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LESSON 2:TOPIC: Supply Chain Management and Logistics Management What is Logistics and Supply chain management? “Logistics typically refers to activities that occur within the boundaries of a single organization and Supply Chain refers to networks of companies that work together and coordinate their actions to deliver a product to market. Also, traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management. Supply Chain Management (SCM) acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service” – Michael Hugos Supply Chain Management As you saw in the video, supply chain management is the process of managing the movement of the raw materials and parts from the beginning of production through delivery to the consumer. In many organizations, operational supply chain decisions are made hundreds of times each day affecting how products are developed, manufactured, moved, and sold. The complexity of the supply chain varies with the size of the business and the intricacy and quantity of items manufactured, but most supply chains have elements in common, such as the following: Customers: Customers start the chain of events when they decide to purchase a product that has been offered for sale by a company. If the product has to be manufactured, the sales order will include a requirement that needs to be fulfilled by the production facility. Planning: The planning department will create a production plan to produce the products to fulfill the customer’s orders. To manufacture the products, the company will then have to purchase the raw materials needed. Purchasing: The purchasing department receives a list of raw materials and services required by the production department to complete the customers’ orders. Inventory: The raw materials are received from the suppliers, checked for quality and accuracy, and moved into the warehouse. Production: Based on a production plan, the raw materials are moved to the production area. These raw materials are used to manufacture the finished products ordered by the customer and then sent to the warehouse where they await shipping. Image1: What is logistics and supply chain management Logistics When used in a business sense, logistics is the management of the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations. The resources managed in logistics can include physical items such as food, materials, animals, equipment, and liquids, as well as abstract items, such as time and information. The logistics of physical items usually involves the integration of information flow, material handling, production, packaging, inventory, transportation, and warehousing. There is often confusion over the difference between logistics and supply chains. It is now generally accepted that logistics refers to activities within one company/organization related to the distribution of a product, whereas supply chain also encompasses manufacturing and procurement and therefore has a much broader focus, as it involves multiple enterprises, including suppliers, manufacturers, and retailers, working together to meet a customer’s need for a product or service. Image2: What is logistics and supply chain management Inbound Logistics A manager in charge of inbound logistics manages everything related to the incoming flow of resources that the company needs to produce its goods or services. These activities will include managing supplier relationships, accessing raw materials, negotiating materials pricing, and arranging quicker delivery. Outbound Logistics A manager working in outbound logistics will be focused on two issues: storage and transportation. He or she will use warehousing techniques to keep the finished goods safe and accessible. Since the products may need to be moved out to a customer at any moment, proper organization is crucial. Having as little product stored as possible can be advantageous since stored products are not making money, so the outbound logistics manager often has to balance company cost savings with consumer demand. The transportation function is by far the most complex part of outbound logistics. what is logistics and supply chain management what is logistics and supply chain management 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. what is logistics and supply chain management what is logistics and supply chain management Transportation The kind of transportation employed by an organization is a strategic decision (it usually accounts for around 1/3rd of 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). 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 operations. 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. Supply chain management vs logistics While logistics is a rather large part of supply chain management, it is still only a part of an even larger picture. The key difference is that, while logistics is concerned with supply chain processes in a vacuum, supply chain management takes a holistic and contextual approach. Think of it like this …. Logistics asks, “The customer wants [product]. How do we get it to them?” Supply chain management asks, “How can we improve our supply chain processes to provide more value to our customers and outperform our competition?” Logistics are vital to your overall supply chain management efforts. After all, if your company literally isn’t able to physically move your products from Point A to Point B, there’s no way you’ll be able to succeed as a business. But, supply chain management involves much more than physically delivering your products. In involves improving the intertwining and tangential aspects of manufacturing, storage, delivery, and fulfillment in a way that maximizes your organization’s productivity and allows your business to truly soar. Logistics Management “Logistics Management deals with the efficient and effective management of day-to-day activity in producing the company’s finished goods and services” – Paul Schönsleben What is Supply Chain “Supply Chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer” – Martin Christopher What is Supply Chain Management Each researcher defines supply chain management differently. However, we would like to provide the simple definition as below, “Supply Chain Management (SCM) refers to the coordination of production, inventory, location, and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market being served” -Michael Hugos What is the Difference Between Inbound and Outbound Logistics? “Inbound Logistics refers to movement of goods and raw materials from suppliers to your company. In contrast, Outbound Logistics refers to movement of finished goods from your company to customers” The Functions Of Logistics Within Supply Chain Management If we systematize all areas of logistics that need to be developed for the rational management of production resources, we can single out the following functions: Warehouse design and management. This role of logistics in supply chain management covers several tasks at once: from the design of storage facilities to the requirements for storage of products and ending with the introduction of various automation solutions (for example, for machinery intended for transporting goods within warehouses); The formation of packages. Packaging, tracking and accounting – all of these tasks allow for end-to-end control of goods on the way to the customer/distributor; Transportation of products. This includes work with cargo carriers and vehicles listed in the company’s fleet: planning their routes, calculating fuel costs, etc.; Working with customs. When an enterprise plans international delivery of goods, it is very important that during their transportation the goods fully comply with customs requirements and contain all the necessary documentation; Working with intermediaries. Intermediaries in logistics are all third-party, non-company resources that are directly involved in the implementation of supply chains. In turn, finding intermediaries with the most acceptable ratio of quality to cost of services, as well as establishing long-term, reliable relations with them are also included in the list of tasks for efficient logistics management; Difference Between Inbound and Outbound Logistics “Inbound Logistics refers to movement of goods and raw materials from suppliers to your company. In contrast, Outbound Logistics refers to movement of finished goods from your company to customers” To illustrate this term, we make a small graphic as below, As you can see, purchasing and warehouse (distribution center) communicates with suppliers and sometimes called “supplier facing function”. Production planning and inventory control function is the center