Question No. 4 - MMPC-006 - Marketing Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

                            MBA and MBA (Banking & Finance)

MMPC-006 - Marketing Management

MMPC-006/TMA/JULY/2022

Question No. 4.                                                                           
(a) What do you understand by the term Advertising? Discuss the various types of advertising and the major role that advertising plays in the promotion of a firms offering. Explain by taking one example each from a product and a service of your choice. 

In modern times advertising prevails in all walks of human life. It has acquired the distinction of being the most visible and glamorous and impactful method of marketing communication. Advertising is defined as any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. Some of the major marketing and communication functions performed by advertising today include to inform, entertain persuade, influence, remind, reassure and add value to the product or service advertised. While sales promotion being a key element of promotion mix makes use of short term incentives to encourage purchase of product or service. Before going to touch upon the role of advertising and sales promotion and their managerial aspects, let us acquaint ourselves with how advertising and sales promotion works and their dimensions in overall marketing communication.

In order to perform the various marketing and communication functions listed above, according to Paul E.J. Gerhald, advertising moves through the following stages before accomplishing its purpose: 

• it gets planned and brought into existence 
• it is reproduced and delivered and exposed to people 
• it is received and assimilated 
• it affects ideas, intentions and attitudes 
•  it affects buying and buying process 
•  it responds to time (situation and repeated exposure) 
•  it affects trade effort and supply 
• it affects product consumption 
• it changes sales and profits 
• it changes the market (size, quality mix, intensity competition, trade relations, consumerism etc.) 

TYPES OF ADVERTISING

• Depending upon the nature of the task involved, type of product represented or the focus of activity transacted, advertising efforts are grouped into various types. Let us take a few examples. 
• Advertisements for machinery and machine tools form part of industrial advertising, and the ones for footwear, cornflakes or edible oil etc. the consumer advertising.
• The advertisements aimed at improving the corporate image are forms of corporate advertising and the ones promoting a company's products, the product advertising.
• Likewise, advertisements promoting the consumption of tea or carpets are called primary demand creating advertisements whereas those relating to specific brand such as Brooke Bond's `Tajmahal' or Nescafe', selective brand advertising is appropriate. 
• Advertisement aimed at effecting immediate sale of the product advertised is called direct advertising, and the ones performing tasks like announcing the launch of the new product, building purchase intentions, creating interest in customers or changing their attitudes towards the product, are termed the indirect action advertising. 
• The advertisements which are sponsored and paid for by the manufacturers are manufacturer advertising, and such advertisements whose costs are shared by the manufacturer and wholesalers or retailers are co-operative advertising. Co-operative advertisements aim at increasing the demand of a specific product of a manufacturer through a particular wholesaler or retailer. 
• On the other hand, when a retailer advertises for his shop entirely on his own to attract traffic to his shop it is retail advertising.

In short, the major types of advertising are: industrial and consumer, product and institutional, primary demand and brand-demand, direct (sales) demand and indirect (awareness, intentions and attitudes) action advertising, and manufacturer, co- operative and, retail advertising.

ROLE OF ADVERTISING

In the pursuit of its purpose, the economic and social effects of advertising have become the subjects of continuing debate. A quick flavor of the arguments put forward on both the sides can be had from Table 1. The table presents two viewpoints, one considering advertising as an information disseminating utility function and the other viewing advertising as a source of market power.

On balance, advertising has carved an indispensable place for itself in the marketing mix of a firm. Philip Kotler very aptly refers to the following situations where advertising is likely to make greater contribution. The situations are:

• when buyer awareness is minimal 
• when industry sales are rising rather than remaining stable or declining 
• when the product has features normally not observable to the buyer 
• when the opportunities for product differentiation are strong • when primary instead of secondary motives can be tapped. 
• 
  
• Are, there some limitations to the role of advertising? The answer obviously is in the. affirmative. Advertising, in the words of Richard H. Stansfield, cannot do the following: 
• sell a bad product twice 
• sell an overpriced or otherwise non-competitive product 
• sell a poorly distributed product 
• sell a seasonal product during non-season /out of season (significantly) 
• sell products to persons having no use for them 
• work overnight
• do the selling job alone.  

During the late 80’s the usefulness of advertising, which for long been accused as a capitalist tool and a bane of market economy, was realised by planned and communist economies too. While Yugoslavia, USSR, Poland and Hungary shed their hostility to advertising quite a few years ago, China welcomed advertisement propelled marketing and hosted the Third World Advertising Congress in Beijing during June 1987. The Economic Times in its marketing and advertising column reported that China's advertising expenditure in 1985 was around $ 200 million.

