ADVERTISING AND SALES PROMOTION-MBA MM

1. Role of Advertising in modern business.

Advertisements play a major role in business. The business world is competitive, and
advertising is used to introduce a business, build a brand, and position a company, product
or service against the competition. Advertising delivers strategic messaging and elevates
awareness within the given market. Several advertising media are used to deliver the
advertisement to the market.

Today’s advertisers have a wide range of options to choose from when promoting their
products and services. Those choices range from the traditional television, radio, and
newspaper ads to a myriad of specialty consumer and business publications, to billboard
advertising and, of course, the online world’s many options, such as banner ads, e-mail
marketing, social media marketing, etc. Creative marketers will take advantage of
opportunities to get their messages across to key target audiences in any way they can,
including on buses, park benches, and bathroom stalls.

Today, Advertising is an integral part of economic and social life and a powerful technique
for promoting the sale of the product. We know the role of advertising by four different
parameters, namely manufacturers, middlemen, society, and customers.

Manufacturers – A manufacturer who needs to make a good profit by selling its goods takes
full advantage of advertising to commercialize its products and service. The primary
importance of advertising in manufacturing is to increase the sale of the product. If people
don’t know about the product, how do you expect it to be sold?

To get this aim frequent advertising of the product needs to be done. It also helps in
maintaining the existing market and explores the new market. With the help of
advertisements, the manufacturers can control the retail price of the product.

Middleman – Middleman is the essential link between a producer and a consumer. Here,
advertising is the salesmanship imprint, which leads to the least cost. It attracts more
customers than a salesman.

Customer – We make all marketing efforts to satisfy the needs of a customer. Advertising
promotes the right products through printing the image of good in the minds of potential
customers. Advertising also increases competition in the market.

Society – Along with the manufacturer, middleman, and customer, advertising is also
beneficial for society. Advertising has made the luxurious product to the public a thing of
yesterday. It also ensures the increase in consumption of the products, which results in a
decrease in production cost and turns increase the earning for society and standard of living
for society.
The major influence of advertisements on business is the ability to influence buyer decisions
and drive purchases. Advertisers introduce their product or service in a credible and
influential manner to educate their potential customers. Unless a business has a high-traffic
physical location, advertising is required to simply let potential customers know they exist.
In addition, advertisements can educate about a product or service, make consumers aware
of pricing or challenge the competition by showing how their features are more beneficial.

2. Types of Advertisements and Advertising Appeals.

Advertising appeals refers to the approach used to attract the attention of customers or to
influence their feelings towards a brand, product or service. It is the central idea of an
advertisement and speak to an individual’s need, wants or interest and entice her to take
the desired action which generally is “Buy me”. Here are the top 10 advertising appeals that
really work.

1. Emotional appeals - Emotional appeals relate to the consumers social or physiological

needs for purchasing a product or a service. Many consumers’ purchase decisions are
emotional and are made on what they feel about a particular brand more than its features.
They are designed to make an audience associate positive feelings with your brand. These
appeals generally focus on trust, joy, love, loyalty and happiness, which you can leverage
through the use of powerful music and imagery. Examples – Jewellery ads, Ariel share the
load ads

2. Sexual Appeals - Sex appeals relate to a person’s natural desire to experience romance
and appeal to others romantically. The goal of this appeal is to make people feel like they
will be more attractive, more desirable, and more likely to get the person of their dreams if
they use a certain product or take certain actions.Sex appeals capture attention, but seldom
promote product consumption. Although history has shown that sex does indeed sell or at
least gets attention. Examples – Fragrance product ads, condom ads

3. Humour Appeals - Who doesn’t like something that’s funny? Humour appeals make
consumers laugh and create an emotional link with the product. It is a proven appeal type
for grabbing attention. When consumers find something humorous, it has value because is
causes them to watch, laugh and, most importantly, remember. By capturing the viewer's
attention, humour appeals cut through advertising clutter and allow for enhanced recall and
improved moods of the viewers. The challenge with humour however is to keep the
brand in the humour – so your market associates the humor with your brand. Often it’s the
humour that is remembered more than the product. Examples – Mentos ads, Center shock
ads, Fevicol ads.

4. Musical Appeals - Like humour, music is a great way for brands to get noticed and make
an audience remember their products. In addition, musical appeals can bring up positive
memories whenever someone hears a catchy tune in an ad, which goes a long way toward
making them feel good about the product being presented. The use of musical
appeals allows for a connection between the product or service and a catchy jingle or piece
of music. Examples – Airtel jingle ad, Lifebuoy “Lifebuoy hai janah tandaroosti hai wahan”,
Washing powder Nirma.

