Archive for June, 2009

Four objectives of trade – promotion tools

  1. Trade Promotion can persuade the Retailer or wholesalers to carry the brand.

  2. Trade Promotion can persuade retailers/wholesalers to carry more goods than the normal amount.

  3. Trade Promotion can persuade the middlemen to promote the brand by featuring, display and price reductions.

  4. Trade Promotion can stimulate retailers and their sales clerks to push the product.

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Major Trade Promotion Tools

Price Off: A price off (also called off – invoice or off – list) is a straight discount off the list price on each carton/case purchased during a stated time period. The offer encourages dealers to buy a quantity or carry a new item that they might not ordinary buy. The dealers can use the buying allowances for immediate profit advertising or price reduction.

Allowance: An allowance is an amount offered in return for the retailer’s agreement to feature the manufacturer’s products in some way. Advertising allowances compensates retailers for advertising the manufacturer’s product. A display allowance compensates them for carrying a special product display.

Free Goods: Free Goods are offered for extra cartons/cases of merchandise to middlemen who buy a certain quantity. Manufacturers might offer push money, which is cash or gifts to dealers or their sales force to push the manufacturer’s goods.

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Global Marketing

A Global Form is one that, in operating in more than one country, captures R&D, production, logistical, marketing and financial advantages in its costs and reputation that are not available to purely domestic competitors. Global firms plan, operate and coordinate their activities on a world wide basis.

Each national market has unique features that must be grasped. A global firm has to take into account economic, political – legal and cultural factors of target country while planning its expansion programmes.

Economic Environment:

Three characteristics reflect a country’s attractiveness as an export market.

  1. The first is the size of country’s population. Other things being equal, large countries are more attractive to exporters than small markets.
  2. The second is the country’s industrial structures, four types of industrial structures can be distinguished: –
    • Subsistence Economics: – In Subsistence economics the vast majority of people engage in simple agriculture. They consume most of their output and barter the rest for simple goods and services. They offer few opportunities for exporters.
    • Raw Material Exporting Economics: – These economics are rich in one or more natural recourses but poor in other respects. Much of their revenue comes from exporting these resources Examples are Chile (tin and copper); Zaire (rubber). These countries are good markets for extracting equipment, tools and supplies, materials handling equipment and trucks. Depending on the number of foreign residents and wealthy native rulers and landlords, they are also a market for western – style commodities and luxury goods.
    • Industrializing Economies: – In an industrializing economy, manufacturing begins to account for between 10 and 20 percent of the country’s grogs national product. Examples include India, Egypt etc. As manufacturing increases, the country relies more on imports of textile raw materials, steel and heavy machinery and less on imports of finished textiles, papers products and automobiles. The industrialization creates a new rich class and small but growing middle class, both demanding new types of goods, some of which can be satisfied only by imports.
    • Industrial Economies: – Industrial economies are major exporters of manufactured goods and investment founds. They trade manufactured goods among themselves and also export them to other type of economies in exchange of raw materials and semi-finished goods. The large and varied manufacturing activities of these industrial nations and their sizable middle class make them rich markets for all sorts of goods.

    The third economic characteristics are the country’s income distribution. Income distribution is related to a country’s industrial structure but is also offered by the political system.

Political – Legal Environment

A company should consider four factors in deciding whether to do business in a particular country.

  1. Attitude towards International Buying: – Some nations are very receptive, indeed encouraging to foreign firms and others are very protectionist. For example, Mexico for a number of years has been attracting foreign investment by offering investment incentives, while India in the post required the exporter to cope with import quotes, blocked currencies and so on.
  2. Political Stability: – Government in some countries changes hands, sometimes quite violently. And with changes in government foreign trade policies also change. The foreign company’s property might be expropriated, or its currency holdings might be blocked. In such conditions international marketers might prefer export marketing to direct foreign investment. They will convert their currency rapidly. As a result, the people in the host country pay higher prices, have fewer jobs and get less satisfactory products.
  3. Monetary Regulation: – Sellers want to realize profits in a currency of value to them. Foreign firms want payments in hand currency with profit repatriation rights, but that may not be available in many markets.
  4. Government Bureaucracy: – A fourth factor is the extent to which the host government runs an efficient system for assisting foreign companies: quick licensing procedures, efficient custom handling adequate market information and other factors conductive to doing business.

Cultural Environment: – Each nation has its own values, customs and taboos. Foreign business people, if they are to be effective, must drop their ethnocentrism and try to understand the culture and business practices of their hosts, who often out on different concepts of time, space and etiquette. The way foreign consumers perceive and use certain products must be checked out by the seller before planning the marketing programme.

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Deciding which Market to Enter

Five steps are involved in estimating the probable rate of return on investment and thus determining which foreign market to enter: –

  • Estimate of current Market Potential: – The first step is to estimate total industry sales in each market. This task calls for using published data and primary data collated through company surveys.

  • Forecast of Future Market Potential and Risk: – Te firm also needs to forecast future industry sales. It requires Predicting economic and Political developments and their impact on industry sales.

  • Forecast of Sales Potential: – Estimating the company’s sales requires forecasting its probable market share based on its competitive advantages.

  • Forecast of cast of Costs and Profits: – Costs will depend n the company’s contemplated entry strategy. If it exports or licenses, its costs will be spelled out in the contracts. If it locates manufacturing facilities in the country, its cost estimation will require understanding local labor conditions, taxes trade practices and so on. The company subtracts estimated costs from estimated sales to derive company subtracts estimated cost from estimated sales to derive company profits each year of the planning horizon.

