BOM

Unit-III
1. Pricing Decisions: Determinants of Price
2. Pricing Methods and strategies.
3. Promotion Decisions
4. Factors determining promotion mix
5. Promotional Tools Fundamentals of advertisement
6. Sales Promotion
7. Public Relations & Publicity and Personal Selling
8. Marketing Channel Decision:Channel functions, Channel Levels
9. Types of Intermediaries: Wholesalers and Retailers
 Pricing Decisions: Determinants of Price

Pricing
Pricing is a key element of the marketing mix.

All the other elements – Product, Packaging, and Promotion are cost
generators, i.e. they cost the company money. But pricing is an income
generator. Let us look at the factors that determine the pricing of a product.

Pricing

A price is a value in monetary terms that one party pays to another in a

transaction in exchange for some goods or services. So the definition of
price is the amount of money the buyer will pay as consideration to the
seller in exchange for goods or services.

Pricing isn’t always as easy as setting a price the seller hopes to obtain. It
involves aspects such as demand and supply, cost of the product, its
perception and value for the customer and many such factors.

So while pricing a product, the company has to take immense care and
consideration. If the price is too high or even too low the product will fail in the
market. This is also the reason why the determination of price is not a one-time
event. A company changes the prices according to the market conditions and
other circumstances.
Factors Affecting Price Determination

A company has to keep in mind various factors while determining the

price of a product. Some such important factors are given here.

1] Cost of the Product

The most important factor affecting the price of a product is the

product cost. The same principle also applies in case of services. The
product cost will be inclusive of the cost of production, the
distribution costs and the selling and promotion costs. This cost will
act as a benchmark for setting the price.

In the long run, the company will obviously try to cover the entire cost
of the product. And in addition, it will set for itself a profit margin
over and above such cost. But perhaps in the short run, the company
may set a price lower than the cost of the product. This is a marketing
strategy to boost sales and capture a share in the market. But in the
long run, no company can survive unless the prices of the
products/services do not even cover their costs.

Let us also learn about the three types of costs of a company

● Fixed Cost: These costs are fixed. They have no relation to the

level of activity or production of the company. Even if there is

 no production of goods these costs will occur. For example, the
rent of the factory is a fixed cost.
● Variable Cost: These are the costs that vary in direct proportion

to the production levels of an entity. Higher the production,

higher the cost and vice versa. The raw material is a classic
example of a variable cost
● Semi-Variable Costs: These costs also vary with the production

levels. But they are not directly proportional. Say for example
the salary of a manager is 10,000/- a month fixed and then 10%
of his sales. This is a semi-variable cost.

2] The Demand for the Product

The cost of the product will only give you a benchmark to determine
the price. The upper limit of the price range will depend on the utility
the product has and hence its demand in the market. So the cost of the
product is the seller’s concern. The buyer’s concern is the utility of the
product. The demand for the product will depend on its utility and its
price. The law of demands states that lower the price higher the
demand.

Another factor to consider when determining the price is the elasticity

of demand. This means the corresponding change in demand to the
change in the price of a product. If the demand is inelastic then the
company can charge a higher price for their products.

3] Price of Competitors

One factor that affects price termination is the price the competition
charges for their product. Not only their price but their products, its
features and other factors like distribution channel, promotions etc.
should also be studied.

In a market, with free competition, the prices have to be very

competitive. You cannot risk pricing yourself out of the market. But
on the other hand, if your products have special r additional features
this must be reflected in the price.

4] Government Regulation

The government has a duty to protect its citizens from unfair practices
and pricing. So it may impose certain laws and regulations with
regards to the pricing of a product. It can even regulate the prices of
goods that it considers essential goods.

This generally happens in the pharmaceutical industries.

Manufacturers charge exuberant prices for life-saving drugs and the
buyers have no choice but to pay. In such cases, the government may
step in and regulate the prices of these essential medicines.
There are other factors also which help a company in their pricing
aspect of the marketing mix. Here we have covered the four most
important ones.

Pricing Methods and strategies

Pricing strategy is a systematic approach aimed at setting the optimal price for every
product. Price is a highly sensitive and visible part of the retail marketing mix and has a
bearing on the retailer’s overall profitability. Further, pricing itself is an essential part of
the marketing mix and has its own place in the strategic decision-making
process.Choosing the right blend of strategies helps retailers to maximize profit and
revenue as well as satisfy market requests and keep customers loyal. Pricing policy has
to consider all the potential influences and factors affecting the market and therefore the
scope facing the retailer is remarkably wide. The choice made will probably be one, or a
combination, of the following. The major difference is between the cost-oriented and
demand-oriented approach to pricing.

The various types of Pricing Strategies are-

1. Cost-oriented pricing-

Cost-oriented pricing is related to the costs a retailer incurs when purchasing a

product or service for sale to their customers. Cost- oriented pricing refers to
setting prices on the basis of an understanding of costs to the retailer.

Under cost-oriented pricing, we have the following methods:

1. Cost-plus pricing: For the cost-plus method this will be in relation to either
marginal costs or total costs including overheads. The approach could be to:
• Select the target market;
• Determine the cost of the goods in store – storage costs, selling costs,
shrinkage estimates, overheads, etc.;

• Determine the ceiling price above which the retailer would be offering expensive
prices compared with those of competitors;

• Apply the mark-up, given that the possible range has been identified in order to
achieve profit objectives. There may be some discretion for pricing individual
items within a department or section as it is the overall profit which is important.
A percentage mark-up is then normally applied to reach the final selling price.
This may be expressed as a percentage of cost or of selling price. It should cover
operating expenses and provide the desired level of profit.

Knowing the cost breakdown of the product is extremely important and it is essential to
have calculated the operating cost of each retail outlet or page in a catalogue. This
allows the marketer to know what the net effect of any tactical price reduction will be.
The weakness of cost- oriented pricing as a method is that it does not give adequate
consideration to demand for the product, what prices the marketplace will bear, or the
different price levels of the competitors.

2. Rate-of-return pricing:

Another cost-oriented method is that of rate-of-return pricing which

provides the company with an agreed rate of return on its investment.
Whereas the cost-plus method concentrates on the costs associated with
the running of the business, the rate-of-return method concentrates on the
profits generated in relation to the capital invested. This approach ignores
the need to link the pricing policy to the creation of a sales volume which is
large enough to cover overheads or to ensure that demand will remain
consistent over time. Cost-plus or rate-of-return methods of pricing are not
appropriate for those retail products which have to survive in a highly
competitive marketplace.

3.Demand-oriented pricing-

In demand-oriented pricing, prices are based on what customers expect or

may be willing to pay. It determines the range of prices affordable to the
target market. In this method, retailers not only consider their profit
structure but also calculate the price-margin effect that any price will have
on sales volume. Demand oriented Pricing focuses on the quantities that
the consumer would buy at various prices. It largely depends on the
preceded value attached to the product by the consumer. An understanding
of the target market and the value proposition that they intend to seek is the
base to this form of pricing.

Demand-oriented pricing takes into consideration the factors of demand

rather than the level of costs when setting price. In times of shortage of
products – from candles at the time of power cuts, to vegetables out of
season – prices are usually raised to take advantage of higher demand and
scarcity of supply.

1. Discrimination pricing

Discrimination pricing, which is sometimes called variable or flexible pricing, is

often used when products are sold at two or more different prices. Quite often
students, the unwaged and older people are charged lower prices than other
consumer segments at attractions or events. A garage will offer different prices
for servicing company cars as opposed to private cars. A customer known to a
retailer may be given a personal discount as part of a flexible approach to pricing
based upon a personal relationship with that individual. Discrimination pricing is
often time related, for example cheaper drinks charges in ‘happy hour’ periods or
cheaper meal prices in the early evening prior to the high demand periods. For
price discrimination to be successful it is necessary to be able to identify those
segments which, without the price differentials, would not purchase the product.
To obtain a high flow of business, a DIY retailer will often discount to those
customers who offer significant sales demand. This means that small businesses
may benefit from volume discount rates and those individual customers building
their own extension, for instance, may be offered a special one-off discount rate.
Discrimination may also be based upon increasing the price of products which
have higher potential demand. For example, if the product is a fad, then it is
normally in high demand; usually demand is so strong that it outstrips supply.
Therefore, such products as Pokémon or Teletubbies dolls could be set at a
higher price based upon an increasing level of demand. Another example of this
is exhibited on special celebration dates, such as Mother’s Day or Valentine’s
Day, when the price of flowers or plants is raised.

2. Backward pricing

This is a market-based method of pricing which focuses on what the consumer is

willing to pay. The price is worked backwards, as the name suggests. First an
acceptable margin is agreed upon. Next the costs are closely monitored so that
the price which is deemed to be acceptable is able to be matched. If necessary
an adjustment is made to the quality of the product offer or service to meet the
cost-led needs of this technique. Retailers selling on a price-led basis often insist
that their suppliers meet specified costs, even if this compromises some aspects
of the quality. This approach can be associated with price lining. Price lining is a
method of simplifying the merchandise comparisons for the customer by
establishing a number of lines within price points for each classification. Once the
price lines have been determined, the retailers purchase goods which fit into
each line. In order to be a successful trader, the monetary difference between the
price lines has to be large enough to reflect a value difference for the consumer.

