Showing posts with label customer. Show all posts
Showing posts with label customer. Show all posts

Customer Profitability Analysis for Corporate Growth

Customer Profitability


Smart marketers should always seek to establish strong relationship with profitable customers. Marketers have to bear so many costs and efforts for attracting, dealing and retaining customers. All such kinds of costs should be recovered for profitability. They should measure the profitability. They should focus on the lifetime stream of revenue and costs. In this regard, customer profitability is the difference between the revenues earned from and the costs associated with the customer relationship in a specified period.

Customer profitability is the result of applying the business concept of profit to a customer relationship. Measuring the profitability of a firm’s customers or customer groups can deliver useful business insights.

Customer Profitability Analysis


Marketers need to analyze customer profitability for corporate growth. A useful type of profitability analysis can be presented in the following figure:
Customer-Product Profitability Analysis

In above figure, columns represent customers and rows represent products. Each cell contains a symbol for the profitability of selling that product to that customer.

  • Customer 1: S/he is very profitable customer. S/he buys three profit making products. (P1, P2 and P4)
  • Customer 2: S/he yields a picture of mixed profitability. S/he buys one profitable product (P1) and one unprofitable product (P3).
  • Customer 3: S/he is losing customer because s/he buys one profitable product (P1) and two unprofitable products (P3 and P4).

Here, customer 2 and customer 3 are unprofitable customers for a company. The company can do the following activities about them.
  • It can raise the price of its less profitable products or eliminate them.
  • It can try to sell them its profit-making products.

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Customer Relationship Management (CRM): Meaning and Steps for Reducing Customer Defection Rate

Customer relationship management is a combination of policies, processes and strategies implemented by an organization to unify its customer interactions and provide a means to track customer information. It involves the use of technology in attracting new and profitable customers, while forming tighter bonds with existing ones.

Customer relationship management pulls together, analyzes and provides easy access to customer information from all these various touch points. It helps to assess the value of individual customers, identify the best ones to target and customize the company’s products and interactions to each customer.

The purpose of customer relationship management is to enable a company to better service its customers through the introduction of reliable service, automated processes, personal information gathering and processing and self-services. It attempts to integrate and automate the various customer serving processes within a company. It can be done through the use of multiple communication channels (phone, WAP Wireless Application Potential, Internet etc.)

Customer relationship management involves three general areas of business. They are as follows:
  1. Marketing information system: It provides information about the business environment, including competitors, industry trends, and macro environmental variables.
  2. Sales-force management system: It automates some of the company’s sales and sales-force management functions. It keeps track of customer preferences, buying habits, and demographics, and also sales staff performance.
  3. Customer service system: It automates some service requests, complaints, product returns, and information requests.


Steps for Reducing Customer Defection Rate

In order to reduce or control the defection rate of the existing customer, the marketing companies need to follow the following steps:
  1. Define measurement basis for retention rate: For reducing customer defection rate, first of all, the measurement basis for retention rate should be defined. For a newspaper, renewal rate is a measure of retention. For college, it is admission in second year after completing first year.
  2. Analyze causes of defection: For reducing customer defection rate, the reasons for defection should be analyzed. The major reasons for defection can be poor service, poor products, high price, inconvenient distribution etc.
  3. Calculate loss of profit: Customer defection results in loss of profit. Profit loss from lost customer should be calculated in terms of life time value of lost customers.
  4. Introduce anti-defection measures: For reducing customer defection rate, the company should introduce anti-defection measures such as extra benefits and services that add value.
  5. Find out cost of reducing defection rate: The cost of anti-defection measure such as extra benefits or services should be calculated. The cost should be less than benefits of reducing defection rate.
  6. Listen to customers: Customer feedback is essential for reducing defection rate. Exit interviews of customers can also be useful. Complaints and suggestions should be carefully handled.
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Value Creating Activities: Activities creating benefits and utilities to the customers

Value Creating Activities


Value creating activities refer to the activities cornering to create benefits and utilities to the customers. Value creating activities in marketing are very important. The major task of marketing is to create value to the customers. It needs to deliver value to the target customers. It should add maximum value to the customers. If a marketing firm creates value, it can run its business successfully. If not it may disappear from the market. In this reality, the marketing firm should perform value creating activities and deliver the maximum value to the customers for their satisfaction. For this, the firm can use value delivery network concept in marketing.

Value Delivery Network


To be successful a firm also needs to look for competitive advantage beyond its own operations, into the value chains of its suppliers, distributors, and customers. Many companies today have partnered with specific suppliers and distributors to create a superior value delivery network which is also known as supply chain. Value delivery network is building mutually beneficial relationship with key stakeholder to capture the value generated by the supply chain. This network is a set of participating companies or stakeholders who agree upon building mutually beneficial relationship among them for capturing the value generated by the supply chain. It involves partnering with key stakeholders to create superior supply chain.

