Test 4 Chapter 16
Sales Promotions
Are marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. Cents-off, in store demonstrations, samples, coupons, gifts, product tie-ins, contests, sweepstakes, sponsorship of special events such as concerts, the olympics, fairs, and point-of-purchase displays are types of sales promotion devices designed to supplement advertising and personal selling in the promotional mix. Sales promotions are short term efforts directed to the consumer or retailer to achieve such specific objectives as consumer product trial or immediate purchase, consumer introduction to the store or brand, gaining retail point of purchase displays, encouraging stores to stock the product, and supporting and augmenting advertising and personal sales efforts. While all software firms decry piracy in foreign markets as a costly crime, most recognize that in some sense it is actually a form of product trial. In markets in which the consumer is hard to reach because of media limitations, the percentage of the promotional budget allocated to sales promotions may have to be increased. Less developed countries, sales promotions constitute the major portion of the promotional effort in rural and less accessible parts of the market. An especially effective promotional tool when the product concept is new or has a very small market share is product sampling. The success of a promotion may depend on local adaptation. Research has shown that responses to promotions can vary across promotional types and cultures. Constraints are imposed by local laws, which may not permit premiums or free gifts to be given. Some countries' laws control the amount of discount given at retail, others require permits for all sales promotions, and in at least one country, no competitor is permitted to spend more on a sales promotion than any other company selling the product. Effective sales promotions can enhance the advertising and personal selling efforts and, in some instances, may be effective substitutes when environmental constraints prevent the full utilization of advertising.
Public Relations
Creating good relationships with the popular press and other media to help companies communicate messages to their publics-customers, the general public, and governmental regulators. The job consists of not only encouraging the press to cover positive stories about companies but also managing unfavorable rumors, stories and events. Regarding the latter, the distinction between advertising and public relations has become an issue now considered by the united states supreme court. The importance of public relations in international marketing is perhaps best demonstrated by several recent controversies 1) the google china political fight over censorship and hacking 2) a wave of suicides by employees at foxonns factories in china, which makes electronics products for the likes of apple, hewlett packard and dell and 3) the toyota brake pedal problem mentioned in chapter 13. Public relations firms billings in the international arena have been growing at double-digit rates for some years. handling such international pr problems as global workplace standards and product safety recalls has become big business for companies serving corporate clients. Fast growth is also being fueled by the expanding international communications industry. Building an international profile. Corporate sponsorships might be classified as an aspect of sales promotions or public relations, through their connections to advertising are also manifest.
Legal constraints
Laws that control comparative advertising vary from country to country. Many fear that if the laws are not harmonized, member states may close their borders to advertising that does not respect their national rules. Comparative advertising is heavily regulated in other parts of the world as well. Comparative advertising restrictions are lifted, international marketers will have to carefully consider consumers responses to novel advertising campaigns in the genre. A variety of restrictions on advertising of specific products exist around the world. Advertising on television is strictly controlled in many countries. Commercials are controlled to exclude superlative descriptions, indecent words, fearful or shocking shots, indecent clothing or dancing, contests, hatred or revenge shots, ethnic derision and attacks on competition. Some country laws against accessibility to broadcast media seem to be softening. Companies that rely on television informercials and television shopping are restricted by the limitations placed on the length and number of television commercials permitted when their programs are classified as advertisements. Internet services are especially vulnerable as EU member states decide which area of regulation should apply to these services. Some countries have special taxes that apply to advertising, which might restrict creative freedom in media selection
International Advertising
Since the turn of the century, growth in global advertising expenditures has become quite volatile. Advertising expenditures grew on average by more than 20 percent in developing countries in 2010, though with slower growth in the US, Europe, and Japan. Amid this choppy global economic environment and fast technological churn, the advertising industry continues to undergo substantial restructuring. Related to the technological revolution in media is a general conundrum about counting. Keeping track of the 100 biggest advertisers and their agencies is a relatively simple matter of record keeping and reporting. But as the nature, use, and monitoring of media churn, it becomes more difficult to define basis of comparison that support useful analysis. Global mass media advertising is a powerful tool for cultural change, and as such, it receives continuing scrutiny by a wide variety of institutions. Advertising expenditures are generally cyclical, though less so in relationship-oriented countries where managers and regulators favor stability and long-term performance. Just beginning to understand some of the key issues involved in international advertising, but our knowledge will continue to be quite perishable as the revolution continues. Of all the elements of the marketing mix, decisions involving advertising are those most often affected by culture differences among country markets. Consumers respond in terms of their culture, style, feelings, value systems, attitudes, beliefs, and perceptions. Because advertisings function is to interpret or translate the qualities of products and services in terms of consumer needs, wants, desires, and aspirations, the emotional appeals, symbols, cultural norms if the ad is to be effective. Seven steps are involved: 1) Perform marketing research 2) Specify the goals of the communication 3) Develop the most effective message(s) for the market segments selected 4) Select effective media 5) Compose and secure a budget based on what is required to meet goals 6) Execute the campaign 7) Evaluate the campaign relative to goals specified. Of these steps, developing messages almost always represents the most daunting task for international marketing managers. Advertising agencies are ordinarily involved in all seven steps and are the subject of a separate section.