5. Rational appeals - Rational appeals use logic, facts, and data to convince consumers to
buy products, and are often found in advertisements for medications, cookware, and
cleaning products. They focus on the consumers practical, functional need and utility for the
product or service. It emphasizes on either product features or its functional benefits or its
problem removal or problem avoidance attribute. Examples – mobile phone ads showing
features, detergent ad showing superior stain removal property.

6. Fear Appeals - Fear appeals focus on the negative outcomes that can happen because of
an action or inaction. Another fear tactic involves isolation. People will purchase a product
to avoid isolation from others because of bad hygiene for example in the case of
toothpastes and Deodorants. Fear appeals fit particularly well with certain types of goods
and services, particularly those products that can eliminate threats or provide a sense of
personal security. For example, fear is often used in insurance company ads, focusing on the
consequences of an untimely death. Examples – anti tobacco ads, toothpaste ads focusing
on germ fighting property.

7. Scarcity appeals - Scarcity appeals tap into people’s fear of missing out, so they’re a great
way to convince people to take advantage of a sale or a limited edition product. However,
make sure that scarcity actually applies to what you’re selling and sale is indeed a sale and is
not a permanent offer. Examples – Toothbrush Free with Toothpaste ads, ads giving gifts or
lucky coupons.

8. Bandwagon appeals – Bandwagon appeals, also known as FOMO appeals (Fear of missing
out appeals), make consumers believe that they are missing out by addressing the
consumer’s need to belong. This type of message says buy this product because everyone
does. Examples – ads showing “India’s no. 1 or most preferred brand”, “Desh ke 80% logon
ne ise chuna”.

9. Favourable Price appeals – Favourable price appeals make price as the dominant point of
the message. It can be used to announce a lower price product, low prices every day.
Examples – 5 Rs. Chhota coke, Vodafone’s 10 ka chhota recharge, Mc Donalds “I’m Loving it”
ads

10. Competitive advantage appeals – Competitive advantage appeals make either a direct
or indirect comparison to another brand and usually claim superiority on one or more
attributes. This is also known as comparative advertising. Examples – Detergent ads showing
a particular product cleaning a cloth better than competition product, health drink ads
showing more or higher nutrients than the competition product.
3. Methods of Determining Advertising Budget.
The advertising budget of a business is typically a subset of the larger sales budget and,
within that, the marketing budget. Advertising is a part of the sales and marketing effort.
Money spent on advertising can also be seen as an investment in building up the business.

Several methods are used for setting advertising budget. Depending upon internal situations
of the company, the suitable method is followed. Every method has its merits, demerits, and
applicability.

1. Percentage of Sales Method:

It is a commonly used method to set advertising budget. In this method, the amount for
advertising is decided on the basis of sales. Advertising budget is specific per cent of sales.
The sales may be current, or anticipated. Sometimes, the past sales are also used as the
base for deciding on ad budget. For example, the last year sales were Rs. 3 crore and the
company spent Rs. 300000 for advertising. It is clear that the company has spent 1% of sales
in the last year.

2. Objectives and Task Method:

This is the most appropriate ad budget method for any company. It is a scientific method to
set advertising budget. The method considers company’s own environment and
requirement. Objectives and task method guides the manager to develop his promotional
budget by (1) defining specific objectives, (2) determining the task that must be performed
to achieve them, and (3) estimating the costs of performing the task. The sum of these costs
is the proposed amount for advertising budget.

The method is based on the relationship between the objectives and the task to achieve
these objectives. The costs of various advertising activities to be performed to achieve
marketing objectives constitute advertising budget.

3. Competitive Parity Method:

Competition is one of the powerful factors affecting marketing performance. This method
considers the competitors’ advertising activities and costs for setting advertising budget.
The advertising budget is fixed on the basis of advertising strategy adopted by the
competitors.

Thus, competitive factor is given more importance in deciding advertising budget. For
example, if the close competitors spend 3% of net sales, the company will spend, more or
less, the same per cent for advertising. Here it is assumed that “competitors or leaders are
always right.” If not followed carefully, this method may result into misleading.
It is obvious that a company differs significantly from the competitors in terms of product
characteristics, objectives, sales, financial conditions, management philosophy, other
promotional means and expenses, image and reputation, price, etc.

