PROMOTIONAL MIX
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PROMOTIONAL MIX 53 - 1 53 - 2 PROMOTIONAL MIX Page: 1 2 3 4 5 6 7 8 9 10 11 12 13 13 14 15 PROMOTIONAL MIX FOR THE INDUSTRY ~ .. PROMOTIONAL MIX ~ .... Advertising ~ ...... i. Public presentation ~ ...... ii. Pervasiveness ~ ...... iii. Amplified expressiveness ~ ...... iv. Impersonality ~ ............ ADVERTISING -v- SELLING ~ ~ ...... Advertising : Public Presentation ~ ~ ...... Advertising : Pervasiveness ~ ~ ...... Advertising : Expressiveness ~ ~ ...... Selling : Sales Technique ~ ~ ...... Selling : Prospect Cultivation ~ ~ ............ Operations ~ ~ ............ Markets + Trade Cell ~ ~ ............ Products ~ ~ ............ Competitors ~ .... Personal selling ~ ...... i. Personal confrontation ~ ...... ii. Cultivation ~ ...... iii. Response ~ .... Publicity ~ ...... i. High veracity ~ ...... ii. Off guard ~ ...... iii. Dramatization ~ ............ PUBLICITY + SALES PROMOTION ~ ~ ...... Publicity Effect : Accepted Veracity ~ ~ ...... Publicity Effect : Off Guard perceptions ~ ~ ...... Publicity Effect : Dramatization ~ ~ ...... Sales Promotion : Insistent ~ ~ ...... Sales Promotion : Product Demeaning ~ ~ ............ Operations ~ ~ ............ Markets + Trade Cell ~ ~ ............ Products ~ ~ ............ Competitors ~ .... Sales Promotion ~ ...... i. Insistent presence ~ ...... ii. Product demeaning ~ .... PROMOTION MIX ~ ...... Consumer -v- Industrial ~ ............ ADVERTISING RATING ~ ~ ...... Awareness Building ~ ~ ...... Comprehension Building ~ ~ ...... Efficient Reminding ~ ~ ...... Lead Generation 53 - 3 16 17 18 19 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 36 ~ ~ ...... Legitimation & Reassurance ~ ~ ............ Operations ~ ~ ............ Markets + Trade Cell ~ ~ ............ Products ~ ~ ............ Competitors ~ ...... The role of advertising in marketing ~ ...... i. Awareness building ~ ...... ii. Comprehension building ~ ...... iii. Efficient reminding ~ ...... iv. Lead generation ~ ...... v. Legitimation ~ ...... vi. Reassurance ~ ............ PERSONNEL SELLING RATING ~ ~ ...... Selling for Distribution Channel Stock Position Increase ~ ~ ...... Selling for Company Stock Position Decrease ~ ~ ...... Selling for Discounted Stocks ~ ~ ...... Selling for Enthusiasm Building ~ ~ ...... Missionary Selling ~ ~ ............ Operations ~ ~ ............ Markets + Trade Cell ~ ~ ............ Products ~ ~ ............ Competitors ~ ...... The role of personal selling in marketing ~ .... PROMOTION + ORGANIZATION ~ ............ ORGANIZATION RATING ~ ~ ...... Formal Corporate Position in Company ~ ~ ...... Formal Corporate Responsibility for Promotion ~ ~ ...... Established Working Plan for Promotion ~ ~ ...... Monitoring of Marketing Mix -v- Promotional Spend ~ ~ ...... Formal Co-ordination of Promotional -v- Marketing Campaigns ~ ~ ............ Operations ~ ~ ............ Markets + Trade Cell ~ ~ ............ Products ~ ~ ............ Competitors ~ ............ MARKETING COSTS ~ ~ ...... Advertising Costs ~ ~ ...... Sales Costs ~ ~ ...... Distribution Costs ~ ~ ...... After Sales Costs ~ ~ ...... Total Marketing Costs ~ ~ ............ Operations ~ ~ ............ Markets + Trade Cell ~ ~ ............ Products ~ ~ ............ Competitors ~ .... HISTORIC FINANCIAL DATA ~ .... HISTORIC MARKETING COSTS & MARGINS ~ ...... SALES COSTS ~ ...... DISTRIBUTION + HANDLING COSTS 53 - 4 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 ~ ...... ADVERTISING COSTS ~ ...... AFTER-SALES COSTS ~ ...... TOTAL MARKETING COSTS ~ .... HISTORIC MARKETING COST RATIOS & MARGINS ~ ...... PROFIT RATIOS ~ ...... MARKETING RATIO ~ ...... MARKETING OPERATIONAL RATIOS ~ ...... MARKETING COSTS ~ .... Financial forecast notes ~ .... PROMOTIONAL MIX BALANCE SHEET FORECASTS ~ .... Base Forecast : Median Market Scenario Balance Sheet Forecast ~ ...... Base Forecast : Median Market Scenario Operational Costs Forecast ~ ........ Base Forecast : Median Market Scenario Financial Ratios ~ .......... Base Forecast : Median Market Scenario Operational Margins ~ .... MARKETING COSTS FORECAST ~ ...... SALES COSTS FORECAST ~ ...... DISTRIBUTION + HANDLING COSTS FORECAST ~ ...... ADVERTISING COSTS FORECAST ~ ...... AFTER-SALES COSTS FORECAST ~ ...... TOTAL MARKETING COSTS FORECAST ~ .... MARKETING MARGINS + RATIOS FORECAST ~ ...... PROFIT RATIOS FORECAST ~ ...... MARKETING RATIOS FORECAST ~ ...... MARKETING OPERATIONAL RATIOS FORECAST ~ ...... MARKETING FACTORS FORECAST ~ .... Marketing Expenditure Balance Sheet Forecast ~ ...... Marketing Expenditure Operational Costs Forecast ~ ........ Marketing Expenditure Financial Ratios ~ .......... Marketing Expenditure Operational Margins ~ .... Variable Marketing Cost Objectives Balance Sheet Forecast ~ ...... Variable Marketing Cost Objectives Operational Costs Forecast ~ ........ Variable Marketing Cost Objectives Financial Ratios ~ .......... Variable Marketing Cost Objectives Operational Margins ~ .... Selling Cost Objectives Balance Sheet Forecast ~ ...... Selling Cost Objectives Operational Costs Forecast ~ ........ Selling Cost Objectives Financial Ratios ~ .......... Selling Cost Objectives Operational Margins ~ .... Advertising Cost Objectives Balance Sheet Forecast ~ ...... Advertising Cost Objectives Operational Costs Forecast ~ ........ Advertising Cost Objectives Financial Ratios ~ .......... Advertising Cost Objectives Operational Margins ~ .... Promotional & Pricing Cost Objectives Balance Sheet Forecast ~ ...... Promotional & Pricing Cost Objectives Operational Costs Forecast ~ ........ Promotional & Pricing Cost Objectives Financial Ratios ~ .......... Promotional & Pricing Cost Objectives Operational Margins ~ .... Promotional Expenditure Balance Sheet Forecast ~ ...... Promotional Expenditure Operational Costs Forecast ~ ........ Promotional Expenditure Financial Ratios 53 - 5 69 71 ~ .......... Promotional Expenditure Operational Margins ~ .... Financial data definitions INDEX 53 - 6 PROMOTIONAL MIX Promotion is one of the four major elements of the marketing mix. Promotion is the company's attempt to stimulate sales by directing persuasive communications to the buyers. The instruments of promotion - advertising, personal selling, sales promotion, and publicity - have separate and overlapping capabilities, and their effective co-ordination requires careful definition of communication goals. The promotion model describes the relative characteristics and properties of the four forms of promotion - advertising, personal selling, publicity, and sales promotion. The firm seeks to blend these elements into an optimal promotion mix. The pure theory calls for using these instruments up to the point where their marginal productivities are equal. Although consumer marketers appear to underplay personal selling and industrial marketers underplay advertising, these instruments have distinct contributions to make in any marketing programme that involves the integrated communications concept. The industry need to urgently address their promotional mix, which describes the array of tools available to the marketing management whose major role is promotional activity. Excluded are the marketing-mix elements of product, price, and place because, while they have some persuasive effects, their major role is not one of persuading potential customers. Below is a typical list the major promotional tools, or promotools. Examples of promotools:Catalogues Contests Corporate identification programmes Corporate publicity Coupons Demonstrations Endorsements Films Free samples House-organ publications Loudspeaker advertising Mailings Packaging Personnel Selling Point-of-sale displays Posters and show cards Premiums Price specials Product publicity Sales conference Sales literature Sales presentations Space advertising Speeches Trade exhibits Trading stamps Each of these promotools has specific potentialities and complexities that could justify managerial specialization. Yet a company, even a very large one, typically does not have a specialist in each area but only in those areas where the importance and usage frequency of the tool justify specialized competence. Historically, companies first made a separate function out of personal selling, later out of advertising and still later out of publicity. The other tools are employed by the sales manager, advertising manager, or public relations manager as needed. Since many years some companies began to appoint sales promotion managers to handle or advice on miscellaneous promotion tools that no one cared about. The term sales promotion (as distinct from promotion) came gradually into wide use to describe a fourth component of the promotional mix. 53 - 7 The following four components make up the promotional mix: any paid form of non-personal presentation and promotion of ideas, products, or services by an identified sponsor. 2. Personal selling oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales. non-personal stimulation of demand for a product, service, or business unit by 3. Publicity planting commercially significant news about it in a published medium or obtaining favorable presentation of it upon radio, television, or stage that is not paid for by the sponsor. those marketing activities, other than personal selling, advertising, and 4. Sales publicity, that stimulate consumer purchasing and dealer effectiveness, such promotion as displays, shows and exhibitions, demonstrations, and various non-recurrent selling efforts not in the ordinary routine. 