Campaign execution and advertising agencies
The development of advertising campaigns and their execution are managed by advertising agencies. Local agencies also have expanded as the demand for advertising services by MNCs have developed. The international marketer has a variety of alternatives available. In most commercially significant countries, an advertiser has the opportunity to employ a local domestic agency, its company owned agency, or one of the multinational advertising agencies with local branches. Agency company relationships can be complicated and fragile in the international context. A local domestic agency may provide a company with the best cultural interpretation in situations in which local modification is sought, but the level of sophistication can be weak. The cross cultural communication between the foreign client and the local agency can be problematic. The local agency may have the best feel for the market, especially if the multinational agency has little experience in the market. Local laws require a local advertising partner. The best compromise is a multinational agency with local branches, because it has the sophistication of a major agency with local representation. A multinational agency with local branches is better able to provide a coordinated worldwide advertising campaign. Many companies with a global orientation employ one, or perhaps two, agencies to represent them worldwide. Compensation arrangements for advertising agencies throughout the world are based on the us system of 15 percent commissions. Agency commission patterns throughout the world are not as consistent as they are in the us; is some countries, agency commissions vary from medium to medium. Companies are moving from the commission system to reward by results system. This method of sharing in the gains or losses of profits generated by the advertising is gaining in popularity and mat become the standard. Services provided by advertising agencies also vary greatly.
Internet as a tactical consideration
The internet has emerges as a viable medium for advertising and must be included in a company's possible media mix. Its use in business to business communications and promotion via catalogs and product descriptions is rapidly gaining in popularity. A large businesss-to-business have access to the internet, the internet can reach a large portion of the business to business markets. The internet is being used by a growing number of companies as an advertising medium for consumer goods. Many consumer goods companies have e-stores, and others use the internet as an advertising medium to stimulate sales in retail outlets. For consumer products, the major limitation of the internet is coverage. This limitation is only temporary as new technology allows access to the internet vis television and as lower prices for personal computers expand their household base. As the internet continues to grow and countries begin to assert control over what is now a medium with few restrictions, increasing limitations will be set. Issues such as pay per view, taxes, unfair competition, import duties, and privacy are being addressed all over the world. The internet industry is lobbying for global understand on regulation to avoid a crazy quilt of confusing and contradictory rules. Another limitation that needs to be addressed soon is the competition for internet users. The sheer proliferation of the number of websites makes it increasingly difficult for a customer to stumble across a particular page. Search engines have now become crucial directors of internet users attention. Internet advertisers or e-marketers will have to be more effective in communicating the existence of their internet sites via other advertising media. Television sports raise brand awareness of a product regionally and promote the companys website. Company can buy ad banners on the web that will lead enthusiastic consumers to the companys site.
Global advertising and the (international) communication process
The seven identifiable steps ultimately can affect the accuracy of the process. 1)An information source. An international marketing executive with a product message to communicate. 2) Encoding. The message from the source converted into effective symbolism for transmission to a receiver. 3) A message channel. The sales force and/or advertising media that covey the encoded message to the intended receiver. 4) Decoding. The interpretation by the receiver of the symbolism transmitted from the information source. 5) Receiver. Consumer action by those who receive the message and are the target for the thought transmitted. 6) Feedback. Information about the effectiveness of the message that flows from the receiver back to the information source for evaluation of the effectiveness of the process. 7)Noise. Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process and affect any or all of the other six steps. If not properly considered, the different cultural contexts can increase the probability of misunderstandings. Research in the area suggests that effective communication demands the existence of a psychological overlap between the sender and the receiver; otherwise a message falling outside the receivers perceptual field may transmit an unintended meaning. It is in this area that even the most experienced companies make blunders. Most promotional misfires or mistakes in international marketing are attributable to one or several of these steps not properly reflecting cultural influences or a general lack of knowledge about the target market. The product message to be conveyed should reflect the needs and wants of the target market; however, often the actual market needs and the marketers perception of them do not coincide. It can never be assumed that if it sells well in one country it will sell in another. From the onset of the communications process, if basic needs are incorrectly define, communications fail because an incorrect or meaningless message is received, even though the remaining steps in the process are executed properly. The encoding step causes problems even with a proper message. Factors as color, timing, values, beliefs, humor, tastes and appropriateness of spokespersons can cause the international marketer to symbolize the message incorrectly. Problems of literacy, media availability and types of media create challenges in the communications process at the encoding step. Message channels must be carefully selected if an encoded message is to reach the consumer. Errors such as using the Internet as a medium when only a small percentage of an intended market has access to the Internet, or using print media for a channel of communications when the majority of the intended users cannot read or do not read the language in the medium. Decoding problems are generally created by improper encoding. Decoding errors may also occur accidentally. In some cases, the intended symbolism has no meaning to the decoder. Errors at the receiver end of the process generally result from a combination of factors; an improper message resulting from incorrect knowledge of use patterns, poor encoding producing a meaning producing a meaningless message, poor media selection that does not get the message to the receiver, or inaccurate decoding by the receiver so that the message is garbled or incorrect. Bad luck comes into play. Feedback step of the communications process is important as a check on the effectiveness of the other steps. Companies that do not measure their communications efforts are likely to allow errors of source, encoding, media selection, decoding, or receiver to continue longer than necessary. Noise comprises all other external influences, such as competitive advertising, other sales personnel, and confusion at the receiving end, that can detract from the ultimate effectiveness of the communication. Noise is a disruptive force interfering with the process at any step and is frequently beyond the control of the sender or the receiver. The growing intensity of international competition, coupled with the complexity of multinational marketing, demands that the international advertiser function at the highest creative level.
Integrated Marketing communications
are composed of advertising, sales promotions, trade shoes. personal selling, direct selling and public relations- almost all are included in the Barbie campaign described in the Global perspective. Common objective the successful sale of a product or service. In many markets, the availability of appropriate communication channels to customers can determine entry decisions. Product and service development must be informed by research regarding the availability of communication channels. A market offering is developed to meet target market needs, intended customers must be informed of the offerings value and availability. Advertising and personal selling are the major components in the marketing communications mix. Achieve synergies possible when sales promotions, public relations efforts and advertising are used in concert.