Therefore, it is not advisable to follow the competitors blindly. Marketing/advertising

manager should take competitors’ advertising strategy as the base, but should not follow as
it is. The advertising budget must be adjusted to the company’s internal and external
situation.

4. Affordable or Fund Available Method:

This is, in real sense, not a method to set advertising budget. The method is based on the
company’s capacity to spend. It is based on the notion that a company should spend on
advertising as per its capacity. Company with a sound financial position spends more on
advertising and vice versa.

5. Expert Opinion Method:

Many marketing firms follow this method. Both internal and external experts are asked to
estimate the amount to be spent for advertisement for a given period. Experts, on the basis
of the rich experience on the area, can determine objectively the amount for advertising.
Experts supply their estimate individually or jointly.

Along with the estimates, they also underline certain assumptions. Internal experts involve
company’s executives, such as general manager, marketing manager, advertising manager,
sales manager, distribution manager, etc.

6. Other Methods:

There are some other methods used for setting advertising budget.

They have been listed below:

i. Arbitrary Allocation Method

ii. Profit Maximization Approach

iii. Incremental Method

iv. Sales Force Opinion Method, etc.

4. Advertising Evaluation.
In today's advertising world, every firm invests heavily on advertisement for making their
products or services known to the target audience and to arouse the interest of target
audience in firm's products or services. Advertising is done with some predefined
objectives- to generate awareness about product, to arouse interest in product, to change
the attitude of audience towards product, to stimulate desire for product, or to make them
buy the product. Advertising is of no use if the defined objectives of communication is not
achieved. So, it is necessary to evaluate the effectiveness of advertisement at different level,
starting from creation of ad-copy to running of ad on media, and also after execution of ad
to know to what extent the objectives are achieved.

Types of Test

Following are the types of test applied in advertisement evaluation:

 Pre-Testing

 Concurrent Testing

 Post Testing

1. Pre-Testing

Pre-Testing follows the universal law "Prevention is better than cure". Advertising can be
pretested at several points in the creative development process. Pre-Testing helps the
advertiser to make a final go or no go decision about finished or nearly finished
advertisement. Pre-Testing method refer to testing the potentiality of a communication
message or ad-copy before printing, broadcasting, or telecasting. Following are the types of
pre-testing methods:

A. Qualitative Methods of Pre-Testing

 Focus Group: Focus group involve exposing the ad to a group of 8 to 12 respondents.

Focus groups are used with surprising frequency for making final go or no go
decision. A moderator facilitates the discussion and walk s the group through a series
of issues that are outlined in discussion guide.

 In-depth Interview: In-depth interview involve one on one discussion with

respondents. Interviews are very effective when a researcher has a good idea of
critical issues but does not have a sense of the kind of responses one will get. This
method can be effectively used to generate new ad concepts and ideas.

 Projective Techniques: In this technique the respondent is instructed to project

himself into the situation and verbalize the thoughts. projective technique can be
very effective for evaluating ad concepts and for generating new ad concepts. But, it
cannot be used for making final decisions.

B. Quantitative Methods of Pre-Testing

 Checklist Method: Checklist method is used to test the effectiveness of ad-copy. The
purpose of this method is to ensure that all elements of the ad-copy are included
 with due importance in the advertisement. As it is a pre-test method any omitted
element of ad can be included in the copy before release of the advertisement.

 Consumer Jury Method: This method involves the exposure of alternative

advertisements to a sample of jury or prospects. This test is designed to learn from a
typical group of prospective customers. Advertisements which are unpublished are
presented before the consumer jury either in personal interviews or group
interviews and their reactions are observed and responses are recorded.

 Sales Area Test: Under this method advertising campaign is run in the markets
selected for testing purposes. The impact of the campaign is evaluated by actual
sales in the selected markets. The market with high sales is considered the best
market for effective sales campaign. In other markets suitable changes are made in
the advertising campaign.

 Questionnaire Method: It is a list of questions related to an experiment. The draft of

an advertisement along with some relevant questions is to be sent to a group of
target consumers or advertising experts. Their opinions are collected and analyzed to
find out whether the proposed advertisement is satisfactory or not.

 Recall Test: Under this method, advertising copies are shown to a group of
prospects. After few minutes they are asked to recall and reproduce them. This
method is used to find out how far the advertisements are impressive.

 Reaction Test: The potential effect of an advertisement is judged with the help of
certain instruments, which measure heartbeats, blood pressure, pupil dilution etc.
Their reactions reveal the psychological or nervous effects of advertising.