3. Skimming pricing

The strategy is to charge high prices initially and then reduce them gradually, if at
all. A skimming price policy is a form of price discrimination over time and for it to
be effective, several conditions must be met. The success of a price skimming
strategy is largely dependent on the inelasticity of demand for the product, either
by the market as a whole or by certain market segments. The main objective of
employing a price skimming strategy is to benefit from high short- term profits
(due to the newness of the product) and from effective market segmentation.
Such a strategy for pricing of products works well when the products are
considered to be prestige goods or luxury items.
Skimming is utilized when there is a shortage of supply of the product or the
brand has been associated with added value and, therefore, demand will not be
dampened by charging a premium price.

Market skimming policies can only occur where there is a healthy potential
demand for the product on offer. Top fashion houses dealing in clothes or
cosmetics companies with strong branding utilize this approach.

4. Leader pricing

Some retail items may be priced very competitively so as to sacrifice profit on

specific items in order to generate more overall demand for other items. These
are often known as ‘loss leaders’ if they are sold below cost but in reality,
retailers seldom make a cash loss on the items even though they are heavily
discounted. The leader items are normally sold near to cost rather than at a loss.
However, a supermarket may sell turkeys as loss leaders at Christmas in order to
achieve extra sales of other Christmas holiday provisions. The purpose behind
the use of leader prices is to increase store visits, purchases and the perception
of good value. The items chosen for inclusion as loss leaders should be widely
known and bought on a frequent basis. The objective would be to price the item
low enough to attract numerous buyers. In addition, if information is made
available as to the value of the offer, the promotion will usually be far more
successful. The approach is often employed by supermarkets which feature
leader items on a regular basis.

5. Competitive pricing

Competitive pricing is employed to match the market prices of competitive

retailers. This is a technique which requires knowledge of actual costs as
matching the prices of a more efficient retailer may lead to losses on particular
items. It also requires an understanding of the importance of the pricing policies
of the competition from a consumer’s perspective. Competitive pricing is a
reactive rather than proactive form of pricing as a retailer with a strong brand
image does not necessarily need to match competitors’ offers.

6. Market penetration pricing

This strategy is the opposite of market skimming and aims to capture a large
share by charging low prices. The low prices charged stimulate purchases and
can discourage competitors from entering the market, as the profit margins per
item are low. Retailers who wish to enter a new market or build on a relatively
small market share often use this strategy. This will only be possible where
demand for the product is believed to be highly elastic i.e. demand is price
sensitive and either new buyers will be attracted or existing buyers will buy more
of the product as a result of low price.
Market penetration pricing is similar to competitive pricing but is adopted when a
company or brand wants to establish itself quickly in a market. Prices are set
below those of the competition in order to create high initial acceptance for the
company’s retail offer. A company selling fast-moving consumer goods (FMCGs)
may use market penetration pricing in the first couple of years and then, when
the product becomes established, will slowly increase the prices.

7. Psychological pricing:

The psychological pricing strategy is based on the idea that various types of
prices have a different psychological impact on shoppers. Subsequently, the
psychological effect is taken into account while pricing products to maximize
revenue and profit. This is sometimes referred to as odd pricing. Retailers will
often price products below a round figure, changing a price from say Rs.100 to
Rs.99 to foster the perception of the price as being below that at which the
customer is willing to buy. However, there is no conclusive evidence that such
pricing policies make any significant difference to profits.

8. Everyday low pricing (EDLP):

A number of retailers now adopt the strategy of everyday low pricing (EDLP).
This strategy stresses the use of a pricing policy with the continuity of prices at a
level between the normal own store price and the price of the deep discount
competitors. The term ‘low’ does not mean ‘lowest’; it simply refers to a price
position which is competitive and, therefore, can remain stable. A number of
retailers who operate

EDLP do not believe in markdown policies and sales but attempt to generate all-
year-round demand by setting the prices at the right level.

EDLP is a strategy which is open to large operators who have significant

economies of scale and buying power. It is popularized by Wal Mart, Home
Depot. In India, this strategy is followed by Big Bazar. But the bulk volume is
necessary to negotiate with the manufacturer for price concession so that it can
be offered at reduced price to the customer. Low prices are stable and not
subject to one-time sale. The strategy is that it continues to offer products below
MRP.

Thus, above were the major pricing strategies adopted by retail firms.

Promotion Decisions
Promotion is a term taken from the Latin word promovere . It means ‘move
towards’. In marketing, promotion means all those tools that a marketer uses to
take his product from the factory to the customer and hence it involves
advertising, sales promotion, personal selling, and public relation.It is necessary
to flow the information about the product from the producer to the consumer
either along with the product or well in advance of the introduction of the product.
This role is played by promotion.

In the words of Masson and Ruth, ”Promotion consists of those activities that are
designed to bring a company’s goods or services to the favorable attention of
customers”

Importance of Promotion:

It may be studied in the following heads:-

1. Importance to Business:- Nowadays, it is very necessary to communicate

information regarding quality, features, price uses etc. of the product to the
present and potential customers. Then only the consumers will select the product
from a wide range of competing products. Most modern institutions cannot
survive in the long run without performing promotion functions effectively.

2. Economic importance: In an economic sense, it helps to generate employment

opportunities for thousands of people. As a result of promotion sales will increase
and it brings economies in the production process and it reduces the per unit cost
of product.

3. Social importance: Promotion has become an important factor in the campaign

to achieve some socially oriented objectives. For eg. Ad against smoking,
drinking etc. It also helpful to provide informative and educational service to the
society

4. Importance to non business organizations: The non business organizations

like govt. agencies, religious institutions, educational institutions etc also realized
the importance of promotion and they are using the various elements of
promotion mix very widely.

PROMOTION MIX

Firms select a mix of promotional tools to effectively communicate with their

target customer group.

The different elements of this group are:

1. Advertising
2. Personal selling

3. Sales Promotion

4. Public relations and

5. Direct Marketing

● FACTORS TO BE CONSIDERED WHILE SELECTING A

PROMOTION MIX:-

1.Nature of the Product:- The product may be consumer product or industrial

product, convenient goods or specialty goods, simple or technical goods etc. In
each case, the promotion mix element may vary

2. Overall marketing strategy:- It means, whether the firm wishes to “push” the
product or create “pull” for the product. Depending upon the strategy, the
elements of the promotion mix will vary.

3.Buyer readiness stage:- The choice of different elements of promotion mix is

depend on the buyer’s readiness and awareness of the brand

4.Product life cycle stages:- Different elements of promotion mix were used in
different stages of the product life cycle.

5.Market size: - In a narrow market, direct marketing is more effective. For a

market having a large number of buyers the promotion tool is mainly advertising.

6.Cost of Promotion elements:- The cost of different tools is very important while
selecting the Promotion mix.

Promotional Tools Fundamentals of advertisement

For effective promotion of any product or service, there are a number of
marketing promotional tools that can be utilized in a promotion program. These
should be applied carefully according to the given circumstances. Since every
promotional tool is suitable for certain circumstances.

The following are the important types of marketing promotional tools that must
be in your mind.

● Advertising
● Personal Selling
● Sales Promotion
● Public Relations
● Direct Marketing

Ways of Marketing Promotional Tools

Following are the ways of Promotional Tools in Marketing:

Advertising
The masses of customers dispersed geographically can be reached with the
Promotional Tools of advertising. Actually, it can be repeated a number of times.
The popularity, size, and success of the selling organization are enhanced by
large-scale advertising. Therefore the customers consider the advertising
products as most legitimate due to the public nature.

Moreover, it’s the quickest way to promote a product to a large portion of

diversified customers. Another important feature of advertising is that it is much
more expressive. In such a way the selling organization dramatizes its products
by applying certain impressive print, sound, visuals, colors, etc.

On the one hand, advertising is very beneficial. However, on the other hand, it
has some disadvantages too. Thus the advertising cannot stimulate the
customers directly, because it is impersonal.

Advertising is based on one way of communication. Actually, which means that

the audience of the advertisement has not the option to give feedback or respond
to the advertising messages. One of the biggest drawbacks of advertisements is
that they are very expensive.

There are some types of advertising, like radio and newspaper advertising that
can be utilized within a range of smaller budgets. However, the other kinds of
advertising, like network television advertising, are not covered in smaller
budgets, but in larger budgets.

Personal Selling
At certain stages of the buying process, personal selling is the most effective
promotion tool in creating customers’ preferences, convictions, and actions. In
personal selling, personal interactions between two or more people take place.
Actually, that can allow both parties to understand the characteristics and needs
of one another. Therefore then make immediate adjustments.

All types of relationships are also flourishing in personal selling like selling
relationships of the matter of fact and personal friendship etc. The salespersons
have professional expertise by which they focus on the interests of the
customers. Although then develop a healthy relationship over it.

Moreover, the customer also gives extra time and attention to listening to the
offerings of salespersons even though his final decision is no. Personal selling is
also faced with extra cost and effort in training salespersons to make them
committed to the given tasks.

The advertising can be altered by continuing and discontinuing it in certain

conditions. However, the size of the sales force is much harder to change in the
case of personal selling.

Sales Promotion
These Promotional tools include sales promotion which further contains a broad
assortment of elements like:

● Coupons
● Cent-off Deals
● Premiums
● Other Tools

The tools of sales promotion are applied to boost sagging sales by attracting
customers and offerings distinct incentives for purchase. A quick response is
generated by using this promotion tool for sales promotion. If advertising is
related to “buy our product” then sales promotion is the representation of “buy
the product now”.
In the short run, sales promotion can be regarded as an effective promotion tool.
However, in the case of the long run, it is not favorable for developing long-
lasting customer relationships. Thus brand preference just like advertising and
personal selling does.