The value delivery network for sugar can be shown in the following figure:

Value Delivery Network for Clothes

The participating firms of this network are fully aware of each other’s needs and priorities and are prepared in advance to deliver products and services at the right time at a low cost.
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Marketing is seen as the task of creating, promoting and delivering goods

Marketing is seen as the task of creating, promoting and delivering goods and services to consumers and business

Marketing is a term of common usage. In general view, it is related to buying and selling goods produced. But marketing is not only concerned with buying and selling of goods and services. It is that commercial process which attends and facilitates the movement of goods and services through the economy to enlarge and satisfy consumer need consistent with the corporation's fundamental objectives. In other words, marketing is an exchange process between producers and consumers, in which the producer matches a marketing offering (the product or service, plus its promotion, distribution, and price) to the wants and needs of the consumer.

Marketing is the business function that identifies customer's needs and wants, determines which target markets the organization can serve best, and designs appropriate products, services, and programs to serve these markets. However, marketing is much more than just an isolated business function. It is a philosophy that guides the entire organization. The goal of marketing
is to create customer satisfaction profitably by building value-laden relationships with important customers.

Definitely, marketing is seen as the task of creating, promotional and delivering goods and services to consumers and business. Following definitions help to explain it. 

According to E. Jeome McCarthy, "Marketing is the performance of activities that seek to accomplish an organization's objectives by anticipating customer or client needs and directing a flow of need-satisfying goods and services from producer to customer or client."
In the words of Stanton, Etzel and Walker, "Marketing is a total system of business activities designed to plan, price, promote and distribute want-satisfying products to target markets to achieve organizational objectives."
According to American Marketing Association, "Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals."
According to Philip Kotler, "Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others."

The above definitions emphasize that marketing focuses on activities to satisfy customer. Marketing consists of those activities which are associated with product, price, place and promotion. Marketing is an on-going process of discovering and translating consumer needs and wants into products service through planning, producing and creating demand, serving customer and business demand through planned physical distribution system and expanding markets in the face of keen competition under certain commitments.

Now, we can say that marketing is seen as the task of creating, promotional and delivering goods and services to consumers and business because these are the core function of modern marketing. It focuses on consumer and business needs, coordinates all the activities that will influence consumers and business firms and generates profit by satisfying them.
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Customer Satisfaction and Factor Determining Customer Satisfaction

Customer Satisfaction


Customer satisfaction is a post-purchase outcome where a customer compares the expected benefits with the actual benefit received from the use of product. If the performance of the product fails short of expectation; the customer is dissatisfied. If the performance matches the expectation, the customer is highly satisfied or delighted. Thus, customer satisfaction is a function of performance and expectations. It is the customer's perceived performance from the product in relation to the expectations. Customer expectations are formed by post buying experiences, advice from friends and relatives and marketing promotion and promises.

According to Philip Kotler, "Satisfaction is a person's feeling of pleasure or disappointment resulting from comparing a product's perceived performance in relation to his/her expectations."

Customers should be satisfied by the firm's offering: products and services. High customer satisfaction leads to high customer loyalty. It creates emotional bond of customer with the brand.

Factors Determining Customer Satisfaction


High satisfaction level is required to be created by marketing organizations in order to develop customer loyalty and retain the customer for a long period of time. For this, following factors can be used:
  1. Complaint and suggestion systems: A customer-centered organization makes it easy for customers to register suggestions and complaints. Some customer-centered companies are: P&G, General Electric, Whirlpool, etc. They establish hot lines with toll-free numbers. Companies are also using websites an e-mail for quick, two way communications.
  2. Customer satisfaction survey: Studies show that although customers are dissatisfied with one out of every four purchases, less than 5 percent will complain. Most customers will buy less or switch suppliers. Responsive companies measure customer satisfaction data, it is also useful to ask additional questions to measure repurchase intention and to measure the likelihood or willingness to recommend the company and brand to others.
  3. Ghost shopping: Companies can hire people to pose as potential buyers to report on strong and weak points experienced in buying the company's and competitor's products. These mystery shoppers can even test how the company's sales personnel handle various situations. Managers themselves should leave their offices from time to time, enter company and competitor sales situations where they are unknown, and experience firsthand the treatment they receive. A variant of this is for managers to phone their own company with questions and complaints to see how the calls are handled.
  4. Lost customer analysis: Companies should contact customers who have stopped buying or who have switched to another supplier to learn why this happened. Not only is it important to conduct exit interviews when customers first stop buying; it is also necessary to monitor the customer loss rate.
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Total Customer Value and Total Customer Cost

Customer Value


When a product or offering delivers value or satisfaction to the target group of buyer, marketing is successful. A target group or buyer will choose different offering or product based on the perceived value or satisfaction. Value is the ratio between what the customer pays and what he receives. Value can be shown as follows:

Value = Benefits/Costs
= Functional benefits + Emotional benefits/Monetary costs + Time costs + Energy costs + Psychic costs

All types of customers want to buy product or services from that company from which they get these offers the highest customer delivered value. It is derived from the differences between total customer value and total customer cost. Customers always want to get a bundle of benefits from the product they expect to buy. These benefits include product value, service value, personnel value, and image value. Similarly, they bear monetary cost, time cost, energy cost, and psychic cost to get expected benefits. In this regard, customer value is the difference between total customer value and total customer cost. Customer value is known as customer delivered value.

