For many managers, trade fairs are, at best, the evil they need to endure, not abuse. Consider these observations:
From the Senior Vice President of a $ 200 Million Industrial Company: "Trade fairs are terribly expensive and have a limited value for the dollars spent on your business. After cutting out the show, buyers reflect on it. Everyone was wondering if they couldn't afford to attend because they were in financial trouble. For us, the trade fair is a self-permanent problem. If I can put it into operating profit every year, I'll be a superstar, but we go, we go. "
From Burton L. Salomon, Instituteal Sales President, Manhattan Industries: "Everything today is done for show management, not exhibitors. The only other thing to get something from the trade fair. Is a hotel and a prostitute. "Still, Salomon's group planned to attend six major shows and ten small shows in 1980 alone and continue to attend these events. ..
Kenton E, President and Chairman of the National Mine Service Company, a large producer of underground mining equipment and fixtures. McElhattan said: In addition, the show gives junior people in our company exposure to our big accounts, cracks new foreign buyers for everyone, and introduces us to the industry with major new equipment. Gives an opportunity. But most of the time it's an image issue. "
Showland trouble
If a potentially attractive marketing tool, coupled with the attractiveness of increased sales, provides direct contact with customers, marketers may be expected to accept it enthusiastically. They accepted the trade fair, but often left as if they were hustle. This is mainly due to the four downsides of the trade fair program.
1. Unknown Effectiveness — Marketing Revenue per $ 1 Used.
2. Difficulty in measuring efficiency — the effectiveness of these events compared to other marketing communications tools such as sales and advertising.
3. Participation costs are high and rising.
4. The heightened emotions displayed are more of a "benefit" for managers and current customers than a sound marketing communications tool.
Due to these issues, there is little consensus on the rewards of money spent on swatches and the role of proper marketing. The purpose of this article is to develop an approach for assessing those benefits.
Macro image
After sales force costs, trade fairs are one of the most important advertising listings in many companies' marketing budgets. Shows are usually primarily related to industrial companies, but often non-industrial companies are also represented. For many companies, trade fair spending is a major, if not a few, form of organized marketing communications activities other than the efforts of sales force and distributors.
The trade fair is best known as an exhibition. Manufacturers, distributors, and other vendors display their products and explain their services to invitees, including current and future customers, suppliers, other business partners, and the press. The general public is usually excluded. Typical events, such as the International Automotive Services Industries Show and the International Coal Show, are previewed 8 hours a day, 3 days, and even 1-2 days, with 25,000 attendees enrolled. 2
Expo, on the other hand, is usually open to the public through the sale of tickets and falls into two categories: public shows and trade fairs. Typical public shows feature themes such as home gardens, boats, cars, hi-fi and antiques. They are often retail-oriented and sometimes resemble a Middle Eastern bazaar. In contrast, most trade fairs are held in the countryside for more than a week and may allow commercial exhibits in addition to regular community activities and commercial exhibits. Of the 431 members listed in the International Trade Fair and Expo directories, 376 show a total of 77.2 million attendees reported in 1979. In 1979, about 35% of the general population participated in some kind of exposition.
A total of 7,857 trade fairs in more than 10 booths in 1979 spent $ 6 billion on items such as space rental, exhibition design and construction, shipping, installation, attendance promotion, and booth staffing. I did. This investment was larger than the investment in magazines, radio, or outdoor advertising in 1979 (the latest year when numbers were available), with only newspaper and television advertising spending significantly higher. The cost of contacting a face-to-face trade fair, defined as an individual who stops at an exhibition booth and requests materials, was estimated at nearly $ 60, compared to about $ 140 for a sales call.
5% to 35% of a company's annual advertising budget can be allocated to trade fair spending. In general, it is more common in industrial businesses and less common in consumer goods companies. Overall marketing budgets range from 5% to 20%, averaging 10% to 12%. These percentages are already large and do not try to explain the time of top management, which is the most important cost of attending a trade fair. There is no such thing as a typical company or trade fair, but an estimated $ 73,000 is allocated to each show, with a median manufacturer or distributor attending 9-10 shows each year.
