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Advertisement for Commodities

by admin

Advertisement for commodities plays a major role in forming perception of a brand, especially because the quality of a commodity is not easily measurable or visible. All cement brands are grey in colour, all glass look equally transparent and all steel rods look equally strong.

Proper choice of media to ensure maximum reach is very important. In their zeal to advertise, companies often reach out to those people who are not the potential buyers or influencers, leading to spillage.

Drafting the message in the advertisement for commodities is a very skillful task. The communication should strike the tacit needs of the customers. In my experience of cement, I observed that strength has become an over-used word in the industry. So, at the time of launch of Solid HD+ cement in Odisha, we tried to distinguish enduringness of structures from the initial strength of concrete. Also, market study told us that aesthetics had become an important consideration for home builders. So cement also has to contribute to the aesthetics of the house. This led to High Durability & High Designability as the positioning USP for the brand and all marketing communications harped on these two promises of the product.

Tag lines and USPs to be promoted need a lot of consideration before finalization.

Media of advertisement for commodities

There are several media of advertisement for commodities, which can be broadly classified under one of the three types.

  1. Above the Line (ATL): Untargeted like TV advertisement, newspaper, radio, hoardings, etc.
  2. Below the Line (BTL): Targeted to a specific audience or region like fliers in newspaper in a specific area, customer meetings, in-shop advertisement, email marketing, trade shows/ exhibitions, event sponsorship, targeted Search engine optimization (SEO), etc.
  3. Through the Line (TTL): It is an integrated approach where both ATL and BTL advertisement strategies are combined. Digital marketing where objective is both brand building among a large audience as well as targeted marketing for a specific online customer is an example of TTL.

All media, including print, electronic (TV/ radio/ theatre), out-of-home, online, marketing literature, point-of-purchase, events etc. have varying roles to play in the advertisement for commodities. Selection has to done basis the their reach and type of consumers. If there is need of mass coverage, consciously select print or TV media. The thumb rule is to advertise at least in the top two newspaper publications if print is the selected medium. Similarly, advertise in TV channels with good TRP if electronic media advertisement is the requirement. Celebrity endorser, if any, has to be in-line with the ethos of the brand.

OOH and POP advertising need proper recce of the geographies to ensure maximum visibility. Advertisement for commodities should also ensure that the captive audience gets the message sound and clear from the advertisement.

Digital marketing and development of brochures & leaflets should be done by specialized agencies if the expertise is not there in the company because among all media, they provide the most detailed information about the product and should achieve the correct positioning of the brand. Promotional events like trade shows, on-ground activation, customer/ influencers meetings, cause marketing activities and public relation events are opportunities where the customer gets to interact with the company personnel. In all these events, a uniform messaging is a must. The brand equity should not get diluted.

Advertisement is often the second largest expenditure for sales promotion, after channel discounts. So, it requires close monitoring during execution. Companies often depend on the agencies for execution of marketing activities. They do not monitor the execution closely. Later, reality strikes and they is no clue as to why there is no uptick in sales, despite such heavy spend.

Advertisement for commodities
Advertisement for commodities

Effective Marketing Communications

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Due to increasing tussle between the companies, marketing communications have become important even for commodities. Effective message delivery helps a brand distinguish itself.

Messages in Effective Marketing Communications

Most of the companies are still promoting themselves basis their superiority in the fundamental attributes of the commodity. But a few companies have taken the lead and come out of the clutter. Some of the impactful communications recently are hinged on technology/ quality, environment-friendliness or customer-service. Companies have adopted innovative ways to drive home their USP. Ambuja Cement using heavyweight Khali to show that houses built with its brand have good strength became an online craze.

A lot of companies also use communications centred around happy family, value for money, legacy and scale of operations, etc. However, very few communications leave any recall in the consumers’ mind.  But at the same time, it is getting more difficult to drive home the point of uniqueness with these approaches. A very recent trend has been commodity companies talking about aesthetic beauty. For example, Solid HD+ cement is harping on High Designability as one of its two USPs, the other being High Durability. Ultratech Cement is promoting its brand through its Build Beautiful campaign.

Themes for Effective Marketing Communications
Themes for Effective Marketing Communications

Objectives of MarComm

Marketing communications should achieve two objectives. First objective is to tell the target audience what are the benefits of using the product. Second objective is to communicate how is the product unique from the competitors.

MarComm is not restricted to churning out product literature only in the form of brochures/ leaflets/ in-shop posters, TV/ radio commercials, sign boards/ hoarding/ OOH media advertisements, etc. Marketing Communications also include using innovative ways of sampling, product packaging, social media advertisements, email marketing content and CSR initiatives to drive home the point.

