6

Promoting and
selling
The main aim of a business is to make a profit by selling goods
and services. To achieve this, businesses use a wide range of
promotion methods to catch the attention of customers and,
hopefully, make a sale.
The task of a wise consumer is to try to get the best value for
their money. By understanding some of the methods used by
businesses to maximise (make the most) sales, you, as a
consumer, can get more for your money. Every day you are
exposed to hundreds of product promotion messages. ‘Buy one
and get one free’, ‘Mega-deal’, ‘Prices slashed’, ‘Save now’ and so
on are used by businesses in their advertisements to persuade
you to buy specific products.

focus
On completion of this chapter, you will have analysed strategies that
sellers use to promote products and maximise sales and evaluated the
impact on consumers.

outcomes
A student can:
5.1 Apply consumer, financial, business, legal and employment concepts
and terminology in a variety of contexts
5.2 Analyse the rights and responsibilities of individuals in a range of
consumer, financial, business, legal and employment contexts
5.4 Analyse key factors affecting commercial and legal decisions
5.6 Monitor and modify the implementation of plans designed to solve
commercial and legal problems and issues
5.7 Research and assess commercial and legal information using a variety
of sources
5.8 Explain commercial and legal information using a variety of forms
5.9 Work independently and collaboratively to meet individual and
collective goals within specified timelines.
glossary
advertising: a paid, non-personal message product placement: the inclusion of advertising into
advertising media: the many forms of electronic and entertainment
print communication used to reach an audience promotion: the methods used by a business to
below-the-line promotions: promotional activities for inform, persuade and remind consumers about its
which the business does not make use of an advertising products
agency promotion mix: the various promotion strategies a
evaluating: the comparison of planned performance business uses in its promotional campaign: personal
against actual performance selling, advertising, below-the-line promotions, and
market segmentation: when the total market is publicity and public relations
subdivided into groups of people who share one or
public relations: activities aimed at creating and
more common characteristics
maintaining favourable relations between a business
materialism: an individual’s desire to constantly acquire
and its customers
possessions
monitoring: checking and observing the progress of publicity: any free news story about a business’s
something products
personal selling: involves the activities of a sales sugging: selling under the guise of a survey, a sales
representative directed to a customer in an attempt to technique disguised as market research
make a sale target market: the group of customers to whom the
product differentiation: occurs when products that are business intends to sell its product
the same or similar are made to appear different and/or value (for money): to obtain the best quality, features
better than those of their competitors and performance for a given price of a product
6.1
The selling process
Product differentiation
Walk into any supermarket to buy a loaf of bread
and you are faced with a wide selection from which A continual flow of differentiated products such
to choose: white, wholemeal, sliced, unsliced, gluten- as Classic Coke, Diet Coke, Caffeine-free Coke,
free, vitamin enriched, thick for toasting and so on. Cherry Coke and Vanilla Coke has kept the Coca-Cola
Providing so many different types of breads is a Company number one in the Australian soft drink
deliberate selling strategy and is an example of market in recent years.
product differentiation. This occurs when prod-
ucts that are the same or similar are made to appear
different from and/or better than those of their Service
competitors. By achieving this, the seller is able to Consumers expect a high level of customer service.
gain a little more control in the marketplace. Pre-sales and after-sales service are very important
to consumers when purchasing expensive items such
Factors which differentiate products as cars or electrical appliances.
The difference could be as simple as changes to the Service may also include the presentation of the
packaging or labelling, or more complex, such as premises, the atmosphere, or the range of products
offering top quality service, greater convenience, that set a business apart and capture the consumer’s
better value for money or products that are environ- interest.
mentally friendly. These factors all play a part in per- For example, an exclusive restaurant will offer
suading consumers that full-table service, an extensive menu and a compre-
the product is superior, hensive wine list. These features differentiate it
therefore influencing from a self-serve bistro.
them to buy it.
Convenience
Because today’s consumers are busy, they will often
select products that are convenient to use. For
Product features and example, many consumers do not have a lot of time
packaging can be used to for meal preparation. Consequently, they will select
differentiate even the prepared meals from a supermarket or fast-food
humble baked bean. store: the ‘quick-and-easy’ product.

Which café
would you
select?

