Channel Strategy and

design
30 Nov 2019

Marketing channels are set of mutually dependent organizations involved in

the process of making product or service available for utilization. It is
established in academic studies that Marketing channels are the means by
which goods and services are made available for use by the customers. All
goods go through channels of distribution, and marketing will depend on
the way goods are distributed. The direction that the product takes on its
way from production to the consumer is imperative because a marketer
must choose which channel is best for his particular product. It can be said
that channel is the link between manufactures and purchasers. Decisions
about the marketing channel system are decisive for management.

The marketing channels chosen by marketers influence all other marketing

decisions. The firm’s sales force and advertising decisions depend on how
much training and inspiration dealers need. Further, channel decisions
involve comparatively long-term commitments to other firms. Holistic
marketers guarantee that marketing decisions in all these different areas
are made to jointly maximize value.

Channel of distribution (Marketing channel)

In current competitive climate, big companies are using hybrid channels in
any one area. The firm must choose how much effort is needed to assign to
push versus pull marketing. A push strategy uses the manufacturer’s
sales force and trade promotion to encourage intermediaries to carry,
promote, and sell the product to customers. This is suitable where there is
low brand loyalty in a category, brand choice is made in the store, the
product is desired item, and product benefits are well understood. In a pull
strategy, the manufacturer uses advertising and promotion to influence
customers to ask intermediaries for the product, thus inducing the
intermediaries to order it. This is suitable when there is high brand loyalty
and high involvement in the category, people perceive differences between
brands, and people choose the brand before they shop. A marketing
channel executes the work of moving products from producers to
consumers, beat the time, place, and possession gaps that separate goods
and services from those who need or want them.

Channel level: The producer and the final customer are part of every
channel. There are numerous channels by which goods and services are
distributed. It is divided into direct and indirect channel. In direct channel
also known as zero-level channel, manufacturer and customer deal directly
with each other. There is no middleman in this channel. It consists of a
producer selling directly to final customers through door-to-door sales,
Internet selling, mail order, telemarketing, home parties, TV selling,
manufacturer-owned stores, and other methods.

In indirect channel, companies manufacture products in huge scale and sell

these products to middle man for example whole seller and retailers. This
channel can be very expensive.

Manufacturer to Customer: Manufacturer produces the goods and sells

them to the customer directly with no mediator, such as a wholesaler, agent
or retailer. Goods come from the manufacturer to the user without an
intermediary.

Manufacturer to Retailer to Consumer: Purchases are made by the seller

from the manufacturer and then the retailer sells the products to the
consumer. This channel is used by manufacturers that specialize in
producing shopping goods.
Manufacturer to Wholesaler to Customer: Consumers can buy directly from
the wholesaler. The wholesaler breaks down bulk packages for resale to
the consumer. The wholesaler reduces some of the cost to the consumer
such as service cost or sales force cost, which makes the purchase price
cheaper for the consumer.

Manufacturer to Agent to Wholesaler to Retailer to Customer: This type of

distribution involves more than one intermediary involves an agent called in
to be the middleman and help with the sale of the goods. An agent receives
a commission from the producer. Agents are useful when products or
services need to move rapidly into the market soon after the order is
placed.

Market channels by which goods and services are distributed

Characteristics of Marketing Channels

Link between Producer and Consumer.

Flow of Goods

Remuneration.
Classification-Direct and Indirect.

Activities- Financing, Credit Facility

It is important to consider some factors when choosing appropriate

marketing channel such as product, market, company. It is observed that
middle man plays vital role in distribution of product in market channel. The
core responsibility of intermediaries is to deliver products to customers in
their desired location. To accomplish this objective, they purchase goods
and store these and then ship to customers.

Marketing channel function performed by middleman.

Designing a Marketing Channel System

Designing a marketing channel system entails factors such as analysing

customer needs, establishing channel objectives, identifying major channel
alternatives, and evaluating major channel alternatives.
Analysing Customers’ Desired Service Output Levels: The marketer must
recognize the service output levels which its target customers want.
Channels produce five service outputs:

1. Lot size: The number of units the channel allows a particular

customer to buy at one time.
2. Waiting and delivery time: The average time consumers of that
channel wait for receipt of the goods. Customers generally prefer fast
delivery channels.
3. Spatial convenience: The extent to which the marketing channel
facilitate for customers to obtain the product.
4. Product variety: The variety provided by the channel. Usually,
consumers prefer a greater collection, which enhances the chance of
finding what they need.
5. Service backup: The add-on services such as credit, delivery,
installation, repairs provided by the channel.

Providing greater service outputs denotes increased channel costs and

higher prices for consumers. The triumph of discount resellers (online and
offline) designates that many consumers will accept lower outputs if they
can save money.

Establishing Objectives and Constraints

Another factor in designing a marketing channel system is that marketers

must declare their channel objectives in terms of targeted service output
levels. In competitive conditions, channel institutions should coordinate
their functional tasks to reduce total channel costs and still offer desired
levels of service outputs. Generally, planners can recognize several market
segments that want different service levels. Successful planning needs to
determine which market segments to serve and the best channels for each.
Channel objectives differ with product characteristics. Channel design is
also affected by numerous environmental factors as competitors’ channels,
monetary conditions, and legal regulations and limitations.

Types of Channels
30 Nov 2019
Manufacturers and consumers are two major components of the market.
Intermediaries perform the duty of eliminating the distance between the
two. There is no standardized level which proves that the distance between
the two is eliminated.

Based on necessity the help of one or more intermediaries could be taken

and even this is possible that there happens to be no intermediary. Their
description is as follows:

(A) Direct Channel or Zero Level Channels:

When the manufacturer instead of selling the goods to the intermediary

sells it directly to the consumer then this is known as Zero Level Channel.
Retail outlets, mail order selling, internet selling and selling

(B) Indirect Channels:

When a manufacturer gets the help of one or more middlemen to move

goods from the production place to the place of consumption, the
distribution channel is called indirect channel. Following are the main types
of it:

1. One Level Channel

In this method an intermediary is used. Here a manufacturer sells the

goods directly to the retailer instead of selling it to agents or wholesalers.
This method is used for expensive watches and other like products. This
method is also useful for selling FMCG (Fast Moving Consumer Goods).
This channel is clarified in the following diagram:

2. Two Level Channel

In this method a manufacturer sells the material to a wholesaler, the

wholesaler to the retailer and then the retailer to the consumer. Here, the
wholesaler after purchasing the material in large quantity from the
manufacturer sells it in small quantity to the retailer.

Then the retailers make the products available to the consumers. This
medium is mainly used to sell soap, tea, salt, cigarette, sugar, ghee etc.
This channel is more clarified in the following diagram:

3. Three Level Channel

Under this one more level is added to Two Level Channel in the form of
agent. An agent facilitates to reduce the distance between the
manufacturer and the wholesaler. Some big companies who cannot directly
contact the wholesaler, they take the help of agents. Such companies
appoint their agents in every region and sell the material to them.

Then the agents sell the material to the wholesalers, the wholesaler to the
retailer and in the end the retailer sells the material to the consumers.

Functions of
Intermediaries
28 Dec 2019

Channel intermediaries, whose main purpose is to deliver product from the

manufacturers to the end users. The purpose of a channel intermediary is
to move products to consumers, whether business or consumer. Some
intermediaries take title, or ownership, of the product from the producer.
This means that they can set the price and control the final method of sale.
This would be an example of a retailer.

When Ninja Corp first decided to launch their product line, they had to
determine which channel intermediaries they would need to effectively
reach their target market. Remember that the overall marketing mix
consists of the 4 Ps (which are product, promotion, price and physical
distribution). This lesson discusses the P of physical distribution through
the channel intermediaries.

There are four generally recognized broad groups of intermediaries:

agents, wholesalers, distributors, and retailers.

Agents/Brokers

Agents or brokers are individuals or companies that act as an extension of

the manufacturing company. Their main job is to represent the producer to
the final user in selling a product. Thus, while they do not own the product
directly, they take possession of the product in the distribution process.
They make their profits through fees or commissions.

Wholesalers

Unlike agents, wholesalers take title to the goods and services that they are
intermediaries for. They are independently owned, and they own the
products that they sell. Wholesalers do not work with small numbers of
product: they buy in bulk, and store the products in their own warehouses
and storage places until it is time to resell them. Wholesalers rarely sell to
the final user; rather, they sell the products to other intermediaries such as
retailers, for a higher price than they paid. Thus, they do not operate on a
commission system, as agents do.

Distributors

Distributors function similarly to wholesalers in that they take ownership of

the product, store it, and sell it off at a profit to retailers or other
intermediaries. However, the key difference is that distributors ally
themselves to complementary products. For example, distributors of Coca
Cola will not distribute Pepsi products, and vice versa. In this way, they can
maintain a closer relationship with their suppliers than wholesalers do.

Retailers

Retailers come in a variety of shapes and sizes: from the corner grocery
store, to large chains like Wal-Mart and Target. Whatever their size,
retailers purchase products from market intermediaries and sell them
directly to the end user for a profit.

Roles and responsibilities of Intermediaries

Intermediaries are the backbone of commerce and include suppliers of raw

materials and components, transport, shipping and distribution companies,
landlords and shop owners, online marketplaces, internet service providers,
search engines and advertising networks, websites, credit card companies
and even the popular social media sites.

Intermediaries, as the underlying infrastructure of all commerce have the

inherent responsibility to restrict the abuse of their infrastructures for illicit
trade. The greater the number of intermediaries and the more elaborate the
supply chain, the more vulnerable the system is to infiltration and
exploitation by counterfeiters. Experience shows that most intermediaries,
when better informed about potential exploitation and the damage done by
counterfeiting and piracy, demonstrate a willingness to secure their portion
of the supply chain from abuse.

The three basic functions performed by an intermediary in the

distribution channel are:

(1) Transactional: This function involves adding value to the distribution

channel by bringing in the intermediary’s resources to establish market
linkages and customer contacts. The intermediary either directly
undertakes the marketing and sales function or helps to establish
buyer-seller relationships by serving as a link between the manufacturer
and the retailer.

(2) Logistical: This function involves the physical distribution of goods. It

involves sorting and storing supplies at locations within the reach of the end
customer. It also breaks up the bulk production of the manufacturer into
smaller portions and may include the transportation of smaller shipments to
intermediaries or retailers further down the channel of distribution.

(3) Facilitating: Although often confused with logistics, the facilitating

functions of intermediaries supplement the entire marketing flow of the
product and are separate from logistics. The facilitating functions include
financially supporting the marketing chain by investing in storage
capabilities. They may include facilitating sales by helping the consumer
buy even when he or she does not have cash (through financing plans,
purchase agreements, etc.).
 Figure:- Function of Intermediaries

Factors affecting choice

of a Distribution Channel
18 Jun 2024

Distribution Channel is the path through which products or services flow

from the producer to the end consumer. This pathway includes
intermediaries such as wholesalers, distributors, retailers, and agents.
Distribution channels can be direct, with no intermediaries, or indirect,
involving various intermediaries to facilitate the movement, storage, and
sale of goods.

Choosing the right distribution channel is crucial for businesses as it

significantly impacts their ability to reach customers, control costs, and
achieve strategic objectives. Several factors influence this decision, and
understanding them helps businesses select the most effective distribution
strategy.

Product Characteristics:

● Perishability:

Products with short shelf lives, such as fresh food or pharmaceuticals,

require fast and efficient distribution channels. Direct distribution or shorter
channels are typically preferred to minimize time in transit and ensure
products reach consumers quickly.

● Complexity and Customization:

Complex or highly customized products, like industrial machinery or tailored

software solutions, often require direct sales channels. This allows for
detailed consultations and support throughout the sales process, ensuring
that customer-specific needs are met.

● Bulkiness and Weight:

Heavy or bulky products, such as furniture or construction materials, may

benefit from direct channels or partnerships with logistics companies that
specialize in handling such goods. This minimizes handling costs and
potential damage.

● Standardization:

Standardized, non-perishable products, such as consumer electronics or

packaged goods, can effectively use indirect channels involving
wholesalers and retailers due to their broad market appeal and longer shelf
life.

Market Characteristics:

● Customer Location and Density:

Geographically dispersed customers may necessitate a network of

wholesalers and retailers to ensure product availability. In contrast, densely
populated markets might support direct distribution through
company-owned stores or e-commerce platforms.
 ● Market Size:

Larger markets with significant demand can justify the costs of establishing
direct distribution channels. Smaller or niche markets might rely on indirect
channels to leverage existing distribution networks and reduce costs.

● Customer Buying Behavior:

Understanding how customers prefer to purchase products is crucial. If

customers value in-person shopping experiences and immediate product
availability, retail channels are essential. Conversely, if they prefer
convenience and online shopping, e-commerce channels are more
suitable.

Company Objectives and Resources:

● Control:

Direct channels provide companies with greater control over the sales
process, brand messaging, and customer interactions. This is often
important for premium brands that emphasize customer experience and
service quality.

● Cost Considerations:

Establishing and maintaining direct distribution channels can be expensive

due to the need for infrastructure, logistics, and personnel. Indirect
channels, while potentially less expensive initially, involve sharing margins
with intermediaries.

● Expertise and Capabilities:

Companies must assess their internal capabilities. Businesses lacking

in-house expertise in logistics and distribution may benefit from partnering
with experienced intermediaries who can efficiently handle these functions.

Competitive Landscape:

● Channel Saturation:

In highly competitive markets, certain channels may be saturated, making it

difficult to gain shelf space or attention. Companies might need to explore
alternative channels or innovate their distribution strategies to stand out.
 ● Competitor Strategies:

Understanding competitor distribution strategies can influence channel

choice. If competitors are successfully using certain channels, it might be
beneficial to follow suit or find complementary channels that exploit market
gaps.

Economic Factors:

● Economic Conditions:

Economic stability and consumer spending power can influence channel

choice. In economic downturns, cost-effective channels become more
attractive, whereas in prosperous times, investing in premium channels can
enhance brand positioning.

● Regulatory Environment:

Legal and regulatory considerations, such as trade restrictions,

import/export regulations, and industry-specific regulations, can impact the
feasibility of certain distribution channels. Companies must ensure
compliance to avoid legal issues and penalties.

Technological Advances:

● E-commerce and Digital Platforms:

The rise of e-commerce and digital platforms has revolutionized distribution

strategies. Businesses must consider online sales channels, digital
marketing, and the integration of technology in logistics to remain
competitive.

● Automation and Data Analytics:

Technological advancements in automation and data analytics can

enhance distribution efficiency and effectiveness. Companies equipped
with these technologies can optimize their supply chains, reduce costs, and
improve customer satisfaction.

Channel Partner Relationships:

● Reliability and Reputation:

Choosing reliable and reputable channel partners is crucial for ensuring
consistent product availability and customer satisfaction. Poor partner
performance can damage the brand and lead to lost sales.

● Alignment of Goals:

Channel partners should share the company’s goals and values.

Misaligned objectives can lead to conflicts and inefficiencies. Collaboration
and mutual benefits are key to successful partnerships.

● Support and Training:

Providing adequate support and training to channel partners ensures they

represent the brand effectively and deliver a high-quality customer
experience. This can include product training, marketing support, and
customer service guidelines.

Role and Importance of

Intermediaries
30 Nov 2019

Marketing Intermediaries Importance for Business: When a business

manufactures a certain product then it can transfer the bulk of its product
units to a large number of customers through marketing intermediaries.
Distribution is an important function of any business which is not possible
without the involvement of marketing intermediaries. Marketing
Intermediaries consist of a chain of suppliers that help in effective delivery
of products and services from the end of producers to the other end of
consumers. It may include distributors, whole sellers and retailers, etc.

Importance of Marketing Intermediaries

The business can have the option to directly sell its products or services to
the customers. But it is more profitable for a business to employ a suitable
chain of marketing intermediaries in its distribution channels. Although
apparently it seems disadvantageous to involve marketing intermediaries,
because in this way a business gives some control to them regarding the
decisions of to whom and how products should be sold. But actually the
availability of products or services to the targeted customers becomes
efficient and effective through the use of marketing intermediaries. The
reason behind their efficiency is the experience, specialization, scale of
operation and their contacts that can make possible for them to achieve
something extra than the independent achievement of the business
organization.

In fact the intermediaries lower the burden of workload by the

manufacturers and customers in searching for their desired items. The
marketing intermediaries buy the bulk of quantities of different types of
products from different manufacturers. They then make a wider
assortment of this product, but in smaller quantities. In this way these
intermediaries match the different demands of customers with the different
supply of products from different manufacturers.

Besides the physical products and services are effectively distributed to the
demanding customers by the employment of marketing intermediaries both
in private and public sector, service provider organizations still pay special
attention to the customers.

Functions of Marketing Intermediaries

The products or services are transferred from manufacturer to the

customers through marketing intermediaries. The place, time and
possession gaps are overcome by the marketing intermediaries that
separate the products or services from their users. Following are the
important functions of marketing intermediaries.

1) Information: One big function of marketing intermediaries is that they

are helpful in provision of useful information about the forces and actors in
the markets in the management and marketing research teams.

2) Promotion: They also communicate with the customers about the new
offering of the businesses.

3) Contact: Prospective customers are found by the marketing

intermediaries and then they are effectively communicated by these
intermediaries.
4) Matching: Marketing intermediaries also match the various diversified
needs and wants of customers to the different supplies of the
manufacturers including the assembling, grading and packaging of
products.

5) Negotiation: This is an important function in which the intermediaries

negotiate with the customers in order to reach at a certain price so that the
ownership of the product is shifted.

There are also some other functions that are performed by these
intermediaries which are.

6) Physical Distribution: The physical distribution of products is also done

by them.

7) Financing: Intermediaries also provide some funding to the businesses

which are properly used by the businesses to cover some of their
distribution costs.

8) Risk Taking: These intermediaries also take some risk in acquiring

different old and new products or services from various businesses.

Channel Selection and

Management
22 Jun 2024

A company has to consider factors related to the market and customers, its
own situation, the product and the competitive environment.

All these factors have a strong bearing on the type of distribution channel
selected.

A company should be very deliberate in deciding upon a distribution

channel as it is expensive, cumbersome and can invite litigations to
dismantle a distribution channel once it is established because interests of
independent intermediaries are involved.
Marketing factors:

1. Buyers may mandate that products be sold to them only in a certain

way. They may prefer to buy from a particular type of outlet, and only
at a particular time, and a supplier needs to match customer
expectations if it wants their business.

A supplier also needs to be mindful of customer needs regarding product

information, installation and technical assistance. Buyers’ level of need
regarding such services has to researched.

The company has to decide whether the channel intermediary can meet
these needs in terms of expertise, commitment and cost, or it has to set up
its own infrastructure to serve customers’ needs effectively.

For instance, car service can be provided by dealers or independent

authorized service providers, or by service centers run by the company.
The company has to decide as to who will provide the service.

1. The willingness of channel intermediaries to sell and distribute a

company’s product strongly influences its decision to use one
channel arrangement over another. A company has to resort to direct
distribution if distributors refuse to distribute its product.

For an industrial product company, this will mean recruitment of

salespeople, and for a consumer product company, this will mean selling
through direct mail, telephone, or internet. This situation may arise if the
brand or the product is not well established, the intermediaries feel that
there would not be enough buyers, selling the product is difficult and
complicated, and there is not enough margin.