CDV = TCV – TCC

Where, CDV = Customer Delivered Value

TCV = Total Customer Value

TCC = Total Customer Cost

Total Customer Value


Total customer value is the bundle of benefits customer expect from a given product or service. It included product value, service value, personnel value and image value.

  • Product value: It is generated by the basic attributes of product such as product quality, packaging, design, functions, price along with advantages and benefits.
  • Service value: It is generated by support services offered along with the product. They can be before sales service, during sales service and after sales services such as counseling, installation, delivery, warranty, guarantee, money refund etc.
  • Personnel value: It is generated by efficient sales persons who use profession selling skills to serve and satisfy customers. Efficient sales persons use their salesmanship to overcome customer objections effectively which helps to increase the customer value.
  • Image value: This value is generated by ownership and use of reputed brand though brand equity where buying and using specific brand provides the customer with an enhanced personal value.

Total Customer Cost


Total customer cost is the bundle of costs customer expects to incur in evaluating, obtaining, suing, and deposing of the product or service. It includes money cost, time cost, energy cost and psychic cost to get expected benefits.

  • Money cost: It is the price of the product that customer buys and achieves desired utility. In other words, it is the price paid for the product or service for its utilities by the customer.
  • Time cost: It is the time spent for searching, evaluating, buying and other decision processes related to product. High involvement product has high time cost than low involvement product.
  • Energy cost: It is the degree of physical effort used by the customer for searching, evaluating, buying desired product and also taking them to their house.
  • Psychic cost: It is the cost related to frustration and dissatisfaction of the customer with the product and service. It can occur during various stages of the buying process.
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Marketing concept is a new way of thinking about the organization's entire activities.

Definitely, the marketing concept is a new way of thinking about the organization's entire activities. Failure of the three concepts i.e. the production concept, the product concept and the selling concept to achieve the organizational goal forced the organizations where they went wrong. They found business slogan of "We sell what we make" inappropriate to deal the competitive marketing environment. They integrated the buyer variable in the marketing decision making and changed the business slogan to "We make what we can sell."

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Meaning and Features of Marketing


The marketing concept is the guiding philosophy by which organizations that have adopted a marketing orientation coordinate their activities and evaluate their success. In its fullest sense, the marketing concept is a philosophy of business that states that the customer's want-satisfaction is the economic and social justification for an organization's existence. The concept is based on the notion that the main task of the organization is to know the needs, wants and value of the target market, and then, delivering products that satisfy those needs and wants.

The major principles listed below comprise the essence of what the 1950s has become known as the marketing concept.
  1. Focus on target marketing: Organization cannot operate within one brand market and satisfy every need of the customers. So now the organization needs to focus on target market that is a group of customers whose needs can be satisfied.
  2. Consumer orientation: The marketing concept views the customer's wants and needs as primary. Through its marketing department the organization gathers market information to determine what to produce and how it should be marketed.
  3. Integrated marketing efforts: Based on the marketing information that has been collected, the organization puts together a marketing offering that includes the product, together with its price, promotion and distribution. Every department in the organization is integrated in this effort by a unified marketing orientation.
  4. Resulting profit: The effectiveness of the process as a whole is determined by the profit yardstick. When costs are deducted from sales, the resulting profit is what remains. This profit, as a percent of assets, is called return on investment (ROI). The assets represent all of the organization's capabilities (marketing, production, personal and the like) in serving the market. ROI (Return On Investment) as a sign of probability measures whether it is in the company's best interest to pursue business in one area or another.

Since its emergence in the 1950s, the concept has been continually redefined by the many changes in the marketing environment and in society at large. The concept was born out of the awareness that marketing starts with the determination of consumer wants and ends with the satisfaction of those wants. The concept puts the consumer both at the beginning and at the end of the business cycle. It stipulates that nay business should be organized and the marketing function, anticipating, stimulating and meeting customer's requirements. The customer has to be the center of the business world. A business cannot succeed by supplying products and services that are not properly designed to serve the needs of the customers. It proclaims that "the entire business has to be seen from the point of view of the customer." In a company practicing this concept, all departments will recognize that their actions have a profound impact on the company's ability to create and retain customers. Every department and every worker and manager will 'think customer' and 'act customer'. For the implementation of the marketing concept requires a complete alternation of the organizational goal and structure, internal marketing, change in authority and responsibility, relationships and a careful planning of the marketing mix.