152
New Concepts in Commerce
 In response, food manufacturers have developed a Value
range of convenience food products. The packaging As a consumer, you want the best value for your
and cooking requirements are designed to make the money. That is, you want to obtain the best quality,
preparation as convenient features and performance for a given price of a
as possible. product. To satisfy this requirement, sellers will
offer and promote a range of products at different
prices. For example, Avon cosmetics has introduced
a collection of medium-priced cosmetics.
To appeal to consumers’ desire to get the best
value for their money, a business will prominently
display its ‘sale’, ‘special’, ‘save now’, ‘never to be
repeated’ and ‘prices slashed’ signs.

Sellers can differentiate their product by promoting how

convenient it is. UNDERSTAND
1 What is meant by the term ‘product differentiation’?
2 List three examples of products that use the
differentiation strategy.
In a backlash to the growth of fast food in recent 3 Identify the product differentiation features displayed
years, there has been a steady increase in the on the baked beans label shown on page 152.
popularity of ‘slow’ restaurant meals. Some 4 Examine the two cafés in the cartoon shown on
restaurants use this change in attitude to successfully page 152.
(a) List the features used by ‘Chez Paris’ to achieve
differentiate their product.
product differentiation.
(b) Which café do you think most customers will
Social and environmental issues select? Why?
People are becoming more concerned with ‘quality
COMMUNICATE
of life’ issues, especially the physical environment.
Businesses that create pollution may risk losing 5 In groups of three or four, choose a product or
service with which you are familiar and list the
customers, whereas businesses that adopt a ‘green’
types of differentiation strategies used to promote
philosophy and produce environmentally-friendly it. Share your answer with the rest of the class. You
products may see their sales increase. For example, may wish to prepare this as a PowerPoint
The Body Shop is committed to producing products presentation.
that are sensitive to environmental concerns. It 6 Design an A4 print advertisement for a new model
sells all its products in reusable or recyclable con- mobile phone that highlights its ‘exclusive’ features.
tainers, many of which are refillable. It also uses You may wish to use desktop publishing software
recycled paper and cardboard for packaging. Fur- to present the advertisement with text and
thermore, its production processes are rigorously graphics.
self-monitored to guarantee minimal harm to the 7 As a class, debate the topic ‘Environmentally friendly
environment. products are just a clever promotional strategy to
make purchasers feel good’.
Share roles so that those not debating are
involved either in assisting with research or
in running the debate and keeping notes on
the arguments on both sides.

E-LEARNING
8 In what ways is The Body Shop committed
to selling and production practices that are
environmentally friendly? For help, go to
www.jaconline.com.au/commerce, click on
weblinks and access The Body Shop link for
this textbook.

WORKSHEETS
6.1 Product differentiation
The Body Shop views environmentalism as a selling
opportunity.

153
Promoting and selling
6.2
Product promotion strategies
Try this quick quiz.

1. Which soft drink has the world’s most valuable

brand name?
2. Which Australian sport usually attracts the
largest amount of business sponsorship
money?
3. Which brand name is the market leader
in the $600 million Australian footwear
market in terms of sales?
4. Which Australian organisation usually
spends the most on all forms of adver-
tising?
5. Which 3M product was predicted to be a
failure by its marketers?

3. Dunlop. 4. Federal government. 5. Post-it notes.

1. Coca-Cola. 2. Formula One motor racing.
Answers:

All the products in this quick quiz rely on a

range of promotion strategies to achieve their
success.

Promotion
Personal selling: a time-consuming and expensive
Promotion is defined as the methods used by a technique that can be highly effective.
business to inform, persuade and remind consumers
about its products. Many people confuse promotion Advertising
with advertising because of its visibility and fre-
Advertising is a paid, non-personal message. Print
quency. However, advertising is just one of the four
and electronic mass media are used to communicate
elements of the promotion mix. A promotion mix
a message about a product. Because of the enor-
is the various promotion strategies a business uses
mous number of products available, advertising is
in its promotional campaign: personal selling, adver-
an important promotion strategy for businesses. In
tising, below-the-line promotions, and publicity and
2004, Australian businesses spent approximately
public relations.
$10 billion on various forms of advertising.
Personal selling
Personal selling involves the activities of a sales
representative directed to a customer in an attempt
to make a sale. The major advantage of this method The form and presentation of advertisements have
is that the message can be modified to suit the indi- changed over time, but the purpose of advertising —
vidual customer’s circumstances. This method can be to inform, persuade and remind — has remained
highly effective, as Coca-Cola has demonstrated. constant.
Each year this company supports its massive adver- As consumers, we need to be aware of the power
tising expenditure with a highly trained sales force of advertising. The advertised product may not make
that becomes the ‘human face’ of Coke to the retailers, us more successful, glamourous, sexy, happy, healthy
working hard to maintain service and product loyalty. or wealthy!