For such products the manufacturer will have to increase margins for the
intermediaries and provide them more support.

Alternatively, the manufacturer has to create demand among final

consumers for the product, so that intermediaries get interested in keeping
it. Investment in branding is a good option for marketers of consumer
products and even the marketers of industrial products should not rule out
the option of branding their products.

When customers will demand products, it will be in the self-interest of

retailers to keep such products. In fact, manufacturers should look at
branding as their weapon for the long term, against powerful
intermediaries.

Once they have made the initial investment in building a strong brand, they
can reduce the margins of the intermediaries and plough back the money in
more branding efforts.

iii. The profit margins demanded by wholesalers and retailers and the
commission rates demanded by sales agents also affect their viability and
attractiveness as a channel intermediary. These costs need to be assessed
in comparison with those that will be incurred if the company decides to sell
directly to customers.

As the power of retailers has increased, they are demanding higher

margins from manufacturers. While most manufacturers are complying due
to retailers’ command over a huge base of customers and lack of alternate
means of reaching customers, some companies are trying to bypass
retailers by opening their own stores.

If retailers’ dominance continues, some radical response to bypass the

powerful retailers should be expected from manufacturers in the near
future.

1. The location and geographic concentration of customers strongly

affects channel selection. Direct distribution is feasible if the
 customer base is clustered, and is local. Direct distribution is also
feasible when customers are few in number and buy in large
quantities, as in the case of industrial customers.

When a company has large number of customers who buy in small lots,
and are widely dispersed, it has to use channel intermediaries to reach
them-direct distribution would be prohibitively expensive, and can be
justified only if unit price is high and the company is able to customize the
product in the time between the customer placing an order and the
company delivering the product, as Dell does.

Manufacturer factors:

1. Most manufacturers are good at designing and producing products,

and hence want to delegate the task of selling and distributing to
channel intermediaries. Some manufacturers lack the financial and
managerial resources to take on the tasks of selling and distributing.

Therefore, the company does not open its own stores or hires its own
salespeople, and uses distributors or agents to sell and distribute its
product. A manufacturer of consumer products will need huge investment
in setting up infrastructure for distribution because the number of
customers is large and are geographically dispersed.

The distribution channels of consumer products are long, and managing

such a wholly- owned distribution infrastructure will be an arduous task
even for the mightiest manufacturers. Also, most manufacturers do not
have customer-based skills to sell and distribute their products, and hence
have to rely on intermediaries.

1. A wide mix of products makes direct distribution feasible, as the cost

of setting up and operating a common distribution infrastructure is
distributed over a larger number of products.

Narrow or single product companies find the cost of direct distribution

prohibitive unless the product is expensive and its customers buy in bulk.
Therefore, they have to use channel intermediaries to sell and distribute
their products.

iii. When a company uses independent channel intermediaries, it loses

control over the way the product is sold to customers. The company loses
control of the price charged to customers and the way the product is
stocked and presented to customers.

There is no guarantee that the channel intermediary will stock its new
products or its full range of products. It may just be interested in stocking
products which sell more or on which it earns higher margins.
Manufacturers of electronic products are opening wholly-owned
megastores to showcase their full range of products.

Channel intermediaries are obliged to perform certain tasks like in-store

promotion in retail stores, promotion in the local media by retailers, or
appointing a minimum number of salespersons in a region by a wholesaler.
It is very important for manufacturers to constantly monitor whether channel
members are performing the agreed functions.

Product factors:

1. Design and production of large and complex products need personal

contact between the manufacturer and customer. These products are
also expensive, and hence direct selling and distribution of such
products is economically viable.

The manufacturer and customer remain in active contact during the lifetime
of the equipment, as both need to collaborate during its installation,
operation and service.

1. Perishable products require short channels to supply the customer

with fresh stock. Bulky or difficult to handle products may require
direct distribution because distributors may refuse to carry them in
their stores due to space constraint or because expensive provisions
will have to be made to handle and store them. Intermediaries may
have difficulty in displaying such bulky products.

Competitive factors:

If competitors control traditional channels of distribution, for instance,

through exclusive dealership arrangements, a company has to decide to
sell directly or set up its own distribution network. It recruits salespeople to
sell directly or builds its own distribution infrastructure in terms of setting up
distribution centers and opening retail outlets, to reach customers.
Players of an industry sell and distribute in a particular way, but a
manufacturer should not assume that channels of distribution used by
competitors are the only way to reach their customers. It should explore
alternate means of reaching customers i.e., use distributors and retailers
not used by competitors to reach customers.

It should also explore the possibility of using direct marketing and

distribution. Alternate distribution channels may be used as a means of
attaining competitive advantage. For instance, Dell uses direct marketing to
gain a substantial competitive advantage by customizing personal
computers to suit customer requirements.

Deciding the number of outlets in a region or for a population, i.e., the

intensity of outlets is a critical decision. If the number of outlets is more
than required, the cost of serving a customer goes up.

If the number of outlets are less than required, customers will face difficulty
in accessing the outlets and they may buy an alternate brand or product or
forgo purchase altogether. There are three options for a company:

Intensive distribution:

The product is inexpensive and customers can choose from large number
of equally good brands. Intensive distribution is required for such products,
which provides maximum coverage of the market by using all available
outlets.
Sales are a direct function of the number of outlets penetrated in case of
mass market products such as cigarettes, food and confectionaries. This
happens because customers have a range of acceptable brands from
which they choose. If a brand is not available in an outlet, an alternative is
bought.

The convenience aspect of purchase is paramount in such products, and

the customer will buy an alternate brand if his preferred brand is not
stocked in the store he is shopping. Some such purchases are also
unplanned a fid impulsive in nature. They are bought because the products
happen to be in sight. If the product or the brand not spotted by the
customer, sales are lost.

New outlets should be sought which have not stocked the product or brand
so far. The retailers who have been stocking the product do not mind when
the manufacturer signs up more retailers to carry the product because the
revenue generated from each customer for such products are low.

Wider availability and display of such products across many outlets act to
make them popular, which increases the sale of the product in every outlet.

Also, most of these purchases happen in grocery stores for which

customers show high amount of loyalty. Therefore it is important that the
store has all the products that its customers may want and expect the store
to stock. It is not very worrying if the next store has them, too.

Selective distribution:

For products like electronics goods and home appliances, a manufacturer

uses a limited number of outlets in a geographical area. It selects the best
outlets in the area in terms of their location, space, decor and the owners’
enthusiasm to carry its products.

It develops close relationships with the outlets and trains their salespeople.
It ensures that the salespeople are motivated to sell its products and that
they are well compensated. Retail outlets and industrial distributors prefer
such an arrangement as it reduces competition amongst them.

Selective distribution works well when the product’s characteristics are

such that the customers are willing to spend time to learn about the product
and evaluate alternatives. The company cannot make its products available
in all possible outlets because customers expect a minimum amount of
assistance in making the purchase.

They may also expect the product to be delivered and installed at their
homes. They may also expect the retailer to arrange loans and insurance
for the product that they plan to buy. Therefore only the retailers who can
provide such services can be signed up to carry the product. And when
these retailers have made such investments, they do not expect the next
shop to be selling the same product.

They expect some territory to themselves. Retailers would be aggrieved if

the manufacturer tried to add more outlets in their region as the new outlets
would eat into their sales.

The customer makes such purchases after deliberation and is purposeful

about buying a brand from a set of brands. He will be willing to travel some
distance to find his preferred brand or brands, and therefore, storing the
brand in stores which are very close to each other is really not required.

Exclusive distribution:

The product is important to the customer and he is willing to travel to buy

his preferred brand. The product is expensive and hence the company will
incur high inventory holding costs if it is stocked at too many locations.

Only one wholesaler, retailer or industrial distributor is used in a

geographical area. Car dealers are an example. Customers cannot
negotiate prices between dealers since to buy in a neighboring town or
from a dealer in a distant location, may be inconvenient when repairing and
servicing are required It allows close co-operation between the
manufacturer and the retailer over servicing, pricing and promotion.

The right to exclusive distribution may be demanded by a distributor as a

condition for stocking a manufacturer’s full product line. The manufacturer
may agree for exclusive dealing where the distributor agrees not to stock
competing lines.

But before granting exclusive dealership to a retailer in a region, the

manufacturer should deliberate if his brand has strength enough to be able
to make the customers face the inconvenience of traveling some distance
to buy the brand. In categories like automobiles where the manufacturers
have strong brands and customers have strong preferences, exclusive
dealership should be granted.

Since establishing such dealerships involves big investments, it is wise not

to fritter away resources in having too many dealers. Not many customers
buy a particular brand of car because its dealer happens to be next door.

The purchase is too expensive for customers to engage in such whims. But
the same arguments do not hold in categories like apparel where exclusive
dealerships are provided Customers’ choice criteria are not crystallized in
such categories and customers do not have strong preferences.

It is unrealistic to expect a customer to travel to the other end of the city to

buy his favorite shirt. But super premium brands, even in such categories
command high brand loyalty and exclusive dealership can be granted for
such high-end brands.

Exclusive dealing can reduce competition and make the dealer

lackadaisical. This may be against the customer’s interest as he has no
alternate recourse.

There is another danger in an exclusive channel arrangement. Since the

level of commitment of both the channel member and the manufacturer are
higher, in case of estrangement, both are likely to fight bitterly.

Channel integration:

Degree of channel integration varies widely. The manufacturer or any

particular intermediary has minimal control when independent wholesalers,
dealers and agents are part of the distribution channels.

At the other extreme, in the wholly-owned distribution infrastructure, the

channel members are owned by the manufacturer who exercises complete
control over them. Somewhere in between are arrangements like franchise
operation where both franchiser and franchisee exercise power and
discretion in their areas of jurisdiction.

Conventional marketing channels:

Channel intermediaries are independent businesses with their individual

profit goals. The channel intermediaries are independent business entities,
and they would look after their own interests. Therefore, manufactures
cannot unilaterally force them to do their bidding.

Independence of channel intermediaries makes it imperative that

relationship between the manufacturer and its channel intermediaries be
based on fairness and equitable distribution of rewards. Manufacturers
have to put money-value on the tasks that the channel intermediaries
perform for them, and then compensate them adequately.

It is also important that they jointly decide as to what tasks will be

performed by whom—one party may be in a better position to perform an
activity, and hence that party should be assigned to perform that activity.
For example, retailers are expected to hold inventory for most durable
products, resulting in large amount of safety inventory being held at
multiple locations.

A manufacturer can hold inventory for all its retailers of a particular region,
and the product can be sent to customers directly from manufacturer’s
storage area—retailers can concentrate on selling.

A manufacturer who dominates a market through its size and strong brands
may exercise considerable power over intermediaries though they are
independent. Traditionally, manufacturers exercised control over
intermediaries because their brands drove business in retail stores and
retailers felt dependent on them.

The manufacturer rationed the supply of hot brands, forced the retailers to
carry their full range, and made them participate and contribute in their
promotional programmes. But with consolidation and emergence of retail
chains, the balance of power has shifted dramatically. They know the
preference of customers, and know which brands are selling and how
much.

The retail chains enjoy enormous clout with customers and they have huge
buying power. The retail chains also have strong brands of their own in
most categories. The manufacturers now are dependent on the retailers
and the latter are extracting their pound of flesh.

The retailers demand slotting fees for new products, carry only the hot
selling brands, require frequent replenishment from manufacturers, and
expect the manufacturer to participate and contribute in the store’s
promotion programmes.

The relationship between the manufacturer and the intermediaries is

governed by balance of power between the two parties. Both
manufacturers and retailers have been guilty of exploiting the vulnerable
party whenever they have been strong. Manufacturers did it earlier,
retailers are doing now. But this is not a good ploy.

The economics of a supply chain dictates that an activity should be done at

a point in the chain where it can be done most efficiently and effectively, so
that the cost structure of the supply chain is improved and there is more
profit for every player. The extra profit should be divided among the
partners depending on the efforts expended by the players.

A supply chain operated by dictum of the more powerful party will be

inherently inefficient compared to the one based on co-operation between
the parties. The powerful player will shift activities to the more vulnerable
player even when the powerful player could do that particular activity more
efficiently and effectively.

The result is an inefficient supply chain with less profit for all the players.
And a large part of the smaller profit is appropriated by the powerful player,
leaving the weaker players disgruntled and less willing to co-operate. And
more dangerously, the vulnerable players are always looking at ways to get
back at their tormentors.

It is time the manufacturer and the independent channel intermediaries

shifted the basis of relationship from power to rational distribution of
activities in the supply chain and equitable distribution of profit amongst
themselves.

Franchising:

A franchise is a legal contract in which the manufacturer or the producer

and the intermediary agree to each member’s rights and obligations. The
intermediary receives marketing, managerial, technical and financial
services from the producer in return for a fee. For instance, McDonald’s
combines strengths of a large sophisticated marketing oriented
organization with energy and motivation of a locally owned outlet.
Franchise operations give the manufacturer a certain degree of control over
its intermediaries. A franchise agreement is a vertical marketing system in
which there is a formal co-ordination and integration of marketing and
distribution activities between the manufacturer and its intermediaries.
Roles and functions of each party are clearly defined, and each is expected
to look after the interest of the other.

Franchising occurs at four levels:

1. Manufacturer and retailer:

The retailer sets up outlets in which manufacturer’s cars are sold, and it
also sets up repair and service facilities for the car. The retailer is
motivated. The manufacturer gets retail outlets for its car and repair
facilities without the capital outlay required with ownership.

1. Manufacturer and wholesaler:

The wholesaler gets the right to produce, bottle and distribute Coke’s
product in a defined geographical area.

1. Wholesaler and retailer:

The wholesaler acquires the right to distribute manufacturer’s products or

purchases its product, and then signs up retailers to sell the product to final
consumers. This arrangement is common in hardware stores.

1. Retailer and retailer:

A retailer expands geographically by means of franchise operations. For

instance, Benetton and McDonald’s have used this approach to expand
their operations geographically.

In all franchising arrangements, it is imperative that profits are distributed

equitably among both parties. The structure of the agreement between the
two parties should be such that profits are divided equitably.

When intermediaries are required to pay a fat upfront fee and the
manufacturer takes only a small or no share of the profit generated at the
intermediaries’ end, the manufacturer has no major financial motivation to
ensure that the intermediaries earn profits.
But when the intermediaries pay small or no upfront fees and the
manufacturer shares the profit generated at the intermediaries’ end, the
manufacturer becomes interested in the profitability of the intermediaries.
McDonald’s follows this practice and ensures that its franchisees earn
profits and takes a share in the profits.

Channel ownership:

Total control over distributor activities comes with channel ownership by the
manufacturer or an intermediary. Channel ownership results in creation of a
corporate vertical marketing system. When a manufacturer purchases a
chain of retail outlets, it begins to control the purchasing, production and
marketing activities of these outlets.

In particular, the manufacturer’s control over purchasing means a captive

outlet for its product. For example, Purchase of Pizza Hut by Pepsi has tied
these outlets to Pepsi’s soft drink brands. Retailing, is a specialized
business, and most manufacturers may find it difficult to manage retail
operations.

Relationship between Manufacturer and Channel Partners:

It is important that the manufacturer and his channel partners understand

and appreciate each other’s requirements.

Most manufacturers believe that if they get more help and support from
their distribution channels, they could substantially increase volumes and
have even greater impact on profits. But manufacturers too must
understand the needs of the channel members and must respond to them.

The prime objective of each member of the channel is to generate profits

through a combination of turnover i.e., sales per time period, and gross
margin as a percent of sales. Supermarkets operate on a low gross margin
but high turnover. Specialty stores and industrial distributors work on high
margins and low turnover.

Each channel member must be compensated by the manufacturer for his

efforts in selling the manufacturer’s products. The manufacturer will expect
to receive greater sales and greater channel motivation. It will be useful for
the manufacturer to determine what he should do for the channel members
and what he should receive from them.
The manufacturer should take care on two counts. The manufacturer
should not ask the channel members to do things that they cannot do. A
retailer can try to push the manufacturer’s products but he cannot generate
demand for his products.

The manufacturer should accept that it is primarily his responsibility to

generate consumer demand for his products. Secondly, the manufacturer
should perform those tasks which are important to the channel members
but is difficult for them to do on their own.

For example, the manufacturer can develop literature for his products, to be
used by all his distributors, much more cheaply than his distributors could
do it individually.

It is important that the manufacturer differentiates between selling to the

channels and selling through the channels. A manufacturer can fill the
distribution pipeline for a limited amount of time. Then the products must
flow through the channel, not just into it.

It is wrong and fatal to assume that the sale is consummated when the
product moves from the manufacturer to the wholesaler.

The manufacturer must exert leadership throughout the chain of the

product moving from its stores to wholesalers to retailers to customers. Not
many products have been successful without strong support from channel
members.

Channel Management
Strategies
21 Jul 2024

Channel management involves creating operational strategies that go

beyond a single organization. Channel management strategies bring
together partners in a supply chain, including material suppliers,
manufacturers, distributors and resellers, in an effort to lower costs and
increase operational efficiency throughout the chain.
Following Channel Management Strategies are:

1. Strategic Partnerships

Developing long-term relationships with your suppliers and retail customers

is the first step toward effective channel management. Rather than
switching suppliers for price discounts and promotional offers, build a solid
supplier base by entering into price/volume contracts, cooperative
marketing arrangements, inter-company financing arrangements or other
activities designed to strengthen your relationships. Develop a loyal reseller
base by helping your resellers to market and sell your product effectively.
Provide credit arrangements to loyal retail customers, and offer
price/volume contracts to your customers as well.

2. Technology Leveraging

Technological tools can be used to increase efficiency along a supply

chain, but dedication and cooperation is required of all parties. Automatic
order systems can instantly place orders along the supply chain when stock
levels reach economic quantities. Picking, packing and shipping activities
can be tied into automatic order systems to further improve efficiency and
decrease delivery lead times. Order tracking technology can help individual
companies to provide better customer service by knowing exactly when
materials and other orders will arrive.

3. Vertical Integration

Vertical integration is the act of purchasing or building your own suppliers

or customers. This technique can be costly and sophisticated compared to
others, but vertical integration can provide the most significant cost savings
and quality control of all channel management options. Owning your own
supplier or retail customer can allow you to set your own prices along the
supply chain and exercise total control over operational procedures and
quality standards.

4. Logistical Support

Acting as a consultant to your suppliers and resellers may be one of the

most hands-off channel management techniques, but it can still improve
efficiency and productivity across the supply chain. Sharing best practices,
technological innovations and managerial expertise can help your strategic
partners to get their houses in order, resulting in lower prices and higher
quality from suppliers, as well as more reliable orders from resellers.
Providing marketing materials and sales training to resellers’ employees
can help to boost sales for your brands as well.

5. Monitoring

Continually monitor and assess the performance and progress of your

supply chain. Create thorough monitoring systems to accompany each
channel management technique, whether it be something as simple as
employee and customer surveys or something as complex as statistical
reports from a chain-wide automatic order system. Reassess your supply
chain strategies regularly and adjust them to respond to changes in the
market or in a particular link in the chain.

Decision Areas in Channel Management:

Optimizing Selection and
Promotion decisions
9 Sep 2024

The ability to select the right person for the job, the team, the project. is a
fundamental capability of highly successful organizations and leaders.
Unfortunately, it is also an area that, in most organizations, is done rather
poorly. This would be more clearly understood if they looked at their level of
engagement, performance, and positive retention.

