Communication and Distribution Policy

Communication Policy

Basics

  • Definition: Planned design and transmission of information to influence the audience's knowledge, attitudes, expectations, and behavior.
  • Market communication: Management to customer.
  • Customer communication: Employee to customer.
  • Employee communication: Management to employees.
  • Impersonal vs. personal communication
  • Communication message: Statement to be suggested. Example: "Our products are of high quality."
  • Means of communication: Presenting a message. Example: commercial, advertisement, poster.
  • Communication carrier/medium: Medium to convey a message. Example: TV, magazine, newspaper.

Communication Process

  • Basic model: Transmitter codes a message, sends it through a medium, receiver decodes, feedback, and interference can occur.
  • Problems: Selective perception, bias, and memory.
  • LASSWELL's Components: WHO (sender) SAYS WHAT (message) THROUGH WHICH CHANNEL (media) TO WHOM (recipient) WITH WHAT EFFECT (reaction).
  • Loss Effects: Told/shown ≠ Heard/seen ≠ Understood/recognized ≠ Understood ≠ Applied ≠ Retained.

Objectives

  • Economic: Profit, sales, market share, test buying, repetitive buying.
  • Ex-economic (Communication): Attention, perception, awareness, knowledge, interest, attitude, image, positioning, emotional experience.
  • AIDA Model: Attention, Interest, Desire, Action.
  • Multistep Flow of Communication: Mass medium influences opinion leaders who then influence others.

Media

  • Customer Journey Example: TV spot, poster, price comparison, POS, hotline, website, mailing, display, Facebook, YouTube, brochure, PR, service hotline, email, newsletter, recommendation, app use, packaging, vendor, presentation, price list, dialog program, blogs, online community, offer, invoice, instructions, support.
  • Media Categories: Owned, Paid, Earned.

Budgeting and Budget Allocation

  • Budgeting: Determining total communication expenditure.
    • Heuristic vs. Analytical Approaches.
    • Orientation: Previous budget, sales/profit, available resources, competitor activities, objectives.
  • Budget Allocation: Distributing the budget across media.
    • Inter-media, intra-media, time, and geographical distribution.
  • Media Assessment Criteria: Distribution, reach, costs (CPM).
  • CPM (Cost Per Mille) Formula:TKP<em>j=(c</em>j/Kj)∗1000TKP<em>j = (c</em>j / K_j) * 1000 Where:
    • TKPjTKP_j = CPM of the j-th medium
    • cjc_j = Costs per occupancy of the j-th medium
    • KjK_j = Users per issue of the j-th medium

Communication Mix

  • Classic Media Advertising.
  • Sales Promotion.
  • Public Relations.
  • Sponsoring.
  • Event Marketing.
  • Direct Marketing.
  • Online Marketing.
  • Product Placement.
  • Personal Sale.
  • Internal Communication.

Classic Media Advertising

  • Basics: Traditional forms before digitalization.
  • Goals: Broad audience and convey messages.
  • Subareas: Television, cinema, radio, print, outdoor.
  • Critical Appraisal: Pros and cons for each subarea.
    • Television:
      • Pros: Good demonstration, perception at home, low pricing per view, local targeting, high awareness, emotional approach.
      • Cons: No accurate target group, divergence losses, attention loss during breaks, zapping, reactance.
    • Cinema:
      • Pros: Concentrated presentation, precise targeting, availability over time, good planning, low implementation cost, high attention.
      • Cons: Low range, high production cost relative to dissemination, viewer reluctance.
    • Radio:
      • Pros: Frequent use, different target groups, low cost, local/regional use, extra medium, quick awareness and activation.
      • Cons: Transient information, limited language and musical placement, low range, inaccurate targeting, reactance, low image campaign feasibility.
    • Consumer Magazines:
      • Pros: Positive attitude, high print quality, high variety, national targets, low pricing, various target groups.
      • Cons: Many ads, short attention span, high cost for special targets
    • Daily Newspapers:
      • Pros: Current, high information, local/regional targeting, fast distribution, low pricing, suitable as base, accurate target groups, suitable for special offers.
      • Cons: Print quality, limited color, short attention, neighboring ads impact, low range.
    • Outdoor Advertising:
      • Pros: Wide range, over-dimensional image, individual locations, high attention with provocative ads, damage reimbursement.
      • Cons: Recipients can't escape, short perception span, risk of public outrage, long term planning, ad frames distributed among big brands, difficult to control success.