154
New Concepts in Commerce
 Advertising is one of Below-the-line
the main forms of pro- promotions
motion used to attract Below-the-line
potential customers by promotions are pro-
creating a desire for motional activities for
the product and com- which the business
municating essential does not make use of an
information. advertising agency. The
promotional activities are
designed and developed
‘in-house’. These
activities include
exhibitions, point-of-
sale material,
demonstrations and
direct marketing.
For example, when
you visit a super-
market, you will
often find a sales
representative
encouraging you to
try or taste a product
such as cheese, bis-
cuits or cake, as a part
of a sales promotion.
Free samples — an example of below-the-line promotion

Advertising informs, The ‘line’ is an imaginary boundary between

persuades and those businesses which pay a commission to
reminds. external advertising agencies and those which do
not. Three types of below-the-line promotional
Advertising media activities that are increasing in popularity include:
Advertising may take many forms, from buying • direct mail catalogues: catalogues mailed to indi-
time on national television to inexpensive leaflets vidual households
or posters. Advertising media is a term for the • telemarketing: the use of a telephone to make a sale
many forms of electronic and print communication • Internet marketing: customers purchase via their
used to reach an audience. television or personal computer.

Television Radio

Magazines Newspapers

The four main advertising media

155
Promoting and selling
 The role of gender in product
promotion
E-commerce is a rapidly expanding form of There are two major criticisms of some promotion
promotion. According to the annual Yellow Pages strategies, particularly advertising, which relate to
Business Index — Small and Medium Enterprises gender. First is the use of stereotypical images of
report, approximately one-third of small businesses in male and female roles. For example, in most adver-
New South Wales expect to use e-commerce to sell tisements it tends to be the male who uses the
products and services within the next 12 months. power tools, or who watches sport with his mates.
Females, on the other hand, are portrayed pre-
paring meals, cleaning the house or caring for the
Publicity and public relations
children.
Publicity is any free news story about a business’s However, in recent years, advertisements are
products. It differs from advertising in that it is starting to appear which portray the ‘new man’ and
free and its timing is not controlled by the business. ‘new woman’ image where stereotypical gender roles
As with the other promotion strategies, the main have been reversed. For example, ‘man-with-baby’
aim of publicity is to enhance the image of the and ‘woman-tradesperson’ scenes are becoming
product. There are five main types of publicity. popular images.
1. Interviews: private meetings of the business’s
representatives with the media
2. Captioned photographs: photograph plus brief
explanation of a new product
3. Feature articles: larger articles outlining the
benefits of a product
4. Press conference: public meetings with the
media where written and graphic materials are
presented
5. Media release: a brief newspaper report sent to
the media.
Public relations are those activities aimed at
creating and maintaining favourable relations
between a business and its customers.

What’s new?
Software news and reviews by Ita Chen

The Executive Drive (TED)

Amid the avalanche of new computer products released onto
the market each day comes an exciting new software
package from Integrated Logistics (IL) — The Executive
Drive, affectionately known as TED.
Targeted at the novice computer user, TED is a fully
integrated, self-paced instructional package.
TED is IL’s bold attempt to provide computer users with a
range of computer skills from basic operations right through to
the most complex applications.
This Australian-made product is the result of extensive
market research and has been three years in development.
TED will meet the needs of a wide range of potential
customers.
As with other IL computer products, a 24-hour help line is
available, a feature many competing products cannot match.
TED has been approved by the Australian Computer Users
Network and comes with a full guarantee. Retail price is
$89.95. For more details contact your local computer retailer
or visit IL’s web site at www.intlogistics.com.au.
The Federal Government’s New Apprenticeships scheme is
one organisation that is breaking the mould of
A media release is a commonly used type of publicity. stereotypical gender roles in its advertising.

156
New Concepts in Commerce
 The second major criticism refers to the over- appeal can have a subtle and persuasive impact.
emphasis on sex to sell products. Some advertisers Consumers need to be critical of such advertisements
target certain groups and appeal to personal desires and realise they do not represent reality but are
such as physical and sexual attractiveness. Unrealistic using an attribute — sex appeal — to sell a product.
images are portrayed as attainable. Sometimes a
double meaning is used for emphasis. A browse through
magazines such as Dolly, Cleo, Cosmopolitan or Ralph
reveals the overuse of sexual themes and connotations. ‘Advertisements shall not portray people or depict
Sex appeal can be found in advertisements for material in a way which discriminates against or vilifies a
products ranging from motor vehicles to toothpaste. person or section of the community on account of race,
Advertisers use sex appeal to suggest to consumers ethnicity, nationality, sex, age, sexual preference, religion,
that the product will increase the attractiveness disability or political belief.’ Section 2.1, the Australian
or charm of the user. Although many people are Association of National Advertisers Code of Ethics.
sceptical of such claims, advertisements that use sex