Considerations:

● The people decisions are normally what determine the level of

success a leader will have.
● Effective people decision-making is both and art and a science and
increasingly, with the tools available, can become more of a
predictive science.
● Making the wrong people decision is remarkably expensive as it may
be easy to get rid of truly bad performers- but that mediocre
performer can pose greater risks as they can cost your organizations
month after month and they also lead to the loss of high performers…
● In a rapidly changing world and market environment, picking the right
investments to make in your people is key to creating and
maintaining a high performing organization.
● Technology is having a huge impact on the cost-effectiveness of
available alternatives both for selection and development of people.
● For many competition for competencies and skills can come from
those half way around the world who are more educated and cost 1/3
as much (or less). How does this impact people decisions locally?
● Selecting the wrong person is a very expensive proposition but it’s
commonly done.
● Interviews, even structured behavioral interviews, are often poor
ways to accurately assess the future performance of an individual
(but effectivve in validating key performance factors).
Strategies:

1. Don’t Focus on The Questions, Focus on The Interview.

Too many times interviewers focus on buzzworthy questions they believe

will help them understand everything they need to know about the
candidate. However, there aren’t specific questions that will instantly give
them insight into the candidate.

Instead, recruiters should focus on the interview process as a whole.

Spend your time getting to know the candidate better by exploring their
skills and gaining an understanding of their experience and personality.
Asking questions related to your industry and the candidate’s skillsets will
be far more effective than a couple of oddball questions.

Test A Candidate’s Skills

Unfortunately, some candidates lie on their resume which is why it’s

important that hiring staff check references and follow up with previous
employers to evaluate a candidate’s stated skills and background.

For some hiring managers, viewing a candidate’s portfolio is enough to

prove their skills. However, many companies test a candidate’s skills in the
form of a test, written, verbal or otherwise. The job assessment test doesn’t
have to be complex, but it should be difficult enough for the candidate to
show the level of their skill set.

Include Other Relevant Employees

One person shouldn’t conduct the entire talent acquisition process on their
own. Recruiters should involve other qualified employees throughout the
interview process to get an accurate understanding of the skills the
potential candidate can bring to the company and how their personality will
fit in with the rest of the team.

This should include the candidate’s future manager, the department’s head
or even a team member who will be working closely with them on a daily
basis. It can also be effective to include a recruitment and staffing expert in
the hiring process. These consultants can manage almost all of the entire
recruitment and selection process from candidate sourcing to interviews,
streamlining the hiring process for internal HR teams.
Consumer
Communication process
4 Jul 2024

Consumer communication and persuasion is an essential part of any

Marketing Strategy.In fact, it is the starting point of all improvement as
consumer voices provide companies with the data such as where they are
lacking and what all they could do to improve the product or service.

Do all companies listen to the consumer voices? Not really. It is only the
ones which have an effective consumer communication process in place,
that are really able to focus on consumer needs. Are you one of them? Let
us take a look at the consumer communication process at Suntory to
understand the Consumer Communication Process.

This company has set up a Customer Centre which takes up all inquiries,
complaints, and proposals from customers. Though most of the queries are
answered, the customer voices are sent across to related departments of
the company. These departments analyze the gap between the customer
needs and the products and services. After doing so, the quality
improvements are suggested and the product development takes place in
keeping with the customer demands.

Consumer communication should be used effectively to drive

maximum benefits to the company. You must be thinking how. Let us
look at few ways which will help you market effectively even in a downturn.

1. When economy is changing, it is all the more important to get the

customer feedback. It is not a good idea to fill their inboxes and
mobiles with promotional messages. More so, you can use online
surveys to understand how they are thinking and what they want. You
can then make changes in your strategies, processes and so on to
deliver the product that your consumers are aiming for.
2. It is just not important to feed information to your consumers. Having
a dialogue with them from time to time is also important. You can use
the email marketing newsletters to invite them for such
conversations. Apart from understanding their concerns, showing
your consumers that you care is also very important. This will have
far-reaching consequence and will benefit your company’s image.
3. Try and co-host an event with another local business. This will
highlight your product’s image in a positive manner. This is a kind of
customer relationship building activity where you interact face-to-face
with the consumer and show him your expertise.
4. Consumers are becoming more and more environmentally aware
these days. Anything against the environment would put you in a bad
light. So focus that your product or service is following all the
environment friendly standards. You can also show your concern by
teaming up with local charity and involving your consumers in the
event too.

The above points can also be used for consumer persuasion too.
Face-to-face meetings are more effective in persuading people to buy your
stuff. People can judge easily whether what you are saying has substance
or not. Therefore, try your level best to portray the positive image of your
product in a positive fashion. Once you learn the essence of consumer
communication, you would never have to look back.

Elements of the Communications Process

 ● The Message Initiator (the Source)
● The Sender
● The Receiver
● The Medium
● The Message
● The Target Audience (the Receivers)
● Feedback – the Receiver’s Response
● Medium can be:
● Impersonal (mass media)
● Interpersonal (with salesperson or a friend)
● Interactive (direct feedback possibility exists)

Marketing communications is essentially a part of the marketing mix.

Promotion is what marketing communications is all about.

Marketing communication aims at conveying a firm’s message as

effectively and accurately as possible.

The process is as follows: Sender, Encoding, Transfer Mechanism,

Feedback, Response and Decoding.

● Source: A source is also referred to as a sender. The sender has a

message to convey to others. The sender can be anyone from a
brand manager (in a major corporation such as Nike or Budweiser) to
a salesperson in a smaller organization. At times, celebrities are
used to endorse products and act as a sender for the product. It is
always important to make sure that the source is credible and
trustworthy.
● A direct source can be a salesperson delivering a message about a
product.
● An indirect source uses a well known public figure to draw attention
to a product.
● Encode: The source encodes or translates ideas into a message.
For example, a brand manager decides to promote a new product.
● Message: After defining the target market, the marketer designs an
effective message that will achieve the communication objectives.
● Receiver: The receiver is the person or group with whom the sender
attempts to share ideas. Marketers want a response, the reactions of
the receiver, after being exposed to the message: for example, a
consumer receiving the message about the new product.
 ● Decode: The receiver decodes or interprets the message. For a
message to be decoded by a receiver the way it was intended by the
sender, the sender and receiver need to have common experiences.
In other words, a receiver may not decode a message the way it was
intended to if her background and experience differ greatly from the
sender’s. A marketer has to be sensitive to the intended audience.
● Noise: Noise interferes with or disrupts effective communication.
This can include a poor television or radio signal.
● Feedback: Feedback is monitoring and evaluating how accurately
the intended message is being received. This can be done by
conducting market research. Essentially, this involves asking
consumers if they have seen the message, if they recall the
message, and what their attitude was towards the product.

Communication
Development Process
22 Sep 2024

Marketing communications process consist of integrated activities in

which the targeted audience is identified and a well-coordinated
promotional program is prepared to generate the desired response from the
audience. Most problems of preferences, image and immediate awareness
in the target customers is focused by the marketing communication. But
there are certain limitations associated with the concept of communication.
These limitations include high cost and short term duration that cannot
generate the desired results from the targeted customers.

In recent years Marketing Communication is used by most of marketers as

building customer relationship at the stages of pre-selling, selling,
utilization, and post utilization. Due to differences in customers, different
programs of communications are developed for specific segments.

Marketing Communication Development Process Steps

There are certain steps that should be involved in the effective marketing
communication process. The marketing and promotional activities should
focus on these steps in order to attract a huge portion of long run
customers. Following are the steps that make communication process
effective.

● Identification of the Target audience

● Determination of the communication objectives
● Designing of Message
● Message Content
● Message Structure & Format
● Choosing Media
● Collecting Feedback
1. Identification of the Target Audience

The first step in the effective marketing communication process is to

identify the target audience. These audiences may be potential customers
or other people that can influence the decisions of these customers. The
audience may include the individuals, groups, general public or special
public. The audience has a direct effect on the decisions of the
communication, like what to say? How to say? And when to say? Etc.

2. Determination of the Communication Objectives

In this step the marketing communicator should clear the objectives of the
communication process. In most of the situations, the purchase is required
by the marketing communicator, but purchase is made after a prominent
customer decision making process. The communicators should also
understand the standing position of the customer. Generally there are six
Stages of Customer Readiness through which a customer pass to make a
purchase which are as follow.

● Awareness
● Knowledge
● Liking
● Preference
● Conviction
● Purchase

The target group of the marketing communicator is not much familiar with
the new product or its silent features. So the marketing communicator
should create the awareness and knowledge of its new product and
features. But this is not the surety to the success; the new product should
also provide superior customer value too.

3. Designing of the Message

In this step the marketing communication, communicator focuses upon the

design of the message. Any message that can attract the attention, develop
the interest, arousal of desire and stimulate the action is the effectively
designed message. This procedure is best known as AIDA model that can
make any message effective and potential. Besides this the marketing
communicator also decides about the content and structure of the
message.

4. Message Content

In this step of the marketing communication process the content of the

message is decided. The theme or an appeal is suggested that can bring
the desired response from the audience or receiver. Following are the three
appeals that should be used in this regard.

● Rational Appeal: The self-interest of the audience is focused on the

rational appeal in which the benefits availed by the usage of the
products or services.
● Emotional Appeal: In this case positive or negative emotions are
stimulated to encourage the purchase of the product.
● Moral Appeal: In this situation the morality is included in the
message to influence the targeted customers.
5. Message Structure & Format

In this step the important issues of the message structure together with the
message format is analyzed. In marketing communication of a product, it
must be decided that the message must include the conclusion or may
keep to the audience to get a conclusion from them. Or the massage
presents either only the strengths of the product or both the strengths and
weaknesses. Moreover the format of the message is also focused on which
the size and shape use, eye-catching colors, and headlines etc. are
decided in the most effective manner.

6. Choosing Media
The channels of communication are decided in this step of a marketing
communication process, which may take the following two forms.

● Personal: In this channel of communication two or more persons

directly communicate with each other like face to face, through the
mail, on the telephone, or through a chat on the internet. Personal
Addressing and feedback is allowed in the personal communication.
● Non Personal: Non personal messages are spread through these
channels which also excludes the option of feedback. Such channels
include print media, display media, broadcast media, online media
etc.
7. Collecting Feedback

This is the last step of the marketing communication process in which the
feedback from the target customers. This can help the marker to alter the
promotion program or other marketing activities. For this purpose the
buying behavior of targeted customers is analyzed in the light of the new
product. Questions may also be asked to the customers to collect their
views about the positive and negative aspects of the new product.
Promotion: Promotional
Mix and Tools of
Promotional Mix
26 Jun 2024

“Promotion” refers to the various activities and techniques used to

communicate the benefits and value of a product or service to target
customers and persuade them to make a purchase. Promotion
encompasses a range of strategies including advertising, sales promotions,
public relations, direct marketing, and personal selling. Its primary goal is to
create awareness, generate interest, stimulate demand, and ultimately
influence consumer behavior. Effective promotion strategies not only
highlight the features and advantages of a product but also differentiate it
from competitors in the marketplace. By strategically combining different
promotional tools and channels, businesses can build brand awareness,
foster customer loyalty, and ultimately drive sales growth in competitive
markets.

Promotional Mix.:

The promotional mix refers to the combination of promotional tools and

strategies that a company uses to communicate and promote its products
or services to its target audience. These tools typically include advertising,
personal selling, sales promotion, direct marketing, and public relations.
Each element of the promotional mix plays a specific role in reaching and
influencing potential customers.

Tools of Promotional Mix.

The promotional mix consists of various tools or elements that businesses

use to communicate with and persuade their target audiences. These tools
are strategically combined to achieve specific marketing objectives and
enhance brand visibility.
 1. Advertising:

Advertising involves paid, non-personal communication through various

media channels to reach a large audience. It includes television, radio, print
(newspapers, magazines), outdoor (billboards, posters), online (digital ads,
social media), and more. Advertising aims to create awareness, inform
customers about products or services, and persuade them to make a
purchase.

2. Personal Selling:

Personal selling is a face-to-face or direct interaction between a sales

representative and potential customers. It allows for personalized
communication, relationship building, and addressing customer questions
or objections in real-time. Personal selling is crucial in industries where
complex or high-involvement purchases require consultative selling
approaches.

3. Sales Promotion:

Sales promotion includes short-term incentives designed to stimulate

immediate buying action or increase customer engagement. Common
tactics include discounts, coupons, rebates, contests, sweepstakes, free
samples, and loyalty programs. Sales promotions are effective in
encouraging trial purchases, boosting sales during specific periods, and
fostering customer loyalty.

4. Direct Marketing:

Direct marketing involves direct communication with targeted individuals or

businesses to promote products or services. It includes methods such as
direct mail, email marketing, telemarketing, SMS marketing, and targeted
online advertising. Direct marketing allows for personalized messaging,
precise targeting based on customer demographics or behavior, and
immediate response tracking.

5. Public Relations (PR):

Public relations focus on managing and enhancing the reputation and

image of a company or brand through unpaid or earned media coverage.
PR activities include media relations, press releases, events, sponsorships,
community relations, and crisis management. PR aims to build positive
relationships with stakeholders, generate favorable publicity, and maintain
a favorable public perception.

6. Digital Marketing:

In the modern promotional mix, digital marketing has become increasingly

important. It encompasses various online strategies such as search engine
optimization (SEO), pay-per-click (PPC) advertising, content marketing,
social media marketing, influencer marketing, and online reputation
management. Digital marketing leverages the internet and digital
technologies to reach and engage target audiences effectively.

Factors Influencing
choice of Promotional
Mix.
14 Sep 2024

The promotion mix refers to the blend of promotional tools and strategies a
business uses to communicate with its target audience and achieve its
marketing objectives. It typically includes advertising, sales promotions,
public relations, personal selling, direct marketing, and digital marketing. By
strategically combining these elements, companies can create a
comprehensive approach to reach potential customers, enhance brand
visibility, drive sales, and build strong customer relationships. The
effectiveness of the promotion mix depends on aligning it with the target
audience’s preferences and the overall marketing strategy.

Factors affecting Promotion mix. Decisions:

● Target Audience:

Understanding the demographics, preferences, and behaviors of the target

audience is crucial. Different promotional tools resonate differently with
various audience segments. For example, younger audiences might
respond better to social media marketing, while older demographics may
prefer traditional advertising or direct mail.

● Marketing Objectives:

The goals of a marketing campaign, such as increasing brand awareness,

generating leads, or driving immediate sales, dictate the choice of
promotional strategies. For instance, a new product launch might rely
heavily on advertising and public relations, while a clearance sale could
focus on sales promotions and direct marketing.

● Product Characteristics:

The nature of the product—whether it’s a high-involvement or

low-involvement item, or a complex versus a simple product—affects the
promotion mix. High-involvement products, like cars, might require personal
selling and detailed advertising, while low-involvement products, like
groceries, might rely more on sales promotions and broad advertising.

● Budget:

The available promotional budget significantly impacts the mix. Limited

budgets may lead to a focus on cost-effective methods like social media
marketing and direct mail, while larger budgets might allow for extensive
advertising campaigns and high-profile public relations activities.

● Competitive Environment:

The level and nature of competition influence promotional decisions. In

highly competitive markets, businesses might invest more in advertising
and sales promotions to stand out. Conversely, in less competitive
environments, a company might focus more on public relations and
personal selling.

● Channel Strategy:

The choice of distribution channels affects promotion mix decisions. If a

company sells through multiple channels, it might need to coordinate
promotional efforts across those channels to ensure consistency and
effectiveness.

● Stage in Product Life Cycle:

The stage of the product in its life cycle—introduction, growth, maturity, or
decline—determines the promotional focus. New products often require
heavy advertising and public relations, while mature products might benefit
from customer retention efforts and periodic sales promotions.

● External Environment:

Factors such as economic conditions, technological advancements, and

regulatory constraints can impact the promotion mix. Economic downturns
might lead to a focus on cost-effective promotions, while technological
advancements could open new avenues for digital marketing..

Advertising: Definition
and Importance
30 Nov 2019

Advertising is the best way to communicate to the customers. Advertising

helps informs the customers about the brands available in the market and
the variety of products useful to them. Advertising is for everybody
including kids, young and old. It is done using various media types, with
different techniques and methods most suited.

Objectives of Advertising

1. Trial
2. Continuity
3. Brand switch
4. Switching back

Let’s take a look on these various types of objectives.

1. Trial: The companies which are in their introduction stage generally

work for this objective. The trial objective is the one which involves
convincing the customers to buy the new product introduced in the
market. Here, the advertisers use flashy and attractive ads to make
customers take a look on the products and purchase for trials.
 2. Continuity: This objective is concerned about keeping the existing
customers to stick on to the product. The advertisers here generally
keep on bringing something new in the product and the
advertisement so that the existing customers keep buying their
products.
3. Brand switch: This objective is basically for those companies who
want to attract the customers of the competitors. Here, the
advertisers try to convince the customers to switch from the existing
brand they are using to their product.
4. Switching back: This objective is for the companies who want their
previous customers back, who have switched to their competitors.
The advertisers use different ways to attract the customers back like
discount sale, new advertise, some reworking done on packaging,
etc.

Basically, advertising is a very artistic way of communicating with the

customers. The main characteristics one should have to get on their
objectives are great communication skills and very good convincing power.

Importance of Advertising

Advertising plays a very important role in today’s age of competition.

Advertising is one thing which has become a necessity for everybody in
today’s day to day life, be it the producer, the traders, or the customer.
Advertising is an important part. Lets have a look on how and where is
advertising important:

1. Advertising is important for the customers

Just imagine television or a newspaper or a radio channel without an

advertisement! No, no one can any day imagine this. Advertising plays a
very important role in customer’s life. Customers are the people who buy
the product only after they are made aware of the products available in the
market. If the product is not advertised, no customer will come to know
what products are available and will not buy the product even if the product
was for their benefit. One more thing is that advertising helps people find
the best products for themselves, their kids, and their family. When they
come to know about the range of products, they are able to compare the
products and buy so that they get what they desire after spending their
valuable money. Thus, advertising is important for the customers.
 2. Advertising is important for the seller and companies producing
the products

Yes, advertising plays very important role for the producers and the sellers
of the products, because

● Advertising helps increasing sales

● Advertising helps producers or the companies to know their
competitors and plan accordingly to meet up the level of competition.
● If any company wants to introduce or launch a new product in the
market, advertising will make a ground for the product. Advertising
helps making people aware of the new product so that the
consumers come and try the product.
● Advertising helps creating goodwill for the company and gains
customer loyalty after reaching a mature age.
● The demand for the product keeps on coming with the help of
advertising and demand and supply become a never ending process.
3. Advertising is important for the society

Advertising helps educating people. There are some social issues also
which advertising deals with like child labor, liquor consumption, girl child
killing, smoking, family planning education, etc. thus, advertising plays a
very important role in society.