 Readability Test: All the listeners of advertisements cannot read it equally. So

respondents are drawn from different socio economic and geographical
backgrounds. This method is used to find out the level of effectiveness when and
advertisement is read.

 Eye Movement Test: The movements of eyes of the respondents are recorded by
using eye observation camera when advertisements are shown to them in a screen.
This helps to find out the attention value of advertisement.

2. Concurrent Testing

Concurrent testing is evaluated throughout the whole advertisement execution process.

Tests are conducted while audience is exposed to different type of media. Following are the
types of concurrent testing methods:
  Consumer Diaries: Diaries are provided to a selected customers. They are also
informed to record the details of advertisements they watch, listen or read. The
diaries are collected periodically. The result obtained from such a survey reveals the
effectiveness of advertisement.

 Co-incidental Surveys: This method is also called as co-incidental telephone method.

Under this method, samples of customers are selected and calls are made at the
time of broadcast of the advertisement programme. The data obtained and analyzed
will give a picture about the effectiveness of an advertisement.

 Electronic Devices: Now day’s electronic devices are widely used to measure the
effectiveness of an advertisement. They are mainly used in broadcast media. These
are auto meters, track electronic units etc.

3. Post Testing

Post testing is done to know- to what extent the advertising objectives are achieved.
Following are the types of post testing methods:

 Recognition Test: Recognition test involves the ability of viewers to correctly identify
ad, brand, or message they previously exposed to. The types of recognition test are:

o Starch Test - The Starch test is applied only to print ads that have already run.
The interviewer shows each respondent a magazine or newspaper containing
the ads being tested. For each ad the interviewer asks the respondents to
reply to ad related questions.

o Bruzzone Test - The Bruzzone test is conducted through mail surveys.

Questionnaires containing frames and audio scripts from television
commercials are sent to respondents and respondents are asked whether
they recognize the ad and brand.

 Recall or Impact Test: The recall test is designed to measure the impression of
readers or viewers of the advertisement. If a reader has a favorable impression of
the advertisement, he will certainly retain something of the advertisement. The
measures of interest would be obtained by interviewing the readers or viewers or
listeners, days after the advertisement or commercial is appeared in the newspaper,
or on T.V. Interviewer asks the readers or viewers to answer some ad related
questions, and in response to the question asked, the reader reveals the accuracy
and depth of his impression.
5. Sales Promotion Techniques.
A sales promotion is a marketing tactic in which businesses use offers or a temporary
campaign to increase interest in their products or services. Companies use sales
promotions for two main reasons- to motivate buying behaviour and increase short-
term purchases. Regardless of the industry you operate in or the size of your business,
there are several sales promotion techniques that could work wonders for your
business. Here are ten such sales promotion techniques:

1. Buy One, Get One Free

Buy one, get one, or BOGO is perhaps one of the most popular sales promotion
techniques. Pizza Hut, Subway, and several other businesses use this technique to drive
sales. Offering two products for the price of one increases sales because the perception
of freebies attracts customers.

It is also an excellent way to clear stock, which is why you will see a lot of retail
businesses using this technique. A lesser-known benefit of BOGO promotions is that it
increases brand awareness because, many a time, customers share the free product
with their loved ones.

BOGO deals are not limited to only product-based businesses. They work equally well for
service-based businesses as well. For instance, if you run a spa or a gym, you could offer
BOGO deals on your classes and training to acquire new clients.

Service-based industries are based on time and not product value. If you have the time
to spare, this is one sales promotion technique you must try.

For product-based businesses, it is important to choose the right set of products for
BOGO promotions. You do not want to end up making a loss, do you? You should also
pay attention to the timing of the offer if you want to boost sales. For instance, offering
BOGO during festivals or the holiday season could help your business attract more
customers.

2. Free Trial or Samples

If you have opened a new store or introduced a new product, sales could be slow in the
initial days. Sales promotion techniques are a great way to boost sales and succeed
immediately.

Offering free samples is a popular technique used in many industries, especially the
beauty and retail industries. Many beauty brands offer free samples to their customers.
For instance, Sephora allows you to add any two samples to your order.
If you have shopped with Big Basket, you may have received free samples of new cereals
or snacks. Free sample promotions help customers “sample” the quality of your
products, making it easier for you to convert them into buyers.

If you have a physical store, consider setting up a sampling station in your store. You
could also offer some free samples at your checkout counter. For online businesses, you
could give your customers free samples on the purchase of certain products.