Public Relations
Public relations are much different from the ads and they are more influential
than these ads. So public relations consist of news stories, events, and features.
Actually, they are considered more real. Therefore the readers also consider them
more believable.

Many prospects avoid advertisements and personal selling. However, they can
also be influenced by public relations. So the real message in public relations is
considered to be “news” by the customers rather than a sales-centered
communication.

The product of an organization is also dramatized by public relations. Public

relations should not be used too much or it should be used as an afterthought. It
is combined with the elements of the other promotional mix to use it in an
effective and economical way.

Direct Marketing
Direct marketing may take the following forms.

● Telemarketing
● Electronic Marketing
 ● Online Marketing
● Direct Mail

There are four distinct characteristics that are shared in all of the above forms.
The first characteristic is direct marketing, which is non-public in nature. It means
that a specific person is addressed in this form of promotion tool rather than
focusing on the general public.

Furthermore, direct marketing is customized and immediate, which means that

the messages can be fitted to the specific requirements of the customers and
they are developing very quickly. At last, direct marketing is interactive which
means that customers and Marketing may show a dialogue with each other.

The message in direct marketing can be changed according to the response of

the customer. In short direct marketing, and promotional tools are used the most
effectively in the case of developing one-to-one customer relationships and in the
situation of highly targeted marketing efforts.

Sales Promotion
What is sales promotion?

A sales promotion is a marketing strategy where a business will use short-term

campaigns to spark interest and create demand for a product, service or other
offers.Sales promotions can have many objectives and ideal outcomes, which we will
explore in detail throughout this article.

Primarily, sales promotions are used to motivate buying behavior or trigger an uptick in
purchases in the short term, in order to reach a benchmark or goal. Although the
immediate purpose of a sales promotion is an uptick in sales, there are plenty of other
benefits to building out a strategic sales promotion technique with your marketing team.

The pros and cons of sales promotions

Some of the benefits to running a sales promo include:

1. Creating loyalty and enthusiasm for your brand

2. Increasing sales and revenue
3. Gaining valuable insights into customer behavior and price sensitivity

Strategically using sales promotions helps support a variety of business interests and
keep your existing audience engaged with your offers.

The downside of sales promotions is that some businesses suffer from becoming overly
dependent on them in an effort to boost sales. As a result, they enter a precarious short-
term marketing cycle and struggle to plan for long-term goals and growth.

Take the “sales promotion trap” as an example. If you consistently run promotions, your
consumers may come to expect them and only buy products or services when they’re
on promotion. This can work to:
 1. Devalue your brand
2. Make it difficult to sell products or services at your standard price point.

Howard Freidman, former CEO of Aptela (Now Vonage Business) speaks to this pain
point:

“The trap is running constant promotions to spike sales. As a result, [owners and
manufacturers] condition consumers to wait for them and erode their price integrity.”

Further, if your competitors also run tons of sales promotions, the market itself may be
negatively affected. Bidyut Bikash Das, former Demand Manager at OYO, notes that,
“...when a number of competitors extensively use promotions to differentiate products or
services, and other competitors copy the strategy, [it can result in] no differential
advantage and a loss of profit margins to all.”

Therefore, the definition of a good sales promotion is one that’s run strategically to work
in conjunction with your sales cycle.

In addition, too many promotions can damage your business reputation because the
offers no longer seem exclusive or valuable and clients begin to see your product or
service as worth less than what you typically sell it for.

Overall, sales promotions are a powerful tool to rapidly inject sales, attention and
demand into your business. To ensure they remain effective, they should be used
strategically and with a specific goal in mind.

Although the main driver of running a sales promotion is to increase demand for a
particular offer, sales promotions can help you to achieve multiple outcomes, depending
on your end-goals.
Generate new leads

In the short-term, sales promotions can help you attract new leads or customers.
However, this should also be seen as one piece in a long-term strategy, since you’ll
need to continue to nurture these leads to move them along the sales pipeline or turn
them into loyal customers that don’t churn.

An example of using a sales promotion to generate new leads is to offer a free trial for a
SaaS tool so that potential customers can see if your product is the solution they’ve
been looking for.

Or, if you’re selling a digital template at a reduced price, people may share it with others
who could benefit from the discount as well. In this way, sales promotions are a great
way to attract qualified leads for your sales team.

Introduce a new product, service or feature

Sales promotions are a great way to grab attention and increase demand when
introducing a new product, service or feature that doesn’t yet have social proof within
your market.

For example, pairing the announcement of your new SaaS feature with a limited-time
discount might be enough to turn long-time leads into paying customers. Alternatively, if
you’re revealing a new product, you could share an introductory price that will expire
after the first “X” number of purchases.

Sell out extra inventory

Sales promotions are an efficient way to clear out extra inventory at the end of a sales
period. If there’s a particular product taking up too much space, going out of production
or becoming redundant, retailers can run a sales promotion such as ‘buy one get one
free’ to help clear it out. You’ve probably seen this kind of promotion in stores marketed
as the acronym: BOGOF.

Gain valuable insights

Sales promotions work to generate valuable insights into what your customers desire,
how they make purchasing decisions and what kinds of promotions they value the most
– useful information for both your sales and marketing teams.

When designing your sales promotion campaign, you’ll need to conduct research into
your customers’ interests, as well as what your competitors offer. Taking time to do this
research can help you and your team learn how to attract new clients, improve
customer service and create compelling offers that resonate with your target audience.
Just imagine, you wouldn’t want to run a campaign for 15% off the same week when
your competitor is running a promo for 20% off.

Encourage existing customers to buy more

A great sales promotion idea could focus specifically on repeat customers. Encouraging
repeat business is easier and more cost-effective than attracting new clients. In fact, a
5% increase in customer retention generates more than a 25% increase in profit, on
average.

By providing existing customers with exclusive incentives, you can increase loyalty,
generate repeat purchases and hopefully draw high-quality referrals. You can also

attract long-term and repeat customers. This practice is a good one for any sales
pipeline, as repeat clients move through the funnel quickly, since they already know
what to expect.
Sell during off-season or slow periods

Similar to selling out extra inventory, if your business is seasonal or has slower periods,
well-timed sales promotions can help inject purchases and galvanize interest during a
time where sales are often slow or stagnant.

Short burst of revenue increase

Sales promotions can help companies increase the number of products or services
sold. Although the sale often occurs at a reduced price, the increased quantity sold
helps counteract the difference.

Send sales promotions to your existing audience

Once a person makes a purchase, they’re often subscribed to your email list. By
sending them a mix of helpful content as well as sales promotions, you can continue to
keep them engaged.Email is a great vehicle for this communication, as research shows
that 49% of people would like to receive weekly email blast campaigns from their
favorite brands. By segmenting your list, you can ensure that you’re sending them only
the most relevant offers.

12 types of sales promotions

Regardless of the type of business or industry you’re in, there are a variety of sales
promotion examples and techniques at your disposal that you can align with your sales
needs. Some great sales promotion ideas include:

1. Competitions and giveaways

Customer competitions can be about getting the most engagement on a social media
post your brand is tagged in, or a social media challenge that enters them in a
giveaway. This is a fun way to both create buzz around your business and reward
customers for being avid supporters and promoters of your brand.

2. Flash sale or limited-time price reduction

A flash sale is a sales promotion that offers a discount, promotion or rebate that’s only
valid for a short period of time, ranging from just a few hours to a few days. Flash sales
work well to create a sense of urgency, which can help nudge consumers to make a
purchase decision.Even though the buying window is short, marketers can build interest
ahead of time by sharing exactly when the flash sale will occur.

3. Bundling of products or services

If you have a product set that has the potential to create more value as bundled
offerings rather than standalone items, selling them as a package for a discounted rate
can help to increase overall sales.

This can be highly incentivizing for customers that were struggling to choose between
several of your products or services and a competitor’s and can now get both (or many)
at a discounted price.

4. Free trial or demo

Free trials are a great way to get a lead to try out your product or service with no risk to
or commitment from them. In practice, retailers can offer free samples at the point of

purchase, and B2B or B2C services might offer a free trial or demo of their products or
services so that their leads and potential customers can take the product for a spin.
To support conversion, consider pairing the free trial or demo with a limited-time
discount.

5. Limited-time free shipping or transfer between platforms or services

In e-commerce, Baymard Institute estimates that nearly 70% of consumers abandon

their shopping cart and 50% of those consumers attribute their cart abandonment to
unexpected extra costs like fees, shipping and tax.

Sales promotions that use free shipping and free returns can help eliminate one of the
obstacles that cause people to abandon their cart. If you are a B2B or SaaS brand, the
final hurdle for purchase might be your customer’s resistance to deal with the challenge
of switching providers.

6. Limited-time freebies

If you can’t be flexible on price, you can still generate a sense of urgency by creating a
limited-time offer for a free product added to an order.

For example, you could offer an existing product or service alongside a free bonus
feature or add-on. This adds perceived value without hurting your bottom line or
constraining your resources.

7. First purchase coupon

If someone becomes connected to your business in a way other than making a

purchase, such as a free trial, it might take time for them to warm up to becoming a
paying customer.

To speed up the process, offer a discount on their first purchase. In fact, some brands
even offer discounts on first purchases in their welcome email as a way to thank their
new customer or lead for joining their community. For best results, limit the offer to a
couple of days. Even if they don’t use the coupon, they may browse your products or
services and learn more about your business.

