Global Marketing
Communications Decisions II:
Sales Promotions & Personal
Selling
Chapter 14
Copyright 2013, Pearson Education
Introduction
• In addition to advertising,
publicity and PR, the
promotion
mix includes:
–
–
–
–
–
–
Sponsorships
Sales promotion
Direct marketing
Personal selling
Internet
Infomercials
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2010 Shanghai World Expo Park
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Sales Promotion
• Sales promotion refers to any paid consumer
or trade communication program of limited
duration that adds tangible value to a product
or brand
– Price vs. non-price promotions
– Consumer vs. trade promotions
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Sales Promotion
• Provide a tangible incentive to
buyers
• Reduce the perceived risk
associated with purchasing a
product
• Provide accountability for
communications activity
• Provide method of collecting
additional data for database
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Home and Garden shows
attract homeowners
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Sales Promotion: Global or Local
• In countries with low levels of economic development,
low incomes limit the range of promotional tools
available
• Market maturity can also be different from country to
country
• Local perceptions of a particular promotional tool or
program can vary
• Local regulations may rule out use of a particular
promotion in certain countries
• Trade structure in the retailing industry can affect the use
of sales promotions
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Sampling
• Sampling
– Provides consumer with
opportunity to try product at
no cost
– May be distributed in stores,
in the mail, through print
media, at events, or door-toWine tasting in South Africa
door
• Kikkoman soy sauce launched a sampling
program in supermarkets in the U.S.; today the
U.S. contributes 85% of profit from international
operations
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Couponing
• Couponing
– Printed certificates entitle
the bearer to a price reduction
or some other special
consideration for purchasing a
particular product
•
•
Couponing accounts for 70% of consumer promotion
spending in the U.S.
Free-standing inserts, in-pack, on-pack, cross coupons
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Couponing
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Sales Promotion:
Issues and Problems
• Fraud
– Pepsi promotion with Apple
• Regulations vary by country
• Cultural dispositions to coupons
and other sales promotions
– Malaysians see coupon usage as
embarrassing
– Islam frowns on gambling so
sweepstakes may not work
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Personal Selling
• Person-to-person
communication between a
company representative and a
prospective buyer
• Focus is to inform and
persuade prospect
• Short-term goal: make a sale
• Long-term goal: build a
relationship
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Personal Selling Hurdles
• Political Risks – unstable or corrupt governments
change the rules for the sales team
• Regulatory Hurdles – Governments can set up
quotas or tariffs that affect the sales force
• Currency Fluctuations – increase and decrease in
local currencies can make certain products
unaffordable
• Market Unknowns – lack of knowledge of market
conditions, the accepted way of doing business, or
positioning of the product may derail the sales
team’s efforts
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The Strategic/Consultative
Selling Model
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Evolved in response
to:
•Increased
competition
•More complex
products
•More emphasis
on customer
needs
•Long-term
relationships
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The Strategic/Consultative
Selling Model
• Personal Selling Philosophy – commitment to the
marketing concept and a willingness to adopt the role
of problem solver/partner
• Relationship Strategy – game plan for establishing
and maintaining high-quality relationships with
prospects/customers
• Product Strategy – plan that can assist the sales
representative in selecting and positioning products to
satisfy customer needs
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The Strategic/Consultative
Selling Model
• Customer Strategy – plan that ensures that
the sales professional will be maximally
responsive to customer needs
• Presentation Strategy – consists of setting
objectives for each sales call and establishing a
presentation plan to meet those objectives
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The Presentation Plan
•
•
•
•
•
•
Approach
Presentation
Demonstration
Negotiation
Close
Servicing the sale
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Sales Force Nationality
•
•
•
•
Expatriates
Host-country nationals
Third-country nationals
Other options
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Expatriates
• Advantages
• Disadvantages
– Superior product
knowledge
– Demonstrated
commitment to service
standards
– Train for promotion
– Greater HQ control
– Higher cost
– Higher turnover
– Cost for language
and cross-cultural
training
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Host-Country Nationals
• Advantages
• Disadvantages
– Economical
– Superior market knowledge
– Language skills
– Superior cultural
knowledge
– Fast implementation
– Needs product training
– May be held in low
esteem
– Language skills may
not be important
– Difficult to ensure
loyalty
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Third-Country Nationals
• Advantages
• Disadvantages
– Cultural sensitivity
– Language skills
– Economical
– Allows regional sales
coverage
– May face identification
problems
– May be blocked for
promotions
– Income gaps
– Needs product and/or
company training
– Loyalty not assured
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Other Options
•
•
•
•
•
Sales agents
Exclusive license arrangements
Contract manufacturing or production
Management-only agreements
Joint ventures
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Special Forms of Marketing
Communications
• Direct Marketing
– Direct mail
– Catalogs
– Infomercials, teleshopping
• Event Sponsorship
– Concerts, sporting events
– Product placement in movies
• Internet Communications
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Direct Marketing
• Any communication with a consumer or business
recipient that is designed to generate a response
in the form of:
– An order
– Request for further information
– A visit to a store or other
place of business
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Catalogs
•Catalog: magazine-style
publication that features photographs,
illustrations, and extensive
information about a company’s
products
•U.S. 1/3 of world market, 17 billion
mailed in 2008
•EU: Elimination of barriers has led
to a boom
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German supermodel Yvonne
Catterfeld with Otto Catalog
Infomercials and Teleshopping
• An infomercial is a form of paid TV in which a
particular product is demonstrated, explained,
and offered for sale to viewers who call a tollfree number on the screen
• Teleshopping on channels like HSN and QVC
is exclusively devoted to demonstration and
selling
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Interactive Television
• ITV allows viewers to interact with the
programming content they are viewing
• In the U.K., more than half of pay-TV
subscribers use ITV
• Remote controls have buttons to push to
order products shown on screen
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Sponsorships
• A company pays a fee to be associated with an
event, team, athletic association, or sports
facility
• Combines elements of PR and sales promotion
• Draws media attention
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Product Placement
• Arranging to have the
company’s products and
brand names appear in
TV shows, movies, and
other types of
entertainment
• Marketers also lend or
donate products to
celebrities and other
public figures
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Looking Ahead to Chapter 15
• Strategic Elements of Competitive Advantage
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Global
Marketing
Global Edition
Warren J. Keegan Mark C. Green
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Strategic
Elements of
Competitive
Advantage
Chapter 16
Introduction
• This chapter looks at:
– Factors that shape
competition
– Competitive advantage at
the industry and national
levels
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Industry Analysis:
Forces Influencing Competition
• Industry – group of firms that produce
products that are close substitutes for each
other
• Michael Porter
identifies five
forces that
influence
competition
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Porter’s Force 1:
Threat of New Entrants
• New entrants mean downward pressure on
prices and reduced profitability
• Barriers to entry determines the extent of
threat of new industry entrants
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Threat of New Entrants:
Barriers to Entry
• Economies of Scale
– Refers to the decline in per-unit product costs as the
absolute volume of production per period increases
• Product differentiation
– The extent of a product’s perceived uniqueness
• Capital requirements
– Required investment for manufacturing, R&D,
advertising, field sales and service, etc.