9 What do you think are the strengths and

weaknesses of the following promotion strategies?
UNDERSTAND (a) A manufacturer of a new type of disposable razor
gives out thousands of free razors at a football
1 What is the main role of promotion?
grand final.
2 What is meant by the term ‘promotion mix’? (b) A lifestyle magazine runs its own ‘lottery style’
3 Distinguish between personal selling and promotion for five weeks in which first prize is
advertising. $20 000 worth of furniture.
4 List and describe three types of below-the-line (c) To boost sales, a computer manufacturer
promotion that you have seen in a supermarket or advertises the product on television.
shopping mall recently.
5 Which advertising medium would you choose for the COMMUNICATE
following products? Give reasons for your choices. 10 Design a media release to advertise the opening of a
(a) IBM computers new music store in your local area. Include the
(b) toys for children following details:
(c) Nike sports shoes • name, telephone number and address of the store
(d) school textbooks • date of opening
(e) a hairdressing salon • hours of business
6 Suggest reasons why below-the-line promotion is • range of stock
increasing in popularity among marketers. • any opening special
• store logo.
7 ‘Advertising is what you pay for and publicity is what
You may wish to use computer graphics software to
you pray for.’ Explain. design the media release.
8 In your notebook, construct and complete a mind 11 In groups of three or four, design a television
map like the one started below to summarise advertisement to promote your school.
product promotion strategies. The first list has Think about the scenario to be filmed, the dialogue
been started for you. Alternatively, you may (if appropriate), the overall message, and the song/
wish to use a word-processing package. music that will accompany your advertisement.
Think, too, about the aspects of your school which
might appeal to people in your local area.
rti 12 In groups of three or four, discuss whether advertising:
(a) leads or reflects the change in gender roles
(b) could be criticised for over-emphasising sex to
sell products.
Product Choose a spokesperson to share the group’s
promotion comments with the rest of the class.
strategies 13 As a class, discuss whether advertising creates
(promotion mix)
unrealistic expectations that many consumers can
never attain. Record the main points on the board.
Write a paragraph that summarises the points
recorded. You may wish to use a word-processing
package to write the paragraph.

WORKSHEETS
6.2 Product promotion strategies — you be the judge

157
Promoting and selling
6.3
Targeting customers
Market segmentation
Few businesses can sell their products to the entire
market — the market is just too big. Therefore, a Fifty years ago it was common for marketers to talk
business will divide the market into distinct seg- of the ‘mass market’. In mass markets, the seller
ments. For example, a business that is selling dia- mass produces, mass distributes and mass promotes
mond rings would not direct its promotion efforts one product to all buyers. For example, at one stage
towards every person in the entire jewellery in its history, the Coca-Cola Company produced only
market. Some people may want only earrings. one drink for the whole market, in the belief that cola
Others may want a watch. Instead, the business would appeal to the mass market. Very few products
would direct its efforts towards a particular part, or today are sold to the mass market.
‘segment’, of the total market for jewellery.
Market segmentation occurs when the total
market is subdivided into groups of people who Target market
share one or more common characteristics. The main Target market refers to the group of customers to
features used to segment the total market are: which a business intends to sell its product. Once
• age the target market has been identified, the business
• gender concentrates its promotion efforts on that group. A
• income level rural supplies business, for example, would nor-
• educational background mally aim its promotion strategies at the type of
• geographical location customer pictured below.
• lifestyle
• usage rate.
Once the market has been segmented, the busi-
ness selects one of these segments to become the male
target market. rural-based/farmer
The ultimate aim of market segmentation is to
increase sales and profits by better understanding
and responding to the desires of the target customers.

