INTRODUCTION TO MERCHANDISING AND ADVERTISING
What is Merchandising? References define or describe merchandising in a variety of ways including: . . .the marketing methods and techniques of presenting products for sale (Branson) . . .The planning involved in marketing the right merchandise or service at the right place, at the right time, in the right quantities, and at the right price (American Marketing Assoc.) . . .any activity to stimulate trade interest in moving the product or service to the prospect (Wright) What is Advertising? Likewise, references define or describe advertising in a variety of ways including: . . .paid commercial messages usually delivered through some form of mass media (Branson) . . .a method of delivering a message impersonally to many people over over the sponsor's name (Kleppner) There are combinations or activities in addition to other techniques businesses might use to promote sales, but do not fit neatly within definitions for merchandising or advertising. These activities can be classified as sales promotions and are described in references by passages such as: . . .those marketing activities, other than personal selling, advertising, and that stimulate consumer purchasing and dealer effectiveness (Branson) publicity
Why is it that all businesses, no matter whether they produce, manufacture, or market products and services should be involved in sales promotion activities? There are many reasons and the ones that apply to you will do so because of your specific product or service, location, business arrangement, amount of marketing activity you perform, etc. Some examples why promotion activities would benefit your business include: - commodity merchants, processors, retailers, and consumers must be reminded about your new and existing products; - you sell seasonal crops and products which require some degree of reintroduction and promotion from year to year; - you sell products year-round and face the risk of slow-down in demand; - you attract new consumers that must learn to make buying decisions about your products; - you want to develop sales volume required to maintain low-cost mass production operation dealing in consumer goods; - you are trying to increase sales of your product by some means other than pricing strategies.
PROMOTION ALTERNATIVES Managers oftentimes spend too little time evaluating the effectiveness and economic efficiency of promotion efforts in the confusion of starting-up or operating small businesses. You do not want to get caught in the trap of starting a business and taking care of operations exclusively, and then realizing that sales volume is not sufficient to meet all expenses. Promotional strategies will vary with the amount of money available, the amount of time you have available, the type of product or service you are selling, the time of the year in some cases, etc. Efforts do not have to focus exclusively around one technique at a time. Combinations of various methods usually are more effective, especially when they all focus on a central theme and complement each other. The following are some suggested ways you might consider using to promote yourself, your business, and your products/services:
Personal selling is really just communication between individuals. There is no more intimate way to promote than face-to-face. You can tell immediately whether your customers are getting your message, how your message is being received, whether customers have objections, and the chances for sales. It also provides opportunities to pass along technical information relating to your product or service. All salespeople may not be effective promotors. Some are more suited to taking orders for routine purchases and operate better in businesses such as wholesale services. Others may be very effective order getters. These employees can be depended upon to obtain new business for the firms. They are effective promotors and also salespersons in that they know how to bring sales efforts to ultimate closing. Another kind of personal selling type is the "missionary." People of this type are not necessarily effective sales closers, however, they are very proficient at creating goodwill among present and potential customers. Home economists promoting food processing firms through demonstrations and publicity might be an example of this selling type. .Mass selling techniques such as advertising and publicity are less flexible than personal selling. You as the message sender do not have the opportunity to respond immediately to feedback from the message receivers. In addition, the message you send cannot be individually tailored for each individual. However, mass selling methods offer lower costs of reaching people. Messages sent out as a part of ads and publicity are much more easily controlled than a personal selling staff with each individual on his/her own. Advertising can focus on products, organizations, or institutions. Product ads generally are designed to stimulate demand for particular product brands or product lines. Organizational ads attempt to strengthen the image of companies. Institutional ads promote industries and are much broader in their geographic coverage. Publicity, for the most part, comes free. It usually results from activities such as benefits, charities, grand opennings, etc that are only related to products or organizations. However, your appearance in the public eye could certainly bene fit your business and increase sales. Sales incentives or sales enhancement programs marketing activities, other than personal selling, advertising, and publicity. These activities include displays, trade shows and expositions, demonstrations, and various other selling methods not in the used on an ordinary or routine basis. Here again, the idea is to stimulate consumer purchasing, whether that consumer represents the final user or another dealer.