8. Buy one, get one free

“Buy one, get one free” (also called BOGOF), or “Buy two and get the third free” are
commonly-used sales promotion tactics. These campaigns are useful when you want or
need to sell several products at once.

This type of promotion can also work to build brand awareness, as your customer may
share the extra items with a friend or family member.

9. Coupon or voucher code

Coupons are versatile because they can be delivered in a variety of ways, such as via
your website, social media, or print materials like on your receipts or product packaging.
Coupons are a great way to thank current customers or incentivize first-time customers
to return.

10. Tripwire (upsell)

Tripwire refers to the idea of offering an entry-level product or service to a potential

customer. By doing this, your salespeople can get them into your ecosystem or sales
CRM and begin nurturing them through the buyer’s journey.

Once you build trust, you can show them why upgrading to a higher-priced offer is in
their best interest.

11. Recurring sale

If it suits your business, you might consider becoming known for your one-time or
biannual sale. A recurring sale can help build anticipation so that when it does finally
come around, people are ready and excited to spend.

12. Portion of purchase goes to a charitable cause

Running a sales promotion that dedicates a portion of your purchase to an important

cause or charity can be a great way to spark business. Your customers will feel good
about their purchase, and you’ll be able to enhance your brand image by associating it
with an important cause. This is also an easy way to build customer loyalty with leads
who support that cause themselves.

According to the 2018 Cox Business Consumer Pulse report, 71% of people said they
would spend more at a small business if they knew it supported a social or
environmental cause.

How to prepare your sales force for a sales promotion

When running a sales promotion, it’s important to have a solid grasp on your customer
journey and experience. Your sales team, having spent the majority of their time moving
customers along the buying journey, are perfectly positioned to answer these questions.

As you prepare your sales promotion, ask your sales team to provide any customer
insights that may help with your promotion’s messaging and positioning. For example,
your sales team may have valuable observations into:
The most common barrier to closing a deal. These could be budget issues, time
constraints, seemingly better offers from a competitor, the fact that the product feels too
complicated, and so on.

The most common reason a deal successfully closes. For example, they tried the
product and loved it, got referred by a friend, competitor pricing was too high, trusted
the sales rep throughout the process, and so on.

Sales enablement resources that tipped the scales. If there is a certain piece of sales
collateral that helped to push prospects along the sales pipeline, what is it and why was
it so well received?

From these few examples alone, your sales team can add significant value in terms of
what motivates your target audience’s buying behavior, what barriers they face when
considering purchasing your product or service and what kind of resources resonate
with them (and why).

For example, if a sales objection is that the product feels too complicated, and a sales
enablement webinar helps to ease this strain, offering a free sales demo is the perfect
fit.

Of course, you’ll need to keep your sales team in the loop so that they know what their
role will be in the sales promotion and provide a clear definition of when and how they
will be integrated into the process. For example, do you want a rep to be the first point
of contact when an inbound lead from the sales promotion comes in, or do you want
somebody from the marketing team to have a conversation with them first? The more
specific you can be about the workflow, the smoother your sales promotion will run.

Finally, if your sales team is going to be the first point of contact, make sure to provide
them with all of the information they need to know. This includes
How to decipher who’s eligible, or not, for the sales promotion. For example, is there a
minimum business size requirement?

What exactly they are eligible for. For example, how long is the sales demo slated for
and what happens if they want a follow-up sales demo with a decision-maker?

Any legal information that the sales team should be aware of. This applies
predominantly to sales promotions that involve an exchange of money, such as legally
being required to have the customer accept terms and conditions before moving ahead
with a coupon.

Even if your sales team is not going to be the first point of contact, this information is
key so that your reps can follow the guidelines and help to ensure a smooth sales
promotion process.

Where to run your sales promotion

There are many places, both online and offline, where you can run your sales promotion
to attract new leads and business.

1. Email marketing

Email marketing should play a key role in your sales promotions, especially if you're
targeting existing customers. Unlike social media promotion, there is no guesswork
regarding algorithms, ads, or other factors that can impact your reach.

In fact, eMarketer found that 90.9% of internet users use email and that many of them
prefer to receive brand communication via that channel. By tweaking your email subject
line, you can work to increase open rates and reach more potential leads.
In addition, tools like segmentation can help accelerate the buyer journey by creating
personalized messaging that reflects your customer’s interests, needs and past
purchasing decisions.

2. Facebook and Instagram marketing

Facebook and Instagram marketing are powerful digital sales promotion tools because
you can reach people across the globe as well as get very specific on who you’d like to
target.

These social media platforms are also flexible on the type of ads you can create within
your specified marketing budget. Even if people ultimately don’t purchase, you can still
track and measure other metrics such as new leads, impressions and referral traffic—all
key data for your sales team to leverage in their lead generation efforts.

3. SMS messaging

Similar to email marketing, SMS messaging is guaranteed to reach your audience

because it’s a direct communication channel, rather than an indirect channel such as a
social media post or website banner.

SMS messaging is best used for instant updates, flash sales and time-sensitive deals
that you want in front of your customer’s faces quickly.

4. Events, trade shows and conferences

Large networking events create great opportunities to connect with a number of

qualified prospects. Even during COVID-19, some in-person events are still running,
alongside a plethora of virtual events. Here’s a list of the top events you should know
about for your sales calendar in 2022.

By running a virtual conference, leading a training, or hosting a workshop, you can both
generate leads and offer a sales promotion as thanks for their attendance.

Tips on how to make your sales promotion effective

Here are some best practices to ensure your sales promotion technique is effective and
helps you achieve your goals.

1. Set well-defined sales promotion goals

As mentioned at the outset of this guide, sales promotions can work to achieve more
outcomes than simply increasing sales and revenue. While planning your sales
promotion, consider what additional goals you have. Here are some ideas to consider:

● Attract new leads and customers

● Improve customer retention
● Separate hot leads from cold leads
● Nurture prospects through the sales pipeline
● Increase purchase frequency
● Generate business during slower periods, seasons or times of day
● Increase average purchase amount
● Hit team-wide goals in a specific time frame

Your goal should be specific, measurable and achievable.

2. Select your target audience

 3. Before you create your sales promotion definition and outline your goals, you
should take time to learn more about the customers you already have. By
sending a simple survey or offering an incentive to gather new information, you
can begin to better understand their needs, preferences, buying behavior and
interests.

Once you have a clear idea of who would be best suited to your offer, you can create a
sales promotion that is targeted to those who are most likely to make a purchase or
become a sales qualified lead (SQL).

4. Offer practical value

Think carefully about how to craft your sales promotion so that it adds tangible value to
your clients. Running sales promotions that don’t offer a clear benefit to your customers
will not only fail but may actually damage your reputation.

As you design your sales promotion, place the highest value on a positive customer
experience and be sure that it aligns with your business’s ethical culture and values.

For example, if you craft a sales promotion that states your product can specifically
solve X problem, only for customers to buy it and realize it doesn’t actually solve their
problem in the way you claimed, that promo could backfire.

5. Review, test and improve

Once you run your sales promotion, take time to measure your results before running
another one. Try to schedule your analysis during a time that works well for your sales
cycle.Once you compare your campaign to the goals you set earlier, decide what you’d
like to tweak, change and improve for your next run.
 6. Timing is everything: Align your promotion with common shopping holidays

Aligning with common shopping holidays is a great way to catch your customers’
interest while they’re already on the lookout for gifts, special offers and limited-time
deals.

Common holidays to align with include Black Friday, Cyber Monday, Valentine’s Day
and summer holidays in your area. In addition, any holiday meaningful for a specific
group, like Mother’s Day, can be a great way to target certain segments of your
audience.

Make sure to continue to engage and connect with your audience beyond the holiday so
that they don’t see you as a ‘holiday sale’ company.

7. Create a sense of scarcity or urgency

Sales promotions work because your audience knows they won’t last forever. By
highlighting when the special offer will no longer be available, you can create a fear-of-
missing-out feeling that hastens purchasing decisions.

You can do this by setting a time deadline or offering a limited number of spots, such as
“this offer is only valid for the first X purchases”.

8. Create a loyalty program to promote exclusive offers or discounts

When you provide loyal customers exclusive offers or discounts, it further incentivizes
them to continue participating in the program. It also works to make them feel
appreciated for their continued commitment to your brand.
 9. Referral programs

A referral program helps reward people who send business your way. A report from
Kantar Media showed that 93% of respondents trust friends and family
recommendations more than they trust advertising (a mere 38%). Therefore, having a
referral program is a great way to take advantage of the word-of-mouth conversations
already happening.

Further, research by eMarketer shows that most retailers (65%) said referral programs
created increases in their sales and revenue. Other benefits include increased customer
acquisitions, customer retention boosts and building up email lists.
Public Relations & Publicity and
Personal Selling
PERSONAL SELLING – DEFINITION AND MEANING

Personal selling is an important form of persuasive communication that takes place

between a sales staff and potential buyer. Being a two-way process, personal selling
carries great potential of influencing the buyer’s behavior. Personal selling is a direct
communication or interpersonal communication between sales force / organization’s
representatives and individual consumers. The communication involves person-to-
person contact through face-to-face interaction, by telephonic / mobile conversation or
by e-mails or online chats for the pitching of a product or service to a prospective buyer.
It helps to materialize a deal and converts a prospect into a customer. Personal selling
as a form of persuasive communication has the objective of generating sales, as well as
building and maintaining long-term relationships with the client. It involves selling across
the counter or door-to-door selling. In selling across the counter, the customer
approaches the shop / store and is attended by a salesperson. The customer may visit
the seller physically or contact them via phone, email and online chat. In door-to-door
selling, it is the sales person who approaches the customers and generates leads. The
sales person may approach the customer by physically visiting her / him or via email,
phone and online chat.