Micro Photographs — Three Programs
How will the trade fair money be spent? Ideas come to mind when you look at the three corporate programs.
The National Mine Service Company, first quoted by the chairman, spends about 25% of its annual non-sales force marketing budget on trade fairs. The company participates in four to six small trade fairs each year and allocates totals annually to the funds used at the industry's leading trade fair, the American Mining Congress International Coal Show. This event is held once every four years. With annual sales of $ 130 million, NMS spent more than $ 1 million attending the 1980 coal show. This number includes a conservative estimate of the cost of administration time. The Coal Show, like many other major trade fairs, is a not-for-sale show that is classified as an educational activity by the Internal Revenue Service. Sales are prohibited at such shows. NMS used one coal show to introduce the industry to major new mining facilities and attracted about 12,000 visitors to another exhibition.
Spangler Candy Company is a small business that manufactures candy products, including Dum-Dum brand lollipops. Spangler participates in an average of 12 trade shows annually, primarily for confectionery shows across the country. In contrast to National Mine, Spangler exclusively participates in the sale of shows, which are not only expected to be ordered from distributors and retailers, but are also used as a key indicator of trade fair effectiveness. I will. Managers carefully measure show performance with these two variables, as Spangler expects numerical sales goals to be met and meetings between top officers and key customers to take place at the trade fair.
The Atlantic Aviation Corporation trade fair program is more similar to the National Mine trade fair program than the Spangler trade fair program. Atlantic, a medium-sized marketer for aircraft and aviation services, participates in five to seven events a year. Its biggest participation is the National Business Aviation Association show, which sends representatives of 60 to 70 companies at a cost of over $ 250,000. Unlike Spangler, Atlantic cannot easily assess the impact of a rally on sales. According to the Atlantic manager, "We are having a hard time justifying the cost of a trade show because there is no evidence that the sale was made by attending a particular show. The acquisition of a business aircraft is a long process. Without long and difficult thoughts, no one would buy $ 4 million. Trade fairs may or may not be influential. "
Effectiveness measurement: traditional wisdom
The criteria for assessing the effectiveness of a trade fair are more available than the criteria for assessing its efficiency.
To measure effectiveness, most managers set pre-show goals. For example, according to one survey, 55% of the top managers of companies participating in trade fairs list specific goals to be achieved3. These goals include introducing or evaluating new products, generating sales leads and new sales contacts, and soliciting orders at. Shows, shows, plays. Measuring the effectiveness of trade shows for these purposes includes:
The number of leads generated from the show.
Actual sales from these leads.
Cost per lead generated.
Then feedback on the show provided to the sales force.
The amount of literature distributed at the show.
While such measures may be appropriate for Spangler Candy trade fairs, they are much more difficult to apply to those that are not authorized to sell, such as office work involving NMS and Atlantic Aviation. Many contacts in these types of shows cannot be quantified. When exhibiting expensive mining equipment and business jets, it's hard to tell if the show's "spectators" are really quality leads. Attendance at the booth may be more related to the appearance of the exhibit and the amount of food than the intent to purchase.
Obviously, traditional measures of effectiveness make strong assumptions about what the trade fair will do. Implicit is the concept that there are more direct sales opportunities than promotional devices. The focus on the number of contacts, the cost per contact, the amount of literature distributed, and the sale is that the majority of managers do a lot, not as a tool to maintain relationships. It suggests displaying the display as a nearly linear extension of personal sales, to meet other needs such as information gathering with major customers or competitors.
Effective market communication includes purposes other than those related to sales. For example, regular contact between a company and an existing customer may be a good way to find out about a customer's future plans before the company notices a service problem before it bothers or surprises the vendor in an unpleasant way. not. However, most trade fairs are rated for effectiveness on a cost-per-call basis and do not mention other important potential benefits.
There is no traditional wisdom that managers can trust when it comes to measuring trade fair efficiency. What portion of the marketing dollar do I need to allocate to the trade show? Do show types make a difference? Do companies need to take this into account when designing their trade show mixes? What are the indicators of whether one marketing communications program, including a show, is balanced and another program is unbalanced?
