Promoting and Selling Year 9 Commerce – Option 2 Students learn about: The selling process Factors which differentiate products Service, convenience, value and social Environmental Product promotion strategies Students learn to: The selling process Identify why consumers select particular products. Discuss social, ethical and environmental considerations in promoting products. Identify a range of strategies used to promote products. Discuss the role of gender in product promotion. The Selling Process The selling process involves: The promotion of a good or service AND The sale of a product to a buyer A product can be a good such as a watch or a service such as insurance. That is a product can be tangible or intangible, permanent or consumable. A consumer can choose between different brands of a particular product. The promotion of a good or service AND The sale of a product to a buyer Factors that differentiate products – or influence consumers to choose one product over another Service Environmental Social Convenience Value Draw this diagram in your book. Write a sentence next to each factor to explain the factors which differentiate products. Service The quality of the service provided by a retail outlet. After-sales service for ongoing maintenance like a motor car. How well the product does the job it is designed for. Convenience Consumers are inclined to buy the product that is readily available. Consumers may be unwilling to wait for a product to be ordered and delivered. Value Choices include: The cheapest product. The brand on sale or offered as a special. The brand representing good value because it lasts longer, is of higher quality or has more features than similar products. Social Fashion Teenagers buy a particular brand like Billabong because it is seen as cool or worn by friends. Status People buy a label because of the status it represents and the link it has to wealth and success like BMW, Audi. Environmental People may choose environmentally friendly products to reduce the impact their consumption practices have on the environment. Examples: Unbleached paper products made from recycled paper. Phosphate-free detergents. Environmentally friendly brand names: Planet Ark Earth choice Greencare Activity – factors which differentiate products. Compile a list of the goods and services you purchased in the last week. Identify and describe the factors that influenced your decision to buy each good or service. Imagine you have decided to buy the following: A DVD player A pair of jeans Dishwashing detergent Which of the five factors would be most important to you when deciding which brand to buy. List the factors from most important to least important. Product promotion strategies – to increase sales The aims of a promotion: Introduce a new product. Sell more of an existing product. Attract new customers. Demonstrate the advantage of one product over alternatives. Improve the company’s image Strategies used to raise the Activity – Copy profile of a product strategies and Advertising Product endorsements and sponsorships Event sponsorship and venue naming rights Product placements Guerilla marketing Direct marketing and junk mail Special promotions Personal selling Publicity write a definition of each strategy. Advertising Activity – Construct a mind map identifying as many forms of advertising as you can think of. Everyday we consciously or unconsciously absorb messages which influence our behaviour as consumers from: Television Radio The internet Newspapers and magazines On billboards, buses and trains At sporting events On items of clothing and personal and household products. Central to advertising – brand name, logo or slogan A well known brand is: Often associated with an image that appeals to particular groups. For example Nike uses imagery that appeals to young, active, funloving consumers. Widely used as the generic name for a class of product. For example Levi is used as the generic name for jeans no matter what the brand. Logos Can be instantly recognised by consumers. For example Nike’s swoosh, Coca-Cola’s bottle. Activity Develop a collage of well-known logos. Which of these logos appeal to you and why? Advertising – Packaging and innovations Eye catching packaging, wrapping or a container helps a product stand out on the supermarket shelf. Activity – Decide how you will package what you are selling on market day. Product endorsements and sponsorship Product endorsement definition – the use of sporting stars and media personalities to promote a good or service. Sponsorship definition – brand strengthening via the funding of elite sporting personalities and teams. This strategy attempts to increase brand recognition and convince consumers the product is superior and the company more trustworthy than other products or companies. Activity Brainstorm a list of sporting stars and media celebrities that you have seen promoting products and services. List the products endorsed against the name of the personality. Event sponsorship and venue naming rights Activities – Sponsorship example: Telstra’s sponsorship of both the National Rugby League and the Australian Ballet. Naming rights definition – the right of a company to include its own name in the name of a competition or sporting facility in return for the company financially supporting or sponsoring the event or venue. Naming rights example: In 2002 Telstra paid $60 million dollars for the naming rights for Sydney’s Stadium Australia to be called Telstra Stadium. (This is now called ANZ Stadium). 1. Compile a list of sporting competitions and venues sponsored by companies. 