1. Advertising 1. Advertising In spite of the tight definition of advertising, it is far from a unitary thing. Advertising involves such varied media as magazine and newspaper space; radio and television; outdoor displays (such as posters, signs, skywriting); direct mail; novelties (matchboxes, blotters, calendars); cards (car, bus); catalogues; directories and references; programmes and menus; and circulars. It can be carried out for such diverse purposes as long-term buildup of the company name (institutional advertising), long-term buildup of a particular brand (brand advertising), information dissemination about a sale, service, or event (classified advertising), announcement of a special sale (sales advertising) and so on. Because of the many forms and uses of advertising, it is hard to advance all-embracing generalizations about its distinctive qualities as a component of the promotional mix. Yet the following qualities can be noted, especially when it comes to brand and institutional advertising. i. Public presentation Advertising, unlike personal selling, is a highly public mode of communication. Its public nature confers a kind of legitimacy to the product and also suggests a standardized offering. Because many persons receive the same message, buyers know that their motives for purchasing the product will be publicly understood. ii. Pervasiveness Advertising is a pervasive medium that permits the seller to repeat his message many times. It also allows the buyer to receive and compare the messages of various competitors. Large-scale advertising by a seller says something positive about the seller's size, popularity and success. iii. Amplified expressiveness Advertising provides opportunities for dramatizing the company and its products through the artful use of print, sound and color. Sometimes the tool's very success at expressiveness may, however, dilute or distract from the message. iv. Impersonality Advertising, in spite of being public, pervasive, and expressive, cannot be as compelling as a personal salesman. The audience does not feel obligated to pay attention or respond. Advertising is only able to carry on a monologue, with the audience. 53 - 8 ADVERTISING -v- SELLING Advertising : Public Presentation Advertising : Pervasiveness Advertising : Expressiveness Selling : Sales Technique Selling : Prospect Cultivation H58 Grid Definition 2. Personal selling Personal selling also takes several forms, such as sales calls by a field representative (field selling), assistance by a salesclerk (retail selling), and a golf invitation from one company president to another (executive selling). It can be used for many purposes, such as creating product awareness, arousing interest, developing product preference, negotiating prices and other terms, closing a sale, and providing post-transactional reinforcement. Personal selling has certain distinctive qualities as a component of the promotional mix. i. Personal confrontation Personal selling involves an alive, immediate and interactive relationship between two or more persons. Each party is able to observe at close hand the characteristics and needs of the other and make immediate adjustments. Each party has the potentiality to help or hurt the other by his interest or lack of it, and this can make the encounter stressful. ii. Cultivation Personal selling permits all kinds of relationships to spring up, ranging from a matter-of-fact selling relationship to a deep personal friendship. In most cases, the salesman will be in a deferential position to the buyer; he must use art to woo him. The salesman at times will be tempted to put on pressure or to dissemble to get an order, but he will keep the customer's long-run interests at heart. iii. Response Personal selling, in contrast with advertising, makes the buyer feel under some obligation for having listened to the sales talk or using up the salesman's time. He has a greater need to attend and respond, even if the response is a polite "thank you". 3. Publicity A company and its products can come to the attention of the public through being newsworthy. Here the seller pays nothing for the press he receives. The results of free publicity can sometimes be spectacular. Because of the sales potential of good publicity, many sellers have geared up to make a deliberate use of publicity, or "free advertising". This means preparing company or product-slanted news stories and features and trying to interest the press in using them. Companies have realized that special skills are required to write good publicity and "reach" the press, and they have turned this job over to professional public relations men. Because of their salaries and cost, however, publicity turns out not to be costless advertising. Publicity has three distinctive qualities : i. High veracity New stories and features seem to most readers to be authentic, media-originated reports. Therefore readers are likely to regard news stories about products and companies as having a higher degree of veracity than if they came across as sponsored by a seller. 