Segment 1

female, 50+, high income

Segment 2
TARGET MARKET Promotion
Total
female, 30–40, strategies and
market
middle income selling techniques

middle to high
income
Segment 3 25–60 years of age
female, 15–25, low income

Selecting a market segment to be the target market The target market for a rural supplies business

158
New Concepts in Commerce
 An exclusive women’s fashion boutique in central
Sydney would have a target market of customers
who are similar to the one pictured here.
UNDERSTAND
1 Explain how market segmentation and target
market are linked.
female
2 What is the purpose of market segmentation?
3 Determine the target market for the following
25–45 years of age
products or stores:
(a) Coca-Cola
(b) Rolls Royce
city-based (c) Levi jeans
(d) year 10 Maths textbook
(e) Business Review Weekly.
Share your answers with the rest of the class.
4 Once the total market is segmented, a business
selects a target market. List the different ways a
professional market may be segmented.
5 Explain why having a clear understanding of the
target market improves the success of a business’s
promotion strategies.
high income 6 Here are five different market segments:
(i) Young married couple, no children
(ii) Female teenager, part-time worker
(iii) Older single person, female, retired
(iv) Younger single person, male, working
(v) Male teenager, full-time student
Listed below are ten products. Copy the list of
products into your notebook and, beside each item,
write the most appropriate market segment
The target market for an exclusive
number for that product. In some cases you may
city fashion boutique want to write more than one number. Compare
your answers with those of the rest of the class.
Niche markets (a) Financial advice
Some businesses target a very small segment of the (b) Ballet tickets
total market. This is known as niche marketing. In (c) Bus tour
(d) Dolly magazine
a sense, it is a segment within a segment, or a
(e) Health insurance
‘micro-market’. For example, look around any news- (f) Sony Discman
agent and you will see row upon row of magazines, (g) Rover lawnmower
each appealing to a specific niche market — male, (h) School textbook
female, young, old, high income, low income, urban, (i) Computer
rural, outdoor lifestyle, indoor lifestyle and so on. (j) Furniture
7 Henry Ford’s famous promotion slogan was
that the customer could have the car in any
colour he or she wished, ‘as long as it was
black’. This meant customers’ wishes were not
considered. Why is this approach to selling not
appropriate today?
8 Outline the difference between the mass
market and a niche market. Provide examples
of both types of market.
INVESTIGATE
9 In pairs, conduct a survey of 30 people to find
out what types of movie they watch at the
cinema. Using a database, group the
respondents by age and gender. Present your
results in the form of graphs and charts, using
word-processing applications or a PowerPoint
presentation.
A magazine for every interest

159
Promoting and selling
6.4
Product promotion strategies:
legal and ethical issues
Legal issues Ethical issues
Most product promotions are correct in what they The ethics of sponsorship deals
say. Those promotions that make false claims are One area receiving a great deal of attention is the
breaking the law and will be prohibited. Legislation ethics of company sponsorship arrangements,
(laws) specifically related to promoting and selling especially those involving schools. It is not unusual
has been passed by both state and federal govern- to have a sports ground named after a team’s
ments over the years. sponsor or for the players to wear the sponsor’s logo
The most important of these laws is the Trade on their uniforms. However, it would be considered
Practices Act 1974 which makes false and mis- unusual to have pupils attending a school named,
leading advertising illegal. Advertisements must not for instance, Coca-Cola Primary School!
use words that are deceptive or claim that a product School sponsorship arrangements raise a variety
has some specific quality when it does not. Such of ethical issues, such as:
actions convey a false impression of the exact nature • over-commercialisation of schools
of the product. For example, after McDonald’s Aus- • direct marketing to children
tralia Limited advertised its ‘grilled chicken burger’ • health implications of promoting some food and
it was found by the court to be in breach of sections drink products
52 and 53 of the Trade Practices Act 1974. The Aus- • influence on the school curriculum.
tralian Competition and Consumer Commission
(ACCC) argued that the extensive advertising of the Creation of needs — materialism
burger as ‘grilled’ constituted misleading or decep- Does product promotion encourage materialism?
tive conduct and a false description with respect to Materialism is an individual’s desire to constantly
the qualities and history of the burger. The Commis- acquire possessions. Those who argue that product
sion argued that when consumers purchase ‘fast promotion does not encourage materialism point
food’ they place a lot of importance on the way the out that promotion merely satisfies existing needs
food is prepared. The chicken burger was initially of customers; it does not create those needs.
cooked in an oven, branded and seared and then However, critics of product promotion feel that
cooked between two hot plates. It was not ‘grilled’. most businesses, especially large businesses, use
sophisticated and powerful promotional strategies

Misleading advertising claiming a product has

environmentally friendly qualities is not only unethical
but may actually be illegal. For example, labelling which
states a product has ‘50 per cent more recycled material
than before’ is misleading if the recycled content has
increased only from 2 per cent to 3 per cent.

