IntroductionToBusiness-OP_8D04gAa-99

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Advertising Costs and Market Penetration
Cost per contact is the cost of reaching one member of the target market. Naturally, as the size of the
audience increases, so does the total cost. Cost per contact enables an advertiser to compare media vehicles,
such as television versus radio or magazine versus newspaper, or, more specifically, Forbes versus The Wall
Street Journal. An advertiser debating whether to spend local advertising dollars for TV spots or radio spots
could consider the cost per contact of each. The advertiser might then pick the vehicle with the lowest cost per
contact to maximize advertising punch for the money spent. Often costs are expressed on a cost per
thousand (CPM) contacts basis.
Reach is the number of different target consumers who are exposed to a commercial at least once during a
specific period, usually four weeks. Media plans for product introductions and attempts at increasing brand
awareness usually emphasize reach. For example, an advertiser might try to reach 70 percent of the target
audience during the first three months of the campaign. Because the typical ad is short-lived and often only a
small portion of an ad may be perceived at one time, advertisers repeat their ads so consumers will remember
the message. Frequency is the number of times an individual is exposed to a message. Average frequency is
used by advertisers to measure the intensity of a specific medium’s coverage.
Exhibit 12.8 In addition to listing hundreds of scrumptious menu choices and cheesecakes, the Cheesecake Factory’s magazine-sized menus
feature a number of full-page glossy ads for Bebe, Macy’s, Mercedes-Benz, and more. An increasingly popular media option, menu advertising
offers many promotional benefits: huge readership by a captive audience, outstanding demographic selectivity, and great value—less than a
penny per exposure. How do advertisers decide whether or not menu advertising is right for their promotional mixes? (Credit: Mighell xp/ Flickr/
Attribution 2.0 Generic (CC BY 2.0)
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Media selection is also a matter of matching the advertising medium with the product’s target market. If
marketers are trying to reach teenage females, they might select Seventeen magazine. If they are trying to
reach consumers over 50 years old, they may choose AARP: The Magazine. A medium’s ability to reach a
precisely defined market is its audience selectivity. Some media vehicles, such as general newspapers and
network television, appeal to a wide cross section of the population. Others—such as Brides, Popular
Mechanics, Architectural Digest, MTV, ESPN, and Christian radio stations—appeal to very specific groups.
Marketers must also consider utilizing various social media platforms and which platforms are most likely to
reach the targeted market.
12.7 The Importance of Personal Selling
7. What is personal selling?
Advertising acquaints potential customers with a product and thereby makes personal selling easier. Personal
selling is a face-to-face sales presentation to a prospective customer. Sales jobs range from salesclerks at
clothing stores to engineers with MBAs who design large, complex systems for manufacturers. About 6.5
million people are engaged in personal selling in the United States. Slightly over 45 percent of them are
women. The number of people who earn a living from sales is huge compared, for instance, with the nearly
300,000 workers employed in the traditional advertising sector. Personal selling offers several advantages over
other forms of promotion:
• Personal selling provides a detailed explanation or demonstration of the product. This capability is
especially desirable for complex or new goods and services.
• The sales message can be varied according to the motivations and interests of each prospective
customer. Moreover, when the prospect has questions or raises objections, the salesperson is there to
provide explanations. In contrast, advertising and sales promotion can respond only to the objections the
copywriter thinks are important to customers.
• Personal selling can be directed only to qualified prospects. Other forms of promotion include some
unavoidable waste because many people in the audience are not prospective customers.
• Personal selling costs can be controlled by adjusting the size of the sales force (and resulting expenses) in
one-person increments. In contrast, advertising and sales promotion must often be purchased in fairly
large amounts.
• Perhaps the most important advantage is that personal selling is considerably more effective than other
forms of promotion in obtaining a sale and gaining a satisfied customer.
The Selling Process
Selling is a process that can be learned. Experts have spelled out the steps of the selling process, shown in
C O N C E P T C H E C K
1. How is technology impacting the way advertisers reach their markets?
2. What are the two main factors that should be considered when selecting advertising media?
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Exhibit 12.9, and professional salespeople use them all the time. These steps are as follows:
1. Prospecting and qualifying: To start the process, the salesperson looks for sales prospects, those
companies and people who are most likely to buy the seller’s offerings. This activity is called prospecting.
Because there are no surefire ways to find prospects, most salespeople try many methods.
For many companies, the inquiries generated by advertising and promotion are the most likely source of
prospects. Inquiries are also known as sales leads. Leads usually come in the form of letters, cards, e-mail
addresses, telephone calls, or through social media sites. Some companies supply salespeople with
prospect lists compiled from external sources, such as Chamber of Commerce directories, newspapers,
public records, club membership lists, internet inquiries, and professional or trade publication
subscription lists. Meetings, such as professional conventions and trade shows, are another good source
of leads. Sales representatives attend such meetings to display and demonstrate their company’s
products and to answer the questions of those attending. The firm’s files and records can be another
source of prospects. Correspondence with buyers can be helpful. Records in the service department can
identify people who already own equipment and might be prospects for new models. Finally, friends and
acquaintances of salespeople can often supply leads.
One guideline is that not all prospects are “true” opportunities for a sale. Just because someone has been
referred or has made an inquiry does not mean that the person is a genuine prospect. Salespeople can
avoid wasting time and increase their productivity by qualifying all prospects. Qualifying questions are
used to separate prospects from those who do not have the potential to buy. The following three
questions help determine who is a real prospect and who is not:
◦ Does the prospect have a need for our product?