point of this chart. Customer service and transport function communicates with customers and sometimes called “customer-facing functions. What is Transport and Logistics? “Transport and Logistics refers to 2 types of activities, namely, traditional services such as air/sea/land transportation, warehousing, customs clearance and value-added services which including information technology and consulting” International Logistics These are one of the most ambiguous groups of terms in international business out there. They are used interchangeably with international supply chain or international production and transportation activities. However, the most concise definition is as below, “International Logistics focuses on how to manage and control overseas activities effectively as a single business unit. Therefore, companies should try to harness the value of overseas product, services, marketing, R&D and turn them into competitive advantage” Third Party Logistics or 3PL The concept of 3PL appeared on the scene in the 1980s as the way to reduce costs and improve services which can be defined as below, “Third Party Logistics or 3PL refers to the outsourcing of activities, ranging from a specific task, such as trucking or marine cargo transport to broader activities serving the whole supply chain such as inventory management, order processing and consulting.” In the past, many 3PL providers didn’t have adequate expertise to operate in complex supply chain structure and process. The result was the inception of another concept. Fourth Party Logistics or 4PL The 4PL is the concept proposed by Accenture Ltd in 1996 and it was defined as below, “Fourth Party Logistics or 4PL refers to a party who works on behalf of the client to do contract negotiations and management of performance of 3PL providers, including the design of the whole supply chain network and control of day-to-day operations” You may wonder if a 4PL provider is really needed. According to the research by Nezar Al-Mugren from the University of Wisconsin-Stout, the top 3 reasons why customers would like to use 4PL providers are as below, – Lack of technology to integrate supply chain processes – The increase in operating complexities – The sharp increase of the operations in the global supply chains Supply Chain Network Many companies have the department that controls supply chain activity so they believe that SCM is a “function”. Some companies think SCM is a kind of management system under IT (information system or enterprise resource planning.) In fact, SCM is actually a “network” consists of many players as below, A generic supply chain structure is as simple as Supplier, Manufacturer, Wholesaler and Retailer (it’s more complex in the real world but a simple illustration serves the purpose.) The word “management” can be explained briefly as “planning, implementing, controlling”. Supply Chain Management (in supply chain education context) is then the planning, implementing and controlling the networks. Information Sharing Another important attribute of supply chain management is the flow of material, information, and finance (these are thing that can be found in lean manufacturing and six sigma project too). Even though there are 3 types of flow, the most important one is information flow aka information sharing. Let’s see the example of this through the simplified version of the bullwhip effect as below, When customer demand data is not shared, each player in the same supply chain must make some sort of speculation and this can become the management issues. According to the above graphic, the retailer has a demand for 100 units, but each player tends to keep stock more and more at every step of the way. This results in higher costs for everyone in the same supply chain. When information is shared via demand management from retailer down to supplier, everyone doesn’t have to keep stock that much. The result is a lower cost for everyone. This is sometimes called the extended supply chain or supply chain visibility. Information sharing will also reduce the needs to use the digital transformation solution such as supply chains systems, digital supply chain, predictive analytics or artificial intelligence. Supply Chain Coordination Information sharing requires a certain degree of “coordination” (it’s also referred to as collaboration or integration in scholarly articles). Do you wonder when people started working together as a network? In 1984, companies in the apparel business worked together to reduce overall lead-time. In 1995, companies in the automotive industry used Electronic Data Interchange to share information. So, working as a “chain” is the real-world practice. Conflicting Objectives Working as a network requires the same objective, but this is often not the case (even with someone in the same company). “Conflicting Objectives” is the term used to describe the situation when each function wants something that won’t go well together. For example, purchasing people always place the orders to the cheapest vendors (with a very long lead-time) but production people or project manager need material more quickly. To avoid conflicting objectives, you need to decide if you want to adopt a time-based strategy, low-cost strategy or differentiation strategy. A clear direction is needed so people can make the decisions accordingly. Cost/Service Trade-off The concept of Cost/Service Trade-off appeared as early as in 1985 but it seems that people really don’t get it. When you want to improve service, the cost goes up. When you want to cut cost, service suffers. It’s like a “seesaw”, the best way you can do is to try to balance both sides. Real-world example is that a “new boss” ask you to cut costs by 10%, improve service level by 15%, double inventory turns so the financial statement looks good. If you really understand the cost/service trade-off concept, you will agree that you can’t win them all. The most appropriate way to handle this is to prioritize your KPIs. Supply Chain Relationship To work as the same team, long-term relationship is key. Otherwise, you’re just a separate company with a different strategy/agenda. So academia keeps preaching about the importance of relationship-building but is not for everyone. Since there are too many suppliers to deal with, a portfolio matrix is often used to prioritize the relationship-building to create supply chain partners. Focus your time and energy to create a long-term relationship with suppliers of key products and items with limited sources of supply (or items with high supply chain risk.) Because people and human resource are the factors that can make or break your supply chain.
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LESSON 4 :Promotion Mix A promotion mix is a set of different marketing approaches that marketers develop to optimize promotional efforts and reach a broader audience. The marketer’s task is to find the right promotion mix for a particular brand. Developing a promotion mix requires skills and experience in marketing. Marketers should complete various studies and gather lots of data about a particular company to come up with an effective promotion mix. For instance, it is necessary to identify your target audience, work out a budget that you can afford for a promotion, and decide the most efficient marketing channels for your audience. A promotion mix is a more expanded approach towards one of five elements of the marketing mix — Promotion. Other factors are people, product, place, and price. Promotion mix is a part of marketing mix which determines the success of all marketing efforts of company. All promotional programmers and advertising campaigns carried out by organization are included and performed in accordance with its promotion mix. It includes various marketing approaches designed by marketers with better experience and aims at optimizing the overall promotional efforts of business organizations. Promotion mix of a company is created after a lots of research and collecting data about a particular company, its target audience to involve effective tools of marketing in it. It is all the efforts of promotion mix that enables a brand to develop its better image in market and differentiates itself from other competitors. Promotion carried out by business enables in informing public about its products and impart them all required information. It is served as a communication channel in between company and its customers which helps in building trust. Why is using a promotion mix important? • Improves the effectiveness of promotional campaigns • Helps segment the audience • Improves communication with clients • Informs subscribers • Stands out from the crowd • Improves the effectiveness of promotional campaigns. Promotion is a crucial part of any business, so companies develop a promotion mix, putting all efforts to make promotions at the right place, at the right time, and to the right audience. It helps one get the most out of their marketing resources by optimizing their budget and saving time. • Helps segment the audience. To develop a compelling promotion mix, a company needs to identify its target audience. Potential subscribers may include various groups of people who have something in common, for example, age, gender, preferences, etc., and they all require an individual approach. A promotion mix is a key method for delivering a relevant promotion message via the most suitable channel for each segment. • Improves communication with clients. Companies develop a promotion mix trying to speak their consumers’ language. If prepared correctly, it helps build trust between the brand and its customers. This is a crucial factor in lead nurturing and customer retention. For example, automated email campaigns help achieve these goals by responding to people’s actions instantly. • Informs subscribers. Some promotions, on Instagram for example, aim to show the product from the best angle, and others, like SMS, emphasize the advantages of local services. When using a promotion mix, companies define the best ways to educate people about the products and services they provide. • Stands out from the crowd. People are bombarded with all sorts of advertising at every turn. With a promotion mix, it is possible to stand out from the crowd without creating chaos in your customers’ heads. Successful companies make quality prevail over quantity, promoting their product or service at the right place and right time. Components of a Promotion Mix 1. Advertising 2. Direct selling 3. Sales promotion 4. Public relations 1. Advertising. This is a non-personal promotion of products and services. Marketers use advertising as a vital tool for increasing brand awareness. Advertisers show promotions to masses of people using email, webpages, banner ads, television, radio, etc. 2. Direct selling. This is a one-to-one communication between a sales representative and a potential customer. Direct selling influences people to decide to buy certain products or services. It is one of the most effective ways of promoting your brand because the sales rep can tailor the promotion precisely to those who are most likely to make a purchase. On the other hand, this is the most expensive form of sales because companies need to pay for one person’s time. 3. Sales promotion. This is a set of short-term activities that are designed to encourage immediate purchase. Sales promotions are a campaign that uses time-sensitive offers — sales, discounts, coupons, etc., to engage existing consumers and bring in a larger audience. Many companies make this a core component of their marketing efforts, though sometimes it’s the most annoying type of communication for people. 4. Public relations. This type of promotional method determines the way people treat the brand. Companies using PR try to build a firm and attractive brand image by planting interesting news stories about their activities in the media. Public relations are not fully controlled by the company, though, as some reviews and webpages may negatively highlight the brand. If a company adequately solves these issues, people will reward them with positive word-of-mouth consideration. • Use appropriate marketing channels • Rely on the right promotion mix elements • Implement segmentation • Monitor marketing trends • Identify the target audience. Determine your target audience and take advantage of the promotion mix tactics. Create your customer profile to find out how to provide people with the products they need. • Follow a five P’s rule. Five factors form promotional marketing success: what you sell (Product), how much you want for it (Price), how you offer it (Promotion), where you sell it (Place), and whom you sell it to (People). Work on these five P’s of marketing and give your customers what they need at the most convenient time. • Provide people with useful information. Demonstrate the products and services you sell. Explain what makes them so unique and why customers should choose yours and no one else’s products. Create reviews comparing your product with competitors’ products. • Use appropriate marketing channels. Find out which channel of communication is the most convenient for your audience. Try delivering the same message through different channels and examine which performs best with your customers. • Rely on the right promotion mix elements. Personal selling is usually useful for only small businesses due to its high cost and low outreach. Every business can afford to display advertising and email marketing, though. Develop a balanced system of communication with your audience that fits your business well. • Implement segmentation. This tool targets the audience by dividing it into smaller groups based on similarities. With SendPulse, segmentation works with emails, SMS, and web push notifications. • Monitor marketing trends. As internet marketing evolves, new channels for communication with customers appear. Follow marketing trends to be able to reach your customers the way they like it. Promotion Mix Example 1. Advertising 2. Personal selling 3. Sales promotion 4. Public relations 5. Direct marketing Let’s take Nike’s promotion mix as an example and learn how they use each of the promotion mix components. 1. Advertising. In advertising campaigns, Nike aims to reach large target audiences. The brand invites celebrities who represent the image of an ideal consumer. Potential customers associate themselves with famous ones, and this motivates them to trust the brand and communicate with it. 2. Personal selling. Nike’s selling takes place in their stores. Trained store personnel assist consumers, provide details on the company’s products and stimulate visitors to buy their products. Besides, Nike’s employees help customers find the right Nike product and promote the company through the use of personalized services. 3. Sales promotion. Usually, Nike’s sales promotions include special discounts for a targeted audience. The brand motivates their customers with the savings they can have when they buy discounted products. After that, they create a demand for purchasing more products using those bonuses, turning new customers into loyal clients. 4. Public relations. Nike developed a social responsibility strategy, in response to global ecological trends. Besides, Nike sponsors numerous sports events that build a better brand image in the eyes of their audience. 5. Direct marketing. Nike uses direct marketing to promote its products among sports organizations in universities, colleges, schools. Marketers call this lead nurturing. TOPIC: ADVERTISING Advertising is a means of creating awareness and promoting a product or service in the market. It is a paid form of communication to inform the public about an idea, goods or service. Advertising is a market communication intended to influence people’s actions and persuades them to buy or try the product. This is one of the effective promotional tool of an organization for promoting its product among the target audience. It spreads the promotional message containing full details about the product among the customers. Advertising is a one-way communication by which organizations communicates to people by paying charges to advertising company. Advertising is of different kinds depending upon the type of medium used for communication such as print advertising, social advertising, outside advertising, broadcasting advertising, etc. There are three main motives of advertising: informing potential customers about brand, persuading people for buying brand products and reminding customers time to time about brand message and vision. AIMS OF ADVERTISING 1. Product Introduction: Advertising introduces a new product to peoples in the market. It explains clearly the features and uses of the new product launched by the company. 2. Creating Awareness: Advertising is the medium through which business informs about its products or services to the wider market. It creates wide awareness regarding the company products among the public. 3. Product Differentiation: Product differentiation is another important role played by advertising. It helps the business in differentiating their products from other products by properly explaining product features and advantages to customers. 