Service businesses could offer free trials on their products to boost sales. According to
a report, 62% of companies get 10% of their business from free trials. 16% of businesses
get more than half of their business from free trials.

3. Flash Sales

A flash sale is a sale that lasts for a concise time but offers enormous discounts. Usually,
the quantity is limited, which is why you get higher discounts than standard promotions.
You will often come across flash sales on e-commerce websites. This technique is worth
trying if you want to create a sense of urgency among your customers. Online businesses
must really leverage flash sales to increase sales.

How often you should run a flash sale is entirely up to you. Some businesses run a flash
sale only once or twice a year. Some do it more often, such as once a month. If you want
to conduct a monthly flash sale, consider scheduling it simultaneously each month.

Doing so will help people anticipate the event and be prepared to make purchases on
short notice. Whatever schedule you choose, remember to constantly announce the
flash sale through social media and email marketing campaigns.

4. Referral Discounts

92% of people trust a brand if someone they know recommends it. Also, 70% of
people will likely recommend a brand with a good loyalty program. You are missing out
if referral marketing is still not in your sales strategy.

Referral discounts offer dual benefits. One, you get more sales, and two, word-of-mouth
about your brand. If you still don’t have a referral program, consider implementing one
now because it can significantly increase sales. Word-of-mouth is an ongoing process,
and a well-crafted referral program will ensure that leads keep pouring in.

The best thing about referral discounts is that they bring in warm leads. When deciding
upon the referral discount to offer, pick a number that is affordable for your business
but desirable for the customer.

5. Loyalty Programs
Do you have a loyal customer base? If you do, implementing a loyalty program could be
an excellent sales promotion technique. A loyalty program primarily rewards existing
customers for sticking around with the brand.

Not only do they retain existing customers by thanking them for being committed to the
brand, but these programs also encourage new customers to become loyal.

Your loyalty program should make your customers feel special. The cosmetic brand
Lancome is the perfect example of a good loyalty program. It offers three levels of
loyalty rewards. After you have made a specific number of purchases, you can qualify for
a different tier.

Different tiers offer different benefits, which not only work to boost customer loyalty
but also create a positive user experience.

6. Vouchers and Coupons

Getting a new customer is five times more expensive than retaining an existing one. To
boost sales, you should also look at ways to increase repeat business. Vouchers and
coupons are a great way to encourage your customers to make repeat purchases. You
can offer them through emails, product packaging, catalogs, and more.

However, vouchers and coupons can also be used to acquire new customers. You could
offer a discount on the first purchase, encouraging visitors to turn into paying
customers. You may also use your email marketing campaign to inform prospects of the
first purchase discounts.

7. Free Shipping

What is the arch-enemy of e-commerce stores? Cart abandonment. Moving a buyer

through the sales funnel can be incredibly frustrating, only to have them abandon the
cart at checkout. Did you know that over 60% of carts are abandoned over shipping-
related issues? Offering free shipping could be an easy way to tackle this.

If you are a small business, offering free shipping on every purchase may not be feasible,
especially if the product price is low. In that case, you could offer free shipping over a
certain amount. Your customers will be encouraged to shop for more to avoid shipping
charges.

8. Social Media Giveaways

Social media is powerful, which is why most brands work hard to build a solid online
presence. If you want to boost sales, social media giveaways and contests can be a good
sales promotion technique. It can also be a great way to get people interested in your
brand and acquire new followers.
Most contests and giveaways on Facebook, YouTube, Instagram, or other social media
platforms have one common condition. You need to tag a certain number of people on
the post to be eligible.

When people tag their family and friends, they introduce more people to the brand,
helping it gain new followers. You not only increase brand awareness but also boost
meaningful engagement on your social network, which eventually leads to more sales in
the future.

9. Product or Service Bundles

People can get pretty excited about getting more value for less. So, why not leverage it
as one of your sales promotion techniques? Consider bundling your related products or
services for a reduced price. You will be able to sell more products and get people
talking about your business.

Product bundles can be especially beneficial for people who are confused between
several of your products or services. They can try two or more of these products with
product bundles at a reduced price.

10. Cash backs

If you do not want to use discount promotions, you could opt for cash back promotions.
You may not give your customers a discount upfront, but getting some of their money
back could encourage them to spend it on other products sold by your brand.

Cash back promotions are a win-win for both you and your customers. Your customers
get extra money, and you get more loyalty and business from your customers.