PSM Lecture. I. What is MC? Trends in MC

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2 PSM Lecture I. What is MC? Trends in MC MC mix Integrated MC II. What is personal selling and sales management? Trends in Sales Management/Personal selling Definitions and overview III. What is Marketing & Sales Integration?

3 An average American is exposed to 3000 advertising messages every day! Sources? What does this tell about the consuming environment? How should firms respond?

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5 Current trends in marketing communication: Audience fragmentation Response: content available in multiple platforms Response: message personalization Demand for increased efficiency (traditional mass media communication primarily stimulates awareness & attitudes, less effective in directly influencing demand) Decreasing effectiveness of mass media communication Response: combining mass media communication with internet advertising and social media targeting

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7 Current trends in marketing communication: Technology development: One-pipe convergence (single broadband feed for TV, PC, DVD etc.) Inside media: outdoor posters digital screens New point-of-sale innovations Internet revolution: business models of print media becoming obsolete Merging of media (TV, print, internet )

8 Current trends in marketing communication: Customer development: Social media has transformed people from receivers to communicators From passive consumers of media (and advertising) to active seekers of knowledge Usage of different media has changed rapidly and continues to change From TV and newspapers to internet to social media to messaging services to?

9 I.What is marketing communications? Messages and related media used to communicate with a market. Or The communication between an organization and its target audiences on all matters that affect marketing performance Targeted to the firm s stakeholders: customers, subcontractors, financers, media, employers, shareholders Creates demand directly, or phenomena that positively affect demand Informing, persuading, ensuring, reminding the markets Includes: advertising, branding, brand language, direct marketing, graphic design, marketing, packaging, promotion, publicity, sponsorship, public relations, sales, sales promotion and online marketing

10 What is marketing communications? Marketing communications is the "promotion" part of the "marketing mix" or the "four Ps": price, place, promotion, and product. It can also refer to the strategy used by a company or individual to reach their target market through various types of communication. tools: marketing communications mix process: sender, message, media, receiver Liisa-Maija Sainio

11 Marketing communications mix: Personal selling Advertising Sales promotion, point-ofsale & merchandising Direct marketing Publicity / public relations Corporate identity / image Packaging Exhibitions Word of mouth Product placement Sponsorship Different activities affect different stages of the consumer decision-making process!

12 Effectiveness of MC tools: (Egan 2007)

13 Budget allocations by type of goods (example) (Varey 2002) Advertising Publicity Sales promotion Personal selling Consumer: low value chocolate bar Consumer: high value car Industrial: low value office supplies Industrial: high value machinery 50 % 10 % 25 % 15 % 35 % 10 % 25 % 30 % 20 % 10 % 25 % 25 % 10 % 10 % 25 % 55 % Liisa-Maija Sainio

14 What is integrated marketing communications? Kotler (1999): Integration and coordination of many communications channels to deliver a clear, consistent & compelling message about the organization and its products Percy (2008): Planning and execution of all types of advertising-like and promotion-like messages selected for brand, service, or company, in order to meet common set of communication objectives, more particularly, to support a single positioning. Selected target audience groups Process: analysis, planning, implementation & control

15 Key drivers of integrated communications: loss of faith in mass media advertising media cost inflation need for more impact need for more cost-effectiveness and efficiency media fragmentation audience fragmentation increased reliance on highly targeted communication methods Liisa-Maija Sainio

16 Key drivers of integrated communications: low levels of brand differentiation technological evolutions overlapping audiences more complex decision-making units need to build more customer loyalty move towards relationship marketing globalization of marketing strategies Liisa-Maija Sainio

17 Dimensions of IMC: Promotional mix integration Integration of promotional mix with the other elements of the marketing mix! Integration of creative themes, concepts & messages Intra- & interorganizational integration Liisa-Maija Sainio

18 Dimensions of IMC: Information and database systems Internal vs. external audiences Integration with corporate identity Geographical integration (national vs. global brands) Liisa-Maija Sainio