Broader perspective
Most managers struggle with trade fair budgeting and profit measurement issues without a clear understanding of the answers to the following four questions:
1. What function does the trade show program need to perform in the company's overall marketing communications operations?
2. Who should marketing activities be directed to at the trade fair?
3. What is the right show mix for the company? How can a company achieve its purpose with it?
4. Given the rest of the marketing mix, what should the trade fair's investment audit policy be? How should an audit be conducted?
To answer these questions, we need to explore how trade fairs and trade fairs can meet complex sales and non-sales marketing communications capabilities.
Sales target
The sales goals that can be achieved at the trade fair are clear. Here are five important sales features that you may be able to fulfill by attending various shows and exhibitions:
Identifying prospects.
Give access to key decision makers in current and future client companies.
Disseminate facts about vendor products, services, and personnel.
We are actually selling the product.
We will serve the checking issue through the contact made.
Certain trade fairs are likely to meet one or several of these functional goals and are unlikely to meet other objectives. For example, the New England Truck Show (a sample, not an exhibition) primarily seeks new leads, accesses people who may buy trailer trucks and fleets, and informs potential people about the benefits of vendors. Meet the purpose of spreading. client. Shows like this aren't selling very well on their own, except for secondary vendors of add-on equipment and maintenance services.
In contrast, microcomputer exhibitions such as the Midwest Computer Show for small business owners and shows hosted by industry groups of greeting card makers focus on sales rather than identification and access. doing. Account services generally play a small role in such expositions.
Not all trade fairs and trade fairs offer the opportunity to fully meet all sales goals, but in my experience, most companies do not take full advantage of their potential. A prime example is an important account service opportunity at a major trade fair. Cheap and at once, smart managers can learn how products and services that are already on sale are displayed by key accounts, and get information that is otherwise difficult to obtain.
Not for sale
I have labeled the second marketing communications feature offered by the trade fair for non-sale purposes. This includes maintaining a corporate image with competitors, customers, the industry in general, and even the press. Gather information about competitors' products, prices, and other important marketing variables. Maintain and strengthen corporate morale. And the product testing-evaluation feature cited by so many managers in the above survey.
When top managers talk about the image-preserving effects of trade fair participation, they often refer to this feature, but it's hard to know exactly what it means. The term certainly relates to corporate exhibits and their personnel at important trade fairs, compared to both previous exhibits and competitors' efforts. As one CEO told me, "We must be here to convince our customers and prospects that we are a big, solid and stable force in the industry. No. That is, this big booth, chrome, luxury carpet. If we didn't come here, or if we stood coming to a single linoleum square handing out suction cups, people would us Of course you will wonder if you are in trouble. "
Intelligence of all kinds of competitors is available free of charge at most major trade fairs. Shows are one of the cheapest and most reliable ways companies can inform technology, production and marketing people about competition. Even if their own components and systems are tightly protected, companies may pay attention to the wind for the benefit of the show's customers.
At one of the major trade fairs I attended last year, a new product exhibited by a vendor was a highlight of a competitor's visit. A unique solid-state motor control, usually hidden behind the steel panel, appears below the Lucite panel. I was able to easily take a picture by hanging the blueprint of my own cutting head on the table. Despite wearing a badge indicating that we are partnering with a competitor, the chief design engineer was free to talk about the total R & D cost, development time, and component sources for the new machine. The major trade fairs represent a three-day college education on competitive strategy and tactics.
Although rarely mentioned, a very important trade fair function is to motivate staff selected to attend. This morale boost often affects a wide range of low-level staff (ie engineers, shop floor personnel, sales personnel), inexperienced managers, and regular senior management. .. Most of the staff attending the trade fair work harder than they would for a reasonable period of time in their regular work, but the impression remains that the choice to attend a major trade fair is an important privilege. This feeling is especially strong among engineering and R & D staff who have little contact with customers and members of the sales force who enjoy the opportunity to compete with management.
