A study on the impact of promotion mix on consumer demand

1. Promotion Mix
Vs
Consumer Demand
BY
TOLU OFI
APRIL 20TH, 2016

2. 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

3. 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”

4.  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).

5. 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

6.  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

8. 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).

9. 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).

10.  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)

11.  Helps in stimulating demand
 Building product awareness
Through special events and public events

12. 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

13. 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).

14. 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

15. 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)

16. 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

17. 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)

18. 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

20.  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.

21.  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.

22. Strategies used in advertising
Association
 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

23. 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

24. 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

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

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

28. 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

29. 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)

30.  Inappropriate content
-Images not suitable for children
For example -Viagra

31. 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

32. Sales Promotion
Definitions
 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.”

33. 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

34. Strategies used in sales promotion
 Discount
-product offered at a lowered price
-used in product introduction
-clear out product

35.  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

36. 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

37. 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

38. 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

39. 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”

40. 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

41. 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.

42. 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

43.  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

44. 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

45. 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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