2. Access the Optus website www.optus.com Compile a list of the activities sponsored by Optus. Product placements Product placements definition – the prominent display of products in movies or television programs. Product placements example – The James Bond Film, Die Another Day. The film has 25 promotional partners, 11 did not directly hand over cash but instead agreed to spend $200 million on worldwide marketing campaigns to promote their product and the film. Ford, the owner of Aston Martin paid the film producers $63 million to replace BMW as the official Bond vehicle supplier. Bond Drives an Aston Martin Wears Brioni suits Has an Omega watch Uses a Phillips shaver Drinks Bollinger Champagne Guerilla marketing Guerilla marketing definition – a flexible, nontraditional way of promoting a brand name. Example – when one company sponsors a major sporting event a competing company sometimes seeks to have its brand name publicised at the event by unconventional means including the distribution of T-shirts bearing the company’s brand name or logo. Direct marketing Direct marketing definition – contacting householders personally, by name via businesslike phone calls or letters. It is carried out via telemarketing (selling over the telephone), mail and email. Direct marketing example – real estate agents may phone or write to householders directly to try to get them to buy or sell property. Junk mail Activity Collect the junk mail delivered to your home over a week. 1. List the companies that use this method of advertising. Junk mail definition – advertising flyers delivered via the letterbox. It is especially popular with supermarket chains, hardware stores and real estate agents. It provides information about specials. 1. What types of goods and/or services dominate? Special promotions These can be used to boost normal sales. They can be hard to sell stock or goods purchased from the manufacturer under a special pricing deal. Used to increase store ‘traffic’. People attracted by the special promotion may be encouraged to buy full-priced goods once they have entered the retail outlet. Activity Collect examples of special promotions from the print media. Identify the types of special promotions represented. Special promotions - examples o ‘Specials’ in retail outlets especially supermarkets. o Discounts on the recommended retail price. For example Target, advertises a 20% off sale on specific categories of goods such as underwear. o Prizes or gifts with particular purchases. o Free samples used to introduce new products for example washing detergents distributed via letterbox drops. o Demonstrations of new products in retail areas. o Bonus coupons/vouchers for future purchases for example a free coffee once the customer has purchased a certain number of coffees. o ‘Two-for-one’ or ‘buy one and receive 50% off the second’ offers. o Internet free offers. For example David Jones offering account holders two-year interest free terms on purchases of electrical goods costing more than $500.00. o Sponsorship of charities or non-profit organisations. For example McDonald McHappy Day where $1 from every Big Mac goes to support the activities of Ronald McDonald Activity Decide on a special promotion you could use on market day to increase sales. Personal selling Personal selling definition – a form of direct selling involving door-to-door or in-store promotion of a particular product. Advantage – allows consumers to ask questions and clarify issues about the product. Disadvantage – the seller can pressure a potential buyer into making a purchase or may suggest adding accessories to the initial purchase. Examples – Foxtel, Avon, Mobile phone access Personal selling in retail outlets - Up selling Up selling is a technique used by salespeople to promote add on sales and increase profits. Up selling example – The hairdresser suggests you purchase a special shampoo and conditioner in addition to a haircut. Publicity Publicity definition – free media coverage given to a company by media outlets like radio stations. Publicity example – The weekend newspapers have a large number of real estate advertisements for houses for sale paid for by the real estate industry as well as feature articles about real estate issues, free publicity for the real estate industry. The role of gender in product promotion Males and females are frequently portrayed in advertising in ways that appeal to certain sections of the population Stereotypes are often applied. Examples Girls love dolls. Boys want to play with cars. Women are often seen as beautiful, tall and thin. Men are shown as wealthy, good looking, well dressed and athletic or ‘as one of the boys’ or part of a sporting team Activity 1. Define the term ‘stereotype’ 1. ‘Advertising often challenges views about males and females’. Do you think this statement is true or false? Explain your answer. Activity – Gender in advertisements Collect 3 advertisements from magazines or newspapers. Identify the product being advertised. Describe how the female(s) or male(s) are pictured in the ad. Evaluate whether this is a positive or negative image of female or males. Decide how the advertisement is trying to influence the reader. What do you think of such ads? Students learn about: Targeting consumers Processes used to identify target markets. Legal and ethical issues associated with product promotion strategies. Students learn to: Targeting consumers Match appropriate target markets for particular products. Research and discuss a range of legal and ethical issues associated with product promotion. Identify how promotion strategies target particular groups in the community. Targeting consumers For a company’s products to be successfully promoted the company must know who it is selling it to. Examples Children – Children’s television times features advertisements for products that appeal to young children like toys and snack foods so children