Thus, the above explanation proves that the marketing concept is a new way of thinking about the organization's entire activities. If you have any such statements to prove marketing concept is a new way of thinking about the organization's entire activities, feel free to write comments on the post.
When an organization moves from the selling concept to the marketing concept, some strategic changes are required. It means some factors are needed for successful implementation of marketing concept in the organization. The most important factors are as follows:
  1. Top management concept: All levels of management should be supportive for the marketing concept. Top management should give the financial support to adopt the marketing concept easily in an organization and marketing department should be given facilities and authority to implement the marketing concept.
  2. Information system: Effective marketing information system should be established in an organization to determine customer’s need and satisfaction. Through the external system producer can collect one of the customer comments about the product and service. On the other hand, internal information system of the organization i.e. communication between marketing and other department should be effective to implement the marketing concept.
  3. Organization restructure: To implement the new marketing concept in the organization, organization structure should be changed appropriately. For effective implementation of the marketing concept, the marketing personnel should be involved in top level management.
  4. Appropriate marketing: To implement marketing concept, appropriate marketing functions should be done. Product should have good quality, price and promotion should be effective. Without meeting the market needs, marketing concept cannot be applied in an organization.
  5. Authority and responsibility: To motivate the marketing personnel, related authorities and responsibilities should be given to them. Marketing personnel give positive feedback, if they are given appropriate authority and responsibilities.
  6. Human resource management: For the implementation of the marketing concept, human resource department should be given the necessary training to become customer oriented and direct all the activities towards customer needs and satisfaction because the trained employees will be motivated to do the job and capability will be increased.
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E-commerce or Internet Marketing: an electronic marketing, online marketing

Meaning of E-commerce or Internet Marketing


The buying and selling through Internet is called Internet marketing. Internet is the worldwide computer network. It works as communication media. It helps to have direct contact with every individual customer. All the customers may not be equally profitable. Contact with some customers may need to cut off. So, profitable customers should be selected carefully. Internet helps in it. Similarly, Internet also helps to maintain long term relationship with profitable customers. Contact can be made with stakeholders such as suppliers, intermediaries or middlemen, competitors etc. through Internet. Similarly, Internet also helps in promotion of products, price and distribution including strategic association both at local and global levels. Internet use has become popular for the last few years. Internet marketing becomes more suitable in marketing different products such as cars, and other transport means, share, hotel booking, airways ticket booking, books, tape, magazines, dolls, clothes, equipment including many other things.

Internet marketing is electronic marketing. It helps to have direct contact between producers and customer through electronic channel. They are computer, telephone including other electronic media. Internet marketing is also online shopping. Producer, seller, bank, transportation, hotel and other organizations put descriptive catalogue on Internet or online.

Customers look at the online/Internet selects goods or services given on it and order for delivery. Customers look at the catalogue on personal computers at their homes. Suppose, any customer wants a CD player, she/he looks at all brand CDs and selects it and can buy the desired one through online service.

Internet marketing is also direct marketing. Middlemen do not work in it. The producer contacts the customers directly. Producer contacts customers one by one. In this method, commission that is given to middlemen is saved; as a result, the cost becomes less and the customers get goods at cheap price.

In conclusion, marketing done through Internet is called Internet marketing. It is also called online shopping. It helps to have direct contact between customers and producer through electronic media. As direct contact is made between customers and producer, their relationship becomes durable and strong.

Features of E-commerce or Internet Marketing


Online selling, elimination of middlemen, data depository, enhance promotion, global alliances, good relationship and need of electronic device are the main features of E-commerce or Internet marketing.

1. Online selling


In Internet marketing, products are sold through online. Producer, sellers, bank, hotel, transport and other organizations put catalogues of goods or services on Internet online. Customers look at such catalogues and demand for the goods or services of the brands which ever they want.

2. Elimination of middlemen


In Internet marketing, no middlemen can work. They are not needed. So, they are eliminated by such marketing. Customers and sellers keep direct contact with each other through this electronic media and selling and buying is completed between them. The commission that middlemen would take remains saved. Hence, the cost of the product becomes lesser. As a result, the customers get the goods at less rate of price.

3. Data depository


Internet is a data store. Millions of data can be stored and kept in it. They can be looked at taken out or studied as and when needed. Producer, sellers, bank, hotel, transport, and other organizations keep such information and the customers can easily look at them at their home on Internet.

4. Enhance promotion


Advertisement of goods or services can be put on website. Such advertisement becomes more effective. It increases sale of goods or services.

5. Global alliance


Internet is global computer network. So, it can maintain global strategic alliance in distribution and promotion.

6. Good relationship


Direct contact between producer and customer becomes possible through Internet. Such contact can be made strong and durable. Only profitable customers can be contracted through Internet. And other customers who have become burden can be abandoned.

7. Need of electronic devices


Internet marketing is electronic marketing. This needs computer, telephone and other electronic media. In the lack of such devices, Internet marketing is impossible.
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Relationship Marketing: Meaning, Levels and Approaches of Relationship Marketing

Meaning of Relationship Marketing


Long-term partnership between marketing expert and customers is called marketing relationship. It maintains satisfactory relationship with customers to earn long term goodwill and maintain it. Creating maintaining and increasing good and strong relationship with customers and stakeholders is relationship marketing.
Relationship marketing includes increasing strong relation with customers, keeping contact and enhancing it. Relationship marketing gives emphasis on establishing valuable relationship and creating delivery network with them rather than personal dealings. Relationship marketing is long term oriented. 