CRITERIA FOR SELECTING AMONG PROMOTION ALTERNATIVES Which of the many promotion alternatives, or combinations of alternatives, are right for your business at any point in time depends on several factors. The following illustrate a few of these factors and point out information necessary to making decisions regarding your mix of activities in your promotion strategy: * What are the objectives of the promotion? Objectives for your promotion program depend on the position of your products in their "product life cycle." Marketing experts divide the life cycle of a product into distinct segments, each requiring different promotion techniques and a different focus or theme. During the introduction of products into markets, the main objective would be to inform prospective consumers. This might be accomplished with in-store demonstrations while also running a mass media campaign. During the growth phase the objective is to realize rapid expansion in sales. This might be accomplished with a couponing campaign. As the market for products matures the objective of promotion is to persuade consumers to continue using products they already know about. This might be accomplished through couponing along with a moderate schedule of mass media ads. The main objective during the final phase, or declining market period, is to maintain minimal brand support among customers. Efforts are usually quite varied and change often as businesses search for ways to keep loyal customers. How much do the alternatives cost? The absolute total cost of using a specific alternative is not at issue. The appropriate cost category for comparison between alternatives is the cost per 1,000 exposures. An exposure is reaching one person one time with your message. What are the characteristics of the market? Critical information you should be aware of includes how concentrated your buyers are in a geographic area, how diverse or specific your buyers are in terms of demographic characteristics, and what are buyers' preferences regarding the form your product should take. What are the characteristics of your product? One of the main objectives of promotion is to provide information to consumers. If you produce relatively simple products which are used in well-known ways, not much technical information would be expected of your activities. On the other hand, if your products are highly technical or specialized,
promotions should include more detailed explanations of product features and instructions on use. Where are your consumers in their adoption process? People utilize and need different types of information depending on the stage of the product adoption process in which they happen to be. If you are trying to increase awareness of your new products, more impersonal sources such as mass media may suffice. If you have been promoting your products while they have been on the market for awhile, people likely are aware they are being offered and, therefore, are closer to actually making a purchase. More personal selling efforts would be more effective to insure sales are actually closed.
WHY ADVERTISING? The three main reasons for advertising to exist is that it offers a means: to inform present and prospective customers Advertising provides information. There are economic/benefits to consumers in the form of reduced search time for products they need. Advertising tells customers what products and services are available, informs them about product features, details product specifications and sometimes prices to them, and lets prospective customers know where and when products will be available. to persuade customers to purchase goods and services This can be accomplished with rational or emotional appeals. Ads with rational messages focus on notions that can be thought out logically by buyers. Examples of rational messages include saving time, saving money, and making jobs easier. Emotional appeals capitalize on peoples' feelings and are usually used in ads for products such as jewelry, cars, and perfumes to remind people about something related to goods and services being sold and/or the firms offering them. Many of the ads we see everyday have this purpose. Established products in categories such as soft drinks, automobiles and trucks, cigarettes, and HABA (health and beauty aids) have been on the market for several years. Product managers advertise to keep brand names in front of consumers as many of these products are purchased frequently. Once your products are well accepted and are generally recognized, your ads will focus on reminding consumers you and your products are still around! ECONOMIC BENEFITS OF ADVERTISING Every good manager should evaluate advertising alternatives in light of what the potential payback on dollars spent will be. Investments in advertising campaigns are treated no
differently than any other business investments. Expenditures should be expected to produce positive rates of return. Economic benefits are derived from advertising if increases in total revenue are greater than expenditures generated by the ad campaign. Advertisements can accomplish this in several ways. After the ad campaign, you may be able to charge a higher price for each unit of product you offer for sale and not see a decrease in the number of units sold. If this is the case, you have convinced consumers your product is worth more than prior to the campaign. Ads stressing new improved features or more consumer benefits would be expected to increase the perceived value of products. In many cases, your ad campaign should be expected to stimulate demand for your products. Demand usually can be judged by advertisers to have increased if consumption increases while prices are maintained at constant levels. Such an occurance may be the result of informing consumers of new uses for products. It also may indicate that new users have been drawn into your market. One of the less tangible benefits advertising provides your business is satisfied customers. Ads can reassure customers that they have made wise choices and are using the best products/services that their money can buy.