APPROACHES TO PERSONAL SELLING

Personal selling as an element of marketing mix plays a significant role in building and
maintaining long term relationships. Today, companies focus a lot on training and
mentoring of the sales team as they have realized that the significance of personal
selling goes beyond the achievement of a single sale transaction. With this concept,
personal selling has created a distinguished space for itself in customer relationship
management. Sales persons build these relationships by listening to the customers,
attending to their needs and coming up with customized solutions. Personal selling may
take several forms to reach out to customers including calls and mails from company’s
sales representatives; assistance by a sales clerk; personal interaction at stalls;
showrooms and malls; an informal invitation from one company’s executive to another;
and event venues seeking regular and repeat bookings from local businesses. There
are no glossy brochures, no publicity stories, no competitions or gimmicks, but plain
person-to-person selling, which leads to other promotional activity. Broadly, personal
selling techniques are categorized into two basic approaches. These are sales-oriented
approaches and customer-oriented approaches. Kotler et al. highlight the contrasting
behavior and tactics used in these two approaches. Sales-oriented approach - This
approach uses high pressure sales technique, exaggerates product’s merits and
criticizes competitor’s product. The approach believes that customers buy only when
they are under pressure and get influenced by a slick presentation. Customer-oriented
approach - This approach analyzes the customer’s needs, the salesperson listens to
them and questions them to get thorough understanding of their issues, to work towards
providing appropriate solutions. For them customer’s needs present an opportunity for
building loyal relationships.

Characteristics of Personal Selling

The important characteristics of personal selling may be described as under:

1. Personal selling is an important element of the marketing mix.

2. Personal selling is also a form of business communication.

3. Personal selling is goal-directed activity. After the identification of the
prospective buyer, the salesman tries his best to sell his company’s
product or service.
4. In personal selling, an oral presentation is made to the prospective buyer.

5. Personal selling is a paid form of communication. Salespeople engaged in

personal selling get either salary or Commission or salary plus
commission on the sales of products to prospective buyers.
6. The main task involved in personal selling is to match specific products
with specific consumers so as to secure definite sales.
7. The role of salesmanship is crucial in personal selling.

8. Personal selling is basically an art, having a little proportion of science.

9. Persons engaged in the task of personal selling are called by various

names such as salesmen, sales representatives, missionary salesmen, etc.
How to Become a Successful Salesman? 33 Qualities (Complete List).
10.Personal selling is a goal-directed activity, therefore, the chances of
wastage of efforts are minimum in personal selling in comparison to
advertising.
11.Personal selling is a process. It comprises – prospecting, pre approach,
presentation, handling of the objection, closing and follow up.
12.Personal selling is a mode of direct selling.

13.Some non-selling tasks may also be performed by the salesman, along with
their main selling task. These non-selling tasks involve the recovery of
debts from the middleman and collection of market information etc.
Functions of Personal Selling
he main functions of personal selling are as follows:

1. To Make Sales
The first and foremost function of personal selling is to make sales both to old
and new customers.

2. Service Customers
The function of personal selling is to render services to customers, such as to
introduce the product or products, explain the right use of the product by means
of demonstrations, convince the customers about the quality of the product,
remove doubts of the customers, etc.

3. Keep Sales Records

Another function of personal selling is to prepare and keep sales records.

4. Executive Functions
Personal selling also performs a number of Executive functions, such as to
provide training to the salesman, to prepare short term and long term marketing
programs, to provide the information to the sales manager about market Trends,
etc.

5. To Develop Goodwill of the Company

Another function of personal selling is to develop the Goodwill of the company in
the market, Such as providing satisfaction and after-sale services to customers,
etc.

6. To Achieve Sales Targets

Another function of personal selling is to achieve sales targets by increasing the
volume of sales.

Role of Personal Selling

Marketing promotion mix comprises advertising, personal selling, and sales
promotion.

In the following circumstances, the role of personal selling will be greater in

comparison to advertising and sales promotion for getting success in marketing.

1. Marketing companies may give more weight to personal selling in less

developed countries. The low wages in these countries allow to company
to hire a much larger Salesforce in comparison to developed countries.
2. It is conducive when the product has a high unit price.

3. When the product is in the introductory stage of “product life cycle“, and
requires a push for the generation of effective demand.
4. When the product is complicated and Technical, which requires the
demonstrations.
5. When personal attension is required to meet specific consumer
requirements, such as, insurance policies, investment plans and property
sales, etc.
6. When the number of customers of the company’s product is limited.

7. When the element of after-sale services is more important for marketing

success.
8. When the personality of a salesman is bedded to establish rapport or to
create confidence in the prospect.
9. When the marketing company cannot spare huge funds for aggressive and
large scale advertising campaign, due to limited availability of financial
resources.
10.When the firm sells in a small local market to only institutional buyers.
Difference Between Publicity and Public
Relations

Public Relations (PR) means professionally handling a positive public

image by the company. It is an important element of the promotion mix that
helps in maintaining good relations with the public.

Public Relations (PR)

means professionally handling a positive public image by the company. It is
an important element of the promotion mix that helps in maintaining good
relations with the public.

On the contrary, Publicity is infotainment, i.e. which tends to inform and entertain the
general public at the same time. It provides some interesting, juicy, controversial news
to the general public that has the capability of changing their opinion or outlook, about
the product or company.

Comparison Chart

BASIS FOR PUBLICITY PUBLIC RELATIONS

 COMPARISON

Meaning Publicity refers to a Public Relations is a

public relation function, marketing tool that is
that uses any used to maintain
communication goodwill and reputation
channel to convey of the company and its
news or information product among people.
about someone or
something, through
media.

Control It is not under the It is controlled by the

control of the company
company.
 Nature Positive or Negative Positive

Form of Non-paid Paid Communication

communication Communication

Intends Public awareness Public attention

Definition of Publicity

Publicity is defined as the way of disseminating information to the public at

large, through media. It can be in the form of news, stories, event
information or write-ups, that creates awareness and credibility in the
people regarding a brand, product or the company offering them.

Publicity aims at spreading the information or news, to the maximum

number of people, in minimum time. It is a non-paid form of communication,
which is not under the control of the company. It can be a positive review
regarding a product, i.e. mobile, television, refrigerator, etc. given by a
satisfied customer, or information published in the newspaper regarding the
quality-rich services provided by a company, or it can be a simple word of
mouth, etc.

Definition of Public Relations

Public Relations can be understood as the strategic management tool,
which helps an organization to communicate with the public. Here, ‘public’
means the group of people that have an interest in or impact on a
company’s ability to achieve business objectives. It is not only concerned
with getting public attention, but it also aims at reaching the goals of the
organization, by communicating the message to the target audience. It
includes press releases, crisis management, social media engagement,
etc.

Public Relations is all about maintaining the positive image of the company
in the eyes of the public and developing strong relationships with them. It
encompasses a range of programs organized by the company to promote
its product and services. There are many companies, which have a public
relations department, which looks after the attitude of the appropriate public
and also spreads information to them, to increase goodwill.

Key Differences Between Publicity and Public

Relations

The difference between publicity and public relations can be drawn clearly
on the following grounds:

1. Publicity can be described as public visibility, wherein news or

information is communicated to the general public so as to build
credibility or awareness in them, with the help of a channel, i.e. mass
media. On the other extreme, the term public relations, as the name
suggests, is a strategic management tool that aims to create a
company’s positive image in the eyes of the public.
2. While publicity is not under the control of the company, public
relations is fully under the company’s control.
3. Publicity can be positive or negative, in the sense that it can be
positive or negative feedback regarding the product or service
concerning a product given by the customer or controversial news
about the company. Conversely, public relations is always positive,
 because it is strategised and managed by the public relations
department of the company.
4. Publicity is free of cost; as it is made by the third party. As against, in
case of public relations, the company incurs money to organize
events, sponsor programs, third-party endorsement, etc.
5. Publicity involves gaining the attention of the media, that
communicates any information or news, regarding a product, service,
person, organization, etc. so as to create awareness in people. In
contrast, public relations seek to attract the target audience, for the
purpose of boosting the company’s sales

What is Publicity?
A major element of public relations is publicity. It implies communication about a
product or organization by the placing of news about it in the media without
paying for time and space directly.

Though a company can manage to get talked about in the media without doing
anything which is newsworthy, it will not help its cause if the readers or the
viewers do not find the story about the company stimulating enough to toke a
note of it and register it in their minds. A big portion of the publicity budget is
spent on maintaining relations with the media with the hope that the media will
feature the company more frequently and prominently.

This is wasteful. Instead the company should expend its resources in

staging events, building associations, and doing other things
depending upon the type of business the company is in, that the public
would be genuinely interested in knowing about.

Savvy companies know the triggering points of public and the media
attention and conduct themselves in a manner that invites the
attention of the public and media. Their publicity endeavor does not
end with courting the media. Media, anyway, will carry the stories that
its readers and viewers will wont to read and view.

Tasks of Publicity Department

Responding to requests from media which requires availability of well
organized information of the company.

Supplying the media with information on events and occurrences

relevant to the organization. This requires developed internal
communication channels and knowledge of the media.

