Rajagopal. Marketing Dynamics: Theory and Practice

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Promotion strategies are concerned with the planning, implementation, and control of persuasive

communication with customers. Promotion includes advertising, personal selling, sales promotion, and

publicity of goods and services. Advertising refers to the corporate-sponsored messages transmitted

through the mass media channels including electronic and print media and static communication sources

like billboards, wall paintings etc. Personal selling involves strategies of establishing person-to-person

business relations with the customers. The sales promotion encompasses different techniques (for

example, samples, trading stamps, point-of-purchase motion, coupons, contests, gifts, allowances, and

displays) that support and complement advertising and personal selling. Publicity includes seeking favorable

comments on product or service and/or the firm itself through a write-up or presentation in mass for

which the sponsor is not charged. These strategies may be designed around advertising, personal

selling, sales promotion, or any combination of functions of these. Global advertising is largely uniform

across many countries, however, uniformity may not be necessarily in media vehicles with similar global

reach. In many cases complete uniformity is unobtainable because of linguistic and regulatory differences

between nations or differences in media availability, but with regard to products and services, the

localized advertising can still be considered as uniform in a given region. In contrast, multidomestic

advertising is a type of international advertising adapted to particular markets and audiences.

One of the major strategic issues associated with the development of effective promotion strategy

is the availability of financial resources for a specific product/market. The distribution of the notional

Chapter

PROMOTION STRATEGIES

CHAPTER FOCUS

• To learn the process of creating commercials using effective message

strategy, creative mix, copy writing, campaign and media plan for

international marketing,

• To develop skills on advertising research, Internet advertising and

direct response advertising, and

• To understand the sales promotion strategies and contemporary

retailing approaches.

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Marketing Dynamics: Theory and Practice

budget among advertising, personal selling, and sales promotion is another strategic matter. The

formulation of strategies dealing with these determines the role that each type of promotion plays in

a particular situation. Promotion strategy consists of planning, implementing and controlling

communications from an organization to its customers and other target audiences. The function of

promotion in the marketing program is to achieve various communications objectives in the market

segment. An important marketing responsibility is to plan and co-ordinate an integrated promotion

strategy and to select the specific strategies for the promotion components. It is important to recognize

that word-of-mouth communications among buyers and the communications of other organizations,

may also influence the target audience of the company. The promotion-mix has the following

components:

• Advertising

• Personal Selling

• Sales Promotion

• Direct Marketing, and

• Publicity

Advertising may be defined as the strategy of communicating, a sales message to potential

customers. Advertising plays a crucial role in international business worldwide and it is the

critical factor in achieving sales goals under tough competitive environment. It has been observed

that in the globalization era, the national and multinational companies are increasingly considering

successful advertising as a prerequisite to profitable global operations. Advertising is one segment

of a well-organized, continuous marketing plan. Effective advertising is a cumulative process

that maintains current customers, attracts new customers and establishes a favorable position

for the business with competitors. Advertising will not cure slow business growth or low profits,

nor will it create a better business person or a well-organized business. Advertising offers specified

benefits to a specific or target audience. As part of a sound marketing plan, advertising becomes

an investment in the future of the business, instead of one more expense. An effective

advertisement is based on a careful analysis of the situation before money is spent. Advertising

as a percentage of GNP rise in many countries as their in marketing practices move increasingly

in directions pursued in the U.S. In China the advertising industry has been growing at a rate of

50 percent per annum.

Implementing an advertising and promotions plan best carries out Advertising and promotions.

Many products or services have failed in the market, not because of their quality, packaging or

pricing, but because the potential customers didn’t know they were there, and if they did, they didn’t

know what those were or how to use them. In order to sell your product or service you must promote

it. One effective method of promotion is advertising. The goals of the plan should very much depend

on the overall goals and strategies of the organization, and the results of the marketing analysis,

including the positioning statement. The plan usually includes what target markets you want to reach,

what features and benefits you want to convey to them, how you will convey it to them (this is often

called your advertising campaign), who is responsible to carry the various activities in the plan and

how much money is budgeted for this effort. Successful advertising depends on knowing the preferred

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231

methods and styles of communications of the target markets that you want to reach with your ads. A

media plan and calendar can be very useful, which specify what advertising methods are to be used

and when.