Finally, the trade fair offers a valuable opportunity to showcase products and services and evaluate the preliminary response of customers. It's a cheap test market where self-selected invited audiences are critical but likely to appreciate. However, it is dangerous to use trade fairs for market sampling in this way. This is especially true if the demonstration of the new product is too clear to be of a competitor-exclusive nature.
Not all shows offer all these non-sale benefits to participating businesses. Some minor events, such as local computer expositions and coal industry safety equipment shows, probably don't provide much in a way to gather information and motivate participants. Still, they can be used to build an image of the company (stated that they regularly visit all shows! ”And in the limelight of international exhibitions. You can take a bath and test new products. Other shows may be suitable for boosting morale and gathering information about competition.
The first task of management in assessing a trade fair attendance is to determine how well each planned trade can meet the company's selling and non-selling objectives. A good annual exercise for managers is to select the most important objectives and then map the investment in the trade fair that best meets these. For example, National Mine's goal seems to be much more related to the non-sales goal of building the image and morale of young executives by making it visible to key accountants, and the sales goal of account services. .. Heavy equipment manufactured by NMS ranges in price from $ 60,000 to over $ 1 million, so it is unlikely that NMS will make many immediate sales by being involved in the sale of the show. On the other hand, attending a non-sale industry promotion event probably doesn't make sense for a company that manufactures a full line of low-cost software for small business owners.
Program analysis
Clarifying and expanding the purpose does not create an effective trade show program. To plan communication strategies and measure effectiveness, managers need to make two more decisions about attending the show. First of all, which market members are you targeting? Second, what kind of shows are available for this purpose?
Trade fairs can be broadly divided into those where the purpose of the sales process is the main focus and those where satisfaction for non-sales purposes is likely to be the result of participation. These distinctions can be formalized by the Charter, primarily as educational organizations host industry promotional shows. Often, the difference between a for-sale show and a non-sale show is more of a matter of degree than type, and the two types form a continuum endpoint where you can place any show. This classification of both trade show programs and participation in individual shows serves the purpose of planning.
When the trade fair type matches the market members, guidelines are created to help managers plan their participation and assess their effectiveness. The Matrix in Exhibit I allows management to consider a sample in terms of the key target audiences of current buyers and potential customers they want to reach.
Exhibit I Samples and Market Members
The upper left quadrant of the matrix outlines the characteristics that exist when a company's primary concern is to maintain or strengthen its current customer relationships. The main opportunity for that is to sell the show. Criteria that need to be evaluated for participation in order to evaluate effectiveness in this case include maintaining contact with the account, recognizing and fixing problems with the account, and sending messages to key accounts. If the planning and measurement mechanism includes the number of meetings with key accounts held at the show, the type and nature of account problems that managers notice, and the type of customer and competitor information collected from the event. there is. Do not attempt to calculate the cost per contact or the amount of materials distributed, as the company's main motivation is to maintain and expand accounts.
The lower left quadrant of Exhibit I shows the conditions under which the company's primary purpose is to acquire new leads and customers from prospects and generate callback sales or commitments at the show. Here, the planning and measurement guides are similar to those recommended by traditional wisdom. In other words, it tabulates meetings with prospects, actual sales, and so on. Similar planning-rating scales can be built for the two non-sale quadrants of the exhibit matrix.
The distinction I have drawn, albeit arbitrarily, allows me to comment on the effectiveness of attending the trade fair. For example, if a company selects current buyers as its primary target and potential customers as its secondary targets, then it needs to build an effectiveness measure accordingly. Similarly, as with Atlantic Aviation, if the primary motivation for attending a show is to maintain an image, efficacy measures should be derived from the non-sale quadrant of the exhibit.
Gaining efficiency and consistency
Once the purpose of marketing communications is identified, allocations can be determined in terms of sales and non-sales goals.
Sale of variables
From a sales perspective, management needs to decide how much of the marketing communications budget to allocate to user acquisition and how much to retain users. This decision is highly dependent on the nature of the remaining market communication programs currently in place, such as sales force, promotion, and advertising sub-functions.