Stimulating the media to carry the information and viewpoint of the

organization. This requires creative development of ideas, developing
close relationships with media people and understanding their needs
and motivations.

Characteristics of Publicity
One important task is to supply information to important stakeholders.
Information dissemination may be through news releases, news
conferences, interviews, feature articles, seminars and conferences.
Publicity has five important characteristics:

1. Credible message: The message has a higher credibility than

advertising as it appears to the reader to have been written
independently by a media person than by an advertiser. Because
of the high credibility it is more persuasive than a similar
message in an advertisement.
2. No media cost: Since space or time in a media is not bought,
there is no direct media cost; but someone has to write the news
release, take part in interviews or organize the news conference.
This may be organized internally by a press officer or publicity
department or externally by a public relations agency.
3. Loss of control of publication: Unlike advertising there is no
guarantee that the news item will be published. The decision is in
the hands of the editor and not with the organization. A key
factor is whether the item is judged to be newsworthy. The item
must be distinctive in the sense of having news value. The topic
of the news item must be of interest to the publication’s readers.
 4. Loss of control of content: There is no way of ensuring that
the viewpoint of the company is reflected in the published article.
5. Loss of control of timing: An ad campaign can be coordinated
to achieve maximum impact. The timing of publication of the
news item cannot be controlled.

How Does Publicity Work?

Usually, brands appoint a publicist who is entrusted with the job to
generate and manage publicity for the brand, offering, business, or a
public figure by persuading the news media to report about the same in
the most positive way possible.

Publicists identify newsworthy aspects of brands and offerings like

speeches, interviews, comments, or social work by the brand
representatives, ambassadors, etc. and present the same media outlets
as possible reportage ideas.

While publicity doesn’t require brands to buy advertising time and space,
it does require them to put in efforts. Publicists use multiple ways to
generate news stories about the brand. These are:

● Press release: A press release is a short, compelling story

written in a specific format to inform local media outlets
about newsworthy events or business information. It could be
related to general news, launch release, events, new products,
or expert positions of a brand on a particular matter.
● Networks: Public relations specialists and publicists develop
media personnel relations to increase their brand’s media
coverage.
● Digital Media: Brands also use digital marketing strategies
like social media marketing to get the attention of the target
audience and media outlets.
Objective Of Publicity
The main objective of publicity is to garner public exposure, awareness,
and attention to channelise the information about a brand or an offering
to build its goodwill, stimulate demand, or change public opinion.

Besides this, publicity aims to:

● Build Brand Image: Publicity aims at communicating brand

values, mission, and vision through trustable channels like
news outlets, blogs, and opinion leaders. This helps the
company build its brand image organically.
● Remove Misunderstanding: Often, a company may be a
victim of misunderstanding or misinformation among the
target audience. Publicity aims at removing such
misunderstanding and maintaining the goodwill of the
company.
● Stimulate Interest and Demand: When the product
information reaches the target audience organically, it
automatically stimulates their interest and increases the
product’s demand.
● Communicate Reliable Information: There are certain
information that can’t be communicated through
advertisements. Such information is often propagated
through publicity.

Characteristics Of Publicity
Publicity has the following five characteristics:

● Non-Paid Form: Publicity is a non-paid form of promotion. All

of the media coverage is organic.
● Driven By Media: Publicity depends on media outlets that give
a viral blow to the shared information by publicising it.
 ● No Control: The brand has no control over message, time,
frequency, information, and medium.
● Focuses On A Broader Audience: Publicity isn’t targeted
marketing. It focuses on the shotgun approach, where the
information is publicised to a broader audience.
● Credible: The target audience considers publicity to be a
more credible form of communication as it uses trustworthy
channels like news outlets.
● Short-Term Focus: Publicity is a promotional strategy
focused on fulfilling short-term goals like a product launch,
event promotion, etc.

Importance Of Publicity
Publicity adds credibility to the overall communication message. It gives
the target audience a reason to talk about the brand and, in turn,
increases the effectiveness of word of mouth and viral marketing.

Publicity is considered an important promotional tool. This free

placement of message in the media creates public awareness and
attention around a brand that develops brand image, stimulates demand,
and assists sales efforts.

Types Of Publicity
Based on User sentiments
Depending upon the sentiments of the target audience, publicity can be
categorised into positive and negative publicity.

● Positive Publicity: This is when positive sentiments about a

brand accompany the information that’s publicised by the
 media or other sources. It positively affects the brand image
and often increases the demand for its offerings.
● Negative Publicity: It is when negative sentiments about a
brand accompany the information that’s publicised by the
media or other sources. It could negatively affect the brand
image and can even deteriorate its current demand.
●

Publicity Examples
Every day, news comes out with a new example of publicity – a brand
holds a press conference, releases a new product, distributes a press
release, does a social activity, or gets famous just because of that one
tweet.

Here are a few examples of publicity that explain the concept better.

Reebok Backing Shakira Tour

Reebok held a press conference in 2002 to let the world know that the
company would sponsor Shakira’s worldwide concert tour.

In return, Shakira became the brand ambassador of the brand and did
some advertisements for them.

Star Wars: Passing The Baton

Till 2018, Star Wars had the record for the biggest opening weekend. But
Avengers broke the record by collecting over $250 million. Instead of
being bitter, LucasFilm congratulated Avengers by posting a tweet with a
picture handing over a baton.
What Is A Publicity Stunt?
A publicity stunt is a planned event designed to get viral and attract
public attention and press coverage.

For example, Oreo convinced pop star Lewis Capaldi to lick its biscuits
and then auctioned it as a part of its charity stunt.

Advantages And Disadvantages Of

Publicity
Like other elements of the promotion mix, publicity comes with its own
set of advantages and disadvantages. These are:

Advantages
Publicity is considered an effective form of promotion as it can make the
brand go viral within hours or days. It has the following advantages:

● Economical: Publicity brings in free attention from the media

and the public. Hence, the only cost a business incurs is to
strategise and execute the activity or stunt, which will result in
public exposure, awareness, or attention.
● Credible: Since publicity uses trustable channels like news
outlets, influencers, and opinion leaders, it is considered to be
a more credible form of communication compared to
advertising and other paid forms.
● Innovation: An activity, conference, or stunt needs to be
innovative in order to gain publicity. Hence, publicity always
come with innovation.
● Viral: Virality is a characteristic feature of publicity. A publicity
stunt, event, or activity always spread like wildfire without the
brand paying for the same.
Disadvantages
Publicity also comes with its own set of disadvantages. These are:

● No Control: When it comes to publicity, the brand has no

control over the message, medium, or the narrative of the
publicised information. It could even backfire on the brand.
● No Guaranteed Results: It’s not guaranteed that an event will
be publicised. Hence, there’s always a chance that the cost of
the preparations may go in vain.
● Requires Specialised Skills And Efforts: Not everything
receives positive publicity. It requires specialised skills and
efforts to get the needed attention and make something go
viral.

PUBLIC RELATIONS

Public Relations (PR) is an important component of marketing communication mix. It

deals with establishing and maintaining an organization’s reputation and public
perceptions. Events that engage in PR for their promotion, aim that the stakeholders’
perceptions of an event are in line with the event’s image, which it wants to portray. The
future performance of events which are recurring in nature greatly depends on the
strength of the event’s brand and its reputation among the public. Here, PR as a
marketing communication tool has a significant role to play. It helps in determining event
sales, consumer’s response towards the event and overall attitude of the general public
towards the event. The term ‘public relations’ clearly states that it is a relationship
between event and public, where ‘public’ is much wider than the ‘target audience’.
Jackson has defined event publics as those individuals and groups who share some
interest, perceptions or beliefs about that event, which can be positive or negative.
Therefore for it to be an effective marketing communication tool, PR requires a strong
understanding of event publicity by event organizers. Event publics include all those
stakeholders who are connected to the event in some way or the other, at particular
stages in the event management process, and can affect the performance of the event.
In other words, the event stakeholder is any group or individual who can affect or is
affected by the event. Broadly, the event stakeholders may include - event organizers,
event team, event participants, event attendees, suppliers or vendors, event volunteers
or temporary staff, event sponsors, local community, media people, local, state and
national level government bodies, various socially active groups and general public.

Different stakeholders may have different expectations from the event based on which
the event organizers may design the strategy for public relations. Careful coordination of
communication messages across different stakeholders including 103 Personal Selling,
Public Relations and Experiential Marketing different media channels is required. In fact,
media channels and press releases are a dominating approach of any PR campaign.
Successful PR strategies must be executed to manage an event’s overall image. A third
party publicizing the event gives it more credibility than a big advertisement. The print or
broadcast media are the third party and are effective. To ensure favorable media
coverage, the event manager should master the art of press release. People who work
in events and marketing fields would already be familiar with writing press releases.
When writing a press release, the event manager will face a tough crowd of journalists.
Journalists get press releases everyday. Hence the event manager must make their job
as easy as possible. The skill of the event manager is to not just tell the media contacts
that the event is happening, but to match a newsworthy story of the event with an
appropriate media source and their audience.

