The world of business is very competitive; every year many companies go bankrupt; the reason is that, even if they have made very good products, their communication isn’t good. Business success depends on effective communication.
There are four main ways in which a company communicates with customers; these areas are called the communications mix or the promotion mix:
- SALES PROMOTION
- PUBLIC RELATIONS
- PERSONAL SELLING
There are nine elements in the company communication process:
SENDER – Who sends the communication
ENCODING – The message is expressed in some form
MESSAGE – The message that is sent
DECODING – The message is interpreted by the receiver
RECEIVER – Who receives the message
RESPONSE – The reactions of the receiver
FEEDBACK – The contact between the sender and the receiver
NOISE – Distortion in the communication process
Effective company communication:
1. Identification of the target audience (the target audience is the set of people that the company wishes to communicate with).
2. Determining the communication objective (every target audience’s advertisment has an own language and information).
3. Design of the message (message content, message format and message source).
There are two kinds of communication channel, the personal and the impersonal. Personal channels involve direct communication between people (letters or telephone calls); impersonal channels make use of media such as TV, radio, newspapers, Internet and advertising posters.
A company that decides to invest in advertising needs to have a very clear idea of what it wants to achieve. The main purpose of all advertising is to give customers a reason for purchasing the company’s product. Advertisements can be used to give information, especially for the launch of a new product (informative advertising), to persuade new customers to buy a product (persuasive advertising) or to remind existing customers about the product (reminder advertising). An important step is to select the advertising message. The company will already know what features of the product it wishes to emphasise. The execution style of an advertisement is very important. Some typical examples of execution style are:
1. the slice of life advertisement (it shows the product as it’s generally used; it emphasises both the ordinariness of the family and the ordinariness of the situation);
3. the fantasy advertisement (it shows the product in a fantastic setting; it frequently makes use of humor);
4. the mood or image advertisement (it suggests that someone who buys the product will have access to a particular mood or image);
5. the scientific advertisement (in this advertisement, the product has features that can be proved scientifically; it presents someone who seems a scientist or a doctor who uses some technical words during the presentation);
6. the testimonial advertisement (a celebrity presents the product).
The main purpose of sales promotion i sto give customers an incentive to buy the company’s product immediately. Sales promotion can be used to attract new customers.
The risk is that customers will stop buying products once the promotional incentives are removed. Sales promotion can increase long-term sales where there is a difference between competing companies’products.
If companies which sell similiar products all organise sales promotions at the same time, this can lead to a ‘price war’. It reduces company profits and it can also have a negative effect on company image.
Consumer promotion methods: samples, coupons, cash refunds, price packs, prizes, product warranties, point-of-sale displays and product demonstrations.
Trade promotion methods: price discounts or reductions, free goods, advertising allowances, display allowances.
Sales force promotion methods: bonuses , conventions, contests, incentives.
Planning a sales promotion is important; a company has to consider five important steps:
• The size of the incentive
• Conditions of participations
• Distribute the promotion campaign
• The duration of the campaign
Every business organisation has relationships with other publics that are interested in its activities; these groups are called the company’s ‘stakeholders’. The components of a typical stakeholders system are:
1. News media
2. Government and government departments
6. Local community
One of the duties of a public relations department is to manage company publicity. Publicity is a form of communication; publicity is free, while advertising costs money, and it can be influenced by the company but the latter cannot control the publicity process, while it can control the advertising one.
A publicity campaign has these elements:
1. Press releases
2. Press conferences
3. Press receptions
4. Company visits
Government legislation includes a huge range of topics that are of interest to companies. Sometimes conflicts between companies and the government arise because they have different opinions about an issue. A company has to maintain contacts with governement ministers and officials in order to make sure that its views are communicated.
The main aim of customer communications is to establish consumer loyalty, that takes different forms. The price of the product, its performance and quality and the product guarantees are the major influences on consumer loyalty.
Consumer loyalty bases itself on five steps:
1. The suspect stage (the consumer doesn’t know anything about the company or its product)
3. The customer stage (the consumer has purchased the company’s product)
4. The client stage (if the consumer is satisfied, he can buy other times. He’s a client of the company)
5. The advocate stage (the consumer is loyal to the brand and he recommends the product to other people).
Company’s public relations department tries to turn a consumer into an advocate.
Company directors communicate with shareholders and financial Institutions through formal communications; the pubblic relations department communicates to private investors about the financial state of the company. Communication between the company and the shareholders becomes important if the company faces a merger or joins on the Stock Exchange.
Communication with employees is important because it helps to establish a positive organisational culture (the organisation views from employees).
Many companies helps local community offering employment; a positive local image includes the sponsorship of sport and artistical events and the support of local charities.
The most important form of communication between the company and its customers is personal selling; it’s very flexible and it can take place in a number of different enviroments.
There are three roles in personal selling:
1. Prospetting or ‘cold calling’
The salesperson identifies potential new customers. There are many methods for finding new customers: asking to existing customers for the names of people who may be interested in buying from the company; dealers, suppliers and trade association can provide names of new prospects.
After having made a list of new prospects, it’s necessary to classify them; many companies classify prospects under four headings:
• Hot lead (customer who is likely to make a purchase within three months)
• Warm lead (in three to twelve months)
• Long-term potential (customer who may not want to buy within the next twelve months)
• No potential (someone who’s not likely to buy)
Selling process has several steps:
• Presentation and demonstration (The benefits, the price and other features of the product are described)
• Handling objections (salespersons need to know how to overcome customers’ psychological and logical objections, so that they can move on to the next stage in the selling process.
• Closing (customers agree or don’t agree to make a purchase)
3. Account maintenance and development
Successful selling depends on building long-term relationships with customers. The salesperson makes a follow-up call to check that the customer is satisfied with the product and to help if problems have arisen.
The company has to select the appropriated medium. Some example of media are TV, radio, cinema, newspapers, magazines, internet, etc. The choice will depend on the target audience and the kind of product.
In America, there are local and regional newspapers, while in Britain there are many national ones called “qualities” and “tabloid”: tabloids have small pages and lots of pics; they’re considered to be less serious than other newspapers. A company that adverts an exclusive product will use the quality newspaper, while a company that adverts a product less expensive will use the tabloid one. Britain has several national newspapers.
They’re an important advertising medium. The advertising tends to be for household goods, luxury items and clothes. Some magazines are oriented on a field, so it adverts products of this field.
Companies have to spend lots of money to advert their products on TV. These products have a mass appeal.
Some stations appeal to young people, others appeal to an older audience. Commercial radio stations are usually regional.
The average cinema audience is made up of young people (15-24), so the products that are advertised tend to focalize on this group of people.
It’s the newest advertisement medium, the most interactive and the cheapest. The company can deliver personalized advertisements about its products.