Over a period of time, the Cancer Society of India observed that enough awareness about the

cancer has not been generated in the society and consequently the cancer check out patients

departments (OPDs) in the hospitals had very low turnout. The Society realized the need for

launching an effective campaign for the cancer check and decided to provide free check-up

facilities. The leading advertising agency Ogilvy, Benson and Matter (OBM), Mumbai was

the chosen for this campaign. The Cancer Society of India and OBM felt to assess the level

of awareness of the people and their perception about the disease and its symptoms. The

research study conducted on the sample of 600 existing and anticipated patients revealed

that the awareness of the cancer disease was very high (96%) but people had no specific

knowledge of the disease, people associated very low chances of survival with cancer and

as a result of fear of death the tendency of confining the disease to oneself largely prevailed,

patients also thought, it would be very expensive to get the treatment for the cancer. However,

the attitude of the patients of lower income group towards the disease was fatalistic and the

patients of middle income group were pessimistic. The hope was only for the patients who

come from high-income group and could afford the treatment. The findings of the research

the campaign by the OBM highlighted on the confidence building and awareness aspects.

The campaign in the print media was largely educational describing the myth and reality of

the disease. The perceived causes, symptoms, likelihood of getting the cancer, cure and

medical support have been the major themes of the campaign. The body of the text of

advertisement also brought out the top of the mind reactions of the patient and his family

members and attempted to build the confidence by wiping out the fear of death from the

minds of the patients. The focus of advertising was on bringing the attitudinal change, social

acceptability. Building mental strength and motivating for free check-up at Indian Cancer

Society Centers (ICS). The basic problem that emerged in the campaign was the co-ordination

of information and professional support. The free check-ups were not the cure for the disease

and it discouraged patients, as the economics of treatment seemed to be very high. The

campaign in the print media did not make a marketable dent in the rural areas, as it would not

have been backed with the strong word of mouth support.

Fashion Advertisements (FAds) and strategies building for optimum sales realization are prominent

among various sales promotion tools. As discussed earlier, the FAds have a greater impact on the

elite clientele group as compared to other measures used for raising the sales. The product branding

and packaging technology is the core input for FAds. Attractive packaging and popular branding

have a significant role in the market expansion and product promotion. In a competitive market

economy, the brands are hired by the manufactures for product marketing. In this system, new

product managers have to face an uphill task. In marketing new products, it is essential to take

potential as well as existing customers into confidence through an effective communication

management. In the absence of building up such awareness, the new product manager gets fringe

benefits while the brand owner gets a higher share in the consumers’ rupee. As such, these companies

1 Cancer Society of India: Cancer Awareness Programs, Evaluation documents, CSI, Mumbai, 2000

Web site: http://www.indiancancersociety.org/activities/activities.htm

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Marketing Dynamics: Theory and Practice

may not be in a position to establish their own brand due to many weaknesses pertaining to capital,

technical know-how and market guidance. The future threat in this regard can be visualized in the

light of selling their product. In the long run their identity will be only as a manufacturing unit, but not

as a product seller. Packaging in the competitive product market is an important determinant as far

as the buyer’s behavior is concerned. The more attractive and durable the packaging of any product,

the greater would be the product resistance and market demand. ‘The New packs’ may be the hard

core of some FAds which could be more appealing to the target customers. It requires enough capital

to invest in the packaging technology.

Advertising, direct marketing and public relations are the important tools for the promoting

international marketing. The process of advertising in an international business begins with a market

situation analysis conducted to assess marketing opportunities for the product in the existing market.

On identifying market environment the marketing strategies are formulated and supported by

communication linkages. Advertising strategies are developed in accordance with the marketing plan

and advertisements are released according to the media plan. Hence, commercial advertisements

seen by the consumer are like the tip of an iceberg emerging from a situation analysis, trade goals

and strategies that have been evolved by the marketing and advertising managers. However, it is

difficult to establish whether advertising is the first or the last component in the entire process of

marketing. Despite numerous research efforts on the function of advertising, a unified theory has not

yet emerged.

DEVELOPING ADVERTISING STRATEGY

Advertising is a key instrument in promoting the products and services in the international markets.

However, the rationale of advertising and media communication strategy has regional variations and

among industries. A advertising carries the corporate, products and services communication among

the consumer segments without any limits, it is risk avers towards cultural conflicts and deceptive

information for gain rapid market share. Hence, many firms have ethics codes for advertising.

Advertising has significant contribution in international business as it involves a commitment of funds.