Types of Public Relations

Public relations is often divided into different agencies or departments. Each
department is specifically suited to handle a specific aspect below:

● Media relations is the emphasis of forging a strong relationship with

public media organizations. A media relations team often works directly
with external media by directly delivering them company news,
providing validated content sources, and being accessible for public
comment on other news stories.
● Production relations is closely related to the direct operations of a
company. This department supports broad marketing plans and is often
related to specific, one-time endeavors such as the launch of a new
product, a special campaign, or management of a major product
change.
● Investor relations is the oversight of the relationship between the
company and its investors. This aspect of public relations handles
investor events, oversees the communication of the release of financial
reports, and handles the complaints of investors.
● Internal relations is the public relations branch between a company
and its employees. Internal relations pertain to counseling employees,
ensuring all workers are satisfied with their working conditions, and
mediating issues internally to avoid public disclosure of dissatisfaction.
● Government relations is the connection between a company and
related governing bodies. Some public relations departments want to
forge a strong relationship to provide feedback to politicians, sway
decision-makers to act in specific ways, and ensure fair treatment of the
company's clients.
● Community relations is public relations focused on brand and
reputation within a specific community. The community could be
physical (i.e. a specific city) or non-physical (i.e. the dog-owner
 community). This branch of public relations keys in on the social niche
of the community to align itself with its members.
● Customer relations is the bridge that connects the company and its
customers. Public relations often involves handling key relationships,
conducting market research, understanding the priorities of its
customers, and addressing major concerns.

Working in Public Relations

A career in public relations has no defined career path. An individual can
obtain a degree in a number of different fields such as public relations,
communications, marketing, journalism, broadcasting, or political science.

Professionals in PR must have soft skills including strong written and oral
communication skills, the ability to solve problems, and the ability to think
critically and creatively.

A career in public relations can take many different turns. Some aspects of
public relations emphasize digital media; potential careers include content
creators, social media managers, or digital artists. Individuals can specialize in
an industry (i.e. finance) to emphasize working between a company and its
investors. Individuals interested in working for nonprofit organizations may find
the branch of fundraising overlaps many aspects of public relations.

What Is the Primary Role of Public Relations?

Public relations often boils down maintaining the image of a company, individual,
or brand. Public relations creates media, connects with external media, crafts
public opinion, and ensures customers have a positive disposition towards the
company's brand.

What Skills Do You Need for PR?

Public relation specialists often have strong communication skills. Their role is to
absorb information, process how it may impact a company's image, and how to
externally communicate to shift this image. Public relation specialists often forge
relationships with many different types of people including key customers,
government officials, and external media.

Why Is Public Relations Important?

Customers make decisions for a number of reasons. One of those reasons is the
relationship they feel they have with a company. If a company has a negative
image or is ensnarled in a controversial public issue, a customer may no longer
feel as connected with the brand, image, and product. Public relations often
manages this brand and ensures customers, employees, investors, and other
external parties have a positive disposition to continue involvement with the
company.

It is used to perform following functions:

(1) Press relations – To put information about organization

in a very positive way.

(2) Publicity of Product – It can be done by publicizing the

events to make publicity of Products.

(3) Effective Communication – It is necessary to create and

promote understanding of the organization. It can be
obtained through internal and external communication.

(4) To Promote Lobbying – It necessary to deal with

legislators or government as to encourage or discourage a
particular legislation or regulation.

(5) Counseling – It is to advice the management about public

issues, position of the company and image during the good
and bad times.

Public relations are a broad set of communication activities

used to create and maintain favorable relations between the
organization and its publics. Customers, employees,
stockholders, and the government are officials and society.

Public relations started as publicity, but today its scope has

enlarged to an extent that it is being defined as “helping an
organization and its public adapt mutually to each other”.
The focus in this management function is on mutual
accommodation rather than a one sided imposition of a view
point. Perhaps, it’s only because of this reason the scope of
the PR has become so broad and wide. Further, the use of
variety of terms as substitutes or euphemisms – such as
corporate communication, corporate affairs, public affairs,
has caused confusions about what PR is and what is not.

Conventionally, Public Relations department was

considered to be a small appendage to a large corporation
with four major functional areas; Finance, Operations,
Marketing and Personnel or Human Resource Management.
In such corporations, all such activity, as not specifically
falling under the jurisdictions of any functional department
was given to the PR department. However, today there is
increasing realisation on “Relations”.

The PR department is in constant interaction with all other

functional departments. For example, financial PR helps in
resource mobilisation; labour relations for shop floor
productivity; consumer relations for better understanding
of customer needs; and employee relations for morale and
team building. Not only this, today PR helps in strategy
formulations and organisational policies as this is the
department which work as the bridge between various
publics of the organisations and the various functional
departments.

5 Major Objectives

Department of public relations aims to develop the positive

image of the company, its products and policies.

It achieves following objectives for the organisation:

(i) It facilitates smooth functioning of business and

achievement of organisational objectives.

(ii) It builds corporate image and creates a favourable

impression and creditability of company’s products.

(iii) It helps in launch of new products and maintain interest

and confidence in the existing products.

(iv) It acts as a supplement to advertising in promoting

existing and new products. Thus, it helps business and its
associates to sell products easily.
(v) It lowers the promotional cost as it has to simply
maintain staff to develop and circulate information with
media or manage events.

5 Important Features:

1. Saturation of Effort:

Organisations competing for a finite amount of media

attention puts pressure on the public relations effort to be
better than that of competitors. There can be no guarantee
that PR activity will have any impact on the targets at whom
it is aimed.

2. Can be Targeted:

To a small specialised audience public relations activities

can be targeted assuming if the right media vehicle is used.

3. Relatively Low Cost:

It is much cheaper, in terms of cost per person reached, than

any other type of promotion. Apart from nominal
production costs, much PR activity can be carried out at
almost no cost, in marked contrast to the high cost of buying
space or time in the main media.

4. Relatively Uncontrollable:
A company has only a little direct control over the
proceedings of public relations activity. If successful, a press
release may be printed in full, although there can be no
control over where or when it is printed. A press release can
be misinterpreted and result may be unfavourable news
coverage. This is in contrast to advertising, where an
advertiser can exercise considerable control over the
content placing, and timing of an advert.

Types of Public relations:

Public relations encompasses a broad range of activities. The major areas are
discussed below, with particular attention given to those used most frequently in brand
communication campaigns.

Type # 1. Counseling:

Public relations managers in the most successful communication programs serve a very
important advisory role to senior management. They make recommendations on policy
issues as well as decisions related specifically to communication.

Type # 2. Research:

Companies practicing either of the two-way models of public relations make extensive
use of research to better understand and influence publics.

Type # 3. Media Relations:

Press coverage is a critically important public relations output. Public relations

specialists use publicity efforts to try to get coverage in the print and broadcast media.
They also respond to requests for information or comment from, journalists working on
stories that concern their company or the company’s products and services. Media
relations activities might also include arranging press tours of manufacturing facilities,
press conferences to announce new product introductions, and coverage of the
corporation’s annual stockholders meeting.

Type # 4. Publicity:

Publicity is defined by David Yale as “supplying information that is factual, interesting,

and newsworthy to media not controlled by you”. A critical aspect of marketing public
relations, publicity is described as “the process of planning, executing and evaluating
programs that encourage purchase and consumer satisfaction through credible
communication of information and impressions that identify companies and their
products with the needs, wants, concerns and interests of consumers.”

Marketing public relations involves activities related to persuading customer and

prospects to buy (or continue to buy) the firm’s products and services.

Marketing Channel Decision

What is a Marketing Channel?

A marketing channel is described as the set of people, organizations,
and activities that work together to transfer goods (products and
services) from the point of origin to the point of consumption. The
primary purpose of a marketing channel is to create a connection
between the organization that creates a product or service and
prospective customers who may want to purchase it.
For physical products, there are four basic types of marketing channels:

1. Direct selling, where products are marketed and sold directly to

consumers without a fixed retail location
2. Selling through intermediaries, where products are manufactured
at the point of origin and sold to customers by downstream
intermediaries such as agents, brokers, wholesalers and retail
stores
3. Dual distribution, where manufacturers combine multiple types of
channels to sell products to the end-user. This could mean that the
manufacturer sells directly to customers and also does business
with wholesalers and retailers who sell to customers through their
own distribution networks
4. Reverse marketing, where products move from the customer back
to the manufacturer. Typical cases of reverse marketing include
recycling and product recalls

Businesses that engage in digital marketing campaigns are executing a

special type of direct selling campaign that may leverage many different
types of channels to effectively market to prospects, nurture them
through the sales funnel and drive sales growth and revenue target
attainment.
Marketing channel decisions

They are one of the most complex and important decisions that
management faces today. If one looks at the major strategy of the
marketing mix (product, price, promotion and distribution), the greatest
potential for achieving a competitive advantage now lies in distribution
(Obaji, 2011).
 Channel functions

Marketing channels play a very important role in the success of a

business. Some of the key functions of marketing channels are:

● Logistics and distribution: Marketing channels play an

important role in transporting the product or service from the
manufacturer to the end consumer. They are responsible for
 ensuring that the chosen products reach customers through
their distribution network at an affordable price and in a
timely manner.
● Promotion: Marketing channels also further promote a
product by providing marketing messages and other
advertisements to targeted audiences, which helps them
build a strong brand image and reputation.
● Transactional functions: These channels are vital to enabling
the transfer of product ownership from manufacturers to
consumers. They help businesses in billing, invoicing, and
collecting payments from customers.
● Facilitating functions: Marketing channels also offer other
important services like storage, packaging, credit facilities,
and after-sales service that add value to the product or
service being offered.
● Risk sharing: Marketing channels help businesses to share
the risk by joining hands with them, as they can reduce their
own risks and losses by reducing exposure to all kinds of
uncertainties. This reduces the overall costs of selling a
product or service since manufacturers are not bearing the
entire loss themselves.
 ● Efficiency and effectiveness in distribution: By working with
marketing channels, businesses can ensure that their
products or services reach the right customers at the right
time and place. This helps to improve customer satisfaction
levels as well as the efficiency and effectiveness of
businesses.