Classification of
Advertising
20 Jul 2024

Advertising can be classified in various ways based on different criteria

such as media type, target audience, purpose, or timing.
1. Based on Media Type:

a. Print Advertising:

● Newspapers: Ads placed in newspapers to reach a broad or local

audience.
● Magazines: Ads in magazines targeting specific demographics or
interests.
● Brochures and Leaflets: Printed materials distributed directly to
consumers.
● Posters and Billboards: Large-scale ads displayed in public
spaces.

b. Broadcast Advertising:

● Television: Ads aired on television channels to reach a mass

audience.
● Radio: Ads broadcasted on radio stations, often targeting specific
demographics or local markets.

c. Digital Advertising:

● Online Display Ads: Ads displayed on websites, including banner

ads, pop-up ads, and native ads.
● Social Media Ads: Ads on platforms like Facebook, Instagram,
Twitter, etc., targeting users based on demographics, interests, or
behaviors.
● Search Engine Marketing (SEM): Paid ads displayed in search
engine results pages (SERPs), targeting users searching for specific
keywords.
● Video Ads: Ads displayed within online videos or streaming services.
● Email Marketing: Promotional messages sent directly to consumers
via email.
d. Outdoor Advertising:

● Billboards: Large-format ads in high-traffic areas.

● Transit Advertising: Ads on public transport vehicles or stations.
● Street Furniture Ads: Ads on bus shelters, benches, or kiosks.

2. Based on Target Audience:

a. Consumer Advertising:

● Product Advertising: Promotes specific products to consumers.

● Service Advertising: Promotes services offered by businesses.

b. Business Advertising (B2B):

● Trade Advertising: Targets wholesalers, distributors, or retailers.

● Professional Advertising: Targets professionals such as doctors,
lawyers, engineers, etc.

3. Based on Purpose:

a. Informative Advertising:

● Focuses on providing information about products, services, or issues.

● Aims to educate consumers and build awareness.

b. Persuasive Advertising:

● Aims to persuade consumers to purchase or choose a particular

product or service.
● Often uses emotional appeal or testimonials to sway consumer
decisions.

c. Reminder Advertising:

● Reinforces brand awareness and reminds consumers about products

or services.
● Used to maintain brand presence in consumers’ minds.

d. Comparative Advertising:

● Compares a company’s product or service directly with competitors.

● Highlights advantages or differences to sway consumer choices.
e. Institutional Advertising:

● Promotes a company’s image, reputation, or ideology rather than

specific products.
● Aims to build goodwill or support for the organization.

4. Based on Timing:

a. Pre-launch Advertising:

Generates anticipation and awareness before a new product or service is

introduced.

b. Launch Advertising:

Introduces a new product or service to the market.

c. Post-launch Advertising:

Sustains interest and sales after the initial launch phase.

d. Seasonal Advertising:

Capitalizes on seasonal events or holidays to promote products or

services.

5. Based on Geographical Scope:

a. Local Advertising:

Targets consumers within a specific geographic area, such as a city or

region.

b. National Advertising:

Targets consumers across an entire country or nation.

c. International Advertising:

Targets consumers in multiple countries or across different regions globally.

6. Based on Placement:

a. Above-the-Line (ATL) Advertising:

Uses mass media to reach a wide audience, such as TV, radio, and print.

b. Below-the-Line (BTL) Advertising:

Uses targeted, direct methods to reach specific audiences, such as direct

mail, sponsorships, promotions, etc.

7. Based on Frequency:

a. Continuous Advertising:

Maintains a steady presence throughout the year to sustain brand

awareness.

b. Pulsing Advertising:

Alternates between periods of heavy advertising and lighter advertising

based on sales cycles or promotional periods.

8. Based on Creativity:

a. Traditional Advertising:

Uses conventional methods and formats for advertising campaigns.

b. Creative Advertising:

Focuses on innovative or unconventional approaches to grab attention and

engage audiences.

Personal Selling:
Purpose, Types,
Limitations
9 Sep 2024

Personal selling happens when companies and business firms send out
their salesmen to use the sale force and sell the products and services by
meeting the consumer face – to – face. Here, the producers promote their
products, the attitude of the product, appearance and specialist product
knowledge with the help of their agents. They aim to inform and encourage
the customer to buy, or at least trial the product.

For example, salesmen go to different societies to sell the products.

Another example is found in department stores on the perfume and
cosmetic counters. A customer can get advice on how to apply the product
and can try different products. Products with relatively high prices, or with
complex features, are often sold using personal selling. Great examples
include cars, office equipment (e.g. photocopiers) and many products that
are sold by businesses to other industrial customers.

Types of Personal Selling

Retail Selling: Retail selling the product the consumers through retail store
or door to door visit .in door sales persons work at the store and they deal
with the customers visiting the sorters and outdoor sales personal visit the
potential costomers in their homes or offices and persuade them to buy the
product.

Trade Selling: It involves selling the product to the retailers and

wholesellers trade saales personal made regular contact to the wholeseller
and retailers and receved bulk order from them, trade sales personal work
either for wholeseller or manufactures.

Missionary Selling: In missionary selling missionary sales personal create

demand for the product they do not directly sales the product .they visit
retial staores and incourage them to place orders from the deailers and
wholesellers they work for manufactures.

Industrial Selling: It involves selling the capital item like equipment

,machineres to the industrial users ,industrial sales personal are useually
very well educated experience and train people they provides technical
information and assitances.

Advantages of Personal Selling

● It is a two-way communication. So the selling agent can get instant

feedback from the prospective buyer. If it is not according to plan he
can even adjust his approach accordingly.
 ● Since it is an interactive form of selling, it helps build trust with the
customer. When you are selling high-value products like cars, it is
important that the customer trusts not only the product but the seller
also. This is possible in personal selling.
● It also is a more persuasive form of marketing. Since the customer is
face to face with the salesperson it is not easy to dismiss them. The
customer at least makes an effort to listen.
● Finally, direct selling helps reach the audience that we cannot reach
in any other form. There are sometimes customers that cannot be
reached by any other method.

Disadvantages of Personal Selling

● It is a relatively expensive method of selling. High capital costs are

required.
● Also, it is an extremely labour intensive method. A large sales force is
required to carry out personal selling successfully.
● The training of the salesperson is also a very time consuming and
costly.
● And the method can only reach a limited number of people. Unlike
TV or Radio ads it does not cover s huge demographic.

Merits:

The strength of personal selling is measured in terms of the merits to its

credit as a distinct form of promotion. These are:

1. Flexibility and adaptability:

Personal selling by its very nature is capable of providing more flexibility,

being adaptable. A salesman can adjust’ himself to the varying needs,
moods, motives, impulses, attitudes and other behavioural variables of the
prospects with a view to communicate effectively and effect the sales for
the unit.

2. Minimum waste:

The efforts put in by the salesman are highly focused on a single customer
or a small group of customers. The message is likely to reach them without
distortion and diffusion. This is perhaps the greatest merit in contrast to
advertising where the ad message is released en-masse resulting in
message diffusion and distortion causing more wastage or promotional
efforts.

3. Acts as a feed-back:

The salesman is, in effect, a researcher. Being in direct contact with the
consumers, he has the advantage of collecting and transmitting the
relevant market information affecting his company.

Such timely, authentic and verifiable data is the basis of vital decisions,
strategies, and tactical adjustments. Thus, he feels the pulse of the market
that is ever changing.

4. Creates lasting impression:

The personal selling process is so direct and penetrating that lasting

business relation can be developed between the selling house and the
clientele. In case of advertising, it acts like a flash of a thunder-bolt from the
blue. The light though very powerful, lasts only for a few seconds. The light
of salesmanship is like an electric current that lasts longer.

5. Pulls through logical sequence:

The personal selling follows a logical selling process which matches to the
reasoning of one and all. A salesman pulls through the customer in the
step-by-step selling process starting with attention and ending with
satisfaction with interest, desire, conviction and action juxtaposed between.

Further, he detects loss of consumer attention and interest and brings the
consumer back to the track by repetitions and reinforcements.

Limitations:

However, all is not well with process of personal selling. There are certain
limitations which one should take into account before giving the conclusion
as to its real worth.

1. It is expensive:

Personal selling as a method of promotion is quite expensive. Getting

salesman is one thing and retaining him for long is another. Further, there
are no definite correlations between his stay and cost of retaining and the
contributions of his, in return, to the firm, for such costs.

2. Difficulty of getting right kind of salesmen:

Though, theoretically certain guidelines are prescribed for getting right kind
of salesmen from the potential candidates, it is really very difficult to get
suitable salesmen from company’s point of view. The potential salesmen so
selected, trained and placed, do not guarantee loyal service to the
company.

3. Stake in consumer loyalty:

Personal selling is such a process-direct and close between the customer

and salesman that the consumer loyalty depends on the presence of such
a salesman. The firm’s fortunes are tied to the loyalty of consumers which,
in turn, depends on the very presence of salesman. The moment the
salesman moves out, the clientele drops down to the detriment of the firm.

4. More administrative problems:

Personal selling involves more of administrative problems than impersonal

selling. Since, the firm is to deal with manpower a driving force behind
sales the company has to meet the challenges in the areas of
manpower-planning, organizing, directing, coordinating, motivating and
controlling. The solutions to these problems, even if found out, are not
everlasting because, human content in management is

Personal Selling
unique.

Process and Approaches

9 Sep 2024

Personal selling can be termed as the oral presentation given by the

salesperson to one or more than one consumers face to face to sell the
product or service. Personal selling is a highly peculiar form of promotion. It
is mostly two-way communication, which not only involves a particular
individual but also social behavior.
The intention is to deliver the right product to the right customers.
Depending upon the complexity of product, personal selling plays an
important role. Industries manufacturing technical products like laptops,
computers, digital phone, gadgets, etc., likely depend on personal selling
as compared to the other manufactures.

The reason behind this is to explain the features of the product, tackle the
customer queries and provide the best customer service. The competition
in the market has increased today and therefore the importance of the
salesperson in the organization.

Salespersons are also called salesman or salesgirl or sales

representative and their payment is made as the commission to push the
product in the market by motivating the customer through oral
conversation.

The consumer wants all kinds of goods and services in the market but lack
of interest keeps them away from making decisions or purchasing products.
This is where the salesman needs to act as a catalyst and explain the
product or service to the customer. He/she should motivate the customer
by giving a presentation and he may sometimes act as a consultant. This
helps the consumer to make a decision.

In case of technical products, the salesperson plays a more vital role as

compared to the promotions. It becomes difficult for the customers to make
decision while purchasing high value products with complex nature. The
salesperson helps the customers by making personal contact with them
and making them understand the quality and utility of the product.

Objectives of Personal Selling

Personal selling contributes in achieving the long-term objectives for the
organization.

The following are some of the objectives of personal selling

● To do the complete selling job when there are no other components

in promotional mix
● To provide service to the existing customers and try to maintain
contacts with the present customers
 ● Identify and find new prospective customers
● Promote the products to increase sales
● Provide the information to the customers regarding the change in
product line
● Provide assistance to the customers to help in decision-making
● Provide technical advice to customers for complex products
● Gather the data in relation to market and provide it to company’s
management

The reason behind setting personal selling objectives is to make decision

on sales policies and personal selling strategies, which helps in promoting
the product. The objectives are set for long-term, as it becomes the
important element for qualitative personal selling objectives.

The objectives can also be quantitative if they are short-term and it could
be adjusted from one promotional period to another. The quantitative
personal selling objective is related to sales volume objective. Hence, the
sales volume objective should also be explained.

The following are a few sales objectives

● Capture and maintain a specific market share

● Increase sales volumes that help the organization to gain maximum
profit
● Reduce or keep the expenses provided for personal selling within
limits
● Obtain the percentage of customers as per the set targets

Relevant Situation for Personal Selling

In some situations, personal selling becomes more relevant. The following
are some relevant situations:

Product Situation

Product selling is more effective for the following types of products.

● Product with high value like machinery, computers etc.

● Product in its first stage of life cycle, when it needs more demand.
● Product to match consumer needs like insurance policy
● Products that need presentation, for example, industrial products
 ● When the products need after sales service
● Product with less brand loyalty

Market Situation

Personal selling can be utilized optimally depending upon the market

situation.

● An organization selling products to small number of buyers

● Company selling in local market
● Required middle men or agents not available
● No direct channel available for selling products

Company Situation

Personal selling is comparatively more adequate to the companies when

● A company cannot invest huge amount of money in advertisement on

regular basis.
● A company is unable to find and make use of relevant
non-commercial media in promoting the product.

Consumer Behavior Situation

In case of some consumer behaviors, personal selling can be effective

when

● The product purchased by the consumer is expensive but it’s not

regular.
● The consumers need answers instantly without delay.
● The customers need follow up in competing pressure.

These are the four situations where personal selling is important. This will
help the salesperson to spot the customers and provide product knowledge
through face to face presentation. Once the consumer understands the
nature of the product, it helps him/her to decide whether to purchase the
product.

Diversity of Selling Situation

In our day to day life, we come across different types of selling situations.
This depends on the individual selling styles because of the marketing
factors. The activities of the salesperson differ as per the situation.

Example − The job of a salesperson selling soft drinks is different as

compared to that of a salesperson selling computers. In case of soft drinks,
the salesperson is not required to explain the significance or the nature of
product but in case of computers, the salesperson has to clarify all the
technical requirements.

The categorization of the salesperson is done on the basis of selling styles,

creative skill required in the job, complexity of the product etc.

Let us now discuss different kinds of selling positions:

Delivery Salesperson

As the name suggests, the job of the delivery salesperson is to deliver the
product; the selling responsibility is secondary. Example − Milk, curd,
bread, soft drinks etc

Inside Order Taker

The person standing behind the counter is known as inside order taker. He
does not help the customers much with suggestions. The main purpose is
to provide the product requested by the customer. Example −General
stores.

Missionary Sales People

The salesperson does not have the permission to promote an order. Their
primary job is to develop goodwill and educate the customers about the
products. Example − Medical Representatives.

Consultative Salesperson

This type represents those products or services sold to consumer, which

are highly priced and need huge investment to purchase. Due to high
capital investment by the customer, the salesperson cannot put much
pressure to sell.
The salesperson should have a thorough knowledge regarding the product
and the patience to discuss and advise the features and advantage of the
product.

During the sales process, the salesperson has to be creative. He should

maintain the interest with customer without exerting much pressure on the
client. Example − Huge Machines, computer systems, etc.

Technical Salesperson

The most important character of the salesperson should be the knowledge

relating to the product. The salesperson should have a detailed knowledge
regarding the product features, benefits, disadvantages, etc.

Most of the people do not have the required technical knowledge and easily
agree to the points of salesperson but there are few customers having
knowledge that may influence the decision of purchasing the product. The
salesperson should satisfy these types of customers by explaining the
product features, installation etc. The salesperson should be well trained to
tackle the questions of customers and provide relevant knowledge.

Commercial Salesperson

In this category, the salesperson has to sell the product to other business,
industry or government organization etc. It’s generally business to business
where the salesperson closes the sale in the first or the second call. The
sales process is short as compared to business to customer sales.

The salesperson has to be aggressive and highly motivated for the follow
up and maintenance of accounts. Example − Wholesale goods,
construction products, office equipment etc

Direct Sales People

Direct sale of product involves selling the products and services to the final
consumers. The sales process is short and closed in a short period of time.
There are many products available in market for direct sales; hence the
salesperson is trained to close the deal in the first visit because the
consumer will either purchase the product or switch to its competitor.
Example − Insurance, door to door sales, magazines, etc.
Steps In Personal Selling

The selling process consists of several steps; there are few basic steps,
which need to be followed for all types of products. The selling process can
be for short time or long time, depending upon the nature of the product. A
product, which needs huge investment, may take longer time to complete
the selling process whereas in case of daily products where the customer is
aware of the nature of the product, the selling process ends in shorter time.

Example − Door to door sales, where the salesperson explains all the
steps and ends the process in 10 to 15 minutes. However, for heavy
machinery, it may take time to present the technical nature and explain the
product; it takes more than one visit to complete the selling process.

Prospecting
The initial step of selling process starts with prospecting or searching for
potential customers. Apart from retail sales, it’s very rare when customers
reach out to the salesperson. It’s the salesperson who reaches out to
customers in order to sell the product.

The following are the two major activities under prospecting:

● Find the prospects or the potential customers

● Educate them in order to figure out if they are valid customers

Find the Prospects or the Potential Customers

Finding the prospect is not an easy step for a sales person because
consumers would not even like to listen to the presentation regarding the
product they do not need. The rate of saying “No” is very high. In few
consumer goods, the identification of customers comes from sources like
friends, relatives, colleagues etc. The following are some of the best
sources.

● Existing Customers: One of the good sources of prospects is an

existing customer. For a salesperson, it is very easy to sell the
products to an existing customer instead of selling to the new
customers.
 ● Never-ending Chain: This is a competing strategy to find out
prospects. The salesperson reaches many new customers with the
help of existing customers. The salesperson selling the product to
existing customers asks to provide referral to friends or relatives and
the salesperson reaches the new customers. This chain goes on and
on.
● Cold Call: In this technique, the salesperson has to visit door to door
to sell the products. The sales process starts from introduction but in
this case, the rejection rate is high.
● Directories: The salesperson tries to find out prospect customer
contact with the help of a directory. The salesperson can also collect
the information through membership directories of trade associations,
social organization etc.
● Mailing: The companies promote their product through mails by
sending advertisements. The advantage is that it’s cheap and the
company targets many customers by sending mass mailers.
● Exhibition: The salesperson could target the prospective customers
through tradeshows and exhibitions. It’s one of the simplest ways and
the salesperson could also practically show the use of the product
and the features. Announcement is advance, before the exhibitions
starts, is very helpful to attract more customers.

Train/Educate the Prospects

After the salesperson has identified the potential customers, he should find
out if they are valid prospects. After finding the valid prospects, the
salesperson has to give the presentation.

There are several approaches for qualifying customers and the prominent
approach is MAN, i.e., Money, Authority and Need.

● Money− The salesperson should know the financial status of the

customers because money matters a lot, and, without it, the prospect
cannot purchase the product. The consumer or the prospect should
be able to pay money in return of the product.
● Authority− The prospect that is purchasing the product should have
the authority to make decision. This is important while dealing with
government agencies, corporate etc.
 ● Need− This is one of the most important points because if the
prospect has money and also the authority but there is no need of the
product, he or she will not purchase the product.

The salesperson has to find out about these aspects before proceeding to
the selling process.

Preparation for the Sale of Product

Once the prospect has been identified and qualified as discussed in first
step, the salesperson has to prepare for the sales of product or service.
The following are the two stages involved in preparation:

● Pre-approach
● Call Planning

Pre-approach

This step involves collecting all the information important to learn about the
prospects and their needs. The following are the four steps of
pre-approach:

● Prospect need and ability should be disclosed.

● All the required information, which would help the salesperson to
prepare the presentation.
● Relevant information, which helps salesperson not create any errors
during presentation.
● Confidence to tackle the questions of the prospect.

Call Planning

Call Planning includes a particular planning sequence. The salesperson

calls the customer and explains the objective of the call and explains the
product to makes appointments.

The first objective of the salesperson is to get an order from the customer.
Some objectives may also be required in the mid-of-the-call progress,
depending on the call. Following are a few objectives for call planning −

● Collect more information from the customer .

● Find out the need of the customer and link with the features of
product.
 ● Take permission from customer before presentation of product.
● Suggest a new distributor.

The salesperson has to develop a strategy and plan accordingly to achieve

the objective or goal. The salesperson should be very careful while
checking the background of the customers and obtaining details. This helps
to frame a strategy and develop a plan. The calls made by salesperson are
costly, so they have to take prior appointment.