Though the cost of effective and ineffective advertising varies, both incur high expenses. An effective

advertising campaign represents a tangible resource and is transferable internationally from one

market to another. Further advertising is regarded as the sole representative by many international

companies in establishing and maintaining a desired position of products in the international market.

Once a desired position for a product or service has been achieved through advertising, any local

market interventions such as price or promotion related effects, make low impact. Thus, global

advertising needs certain degree of centralization in terms of controlling the expenditure and carrying

the sustainable impact of communication in the markets world over.

Advertising expenditures in Singapore grew 29 percent during in 2000 to the top S $1.0

billion, with strong growth momentum generated by industry deregulation and keen

competition. Newspaper remained the key advertising medium, registering expenditures

of S$545.4 million and a 27 percent growth. Advertising in the Straits Times, the main

paper of newspaper giant Singapore Press Holdings (SPH), accounted for more than 65

percent of the total newspaper expenditures. While newspapers take up almost 50 percent

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233

of the advertising dollar, TV is close behind with a 34 percent share, accounting for S $

377.8 million after a strong growth of 35 percent, with Channel 8 and Channel 5 attracting

most of the advertising for TCS. ACNielsen AdEx monitors gross advertising expenditures

in major media at published rate card values, giving an indication of the state of the

industry. Consequent upon full deregulation in force since April, the telecommunications

sector has entrenched itself as the top advertising product category, posting a staggering

132 percent growth year-on-year to S $115.9 million in the first nine months. Singtel,

Starhub and M1 remained the 3 leading players, together accounting for a fringe share of

S $ 93.9 million.

Banking and investment was the second fastest-growing category during the first three

quarters, registering S $46.3 million, up 51 percent over the same period in 1999. Key

players included Bank of Singapore, DBS and Standard Chartered Bank. Bank of Singapore

spent most of the money on promoting its financial portal, finatiq.com, but it was DBS that

made it into the top 10 advertisers with monitored expenditures of over S $12 million,

mainly used to promote the DBS American Express Credit Card and ‘Eight’ investment

fund. On the other hand, Standard Chartered Bank featured aggressively its ‘Best of

Breed’ booklet, a special compilation that offered a thorough list of top-performing unit

trusts in Singapore, prominently in TV commercials and newspapers. Among all brands,

McDonald’s remained the most advertised brand with S $12.4 million worth of advertising,

up 34 percent. The bulk of advertisements went on TV, which accounted for over 70 percent

of the total value.

Multinational companies may derive important strategic decisions for international advertising

to make their brand image stronger. The concept of an advertising campaign developed at home

can be transferred to other countries by translating them into local languages or there is a need

to customize the advertising as per the socio-cultural and market requirements in different

countries. Many firms strongly believe that a successful advertising concept has no geographic

boundaries and may do well anywhere. Critics of standardization in advertising argue however,

that cultural differences require a campaign to be tailored to each country. However, customization

of advertising for a particular country may be justified on the plea of cultural differences and

public communication regulations among countries. A standardized advertising approach seems

particularly unsuited in developing countries where exist differences in lifestyle, per capita income,

market structure, and various aspects of the environment as compared with developed countries.

Nike is a champion brand builder. Its advertising slogans Just Do It, There Is no Finish

Line have moved beyond advertising into popular expression. Nike’s athletic footwear

and clothing has become a commonly talked product of America and its brand name is

as well known around the world as Honda and Federal Express. Consumers know Nike

for attention-grabbing commercials that feature athletes like Bo Jackson and Michael

Jordan. They anxiously await the debut of new Nike advertising, and are equally

enthusiastic in their response. “Nike’s advertising is laden with the solitary, self-

involved spirit some associate with jogging”. Bo knows advertising. Wieden &

2 Source : AC Nielson : AdEx Monitor, 2000 http://www.acnielsen.com.hk/news

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Kennedy’s Nike ads, multi-talented baseball and football star Bo Jackson, stretched

the boundaries of jock worship and neatly crossed the bridge from sports marketing

into pop culture. The eight spots helped build a Bo Jackson myth, then deconstructed

that legend and found humour in chastising those who got caught up in it, all the while

peddling high-tech, cross-training shoes. The first Jackson ads were part of the 1988

debut of Nike’s famous tagline, “Just do it.” A trio of light hearted spots showed

Jackson cycling, running and playing basketball. An advertisement shows a radiant

woman running past two clogged lanes of suffocating traffic, the drivers gray and

faceless. Under the title, “Man vs. Machine,” the text notes that machines have “put

our bodies out of a job”. A series of posters shows a solitary runner in a majestic

natural scene over the headline, “There Is No Finish Line.” Nike expands in the text:

“Sooner or later the serious runner goes through a special, very personal experience

that is unknown to most people. Some call it euphoria. Others say it’s a new kind of

mystical experience...” and so on. TV advertising is a large part of Nike’s marketing

success. Originally, Nike became a billion dollar company without television. For years

Nike relied on the athletes to wear their shoes, and ran a limited number of print ads in

specialized magazines like Runner’s World. They did not complete the advertising

spectrum until 1987 when they used television for the first time.