53 - 9 ii. Off guard Publicity can reach many potential buyers who otherwise avoid salesmen and advertisements. This is because the message is packaged in a way that gets to him as news rather than as a sales-directed communication. iii. Dramatization Publicity has, like advertising, a potential for dramatizing a company or product. PUBLICITY + SALES PROMOTION Publicity Effect : Accepted Veracity Publicity Effect : Off Guard perceptions Publicity Effect : Dramatization Sales Promotion : Insistent Sales Promotion : Product Demeaning H59 Grid Definition 4. Sales Promotion Sales promotion is the catchall for various promotools that are not formally classifiable as advertising, personal selling, or publicity. These tools may be sub-classified into items for consumer promotion (e.g., samples, coupons, money-refund offers, prices-off, premiums, contests, trading stamps, demonstrations), trade promotion (e.g., buying allowances, free goods, merchandise allowances, co-operative advertising, push money, dealer sales contests), and sales force promotion (e.g., bonuses, contests, sales rallies). The older concept saw sales promotion as an ad hoc collection of sales tools to be used when necessary as a direct, short-term sales stimulus. With its professionalizing in recent years, sales promotion is increasingly viewed as an important tool in its own right. It plays a critical role in the introductory and maturity stages of the product life cycle and also appears to be especially effective during periods of rapid inflation. The level of expenditures on sales promotion has been variously estimated as ranging from 20 to 35 percent of the typical company's promotion budget. The effects of sales promotion are often more immediate and measurable than those of advertising. Yet there has been insufficient research and decision modelling devoted to it. Although sales promotion tools are a motley collection, they have two distinctive qualities as a class. i. Insistent presence Many sales promotion tools have an attention-getting, sometimes urgent, quality that can break through habits of buyer inertia toward a particular product. They tell the buyer he has a chance that he will not have again to get something special. This appeals to a broad spectrum of buyers, although particularly to the economy-minded, with the disadvantage that this type of buyer tends to be less loyal to any particular brand in the long run. ii. Product demeaning Some of these tools suggest that the seller is anxious for the sale. If they are used too frequently or carelessly, they may lead buyers to wonder whether the product class or brand is desirable or reasonably priced. 53 - 10 PROMOTION MIX When the industry considers promotion as a whole, it faces two major decisions. The first is how much total effort to invest in promotion; the second, how much relative usage should be made of the different promotional tools. Since promotion is only one of several ways to stimulate company sales, the company faces the question of whether promotional funds could not be spent better in marketing research, new product development, lower prices, or more customer services. These latter alternatives tend to increase the real value of the company's offering in the buyer's mind. Buyers, if asked, would probably want the company to cut down on promotion and use the funds to make the offering more attractive. Yet some promotion is essential in order to create customer awareness of the product's existence and characteristics. Furthermore, promotion can create positive psychological associations that can enhance the buyer's satisfaction. In this last sense promotion may be considered to add to the real value of the company's offering. The problem of how much for promotion is not difficult in principle. The total promotional budget should be established at a level where the marginal profit from the marginal promotional spend just equals the marginal profit from using the spend in the best non-promotional alternative. A few generalizations might help indicate whether promotion will be a relatively important or unimportant component of the marketing mix. In general, promotion will be more important in markets where: 1. Products are alike, thus leading suppliers to try to differentiate them psychologically. 2. Products are in the introductory stage of the life cycle, where awareness and interest must be built, or in the mature stage, where defensive expenditures are required to keep market share. 3. Products are sold on a direct handling basis. 4. Products are sold on a self-selection basis. The optimal proportion to use of the various promotion tools is a difficult question. The most striking fact about promotional tools is their substitutability, as it is possible to achieve a given sales level by increasing advertising expenditures or personal selling, or by offering a deal to the trade or a deal to consumers. This substitutability explains why marketing departments are increasingly trying to achieve administrative co-ordination over all the instruments of promotion. The promotion mix in Consumer -v- Industrial marketing Advertising is widely felt to be the most important promotool in consumer marketing, and personal selling the most important promotool in industrial marketing. Sales promotion is considered of equal, though smaller, importance in both markets; and publicity is considered to have even smaller, but equal, importance in both markets. It should be stated that the term Industrial and Consumer do not only refer to the Business and Private buyer, but rather to the type of product in relation to the type of market situation. Thus a business buyer purchasing industrial components from a wholesaler or factor is in the same Consumer marketing and point-of-sale situation as a private individual buying a product off-theshelf at his supermarket. 