The main objective of relationship marketing is to continue long term delivery to the customers and measure their satisfaction. All the departments of a company should work as a group with marketing to provide services to the customers. Relationship should be maintained with economic, social, technical and legal sectors. It helps to increase the reputation of the company and its products or services. In relationship marketing, marketers and customers work together to identify customers' wants and needs and meet those by updating them in marketing mix.

According to Philip Kotler and Gary Armstrong, "Relationship marketing is the process of creating, maintaining and enhancing strong, valued-laden relationship with customers and stakeholders."

For the last some years, the companies have realized the importance of relationship marketing and are practicing it. Nowadays there are many customers, they are living and spreading all over the world. They want such suppliers who can provide goods at any place, any time and can solve problems and bring improvement in quality of the products living nearby them. Relationship marketing fulfills these wants of the customers.

Levels of Relationship Marketing


Different levels are created while buying goods by the customers. They are: basic level, reactive level, accountable level, proactive level and partnership level.

Levels of Relationship Marketing

1. Basic level


At this level, the seller sells products to the customers. But do not establish relationship with them anyway. They only sell products to them.

2. Reactive level


At this level, the seller of the company sells goods to the customers and encourages them to ask if they have any problems and questions. At this level, the sellers become ready to solve problems of the customers after selling goods.

3. Accountable level


At this level, the seller phones the customers a short time after the sale of check whether the product is meeting the customers' expectations. They solicit for suggestions if any improvement is necessary.

4. Proactive level


At this level, the seller and other employees phone the customers from time to time with suggestions about improved product use. They find out whether the customers are satisfied with the improved products or not. If they are not fully satisfied, they will ask for suggestions and advices.

5. Partnership level


At this level, the company works regularly with the customers to find out methods for delivery of products. At this level, the company takes the customers as partners.

Approaches of Relationship Marketing


Financial benefits, social benefits and structural ties are the approaches of relationship marketing. They are made clearer by the following figures:- 

Approaches of Relationship Marketing

1. Financial benefits


The first approach is to provide financial benefits to the customers to strengthen relationship with them. For example, an airline may give special discount to its regular customers by scheduling regular flights. Hotels may provide special discount to their regular customers. Similarly other business organizations may provide discount or prize to their regular customers. Some organizations provide several facilities to their regular customers by giving them membership of their club. Strong and deep relationship can be established with the customers by giving such financial benefit.

2. Social benefits


The second approach of relationship marketing is social benefits. Relationship with customers can be strengthened by providing social benefits to them. Business company develops personal relationship with the customers for the same purpose by this approach. It confers them social respect and recognition. The company identifies wants and necessities of personal customers, and makes marketing mix accordingly. Besides financial benefits, the social benefit strategy strengthens relationship with customers as well.

3. Structural ties


The other important approach of relationship marketing is structural ties. Its main objective is to involve customers in organizational structure. In order to develop effective relationship with customers, special equipment or marketers supply with special equipment or computer linkage that help them manage their order, payroll and inventory. Electronic Data Interchange (EDI) should be developed. The medicine wholesaler, McKesson Corporation had invested millions of dollars to develop EDI to systematize inventories, orders and shelf space of small pharmacies. That means, a company should even spend much capital to establish strong relations with customers, maintain it and involve them in the structural tie.
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Sales Promotion: Short Term Encouragement / Stimulation for Attraction of Potential Customers

Meaning of Sales Promotion


Short term encouragement/stimulation used to create demand for the goods intended to sell is called sale promotion. This is an important element of promotion mix. In this competitive environment, its importance and popularity has been increasing daily. Sales promotion plays an important role to attract potential customers.

Various methods such as free sample distribution, rebet, coupon, price reduction, gift, decoration, fair, premium, display etc. can be used. Some producers keep cash prize into packets of goods.

The meaning of sale promotion can be clearly understood from the definitions given by experts and writers as follows:
According to Prof. William J. Stanton, "Sales promotion refers to demand stimulating device designed to supplement advertising and facilitate personal selling."

 

According to American Marketing Association, "Sales promotion refers to those marketing activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness such as display, show and exposition, demonstration, and various non-recurrent selling efforts not in the ordinary routine."

 

According to Prof. Philip Kotler, "Sales promotion consists of a diverse collection of incentive tools mostly short term, designed to stimulate quicker and/or greater purchase of particular product/services by customers or the trade."

 

The above mentioned definitions make it clear that various ways or methods that are devised to create demand for goods or services is called sales promotion. All the short term ways or methods devised for creating demand are called sales promotions. It works as the bridge to link advertisement and personal sale. Sales promotion also helps wholesalers and dealers.

Objectives of Sales Promotion


Generally, activities of sale promotion are conducted to expand/amplify sales. There may be various reasons and objectives for sale promotion. The main reasons or objectives are:

1. To attract new customers


Sales promotion activities should be conducted to attract attention of new customers. There are many methods to attract attention of the customers. Among them free sample distribution, coupon, price deduction, decoration are some of the examples. Such activities attract customers' attention. They may even give up / change the brand they have been using and get stimulated / encouraged to choose other new brand goods.