4. Increasing Sales: Advertising helps in raising the sales volume of business organizations. It spread product information among a large number of peoples and persuades them for purchasing it. 5. Overcome Competition: Advertising assists business organizations in facing strong market competition. It enables in providing detailed information regarding products and differentiates it from other competitor’s products. It is a means through which business is able to attract more and more customers. 6. Enhances Goodwill: Advertising has an efficient role in improving the goodwill and reputation of the business in the market. Repeated advertising shows the company’s presence in the market and promotes the company’s quality products. It builds a better image of the brand in the mind of customers. 7. Educating Customers: Advertising is the medium through which companies communicate their product details among customers. They inform customers about the uses and utility of products through advertisement. Objectives of Advertising Objectives of Advertising 1. Promotes Products: Advertising is responsible for promoting the company’s product among large peoples in the market. It is one that informs about the latest arrivals to customers and communicates all relevant information regarding products or services. 2. Creates Demand: Advertising creates a favorable environment for increasing demand. It informs more and more customers about products and persuades them to buy by explaining product features and advantages to them. 3. Building Brand Image: It has an efficient role in building a good image and reputation of the brand. Advertising introduces manufacturers and its product in a better way to customers. It explains the product quality and develops a better image in the minds of people. 4. Stabilizing Sales Volume: Advertising helps in stabilizing the sales volumes for business. It helps in retaining more and more customers for a longer period and develops loyal customers. 5. Reduces Cost: Advertising reduces the cost of the product by expanding the scale of production. It raises the production level of business by increasing its demand which reduces the per-unit cost of products. 6. Higher Sales and Profit: It focuses on boosting the sales volume and profit level of organizations. It attracts more and more peoples to company products and persuades them to buy or try it. 7. Expands Market: Advertising expands the market opportunities for business by creating wide awareness in the market. It approaches and informs a large number of people in the market about products or services offered by the business. Sales promotion: Meaning, Types and Benefits Home » Business Studies » Sales promotion: Meaning, Types and Benefits Table of Contents Meaning of Sales Promotion Sales promotion refers to promotional activities used by business for raising the sales and encouraging peoples to use their products. It is one which supplement and coordinate both personal selling and advertising thereby making them more effective. Sales promotion encompasses activities which enables in spreading information about products in society with the aim of boosting product image and inducing people to go for trials. This serves as an important source of information to customers that facilitates them to make informed purchase decisions. Sales promotion works as a part of total distribution system which mostly involve short-term incentive tools designed for stimulating the quick and great purchases of products or services by customers. Sales promotion is a key element of promotion mix which works on taking product toward buyers. It studies and take into consideration the existing communication gaps in between the customers and producer. The techniques used under it are non-personal and indirect in nature such as displays, exhibitions, demonstrations, trade shows, direct mail, expositions and many other non-recurring efforts. Therefore, any activity which is carried out by business organization for boosting the sales and revenue temporarily falls under the purview of sales promotion. Types of Sales Promotion Various types of sales promotion are as discussed below: – Samples The sample is a type of sales promotion strategy under which customers are given goods free of cost for trial purposes. It is very effective in introducing new products expanding their market base. Sampling is a device that does the work of demand creation and increases customer’s interest in products. People via consuming free samples get a chance to compare the products with other substitutes existing in the market. Samples are given either in door-to-door delivery, sent by mail, attached to some other product, picked up in-store, etc. Coupons It is a promotional strategy under which customers are provided with vouchers for buying products at a discounted prices. Coupons are generally the certificate that reduces the price of product. Companies use this promotion for attracting and bring in more customers to their products. Coupons can be offered by attaching them with other products, inserting with into newspapers or magazines, and by mailing them. Free Trials Free trial is a scheme under which prospects are given invitations for using the product free of cost. It is performed with the hope that customer will purchase the product once he/she becomes aware with the features or benefits of a particular product. Premium Offers Premium offers are the offers which are run by businesses on a temporary basis with the motive of inducing customers for purchasing. Merchandise or gifts are offered free of cost or at reduced prices to people as an incentive to buy a particular product. Premium offers are most widely used in consumer goods like paste, soap, brush, glucose, washing powder etc. Bundling’s Bundling is a strategy in which products are put into the combination and offered for sale at the same price. Consumers are more attracted to buy products in bundled offers rather than a single offers. It is because the consumer believes that they getting two products at the price of one. An example of a bundling strategy is giving a free shampoo sachet with every piece of soap purchased by customers. Refunds And Rebate Refunds and rebate is a marketing tactic under which customer gets partial or full amount back after making purchases. The customer sends a proof of purchase to the manufacturer who in turn refund by mail the part of the purchase. In case, if the customer is not at all satisfied then he/she is liable to get the full amount refund. This strategy develops new customers and also strengthens brand loyalty. Contests Contests refer to competition which are organized by companies for introducing new products and attracting customers. In order to enter in competition, consumer need to buy product and submit evidence along with entry form. In these contests, skills and ideas of people are tested. The performance report of every participant is submitted with panel of judges who award the winner with prizes. This promotional strategy is useful in stimulating the sales of brand at retail level. Patronage Award (Trading Stamps) Patronage award refers to values in cash or other form given to the customer for buying the product in a particular shop. Sellers provide premium in the form of stamps to their consumers. Such stamps can be redeemed by customers at stamp redemption centers. Patronage awards serve as a useful means for attracting people to retail shops. Benefits of Sales Promotion The benefits provided by sales promotion can be well-understood from points given below: – Attract New Customers Sales promotion serves as an important means for attracting a new range of customers by the business organization. This promotion strategy is composed of distinct attractive offers which easily grab the attention of peoples. Product samples, coupons, giving free trials, refund offers, and giving product demonstrations are a few of the schemes included under it. All these persuade customers to make on-spot purchase decisions. Introduces New Products Companies run various sales promotion campaigns in the market for introducing their new products. Buyers are induced to purchase the new products by distributing free samples. Dealers are also motivated to stock and sell new products by giving money or merchandise allowance. Bridges Between Personal Selling And Advertising Sales promotion is composed of several activities other than advertising, publicity, and personal selling. All such activities work towards bridging the gap in between personal selling and advertising. Raise Sales During Off Seasons It enables businesses in boosting their sales volume during the off-seasons. There are many products that are only demanded during their peak seasons and there is less or no demand at the time of off-season. This strategy enables in retaining customer’s attention via offering them short-term incentives which results in stimulating the sales volume. Encourages Business Buyers The business buyers refer to retailers and wholesalers who buy brand goods for resale purposes. For motivating the wholesaler and retailer for stocking more amount of goods, different promotional activities are conducted. Dealers are compensated by providing advertising and display allowances for the space given by them for the display of products. In addition to all this, even premiums are offered for buying products above a particular level. Advantages of Sales Promotion 1. Introduce New Products: Sales promotion techniques are the most effective ways of introducing innovative products in the market by business organizations. Companies sometimes face difficulties in creating a market for new products. Sales promotion enables in attracting peoples towards these products using penetration price policy, discounts, coupons, and several other benefits. In this way, it induces clients to buy the brand products that lead to increase demands for newly developed products. 