19 Evolution of the role of selling and sales management Industrial Economy Manufacturing and transportation Capital and natural resources Products and factories Meeting sales quotas Information technology Strategic resource is information Customer relationships Added value Information Economy Adapted from Manning and Reece, 2004, p.5 Anssi Tarkiainen

20 Changes in the selling environment Colletti & Fiss (2006, HBR): - Customers have gained power - Customers have gone global - Channels have proliferated - More product companies sell services - Suppliers have adopted a one company organizational structure Anssi Tarkiainen

21 Changes in sales management Critical issues in reinventing the sales organization: 1) Building long-term relationships with customers 2) Creating sales organization structures that are adaptable to needs of different customer groups 3) Creating commitment 4) Sales management has shifted from commanding to coaching 5) Use of technology 6) Salesperson performance evaluation Johnston and Marshall, 2006 Anssi Tarkiainen

22 II. Personal selling and sales management What is personal selling? Manning & Reece (2004): Personal selling involves person-to-person communication with a prospect. It is a process of developing relationships; discovering needs; matching the appropriate products with these needs; and communicating benefits through informing, reminding, or persuading. Anderson (1995): Selling The use of persuasive communication to negotiate mutually beneficial agreements. Kurtz & Hodge (1991): Personal selling is defined as an interpersonal persuasive process designed to influence some person s decision.

23 Position of selling and marketing Traditionally personal selling is considered to be a component of the promotion in the marketing mix. (Jobber & Lancaster, 2003) 1. Price: Price levels, credit terms, price changes, discounts 2. Product: features, packaging, quality, range 3. Promotion: advertising, publicity, sales promotion, personal selling 4. Place: inventory, channels of distribution, number of intermediaries Personal selling is a form of personalized, customized communication. Anssi Tarkiainen

24 Position of selling and marketing Personal selling Sales promotion and publicity Advertising Consumer goods --- Industrial goods Personal selling Sales promotion and publicity Adapted from Donaldson, 1998 Advertising Awareness - Comprehension - Conviction - Purchase Anssi Tarkiainen

25 Sales management 1. Formulation of a sales program 2. Implementation of the sales program 3. Evaluation and control of the sales program Johston & Marshall, 2006 Anssi Tarkiainen

26 An overview of sales management Environment Marketing Strategy Sales Manag. Activities Salesperson Performance Determinants Outcomes Control External Environment Internal Environment Marketing Activities Account manag. Policies Sales force Organization Sales planning Deployment Supervision Job and role Perceptions and requirements Adapted from Johnston & Marshall, 2006 Selection, Training, Motivating Personal characteristics Performance Evaluation And control Anssi Tarkiainen

27 III. Marketing & Sales Integration? In many companies, sales forces and marketers feud like Capulets and Montagues with disastrous results. - Kotler, Rackham, & Krishnaswamy, (2006) IMC coordination efforts within marketing largely ignore the most significant marketing tool for communicating and influencing relationships with customers the company s sales force -Rouzies et al. (2005) Footer

28 Position of sales in promotion mix? Startups and small businesses often do not establish a formal marketing group at all they equate marketing with selling Eventually, when a marketing person(s) is hired, his/her role is in helping salesforce - market research - works with advertising and promotions - developing collateral material for sales force - finding and qualifying leads to sales force At this stage the relationship between marketing and sales functions is usually positive. (Kotler, Rackham, & Krisnaswamy, 2006 HBR) Anssi Tarkiainen

29 Position of sales in promotion mix? As companies become larger and more successful, the role of marketing often changes into segmenting, targeting and positioning. Marketing becomes an independent player. It often starts to compete with sales for funding Marketing starts to work more closely with other departments Focus on brands (Kotler, Rackham, & Krisnaswamy, 2006 HBR) Anssi Tarkiainen

30 Position of sales in promotion mix? Friction in the integration of sales and marketing: - Economic - Need to divide budget between sales and marketing - Cultural - Time: future vs. present - Behind the desk vs. in the field - Broad appeal vs. needs of individual customers - Strengthening brand vs. increasing sales (Kotler, Rackham, & Krisnaswamy, 2006 HBR) Anssi Tarkiainen

31 Marketing & Sales Integration Footer