2. To introduce new product


The second objective of sales promotion is to introduce or present new products to the market. Bringing new product in market is very challenging and difficult task. It becomes difficult to sell new products in markets only using advertisement, personal sale and publicity or propagation. So, effective activities should be conducted for sales promotion. Sample display, presentation, trade fair etc. should be held to introduce or bring new product in the market. If new products are brought in market, they can face competition to some extent.

3. To encourage greater purchase volume


Sales promotion activities should be able to increase sales volume. The third objective of sales promotion is to increase sales volume and encourage customers to purchase more quantity. As different methods and tools of sales promotion encourage customers they become ready to buy and use greater volume of goods. Only when such situation is created, sales promotion becomes effective.

4. To educate the customers


Goods may remain in different conditions. Further improvement can be made by adding up some new features only after the products reach the maturity stage. This is called product modification. While adding new features to the products, quality and prices also are changed. So, customers should also be given full information about it. The same task is called educating the customers. Hence, sales promotion has the objective to educate customers.

5. To maintain selling stability


Sales quantity / volume remains changing for one or the other reasons. Sales may get fluctuation according to season or time. Greater volume of goods can be sold out in favorable season and less volume in unfavorable season. But, the sales volume can be maintained same even in unfavorable season by using tools of promotion, due to which selling stability remains for long. If stable sale is maintained, both the seller and buyer sides can get benefits.

6. To increase seller's inventories


The sales promotion activities increase the sales volume. When the sales volume increases, the wholesalers and retailers also should increase their inventories. Sellers become ready to increase inventories, provide facility, reduce price by purchasing goods even in unfavorable season. As a result, the inventories increase automatically.

7. To increase brand awareness

Sales promotion should make clear what products have been given brand name and their quality. In this way, to increase brand awareness in customers is also another important objective of sales promotion. Sample presentation, display, trade fair, etc. also greatly help to increase awareness.

8. To make better store display


Sales promotion inspires / encourages the retailers to make better display of goods in their shop. Nowadays, the producer of Lux soap, Bond Cigarette etc. have encouraged the retailers to display them in a beautiful way so that the customers may buy. They announce different prizes including cash, motorcycle and color television to customer.

9. To push new item


Sales promotion also encourages the sellers and channel members for sale of newly introduced products. So, they purchase new brand products from producers and urge or appeal the consumers to buy them.

10. To attract new channel members


Efficient new channel members are needed to sell any new product. Sales promotion encourages such new members to deal in such products. As a result, the market gets expanded and distribution management strengthened due to addition of new persons, channel-members or organizations. In this way, a competition among many channels members in selling products takes place through which the efficiency increases.
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Personal Selling Processes: Internal Selling Process and Travelling Personal Selling

In marketing, selling goods is very sensitive task. Success or failure of business depends on this task. So, an efficient seller should adopt certain process of selling goods. Indoor seller should complete the process such as drawing attention of the customers, politely welcoming them, asking or inquiring, showing goods, solving customers' doubts, helping them in selecting
goods, giving chances for selection, selling additional goods and seeing off with respect. Travelling or outdoor sellers should complete the process such as seeking customers, making pre-approaches, approach, displaying products, facing antagonism or complaint, objections and sell the products.

  • Internal Selling Process
    • Drawing attention
    • Welcome
    • Inquiry
    • Display of goods
    • Meeting objections
    • Selection of goods
    • Additional sale
    • Commendation of seeing off with praise
  • Traveling Personal Selling
    • Prospecting
    • Pre-approach
    • Approach
    • Presentation
    • Meeting objections
    • Closing the sale
    • Follow-up


1. Internal selling process


Internal selling should complete some process for selling goods. They can be mentioned as follows:

a) Drawing attention

The personal seller should, at first, attract potential buyers. Some important things should be done by the seller to attract the potential buyers' attention towards the shop. Such things are to arrange goods in order, in a decorative manner, keep shining board at right place, keep the shop clean, light colorful electric lights, keeping counter at convenient place etc. Only then the potential customers are attracted to the shop. In this way, there remains possibility of sale. These are the first stage tasks of internal seller.

b) Welcome

After the completion of the task of attracting attention, the customers enter the shop. The seller should welcome customers. They should be greeted respectfully. Then they should be offered sofa, chair or seat to sit. Tea, coffee, hot drinks should be offered according to season. In this way, they can be attracted.

c) Inquiry

At the third phase they should be inquired. The customers entered in the shop should be supposed as the emperor. So, they should be inquired with simple and easy manner to understand their wants. But the talks should not go beyond the context. If they are regular customers, they should be asked remembering their social dignity and respect.

d) Display of goods

After the priority has been understood, the seller should display / show the goods available in the shop. While displaying the goods, the seller should not reflect any irritation or bothers, but should be smiling, smart and helpful. The seller should explain the features, quality, utility using method, benefits etc. of the goods to the customers. Such information should be full, true and convincing. Only then the display becomes fruitful.

e) Meeting / facing objections

After hearing complete description of the goods, the seller may express objection. If they express doubt and raise problems towards any goods, the seller should solve such doubts and problems with cool mind and logics. Documents relating to the company, descriptions, guaranty-quality etc. should be proved to satisfy them. In this way, the customers can be convinced immediately.