2. Generate New Leads: It generates a large number of leads for business by exposing more and more customers and other business partners to the products of the company. Sales promotion serves as a communication link between the producer and the customer. It supplies all important information about products to clients and resolves all their queries. Techniques of sales promotion aim at differentiating the products by explaining the benefits of the brand over others that is how it stands out from the crowd. This eventually enables in attracting high number of leads thereby increasing the customer base. 3. Large Scale Production: Sales promotion facilitates an organization is enjoying economies of cost by carrying out large-scale production. It focuses on increasing the demand for the company’s products by doing a mass promotion in the market. An increase in sales volume will ultimately lead to reducing the per-unit cost to the company by doing mass production of products. 4. Immediate Returns: It offers more quick and immediate returns in comparison to other components of the promotion mix like advertising and personal selling. Sales promotion uses different methods for boosting the sales volume within a short period of time. Measures like free samples, discounts, coupons, providing free trials, giving product demonstrations etc. are helpful in attracting more customers for buying products thereby raising the overall sales volume. 5. Strengthen Customer Involvement and loyalty: Another important benefit provided by sales promotion is that it keeps existing customers re-engaging with brand and builds loyalty among them. It is a mechanism used by organization that keeps on interacting with customers once they make purchases with brand or subscribe to its email’s newsletter. Sales promotion team keeps on sending promotional emails and messages to customers on a regular basis to keep them engaging which leads to developing a close connection with them. 6. Better Control: Sales promotion techniques provides effective control in the hands of management for regulating the promotional activities of organization. Programmes of sales promotion are more cost-efficient having lower promotional costs and provide quick and better returns. Managers can easily evaluate the results of each promotional programmes in relation to their cost factor. 7. Improve Public Image of Firm: It has an effective role in building a strong image of firm in market. Sales promotion provides customers with all necessary information about products and resolves all their queries. Clients in presence of right information are able to choose right product by easily doing a comparison of brand products with other competitors in market. This results in better service experience of customers with their brined thereby building a strong position in market. Advantages and Disadvantages of Sales Promotion Disadvantages of Sales promotion 1. Increase Price Sensitivity: Sales promotion is disadvantageous for business organization if it is provided on a regular basis by organization. Customers may become too price-sensitive and wait for promotional deals to be announced by the company. They may not buy products from routine sales at the market and instead buy at discounted price which lowers the overall organizational profitability. 2. Costly: Sales promotion raises the expenses of business organization which have adverse impact on their profit margin. Techniques of sales promotion like free samples, discounts, and coupons require huge costs on the part of company. It is uncertain whether all these measures will provide equal returns that reduce the profitability of business. 3. Tarnish Brand Image: Sales promotion may also lower the perception of customers towards the brand in case it is overused by the organization. When products are offered continuously at discounted price by brand then the customers believe it as a regular price. They may doubt the product quality of the brand in comparison to other competitors providing products with no offers and price reductions. 4. Short-Term Orientation: Sales promotion is meant for short-term which boosts the sales volume for a shorter period by offering distinct offers and benefits to customers. Short-term sales volume is quite difficult to maintain and has a negative influence on the long-term future of business. TOPIC: PUBLIC RELATIONS What Is Public Relations? Public relations is a strategic communication process companies, individuals, and organisations use to build mutually beneficial relationships with the public. A public relations specialist drafts a specialised communication plan and uses media and other direct and indirect mediums to create and maintain a positive brand image and a strong relationship with the target audience. In simple terms, public relations is a strategised process of managing the release and spread of organisation-related information to the public to maintain a favourable reputation of the organisation and its brands. This process focuses on – • What information should be released, • How it should be drafted, • How it should be released, and • What media should be used to release the information (usually earned or free media is used for the same). What Is The Objective Of Public Relations? The main objective of public relations is to maintain a positive reputation of the brand and maintain a strategic relationship with the public, prospective customers, partners, investors, employees and other stakeholders which leads to a positive image of the brand and makes it seem honest, successful, important, and relevant. Advertisement Functions Of Public Relations Public relations is different from advertising. Public relations agencies don’t buy ads, they don’t write stories for reporters, and they don’t focus on attractive paid promotions. The main role of public relations is to promote the brand by using editorial content appearing in magazines, newspapers, news channels, websites, blogs, and TV programs. Using earned or free media for promotion has its own benefits as information on these mediums aren’t bought. It has a third-party validation and hence isn’t viewed with scepticism by the public. The functions of public relations managers and public relations agencies include: 1. Anticipating, analysing, and interpreting the public opinion and attitudes of the public towards the brand and drafting strategies which use free or earned media to influence them. 2. Drafting strategies to support the brand’s every campaign and new move through editorial content. 3. Writing and distributing press releases. 4. Speechwriting. 5. Planning and executing special public outreach and media relations events. 6. Writing content for the web (internal and external websites). 7. Developing a crisis public relations strategy. 8. Handling the social media presence of the brand and responding to public reviews on social media websites. 9. Counselling the employees of the organisation with regard to policies, course of action, organisation’s responsibility and their responsibility. 10. Dealing with government and legislative agencies on behalf of the organisation. 11. Dealing with public groups and other organisations with regard to social and other policies of the organisation and legislation of the government. 