The ethical dilemmas of school sponsorship

160
New Concepts in Commerce
 (particularly advertise- as subliminal or, in the words of marketers, ‘getting
ments) to persuade and under the radar of consumers’.
manipulate customers to
Sugging
buy whatever the firm
wants to sell. These Have you ever been approached by someone in a
critics argue that promo- shopping centre and asked to complete a short
tional strategies create survey? Perhaps you have been contacted by tele-
needs, many of which are phone and surveyed about a particular product,
artificial, by playing upon only to discover the person was really trying to sell
an individual’s emotions. you something? If so, then you have been ‘sugged’.
Sugging, selling under the guise of a survey, is a
Promotion — satisfying existing needs or creating new sales technique disguised as market research.
ones? This technique is not illegal, but it does raise
several ethical issues, especially the invasion of
The ethics of product placement
privacy and deception.
Chances are that you, along with thousands of
other film-goers, have seen the films Matrix:
Reloaded, Minority Report or GoldenEye. All these
movies used a promotion strategy referred to as
product placement: the inclusion of advertising UNDERSTAND
into entertainment. For example, in Matrix:
1 What is meant by the term:
Reloaded, when the characters travel through time (a) ‘sugging’?
(teleport) they do so through a Samsung mobile (b) product placement?
phone with the Samsung logo clearly visible. In the 2 Provide a brief description of misleading
first Matrix film, teleporting was via Nokia phones, advertising.
sales of which afterwards skyrocketed. 3 How did the ACCC determine that
McDonald’s had conveyed a false
impression of the nature of their grilled
chicken burgers? Do you agree with the
ACCC’s decision?
4 Present arguments for and against
business sponsorship arrangements
involving schools.
5 Do you consider product placement an
ethical or unethical promotion strategy?
Give reasons for your answer.
6 Suggest reasons why sugging may be an
unethical practice.
7 Why is it sometimes difficult to decide
whether a promotion strategy is ethical or
unethical?
8 You have been asked by your manager to
place a ‘special’ sign on a number of
items but the price is not to be lowered.
Product placement, especially the motorised variety, is a Is this an ethical or unethical practice?
traditional part of the James Bond films. In GoldenEye, Compare your answer with those of other
the BMW Z3 Roadster was prominently featured. class members.

In Minority Report, which actually satirised the COMMUNICATE

technique of product placement, 15 brands 9 In groups of three or four, prepare a report critically
including Gap (clothing) and Lexus (motor vehicles) analysing the ethical issues involved in:
were prominently placed throughout the movie, (a) advertising to young children during morning
television programs
earning the producers approximately $43 million.
(b) using sexual overtones and imagery in
Businesses are keen to use this promotional tech- advertisements.
nique because it allows them to reach savvy but You may wish to use desktop publishing software
advertisement-weary consumers. However, critics of to present the article with text and graphics.
product placement argue that, because of its ‘con-
cealed’ nature, this type of advertising blurs the line WORKSHEETS
between what is advertising and what is entertain- 6.3 Create an advertising storyboard
ment. Consequently, product placement may be seen

161
Promoting and selling
6.5
Applying selling techniques
Development and implementation of greatly increased to satisfy this demand. Conditions
selling techniques for a particular were right for a post-war boom in sales.
product — Coca-Cola It was now time for the promotion strategies and
selling techniques to be fully implemented, with adver-
The Coca-Cola soft drink was released onto the tising campaigns being the most visible promotion
Australian market in 1938, 50 years after its release strategy.
in the USA. The first distinctively shaped bottles,
themselves part of the Coca-Cola Company’s overall
promotion strategy, were produced in that year by
one of Sydney’s oldest soft drink factories.
Australian consumption of soft drink was growing
but that did not guarantee the Coca-Cola product
immediate success. Early sales representatives for
the company were lucky if a storeowner bought a
single bottle, let alone a case.
The war in the Pacific region in the early 1940s
was the stimulus needed by the Australian pro-
ducers of the soft drink. With the American Armed
Forces now established in Australia and the region,
a ready-made market was in place and production

Contemporary Coca-Cola soft drink advertisement

Advertisements for the Coca-Cola product were

initially aimed at older age groups, a reflection of
the main target market selected in the USA. Over
the years, the target market was modified to
concentrate on teenage and young adult consumers.
The company’s selling technique was so successful
that the product has become Australia’s market
leader in the soft drink market.
In the last year, 1.6 billion litres of Coca-Cola were
sold in Australia, out of total worldwide sales of
17.1 billion litres. Since the early 1950s, teenagers
and young adults have grown up believing that this
product truly is a part of their lives: ‘Coke is it’.
Through its sophisticated promotion strategies and
selling techniques, the Coca-Cola Company has built
on its highly recognisable brand name by constantly
implementing new promotion strategies.