  • Estimate of Rate of Return in Investment: – The forecast income stream should be related to the investment stream to derive the implied at the rate of return. This should be high enough to cover the company’s normal target return on its investment and risk of marketing in that country.

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How to Enter Foreign Market

Once a Company decides to target a particular country it has determine the best mode of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint ventures and direct investment.

Indirect Export: Companies typically start with indirect exporting, that is, they work through independent middlemen. Four types of middlemen are available to the company.

  1. Domestic-based Export Merchant: – This middleman buys the manufacturer’s products and sells it abroad on its own account.
  2. Domestic-Based Export Agent: – This agent seeks and negotiates foreign purchases and is paid commission. Included in the group are trading companies.
  3. Cooperative Organization: – A Cooperative organization carries on exporting activities on behalf of several producers and is partly under their administrative control. This form is often used by producers of primary products fruits, nuts and so on.
  4. Export-management Company: – The middleman agrees to manage a company’s exports for a fee.

Direct Export: A Company can carry on direct exporting in several ways.

  1. Domestic-Based Export Department or Division: – An export sales manager carries on the actual selling and draws on the market assistant as needed. It might involve into a self-contained export department performing all activities involved in export and operating as a profit centre.
  2. Overseas Sales Branch or Subsidiary: – An overseas sales branch allows the manufacturer to achieve greater presence and programme control in the foreign market. The sales branch handles sales distribution and might handle warehousing and promotion as well. It often serves as a display centre and customer service centre.
  3. Traveling Export Sales Representatives: – The Company can send home-based sales representatives abroad to find business.
  4. Foreign-Based Distributors or Agent: – Foreign Based Distributors would buy and own the goods; Foreign based agents would sell the goods on the behalf of the company. They might be given exclusive rights to represent the manufacturer in that country or only general rights.

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Web Marketing

Web Marketing describes the use of electronic means and platform to conduct a company’s business . the advent of internet has greatly increased the ability of a company to conduct their business faster, more accurately, over a wider range of time and space at a reduced cost, countless companies have set up web sites to inform and promote their products and services.

E-commerce is more specific than e-business, it means that in addition to providing information to visitors about the company, its history, policies, products and services and job opportunities, the company or site offers to online. E-commerce has given rise to e-purchasing and e-marketing. E-purchasing means companies decide to purchase goods, services and information from various online suppliers. E-marketing company efforts to inform, communicate, promote and sell its products and services.

E-business and e-commerce take place over four major internet domains : B2c (Business to consumer) ; B2B (Business to business ) ; C2C (Consumer to consumer ) and C2B (Consumer to Business).

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Evaluating and controlling marketing performance

The marketing department’s job B to plan and control marketing activity four types of marketing control can be distinguished.

  1. Annual plan control

  2. Profitability control

  3. Efficiency control

  4. Strategic control

  1. Annual plan control

The purpose of annual plan control is to ensues that the company achieves the sales, profit and other goals established in its annual plan. The heart of annual plan control is management by objectives . four steps are involved. First, management sets monthly or quarterly goals. Second, management monitors its performance in the market place. Third, management determines the causes of serious performance deviations. Fourth , management takes corrective action to close the gaps between its goals and performance.

Managers use various tools to check on plan performance; sales analysis, market share analysis , marketing expense to share analysis and customer attitude tracking.

A) Sales Analysis: sales analysis consists of measuring and evaluating actual sales in relation to sales goals.

B) Market share Analysis: company sales do not reveal how well the company. If the company ‘s market share goes up. The company is gaining on competitors; if it goes down, the company is losing relative to competitors.

C) Marketing Expense to Sales Analysis: annual plan control requires making sure that the company is not overspending to achieve its sales goals. The key ratio is to watch is marketing expense to sales. The are five components in expense to sales ratio:-

1) sales force to sales

2) Advertising to sales

3) marketing research to sales and

4)sales administration to sales.

D) Customer Satisfaction: tracking alert concpanter set up systems to monitor the attitude and satisfaction of customers, dealers and other market system participants, by monitoring changing levels of customers preference and satisfaction before they affect sales, management can take earlier action. The main customer satisfaction tracking system are:-

1) complaint and suggestion system:- market oriented companies record, analyze and respond to written and oral complaints that come from the customer.

2) customer panel:- some companies run panels of customers who have agreed to communicate there attitude periodically through phone calls or mail questionnaires

3) customer surveys; – some companies periodically mail questionnaire to a random saeuple of customer to evaluate the friendliness of the staff, the quality of service etc

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Efficiency control

Suppose profitability qualysis reveals that the company is earning poor profits in connection with certain products, territories, customer groups etc. in such a ease company has to find more efficient ways to improve the performance of there marketing entities.

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Sales Force Efficiency

Sales manager should keep traek of the following key indicators of sales force efficiency in their territory.

    1. Average number of sales calls per salerperson per day.

    2. Average sales eall time per contact

    3. average revenue per sales call

    4. average cost per sales call

    5. percentage of orders per hundred sales call

    6. number of new customers per period

    7. number of lost customers per period

    8. sales force cost as a percentage of total sales.

When a company starts investigating sales force efficiency it can often find areas improvement.

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Profitability control

Besides annual-plan control companies need to measure the profitability of their various products, territories, customer groups, trade channels and orders sizes. This information will help management determine whether any products of marketing activites should be expanded, reduced or eliminated.

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