stage, the major thrust is on heavy advertising supported by missionary selling to help distributors move the product. In addition, different devices of sales promotion (e.g., sampling, couponing, free demonstrations) are employed to entice the customer to try the product. In the case of industrial products, personal selling alone is useful during this period. During the growth phase, there is increasing demand, which means enough business for all competitors. In the case of consumer goods, however, the promotional effort shifts to reliance on advertising. Industrial goods, on the other hand, begin to be advertised as the market broadens. However, they continue to require a personal selling effort. In the maturity phase, competition becomes intense, and advertising, along with sales promotion, is required to differentiate the product (a consumer good) from competitive brands and to provide an incentive to the customer to buy a particular product. Industrial goods during maturity call for intensive personal selling. During the decline phase, the promotional effort does not vary much initially from that during the maturity phase except that the intensity of promotion declines. Later, as price competition becomes keen and demand continues to decline, overall promotional perspectives are reduced. For a given product class, if market share is high, both advertising and personal selling are used. If the market share is low, the emphasis is placed on either personal selling or advertising. This is because high market share seems to indicate that the company does business in more than one segment and uses multiple channels of distribution. Thus, both personal selling and advertising are used to promote the product. Where market share is low, the perspectives of the business are limited, and either advertising or personal selling will suffice, depending on the nature of the product. If the industry is concentrated among a few firms, advertising has additional significance for two reasons: (a) heavy advertising may help discourage other firms from entering the field, and (b) heavy advertising sustains a desired position for the product in the market. Heavy advertising constitutes an implied warranty of product performance and perhaps decreases the uncertainty consumers associate with new products. In this way, new competition is discouraged and existing positions are reinforced. Intensity of competition tends to affect promotional blending in the same way that market share does. When competition is keen, all three types of promotion are needed to sustain a product’s position in the market. This is because promotion is needed to inform, remind, and persuade customers to buy the product.
On the other hand, if competitive activity is limited, the major function of promotion is to inform and perhaps remind customers about the product. Thus, either advertising or personal selling is emphasized. Hypothetically, advertising is more suited for products that have relatively latent demand. This is because advertising investment should open up new opportunities in the long run, and if the carryover effect is counted, expenditure per sales dollar would be more beneficial. If demand is limited and new demand is not expected to be created, advertising outlay would be uneconomical. Thus, future potential becomes a significant factor in determining the role of advertising.
Customer Factors. One of the major dimensions used to differentiate businesses is whether products are marketed for household consumption or for organizational use. There are several significant differences in the way products are marketed to these two customer groups, and these differences exert considerable influence on the type of promotion that should be used. In the case of household customers, it is relatively easy to identify the decision maker for a particular product; therefore, advertising is more desirable. Also, the self-service nature of many consumer-product sales makes personal selling relatively unimportant. Finally, household customers do not ordinarily go through a formal buying process using objective criteria as organizational customers do. This again makes advertising more useful for reaching household customers. Essentially the same reasons make personal selling more relevant in promoting a product among organizational customers. The number of customers and their geographic concentration also influence promotional blending. For a small customer base, especially if it is geographically concentrated, advertising does not make as much sense as it does in cases where customers are widely scattered and represent a significant mass. Caution is needed here because some advertising may always be necessary for consumer goods, no matter what the market perspectives are. Thus, these statements provide only a conceptual framework and should not be interpreted as exact yes/no criteria. Budget Factors. Ideally, the budget should be based on the promotional tasks to be performed. However, intuitively and traditionally, companies place an upper limit on the amount that they spend on promotion. Such limits may influence the type of promotion that may be undertaken in two ways. First, a financially weak company is constrained in undertaking certain types of promotion. For example, television advertising necessitates a heavy commitment of resources. Second, in many companies the advertising budget is, by tradition, linked to revenues as a percentage. This method of allocation continues to be used so that expected revenues indicate how much may be spent on advertising in the future. The allocated funds, then, automatically determine the role of advertising.