It is a complex issue for the multinational companies to opt for the advertising strategy between

the standardization and localization. Among many factors that help the firms to decide on the type of

advertising strategy to be adapted, the analysis choice criteria, advertising transferability and

organizational support may be useful. The choice criteria comprises of the factors associated with

environmental factors, advertising objectives of the company and target market where the

advertisement needs to be delivered. A range of environmental variables affect advertising

transferability across national boundaries. Of these some are listed as below:

Rate of economic growth of country

• Per capita income and distribution of income

• Average size of household

• Level of education

• Level of nationalistic feeling among the consumers

• Attitudes towards work and leisure

• Attitudes toward wealth and returns on investment

• Assessment of satisfaction towards spending

• Ethical and moral standards

• Availability of time on commercial broadcast media

3 for detailed discussion on Nike please see Robert J Dolan : Nike Inc, in 1990’s : The New Directions,

Harvard Business School Case, Harvard Business School, April 1995; also see official web site of Nike

Inc. www.nike.com

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• Adequacy of coverage of market by broadcast media

• Availability of satisfactory electronic, print and outdoor media

• Extent of Independence of media

• Government control on public and commercial communications

• Import/export perspectives

• Legal restraints on advertising within the country

• Import duties and quotas in the country

It has been observed that advertising objectives vary in each country. Though, advertising

of products and services do not lead directly to sales, it can be for transferring the customer

from one phase to the next. Advertising only attempts to bridge the gap between unawareness

Strategy Focus 6.1:

Earnings by Selling Media Rights for Sports Events

The global economic downturn intensified the competition with other forms of entertainment. Not surprisingly,

sports that have been traditionally popular in the United States or Europe which are the most lucrative

television-advertising markets enjoy an inherent advantage and are grabbing the biggest slices of a competitive

pie. Soccer and US football together take more than a third of the revenues in the global TV sports market

(exhibit). But commercial success isn’t just about popularity. The sports industry’s core sources of revenue can

be divided into three main categories: broadcast rights, sponsorships (including licensing and merchandising),

and ticketing and hospitality (such as entertainment and catering in sports venues). Each category accounts for

roughly one-third of the industry’s revenues, and each has enjoyed strong growth. Total revenues from television

rights are particularly important because of the exposure television generates for a sport and its sponsors rose

by 14 percent a year from 1997 to 2001. The advertising revenues of the US networks couldn’t match the

amount they had paid to acquire broadcast rights at the business cycle’s peak, so they lost an estimated $ 4

billion from sports programming that year. When sports rights holders renegotiate their television contracts,

prices are unlikely to go on rising sharply. Golf and tennis are major sports but not huge to be regarded as global

sports. Their audiences consist largely of affluent people who often play tennis or golf themselves. Such

characteristics make the audience not only attractive targets for advertisers but also potential purchasers of

goods licensed by the governing bodies of the two sports or by event organizers. Yet golf has been more

successful than tennis has in exploiting this high-income niche.

The decline of consumer interest is another sobering, and more structural, development. In Europe, the number of

sports-TV viewers fell by 15 percent from 1996 to 2001 as other forms of entertainment programming, such as

reality TV, came into fashion. In the United States, even the traditionally popular Monday Night Football game of

the National Football League (NFL) has lost 17 percent of its TV viewers since 1999. And fewer amateur athletes

are playing certain major sports—the number of participants in US baseball games dropped by 10 percent from

1991 to 2001, for example. This decline potentially reduces the level of interest in watching these sports on TV and

in spending money on them over the longer term. Consequently, in some areas the sports business is becoming a

buyer’s market in which broadcasters and sponsors not only resist any increase in price but also insist that games

be tailored to their needs

Source : Tekla V. Back, Philippe Blatter, and Jacques R. Bughin: Playing to Win in the Business of Sports, The

