Promotion MixVs

Consumer Demand BY TOLU OFI APRIL 20TH, 2016

Brief Overview

Why embark on this study Promotion tools Strategies deployed in each tool Merits and demerits of each promotion tool Measuring each tools impact on consumer demand Conclusion

* Analysis

Why embark on this study

Promotion mix plays an important role in stimulating the behavior of consumers to make a purchase

The major challenge faced by organizations today is selecting the combination of tools appropriate for stimulating consumer demand

Combination of tools relies mainly on the message For example, Nike indulges in marketing communication mix.

“The Marketing Communications Mix is the specific mix of advertising, personal selling, sales promotion, public relations, and direct marketing a company uses to pursue its advertising and marketing objectives”

Nike uses this strategy to;

Communicate with target market worldwide

Creates a balance between attracting new customers and keeping existing ones. Risks associated with using one or more promotional tools

Inability to comprehend message “By taking the time to develop and implement an appropriate promotional mix, you will stimulate

your target audience to buy your products or services – and manage this within a budget you can afford” (CIM, 2009).

This study is been embarked upon to understand how various promotional tool affect or have an impact on consumer demand as well as what motivates consumers in making buying decisions

Promotional mix is the combination of various tools designed to help a firm reach its goals

Consumer demand is the measure of consumers’ desire for a product or service based on its availability and the extent to which they are willing to go to make a purchase

Public Relation

Definitions It is a tool used to create or enhance the reputation of a firm by establishing and maintaining

mutual relationship or positioning between the firm and its customers/public. According to Carl Botan 1992, It is using communication to adapt relationships between

organizations and their publics. According to Public Relations Institute of Australia, public relation is the management function

which evaluates public attitudes, identifies the policies and procedures of an individual or an organization with the public interest, and plans and executes a programme of action to earn the public understanding and acceptance (ABS, 2015).

Importance of Public Relation Boost or foster company image

One of the leading factors to an organizations success revolves mainly around how the public views that organization.

Example: Nike – Charitable events and marketing communication mix Build understanding between a company and public

Organizations seek the cooperation of public on a long term basis

“The aim of public relations by a company often is to persuade the public, investors, partners, employees, and other stakeholders to maintain a certain point of view about it, its leadership, products, or of political decisions” (Boundless, 2015).

Useful in dealing with bad situations

Damaged company image

Example: Chipotle’s food contamination problem

Effective public relations tell a company's story in a way that is accurate, honest, and easy to understand, helping to establish a reputation for credibility (Johnston, 2015). Encourages feedback from the public

Creates atmosphere of trust

“PR professionals recognize that to manage relationships, they must understand and respect public concerns and viewpoints” (Johnston, 2014)

Helps in stimulating demand Building product awareness

Through special events and public events

Strategies used in public relation

Public Events - The need for professionals

Raise the company’s profile or lend its name to an event that represents its philosophy

- Hospital organizing a health outreach day

Example: McDonald in 2012

https://youtu.be/FCe1yM_jYik

Word of Mouth

Concept used by organizations in requesting that each satisfied customers help spread a positive message about its products or services The Objective – to create advertisement that spark conversation, which would lead to persuasion

of the prospect and eventually to a purchase Enhances credibility and prestige Use of technology to share experience via social media

Example: Starbucks Marketing strategy not commonly seen in business today Huge emphasis on customer satisfaction Improvement in product quality

“Starbucks has invested a lot of resources into growing their social media presence and encourages customer comments and suggestions with its digital properties and continues to favor word-of-mouth communication and technology over traditional advertising” (Dougherty, 2015).

Advantages of public relation Exposure to detailed information

-Product, services & company

-Educated decision Establishes credibility

-Positive experience shared is more likely to induce purchase Low cost

- less cost associated with conducting a campaign

-Smaller business looking to save money

Disadvantages

Damage brand image

-Unsatisfied customers Locating the most appropriate media

-Difficulty in selecting the most effective medium to reach target audience Lack of guarantee for media space and time

-unexpected events (Critical weather conditions/crime news)

Measuring the effectiveness

Media coverage

* count on the amount of news releases, feature stories, photo’s etc. produced in a given period

* evaluation provides information on productivity and level of output. Changes in attitudes, opinions, and behaviors

* track social networking sites (comments), blogs, news sites etc. to gain insight on conversation Repeat purchase

* Level of demand

Advertising

Definitions Advertising can be defined as a paid medium of communication, through which an organization

calls the attention of its current and potential customers towards its new or existing products and services in an attempt to convince them that the organizations offering will satisfy their very needs

According to Richard Buskirk, “Advertising is a paid form of non-personal presentation of ideas, goods or services by an identified sponsor.”

Advertising is the non-personal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through the various media."(Bovee, 1992, p. 7)

Importance of advertising Create awareness

-inform target audience about a product

-focus on products ability to solve a common problem

Example – Acne medication

-pictures from before and after

-specific target: people experiencing acne problem

Product differentiation

-Monopolistic competition concept

whereby a product must enjoy a unique trait or group of traits, differentiating it from other product, thereby allowing it to claim its own monopolistic space

-inform consumers about the benefits/effective

Example -Automobile companies

- specifics and price range when purchasing a car

Advertising in this scenario

-benefits, accessories, price and payment plan.