12. Handling investor relations. Types Of Public Relations According to the functions of the public relations department/agencies, public relations can be divided into 7 types. These are: • Media Relations: Establishing a good relationship with the media organisations and acting as their content source. • Investor Relations: Handling investors events, releasing financial reports and regulatory filings, and handling investors, analysts and media queries and complaints. • Government Relations: Representing the brand to the government with regard to the fulfilment of policies like corporate social responsibility, fair competition, consumer protection, employee protection, etc. • Community Relations: Handling the social aspect of the brand and establishing a positive reputation in the social niche like environment protection, education, etc. • Internal Relations: Counselling the employees of the organisation with regard to policies, course of action, organisation’s responsibility and their responsibility. Cooperating with them during special product launches and events. • Customer Relations: Handling relationships with the target market and lead consumers. Conducting market research to know more about interests, attitudes, and priorities of the customers and crafting strategies to influence the same using earned media. • Marketing Communications: Supporting marketing efforts relating to product launch, special campaigns, brand awareness, image, and positioning. Public Relations Examples PR stunts or strategies range from donating to an affected community to running a brand activation stunt in a mall. Some of the examples of successful public relations campaigns are: Google’s Fight Ebola Campaign The outbreak of the Ebola virus in 2014 was critical as it was spread among many countries and took many lives. Google, to help the people in need and to build up a positive brand image, started a donation campaign where it pledged to give $2 for every $1 donated to the cause through its website. The public relations strategy attracted the media attention and resulted to be a huge success as Google raised $7.5 million. Paramount Pictures The Ring Publicity Stunt Paramount Pictures, to promote its new horror franchise, The Ring, and to get more user attention, took a step forward and planned a publicity stunt where the protagonist haunted the people in a real-life scenario. The film’s most iconic scene of Samara crawling out of the TV set was recreated in a TV showroom where the protagonist came crawling out of the hidden compartment behind a TV screen and scared people. The stunt went viral and the video received over 10 million views on Facebook. Just Eat & A Sick Customer Just Eat is an online food ordering application that lets users add comments to their orders to inform the delivery person about the right address or to leave the order to the neighbour etc. One unwell customer tried her luck to see if she could get the delivery person to stop en-route and get her some medicines. She wrote: Will you please stop in the Spar on the way and get me some Benylin cold and flu tablets and I’ll give you the money. Only ordering food so I can get the tablets. I’m sick xx. The delivery person delivered both and this public relations stunt went viral over the media. Facebook Paris Support Profile Pictures In response to the tragic shooting in Paris in 2015 where at least 129 people died, Facebook added a France flag filter which the users could apply to their profile pictures to support France. Millions of people applied this filter and appreciated this effort by Facebook. Advantages Of Public Relations • Credibility: Public trusts the message coming from a trusted third party more than the advertised content. • Reach: A good public relations strategy can attract many news outlets, exposing the content to a large audience. Moreover, this medium can help the company utilise certain organic touchpoints that are hard to capitalise on otherwise. • Cost effectiveness: Public relations is a cost effective technique to reach large audience as compared to paid promotion. • Better Communication: Public relations help the company to communicate more information to the public than other forms of communication media. Disadvantages Of Public Relations • No Direct Control: Unlike paid media, there isn’t a direct control over the content distributed through the earned media. This is the biggest risk of investing in public relations. • Hard To Measure Success: It is really hard to measure and evaluate the effectiveness of a PR campaign. • No Guaranteed Results: Publishing of a press release isn’t guaranteed as the brand doesn’t pay for it. The media outlet publishes it only if it feels that it’ll attract its target audience. Importance Of Public Relations With over 63% of the value of most companies dependent on their public image, public relations has become a very important topic today for numerous reasons: Builds Up The Brand Image The brand image gets a boost when the target customers get to know about it through a third-party media outlet. A good public relations strategy help the brand builds up its image in the way it wants to. It’s Opportunistic Public relations strategies make the brand capitalise on the opportunities. Google was in the news for donating to Ebola. Facebook promoted LGBTQ rights. Coca-Cola did a PR stunt against obesity. These opportunities even attract many influencers to share the brand story to their followers. Promote Brand Values PR is used to send out positive messages which are in line with the brand’s value and its image. This builds up the brand’s reputation. Strengthen Community Relations PR strategies are used to convey that the brand is as much part of society as the target audience. This builds up a strong relationship of the brand with the public. Public Relations vs Marketing vs Advertising Public relations deals in communicating expertly drafted messages using non-paid/earned media to build mutually beneficial relationships with the public. Advertising, on the other hand, is a paid communication message intended to inform people about something or to influence them to buy or try something. Marketing is the umbrella under which all the divisions dealing with creating, communicating, delivering, and exchanging dwells. That is, PR is the subset of marketing. Everything a PR department does is determined by the marketing goals set by the organisation. Public Relations Advertising Marketing Definition Public relations is a marketing tool of communicating expertly drafted messages using non-paid/earned media to build mutually beneficial relationships with the public. Advertising is the action of calling public attention to an idea, good, or service through paid announcements by an identified sponsor. Marketing refers to activities a company undertakes to create, communicate promote, deliver, and exchange the offerings that have value for the customers. Driven by Relationship driven Communication driven Company/Brand growth driven Communication Two-way One-way Two-way Importance To build a favourable relationship with the target audience. To communicate to the target audience about a certain offering, action, work, or other brand-related information Identify and cater to the customers’ needs to survive and thrive. TOPIC: DIRECT SELLING AND ONLINE SELLING Introduction to Direct Sales Direct selling is one of the primary forms of doing business. This method of sale is adopted by both small businessmen as well as big enterprises. Small entrepreneurs use it because of the low margin on products or because of the lack of funds to establish a retail store. On the other hand, there are many companies which use it along with other methods of selling to reach different segment of the population. In direct selling, a seller buys a product from the company and sell them to consumers directly, or a person produces goods and sells them directly to consumers without any middlemen. Another thing that makes direct selling unique and different from other forms of selling is that it takes place in a non-retail environment. The direct sales take place in a non-retail environment like home, public place, work, online, etc. In direct selling, both parent company and seller generate high profits as compared to other forms of businesses because there are no middlemen. It is an essential method of selling and is a primary method of selling used by several companies. Therefore, if you are planning to associate with a company that uses a method for sales, then it would be good that you read this article. It will help you to learn about the different types of direct selling and their advantages and disadvantages. This information will help you in taking a well-calculated decision. Definition of Direct Sales Direct selling is a method of selling where seller directly contacts the customers and sell products in non-retail environments such as by meeting them at their home or public places. Types of Direct Sales 1.. Party Plan sale You might have got an invitation for party plan sales by a distributor or sales representative living in your neighborhood. If yes then let me tell you that you already know what is “Party Plan direct sales”. This can take place in a group. Usually a distributor or sales representative invites his potential customers at his own house or someone else’s home. In party plan sales, you talk about your products in a group, give them a demonstration of your products, hand out material related to products, and take orders. It is a neat way of doing business and having fun altogether. This method is quite successful as you sell many units of your products at one time. 2. Single-level sale Single level direct sales are sales where you contact people individually. The examples of single-level direct sales are door-to-door selling, selling through catalogs, and selling through in-person presentations. You approach each customer with a personalized direct sales approach. 