Presentation
In this step, the salesperson has to give the presentation regarding the
product to the customer. She/he should explain the features of the product
and how it will fulfill the needs. The presentation should be clear and
understandable by the customer. It should also be interesting to keep the
customer involved in the conversation.

A presentation can be classified into the following categories −

● Fully automated
● Semi-automated
● Memorized
● Organized
● Unstructured

Fully Automated

In this approach, the salesperson gives the presentation with the help of
slides in a structured manner. He also explains and clears the doubts of the
customers. Example: Life Insurance.

Semi-Automated

The salesperson reads out the company brochures and adds comments as
per requirement or queries from the client. Example: Pharmaceutical
products.

Memorized

The company presents its message, which is short and crisp, and which
can be easily memorized by the customer.
Organized

One of the most attractive, effective and often-used approaches is

organized presentation. The salesperson can make changes in the
presentation as required but based on the company’s pre-defined outline.
In this approach, the sale person covers the four steps, i.e., Attention,
Interest, Desire and Action.

Unstructured

The salesperson and the customer together try to resolve the problems.
Hence this approach is also known as problem solving. This type of
presentation is not well focused many a times; some points are missed and
time is wasted. Also the salesperson has to face many queries from the
customers and if the salesperson is new in the field, he/she will not be able
to answer the queries in an effective manner.

Thus, we can conclude that the presentation to the established customers

should be done by an effective salesperson.

Handling Objections

The salesperson has to struggle to sell the product to the customers.

During the sales process, the prospects raise objections, which can be
stated or hidden. Prospects may state the reason for objections and give a
chance to salesperson to answer. This is an absolute situation because the
prospect is informed regarding the objections.

Unfortunately, in many cases, the prospects do not provide the reason for
objection of the product. They hide their real reason for not buying the
product. If the salesperson is unable to know the real reason, he/she will
not be able to resolve the problem.

To resolve this, there are two techniques to find out the objections.

● To allow the prospect to talk to find out the hidden objection.

● The observation gained by experience and mixing with the
knowledge of the prospects.
Many times, the objection is due to high price of the product. That objection
can be answered when the salesperson has the knowledge of the
competitor’s products as well.

Also, in many cases, the prospects do not understand the technical aspects
and are misinformed. The salesperson should provide additional
information in this case.

Now we can conclude that the objection can be resolved by providing an

alternative product to the prospects.

Closing the Sale

After answering the objections made by prospects, the salesperson asks
for the prospect to order the product. If the prospect does not agree to buy
the product, the entire effort gets waste. The following are some effective
techniques to close the sale −

Gift Close

In this technique, the customers get an incentive for immediate buying

action. The salesperson informs regarding the benefits of the product to the
prospects.

Example − A company provides an option to the prospect that if the bill

exceeds Rs.3000, he can buy a bed sheet worth 2000 for just Rs.200.

Here, if the customer has made a purchase of Rs.2500, he will check out to
buy something else to reach 3000. This helps the company to sell two extra
products — one for Rs.500 or more to reach 3000 and another, bed sheet
for Rs.200.

Direct Close

This is one of the simplest techniques to close the sales. This happens
when the buyer has positive approach to buy a product. The salesperson
summarizes the important points that were made prior to sale.

Example − A prospect needs beauty cream and steps into a shop. The
salesperson offers the products; if required, shows the demo. Once the
prospect is satisfied, he/she will buy it.
If the salesperson is experienced, he/she will try to close it as early as
possible because he/she would understand if the prospect is inclined to buy
the product. A good salesperson makes sure that he has completed all the
steps during sales process.

Thus, closing is an important step in sales process. The other steps are
meaningless without closing.

Follow-up
After making the sale, the salesperson has to follow up with the prospects.
After sales activities are important parts of the selling process. This helps in
reducing any doubt by the customer regarding the product or service.
There is also a chance that the buyer with buy again in future.

There are specific policies by a company for after sales activities. Even
though the company provides good products, there will be few complaints
from customers. The complaints should be taken seriously and the
company should try to resolve. This helps the company to improve in terms
of product or service.

An experienced salesperson tries to provide the best service to its

customers. As a part of handling complaints, they also keep the prospect
informed regarding the latest products or services and also provide other
types of assistance. The salesperson should build good rapport with the
customer. This helps to get more customers because the existing customer
will refer to his friends and relatives.

The salesperson should thank the customer for the business and offer
small gifts.

Sales Promotion Meaning,

Nature, Importance,
Advantages, Challenges
12 Apr 2024

Sales Promotion refers to a variety of short-term marketing strategies

designed to stimulate immediate demand for a product or service. These
tactics are intended to enhance the attractiveness of a product, increase its
value temporarily, and encourage prompt consumer action. Sales
promotions can include discounts, coupons, flash sales, free samples,
contests, buy-one-get-one-free offers, and loyalty programs. The main goal
is to create urgency and drive immediate increases in sales by offering
additional value to consumers or distributors. Often used to clear out
inventory, launch new products, or boost sales during slow periods, sales
promotions are typically time-bound and targeted. By engaging customers
and incentivizing purchases, sales promotions are a vital tool in a
marketer’s arsenal, complementing other components of the marketing mix
like advertising, public relations, and personal selling.

Nature of Sales Promotion:

● Short-Term Incentives:

Sales promotions are typically designed to be short-term, aiming to boost

sales quickly. This contrasts with long-term strategies like branding or
product development.

● Immediate Impact:

The objective of sales promotion is to have an immediate impact on sales.

Promotions drive quick responses from consumers through limited-time
offers that create a sense of urgency.

● Tactical Nature:

Sales promotions are tactical rather than strategic. They are used to
address immediate sales challenges, such as moving excess inventory,
rather than long-term brand building.

● Target Specific:

Sales promotions can be targeted at different audiences including end

consumers, retailers, and other members of the distribution channel. Each
target may require a different type of promotion.
 ● Variety of Techniques:

Sales promotions include a diverse range of techniques such as coupons,

discounts, contests, free samples, and product bundling. Each technique
can be tailored to meet specific marketing goals and target audiences.

● Enhances Other Marketing Efforts:

Sales promotions are often used in conjunction with other marketing

activities, such as advertising and personal selling, to enhance their
effectiveness. They can be particularly effective when integrated into a
comprehensive marketing campaign.

● Inducement:

Unlike advertising, which seeks to persuade or inform, sales promotion

involves a direct inducement that offers extra value or incentives to make a
purchase.

● Quantifiable Results:

The results of sales promotion activities are often easier to measure than
those of other marketing tools. Sales figures, redemption rates for coupons
and vouchers, and participation levels in contests provide clear, quantifiable
data.

Importance of Sales Promotion:

● Boosts Sales Volume:

Sales promotions are designed to create a sense of urgency, which

encourages consumers to purchase immediately. This can significantly
boost sales volume during the promotion period.

● Clears Inventory:

Promotions such as discounts or special sales can help businesses clear

out old or excess stock, making way for new products and reducing holding
costs.

● Increases Customer Traffic:

Attractive promotions draw more customers to both physical stores and
online platforms, which can increase overall sales and enhance exposure
to the wider product range.

● Enhances Product Visibility:

Sales promotions, especially those in-store like end-cap displays or special

signage, increase product visibility and can attract new customers who
might not have noticed the product under normal circumstances.

● Encourages Product Trials:

Free samples, demonstrations, and trial offers lower the risk for customers
in trying a new product. Once customers experience the product, they
might be converted into regular users.

● Strengthens Customer Relationships:

Rewards for loyalty, such as points programs or exclusive offers for

returning customers, help in building and maintaining long-term
relationships with customers.

● Facilitates Competitive Advantage:

By offering more attractive promotions compared to competitors, a

company can gain a significant competitive edge in the market. This is
particularly useful in highly competitive markets.

● Supports Other Marketing Initiatives:

Sales promotions can be effectively synchronized with advertising, public

relations, and personal selling efforts to enhance the overall marketing
strategy. This integration can amplify the effectiveness of all promotional
tools.

Advantages of Sales Promotion:

● Immediate Boost in Sales:

Sales promotions often lead to a significant and immediate increase in

sales by offering limited-time incentives that encourage consumers to act
quickly. This is especially useful during slow periods or when launching
new products.
 ● Inventory Management:

Through promotions like clearance sales or special discounts, companies

can effectively manage their inventory levels by accelerating the movement
of older or excess stock, helping to optimize storage and reduce overhead
costs.

● Market Penetration and Expansion:

Sales promotions can help a product penetrate a crowded market more

effectively or break into new geographic territories by temporarily improving
the product’s value proposition compared to competitors.

● Consumer Engagement and Brand Loyalty:

Engaging promotions like contests, loyalty rewards, or interactive

campaigns can enhance consumer interaction with the brand. This not only
helps in building customer loyalty but also increases customer lifetime
value.

● Enables Market Research:

Promotions that involve customer interaction can provide valuable insights

into consumer preferences and behaviors. Companies can use this data to
refine their product offerings and target their marketing strategies more
effectively.

● Enhances Visibility and Awareness:

Well-crafted promotions help increase brand awareness and product

visibility. Tools such as point-of-purchase displays, free samples, and
promotional events draw attention and can introduce new customers to the
brand.

● Cost-Effective:

Compared to other marketing strategies, sales promotions can be more

budget-friendly and yield a higher immediate return on investment. This
makes them particularly attractive for small businesses or those with limited
advertising budgets.

Challenges/Limitation’s of Sales Promotion:

 ● Short-term Orientation:

Sales promotions typically generate immediate, short-term sales rather

than building long-term customer loyalty. This can lead businesses to rely
excessively on promotions, potentially harming their brand image and
profitability in the long run.

● Customer Expectation:

Regular promotions can lead customers to expect discounts and avoid

purchasing at regular prices, which can diminish brand value and reduce
profitability during non-promotional periods.

● Profit Margin Reduction:

Frequent use of discounts and promotions can erode profit margins. When
promotions are not carefully planned and executed, the increased sales
volume may not compensate for the lower per-unit profit.

● Brand Image Risk:

If not aligned with the brand’s overall positioning, sales promotions could
negatively affect how consumers perceive the brand. High-end brands, for
example, risk diminishing their perceived value by offering frequent
discounts.

● Overdependence:

Businesses might become overly dependent on promotions, neglecting

other important aspects of marketing such as product development and
customer service. This can lead to a weak overall strategy that fails when
promotions are scaled back.

● Customer Quality:

Sales promotions often attract deal-seeking consumers who may not turn
into loyal, repeat customers. This can lead to a lower lifetime value from
customers acquired through promotions compared to those acquired
through other marketing strategies.

● Timing and Coordination Challenges:

Successfully executing sales promotions requires precise timing and
coordination with other marketing activities. Poorly timed or poorly
coordinated promotions can lead to inventory issues, overwhelmed staff,
and confused customers.

Personal Selling:
Purpose, Types,
Limitations
9 Sep 2024

Personal selling happens when companies and business firms send out
their salesmen to use the sale force and sell the products and services by
meeting the consumer face – to – face. Here, the producers promote their
products, the attitude of the product, appearance and specialist product
knowledge with the help of their agents. They aim to inform and encourage
the customer to buy, or at least trial the product.

For example, salesmen go to different societies to sell the products.

Another example is found in department stores on the perfume and
cosmetic counters. A customer can get advice on how to apply the product
and can try different products. Products with relatively high prices, or with
complex features, are often sold using personal selling. Great examples
include cars, office equipment (e.g. photocopiers) and many products that
are sold by businesses to other industrial customers.

Types of Personal Selling

Retail Selling: Retail selling the product the consumers through retail store
or door to door visit .in door sales persons work at the store and they deal
with the customers visiting the sorters and outdoor sales personal visit the
potential costomers in their homes or offices and persuade them to buy the
product.
Trade Selling: It involves selling the product to the retailers and
wholesellers trade saales personal made regular contact to the wholeseller
and retailers and receved bulk order from them, trade sales personal work
either for wholeseller or manufactures.

Missionary Selling: In missionary selling missionary sales personal create

demand for the product they do not directly sales the product .they visit
retial staores and incourage them to place orders from the deailers and
wholesellers they work for manufactures.

Industrial Selling: It involves selling the capital item like equipment

,machineres to the industrial users ,industrial sales personal are useually
very well educated experience and train people they provides technical
information and assitances.

Advantages of Personal Selling

● It is a two-way communication. So the selling agent can get instant

feedback from the prospective buyer. If it is not according to plan he
can even adjust his approach accordingly.
● Since it is an interactive form of selling, it helps build trust with the
customer. When you are selling high-value products like cars, it is
important that the customer trusts not only the product but the seller
also. This is possible in personal selling.
● It also is a more persuasive form of marketing. Since the customer is
face to face with the salesperson it is not easy to dismiss them. The
customer at least makes an effort to listen.
● Finally, direct selling helps reach the audience that we cannot reach
in any other form. There are sometimes customers that cannot be
reached by any other method.

Disadvantages of Personal Selling

● It is a relatively expensive method of selling. High capital costs are

required.
● Also, it is an extremely labour intensive method. A large sales force is
required to carry out personal selling successfully.
● The training of the salesperson is also a very time consuming and
costly.
 ● And the method can only reach a limited number of people. Unlike
TV or Radio ads it does not cover s huge demographic.

Merits:

The strength of personal selling is measured in terms of the merits to its

credit as a distinct form of promotion. These are:

1. Flexibility and adaptability:

Personal selling by its very nature is capable of providing more flexibility,

being adaptable. A salesman can adjust’ himself to the varying needs,
moods, motives, impulses, attitudes and other behavioural variables of the
prospects with a view to communicate effectively and effect the sales for
the unit.

2. Minimum waste:

The efforts put in by the salesman are highly focused on a single customer
or a small group of customers. The message is likely to reach them without
distortion and diffusion. This is perhaps the greatest merit in contrast to
advertising where the ad message is released en-masse resulting in
message diffusion and distortion causing more wastage or promotional
efforts.

3. Acts as a feed-back:

The salesman is, in effect, a researcher. Being in direct contact with the
consumers, he has the advantage of collecting and transmitting the
relevant market information affecting his company.

Such timely, authentic and verifiable data is the basis of vital decisions,
strategies, and tactical adjustments. Thus, he feels the pulse of the market
that is ever changing.

4. Creates lasting impression:

The personal selling process is so direct and penetrating that lasting

business relation can be developed between the selling house and the
clientele. In case of advertising, it acts like a flash of a thunder-bolt from the
blue. The light though very powerful, lasts only for a few seconds. The light
of salesmanship is like an electric current that lasts longer.

5. Pulls through logical sequence:

The personal selling follows a logical selling process which matches to the
reasoning of one and all. A salesman pulls through the customer in the
step-by-step selling process starting with attention and ending with
satisfaction with interest, desire, conviction and action juxtaposed between.

Further, he detects loss of consumer attention and interest and brings the
consumer back to the track by repetitions and reinforcements.

Limitations:

However, all is not well with process of personal selling. There are certain
limitations which one should take into account before giving the conclusion
as to its real worth.

1. It is expensive:

Personal selling as a method of promotion is quite expensive. Getting

salesman is one thing and retaining him for long is another. Further, there
are no definite correlations between his stay and cost of retaining and the
contributions of his, in return, to the firm, for such costs.

2. Difficulty of getting right kind of salesmen:

Though, theoretically certain guidelines are prescribed for getting right kind
of salesmen from the potential candidates, it is really very difficult to get
suitable salesmen from company’s point of view. The potential salesmen so
selected, trained and placed, do not guarantee loyal service to the
company.

3. Stake in consumer loyalty:

Personal selling is such a process-direct and close between the customer

and salesman that the consumer loyalty depends on the presence of such
a salesman. The firm’s fortunes are tied to the loyalty of consumers which,
in turn, depends on the very presence of salesman. The moment the
salesman moves out, the clientele drops down to the detriment of the firm.
4. More administrative problems:

Personal selling involves more of administrative problems than impersonal

selling. Since, the firm is to deal with manpower a driving force behind
sales the company has to meet the challenges in the areas of
manpower-planning, organizing, directing, coordinating, motivating and
controlling. The solutions to these problems, even if found out, are not
everlasting because, human content in management is unique.

Sales Promotion:
Different Types of Sales
Promotion
9 Sep 2024

Sales promotion is a type of Pull marketing technique. If you have a

product which is new in the market or which is not receiving a lot of
attention, then you can promote this product to customers via sales
promotions. You can use various techniques like giving discounts on the
product, offering 1 + 1 free schemes, etc.

When a brand wants to increase the sales of its products, it uses Sales
promotion. The brand can increase the sales by attracting new customers
to their products or by retaining the old customers by various means. The
company can also motivate the dealers and distributors of their channel to
perform better for their brand, and to get their stock moving.

Types of Sales Promotion

There are two types of Sales promotions

1. Consumer Sales Promotions

Any sales promotion activity that you do keeping the end consumer in mind
is known as consumer sales promotions. Example – if an E-commerce
website gives 10% discount on its products, then it wants the consumers to
make the best of this deal. This is a consumer focused promotional activity
and hence can be called as consumer sales promotions.

The objective of Consumer sales promotions might be various. A consumer

might be asked to test a sample of a completely new perfume in the market
and rate it. An existing customer might be asked to use a Scratch card so
that he receives a gift.

At the end, the result should be an action from the consumer. Either the
consumer should purchase the product right away, or he should come to
know about the product so that further awareness is created for the brand.

2. Trade Sales Promotions

If your promotional activities are focused on Dealers, distributors or agents,
then it is known as trade promotions. There is a lot of competition in any
field. And in channel sales, to get the products moving and to motivate the
dealer to perform better, trade discounts are given.

Example – You are a dealer for Televisions. Now Sony comes and tells you,
you will be given 5% discount if you cross a sale of 100 televisions.
Naturally, you will be very motivated because 5% in television sales is
huge. Plus selling Sony TV’s is easy because it is already a brand. Thus,
you divert all potential customers to Sony Televisions so that you can
achieve the target.

Similarly, there are other types of trade sales promotions which can be
used to motivate the dealer and distributor. More such techniques of sales
promotions are discussed below.

As the noise of competitors rises, you will find more and more companies
using sales promotions techniques. The advantage of sales promotion is
that they are not too expensive for the company when compared with ATL
advertising mediums like Television or newspaper. Hence, even small
businesses use it quite effectively.
Sales Promotion Techniques

Below are some of the most common type of sales promotion techniques
used across all industries. Some industries, like FMCG, see a lot of these
techniques being implemented simultaneously mainly because of the sheer
volume of business as well as because of the competition in FMCG. Other
businesses, like Consumer durable, furniture etc also use a combination of
these sales promotion techniques.

(i) Discounts – Trade / consumer

The most common type of sales promotions is consumer discounts or trade

discounts. In trade discounts, the dealer may or may not forward the
discount to the customer. It is not necessary that the dealer will give
additional 5% discount to customers when he is himself receiving 10%
additional discount. However, many dealers know the importance of
achieving sales volumes hence they pass on discounts to customers
whenever they receive trade discounts.

(ii) Gifting
One of the most common ways to promote your store during festival time or
when there is a huge walk in expected is Gifting. It is also a way to increase
the sales of the products because customers have an anticipation that they
might win a gift from the store.