A glass company wanted to communicate that its glass sheets are actually of the thickness as promised in the specifications against the non-compliant ones by its competitors. So, it distributed a small U-shaped tool to all its retailers to measure the thickness of a set of 5 or 10 glass sheets. This helped the retailers in demonstration in front of the end consumers. Several cement companies have mobile technical labs or toll-free customer care numbers. They make it a point to advertise about these customer services.

Having realized the importance of each of the elements for promotion like advertisement, targeted marketing, customer meetings, wholesaler meetings, etc., the companies are adopting Integrated Marketing Communications for branding their products. Companies use TV commercials, newspaper advertisements, radio jingles, brochures, leaflets, outdoor displays, retail shop branding, etc. to communicate their USPs. Previously each medium was treated as a silo. Different message was coming from each medium as there was no Centralized or Integrated planning. But now trends have changed. It is Marketing Communications department (MarComm) responsibility to achieve coherence in all the communication campaigns.

A commodity brand might have been introduced at a certain price in the market but if the communications strategy is not aligned with the marketing objective, the desired positioning in the market cannot be achieved.  Also, proper market research has to drive the marketing communications planning. Research will let us understand what the consumer desires. As a result, commodity companies are using market survey companies now-a-days before embarking on a new marketing campaign.

Wholesaler Promotion- How to achieve

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Wholesalers are the first contact for the company’s for B2C sale. It is the wholesaler who pushes the brand to the retailers and other bulk consumers. He plays a big role in maintaining the price in the market. So, wholesaler promotion or motivation is an important task for the companies.

Why should commodity wholesalers be promoted

If a wholesaler is able to generate good business through a brand, he might also take steps to promote the brand. A dealer of my cement company was so happy with our services that to boost sales in his region, he got advertisement sign-boards installed, distributed Point-of-Purchase material to his retail network and conducted promotional meetings at his cost. A wholesaler will give a brand he trusts on credit to his retail network with confidence that his investment will not sink as the retailers will be able to liquidate the product. Same cannot be said for untrustworthy brands.

Remember, having quality wholesalers in the network reduces the effort of the company towards push sales and company can concentrate on creating a pull from the market. They can make or break a brand in the market. They are so closely associated with companies that often customers cannot distinguish them from the company. That is why wholesaler promotion is an important strategy element.

Wholesaler Promotion requirements

Wholesaler promotion needs to fulfill two needs of wholesaler from the brand point of view: monetary & psychological. Companies need to fulfill both these needs in their wholesaler promotion plan.

Monetarily the commodity brand should be as rewarding or better than the competitor brands. Only exception is when the commodity is having a good brand equity and despite lower returns, the wholesaler is able to quickly rotate his money and does not need to give material on credit in the market. Apart from the mark-up on the billing price of the company, the wholesalers also earn through the discounts and schemes run by companies.

However, if the company gives entire discount along with billing itself, there is a possibility that the wholesalers will pass it on to the retailers due to pressure to clear the stock. This will put a downward pressure on the prices in the market. So the companies pass on some discounts at the end of the year. This is not informed to the wholesalers initially and is an additional profit for him. Also, often schemes benefits are in the non-cash form like gold, white goods, vehicles, etc.

Psychological satisfaction is the second thing wholesalers look for when dealing with commodity brands. It is due to this reason that companies conduct competition for highest sales at district, state or national level as part of their wholesaler promotion plan. To encourage small wholesalers, companies often have various other categories, like highest growth, highest market share, etc.

Big wholesalers always want a treatment different from the smaller ones. A few big wholesalers are so egoistic that they do not like to stay in the same rooms as small wholesalers when the company takes them to tours. Companies need to be careful while handling such wholesalers. At the same time, the small wholesalers should not feel step-brotherly treatment. There should be an endeavour to reduce company’s dependence on the egoistic wholesalers.

A tertiary need of some wholesalers is the relationship building by the companies. Companies organize picnics, festival get-togethers, movie shows, etc. to allow wholesalers interact with company personnel in a non-business set-up. Company personnel personally give birthday and anniversary gifts to Wholesalers. Companies are trying to have formal systems to track this initiative also. Automatic messages are sent to local salesperson, reminding him of the birthday or anniversary of the wholesaler. On festivals or important occasions, greetings are sent by the company directly to the wholesaler or through the sales personnel. All these initiatives are taking wholesaler promotion to a new level.

Wholesaler promotion
Wholesaler promotion- How to achieve

Pricing Strategy for commodities

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Pricing strategy for commodities, especially right at the time of introduction is another important element of the marketing strategy. Typically in commodities, there is a range of brands available for a wide spectrum of prices. Generally there are one or two price leaders in a market. As we go lower in the price spectrum, the number of brands increases at each price level. After introduction of the brand, most of companies follow market-based pricing strategy for commodities.

Types of Pricing strategy for commodities adopted by companies

Below are the various pricing strategies adopted by commodity companies. Cost plus pricing and competition based pricing are the most prevalent ones in the market and easy to ascertain. Value based pricing needs some research into the usage patterns of the product by the consumer and can change with geography. Penetration pricing and price skimming are used during production introduction phase.