3. Multi-level sale In multi-level direct sales, sales representatives are hired by companies to sell their products, or sometimes multi-level direct sales are made through business partners. Multi-level direct sales also take place on online platforms by selling through product catalogs or selling through social networking mediums. 1. More profit margin The first and foremost advantage is a high-profit margin for both parent companies and sellers. Many entrepreneurs adopted this method to earn high profits. Small entrepreneurs usually have limited funds when they start their business. Therefore, they save the cost of mediators and thus increase their profit margin. 2. No expense of store maintenance It takes place in a non-retail environment. That means a seller is not required to set up a business store to sell his goods. A store is an expensive liability for a seller. He is required to rent or buy a place to set up his retail store, pay property taxes, keep the stock full, hire salespersons and people to maintain a store, and other small expenses. All of these expenses are paid out of the profit made from selling. A seller can avoid all of these expenses by direct selling and can increase his profit margin. Moreover, when a seller sells in-store, he is required to buy goods from a manufacturer in huge quantities which puts his own money at risk. His money will be lost if the sales of products are not as expected. Whereas, the seller can buy limited no of units and can sell more after selling the previous stock. 3. Personal contact with customers The seller has direct contact with his customers. There are various benefits of having direct contact with customers. You can learn about the needs of customers and can create business opportunities and can provide services to them as per their requirements. For example, your regular customers can place an order for the products that they need or can give your reference to their friends and family. In this way, you can expand business easily. 4. No advertising and marketing expenses The purpose of advertising and marketing is to make people aware of the existence of the product and make people know about the qualities of products. Companies spend millions of dollars in the advertising and marketing of products. The expense of advertising and marketing is part of the variable of cost of production. The expense of advertising and marketing is recovered from the profit earn by selling the products. As a result of which, the profit margin of the seller reduces. In such cases, the seller meets customers individually and tells them about the products and hands them material containing information about the products. Therefore, the expense of advertising and marketing is eliminated, and the seller can save those millions of bucks. 5. Personalized approach for each customer The sellers meet customers individually. Because of this, they have an opportunity to pitch personalized sales pitch for their customers. A personalized sales approach has several benefits. For example, you know that a particular customer is price sensitive and buy products only on discount or offers, then you will inform that customer first as soon as there is a discount on the products. In this way, you can convince them to buy products in bulk. This is not possible in other modes of selling. In other selling methods, one selling technique is used to sell products to everyone. 6. Visible customers’ reaction A seller meets his customers face to face to sell products to them. The benefit of meeting customers face to face is that you can see their reactions on their faces and modify your sales pitch based on their reactions. On the other hand, in retail stores or online shopping seller don’t see the reactions of customers and thus is unable to suggest a deal immediately persuading the customer. 7. Product demonstration Another important benefit of another type of selling is that you can provide a demonstration of your products to your customers. You win the trust of your customers by giving them a demonstration as they can see what they can check what they are putting their money. Product demonstration reduces the chances of complaints after the sales because people will buy your product only if they are satisfied with the demonstration of your product. In this way, you can protect the image of your company. 8. Feedback directly from customers It means selling products to your customers. When you meet your customers in a non-retail environment, then you have an opportunity to have a conversation with them other than just selling. In this way, you can build a healthy relationship with them where they will feel comfortable to give you honest feedback about your products. Getting honest feedback directly from customers is far better than getting feedback from mediators. You can use this information to improve the quality of your products and keep your customers satisfied. 9. Customers’ satisfaction The last benefit is that you can keep your customers satisfied. Most customers get annoyed when they are not given proper attention in stores, and they have to spend hours looking for a product in the store. Some customers have time constraints to go out for shopping. In this way, you can approach a new segment of the market. Therefore, it is not wrong to say that customers’ satisfaction is an additional benefit. Disadvantages Like every coin has two sides, it also has a few disadvantages despite several advantages mentioned above. Therefore, in this section, I am going to talk about the disadvantages of direct selling. So that you can make up your mind whether you want to go for it or not. 1. Difficult to reach a wide audience Like I mentioned before it means approaching each customer individually by going door to door or hosting in-house parties. Therefore, it is difficult for an individual to reach a wide audience. You can cover people leaving in one town at most, and it would be challenging for you to entertain all the customers at the same time. 2. Affects personal life It requires too much time from a seller. When you have invested your money, you want to make sure that you don’t lose your money. Therefore, you can’t take vacations like other people in the business. You will even need to work on your weekends because it’s the only time people are free and can come to your business meetings or can sit with you and listen to you patiently when you go to their homes to sell your products. Even though you will be making huge profits, but be ready to compromise your personal life. 3. Rejections Nowadays, when there are so many ways to buy goods, people have become a little skeptical about buying from an individual coming to their doors. There are very few people who still prefer to buy from online sellers. Therefore, you are getting into the direct selling business to be ready to face a lot of rejections. Moreover, there is a negative image of direct sellers in the market. For example, people try to avoid meeting them even accidentally because they think they will be forced to buy their products. Therefore, there might be several incidences when you feel like giving up. 4. Risk of failure Like all other businesses, there is a risk of falling too. Therefore, never put your whole fortune at risk. Take small steps and see whether your business works out or not and expand your business day by day. How to ace Direct Sale? Direct selling is not a business that everyone can do. You require a lot of patience and persistent hard to get successful. In this section, I will give you a few tips that will help you to ace. 1. Learn about your product and company In direct selling, you either sell your product or service or the products of other companies. My tip here to you is, don’t start your business instantly. Give yourself time. Do your homework. Learn about your products. Learn about their shortcomings and strengths. Learn about the history of the company whose products you are going to sell. All of the above information is important and will help you in making an effective sales pitch. Be ready to answer all the questions that your customers might ask you about your product. It will give a wrong impression if you don’t have an answer to any of their concerns. Therefore, to avoid such situations, you should learn every little about your product and your company. 