Another popular way to use gifting is to advertise “Assured gifts”. Basically,

you have different gifts on offer like a mixer grinder or a steam iron. A
customer who purchases a set amount of products will get the “Assured
gift” from you. This creates excitement in the mind of the customer and he
received something for “free”. He might visit again and again.

(iii) Coupons

Quite commonly used to motivate people to purchase when they think the
price is high or it can be incentive to buy your product above the
competitors. Domino’s, Pizza hut and McDonalds very prominently use
coupons in their marketing. If you have their coupon in hand, you get a
discount of X amount on the purchase.

(iv) Financing

Financing is ingenious amongst the various types of sales promotions. It is

a combination of various factors. Companies which have huge resources
generally act as Financers. They allow customers to purchase a product on
EMI or on different financing options. All this happens for a minor
processing fee and less interest.

As a result, the customer, who does not have complete money to buy the
product, will likely purchase the product using financing options. Such
financing helps the dealer to liquidate the product faster and also helps the
customer in making purchasing decisions.

(v) Sampling

It is predominantly used in the FMCG industry for perfumes, deodarants,

soaps or even eatables. Sampling is an excellent way to introduce your
product in the market and at the same time to increase the awareness of
the product.

The customers who are being targeted by sampling carry a huge “lifetime
value”. Once they get hooked onto your product, they won’t leave it that
early. Hence, Sampling might be of higher cost to the company but it is
quite successful in the various types of sales promotions.

(vi) Bundling

Bundling is when you put a combination of products on sale for the same
price. So, for example, normally a 100 dollars might buy you just a shirt.
However, with product bundling, 100 dollars might buy you a set of shirt
and pants. As a result, the consumer is much more likely to buy this
bundled offer as compared to a single offer.

(vii) Contests

There are different forms of contests which can be run to gather more
customer information or to motivate the customer to try the product or to
create awareness about the new retail place. Contests can be as simple as
winning a gift through a scratch card, or it can be an in house game in a
retail showroom or it can be an online contest for which users have to enter
their information.

Due to the phenomenal rise of the internet, online contests have become
very easy and important. They also penetrate faster and reach a lot of
customers.

(viii) Refunds & Rebates

As the name suggests, refunds are a marketing tactic when you get a
partial amount refunded to you based on an action you have taken. For
example – if you bring the parking ticket to the showroom, your parking
amount will be refunded by the store. Such refunds make the customer
excited to visit a store.

Similarly, rebate is a type of partial refund which is most popular in the

United states, though not much popular in other countries. In rebates, you
fill forms while checking out of stores. And if you have won the rebate, you
will have to mail your details to the company and the company will refund
you the rebate amount in your bank or via a paypal account.

(ix) Exchange offers

Exchange offers are quite commonly used all across the world and used
strongly in festive season when sales will be more and people are in a
purchasing mood. In exchange offer, you can exchange an old product for
a new product. You will receive a discount based on the valuation of your
old product.

So, if you had an old washing machine at home and there was an
Exchange offer in the market, then you will receive an X amount for the
washing machine which is decided by the parent company or the retailer.
This X amount will be deducted from your final payable amount and will be
reduced under the header of “Exchange offer reimbursed”.

(x) Free trial

We have come across several softwares or online programs which offer a

free trial to you before you purchase the product. Shareware programs are
also a kind of free trial programs where you can use the product for some
time but later on have to purchase the product to use it completely.

This is done so that the customer gets a chance to trial run the product
before he pays for the product in full. Programs like Adobe Photoshop,
Microsoft office 365 and others are known to give free trial programs of
upto a month so that the customer can know more about the product, he
can try it and then purchase.

Consumer Promotion and

Types of Consumer Sales
Promotion tools
9 Sep 2024

Consumer Promotions are incentives aimed toward a company’s

customers. Promotions are used to gain potential customers or keep
current customers satisfied. Consumer promotions are geared toward
customer needs and wants. There are many types of consumer promotions
to boost sales and keep the customer coming back. Companies use market
researchers to develop consumer promotion ideas.
Sales promotion aimed at consumers is called ‘consumer sales promotion‘.
It aims at stimulating consumers. The main consumer promotion tools
include samples, coupons, demonstration, contests, cash refund offer,
premium, etc.

Types of Consumer Sales Promotion tools

1. Coupons

A coupon is a certificate that fetches buyers a saving when they purchase a

specified product. Coupons are generally issued along with the product.
They entitle the holder to either a specified saving on a product or a cash
refund.

Coupons are designed

● To introduce a new product

● To promote the sale of an established product
● To sell a product in large sizes
● To stimulate customers to switch brands; and
● To encourage repeat sales.

Coupons are used for consumer convenience goods. They may be

distributed door to door, by mail or they may be inserted in packages.
Sometimes, coupons may be part of magazine or newspaper
advertisements.

2. Premium

Premium refers to goods offered either free or at low cost as an incentive to

buy a product. A premium may be inside the package, outside it or received
through mail. The reusable package itself serves as a premium.

Premium is generally offered for consumer goods such as soap,

toothpaste, etc. Premium may be of several kinds — direct premium,
reusable container free in mail premium, a self liquidating premium, trading
stamps, etc.

Direct premium can be inside the pack or outside it. A reusable container
can be reused after the product is reused. Free in mail premium means a
premium item will be sent by mail to consumers who present proof of
purchase to the manufacturer.
A self liquidating premium is the extra quantity offered at the normal price.
Trading stamps are given by the seller to consumers. These are
redeemable at the stamp redemption centres.

3. Contests

Contests are the promotion events that give consumers the chance to win
something such as cash, trips or goods. Contests are conducted to attract
new customers. They introduce new product by asking the prospects to
state the reasons for the purchase of the product.

The buyer purchases the product and submits the evidence of purchase
with entry form for contest. Entry forms are duly filled by the buyers. A
panel of judges selects the best and buyers are given prizes.

4. Consumer Sweepstakes

A sweepstakes calls for consumers to submit their names for a draw.

Names of consumers are included in a list of prize winning contest. The lots
are drawn and the winners get prizes.

5. Cash refund offer

Cash refund offers are rebates allowed from the price of the product. It is
an offer to refund part of the purchase price of a product to consumers who
send a proof of purchase to the manufacturer.

Moreover, if the purchaser is not satisfied with the product, the whole price
or part of it will be refunded. Cash refunded offer is stated on the package.

6. Sampling

Samples are one of the most important tools of sales promotion. Samples
are defined as offers to consumers of a small amount of a product for trial.
Free samples are given to consumers to generate their interest in the
product. Samples help consumers verify the quality of the product.

Samples are delivered at the doors of consumers. They are also sent by
mail or given to customers in the retail store itself. Sometimes, samples are
attached to another product.
Though sampling is effective, producing numerous samples of a product is
quite expensive. Moreover, distributing samples to customers also involves
expenditure.

Sampling is not justified in case of

● Well established product

● A product that is not superior in some way to competing products
● A product with a slow turnover
● A product with a narrow margin of profit, or
● A highly fragile, perishable or bulky product.
7. Buy back allowances

Allowances are granted to buyers on the basis of their previous purchases.

In other words, buy back allowances are given for new purchases, based
on the quantity of goods bought previously.

8. ‘Price off’ offer

Goods are sold at reduced prices during slump season. Reduction in prices
stimulates sale of goods.

9. Demonstration

Demonstration is required when products are complex and of a technical

nature. Customers are educated as to how to make proper use of the
product. Demonstration of products induces customers to buy.
Demonstrations are provided free of cost.

Publicity and Public

Relations
20 Jul 2024

Publicity

Publicity is defined as the way of disseminating information to the public at

large, through media. It can be in the form of news, stories, event
information or write-ups, that creates awareness and credibility in the
people regarding a brand, product or the company offering them.

Publicity aims at spreading the information or news, to the maximum

number of people, in minimum time. It is a non-paid form of communication,
which is not under the control of the company. It can be a positive review
regarding a product, i.e. mobile, television, refrigerator, etc. given by a
satisfied customer, or information published in the newspaper regarding the
quality-rich services provided by a company, or it can be a simple word of
mouth, etc.

In a nutshell, publicity has nothing to do with the company’s sales; it is all

about creating awareness in general public through editorial or unbiased
comments concerning a product.

Public Relations

Public Relations can be understood as the strategic management tool,

which helps an organization to communicate with the public. Here, ‘public’
means the group of people that have an interest in or impact on a
company’s ability to achieve business objectives. It is not only concerned
with getting public attention, but it also aims at reaching the goals of the
organization, by communicating the message to the target audience. It
includes press releases, crisis management, social media engagement,
etc.

Public Relations is all about maintaining the positive image of the company
in the eyes of the public and developing strong relationships with them. It
encompasses a range of programs organised by the company to promote
its product and services. There are many companies, which have public
relations department, which looks after the attitude of the appropriate public
and also spread information to them, to increase the goodwill.

The functions performed by the public relations department include press

relations, corporate communications, counselling, product publicity, etc.

Key Differences between Publicity and Public Relations

The difference between publicity and public relations can be drawn clearly
on the following grounds:
1. Publicity can be described as public visibility, wherein news or
information is communicated to the general public so as to build
credibility or awareness in them, with the help of a channel, i.e. mass
media. On the other extreme, the term public relations, as the name
suggest, is a strategic management tool, that aims to create a
company’s positive image in the eyes of the public.
2. While publicity is not under the control of the company, public
relations is fully under the company’s control.
3. Publicity can be positive or negative, in the sense that it can be
positive or negative feedback regarding the product or service
concerning a product given by the customer or controversial news
about the company. Conversely, public relations is always positive,
because it is strategised and managed by the public relations
department of the company.
4. Publicity is free of cost; as it is made by the third party. As against, in
case of public relations, the company incurs money to organize
events, sponsor programs, third-party endorsement, etc.
5. Publicity involves, gaining the attention of the media, that
communicates any information or news, regarding a product, service,
person, organization, etc. so as to create awareness in people. In
contrast, public relations seek to attract the target audience, for the
purpose of boosting the company’s sales.
By and large, publicity and public relations are different from one another,
as in publicity is when someone or something is being noticed by the
media, and people are informed about it. Unlike, public relations, is all
about taking such steps, to maintain a good relationship with the interested
public, which includes customers, government, shareholders, creditors,
suppliers, government, etc.

Publicity: Types of
Publicity
20 Jul 2024

Publicity is also a way of mass communication. It is not a paid form of

mass communication that involves getting favourable response of buyers
by placing commercially significant news in mass media. Publicity is not
paid for by the organisation. Publicity comes from reporters, columnists,
and journalists. It can be considered as a part of public relations.
Publicity involves giving public speeches, giving interviews, conducting
seminars, offering charitable donations, inaugurating mega events by film
actors, cricketers, politicians, or popular personalities, arranging stage
show, etc., that attract mass media to publish the news about them.

Publicity is undertaken for a wide range of purposes like promoting new

products, increasing sales of existing product, etc. It also aimed at
highlighting employees’ achievements, company’s civic activities, pollution
control steps, research and development successes, financial performance,
its progress, any other missionary activities, or social contribution.

Publicity has been defined as:

William J. Stanton: “Publicity is any promotional communication

regarding an organisation and/or its products where the message is
not paid for by the organisation benefiting from it.”

Philip Kotler: “Non-personal stimulation of demand for the product

or service, or business unit by placing commercially significant
news about it in public medium or obtaining favourable presentation
of it upon radio, television, or stage that is not paid for by the
sponsor.”

Importance of Publicity

1. Publicity is an effective medium to disseminate message to the mass

with more credibility. People have more trust on news given by
publicity.
2. The credibility level of publicity is much higher than advertising and
other means of market promotion. People express more trust on what
the third party independently says. It appears directly through
newspapers, magazines, television, or radio by the third party. It is
free from bias.
3. It provides more information as the valuable information is free from
space and time constraints. Similarly, publicity takes place
immediately. No need to wait for time or space in mass media. It
enjoys priority.
4. The firm is not required to pay for publicity. The indirect costs related
to publicity are much lower than other means of promotion.
5. It is a part of public relations. It is free from exaggeration; it carries
more factual information about company. It is more trustable. It helps
establish public relations.
6. Generally, publicity covers the varied information. It normally involves
name of company, its goods and services, history, outstanding
achievements, and other similar issues. The knowledge is more
complete compared to advertisement.
7. Publicity directly helps middlemen and sale persons. Their tasks
become easy. Publicity speaks a lot about products on behalf of
middlemen and salesmen. Sellers are not required to provide more
information to convince the buyers.
8. It is suitable to those companies which cannot effort the expensive
ways to promote the product.
9. Publicity increases credit or fame of the company. Publicity on
company’s assistance in relief operations during flood, earthquake,
draught, and other natural calamities highlights its name and social
contribution in mass media. People hold high esteem to this
company.
10. Publicity can be used by non-commercial organisations/institutes
like universities, hospitals, associations of blinds or handicaps, and
other social and missionary organisations. They can publicize their
noble works by the medium of publicity.
Advantages

Branding

Many companies that are successful over the long haul rely on the strength
of their brand to cultivate new sales. If you can offer your customers a
series of quality products that meet or exceed expectations, they may be
more likely to give any new products you develop a try, simply by hearing
the name of your brand. Successful branding typically takes time.
Consistent publicity can help you strengthen your brand by repeatedly
putting your company’s name in front of potential customers. Over time, the
public may grow to think of your company as a household name, which
could set you apart from your competitors.

Credibility

Consumers expect a certain level of bias or exaggeration in the

commercials or advertisements a company produces about its products.
However, third-party sources, such as magazine articles or online reviews,
are often considered less biased. This is particularly true with reputable
sources, such as longstanding publication houses or well-regarded
professional reviewers. As opposed to company-generated claims, publicity
from non-affiliated parties can often seem more credible in the eyes of your
potential customers. While professional marketing can be effective,
particularly if you offer high-quality products, positive third-party publicity
can enhance your company’s reputation.

Generating Publicity

Although publicity comes from outside sources, it rarely comes about

spontaneously. To get the ball rolling with possible sources of publicity,
you’ll have to pitch your company directly to various media outlets perhaps
through a public relations professional, whose services can be contracted
for a fee. Newspapers, magazines and social media sites can’t write about
something they don’t know about, so you’ll have to provide them with
information that gets them interested in learning more about your company
and spreading the word to their readers or followers. To be effective, you
must target your message to the appropriate audience. To get repeat or
ongoing coverage, you will need to have something new. The good news is
that publicity often feeds on itself. If good reviews or comments about your
business start popping up, it often gets other sources interested.

Cost

Publicity and marketing are often used interchangeably to describe a

company’s promotional activity, but there are significant differences.
Whereas companies generate their own marketing materials, publicity is
granted by outside sources, such as the media. One of the biggest
advantages of publicity is that it is usually free. A marketing staff and
promotional activities can cost a company a significant amount of money.
However, publicity ranging from unsolicited newspaper reviews to social
media word-of-mouth typically costs nothing.

Disadvantages

Depends on the type of publicity, to a great extent. Negative publicity can

have a negative impact on how others view you and thus affect your ability
to get a job, a mate or even get respect. But even positive pub can be a
drawback in that there are jealous people out there who will never get
positive pub because they will never earn it. When you get positive pub, be
ready to be attacked by those who hate you for your popularity or the
adoration others express for you. You are now a target to be taken down by
those who feel worthless in their own being. Plus, positive publicity may set
the bar higher for you in all endeavors. It’s like you may be held to a higher
standard than you were before this positive pub was hoisted upon you. And
you may be put under a microscope and under stricter scrutiny by those
who despise their own inability to do anything worth publicly praising. The
safest (and most difficult) thing to do, is not give a shit what anybody says
about you and that way even the worse kind of pub will just roll off your
back.

Direct Marketing
9 Sep 2024

Direct Marketing is a form of advertising in which companies provide

physical marketing materials to consumers to communicate information
about a product or service. Direct marketing does not involve
advertisements placed on the internet, on television or over the radio.
Types of direct marketing materials include catalogs, mailers and fliers.

Direct marketing removes the “middle man” from the promotion process, as
a company provides a message directly to a potential customer.
Companies with smaller advertising budgets typically use this type of
marketing since they cannot afford to pay for advertisements on television
and often do not have the brand recognition of larger firms.
How Direct Marketing Works?

Direct-marketing messages generally include a call to action, encouraging

the recipient to respond via a toll-free phone number or a reply card or by
clicking on a link in an email promotion. Companies are able to measure
the effectiveness of their direct-marketing campaigns by tracking
responses. Direct marketing is more effective when companies use
targeted lists of prospects developed using available marketing data that
can segment them into identifiable groups that are likely to have an interest
in a product or service.

Over the years direct marketing has developed a bad reputation for
cluttering up people’s mail boxes with junk mail or generating spam in email
inboxes. Many companies engage in opt-in or permission marketing, which
limits their mailing or emailing to only those willing to receive it. Companies
select communication channels they consider most effective for a particular
market. For instance, a new gym may find more success distributing flyers,
while a new grocery store prefers to mail promotional coupons to the
residents of nearby neighborhoods.

Pros and Cons of Direct Marketing

Companies that use direct marketing benefit from being able to focus
limited resources on a targeted promotion, which also allows them to
personalize the marketing message. Because it is easy to measure
responses, companies can test different marketing messages for improving
the response rate. Direct marketing can be cost-effective if the customer
database is well-managed.

The downside of direct marketing is that response rates can vary widely
making the flow of prospects unpredictable. Ineffective campaigns can be
costly, especially if they occur frequently. Companies that send blanket
direct mail or email promotions have to overcome the negative image of
junk mail and email spam. The key to effective direct marketing is an
accurate database, which can be expensive to maintain.

Growth and Benefits of

Direct Marketing
23 Sep 2024

Direct Marketing is a promotional strategy where businesses

communicate directly with customers through channels like email, direct
mail, telemarketing, or digital ads, bypassing intermediaries. It focuses on
personalized messages, targeted offers, and prompts immediate action,
such as making a purchase or responding to an offer. This approach allows
for measurable, data-driven, and cost-effective marketing.

Growth of Direct Marketing:

Direct marketing has grown significantly over the past few decades due to
advancements in technology, shifts in consumer behavior, and the
increasing need for personalized communication.

● Technological Advancements:

The rise of digital platforms, email marketing, social media, and automation
tools has revolutionized direct marketing. Businesses now have more
channels and tools at their disposal to engage with customers directly and
efficiently. Data analytics, CRM systems, and marketing automation have
also enhanced targeting and personalization efforts, enabling more
effective campaigns.

● Increased Customer Data Availability:

With the growth of e-commerce, mobile usage, and online interactions,

businesses have access to vast amounts of customer data. This data
allows companies to create highly personalized and targeted direct
marketing campaigns, improving response rates and engagement. The
ability to analyze consumer preferences, behavior, and purchase history
has made direct marketing more precise.

● Shift Towards Personalization:

Consumers now expect personalized experiences from brands. Direct

marketing, with its focus on tailored messages and offers, has become a
key method to meet these expectations. By leveraging data and insights,
marketers can create relevant, personalized content that resonates with
customers, making direct marketing an increasingly popular strategy.