Types of Pricing strategy for commodities
Types of Pricing strategy for commodities

Initial Pricing strategy for commodities

Initial pricing is determined by what does the company want to achieve. If it wants quick sales numbers, then pricing at the lower spectrum makes sense (penetration pricing). However, so strong are the perceptions in the minds of wholesalers, retailers and customers formed about a product that it is very difficult to drastically change price relative to alternatives/ competitors after a certain period. Prices of commodities are always determined with respect to the price leaders. The price gap with the price leader remains more or less the same for long period despite the market seeing price fluctuations several times. Also, it is prudent to initially make more profits when the competition is not intense (price skimming).

Price Leader vs Volume Leader- Whom to follow

There are generally two types of markets, one where the price leaders are also the volume leaders and second where the lower-priced brands command the major market share and the premium priced brands have limited presence. Penetrating the market and getting some early sales is easier in the first scenario than in the second. However, positioning in the premium segment requires a whole lot of marketing effort. The switching costs are higher for consumers in the premium segment. The brand equity and thus loyalty of premium brands is already high. Company will have to invest heavily in advertisement as it will help in image building.

In markets dominated by low price leader, without a comparable price, entering the market itself is an uphill task. However, at low price, the new entrant might not be profitable as its costs might be higher than an established player in the market. The pricing strategy for commodities have to be such that the users see that the new product is giving a better value to the customers despite a higher price. Influencers like contractors and architects in case of building materials will have to be lured to promote the new brand. To operate at low price means that the input costs also have to be low, which means that all cost centers have to be very efficient.

Discounts for channel partners- Important aspect of pricing strategy for commodities

The pricing strategy for commodities becomes more complicated because of the various types of discounts floated by competitors. Often the billing price of the company has no correlation with the existing wholesale prices in the market. What is more important is the landing cost for the wholesalers. As part of the pricing strategy, companies need to closely monitor their wholesale and retail price. This will help to maintain the desired positioning in the market. Companies need to periodically adjust the billing price and discounts. This ensures that price fluctuations do not affect the wholesalers and retailers earnings per unit. They need to conduct marketing activities appropriate to maintain the brand positioning in the market.

Pricing strategy for commodities must also consider the influence of a few stakeholders in the market. Companies must also ensure that a big wholesaler does not disturb the prices in the market as it shakes the confidence of small retailers in the control mechanisms of the company. There should not be arbitrage opportunity for the wholesalers by way of bringing material from one region and selling in another. This becomes important because commodity prices vary drastically every few kilometers due t high freight involved in their transportation.

Role of influencers

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No industry will be so peculiar like building materials wherein the consumers’ decision is shaped so much by the influencers. The role of influencers like masons/ glaziers, engineers, architects, retailers, shop managers, friends, family members, contractors and star endorsers is immense, not to forget the influence by the wholesalers/ distributors. Their influence is because consumers do not know much about these products and there is no second opportunity for them to build a house. It should not come as a surprise if the mason is insisting on a specific cement or steel brand or the contractor is insisting for one paint brand.

The role of influencers is so high that companies are running incentive schemes for these influencers so that they promote their brand more often. Companies are sending the engineers & architects for foreign leisure tours, giving white goods to masons and shop managers and felicitating high sales volume retailers.

Role of influencers
Role of influencers varies with awareness level of end user

Role of influencers

Masons, glaziers, plumbers, electricians, painters etc.

Role of influencers, who have become specialists in their job, because of their know-how earned through years of experience, have a lot of clout among the customers. Their influence is higher in rural areas. As these people have worked with the commodities like cement, steel, pipes, cables, paints, etc., consumers think that they will provide correct feedback. Consumers often go against the other influencers and well-wishers’ advice to procure the brands suggested by this lot. Their influence reduces in urban places where they act on the recommendations of the contractors.

Contractors

Individual house builders are now-a-days outsourcing construction to contractors. Here, the contractors becomes the biggest influencer. The contractor recommends brands with which cost of construction is minimum or there is a special incentive for promoting a brand.

Engineers & architects

In urban areas, it is a trend to hire engineers and architects/ interior designers for house construction. These technical people often recommend certain brands according to the durability and design needs. Brands try to bring them under their loyalty fold by creating awareness programs for them and through referral programs.

Retailers & Shop managers

Role of retailers or shop managers appears at the point of purchase, especially if the customer has not come with a pre-determined brand in mind. They are often able to influence him to the brand which is most profitable to the store’s business.

Other influencers

There is another set of influencers like friends and family, and celebrities promoting a brand in advertisements. That is why we see that several actors and sportsmen now-a-days are advertising for cement, steel, paints, etc. The role of influencers varies with awareness level of end user.