The Coca-Cola Company has proved that it does not

need new markets to expand. It can grow by
introducing new products. Vanilla Coke, introduced
onto the Australian market in 2002, had one of the
fastest acceptances of any consumer product ever
The Coca-Cola Company’s advertising has always launched in Australia. About 34 million litres were sold
adopted a consistent message — that Coke is a part of in the first three months after its launch.
life, associated with fun and pleasure.

162
New Concepts in Commerce
Selling techniques of the Coca-Cola Product differentiation Product enhancement
Company
• Product features • Different Coke
The Coca-Cola Company uses a wide variety of selling e.g. bottle shape products targeted
techniques to maximise sales. • Advertising to at specific markets
reinforce image e.g. Classic Coke,
Product development Product promotion • Recognised brand name, Caffeine-free Coke
symbol, logo and colour • Improved packaging
• Wide range of products • Advertising
– bottles
including: • Sponsorship
Product pricing – cans
Cherry Coke • More distribution outlets
• New signage
Vanilla Coke e.g. fast food fountains, • Reduce prices for specific
Sprite vending machines promotional activities
Fanta • Sales representatives and supermarket sales
Frutonic • Interactive web page
Nestea Cool • Competitions
Pump • Product placement
Neverfail Springwater
Diet Coke Product niche focus
Fresca
• Targeted promotion strategies,
Lift
e.g. SMS messaging to 18–30
Fanta 'lemon'
year old generation
'Winnie the Pooh' juice
Powerade
Peats Ridge water
Aquarius

Selling techniques used by

the Coca-Cola Company

UNDERSTAND techniques used by the business. Present your report

1 What is the message the Coca-Cola Company has using a multimedia application and graphics to enhance
adopted in its advertisements? the presentation of information.
2 ‘Coke’s successful formula is not the ingredients of 7 In groups of three or four, research the selling
the drink but its superior selling techniques.’ Do you techniques used by Nike. Share your responses with
agree or disagree with this statement? Give reasons the rest of the class.
for your answer.
3 ‘Any business that neglects to develop effective selling E-LEARNING
techniques will almost certainly experience low levels 8 A business can have a product’s name or symbol
of sales and reduced profit levels.’ Why is this so? registered as its trademark. The ‘Dynamic Ribbon’
4 What are the advantages to the Coca-Cola Company device and the contour bottle design are trademarks
in diversifying and selling water and fruit juice of the Coca-Cola Company.
products? (a) What is meant by the term ‘trademark’?
5 Select three selling techniques used by the Coca-Cola (b) What icon is used to show that the name or
Company and explain how each one helps the symbol is a registered trademark?
company increase its sales. (c) Why would a business want to protect its
trademark?
INVESTIGATE To help you, go to www.jaconline.com.au/commerce,
6 Select a product or service with which you are familiar. choose weblinks and click on the Intellectual Property
Research and prepare a report on the selling Australia link for this textbook.

163
Promoting and selling
6.6
Monitoring and evaluating
selling techniques
An interview with
Alegria Bartock,
Omni Electronics Pty Ltd
INTERVIEWER: What does Omni
Electronics produce?
ALEGRIA: Omni manufactures a range
of home theatre systems
including digital receivers
and integrated digital
televisions.
INTERVIEWER: Alegria, what is your role
in the business?
ALEGRIA: I am the Sales Manager.
INTERVIEWER: What selling techniques has your company Print
advertising was
used in the past?
through
ALEGRIA: Our products are aimed at the male, high income, magazines and
45 to 55 years age group target market. catalogues.
Consequently, our products were sold through
exclusive hi-fi stores. We relied heavily on personal INTERVIEWER: What do you do with the data you collect?
selling and below-the-line promotions. Our sales
representatives concentrated on specific stores ALEGRIA: The data collected during the monitoring stage is
within their territories. Very little direct advertising used to evaluate the selling techniques.
was done, apart from some trade journal media Evaluating involves comparing what we forecast
releases and pamphlets distributed at trade fairs. to happen against what actually happened.
Remember, the aim of selling and promoting is to
INTERVIEWER: Why did you recently introduce a new selling increase sales and maximise profit. By evaluating
technique? the new selling techniques, I can determine
ALEGRIA: Because the company decided to target a new whether our actual sales are above or below what
market. We wanted to start selling to the male and we forecast. If the sales are above what we
female, middle income, 20–30 years age group forecast then the new selling techniques have
target market. been a success. If the figures are below, we need
INTERVIEWER: What new selling techniques did you to take some type of corrective action.
introduce? INTERVIEWER: Were the new selling techniques a success?
ALEGRIA: We decided to use a print advertising campaign. ALEGRIA: Here are the sales figures for April, May and June
Full page, colour spreads were placed in — the second quarter of the year.
electronics, video, hi-fi and suitable lifestyle
magazines. These advertisements were
Sales for Omni Electronics — 2nd quarter
supplemented with a catalogue that was
distributed to selected geographical areas. % change
INTERVIEWER: How have you been involved with the new Sales Forecast Actual Difference (− decrease
selling techniques? territory sales $ sales $ $ + increase)
ALEGRIA: As the sales manager, one of my main tasks is to 1 50 000 58 000 8 000 +16.0
monitor and evaluate the effectiveness of the new 2 80 000 85 000 5 000 +6.3
selling techniques. Monitoring means that I have to 3 70 000 67 000 −3 000 −4.3
check and observe the actual progress of the new 4 65 000 72 000 7 000 +10.8
selling techniques. This requires gathering sales 5 45 000 50 000 5 000 +11.1
figures data. Just as a hospital patient is regularly
monitored by medical staff for any signs of change, Total sales
revenue 310 000 332 000 22 000 +7.1
so, too, must the selling techniques be monitored.