53 - 11 ADVERTISING RATING Awareness Building Comprehension Building Efficient Reminding Lead Generation Legitimation & Reassurance H60 Grid Definition This view leads some marketers to act as if advertising is unimportant in industrial marketing and as if personal selling is unimportant in consumer marketing. Such conclusions are erroneous and can be refuted both in terms of common sense and research. 1. The role of advertising in marketing The industrial marketing situation appears to involve sellers confronting highly rational buyers who respond primarily to the quality of the product, its price, delivery and reliability. It would seem that a sales call would have much more impact than an advertising impression, especially if the product is complex. Yet consider the following functions that can be performed by advertising : i. Awareness building: If the prospect is not aware of the company or product, he may refuse to see the salesman, or the salesman may have to spend time in introducing himself and his company. ii. Comprehension building: If the product represents a new concept, some of the burden of explaining it can be effectively carried on by advertising. iii. Efficient reminding: If the prospect knows about the product but is not ready to buy, an advertisement reminding him of the product would be much more economical than a sales call. iv. Lead generation: Advertisements carrying return coupons are an effective way to generate leads. v. Legitimation: Company salesmen can use tear sheets of the company's advertisements to legitimatize their company and products. vi. Reassurance: Advertising can remind customers how to use the product and reassure them about their purchase. There is substantial research which has confirmed the important role played by advertising in a well-designed promotion programme for industrial products and the effectiveness of four promotional tools: personal selling, advertising, education and publicity. The typical sales transaction process was divided into four stages: awareness, comprehension, conviction, and order. The results show that advertising, along with publicity, plays the most important role in the awareness stage, more than is played by "cold calls" from salesmen. Customer comprehension is primarily affected by education, with advertising and personal selling playing secondary roles, each equal to the other. Customer conviction is influenced most by personal selling followed closely by advertising. Finally, closing the sale is predominantly a function of the sales call. These findings have important practical implications. First, the company could affect promotional economies by cutting back on salesmen's involvement in the early stages of the selling job so that they could concentrate on the vital phase - closing the sale. Second, in relying on advertising to do more of the job, it should take different forms, some addressed to building product awareness and some to creating conviction. 53 - 12 Moreover research sought to determine the relative roles of the company's reputation (built mainly by advertising) and the company's sales presentation (personal selling) in producing sales: The variables were the quality of the presentation and whether the salesman represented a wellknown company, a less known but creditable company, or an unknown company. The reaction and ratings of the buyer groups indicated the following: i. A company's generalized reputation (the source effect) has a positive influence on sales prospects in improving the chances of a) getting a favorable first hearing, and b) getting an early adoption of the product. Therefore, to the extent that corporate advertising can build up the company's reputation (other factors also shape its reputation), this will help the salesmen. ii. Salesmen from well-known companies have an edge in getting the sale, provided that their sales presentation is up to the expected standards. If, however, a salesman from a lesser-known company makes a highly effective sales presentation, this can overcome his disadvantage. To this extent, smaller companies may find it better to use their limited funds in selecting and training better salesmen rather than in advertising. iii. Company reputations tend to have the most effect where the product is complex, the risk is high, and the purchasing agent is less professionally trained. In general, the research findings confirm the constructive role of both advertising and the source