● Cost-Effectiveness:

Direct marketing allows companies to focus their marketing budgets on

targeted segments rather than mass audiences, making it more
cost-effective. Email marketing, for instance, is one of the most economical
ways to reach customers, allowing businesses to achieve higher returns on
investment compared to traditional forms of advertising.

● Measurability and Accountability:

Direct marketing provides measurable results, such as response rates,

click-through rates, and conversion rates, enabling marketers to track the
success of their campaigns accurately. This accountability has encouraged
its growth, as businesses can continuously refine and improve their efforts
based on clear metrics.

● Multi-Channel Integration:

The growth of digital marketing has allowed direct marketing to evolve into
a multi-channel strategy. Businesses can now combine direct mail, email,
SMS, social media, and other digital platforms to reach their customers at
multiple touchpoints, increasing the effectiveness of their campaigns.

● Rise of E-commerce:

The growth of e-commerce has fueled the rise of direct marketing, as

online businesses heavily rely on email marketing, targeted ads, and
remarketing to engage customers. The need to reach consumers directly
with relevant offers has made direct marketing a crucial part of online retail
strategies.

Benefits of Direct Marketing:

● Targeted Reach:

Direct marketing allows businesses to focus on specific segments of their

audience, ensuring that their marketing efforts are reaching the right
customers. By using data such as demographics, buying history, and
preferences, companies can create personalized campaigns that speak
directly to the needs and interests of individual consumers.

● Cost-Effectiveness:

Compared to mass marketing efforts like TV or print ads, direct marketing

is often more cost-effective. It allows businesses to allocate their budgets
efficiently by focusing on high-potential customers and avoiding spending
on audiences unlikely to convert. Email marketing, for example, offers a
low-cost option with high return on investment (ROI).

● Measurable Results:

One of the biggest advantages of direct marketing is the ability to track and
measure campaign performance. Businesses can monitor metrics such as
response rates, open rates, click-through rates, and conversions, providing
clear insight into the success of a campaign. This data-driven approach
enables companies to adjust their strategies for optimal results.

● Personalization:

Direct marketing provides opportunities for businesses to personalize their

communication. By addressing customers by name and tailoring offers to
their specific needs and preferences, companies can create a more
meaningful connection with their audience. Personalized campaigns often
result in higher engagement and better customer satisfaction.

● Improved Customer Relationships:

Regular and targeted communication through direct marketing helps to

build strong, long-lasting relationships with customers. By consistently
reaching out with relevant offers, updates, and information, businesses can
foster customer loyalty and retention, leading to increased lifetime value.

● Immediate Feedback:

Direct marketing often prompts immediate customer responses, allowing

businesses to gather quick feedback on their products or services. Whether
through a response to an email, a call-to-action on a website, or
participation in a survey, businesses can use this feedback to refine their
offerings and improve customer experience.

● Higher Conversion Rates:

Because direct marketing is targeted and personalized, it typically results in

higher conversion rates compared to broader marketing strategies. When
customers receive content that speaks directly to their needs, they are
more likely to take action, whether it’s making a purchase, signing up for a
service, or responding to an offer.

● Flexibility and Adaptability:

Direct marketing campaigns can be quickly adapted based on market

trends, customer behavior, or campaign performance. Businesses can test
different messages, offers, or creative elements to see what resonates best
with their audience, ensuring that their marketing efforts are always aligned
with customer preferences.

Integrated Marketing
Communication
28 Dec 2019
Integrated marketing communications (IMC) is the use of marketing
strategies to optimize the communication of a consistent message of the
company’s brands to stakeholders. Coupling methods together improves
communication as it harnesses the benefits of each channel, which when
combined together builds a clearer and vaster impact than if used
individually. IMC requires marketers to identify the boundaries around the
promotional mix elements and to consider the effectiveness of the
campaign’s message.

Integrated marketing communications is a holistic planning process that

focuses on integrating messages across communications disciplines,
creative executions, media, timing and stakeholders. An integrated
approach has emerged as the dominant approach used by companies to
plan and execute their marketing communication programs and has been
described as a paradigm shift.

IMC combines a variety of marketing and advertising concepts and theories

and can be challenging because it has multiple working components.

IMC advantages include:

● Cost containment
● Increased communication between departments and agencies
● Customer satisfaction
● Increased sales of products and services

The Purpose of Integrated Marketing Communication

Integrated marketing communication leads to development and

maintenance of a good company-customer relationship.

The strategies employed promote the company’s brands to potential clients

convincing them to try out the new brands. The overall effect is that the
company enjoys an increased profit margin which is the sole reason for
engaging in any entrepreneurial activity.

The Different Types of Integrated Marketing Communication

● External: This is in the event where a company outsources the task

of marketing to a marketing firm or a public relations firm. The firms
are then tasked to design and develop the most effective strategies
for the contracting firm.
 ● Internal: Internal marketing integration involves the top level
management ensuring that the employees are happy and excited
about developed new products. This ensures that the workers leak
the details prematurely hence exciting prospective customers even
before the product hits the target market.
● Horizontal: This contributes to a very crucial part in the development
of a product or service. This demands a lot of efficiency between the
team tasked to develop and the distribution team as well as the
finance team. This open flow of information provides the requisite
synergy required to make the strategy a success.
● Vertical: Under this, the strategy demands that the product
developed to fit with the corporate policy as well as the structure of
the company. This means that the product has to be within the
breadth of the company’s mission and goals.

In conclusion, it is safe to employ integrated marketing communication

since it has proven to be an ideal tool to reach out to potential customers.

Why Integrated Marketing Is Important?

We all know that integrated marketing is not new, but why is it important in
today’s world? There are more marketing channels now than ever before,
because of this market channels can be led and directed by different
people, integrated marketing strategies help to pull the message together
to ensure that the message is not disjointed and confusing. Integrated
marketing requires us to pay attention to every marketing message and
every marketing piece that is distributed to ensure consistency, regardless
of the channel.
Integrated Marketing
Communication (IMC):
Concepts and Process
20 Jun 2024

Integrated marketing communications (IMC)is an approach used by

organizations to brand and coordinate their communication efforts. The
American Association of Advertising Agencies defines IMC as “a
comprehensive plan that evaluates the strategic roles of a variety of
communication disciplines and combines these disciplines to provide
clarity, consistency and maximum communication impact.” The primary
idea behind an IMC strategy is to create a seamless experience for
consumers across different aspects of the marketing mix. The brand’s core
image and messaging are reinforced as each marketing communication
channel works together as parts of a unified whole rather than in isolation.

Benefits of IMC

With so many products and services to choose from, consumers are often
overwhelmed by the vast number of advertisements flooding both online
and offline communication channels. Marketing messages run the risk of
being overlooked and ignored if they are not relevant to consumers’ needs
and wants.

One of the major benefits of integrated marketing communications is that

marketers can clearly and effectively communicate their brand’s story and
messaging across several communication channels to create brand
awareness. IMC is also more cost-effective than mass media since
consumers are likely to interact with brands across various forums and
digital interfaces. As consumers spend more time on computers and mobile
devices, marketers seek to weave together multiple exposures to their
brands using different touch points. Companies can then view the
performance of their communication tactics as a whole instead of as
fragmented pieces.

The other benefit of integrated marketing communications is that it creates

a competitive advantage for companies looking to boost their sales and
profits. This is especially useful for small- or mid-sized firms with limited
staff and marketing budgets. IMC immerses customers in communications
and helps them move through the various stages of the buying process.
The organization simultaneously consolidates its image, develops a
dialogue, and nurtures its relationship with customers throughout the
exchange. IMC can be instrumental in creating a seamless purchasing
experience that spurs customers to become loyal, lifelong customers.

Process of Integrated Marketing Communication (IMC)

1. Get organizational buy-in

Integrated marketing requires co-ordination between various functional

silos within marketing — media planning, buying, marcom, PR, sales,
advertising agencies, PPC & SEO agencies and so on. Ensure the
organization recognizes the need for integrated marketing and impresses
this need upon all involved parties for smooth execution. Get ideas from
different functional teams on their ideas and how they can contribute to an
integrated marketing program. Set up clear collaboration processes and
zero in on tools to help you do the same.

2. Do a SWOT analysis of your brand

A soul searching process that will tell you exactly where you stand in terms
of your brands strengths, weaknesses, opportunities that can be explored
and competitive and market forces that pose a threat to your brands
growth. Identify your products key features that give it an edge over
competition and how you can leverage the same to gain market share.

3. Choose the Best Communication Tools

Based on what you intend to achieve with your communication and what
kind of media consumption habits your target audience displays, pick the
right type of communication tools to reach out to your audience. This
means choose between advertising, PR, direct marketing, sales promotion
and personal selling. Whatever options you zero in on, need to work in
tandem and complement each other. This synergy between promotion tools
is what gives integrated marketing its edge over regular marketing.

Within each type of communication tool, drill down to the actual media
vehicles that will carry your message most effectively. So if you decided to
go with advertising and direct marketing, decide what media you will
advertise on, whether you will go with brochures or fliers or email
campaigns to achieve your objectives.

Media mix decisions also depend on your budgets and the estimated ROI
you hope to achieve from each media vehicle. Create exact budgets for
each media vehicle to guide media buying decisions.

4. Test and Execute

Once you have decided on your messaging and media mix, its finally time
to test your communication and roll it out to your target audience.

Communication testing can be done in many ways, depending upon the

platform being tested. Website communication can be tested with multiple
online tools, emails can be tested on the email marketing software that you
use before being sent out, TV commercials can be shown to test markets to
test effectiveness, conduct group discussions with the sample groups to
see if your communication hits bulls eye.

Once testing is complete, fix any issues that you unearthed. Once the fixes
are made, roll out your campaign across all platforms. Or in Nikes immortal
words, Just Do It.

5. Measure Results and Track Progress

There is no way to know how well a campaign performed without

measuring the results achieved against the objectives set out in the
beginning. Obsessively track every step of your marketing campaign to see
if your marketing efforts have moved the needle and how significant is the
difference that the campaign has made to organizational goals.

Tracking and measurement against numeric objectives is even more

important in the case of marketing communication as sometimes,
communication is well received and appreciated by the target audience but
it may or may not show concrete results.

Factors Contributing to
IMC
17 Jun 2020

(i) Fragmentation of the mass market

This mass-marketing strategy focuses on what is general in the needs of

consumers rather than on what is different. The organization offer single
Marketing Mix consists of one type of product with small or no variation,
one pricing strategy, one promotion program aimed at every person and
one distribution system aimed at the entire market.

(ii) Media Fragmentation

Market fragmentation has resulted in media fragmentation because the of

alternative media channels available to the consumer and all messages
seen as one single message to consumer. Today’s consumers are being
irritated with a bundle of of television channels, and a steady stream of new
magazines that hit the newsstands every week. Coupled with rising level of
ad dodging and the future for some mass media might seem austere.
Therefore advertising has to spread further, covering massive amount of
channels to gain the same exposure.

(iii) Explosion of New Technologies

The Technology is evolving today with much speed and has a very
disruptive impact on our daily life. Something that has been considered as
status symbol today is a myth of past now. Also this explosion allow
customer to have greater control over the communication. Consumer can
now select what to see, and what to hear more easily as in past.

(iv) Emergence of Global Markets

Due to advent of IT the whole world has collapse to a global village. The
culture around the world is merging and a unified culture is emerging.
Although this has created some opportunities for organization, but is also
posing some potential threat as they need now to be very cautious while
designing there promotional programs and unless the promotional program
are well coordinated and integrated it will not have any impact on the target
market. The global market has also led to increase in advertising mess due
more channels and more group placing ad on mass media.

(v) Shifts of Power from Manufacturers to Retailer

The power that historically rests with manufacturer has been shifted to
retailer. The retailers due to this power now demands huge promotion fees
and can offer better retail information from due to the usage of checkout
scanner technology.

(vi) Shifting of Promotion Cost from Advertising to other

Forms of Promotion

Due to the increase usage of Internet, growth of customer databases,

customer lack of time, companies are moving toward concentrated and
niche segmentation, as consumer has the convenience to order what he
needs and wants from direct marketers. This had led to change on the
percentage of promotion spent on advertising. Traditionally this percentage
used to be very high but now as the market conditions are changing it is
eroding and taking the form of direct marketing, point of sales activities,
online advertising etc.

(vii) Emergence of Lower Cost and More Target

Communication Tools

As the traditionally used media tools is losing its impact, the exploration of
lower-cost and more targeted communication tools continues. Marketer
now have the option to use promotional tools like event marketing and
direct mail etc that are more targeted and have less cost as compared to of
mass media.

(viii) Development of Database and Relationship Marketing

One of the most important Direct Marketing is the Customer Databases. It

is a controlled collection of absolute data about individual customers or
prospects, together with geographic, demographic, psychographic, and
behavioral data. These databases help companies in influencing and
building customer relationships and the organization can also tailor its
message or market offering according to the personal needs of the target
market.

(ix) Increase Usage of Internet

The usage of Internet around the world is increasing with the passage of
time, and this had led to change how a company does its business and
how the organization communicate and interact with its target market.
Companies around the world are using the Internet as a competitive tool to
change how they transact the business. They can a company does
business and how they communicate and interact with customers as they
can reach prospects at just the right moment and can offers a low-cost,
well-organized way to reach markets.

(x) Agency Accountability

The terms and conditions of the relation that the company and agency used
to have are changing, due to changes in the competitive setup of the
industry. The organization now demands for greater accountability from the
advertising agencies and changes in return and incentives of the agency.
(xi) Marketing Strategy Results Measurement

Organization now calls that the activities that the marketing department
carries out should be measurements appropriately and expectations from
marketing strategy.

(xii) Change in Shopping Approach

The reason behind why the consumer goes for shopping has been change.
Traditionally people used to went for shopping in order to get the desired
products and/or services from the market. But now the shopping approach
has been changed, it is now taking form of freedom and entertainment.

(xiii) Growth of Digital Media

Multi-track media society that is constantly developing and changing with

the passage of time has led to advent of digital media. In digital media
consumer have extraordinary control over the information and
entertainment choice. With new digital media in place, people have
thousands of viewing options they can select from.

Role of Integrated
Marketing
Communication (IMC) in
Branding
17 Jun 2020

Marketing programs play an important role in building up of brand equity.

These marketing programs are related to product, price and distribution
channels. And these programs are necessary to create brand image and
also to build brand awareness. This task is done through medium of
marketing communication, in its most form is advertising. Marketing
communication is essential in establishing point of similarity, as well point of
difference with competition, making an impression in consumer’s mind
leading to development of strong consumer based brand equity and also to
develop long- lasting relationship.

Marketing communication needs to be flexible in current technology

driven environment where consumer are internet savvy and have access to
information. Traditional communication avenues like TV ads have to
undergo subtle changes. Advent of digital video recorders has seen
consumer watching their favorite program post actual telecast. But a trend
observed here is that consumes tend to skip ads in recorded program. If
that is the case than fortune spent of getting spots won’t translate into
effective communication. Today’s youth tend to spend more time playing
video games and not on watching television. So communication developed
should follow certain criteria to prove its effectiveness.

For marketing communication to be effective in conveying its message a

simple cycle has to be understood. Marketers need to understand the
present state of brand awareness and brand image within consumer’s mind
and then ask question, do they want to be in current state. Now design
communication in whatever form required that will take to desired level,
while clearly stating similarity and difference from competitors. Finally,
research consumers to understand whether desire effect or brand
knowledge has been created.

There are various marketing options available to marketers. Each option

has its own strength and weakness. Advertisement is one the most
common form of marketing communication; this can be done through
television, radio, magazines, newspaper, direct approach, etc. Television is
good medium to target large audience and greater geographical area,
thereby reducing dollar cost per customer. However this medium can be
expensive and may not create a strong impact. Radio on other hand has
lesser geographical coverage and audience, thereby creating focus on
selective audience and reducing cost. However radio again can only have
audio and cannot grab attention the way visuals can. Magazines and
newspaper can provide good coverage with greater information content.
However it is just visual and may not generate desirable consumer
response. Other form of marketing communication are direct marketing
which includes door to door, phone calls and mail, then, marketing at point
of purchase through cut outs and display, another way through billboards
which can have both visual as well as audio.

Marketers also extensively use promotional activity for marketing

communications. These are of two types’, consumer promotion and trade
promotion. Consumer promotion can be in form of sampling, evident at
malls and super market, another way by providing coupons and various
other schemes. Trade promotion is targeted for channel partner like
retailers, distributors and these could be in form cash incentives etc.

To design a complete marketing communication program, marketers have

to ensure that they are able to establish connection with consumer and
able to effectively communicate about brand, there by creating a strong
brand awareness and image. This will ensure in creating a strong
consumer based brand equity.
Selection, Motivation and
Evaluation of
intermediaries
22 Oct 2018

Identify Major Channel Alternatives

Other decisive factor in developing market channel is to recognize

alternatives. Companies may select array of channels to approach
customers, each of which has distinctive strengths as well as limitations.
Each channel alternative is explained by

(i) The types of available intermediaries

(ii) The number of intermediaries needed; and

(iii) The terms and responsibilities of each channel member.

Types of Intermediaries entails a firm needs to discover the types of

intermediaries available to run its channel work. Some intermediary
merchants such as wholesalers and retailers buy, take title to, and resell
the products. Agents such as brokers, manufacturers’ representatives, and
sales agents chase customers and may bargain on the producer’s behalf
but do not take title to the merchandise. Facilitators, including
transportation companies, independent warehouses, banks, and
advertising agencies, help in the distribution process but neither neither
take title to goods nor negotiate purchases or sales.

Companies should recognize pioneering marketing channels. Number of

Intermediaries indicates that to choose intermediaries to use, companies
can adopt one of three strategies: exclusive, selective, or intensive
distribution. Exclusive distribution means severely limiting the number of
intermediaries. Selective distribution depends on more than a few but less
than all of the intermediaries willing to carry a particular product. In
intensive distribution, the producer places the goods or services in as many
outlets as possible. This strategy is usually used for items such as snack
foods, newspapers, and gum. Terms and Responsibilities of Channel
Members signify that each channel member must be treated courteously
and given the opportunity to be lucrative. The main constituents in the
“trade-relations mix” are price policy, conditions of sale, territorial rights,
and specific services to be performed by each party. Price policy assists
the producer to ascertain a price list and schedule of discounts and
allowances that intermediaries see as equitable and sufficient.

Evaluating the Major Alternatives

The Company must assess each alternative against suitable economic,

control, and adaptive criteria. The firm should verify whether its own sales
force or a sales agency will create more sales and it estimates the costs of
selling different quantities through each channel.

Managing Marketing Channel

In order to maximize profit, companies must manage their marketing

channel effectively. Management of marketing channel refers to the
process of analysing, planning, organizing and controlling its marketing
channel. In marketing channel two different activities occur. One is the
establishment of physical distribution system and other is management of
marketing objectives. Management of marketing channel involves all
functions of marketing mix which include product, price, physical
distribution, program and people. The physical distribution system and
channel structure is established through which products flow in the
marketing channel.

Marketing Mix Activities In Marketing Channel Management:

(McCalley, 1996)
To Mange marketing channel, firms must adopt motivational strategies such
as paying higher slotting allowances, offering higher trade discount,
providing strong promotional and advertising support, training channel
member sales people, giving high level logistic support. Management
professional stated that after a firm has selected a channel system, it must
select, train, motivate, and evaluate individual intermediaries for each
channel. It must also modify channel design and arrangements over time.