164
New Concepts in Commerce
 UNDERSTAND
1 What data did Omni Electronics need to collect to
monitor and evaluate the new selling techniques?
2 How can a business evaluate the effect of its selling
techniques on its customers?
3 Why is it important to survey customers?
If you look at the bottom line, you can see that the 4 Explain how monitoring and evaluating are linked.
total sales revenue increased by $22 000 or 7.1 per 5 A business has a sales potential of $90 000 but
cent above our forecast. This is a pleasing result. achieves actual sales of only $25 000. What does
I am concerned about the result in sales territory 3. this signify? What should the business do next?
I will need to investigate that later. However, all the 6 ‘Any business that fails to monitor its sales will not
other territories performed above expectations. be able to evaluate the effectiveness of its selling
This tells me that the new selling techniques are a techniques.’ Discuss.
success. We will obviously continue with them. 7 You have just been appointed sales manager for
Oz-T-Shirts Pty Ltd. One of your first tasks is to
INTERVIEWER: How do you evaluate the effectiveness of the evaluate the sales performance as shown in the
selling techniques on your customers? following table.
ALEGRIA: This is more difficult but it is important that it be
done. Essentially, we rely on two methods. First, Sales for Oz-T-Shirts 2nd quarter
we make regular contact with our customers and
talk to them. % change
This feedback Sales Forecast Actual Difference (— decrease
provides me territory sales $ sales $ $ + increase)
with lots of
1 39 000 45 000
ideas. It also
2 64 000 68 000
lets us know if 3 42 000 46 000
the customers 4 47 000 43 000
are satisfied 5 54 000 62 000
with our
products. Total sales
In addition, revenue
written surveys
are sent twice a (a) Complete the table.
year to a (b) Analyse the forecast and actual sales. What do
representative these figures indicate?
sample of our (c) Would you recommend continuing with the
customers. selling techniques? Why?
The survey 8 Look at the Omni Electronics sales data on page
asks for 164 and then complete the tasks.
feedback (a) Which sales territory had the:
about (i) highest actual sales?
satisfaction (ii) lowest actual sales?
with product (b) What does the ‘Difference’ column measure?
features, What is the importance of this column?
performance, Regular customer contact is (c) Which sales territory had the:
quality and the made to assess the level of (i) largest percentage change?
level of after- consumer satisfaction. (ii) smallest percentage change?
sales service. (d) What is the importance of having a ‘% change’
We outsource the survey to a marketing company. column?
(e) Convert this data into two line graphs measuring
INTERVIEWER: Why don’t you just use the sales figures as an ‘Forecast sales’ and ‘Actual sales’. Carefully label
indication of customer satisfaction? the graphs and provide a key. You may wish to
ALEGRIA: Obviously, if your products, customer service use a multimedia application to construct your
and selling techniques are all functioning well, graphs.
sales will increase. However, it is possible that
we are not achieving maximum level of sales WORKSHEETS
because of some consumer dissatisfaction. We 6.4 Strategies for product selling and promotion
can only evaluate this by talking to our 6.5 Topic test — promotion and selling
customers.

165
Promoting and selling