LIMITATIONS OF ADVERTISING Do not be ready to throw caution to the wind and invest too heavily in advertising without knowing some of its limitations. Advertising is just another management tool that, if used correctly, can be of benefit. Otherwise, you may be throwing your money away. Advertising cannot be expected to make up for poor manage ment and products/services. You can not expect promotional efforts to be a cure all that will pull your business out of a hole. Even the most effective ad campaign cannot sell goods or services that customers do not want, do not need, or cannot afford to buy. This point emphasizes the importance of integrating market research, promotion, and pricing management. Advertising cannot be expected to overcome poor business locations, unpleasant shopping atmospheres, or poor quality store personnel. You have to sympathize with the consumer who sees an ad for a big sale, but either can not find the store or has to put up with unfriendly sales clerks to buy what is needed. Such situations do not lend themselves to repeat business which should be one of your foremost sales objectives.
Advertising is generally not very productive unless it corresponds with peak timing for items that sell mainly on seasonal basis. You should not expect a great deal of success advertising barbeque equipment during the dead of winter. Those involved in agriculture should note that chemical dealers advertise their products just prior to application times. Advertising requires repeated impressions to be effective. People do not retain messages very long. As a result, periodic or occasional advertising usually accomplishes very little. This is why advertisers buy TV time so that you see their ads several times during the same program. It is also why you see ads published on a regular basis by major retailers even though there may be few major items on sale.
SELECTING ADVERTISING MEDIA Providing responses to the following will help you think about which media are most appropriate for you to use at this stage of your business: What is my trading area? Who are my potential customers and how can they be described? What are my budget limitations? What media do my competitors use? How important is continuity and repetition to effectively promoting my products? How much do the various media cost in terms of an effective total campaign and in terms of 1,000 exposures? How does distribution of media compare? What is their reach (total number of individuals, or households, exposed in a given period)? What is their frequency (number of times individuals, or households, are exposed to a specific ad, or the number of times an ad is delivered during a given period)? How does audience selectivity of media compare? What is their ability to reach an audience on the basis of demographic, geographic, and psychographic factors? How does the penetration (size of audience claimed) and coverage (ability of medium to reach a certain percentage of homes in a given area) compare? How much flexibility in terms of placing and withdrawing ads do I need?
Does the editorial environment, other information, and entertainment material which will surround the ad meet with my image? How does the production quality of various media compare? What type of quality best sell my products? How long will customers have access to the ad? How much assistance in planning and producing the ad will I get?
MERCHANDISE DISPLAYS Merchandise displays offer retailers nonpersonal ways of presenting products or information to consumers inside stores. Retailers use displays to stimulate sales of products at points of purchase (POP). POP displays capitalize on existing traffic that has already come into the store with or without the intent to buy products on display. Innovative, colorful, helpful displays often heighten the interest of shoppers in specific merchandise and in shopping in general. Most retailers can expect to incur little or no risks or work with many displays. It is common practice for wholesalers and sales representatives to set up and maintain displays of their products. This is one way that these suppliers can insure shelf space for their products, thus, they claim, benefitting both themselves and retailers. Displays offer effective means of increasing exposure for specific products at little or no extra cost. They are especially effective ways of introducing new products or some at minimal discount. Many products sell better if they can be shown in operation. Displays can offer striking evidence about products such as dishwashers, vacuum cleaners, computers, toys etc. Consumers can get positive results immediately by trying products prior to actually buying them. The following are considered characteristics of good displays: * are simple; * have a central theme that ties in with other promotions; * are distinctive and dramatic; * are pleasing and appropriate for the product and store; * show merchandise in use, where possible; * are clean and neat; * provide information; * are consistent with image of store.