Advertising constitutes one of the four components of a firm's promotion mix which in turn forms an integral element of the firm's marketing mix. In order to implement the marketing concept and to achieve the objective of integration among different elements of marketing mix, it is necessary that the advertising function be systematically planned. In particular, the link of advertising with the promotion and marketing objectives of the firm on the one hand, and with factors like product positioning objective, role of sales force, dealer support plan and the buying habits of consumers, on the other hand, must be clearly established. This link helps a firm to achieve the desired push-pull strategy objectives, and enables the product to have a distinct personality. The task involved in advertising is, therefore, complex and its management requires systematic decision-making. Charles Ramond advocates appropriate research to precede each stage of an advertising campaign. 

(b) Explain the nature and role of Personal Selling. Discuss the steps involved in the selling process by taking an example of a financial software product for a medium enterprises

Personal selling, as the name implies, is an individual to individual selling. It, therefore, carries the distinctive advantage of flexibility in terms of tailoring the sales presentation/interaction to the needs of the buyer. Another unique advantage comes from its two-way communication, and human interaction thereby providing instant feedback. These two unique advantages make personal selling the most result-oriented promotion method.

Generally speaking, the nature of goods/products marketed, as well as the distribution system adopted; determine the role of personal selling in a firm. Therefore, personal selling is used extensively in the case of industrial goods, where the salesperson performs functions such as assisting the customer in designing the product specifications, product installation, product commissioning, solving technical problems through providing service after sales and helping customer to have optimal utilization of the product. In the case of consumer goods, on the other hand, the role of personal selling gets usually restricted to the dealer/distributor/stockiest level. The scope of the tasks performed include obtaining periodic orders, ensuring supplies, offering tips to dealers on product display and attaining desired levels of stock movement. Similarly, the role played by personal selling is more in a firm which uses door-to-door selling method through its sales force than in the firm which sells through large stockiest, distributors or sole- selling agents.

Notwithstanding the varying role of personal selling in the strategies followed by different companies, the nature of the selling function requires that the following tasks be performed: 

• sales generation
• feedback and market information collection 
• provision of customer service covering aspects such as delivery of goods, warranty administration, timely availability of repair and spares etc. 
• performance of sales support activities such as monitoring distribution function, credit collection, improving manufacturer-dealer relations, implementing the promotional programmes, etc. 

In practice, the complexity of the selling task actually performed varies from company to company even under the above four categories. 

THE SELLING PROCESS

Up to this point we were discussing the role of personal selling and the degree of creativity required in a salesperson to perform his task satisfactorily. Now we will take a look at the selling process followed for completing a sale. Though the steps in the selling process discussed below will be applicable to most of the selling situation. What will differ will be the degree of importance given to each step of the process under different selling situations. The basic steps in the selling process . A salesperson must become accomplished at performing the selling steps. These steps are: 

Step 1 Preparation: 

Before starting the selling job, a salesperson should make a valuable investment of time and resources to know the products he will be selling, know the customers (i.e. customer types, buying motives and buying process) to whom he will be selling; know the competitors against whom he will be selling, and finally know the philosophy, policies and range of products of his company, In short, he should be well equipped with the fundamentals of selling. 

Step 2 Prospecting: 

This step of the selling process deals with locating and preparing a list of prospective customers. Prospects can be located through (1) identifying the potential of buying more in the existing customers, (2) recommendations of existing customers, (3) winning back lost customers, (4) attracting competitor' s customers, (5) customers' information request from advertisement, (6) newspaper announcements, (7) public records, (8) directories like telephone, trade association etc., (9) other salesmen, (10) references from friends, neighbours and business associates, and (11) cold canvassing, that is, going from door-to-door. 

The located prospects should first he qualified broadly in terms of (i) whether they want the product and how intense their want is (ii) whether they have the adequate purchasing power, and (iii) whether and who possesses the power or authorisation to purchase and spend the required money. The qualifying of prospects is the process of separating the prospects from the suspects. It is worth-mentioning here that the ability to prospect is the most essential ability of a successful salesperson. A good salesperson keeps examining, weeding out the already tapped prospects and updating his lists of prospects, and remains in constant search of new prospects. 

Step 3 Pre approach: 

The qualifying process of separating prospects from suspects further requires that the salesperson should possess detailed information relating to the prospects in terms of existing products consumed, their scale of operation, product range, their buying size, frequency, budget and the process, etc. In short, obtain customer orientation. The sources of information for the purpose include company annual reports, other salespersons, other suppliers to the prospects, census of manufacturers, professional journals, newspapers and market intelligence, The availability of the above information in a detailed manner as possible will help the salesperson in ranking the prospect in terms of their priority to the company. Good salespersons use the above information in classifying the prospects in A, B and C categories in terms of the immediacy of the attention to be given to them. 