2. Set your sales goal My second tip to you is to set your monthly goals. In direct selling, you will be your boss. There will be no-one to questions you or to push you to make more sales. The more sales you will make the more will be your profit. But over-work is also not a healthy approach. The right path to get successful is to set your goal. Set your goal for the month and divide the work in the right proportion throughout the week. Having a pre-decided goal will motivate you and will fill you with guilty each time you will procrastinate your work. Don’t decide your goal in your mind. Plan it properly and write it one paper and don’t fool yourself by setting unrealistic sales goals. Unrealistic or too high sales goals will only demotivate you when you fail to achieve them. 3. Plan your week and day Once you have decided on your monthly goal or target, the next thing you need to do is to distribute that work properly throughout the month. Plan your week and decide how much of your goal you want to achieve in one week. Be ready for unexpected events and be prepared to modify your plan accordingly. Plan your day. Plan in advance which areas you want to cover or the people you want to meet. When you plan your work and distribute your work equally throughout the month, you will not feel stressed at the end o the month. 4. Make an appointment in advance Don’t appear at people’s doors without giving them prior notice or without taking their permission. It is possible that they will not be at home or busy with something or have a birthday party for their child. In any scenario, they will not be able to give time to you and listen about the products that you have to offer to them. Therefore, make sure that you take an appointment with people at least one day before you visit them. 5. Organize your customers’ details Customers are the asset of your business. Therefore, it is essential to keep all the details like their contact numbers, email address, physical address, records of their history, product choice, and all other miscellaneous information. Make a google sheet or excel sheet containing all this information, because if you lose that sheet, you will lose your customers. 6. Follow up Many salespeople sell products and never bother to take follow up. But let me tell you it is a lousy business ethic. Even a well-establish business asks for feedback from their customers. Therefore, you should always take feedback from your customers after selling a product to them. There will be two outcomes if you do this. First, you will get negative feedback that you can use to improve your product. Second, you can get a reorder if they like your product and you will be one step closer to getting a loyal customer. Therefore, Never forget to take a follow-up. 7. Increase your network The success of direct selling depends mainly on your network. The more people you know more potential customers you have for your business. Therefore, socialize as much as possible. Keep your business cards handy and offer to people you meet. Don’t forget to take their contact numbers so that you can invite them whenever you organize a business house party. 8. Don’t be pushy One thing that people don’t like about sales-people is their pushy nature. Pitch your product subtly and know up to what extent you can push your customers to buy your product. 9. Brush your skills Learn selling skills and keep brushing them from time to time. Attend those workshops and training sessions organized by your company. Read the books that help you with setting your sales pitch. It will help you. 10. Always keep a positive attitude My last but not least direct selling tip for you is to keep a positive attitude. Marketing Communication Marketing communication process consists of integrated activities in which the targeted audience is identified. Although 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 are focused by the marketing communication. However 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 marketers. As to build customer relationships 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 and niches. Element of Marketing Communication Process For Effective Communication, the marketer should know how communication works? Following are the nine elements that are involved in the marketing communication process. • Sender • Encoding • Message • Media • Decoding • Receiver • Response • Feedback • Noise Each of these is discussed one by one. Sender: The party or person who is sending the message to the other party or person is the sender. Encoding: The conversion of thought into the meaningful symbols is called encoding. Message: The group of symbols transmitted by the sender is called a message. Media: The channel of communication through which transfers the message from sender to receiver is called media. Decoding: The conversion of symbols into meaning by the receiver is called decoding. Receiver: The sent message received by another person or party is called the receiver. Response: The reaction shown by the receiver before the message is called response. Feed Back: The portion of the response of the receiver that is sent back to the sender is called feedback. Noise: The unplanned distortion during the process of communication due to which the receiver understands the wrong meaning of the original message is called noise. The effective message is that where the process of encoding is matched with the decoding of messages. Moreover the message sent should consist of words and symbols that are known to the receiver. Marketing Communication 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 the communication process effective. • Identification of the target audience • Determination of the communication objectives • Designing of message • Message content • Message structure and format • Choosing media • Collecting feedback Each of these is now explained below. Identification of the Target Audience: The first step in the effective marketing communication process is to identify the target audience. So 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. Moreover the audience has a direct effect on the decisions of the communication, like what to say? How to say? And when to say? Etc. 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. However 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 passes to make a purchase which are as follows. • Awareness • Knowledge • Liking • Preference • Conviction • Purchase The target group of the marketing communicator is not much familiar with the new product or its salient features. So the marketing communicator should create the awareness and knowledge of its new product and features. However this is not the surety to the success; the new product should also provide superior customer value too. Designing of the Message: In this step the marketing communication communicator focuses upon the design of the message. So any message that can attract the attention, develop the interest, arousal of desire and stimulate the action is the effectively designed message. Hence this procedure is best known as the 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. 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. So 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 morality is included in the message to influence the targeted customers. Message Structure and 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. Also may keep to the audience to get a conclusion from them. Moreover the massage presents either only the strengths of the product or both the strengths and weaknesses. Therefore 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. 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. Or 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. Collecting Feedback: This is the last step of the marketing communication process in which the feedback from the target customers. So 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
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