f) Selection of goods

After the satisfactory answers have been given against the doubts, the customers can take buying decision. In this way, they select necessary goods with suitable price. The seller should help them in selecting good. They should not be given unnecessary pressure to buy any goods. They should be left free in choosing goods and given sufficient time to select and take rational buying decision.

g) Additional sale

When the customers become ready to pay the bill after selecting goods, the selling function completes. At that time, the seller should make efforts to sell additional goods. For example: the customers who buy television needs voltage controller, those who buy pen needs ink and copy, those who buy shoes need socks, those who buy suit may need tie. They also should be given information about such additional goods so that they are interested to buy such goods. Most of such efforts become successful to motivate them to buy additional goods.

h) Commendation and seeing off with praise

After taking price of the products sold, the customers should be seen off with respect. While seeing them off, the seller should praise or commend them for the selection, purchasing power, personality, behavior and identification of equality of goods. Such behavior of seller establishes close relation between sellers and customers. Such dealings of sellers also help in business success, and inspire customers to buy the goods repeatedly.

2. Travelling personal selling


Goods can be sold by roaming / traveling around different areas. Some processes should be completed to sell goods by a seller. The processes are as follows:

a) Prospecting

At first, the seller should seek prospective customers. The seller should find out the customers of the target market and investigate them who are to buy the goods. Prospective customers can be found out from past records, suppliers, reputed sellers, organizations etc. Besides, telephone, post office, newspapers, letters etc. also become helpful in finding out customers.

b) Pre-approach

After the completion of seeking out prospective customers, arrangement for pre-meeting them should be made. More information about the prospective buyers should be collected. Specially, the task of meeting prospective buyers, knowing about their need, interest and wants should be completed at this stage.

c) Approach

The seller meets the customers in order to sell goods or services according to their need. In this process, the seller establishes close relationship with them. In such meeting, the sellers should be efficient, flexible, polite and confidential.

d) Presentation

At this stage, the seller should show the goods, describe the quality, utility, benefits features, handling methods, etc. of the goods to the customers. While explaining, the sellers should be confidential and dependable.

e) Meeting objection

The prospective customers may raise different questions on the goods after presentation of the goods. Such questions and doubts should be clearly and orderly replied so that they are convinced also mention about the company, its sales records, sales quantity etc. After they are answered clearly presenting data, objections can be carefully met.

f) Closing the sale

After the seller gives satisfactory answers to the questions of the buyers, they are satisfied. Then buying order is received. Arrangement for sale according to the order should be made. At this stage, conditions of sale, after sale services, warranty, guaranty conditions etc. are determined. Then the buyer should be praised for selecting quality goods.

g) Follow-up

After the goods have been sold, follow up should be done about the goods. The seller should observe whether the goods have been correctly used or not. Along with this, the goods should be repaired, exchanged, or provide free service, if needed, according to the pre-set condition. This helps to keep continuity of selling the goods and the relationship between seller and buyer remains always good, renewed and warm.
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Advertising Media and Selection of Advertising Medias

Advertising Medias


The tool used for disseminating information and message about goods or services is called advertising medium/media. Such tools/media carry sales messages to the customers. Effective media works as the bridge between producers and customers. Various medias can be used to make flow of information or messages. Every company may use the following media for disseminating their messages.

1. Newspapers


Newspapers provide information, ideas, attitude of organizations sponsors/advertisers to all the customers. Target customers get different materials such as refutation, criticisms, descriptions, analysis, etc. relating to various subjects through newspapers. Such news papers may be daily, weekly, monthly, bi-monthly or so on. The newspapers can be of local level, regional level, national or international levels. News, information, notices, messages, etc. are published in them. Such medias are called print medias. Most of the customers study such published materials.

2. Magazines


Magazines, bulletins, journals, business diary etc. are also important media for advertisement. Advertisement of goods or services can be disseminated through such media using different forms such as article, notice, poems, essays etc. Generally, they can be published in fortnightly, monthly, bi-monthly, etc. publications. In such papers, business, banking, agriculture, education, finance, insurance, transport, religion, culture, communication, advertisement etc. are mentioned which become very important for advertisement of any products.

3. Radio advertising


The subscribers / sponsors of advertisement may disseminate their advertisement of their products in the form of notice, information, description, etc. through radio. Generally, such radio advertising is made in the form of song, music, verse, short stories, etc. Such form of advertisement may be very popular among target customers or markets. Sports materials, consumer goods, household goods, minor equipment, health related goods etc. may be advertised in the form of notice or message. Such advertisement becomes very effective as the customers / audiences can hear even when they are busy working.

4. Film advertising


Entertaining and knowledge giving information / notices can be provided through film. As all the audiences hear, see and understand such advertisement, it becomes very effective and important. Advertisement with examples can be disseminated through cartoon strips, song, music, colorful slides, documentary films etc. The customers can remember the information or advertisement disseminated in such forms. So, firms are also one of the effective media for advertisement.