Increase sales/stimulate demand

-product desire = high demand = higher sales Builds brand image

-high quality products creates goodwill on the market

-increase in consumers expectation

Example; Apple Inc.

Strategies used in advertisingAssociation Link product with famous/popular people to create interest Creates a strong psychological connection

For example – Cosmetic products - Celebrities

Nike – Athletes

https://youtu.be/-R_483zeVF8

Claims How would you define or know an effective product Every consumer thinks about this when making a purchase Organizations make assertions on products effectiveness Common with substitute products Also make exaggerations to stimulate demand – Lego commercials Provides successful results by informing, educating, and developing expectations

https://youtu.be/l5aF23XpBwU

Various means of advertising

Television

-Used to reach a large number of people

-Combination of audio and visual image

-attracts attention especially during events

-Effective in passing information

Product placement Marketing strategy Incorporate a branded product in a movie or TV show

Internet Fastest growing media Companies nowadays use Facebook, twitter, Instagram Effective in catching the attention of consumers

Advantages of advertising Product introduction

-creates awareness Provides information

-qualities and benefits

-simplifies the work of a salesman

-eliminates the need for middlemen Creates desire

-increase in demand = higher production = increase in sales Increase competitive advantage

-continuous repetition keeps consumers apprised

Disadvantages of advertising Cost

-willingness to spend huge amount

-adds to the cost of purchasing a product

“in this reference it is said that advertising costs are passed on to the consumers in the form of high prices” (Pujari, 2011). Mislead consumers

-exaggerate about a products ability

-not providing all information

“believing in advertising, consumers buy the product. On its use, they feel cheated” (Pujari, 2011)

Inappropriate content

-Images not suitable for children

For example -Viagra

Measuring advertisings effectiveness

Increase in demand

-track sales before and after for increase Customer enquiry

-ask customers how they heard about your product Measure web traffic

-use of internet to advertise a product

Sales PromotionDefinitions Sales promotion is a form of marketing designed to be used as a temporary strategy to persuade

consumers and intermediaries such as wholesalers or retailers to purchase a product in other to promote an increase in sales of a new or existing product

A sales promotion is a marketing technique that is designed to entice a customer to take specific action such as make a purchase or request information and it usually occurs for a limited period of time to help create a sense of urgency (Joseph, 2015).

According to Burnett John, “At its core, sale promotion is a marketing activity that adds to basic value proposition behind a product (i.e., getting more for less) for a limited time in order to stimulate consumer purchasing, selling effectiveness, or the effort of the sales force.”

Why firms use sales promotion To attract new customers

-offering incentives Stimulating demand for a product Improving the marketing performance of sales men

-consumers are willing to listen Clear out inventory

-higher production lesser demand Entice reluctant customers

-Customers loyal to other company’s

Strategies used in sales promotion

Discount

-product offered at a lowered price

-used in product introduction

-clear out product

Product sampling

-opportunity to try a product before making a purchase

-eliminates doubt

-often used in product introduction

For example – test driving a car before making a purchase

Advantages of sales promotion Encourage repeat purchase

-gaining customer loyalty

-gaining loyalty requires customer satisfaction

For example - Sam’s club and membership card Lure new customers

-offering product with reduced price Creates differentiation

-Creates a reason to choose your product in a crowded market

Disadvantages of sale promotion Short-term orientation

-effective for a short period of time

-helps sales for that same period Damage product image

-consumers perception on low price Increase in price sensitivity

-customers wait for promotion deals

-affect profit margin

Measuring sales promotions effectiveness Brand awareness

-“Sometimes sales promotions are good public-relations vehicles, and can generate interest and return customers”. Keep track of profit margin

-The volume of additional sales must be large enough to generate profits greater than the cost of the sales promotion Track sales to measure the effectiveness of a promotion once it is launched.

-take note of numbers before and after promotion

-assist in determining whether there as an increase in sales

Personal selling

Definitions It is a one-on-one promotion approach, in which the sales person builds a personal relationship in

an attempt to persuade the customer to make a purchase “Personal selling is a strategy that salespeople use to convince customers to purchase a product”

Laura Jerpi “Personal selling is the process of communicating with a potential buyer (or buyers) face-to-face

with the purpose of selling a product or service”

Advantages of personal selling Promote a company and its product

-share personal experience with product Two-way communication process

-allows for immediate feedback

-concerns and questions can be addressed Build long-term relationship

-customers satisfied with presentation and product

Disadvantages of personal selling Inability to reach a large audience

-Directed at limited customer

-limited time period to create product awareness High cost

-amount spent on a sales person (training & maintaining) Stake in consumer loyalty

-Customer loyalty depends on the presence of the sales person

-firm would be affected if the sales person moves out.

Strategies used in personal selling After-sales service

-additional assistance a seller provides

-aimed at enhancing convenience and company image

For example-home delivery, installation of items, or warranty service

-maintenance service

-shows confidence in product sold

Maintaining contact

-customer service (follow-up on a buyer)

-keep customers apprised on latest development on product purchased

Relationship building

-create trust

-loyalty/repeat purchase

Methods of personal selling

Telemarketing

-using the telephone as a primary means of communicating with prospective customers Field selling

-business to business selling that takes place at the prospective customers business place

Conclusion Personal selling

* persuade customers to make a quick purchase Sales promotion

* increase short-term sales Advertising

* create awareness of its product to a large audience Public relation

* build company image/reputation

* build long-term relationship

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