Step 4 Approach: 

`First impression counts'. As such, this step needs to be carefully planned. This step has two distinct parts. One, of meeting the customer with a positive set of mind, and the second, is make an impact on him. For the former, referrals of reliable persons known to prospects, calling after fixing an appointment, use of door openers, help. For the latter the salesperson should equip himself with the key benefit to be emphasised, samples or new literature to be handed over, etc.

Step 5 Sales Presentation: 

Through advance information relating to the prospect every effort should be made to match the product offered to the needs/problems faced by the customer. The sales presentation should generally go according to the AIDA-attention, interest, desire, and action approach. How can this be done? Use of key benefit or a problem solver, or a unique act of the salesperson results in gaining attention. When used attentively this part also provides opportunity to get the main point of the initial statements made by the prospect. The presentation should proceed in a straightforward manner to help the prospect know that you understand his problem and that is the reason of your being there. To convince the prospect as early as possible, the salesperson should offer evidence through demonstration of the product, use of exhibits, models, sharing Of acts, citing examples of its successful applications/usage, showing testimonials, etc. The overall approach should be to build credibility and confidence in the supplying company, its products, and also in its competence to render specialised type of service to the, complete satisfaction of its customers. 

The flexibility of the sales presentations can range from the `Canned' or previously prepared presentation, to those allowing the salesperson complete freedom in the ' presentation. Though both the extremes, and even the hybrid of the two, have their own situational suitability, the important point to note is that salesmanship, being a showmanship function, must arouse active participation of the prospect in the presentation process. This can be done by introducing some action which would keep the prospect captivated. One possible way would be a joint review of the problem faced by the prospect. Another is helping the prospect imagine the projected benefits of owning the product.

Step 6 Handling Objections: 

It is in the last phase of the sales presentation step that the prospects start expressing doubts, or raising objections whether relating to price, need for more time to think, satisfied with the existing product/supplier or product quality claims. These doubts or objections should be welcome and they should be answered with confidence. There is certainly no doubt that the prospect has to be thoroughly, convinced that the product would satisfy his need. The ability of the salesperson of mind reading of the prospects enables him to anticipate the prospect's objections and reactions. The golden rules for handling objections are: (1) welcome the objection and show respect to the prospect, and (2) do not argue with the prospect. Even when the objections raised are half backed or trivial in nature, the salesperson should handle the situation tactfully. Only in extreme necessity, should a salesperson ask the prospect to adequately explain his problem faced. Even under these circumstances courtesy should not be lost sight of, and while the discussion is on, the salesperson should start recounting the benefits of the product agreed upon, and lead the prospect to make a favourable decision. It should be remembered that handling objections sharpens the selling skills of the salespersons. 

Step 7 Closing the Sale: 

Closing is that aspect of the selling process in which the salesperson asks the prospect to buy the product. There is a critical point during each presentation when the salesperson should ask for the order. Pending the location of the critical point, as the objections are being met, the salesperson should help reduce the choice of options, summarise the benefits of buying, and the consequences of not buying, and if need be, make use of the big idea appeal of buying `now' at that moment. The salesperson should have the ability of catching the buying signals given by the prospect and should act on them fast. Some such signals are changing the sitting/standing position and moving closer to the product; reading the instructions on the product; perusing the testimonials; showing hesitation in being able to afford; asking for another demonstration, if applicable; checking the warranty or asking questions relating to warranty terms. These signals show that the time is ripe to start taking the order. 

Step 8 Post-sale Follow-up: 

The selling process does not come to an end by writing the order. A few repetitions reassuring the benefits of the product keep the customer sold. Follow-up provides an opportunity to ensure that the product is being rightly used, and if necessary to re-explain the method of using, handling, and storing of the product when not in use. This builds favourable feelings and nurtures strong buyer- seller relationships. Post-sale follow-up not only reinforces the customer's confidence in the salesperson and his company but also tends to keep competition out. This also helps generate repeat business and valuable word-of-mouth publicity. The follow-up is a good source of feedback too. Let us conclude this section by stating that although the eight steps of the selling process are essential in spirit, these may not always be followed. This could be partly the (1) the selling situation involved (e.g., in the case of insider order-taker or retail salesperson) the first three steps of the selling process are generally not applicable as the customer walks into the store for buying a product, (2) the expertise of the salesperson (such that he can ignore or assume some information), or (3) the seller's market of the product where customers generally queue up for the product.