Sales force is a great tool for retaining customers through sales and account services, and a poor tool for acquiring new customers due to the high cost per contact. Advertisements, pamphlets, etc. are great customer acquisition tools and can also help you maintain your images. However, unless it's a low-priced, simple product, it usually doesn't help to persuade the customer to come back. Promotions such as incentives, gifts, or other items given to current and potential customers serve both acquisition and retention purposes, depending on the industry. For consumer goods, for example, coupons and other trade promotions can help attract new users. For some industrial products, gifts and other promotions can satisfy current users and increase sales.
In contrast to these specific targeted marketing communications tools, trade shows can serve a variety of purposes at the same time. However, like all multipurpose tools, if not tightly controlled, their effects tend to spread and be underpowered. For this reason, companies are wise to use trade show programs as mortar to fill the brick gaps in overall advertising, sales force placement, and promotional strategies. If one aspect of the marketing communications mix is weak, managers need to adopt a trade show to enhance it.
For example, a typical industrial or commercial company spends most of its marketing costs (often up to 80%) on its sales force, spending less on promotion and even less on advertising. This combination of communications is far better at retaining users than acquiring new ones. Managers in this case may primarily want to invest in swatches that can maximize their potential customer generation and research objectives. It's much better if you also offer account services, but that's not the main reason for joining.
Companies with the highest advertising budgets and low salesperson spending may want to look for events that can achieve their goals, such as closing sales, servicing accounts, and other customer retention activities. Similarly, companies whose greatest marketing power is in investigating and acquiring trial customers are devoted to account service shows.
Not for sale variables
Administrators also need to determine how the non-selling aspects of the marketing communications mix can help maintain the corporate image, gather intelligence, boost morale, and allow testing of new products. Trade fair opportunities need to be compared to other aspects of the strategy, such as corporate communication programs aimed at image maintenance and market research programs for product testing. For example, companies like Atlantic Aviation have extensive corporate communications programs in the form of advertising, backed by aircraft manufacturers with extensive market research facilities, and trade fairs to meet non-sales capabilities. The cost is a national mine with a small advertising budget and little formal market research.
Showland management
To summarize how trade fair budget allocation fits into the broader scope of a company's overall marketing communications program, consider Attachment II. Evaluate how well the current program of a trade fair-less company meets its goals. Powerful areas include the ability to acquire and retain customers, or to meet non-sales objectives such as image building, information gathering, and morale. Describes the available trade shows in terms of their ability to achieve these goals. The squares in the Matrix in Exhibit II serve as a rough guide to the amount of money a company may invest in a trade fair program under a variety of conditions.
Chart II Trade Fair Expenditure Decisions
For example, an exhibition is an efficient marketing communications mix to retain customers, but inefficient to acquire customers, if shows are available that potential customers can expect to attend. We recommend a trade show program that draws attention to the companies that are. However, if the manager suspects that most of what is happening at the available shows meets the non-sale features, it is advisable to stop or at least reduce the appearance of the trade fair.
On the other hand, if the available shows are primarily attracting current customers, then full-bore attention is paid to companies that are efficient in identifying and selling prospects, but not well-mixed to retain customers. A high show program is recommended. Many small computer companies, such as Apple Computer and Tandy Corporation, face this problem because they find it easier for customers to come in than staying in a rapidly changing technology environment that promises cutting-edge technology by switching suppliers. I am. If the shows available show great opportunities to look at new businesses, such companies should not miss them. However, they may be better off investing money in shows that help retain their customers.
Establishing or maintaining a trade fair program to enhance your image or just to gather information is probably a bad investment. Doing so just in the hope of servicing your checking deposits or attracting new prospects is also a bad investment. Unless management plans to attend the show to reinforce its sales weaknesses and achieve non-sales objectives, attend only a few trade shows, or perhaps not at all.
The evaluation data, as I suggest, comes from the company show records, and more importantly, from the "long subjective look" of the communication program recommended by one of the managers quoted earlier. available. Trade fairs are essentially a "sloppy" marketing issue. A vivid quantitative decision-making model can never be used to systematize those subtle functions. But that's not why marketers avoid careful thinking and systematization of their subjective impressions. After all, that is the essence of management.
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