effect in the industrial marketing process. Findings such as these have been developed into a formal model for apportioning promotional funds between advertising and personal selling on the basis of the selling tasks that each performs more economically. PERSONNEL SELLING RATING Selling for Distribution Channel Stock Position Increase Selling for Company Stock Position Decrease Selling for Discounted Stocks Selling for Enthusiasm Building Missionary Selling H61 Grid Definition 2. The role of personal selling in marketing The role of a company's force in consumer marketing would appear to be small relative to brand advertising and many consumer companies use their sales force (or a dealer sales force) mainly to collect weekly orders from dealers and to see that sufficient stocks are held and displayed. The common feeling is that "salesmen put products on shelves and advertising takes them off". Yet even here, an effectively trained sales force can make three important contributions: i. Increased stock position. Persuasive salesmen can influence dealers to take more stock or devote more self to the company's brand. ii. Enthusiasm building. Persuasive salesmen can build dealer enthusiasm for a new product by dramatizing the planned advertising and sales promotion backup. iii. Missionary selling. Salesmen are crucial in any effort to sign up more dealers to carry the company's brands. Within the same consumer industry companies can be found with quite different relative emphasis on the advertising, personal-selling mix. Some rely very heavily on sales-force "push", while many of their competitors rely more heavily on advertising "pull"; some put most of its promotional money into advertising, while others put most of it into personal selling. 53 - 13 PROMOTION + ORGANIZATION Members of the marketing organization have strong and varying feelings about the proper proportions of the company's promotion money to spend on the different promotools. Sales managers find it hard to understand how the company could get more value by spending a relatively large amount of money on a one-minute television commercial than by hiring an additional salesmen for a whole year. Public relations feels that the company can realize more through switching some of the advertising budget into publicity efforts. There is disagreement on how money should be divided between advertising and sales promotion, and within advertising between institutional and brand advertising, and within sales promotion between consumer and trade deals. Historically, companies left these decisions to different people. No one was given the responsibility for thinking through the roles of the various promotional tools and coordinating communication and promotion mix. Efficient companies use the concept of integrated communications, calling for: i. Developing a corporate position, such as marketing communications director, who has overall responsibility for the company's persuasive communication efforts. ii. Working out a philosophy of the role, and extent, to which the different promotools are used. iii. Keeping track of all promotional investments by product, promotool, stage of product life cycle, and observed effect, as a basis for improving subsequent effective use of each tool. iv. Coordinating the promotional inputs and their timing when major campaigns take place. One reason for this organizational integration is that increasingly promotional campaigns are multitooled and multi-brand. In introducing a new product, one has to co-ordinate advertisements in the major media, distributor handling, trade deals, customer deals, and publicity. A new brand may be tied to existing brands. All of this takes careful planning, timing, vision and authority. Another argument is that normally records are not kept of the different promotional effects tried for various company products. One product manager may be considering a special tool to boost sales, unaware that this ploy failed for another product. By centralizing and analyzing data on promotional efforts over time and across products, the company can improve its promotional planning. Finally, integrated management of promotional activities promises more consistency in the company's meaning to its buyers and audiences. It places a responsibility in someone's hand, where none existed before, to constructively worry about the company's image as it comes through the many activities of the company. It leads to the determination of a total marketing communications strategy aimed at showing how the company can help customers solve their problems. ORGANIZATION RATING Formal Corporate Position in Company Formal Corporate Responsibility for Promotion Established Working Plan for Promotion Monitoring of Marketing Mix -v- Promotional Spend Co-ordination of Promotional -v- Marketing Campaigns H62 MARKETING COSTS Advertising Costs Sales Costs Distribution Costs After Sales Costs Total Marketing Costs H63 Grid Definition 53 - 14 HISTORIC