McKinsey Quarterly, Internet Edition, July 2004

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Marketing Dynamics: Theory and Practice

of a product or service-to awareness among the consumers, which further leads to

comprehension, conviction and finally action towards buying the products. The advertising

objectives for the products in the developing countries are largely oriented towards perceived

benefits, value for money and better quality. For example, a DVD player manufacturer’s

advertising objectives for India would have to be different from those for the UK and USA, as

in these countries the DVD player market has attained its maturity in the product life cycle,

while in India it is in its growth stage. Hence, the major focus of advertising in India may be to

comprehend the customer about the values associated with the product whereas in the developed

countries like UK and USA the advertisements may focus on moving the consumers from

conviction to action. Thus, the advertising concepts for marketing DVD playerss would not be

effective in India. The advertising strategy also depends on the target market in the host country.

If the proposed advertising campaign for another country is aimed towards a segment that is

more or less similar in nature to the segment served in the home country, standardized advertising

would appear satisfactory. Further, the attributes of a product involve also determines whether

such advertising is appropriate. The product attributes include buying and usage patterns,

psychological attributes and cultural factors. The media availability and the cost benefit

relationship are other factors that determine the nature of advertising to be implemented in the

host country. If the cost of adoption of advertising to the local conditions exceeds the benefits

that an adaptation might provide, it would be wise for a firm to choose standardization of

advertising contents.

Transferability of a commercial advertisement has various barriers comprising the cultural,

communication styles, legislative, competitive and implementation factors. The cultural barriers

also carry the social and cultural limitations laid by the religion. The local phonetics for the

standardized advertisement that may provide an awful sense sometime hinder the free transferability

of commercials. The competition for a product varies from one country to another country and

some time requires changing the viewpoint for its proper positioning. The legislative barriers may

be those imposed under the public laws in a country like child and gender abuse. However, some

companies develop the global prototypes which are developed considering all possible barriers in

other country and can be easily transferred. Such global prototypes comprise the facilities of

voice-over and the provisions of visual change to avoid language and cultural problems. These

advertisements may also be re-shot with local spokespeople but using the same visualization.

Drakkar Noir, a man’s fragrance, in an Arab print advertisement shows a woman’s hand caressing

a man’s hand holding the product; in the United States the same hand grasps the man’s wrist.

Colgate-Palmolive, Proctor & Gamble, Nestlé and Coca-Cola often use prototypes of actual

commercial and advertisement samples that demonstrate, what headquarters want in the

advertisements with specific written guidelines for acceptable deviations from the prototypes in

terms of story and message (usually limited flexibility) and creative aspects (layout, color, symbols-

usually more flexibility), with suggestions for appropriate media.

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ADVERTISING ENVIRONMENT

As with the marketing environment, advertising also works in an environment that may be understood

by studying the conditions under which it function. The environmental factors affecting the advertising

are given below:

• Social and cultural factors

• market competition related factors

• legal factor

• economic factors related to business and consumer

These factors nurture advertising as well as other related environments like marketing. The

environment helps planners asses the extent of the investment needed and to accordingly decide the

advertising strategies. Environmental conditions provide a base for formulating the advertising policy

and to provide magnitude and direction. The contemporary advertising system is an example of a

“free enterprise” environment.

S ocio-cultural environment comprises of shared beliefs, social values, customs, life styles, ethics

and community behavior. These components play a major role in shaping the behavior of consumer.

Thus advertising should keep to the social cultural standards and if failing to do so, the consumer

should resolve not to buy the advertised product. A competitive environment provides more options to

influence the consumer. Hence, to plan strategies for effective advertising, there is a need to look

into the product policies, distribution approaches, pricing mechanism and promotional strategies with

reference to competitive products and their sustainability in the market. The legal environment consists

of enforced regulation under which advertising has to be developed and exposed. Business fluctuations,

the broad economic framework for establishing business at the embryonic stage, prospects and

political stability form the economic environment for developing advertising plans. Thus, it is difficult

for any advertiser to ignore these factors while planning advertising within the given economy of the

country or region.

There are many other factors which have stake in the advertising environment and play a significant

role in determining policies for effective advertising as a communication and marketing tool. These

factors are:

• Technology development

• Growth in per capita income

• Increase in disposable income

• Higher purchasing power of consumer

• Growth of popular consumer clusters

• Development of infrastructure

• Increase in education standards of consumer

• Specialization in advertising techniques

• Use of research and development results