5. Television advertising

Nowadays, television advertisement has also become very popular among people. Advertisement of any product in form of colored pictures, scenes, main subject matter etc. can beautifully as well as attractively presented through this modern means of advertisement in television. So, all the customers can get opportunity to hear, see and understand the advertisement. They become clear about the quality, features, utility, price, using methods etc. of the products. Descriptive information and notices about household and consumer goods, construction materials, transport means, agricultural tools etc. are disseminated through such type of advertisement media.

6. Poster advertising


Posters can be pasted giving simple information about products. Posters may be prepared by printing or writing and can be pasted on walls, pillars etc. Such advertisement attracts the attention of many customers. The matters to be mentioned in posters should be short, attractive, complete and sweet. Such posters should be pasted mostly in stadium, cinema hall, super markets, bus stop, airport, education institution, port etc. so that the people / customers can get important information about the product.

7. Travelling display

Travelling and mobile display is also is one of the strong methods of advertisement. In this method, advertising materials are pasted, hung on buses, tempo, train, car, jeep, lorry, truck etc. to disseminate the messages or information. Such type of advertisement is done in the form of exhibition and poster. Different sized cards should be prepared according to the nature of product or services and capacity of company and should be pasted at different places. As such posters/cards are pasted on different means of transport, customers can easily see the information or messages. This travelling display method is very simple and cheap.

8. Bill board and hoarding board

Necessary information about goods or services are written on boards and are hung around supermarkets, crossroads, train and bus stations etc. to propagate them. Such advertisement can impress the customers. If such boards are hung at proper places, maximum number of customers can see and understand the message. Mostly, consumer goods, machineries and tools, means of transport, soaps, radio, televisions, sports' goods, etc. are advertised through these media. As this type of media repeatedly reminds the customers, this method is very important.

Selection of Advertising Media


Advertisement carries information and message to the customers of target markets at right time. For this, a proper medium is needed. If proper media is not selected, it cannot bring expected result. So, proper media for disseminating the company's message and information should be selected correctly. Only the proper media can provide necessary information to all the customers, readers, audience and observes. There are some important bases to be cared while selecting proper media for advertisement. They are as follows:

1. Nature of product


At first nature of product should be specially considered while selecting advertisement media. If the advertisement is not suitable to the nature of product, it becomes meaningless. Posers, newspapers, magazines etc. become suitable to use for advertisement of the products of local and small companies. The big companies should use national level media for advertisement. One type of media becomes suitable for the advertisement of perishable goods and other types of media become suitable for long lasting goods. So, right and suitable media should be selected according to the quality, features, utility, nature etc. of the goods. Only then advertisement can give effective result of advertisement.

2. Nature of market


Market area, size and nature also affect media selection. Message, information and description of goods or services become effective and interesting only through suitable media. In the national level market, print and electronic media become suitable and in local market external exhibition media become suitable. Geographical area, age group, income source, number of customers etc. also affect media selection. So, media should be selected only by considering the nature of market.

3. Advertising objective


Business firms advertise their products to achieve some important objectives. So, advertisement media should be selected considering the objectives of the company. If right media is selected, expected result can be achieved. For instance, if the objective is to sell new product, outdoor media may be used. On the other hand, if it is also to save company's reputation, direct media may be used. Os, main and auxiliary objectives should be considered while selecting advertisement media.

4. Nature of message


Nature of message also affects selection of media for advertisement. Message may be short, detail, important or less important. So message should be disseminated on the basis of the description and priority. Different media can be used according to the nature and subject of the advertisement. The media should be fixed only after deciding which types of customers or which group or community is intended to be given message or information about the product. So, media should be selected according to the nature of message and subject matter for advertisement.

5. Media cost


Suitable or proper media should be selected only after studying what cost is needed to use what types of media for advertisement. Reasonable and cost effective media should be used. As producers have to advertise various products and if proper and reasonable media is not used, advertisement cost becomes high and certain budget is finished in it. So, availability and budget source also should be considered and proper media cost be identified. So, proper media should be selected at reasonable cost.

6. Media Availability


Easy availability of media also should be considered for using them to advertise products or services. If there are many alternatives, the best media can be selected. But in the lack of different media, easy available one should be used. Availability of media also plays an important role. Sometimes, any media available at the time when needed needs to be compulsorily given responsibility for advertisement. However, in such condition there remains possibility to arise problems.

7. Competitors' selection


Sponsor/subscriber of advertisement, sometimes, should keep in mind the competitors' selection. If the media selected by the competitors' are stronger and more effective than selected by the company, advertisement is overshadowed. But sometimes, the same media selected by other competitors need to be accepted. Only then the customers' attention can be drawn. So, media selected by other sponsors/subscribers should be selected. Sometimes imitation also becomes helpful in achievement of company's objective.

8. Sales and distribution policy


Sales and distribution policy of a company also affect media selection. The advertisement and media should be suitable to the policy of the company. If advertisement media is selected which can be helpful to the company's policy and program, its effect becomes positive. So, if the distribution system is suitable and scientific, any media can be selected. So, the structure of distribution system also should be considered while selecting media.
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