Selecting Channel Members: For successful management, Companies

must have to choose talented channel members cautiously because for
customers, the channels are the company. Producers should decide what
features distinguish the better intermediaries and scrutinize the number of
years in business, other lines carried, growth and profit record, financial
strength, cooperativeness, and service reputation of potential channel
members. If the intermediaries are sales agents, producers should assess
the number and character of other lines carried and the size and quality of
the sales force. If the intermediaries want exclusive distribution, the
manufacturer should assess locations, future growth potential, and type of
customers.

Training and Motivating Channel Members: It is a major responsibility of

a company to examine its intermediaries in the same way it views its
customers. It needs to establish intermediaries’ needs and build a channel
positioning such that its channel offering is tailored to provide superior
value to these intermediaries. To enhance intermediaries’ performance, the
company should offer training, market research, and other
capability-building programs. The company must also continually
strengthen that its intermediaries are to jointly gratify the needs of end
users. Producers differ greatly in channel power, the ability to change
channel members’ behaviour therefore the members take corrective
actions. Often, gaining intermediaries’ collaboration is a major challenge.
Sometimes, Producers try to forge a long-term affiliation with channel
members. The manufacturer must talk clearly what it expects from its
distributors in the way of market coverage and other channel issues and
may ascertain a compensation plan for adhering to these policies.
Motivating channel members takes numerous forms in order to gratify the
requirements at each level in channel. Profitability is major Motivational
force for whole seller for product selection. When profit motivation is
satisfied, whole seller will look for marketing programs offered by producers
to sell products to retailers. Whole seller checks the credit option and terms
of payment when assessing the profit option for business when dealing with
particular supplier. Retailers are mainly concerned with maintenance of
product supply and availability. It is observed in market that when
customers cannot get product in one retail shop, they immediately search
for it in another retailers. But retailers do not want to lose customers.
Another interest of retailers is profitability of the product.

Motivational consideration for channel members: (McCalley, 1996)

Evaluate Channel Members: To successfully manage market channel,

producers must assess intermediaries’ performance at regular intervals
against such standards as sales-quota attainment, average inventory
levels, customer delivery time, treatment of damaged and lost goods, and
cooperation in promotional and training programs. A producer will
occasionally determine that it is paying particular intermediaries too much
for what they are actually doing. Producers should establish functional
discounts in which they pay specific amounts for the intermediary’s
performance of each agreed-upon service. People who are not performing
must be given extra training or counselling.

Modifying Channel Arrangements: Channel arrangements must be

reassessed regularly and altered when distribution does not work as
planned, consumer buying patterns change, the market develops, new
competition occurs, inventive distribution channels appear, and the product
moves into later stages in the product life cycle. No marketing channel
remains successful over the entire product life cycle. Early purchaser might
be willing to pay for high-cost value-added channels, but later buyers will
change to lower-cost channels. In highly competitive markets with low entry
barriers, the best channel structure will transform over time. The company
may add or drop individual channel members, add or drop particular market
channels, or develop a new way to sell merchandise. The process of
adding or dropping an individual channel member needs an incremental
analysis to decide profitability of company. Additionally, marketers adopt
data mining to analyse customer shopping data as input for channel
decisions. The most complicated decision is whether to modify the overall
channel scheme. Channels can become old-fashioned when gap occurs
between the existing distribution system and the ideal system to gratify
customer’s needs and wants.

The most challenging face of channel management is the maintenance of

control over all parts of distribution flow and marketing activities. Marketers
have to undergo legal issues in controlling marketing channels therefore
they need to develop successful channel programs that will stimulate the
action planned without creating conflict among competitive channel
members.

To summarize, market channel is medium through product from raw

material move to costumer. In designing market channel it is important to
comprehend customer’s need. The task of managing marketing channel
falls to marketing and sales managers. These people directly involve with
channel members and company’s competitors. They know how to find
valuable information for good management decisions. To organize
marketing channel, it is imperative to gather relevant information. It assists
in writing accurate and detail market profile statement. Most marketing
channels are created with one or more intermediaries between the
manufacturer and consumer.

Physical Distribution
System, Objectives,
Decision Areas,
Challenges
25 Oct 2018
Physical Distribution System refers to the set of activities and processes
involved in efficiently managing the flow of products from production to
consumption. It encompasses logistics, warehousing, inventory
management, transportation, and order processing. The goal is to ensure
that products are delivered to customers in the right quantity, at the right
time, and in optimal condition. Key components include selecting
transportation modes, optimizing storage facilities, managing inventory
levels, and coordinating distribution channels. By effectively managing
these elements, businesses can minimize costs, reduce delivery times,
improve customer satisfaction, and enhance overall supply chain efficiency.
Physical distribution systems are crucial for maintaining competitive
advantage in the marketplace by meeting consumer demands effectively
and efficiently.

Objectives of Physical Distribution System:

● Minimize Transportation Costs:

Efficient route planning, mode selection (e.g., trucking, rail, air), and load
optimization aim to minimize transportation expenses while ensuring timely
deliveries.

● Optimize Inventory Levels:

Balancing inventory levels across the supply chain to meet demand without
overstocking or understocking. This involves accurate demand forecasting
and efficient inventory management practices.

● Ensure Timely Delivery:

Meeting customer expectations by ensuring products reach destinations on

time. This includes reducing lead times and managing transportation
schedules effectively.

● Maximize Customer Service:

Enhancing customer satisfaction through reliable and responsive delivery

services. This involves providing accurate order tracking, timely
communication, and flexibility in delivery options.

● Reduce Order Processing Time:

Streamlining order processing activities such as order entry, picking,
packing, and dispatching to accelerate the fulfillment process and improve
overall efficiency.

● Minimize Warehousing Costs:

Optimizing warehouse operations to reduce storage costs while ensuring

sufficient capacity to handle inventory. This includes efficient layout design,
inventory control systems, and space utilization strategies.

● Improve Overall Supply Chain Efficiency:

Integrating and coordinating activities across the supply chain—from

suppliers to end customers—to enhance overall efficiency, responsiveness,
and profitability.

Decision Areas of Physical Distribution System:

1. Transportation:
● Mode Selection:

Choosing between trucking, rail, air, sea, or a combination based on factors

like speed, cost, reliability, and the nature of the product.

● Routing:

Determining the optimal routes to minimize transit times and costs while
considering factors such as traffic patterns, road conditions, and fuel
efficiency.

● Carrier Selection:

Selecting transportation carriers or logistics partners based on service

levels, capacity, reliability, and cost-effectiveness.

2. Inventory Management:
● Inventory Levels:

Deciding on optimal inventory levels at various points in the supply chain to

balance between customer service levels and holding costs.

● Inventory Location:
Determining the placement of inventory across warehouses or distribution
centers to optimize delivery times and minimize transportation costs.

● Safety Stock:

Calculating and maintaining safety stock levels to buffer against

uncertainties in demand, lead times, and supply chain disruptions.

3. Warehousing:
● Facility Location:

Choosing the locations of warehouses or distribution centers based on

proximity to suppliers, customers, transportation hubs, and cost
considerations.

● Warehouse Layout:

Designing efficient layouts to facilitate the flow of goods, minimize handling

costs, and optimize storage space utilization.

● Material Handling:

Selecting appropriate equipment and technologies for material handling,

storage, and retrieval operations to enhance efficiency and reduce labor
costs.

4. Order Processing:
● Order Entry:

Streamlining the process of capturing and processing customer orders

accurately and efficiently.

● Picking and Packing:

Optimizing methods for picking items from inventory and packing them for
shipment to ensure accuracy, speed, and cost-effectiveness.

● Dispatching:

Coordinating the dispatching of orders to transportation carriers or delivery

vehicles while ensuring timely departures and adherence to delivery
schedules.

5. Packaging:
 ● Packaging Design:

Designing packaging solutions that protect products during transit,

minimize shipping costs, and enhance brand perception.

● Packaging Materials:

Selecting appropriate packaging materials based on product

characteristics, transportation mode, and environmental considerations.

● Sustainability:

Incorporating sustainable packaging practices to reduce waste, lower

transportation emissions, and meet environmental regulations.

6. Information Systems:
● Technology Integration:

Implementing and integrating information systems such as Warehouse

Management Systems (WMS), Transportation Management Systems
(TMS), and Enterprise Resource Planning (ERP) systems to streamline
operations and enhance visibility.

● Data Analytics:

Utilizing data analytics to monitor key performance indicators (KPIs),

optimize supply chain processes, and make data-driven decisions for
continuous improvement.

7. Customer Service:
● Service Levels:

Defining service level agreements (SLAs) with customers regarding

delivery times, order accuracy, and responsiveness to inquiries or issues.

● Communication:

Establishing effective communication channels with customers to provide

updates on order status, delivery schedules, and any potential disruptions.

● Returns Management:

Developing processes and policies for handling product returns efficiently,

including reverse logistics and disposition of returned goods.
Challenges of Physical Distribution System:

● Cost Management:

One of the primary challenges is managing the costs associated with

transportation, warehousing, and inventory. Balancing costs while
maintaining service levels requires careful planning and optimization of
logistics operations.

● Inventory Management:

Maintaining optimal inventory levels to meet customer demand without

excessive stockpiling is crucial. Overstocking ties up capital and storage
space, while understocking can lead to lost sales and dissatisfied
customers.

● Transportation:

Logistics managers must contend with various transportation challenges,

including choosing the right modes (e.g., road, rail, air, sea), managing
freight costs, and ensuring timely delivery. Factors such as fuel prices,
traffic congestion, and regulatory requirements add complexity.

● Warehousing and Storage:

Efficient use of warehouse space, proper storage conditions (e.g.,

temperature control for perishable goods), and inventory tracking are
critical. Warehousing also involves labour management and the integration
of technology for inventory management systems.

● Customer Expectations:

Meeting customer expectations for delivery speed, reliability, and flexibility

presents a significant challenge. The rise of e-commerce has heightened
expectations for faster shipping times and real-time tracking capabilities.

● Global Supply Chains:

For businesses operating globally, navigating international trade

regulations, customs procedures, and geopolitical risks can complicate
logistics. Cultural differences, currency fluctuations, and varying
infrastructure levels further impact supply chain efficiency.
 ● Risk Management:

Logistics operations are susceptible to various risks such as natural

disasters, supplier disruptions, labor strikes, and geopolitical instability.
Developing contingency plans, establishing backup suppliers, and
maintaining robust insurance coverage are essential to mitigate these risks
and ensure business continuity.

● Sustainability and Environmental Concerns:

Increasingly, businesses are under pressure to reduce their environmental

footprint and adopt sustainable practices throughout their supply chains.
This includes optimizing transportation routes to minimize fuel
consumption, using eco-friendly packaging materials, and adhering to
environmental regulations. Balancing sustainability goals with
cost-effectiveness and operational efficiency is a complex challenge in
physical distribution systems.

Introduction to Logistics
and Supply chain
Management
30 Nov 2019

The term “Supply Chain Management” was coined in 1982 by Keith Oliver
of Booz, Allen and Hamilton Inc. But the discipline and practice has been in
existence for centuries.

The terms Logistics and Supply Chain Management are used

interchangeably these days, but there is a subtle difference that exists
between the two.

‘Logistics’ has a military origin, and used to be associated with the

movement of troops and their supplies in the battlefield. But like so many
other technologies and terminologies, it entered into the business lexicon
gradually and has now become synonymous with the set of activities
ranging from procurement of raw materials, to the delivery of the final
polished good to the end consumer.

In a typical business scenario, many organizations work in tandem

(knowingly or unknowingly) to get the final product in hand of the end
consumer. The supply chain is a network of these organizations that
coalesce with each other (downstream or upstream) to make the final
shipment successful.

A group of farmers, a cotton mill, a designer and a tailor is the least number
of stakeholders you can expect from a regular shirt you wear every day

Introduction to Logistics and Supply Chain Management (SCM)

Logistics is generally seen as a differentiator in terms of the final bottom

line of a typical “hard and tangible goods” organization; enabling either a
lower cost or providing higher value.

While a lower cost is mostly a one-time feel good factor and has been the
traditional focus area in logistics, high value comes into the picture much
later and may be tangible or intangible in a good’s initial stages.

So while an organization like Zappos may look costly at a first glance, the
extraordinary customer service due to robust policies is a value which more
than offsets the slightly higher cost.

Logistics is concerned with both materials flow and information flow. While
the materials flow from the supplier to consumer, the information flows the
other way round. It is not only concerned with inventory and resource
utilization, customer response also falls under the ambit of logistics.

In simple terms, logistics can be seen as a link between the manufacturing

and marketing operations of a company. The traditional organizations used
to think of them separately, but there is a definite value addition in
integrating the two due to the interdependence and feedback channel
between the two.

The level of coordination required to minimize the overall cost for the end
consumer gets tougher to achieve as the number of participants in a supply
chain increase, as an extremely efficient flow of material and information is
required for optimization.
Logistics cover the following broad functional areas: network design,
transportation and inventory management.

Manufacturing plants, warehouses, stores etc. are all facilities which form
key components in the network design. Transportation: the cost and
consistency (reliability) required out of the transportation network
determines the type and mode of the movement of goods and also affects
the inventory.

Buffer (or safety) stock is the reserve stock held to safeguard against
shortages or unexpected surge in demand, to avoid “stock-outs”. Fewer
inventories with negligible stock-outs — the hallmark of an efficient
logistical system

Basic concepts of Logistics and SCM

Inventory Planning

Organizations want to minimize the inventory levels due to its almost linear
relationship with the cost. Yet if the demand is forecasted accurately, there
would ideally be no need for inventory and the goods will move seamlessly
from warehouses to customers.

● That would have been awesome, but it is deep into the ideal world
zone. In the real world, the forecasted numbers can only take you so
far and some inventory has to be maintained to satiate any surges in
demand; the cost of unhappy consumers who are not serviced is
often huge, and is immeasurable in most cases.
● Yet overstocks lead to increase in working capital requirements,
insurance costs and blocked resources which could have been
productive someplace else.
● Making a business forecast has largely been a gut-based process,
but is changing rapidly in the era of data-based decision making. The
forecast depends on the historical baseline for sales, seasonality
(soft drinks have higher sales volume in May), recent trends
(Samsung is losing out to competitors when it comes to phones, a
declining trend), business cycles (economies go through expansion
and contraction every few years), promotional offers (up to 50% off
can drive the average fashionista mad) etc.

Transportation
The kind of transportation employed by an organization is a strategic
decision (it usually accounts for around 1/3rdof the total logistics cost)
based on the required level of risk exposure, customer service profiles,
geographic area covered etc. Truck shipments take more time for delivery
compared to air transport (customers with relaxed turnaround times); is
cheaper but necessitates maintenance of higher inventory levels.

● Transportation serves the purpose of not just product movement, but

storage as well (not very intuitive). Time spent for delivery means
saved time for warehousing, and many times the cost to offload and
reload shipments can be greater than the cost of letting the goods
stay in the transportation vehicles itself.
● Two basic thumb rules apply for transportation decisions: truck load
(TL) shipments are better than less-than-truckload (LTL) shipments
as storage space is a perishable commodity (just like a commercial
airline does not want to fly with empty seats), and the cost per
kilometer decreases as the distance increases (two 500 km
shipments is usually more expensive than a single 1000 km
shipment).
● The factors which determine the economies of transportation
decisions include but are not limited to: distance between the starting
and destination points, and density (higher density products take less
space — space constraints outweigh weight constraints by a huge
margin), stow ability (spherical packaging will lead to more empty
spaces compared to cubical) and volume of the goods. Different
modes of transport serve different strategic ends (rail, road, air, water
etc).
● FlipKart has eKart for its logistical operations and warehousing,
whereas smaller e-commerce players generally outsource their
operations to specialized logistics players such BlueDart, DHL and
now Delhivery.

Packaging

The end goals differ: can either be done for end consumers or for logistical
considerations. The packaging will then depend on the end goal; form
factor plays the lead role when packaging goods for the end consumers,
while function plays the lead role in packaging for logistical operation.
Warehousing

It is the back-end building for storing goods. Based on the needs of the
organization, it can be in-house or outsourced.

● Primary functions of a warehouse are product movement and

storage. Activities such as offloading of the goods coming from the
suppliers, the intermediate packaging (if required), and shipping to
other destinations (retailers or end consumers) are handled in the
warehouse. Similarly, they can also serve as a storage house for
handing peak consumer demand to avoid stock out of items, and acts
as a buffer between the starting point (usually manufacturing plant)
and ending point (think about a typical retail outlet).

Different distribution strategies can be adopted by an organization based

on its needs and infrastructure in place, namely:

● Cross-Docking: Relies on minimal processing at the warehouse

level and facilitate seamless connection between “incoming” and
“outgoing” goods through technologies such as bar code scanners;
becoming increasingly important due to established structured
communication between retailers and manufacturers; best for high
velocity goods with predictable demand patterns.
● Milk Runs: The delivery guy is out to deliver items from a single
supplier to multiple retailers or to pick up items from multiple
suppliers for a single retailer (An Indian Doodhwala can literally teach
a thing or two about this, hence the naming we think).
● Direct Shipping: A supplier directly ships to a particular retailer
without any intermediaries. Mostly happens with big-name stores with
huge good volumes, and very frequent replenishments. Big savings
on time.
● Hub and Spoke Model: Hub serves as the central node for nearby
places, and the spokes depend on the hub for their needs (think of a
metropolitan and various tier-2 cities in its proximity).
● Pooled Distribution: Region is the most important factor driving this
strategy. Delivers to every destination point in a geographical area,
smart for handling peak time loads and LTL shipments. Plus one for
the planet as a bonus!

Human : Arteries :: Logistics : Information

Traditional paper-based information systems are increasingly on their way
out, and electronic exchanges are making rapid inroads into the logistical
process flow. The initial investment in electronic systems is recouped
quickly by cost savings due to better operational efficiency and enhanced
customer service. Advances in electronic data interchange (EDI), artificial
intelligence and wireless communication is partly responsible for this
intelligent shift.

● The principal information flow can be subdivided in two main

streams: one for planning (looking into the future) and the other for
operational flows (in the past and present). Plans are to be made for
production, storage and movement of goods. Manufacturing
constraints (internal) and expected sales (external) are the key areas
focused upon. Operating flows refer to the information generated (or
required) to serve the orders to the customer.
● Enterprise Resource Planning (ERP) is a fancy term used by IT
people for one-stop, integrated packages to support multiple
functions across an organization. It serves as a central destination to
capture data which aids in making optimal decisions, while also
serving as a repository to better understand the current business
scenario and plan for any future needs.

Green Supply Chain Management: Lean Practices

Green is the new way to go about things, and the myth that profits and
environment cannot go hand in hand is evaporating fast. Commitment to
lean practices is a promise to do away with inefficiencies in the system to
reduce wastes and have a minimal impact on the environment.

The emphasis on continuous product flows, standardization within the

organization/industries and a greater integration between producers and
consumers — all these have contributed to efficient supply chains with
gradually decreasing waste levels.

Information is often the key differentiator when it comes to successful

supply chain practices, and the organizations that share information with
each other based on the premise of trust and long-term business viability
will often have decisive competitive advantage over organizations that do
not share critical information upstream and downstream.
The best part is everybody winning — organizations, end consumers and
Mother Nature.