Sales Promotion

  • Basics: Temporary measures to achieve communication and sales targets.
  • Goal: Short-term sales stimulation.
  • Types:
    • Sales staff-oriented (push effect).
    • Trade-oriented (push effect).
    • Consumer-oriented (pull effect).
  • Forms of Appearance: Direct (vouchers, coupons, sampling) and indirect (POS games, display ads).
  • Critical Appraisal:
    • Pros: Target-specific, entry medium, push motivation, product sampling, short-term sales increase.
    • Cons: Short-term focus, negligence of integration, frequent change, low brand image suitability.

Public Relations (PR)

  • Basics: Activities to promote understanding and trust.
  • Goals: Building understanding, trust, and acceptance.
  • Tasks: Information, maintaining contacts, documenting social responsibility.
  • Types:
    • By beneficiaries (product, corporate, industry, government, personal).
    • By content (crisis, location, non-profit, human relations).
    • By target groups (media relations, employee PR, lobbying, investor relations).
  • Forms of Publication: Press conferences, brochures, personal relations, knowledge material, advertisements, corporate magazines.
  • Critical Appraisal:
    • Pros: Strategic communication, psychological objectives, corporate communication, pre-emptive narrative design.
    • Cons: Not for short-term objectives, image awareness, product communication, risk of misuse.

Direct Marketing

  • Basics: Establishing direct contact with a targeted approach.
  • Tasks/Goals: Individual dialog, selected target groups, specific information, attracting attention, new customer acquisition, loyalty.
  • Technical Support: Database management, call centers.
  • Critical Appraisal:
    • Pros: Target-specific, dissemination loss avoidance, dialogue, follow-up, customer loyalty, integration ability.
    • Cons: Intrusiveness, unsystematic, redundancy, unprofessional application, low emotional approach, low range.

Sponsoring

  • Basics: Providing resources to promote individuals/organizations.
  • Goals: Brand awareness, image improvement, contact with stakeholders, goodwill, social responsibility, employee motivation.
  • Types: Sport, culture, social, ecological, program.
  • Critical Appraisal:
    • Pros: Low cost, creative application, circumventing reactance, corporate responsibility.
    • Cons: Risk of trust loss, barriers of sponsored persons, public critique.

Event Marketing

  • Basics: Self-staged events for experience-oriented presentation.
  • Goals: Increasing awareness, improving image, creating sympathy.
  • Tasks: Experience-oriented presentation, dialog, information, emotion, action, motivation.
  • Critical Appraisal:
    • Pros: Strong attention, special target groups, special images, employee engagement, independent profile, positive environment.
    • Cons: No long-term effect if sporadic, occupied by others, negative transfer effects, attention not primarily on the company.

Product Placement

  • Basics: Planned placement of marketing objects in appropriate media.
  • Options: Information transmission, intensity of placement, remuneration, replacement.
  • Critical Appraisal:
    • Pros: Less recognizable ad influence, high activation, trustworthiness, brand image combination.
    • Cons: Not suitable for many products, not for short-term, control and success difficult.

Online Marketing

  • Tools: Affiliate, email, couponing, banner, video, social media, SEM, viral, guerrilla, SEO, SEA, display marketing, direct marketing, community, homepage/webshop.

Social Media Marketing

  • Basics: Using social networks to achieve goals through communication and exchange.
  • Perspective: Many-to-many, indirect addressing, interactive customer role.
  • Instruments: Weblogs, microblogs, social networks, web forums, bookmarks, wikis, podcasts, video sharing, evaluation sites.

Influencer Marketing

  • Cross-Platform Social Media Marketing: Strategies using professional opinion leaders.
  • Success Factors: Suitable target group, "fit" between product and influencer.

Mobile Marketing

  • Definition: Implementing marketing via mobile devices.
  • Techniques: Text messaging, mobile apps, mobile advertising, QR codes, NFC, location-based marketing.

Integrated Communication

  • Definition: Strategic/operational process aimed at creating unity from differentiated sources to convey a consistent image.
  • Content/Objectives: Uniform appearance, strengthening effect, differentiation, learning, trust.
  • Psychological Effects: Increased employee motivation/identification.
  • Economic Effects: Reduced costs, increased efficiency, sales, profits, market share.
  • Planning Levels: Overall communication strategy, communications department, tactical/strategic planning.

Distribution

Basics

  • Definition: Decisions and actions affecting the transmission of material and immaterial goods from manufacturer to end buyer.
  • Subareas: Acquisition-based distribution, physical distribution (marketing logistics).
  • Goals: Profit/sales/market share increase, cost reduction, desired distribution level, readiness to deliver, right quantity/condition/place/time.