try to persuade their parents to buy the products. Teenagers – Advertisements in magazines like Dolly, Girlfriend and television show like The Simpsons, Home and Away feature personalities popular with young people. This is to encourage sale of clothing, music and fast food bought by this age group. Target markets Target market definition – A specific demographic or social group to which an advertiser wishes to appeal. Target market examples – Middle aged men The affluent Professional women The aged Activity – Who is your target market for market day. How can you advertise to appeal to this market? Mass marketing Mass marketing definition – Promotional campaigns targeting a large proportion of the population. Product examples – food and household items. This kind of marketing is: Informative. Aimed at a wide variety of people in the community, not specific groups. Niche marketing Niche marketing definition – Promotional campaigns targeting quite small groups of potential customers. Product examples – luxury cars, ski equipment, adventure holidays. This kind of marketing is: To sell a particular product in a relatively small or exclusive market. The image promoted is more important than the price in advertisements. Processes used to identify target markets Market research definition – The gathering of information about the needs and desires of potential consumers. Often involves use of a survey in person or on the phone. Focus group definition – A group of potential consumers chosen at random who give their opinions about a campaign developed to promote a particular good or service. Used to ensure: Advertising campaigns appeal to the target market. Whether there is a demand for the actual good or service being sold. Activity Bring in two items from home that are the same product but a different brand. See if the brand for you product can be worked out. Legal and ethical issues associated with product promotion strategies Advertising can brainwash people to buy things they do not really need. Legal regulations include: Banning promotions for certain products. For example cigarettes. Self regulation definition – ethical standards and complaint resolution procedures put in place and maintained by an industry group. Industries involved in self regulation The Australian Association of National Advertisers The Advertising Standards Bureau (ASB) Considers complaints about any form or published or broadcast advertising. These include complaints about: Discrimination (race, nationality, sex, age, sexual preference, religion, disability or political belief) Violence Language Portrayal of sex, sexuality or nudity Health and safety Alarm or distress to children If advertisements are considered inappropriate the company generally agrees to withdraw or change the ad otherwise they can be reported to government or media bodies and given penalties. Individuals or groups can also directly force large companies to withdraw promotional material. Unethical promotional strategies Bait and switch advertising – Advertising a product for sale where there is little or no stock on hand so the customer is persuaded to buy a more expensive product. Sales price manipulation – When goods are marked with a sales price that is higher than the regular price so customers are tricked into thinking they are getting a bargain. Unethical promotional strategies continued Special prizes or offers – Receiving a phone call or letter notifying you that you have won a special prize but before you can collect the prize you must purchase another product. High pressure door-to-door selling – Products offered may be acceptable but consumers are pressured into signing an agreement to buy on the spot or to commit themselves to home trials. Students learn about: Applying selling techniques Processes associated with the development and implementation of selling techniques for a particular product or service. Monitoring and evaluating selling techniques. Students learn to: Applying selling techniques Analyse the selling techniques used to market a product or service to maximise profit. Investigate a number of these selling techniques for a product. Evaluate the effectiveness of the selling techniques of a particular product. Evaluate the effectiveness of selling techniques on consumers. Applying selling techniques Steps to selling a product: 1. Develop selling techniques for identified target market. 1. Implement selling techniques. 1. Monitor and evaluate selling techniques. Activity – television survey View an hour of television in the afternoon and another hour in a mid-evening time slot. Compare the types of products advertised in these time slots. Selling techniques Promotional strategies: Brand name, logo, packaging Advertising Special promotions Personal selling Publicity Selling techniques continued Other factors: Activity - Describe the layout of your market day stall. The Shop layout – if roomy, attractive and well lit sales are higher than if difficult to move around the shop and locate items. For example lighting for fruit and vegetables is often soft and warm to display the colour of the goods in the best possible way. Music – to create an atmosphere that encourages shoppers to buy. For example clothes shops for young people play music that appeals to this audience. Positioning of item in the store – if the item is put at the checkout, at the end of the aisle or at eye level people are more likely to buy it. Activity – sales strategy for a new product. You are part of a sales team for an Australian company that has just developed a new product. You wish to target the teenage market. Prepare and present a PowerPoint presentation describing the product (including its name, price and logo) and the strategies you plan to use in selling