FINANCIAL DATA PROMOTIONAL MIX ISSUES HISTORIC FINANCIAL DATA F_H - FIN_HIST.HTM Financial Definitions PROMOTIONAL MIX The PROMOTIONAL MIX FINANCIAL SCENARIOS BALANCE SHEET FORECASTS section gives a series of Balance Sheet Forecasts for the industry using a number of assumptions relating to the promotional decisions available to the marketing management of the industry. The Balance sheet forecast given shows the effects of promotional improvements which Marketing Management is likely to recommend: PROMOTIONAL MIX FINANCIAL SCENARIOS - Base Forecast : Median Market Scenario - Marketing Product Launch Cost Scenario - Marketing Expenditure - Variable Marketing Cost Objectives - Selling Cost Objectives - Advertising Cost Objectives - Promotional & Pricing Cost Objectives - Promotional Expenditure Managers in the industry will, in both the short-term and the long-term, have vital decisions to make regarding the promotional improvements, margins and profitability and these decisions will need to be evaluated in light of the customers, markets, competitors, products, industry and internal factors. The scenarios given isolate a number of the most important factors and provide balance sheet forecasts for each of the scenarios. Marketing Product Launch Scenario PRODUCT LAUNCH MARKETING DATA FPL - FINAMKTG.HTM PRODUCT LAUNCH MARKETING RATIOS IPL FINBMKTG.HTM 53 - 15 Base Forecast : Median Market Scenario F0M | MEDIAN FORECAST : Financials G0M | MEDIAN FORECAST : Margins & Ratios Marketing Expenditure F01 | MARKETING EXPENDITURE : Financials G01 | MARKETING EXPENDITURE : Margins & Ratios Variable Marketing Cost Objectives F26 | VARIABLE MARKETING COST OBJECTIVES : Financials G26 | VARIABLE MARKETING COST OBJECTIVES : Margins & Ratios Selling Cost Objectives F30 | SELLING COST OBJECTIVES : Financials G30 | SELLING COST OBJECTIVES : Margins & Ratios Advertising Cost Objectives F31 | ADVERTISING COST OBJECTIVES : Financials G31 | ADVERTISING COST OBJECTIVES : Margins & Ratios Promotional & Pricing Cost Objectives F32 | PROMOTIONAL & PRICING COST OBJECTIVES : Financials G32 | PROMOTIONAL & PRICING COST OBJECTIVES : Margins & Ratios 53 - 16 Promotional Expenditure F40 | PROMOTIONAL EXPENDITURE : Financials G40 | PROMOTIONAL EXPENDITURE : Margins & Ratios FINANCIAL DEFINITIONS FIN_DEFI.HTM 53 - 17 INDEX Advertising, 2 Advertising Costs, 31, 36 ADVERTISING COSTS FORECAST, 44 ADVERTISING RATING, 15 ADVERTISING -v- SELLING, 3 Advertising : Expressiveness, 3 Advertising : Pervasiveness, 3 Advertising : Public Presentation, 3 After Sales Costs, 31 AFTER-SALES COSTS, 36 AFTER-SALES COSTS FORECAST, 44 Amplified expressiveness, 2 Awareness Building, 15, 19 Balance Sheet Advertising Cost Objectives, 58 Balance Sheet Base Forecast : Median Market Scenario, 40 Balance Sheet Marketing Expenditure, 46 Balance Sheet Promotional Expenditure, 66 Balance Sheet Promotional & Pricing Cost Objectives, 62 Balance Sheet Selling Cost Objectives, 54 Balance Sheet Variable Marketing Cost Objectives, 50 Comprehension Building, 15, 19 Consumer -v- Industrial, 14 Cultivation, 7 Distribution Costs, 31 DISTRIBUTION + HANDLING COSTS, 36 DISTRIBUTION + HANDLING COSTS FORECAST, 44 Dramatization, 8 Efficient Reminding, 15, 19 Enthusiasm building, 25 Established Working Plan for Promotion, 27 Financial data definitions, 71 Financial forecast notes, 38 Financial Ratios Advertising Cost Objectives, 60 Financial Ratios Base Forecast : Median Market, 42 Financial Ratios Marketing Expenditure, 48 Financial Ratios Promotional Expenditure, 68 Financial Ratios Promotional & Pricing Cost Objectives, 64 Financial Ratios Selling Cost Objectives, 56 Financial Ratios Variable Marketing Cost Objectives, 52 Formal Corporate Position in Company, 27 Formal Corporate Responsibility for Promotion, 27 Formal Co-ordination of Promotional -v- Marketing, 27 High veracity, 8 HISTORIC FINANCIAL DATA, 35 53 - 18 HISTORIC MARKETING COST RATIOS & MARGINS, 37 HISTORIC MARKETING COSTS & MARGINS, 36 Impersonality, 2 Increased stock position, 25 Insistent presence, 13 Lead Generation, 15, 19 Legitimation, 19 Legitimation & Reassurance, 15 MARKETING COSTS, 31, 37 MARKETING COSTS FORECAST, 44 MARKETING FACTORS FORECAST, 45 MARKETING MARGINS + RATIOS FORECAST, 45 MARKETING OPERATIONAL RATIOS, 37 MARKETING OPERATIONAL RATIOS FORECAST, 45 MARKETING RATIO, 37 MARKETING RATIOS FORECAST, 45 Missionary Selling, 21, 25 Monitoring of Marketing Mix -v- Promotional Spend, 27 Off guard, 8 Operational Costs Advertising Cost Objectives, 59 Operational Costs Base Forecast : Median Market, 41 Operational Costs Marketing Expenditure, 47 Operational Costs Promotional Expenditure, 67 Operational Costs Promotional & Pricing Cost Objectives, 63 Operational Costs Selling Cost Objectives, 55 Operational Costs Variable Marketing Cost Objectives, 51 Operational Margins Advertising Cost Objectives, 61 Operational Margins Base Forecast : Median Market, 43 Operational Margins Marketing Expenditure, 49 Operational Margins Promotional