• Switching costs
– Costs related to making a change in suppliers or
products
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Porter’s Force 2:
Threat of Substitute Products
• Availability of substitute products places limits
on the prices market leaders can charge
• High prices induce buyers to switch to the
substitute
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Porter’s Force 3:
Bargaining Power of Buyers
• Buyers=manufacturers and retailers, not
consumers
• Buyers seek to pay the lowest possible price
• Buyers have leverage over suppliers when:
– They purchase in large quantities (enhances
supplier dependence on buyer)
– Suppliers’ products are commodities
– Product represents significant portion of buyer’s
costs
– Buyer is willing and able to achieve backward
integration
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Bargaining Power of Buyers
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Porter’s Force 4:
Bargaining Power of Suppliers
• When suppliers have leverage, they can raise prices
high enough to affect the profitability of their
customers
• Leverage accrues when
– Suppliers are large and few in number
– Supplier’s products are critical inputs, are highly
differentiated, or carry switching costs
– Few substitutes exist
– Suppliers are willing and able to sell product themselves
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Porter’s Force 5:
Rivalry Among Competitors
• Refers to all actions taken by firms in the
industry to improve their positions and gain
advantage over each other
– Price competition
– Advertising battles
– Product positioning
– Differentiation
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Competitive Advantage
• Achieved when there is a match between a
firm’s distinctive competencies and the factors
critical for success within its industry
•
Broad market strategies
– Cost Leadership—low price
– Product Differentiation—premium price
•
Narrow market strategies
– Cost Focus—low price
– Focused Differentiation—premium price
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Cost Leadership
• Based on a firm’s position as the industry’s low-cost
producer
• Must construct the most efficient facilities
• Must obtain the largest market share so that its per
unit cost is the lowest in the industry
• Only works if barriers exist that prevent competitors
from achieving the same low costs
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Cost Leadership
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Product Differentiation
• Product that has an actual or perceived
uniqueness in a broad market has a
differentiation advantage
• Extremely effective for defending market
position
• Extremely effective for obtaining aboveaverage financial returns; unique products
command a premium price
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Product differentiation
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Cost Focus
• Firm’s lower cost position enables it to offer a
narrow target market and lower prices than
the competition
• Sustainability is the central issue for this
strategy
– Works if competitors define their target market
more broadly
– Works if competitors cannot define the segment
even more narrowly
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Cost Focus
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Focused Differentiation
• The product not only has actual uniqueness
but it also has a very narrow target market
• Results from a better understanding of
customer’s wants and desires
• Ex.: High-end audio equipment
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Global Competition and National
Competitive Advantage
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Factor Conditions
• Human Resources – the quantity of workers
available, skills possessed by those workers, wage
levels, and work ethic
• Physical Resources – the availability, quantity,
quality, and cost of land, water, minerals, and other
natural resources
• Knowledge Resources – the availability within a
nation of a significant population having scientific,
technical, and market-related knowledge
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Factor Conditions
• Capital Resources – the
availability, amount, cost, and
types of capital available; also
includes savings rate, interest
rates, tax laws, and government
deficit
• Infrastructure Resources – this
includes a nation’s banking,
healthcare, transportation, and
communication systems
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Demand Conditions
• Composition of Home Demand – determines
how firms perceive, interpret, and respond to
buyer needs
• Size and Pattern of Growth of Home Demand
– large home markets offer opportunities to
achieve economies of scale and learning in
familiar, comfortable markets
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Related and Supporting Industries
• The advantage that a
nation gains by being
home to internationally
competitive industries in
fields that are related to,
or in direct support of,
other industries
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Firm Strategy, Structure,
and Rivalry
• Domestic rivalry in a single national market is a
powerful influence on competitive advantage
– The absence of significant domestic rivalry can lead to
complacency in the home firms and eventually cause
them to become noncompetitive in the world markets
Differences in management styles, organizational skills,
and strategic perspectives also create advantages and
disadvantages for firms competing in different types of
industries
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Firm Strategy, Structure,
and Rivalry
• Capital markets and attitudes toward investments
are important components of the national
environments
• Chance events are occurrences that are beyond
control; they create major discontinuities
• Government is also an influence on determinants by
virtue of its roles as a consumer, policy maker, and
commerce regulator
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Global Marketing Communications Decisions II: Sales