the product. Include a magazine-style advertisement that you have designed to promote the product. Design a survey form to enable other students to rate the product, its logo and price and the promotion strategies. The ratings could range from poor to excellent. Present your product and sales strategy to the class. Monitoring and evaluating selling techniques Companies keep detailed records to monitor the volume and value of sales on a weekly, monthly, quarterly, six monthly and an annual basis. Personal logins by staff on computerised cash registers track sales performance of individual staff. Underperforming staff are given extra training or dismissed if their performance does not improve. Sales of goods during special in-store promotions can be calculated to determine the effectiveness of the strategies adopted. Sales can be analysed before, during and after media based advertising campaigns to determine whether the promotion is making a difference to sales. Monitoring and evaluating selling techniques continued Product sales can be compared to previous years to see if a marketing campaign is successful. Sales can be compared on a store-by-store basis or on the basis of which groups of people are purchasing the product. Resources can be reallocated or increased to boost sales in specific stores or markets. Consumer surveys and focus groups can be used to gather information about how well people know a particular brand or about the effectiveness of different selling techniques. Activity – Mobile phone study In pairs make a detailed study of how a particular brand of mobile phone is sold and report your findings. You should: Analyse the appeal of the name, logo and packaging. Identify the target audience it is appealing to. Compile a summary of the kind of advertising used for this product; for example radio, television, magazines, newspapers, billboards, cinemas and the use of personalities. Comment on the nature of the advertising. For example: Is price used to promote the product? Who is it designed to appeal to? Comment on the amount of advertising and when it occurs. Describe the special offers associated with the sale of the product. Students learn about: Current issues Current issues involving promoting and selling goods and services. Students learn to: Current issues Identify and investigate current issues relating to the promotion and selling of goods and services and the impact on consumers. Current issues in promoting and selling products Right to privacy Spam Telemarketing A new style of direct marketing Hidden advertising Tobacco and alcohol advertising Right to privacy People expect to be protected from interference or intrusion from others in their day-to-day activities. New technologies especially the internet and mobile phones mean people receive messages containing advertisements whether they want to or not and they have little protection against this. Spam Spam definition – messages including advertising received via the internet and which the user has not requested. Mostly commercial advertising for poor quality products or get rich quick schemes. Costs the sender little to send, costs paid for by the receiver or the internet service provider. An example of invasion of privacy due to new technology because most do not want to receive. Telemarketing Telemarketing has become increasingly unpopular in recent years. Computers can place phone calls increasing calls received by many people. It is seen as an invasion of privacy, an unwanted interference and an annoyance. Some Australian states have placed limits or specific requirements on calls: Prohibiting the use of automatic calling devices. Requiring clear disclosures at the beginning of the call. A new style of direct marketing Advertising was previously one way communication through a mass medium like television or newspapers but today enables two way communication between buyer and seller. This presents the risk the seller will take advantage of the potential buyer. For example – a child may become involved in a financial transaction via the internet without the knowledge of a parent or responsible adult. Hidden advertising Hidden advertising definition – a form of advertising that we may not be conscious or aware of. Hiding images and messages within advertisements which have the potential to be absorbed subconsciously and affect our behaviour even though we are not aware we have seen them. Activity Define the terms: Right to privacy, Spam, Hidden advertising Tobacco and alcohol advertising This advertising is highly regulated as it can cause death or injury. All forms of tobacco advertising are banned in Australia with the exception of the Australian Formula 1 Grand Prix. Medical experts argue the promotion of tobacco and alcohol cause consumption to increase and that the harmful impacts of these goods can be reduced by banning or severely restricting their promotion. Others argue there is no evidence product promotions influence consumption. Activity – Current issue role play A person appears at your door offering to demonstrate a vacuum cleaner. You go to an electrical appliances shop to look at a well priced CD player that was advertised in a junk mail flyer but there are none in stock. You receive a phone call from a marketing firm informing you that you have won a free prize of a weekend at a Gold Coast resort. You want to return the ‘sale’ item to the shop you bought it from as you saw it was cheaper at another shop. Activity – Current issue research Use website http://puzzlemaker.discoveryeducation.com Select a current issue on promoting and selling. Identify and describe the main concerns relating to this issue. How are these concerns being addressed? Prepare a comic life presentation to outline your findings.