Expenditure, 69 Operational Margins Promotional & Pricing Cost Objectives, 65 Operational Margins Selling Cost Objectives, 57 Operational Margins Variable Marketing Cost Objectives, 53 ORGANIZATION RATING, 27 Personal confrontation, 7 Personal selling, 7 PERSONNEL SELLING RATING, 21 Pervasiveness, 2 Product demeaning, 13 PROFIT RATIOS, 37 PROFIT RATIOS FORECAST, 45 PROMOTION MIX, 14 PROMOTION + ORGANIZATION, 26 PROMOTIONAL MIX, 1 PROMOTIONAL MIX FORECASTS, 39 Public presentation, 2 Publicity, 8 Publicity Effect : Accepted Veracity, 9 Publicity Effect : Dramatization, 9 53 - 19 Publicity Effect : Off Guard perceptions, 9 PUBLICITY + SALES PROMOTION, 9 Reassurance, 19 Response, 7 Role of advertising in marketing, 19 Role of personal selling in marketing, 25 Sales Costs, 31, 36 SALES COSTS FORECAST, 44 Sales Promotion, 13 Sales Promotion : Insistent, 9 Sales Promotion : Product Demeaning, 9 Selling for Company Stock Position Decrease, 21 Selling for Discounted Stocks, 21 Selling for Distribution Channel Stock Position, 21 Selling for Enthusiasm Building, 21 Selling : Prospect Cultivation, 3 Selling : Sales Technique, 3 Total Marketing Costs, 31, 36 TOTAL MARKETING COSTS FORECAST, 44 53 - 20 INDEX ADVERTISING -v- SELLING Advertising : Expressiveness Advertising : Pervasiveness Advertising : Public Presentation Advertising Cost Objectives Advertising Costs ADVERTISING RATING Advertising After Sales Costs Amplified expressiveness Awareness building Awareness Building Base Forecast : Median Market Scenario Co-ordination of Promotional -v- Marketing Campaigns Comprehension building Comprehension Building Consumer -v- Industrial Cultivation Distribution Costs Dramatization Efficient reminding Efficient Reminding Enthusiasm building Established Working Plan for Promotion Formal Corporate Position in Company Formal Corporate Responsibility for Promotion High veracity HISTORIC FINANCIAL DATA Impersonality Increased stock position Insistent presence Lead generation Lead Generation Legitimation & Reassurance Legitimation MARKETING COSTS Marketing Expenditure Marketing Product Launch Scenario Missionary selling Variable Marketing Cost Objectives Missionary Selling Monitoring of Marketing Mix -v- Promotional Spend Off guard ORGANIZATION RATING Personal confrontation Personal selling PERSONNEL SELLING RATING Pervasiveness Product demeaning PROMOTION + ORGANIZATION PROMOTION MIX Promotional & Pricing Cost Objectives Promotional Expenditure PROMOTIONAL MIX FORECASTS PROMOTIONAL MIX Public presentation PUBLICITY + SALES PROMOTION Publicity Effect : Accepted Veracity Publicity Effect : Dramatization Publicity Effect : Off Guard perceptions Publicity Reassurance Response Role of advertising in marketing Role of personal selling in marketing Sales Costs Sales Promotion : Insistent Sales Promotion : Product Demeaning Sales Promotion Selling : Prospect Cultivation Selling : Sales Technique Selling Cost Objectives Selling for Company Stock Position Decrease Selling for Discounted Stocks Selling for Distribution Channel Stock Position Increase Selling for Enthusiasm Building Total Marketing Costs 53 - 21 CONTENTS PROMOTIONAL MIX Advertising Public presentation Pervasiveness Amplified expressiveness Impersonality Personal selling Personal confrontation Cultivation Response Publicity High veracity Off guard Dramatization Sales Promotion Insistent presence Product demeaning PROMOTION MIX Consumer -v- Industrial Role of advertising in marketing Awareness building Comprehension building Efficient reminding Lead generation Legitimation Reassurance Role of personal selling in marketing PROMOTION + ORGANIZATION HISTORIC FINANCIAL DATA PROMOTIONAL MIX FORECASTS ADVERTISING -v- SELLING Advertising : Public Presentation Advertising : Pervasiveness Advertising : Expressiveness Selling : Sales Technique Selling : Prospect Cultivation PUBLICITY + SALES PROMOTION Publicity Effect : Accepted Veracity Publicity Effect : Off Guard perceptions Publicity Effect : Dramatization Sales Promotion : Insistent Sales Promotion : Product Demeaning ADVERTISING RATING Awareness Building Comprehension Building Efficient Reminding Lead Generation Legitimation & Reassurance PERSONNEL SELLING RATING Selling for Distribution Channel Stock Position Increase Selling for Company Stock Position Decrease Selling for Discounted Stocks Selling for Enthusiasm Building Missionary Selling ORGANIZATION RATING Formal Corporate Position in Company Formal Corporate Responsibility for Promotion Established Working Plan for Promotion Monitoring of Marketing Mix -v- Promotional Spend Co-ordination of Promotional -v- Marketing Campaigns MARKETING COSTS Advertising Costs Sales Costs Distribution Costs After Sales Costs Total Marketing Costs Base Forecast : Median Market Scenario Marketing Product Launch Scenario Marketing Expenditure Variable Marketing Cost Objectives Selling Cost Objectives Advertising Cost Objectives Promotional & Pricing Cost Objectives Promotional Expenditure 53 - 22 53 - 23