Sales Organs

  • Definition: Internal or external persons/departments that carry out/support sales activities.
  • Components: Internal (dependent/independent), external (sales agents, aids, wholesale, retail, brokers).
  • Internal sales components
    • CEO
    • Key Account Manager
    • Sales Director
    • Sales staff
    • Sales team
    • Client service
    • Sales service team
    • Administration team
    • Acquisition service
    • Call Center
    • E-commerce
  • Sales assistants
    • Individuals
    • Sales support
    • Contract partner
    • Franchise partner

Distribution System Design

  • Vertical Structure: Direct vs. Indirect sales channels (single-level, two-level, multi-level).
  • Horizontal Structure: Width (number of intermediaries per level).
  • Operational and Strategic Design.

Vertical Structure

  • Level scope of sales channels
  • Direct sales with own organs
    • Zero-level channel
  • Direct sales with sales assistants
    • 1-stage channel
  • Indirect sales with sales intermediaries
    • 1-stage channel
    • 2-stage channel
    • 3-stage channel

Horizontal Structure

  • Area coverage strategies
    • Universal distribution
    • Intensive distribution
    • Selective distribution
    • Exclusive distribution
  • Decreasing width of the distribution channel
  • Declining number of sales outlets = declining market coverage
  • Increasing flexibility and quality of sales outlets
  • Increasing control options for the manufacturer

Distribution Ratio

Distribution Quota=Number of sales outlets supplied with a specific brand or productNumber of all eligible sales outlets that stock this product group∗100Distribution \ Quota = \frac{Number \ of \ sales \ outlets \ supplied \ with \ a \ specific \ brand \ or \ product}{Number \ of \ all \ eligible \ sales \ outlets \ that \ stock \ this \ product \ group} * 100

  • Weighted Distribution:
    =Turnover of the product−and brand−leading sales outletsTotal sales of all outlets selling this product group∗100= \frac{Turnover \ of \ the \ product-and \ brand-leading \ sales \ outlets}{Total \ sales \ of \ all \ outlets \ selling \ this \ product \ group} * 100

Sales Channel Depth

  • Diversity of specialized Dealer, One-Line shop, Department store, warehouse, mail order company, supermarket.

Direct vs. Indirect Sales

  • Decision Criteria: Company competence, cost-effectiveness, demand for product range diversity.
  • Direct Sales options: Factory outlet, traveling salesmen, sales assistants, own stores, management, market events, media.

Sales Assistants

  • Types: Acquisition sales assistants, logistical sales assistants, supplementary services.
  • Commercial Agent is a self-employed trader who is entrusted with brokering transactions
  • Commission Agents act in their own name but for the account of others by buying or selling goods or rights.
  • Commercial Brokers are only involved in brokering on a case-by-case basis in the name.

Numerical Optimization

  • Example:
    • Traveling Salesman (TS)
      Fixed Salary: € 48,000
      Sales Commission: 1 % with a minimum Sales Volume of 12 units
    • Sales Representative (SR)
      Home Office Cost Contribution: € 6,000
      Sales Commission: 4 %
    • Break-even point is 10 units of sales in value (€ 100,000 each)

Authorized Dealer

  • Independent trading company bound to manufacturer by contract with high economic dependence.
  • Features: Exclusive arrangement, binding to manufacturer's marketing.

Franchising

  • Definition: Sales system based on partnership to promote sales.
  • Features: Vertically cooperative, legally independent, franchise agreement, uniform appearance, instruction and control system, service package.

Franchise System

  • Advantages and disadvantages from franchisor and franchisee perspective.

Sales Intermediaries

  • Types of Retailers
    • Specialized Dealer, One-Line Shop, Department Store, Warehouse, Mail order company
  • Types of Wholesalers
    • Merchant Wholesalers, Cash-and-Carry Wholesalers, Drop Shippers, Mail-Order Wholesalers

Indirect Sales

  • Manufacturer --> Retailer --> Customers. Reduced communication Effort: contact channels with or without trade activation
  • Functions assumed by sales intermediaries
    • Material goods re-grouping function
    • Demand adjustment function
    • Market balancing function
    • Material goods processing function
  • Advantages and disadvantages from the manufacturer's perspective.
  • Areas of cooperation between manufacturers and sales partners.

Direct vs Indirect sales

  • Trends for the realization of direct / indirect Sales

Multi-Channel Sales System

  • Has several indepentent sales channels: increase market coverage, synergy effects, customer customization. Disadavantages: conflicts between sales partners and difficult control.