◦ Can the prospect make the buying decision?
◦ Can the prospect afford our product?
Exhibit 12.9 Steps in Making a Successful Sale (Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.)
2. Approaching customers: After identifying a prospect, the salesperson explains the reason for wanting an
Chapter 12 Distributing and Promoting Products and Services 481
appointment and sets a specific date and time. At the same time, the salesperson tries to build interest in
the coming meeting. One good way to do this is to impart an interesting or important piece of
information—for instance, “I think my product can cut your shipping and delivery time by two days.”
3. Presenting and demonstrating the product: The presentation and demonstration can be fully automated,
completely unstructured, or somewhere in between. In a fully automated presentation,the salesperson
shows a movie or slides or makes a PowerPoint presentation and then answers questions and takes any
orders. In today’s business world, in which relationships are most important for long-term sales, canned
or structured presentations are not well received, nor do they support the idea of building a great bond
with the customer. A completely unstructured presentation that has no set format is a much more
successful approach. It may be a casual conversation, with the salesperson presenting product benefits
and assisting the customer in solving his or her problems (like a partner on the client company’s team) in
a way that might interest the potential buyer.
4. Handling objections: Almost every sales presentation, structured or unstructured, meets with some
objection. Rarely does a customer say, “I’ll buy it,” without asking questions or voicing concerns. The
professional salesperson tries to anticipate objections so they can be countered quickly and with
assurance. The best way to counter objections is to have a thorough knowledge of the product offering so
that a solution can be found that overcomes the objection.
Often employed in business, the “higher authority” objection is frequently used when one of the parties
says, “This agreement looks good, but I’ll have to run it by my committee” (or wife or any other “higher
authority”). The result is that that sales presentation turns out to be just a preliminary, nonbinding round.
After the higher authority responds, often disapproving the agreement, the sale goes into round two or
starts all over again.
For example, when a customer wants to buy a house, car, or anything expensive, the salesperson will say,
“If we find the house (or car) that you really like, is there any reason you could not make the purchase
today?” Once they get the green light, the salesperson will spend whatever time it takes to find the right
product for the customer. However, if the client says his uncle has to give the final approval because he
will be loaning the money, the salesperson will try and set up an appointment when the uncle can be
present.
5. Closing the sale: After all the objections have been dealt with, it’s time to close the sale. Even experienced
salespeople sometimes find this part of the sales process awkward. Perhaps the easiest way to close a
sale is to ask for it: “Ms. Jones, may I write up your order?” One of the best techniques is to act as though
the deal has been concluded: “Mr. Bateson, we’ll have this equipment in and working for you in two
weeks.” If Mr. Bateson doesn’t object, the salesperson can assume that the sale has been made.
6. Following up on the sale: The salesperson’s job isn’t over when the sale is made. In fact, the sale is just the
start. The salesperson must write up the order properly and turn it in promptly. This part of the job may
be easy for many consumer products, but for B2B products or services, it may be more complex. An order
for a complex piece of industrial equipment may include a hundred pages of detail. Each detail must be
carefully checked to ensure that the equipment is exactly what was ordered.
After the product is delivered to the customer, the salesperson must make a routine visit to see that the
customer is satisfied. This follow-up call may also be a chance to make another sale. But even if it isn’t, it
will build goodwill for the salesperson’s company and may bring future business. Repeat sales over many
years are the goal of professional salespeople.
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12.8 Sales Promotion
8. What are the goals of sales promotion, and what are several types of sales promotion?
Sales promotion helps make personal selling and advertising more effective. Sales promotions are marketing
events or sales efforts—not including traditional advertising, personal selling, and public relations—that
stimulate buying. Sales promotion can be developed as part of the social media or e-commerce effort just as
advertising can, but the methods and tactics are much different. Sales promotion is a $300 billion—and
growing— industry. Sales promotion is usually targeted toward either of two distinctly different markets.
Consumer sales promotion is targeted to the ultimate consumer market. Trade sales promotion is directed to
members of the marketing channel, such as wholesalers and retailers.
The goal of many promotion tactics is immediate purchase. Therefore, it makes sense when planning a sales-
promotion campaign to target customers according to their general behavior. For instance, is the consumer
loyal to the marketer’s product or to the competitor’s? Does the consumer switch brands readily in favor of
the best deal? Does the consumer buy only the least expensive product, no matter what? Does the consumer
buy any products in your category at all?
Procter & Gamble believes shoppers make up their mind about a product in about the time it takes to read this
paragraph.
This “first moment of truth,” as P&G calls it, is the three to seven seconds when someone notices an item on a
store shelf. Despite spending billions on traditional advertising, the consumer-products giant thinks this
instant is one of its most important marketing opportunities. It recently created a position entitled Director of
First Moment of Truth, or Director of FMOT (pronounced “EFF-mott”), to produce sharper, flashier in-store
displays. There is a 15-person FMOT department at P&G headquarters in Cincinnati as well as 50 FMOT leaders
stationed around the world.11
C O N C E P T C H E C K
1. What are the advantages of personal selling?
2. Explain the selling process.
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	Chapter 12. Distributing and Promoting Products and Services
	12.7. The Importance of Personal Selling*
	12.8. Sales Promotion*