Channel Levels

What is Channel Levels?

Channel level refers to the intermediary in marketing distribution channel between the
producer/manufacturer and the end consumer. Every channel level plays a role in
making the good available to the end consumer. The number of channel levels between
the producer and consumer could be 0,1,2,3 or more.

Types of Channel Levels

Marketing channels can be categorised into direct and indirect channels

depending on the structure of the channel. The indirect channels are
further divided into three types: one-level, two-level, and three-level
channels based on the number of intermediaries present.

Direct Channel or Zero Level Channel

Producer → Customer

A direct or zero-level channel is one in which the manufacturer sells

directly to the end-user with no intermediaries involved. This type of
channel is often used by businesses that produce perishable goods,
expensive goods, or whose target market is small and concentrated.

An all-new D2C model in which the manufacturer sells directly to the

customer through its online branded channels is being followed by a lot
of companies these days.

Indirect Channel
Producer → Intermediaries → Customer

When the manufacturer takes the help of one or more intermediaries to

reach the end-user, it is known as an indirect channel.

One-Level Channel

Producer → Retailer → Consumer

A one-level channel has only one intermediary – the retailer – between

the manufacturer and the end-user. In this type of channel, the
manufacturer sells directly to a retailer, who then sells the product to the
consumer. This type of channel is often used for shopping goods like
clothes, food, and home furnishings.

Two-Level Channel

Producer → Wholesaler → Retailer → Customer

A two-level channel has two intermediaries – the wholesaler and the

retailer – between the manufacturer and the end-user. In this type of
channel, the manufacturer sells to a wholesaler who, in turn, sells to the
retailer who then sells to the consumer.

The wholesaler’s role is to break the bulk and deliver the product to the
retailer. The retailer’s role is to reach the end consumer.

Goods that are sold in two-level channels are usually durable, have a
long shelf life, and target an audience that isn’t limited to a confined
area. These include goods like home appliances, FMCG products, and
automobile parts.

Three-Level Channel
Producer → Agent/Broker → Wholesaler or Retailer →

Customer

A three-level channel has three intermediaries – the agent, the

wholesaler, and the retailer – between the manufacturer and the end-
user. In this type of channel, the manufacturer sells to an agent whose
role is to break bulk for a wholesaler or retailer. The agent then sells to
the wholesaler throughout the country or region.

The wholesaler’s role is to distribute the product to the retailer who sells
it to the consumer. The agent in this channel often provides services like
credit, financing, and market information.

The main advantages of this type of channel are that it allows

manufacturers to reach more markets faster and build relationships with
multiple retailers at a time.

Products that are sold in three-level channels include agricultural .

 Types of Intermediaries: Wholesalers
and Retailers

4 Types of Marketing Intermediaries

Unless customers are buying a product directly from the company that makes it, sales
are always facilitated by one or more marketing intermediaries, also known as
middlemen. Marketing intermediaries do much more than simply take a slice of the pie
with each transaction. Not only do they give customers easier access to products, they
can also streamline a manufacturer's processes. Four types of traditional intermediaries
include agents and brokers, wholesalers, distributors and retailers.

1. Agents and Brokers

Agents and brokers are nearly synonymous in their roles as intermediaries. In fact, when
it comes to real estate transactions, they are synonymous to any client, despite the
differences in their roles in the industry. In most cases, however, agents serve as an
intermediary on a permanent basis between buyers and sellers, while brokers do this on
a temporary basis only. Both are paid in commission for each sale and do not take
ownership of the goods being sold.

In addition to real estate, agents and brokers are also common in the travel agency.
Companies routinely use agents and brokers when importing or exporting products
across the border.
2. Merchant Wholesalers and Resellers

Merchant wholesalers, which are also simply called wholesalers, buy products from
manufacturers in bulk and then resell them, usually to retailers or other businesses.
Some carry an extensive range of different products, while others specialize in a few
products but carry a large assortment. They may operate cash-and-carry outlets,
warehouses, mail order businesses or online sales, or they may simply keep their
inventories in trucks, and travel to their customers.

3. Distributors and Functional Wholesalers

Also called functional wholesalers, distributors do not buy products from the producers.
Instead, they expedite sales between the manufacturer and retailers or other
businesses. Like agents and brokers, they can be paid by commission, or they can be
paid in fees from the manufacturer.

4. Traditional and Online Retailers

Whenever a consumer buys a product from anyone other than the company that makes
it, the consumer is dealing with a retailer. This includes corner stores, shopping malls
and e-commerce website. Retailers may buy directly from the producers or from
another intermediary. In some markets, they may stock items and pay for them only
after they make a sale, which is common for most bookstores today.

Any e-commerce website that's not owned by the company that makes a product, which
it then sells to a consumer, can also be called a retailer. However – with companies
such as Amazon, which make their own products and sell them directly to customers in
addition to products made by other companies – the line between producers and
retailers is becoming increasingly blurry.
Wholesale Intermediaries, Types and
Examples

Wholesale Intermediaries
Wholesale intermediaries are business entities that distribute goods from manufacturers to
retailers who further sell to the final consumer. However, it is important to note that not all
wholesalers take the title of the products they purchase. These businesses act as middlemen
between manufacturers and retailers. Wholesale intermediaries play an essential role in
linking producers and retail intermediaries. Like other intermediaries, wholesale
intermediaries connect different distribution channel partners to ensure the movement of
goods to the ultimate end user. They carry out commercial operations on behalf of third
parties like commission agents, brokers, representatives, and trading groups. These traders
earn commissions proportional to the volume of sales. In simple words, wholesalers are not
final owners of traded goods.

Wholesale intermediaries provide essential services like packaging, grading, warehousing,

and transportation of goods. Above all, they bear the greatest risk associated with handling
goods from the producer. One can think of intermediaries as an entity that breaks down
bulky goods from producers into small portions desired by the retailers. This way, they assist
in the movement of goods from the producers to the final consumers. When a manufacturer
produces a large number of goods, it is more efficient to sell them to a single wholesaler
rather than negotiate prices with retailers or reach out to many consumers. The two types of
wholesale intermediaries are functional intermediaries (agents) and merchant intermediaries.

What Is a Merchant Intermediary?

Merchant intermediaries are business organizations that acquire title ownership of products
they purchase from manufacturers and then sell to other wholesalers, retailers, or
government institutions. They are also known as merchant wholesalers, supply houses, or
jobbers. The role of the merchant intermediaries is to purchase products from manufacturers
in bulk, process, store the products, carry our repackaging, and redistribute them-broken
down-to retailers, government institutions, other wholesalers, or other businesses. This
eases the distribution of products, enabling a smooth chain that provides a continuous flow
of products into the market, shaping the economy at large. They enable producers to reach
out to several distributed consumers without direct contact. Merchant intermediaries provide
employment opportunities and contribute largely to a country's revenue. Most importantly,
merchant wholesalers are at the pivot of any market equilibrium since they can influence the
prices of goods in the market by efficient distribution or hoarding goods. Some merchant
wholesalers deal in a wide range of goods while others specialize in a few, but handle large
quantities.

Merchant intermediaries can be categorized into full-service wholesalers and limited-service

wholesalers.

Full-Service Wholesalers
They are wholesalers that handle large volumes of sales. They buy goods in large volumes,
break bulk, and deliver to retailers in their respective shops. These wholesalers also move a
little further to offer their customers a wide range of services. These include stocking
inventories, operating warehouses, delivering goods to consumers, and supplying credit.
Additionally, these types of wholesalers promote their products, collect market information
and bear all risks associated with indirect sales. Examples of full-service wholesalers include
limited line, general merchandise, and specialty line wholesalers, among others.

Limited-Service Wholesalers
Refers to wholesalers that offer limited services to consumers to reduce the cost of
operation. It is one of the most common examples of wholesale distribution that does not
deal in a full range of services like other kinds of wholesalers.

The similarities between full-service and limited-service wholesalers are:

● They are both types of merchant intermediaries

● They are both involved in handling huge amounts of products
The difference between full-service and limited-service wholesalers is that full-service
wholesalers deal with a wide range of products. In contrast, limited-service wholesalers deal
in a specified field of distribution products.

What Is a Functional Intermediary (Agent)?

Functional intermediaries (agents) are middlemen that serve as brokers to facilitate trade
between producers and retailers. Functional intermediaries do not take title to the products
they deal in but are usually involved in negotiations, and other activities related to buying
and selling on behalf of their clients. They normally act on behalf of manufacturers to find
buyers for products. Function intermediaries are paid in the form of commissions depending
on their sales volume. Function intermediaries assume no risks in the product distribution
chain. Their main focus is to get sales deals done between producers and the ultimate
customers and earn commissions on the sales deals they complete. This kind of wholesaling
is popular with producers with limited capital for setting up and maintaining a sales
workforce. Agents usually deal in non-competing products.

Merchant and functional intermediaries are similar in that they are both wholesaling
intermediaries. The differences between these types include:

● Merchant intermediaries take the title of the goods they handle, while functional
intermediaries do not take the title of the goods they handle.
● Merchant intermediaries take all risks associated with stocking and handling
products, whereas functional intermediaries take any risk associated with stocking
the products.