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Executive Post Graduate Program in Management

Assignment : Assignment 2

Course : B3 Marketing Management

Professor : Prof. Rajasekhar

Total Marks : 15

Answer the following. Each carries FIVE Marks

1) In terms of source credibility, why would a medical doctor have greater

source credibility as a spokesperson speaking about the effects of a

new drug than a retired actor would. In your answer, be sure to list the

characteristics of source credibility.

Answer :

Selecting efficient means to carry the message becomes more difficult

as channels of communication become more fragmented and

cluttered. If we look at the challenges in the pharmaceutical industry,

a large number of medical representatives detail doctors every day,

but only a small proportion of calls result in seeing the doctor, and

then for an average of only 2 minutes or less, which makes sales

calling extremely expensive. The industry has had to expand its

battery of communications channels to include ads in medical journals,

direct mail (including audio & video tapes), free samples, and even

telemarketing. Pharmaceutical companies sponsor clinical conferences

at which they pay physicians to spend a weekend listening to leading

colleagues extol certain drugs in the morning, followed by sightseeing,

variety-entertainment programs, and dinner.

Pharmaceuticals use all these channels in the hope of building

physician preference for their branded therapeutic agent. They are

also using new technologies to reach doctors through handheld

devices, online services, and videoconferencing equipment.

So it is imperative to use a medical doctor as a spokesperson for

maeketing a new drug rather than using a retired actor as patients &

customers believe in the doctor who knows the indepth details &

causes about the drug rather than an actor who will just recite the pre-

written message in the advertisement.

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2) A decade ago, the advertising-to-sales promotion ratio was about

60:40. Today, in many consumer-packaged-goods companies sales

promotion accounts for more than 70 percent of the combined budget.

Several factors contribute to this rapid growth. List and explain these

factors.

Answer :

Promotion became more accepted by top management as an effective

sales tool; the number of brands increased; competitors used

promotions frequently; many brands were seen as similar; consumers

became more price oriented; the trade demanded more deals from

manufacturers; and advertising efficiency declined.

But the rapid growth of sales promotion created clutter. Incessant

prices off, coupons, deals, and premiums may devalue the product in

buyers minds. So there is risk in putting a well-known brand on

promotion over 30% of the time. Dominant brands offer deals less

frequently, because most deals subsidize only current users.

Loyal brand buyers tend not to change their buying patterns as a result

of competitive promotions. Advertising appears to be more effective

at deepening brand loyalty, although added-value promotions can be

distinguished from price promotions. Certain types of sales promotions

may be able to actually enhance brand image.

Price promotions may not build permanent total-category volume. One

study of more than 1,000 promotions concluded that only 16% paid off.

Small-share competitors find it advantageous to use sales promotion,

because they cannot afford to match the market leaders large

advertising budgets; nor can they obtain shelf space without offering

trade allowances or stimulate consumer trial without offering

incentives. Price competition is often used by a small brand seeking toenlarge its share, but it is less effective for a category leader whose

growth lies in expanding the entire category.

The upshot is that many consumer-packaged-goods companies feel

they are forced to use more sales promotion than they wish. They

blame the heavy use of sales promotion for decreasing brand loyalty,

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increasing consumer price sensitivity, brand-quality-image dilution,

and a focus on short-run marketing planning. One review of promotion

effectiveness concluded, When the strategic disadvantages of

promotion are included, that is, losing control to the trade and training

consumers to buy only on deal, the case is compelling for a revaluation

of current practices and the incentive systems responsible for this

trend.

In using sales promotion, a company must establish its objectives,

select the tools, develop the program, pretest the program, implement

and control it, and evaluate the results.

Establishing objectives : Sales promotion objectives derive from

broader promotion objectives, which derive from more basic marketing

objectives for the product. For consumers, objectives includeencouraging purchase of larger-sized units, building trial among

nonusers, and attracting switchers away from competitors brands.

Ideally, promotions with consumers would have short-run sales impact

as well as long-run brand equity effects. For retailers, objectives

include persuading retailers to carry new items and higher levels of

inventory, encouraging off-season buying, encouraging stocking of

related items, offsetting competitive promotions, building brand

loyalty, and gaining entry into new retail outlets. For the sales force,

objectives include encouraging support of a new product or model,

encouraging more prospecting, and stimulating off-season sales.

Selecting consumer promotion tools : The promotion planner

should take into account the type of market, sales promotion

objectives, competitive conditions, and each tools cost-effectiveness.

The main consumer promotion tools are summarized in the table

below. Manufacturer promotions are, for instance in the auto industry,

rebates, gifts to motivate test drives and purchases, and high-value

trade-in credit. Retailer promotions include price cuts, feature

advertising, retailer coupons, and retailer contests or premiums.

Category ActivitySamples Offer a free amount of product or service delivered

door-to-door, sent in the mail, picked up in a store,

attached to another product, or featured in an

advertising offer.

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Coupons Certificates entitling the bearer to a stated saving on

the purchase of a specific product: mailed, enclosed

in other products or attached to them, or inserted in

magazine and newspaper ads.Cash Refund

Offers

(Rebates)

Provide a price reduction after purchase rather than

at the retail shop; Consumer sends a specified proof

of purchase to the manufacturer who refunds part

of the purchase price by mail.Price Packs

(cents-off

deals)

Offers to consumers of savings off the regular price of

a product, flagged on the label or package. A

reduced-price pack is a single package sold at a

reduced pack (such as two for the price of one). A

banded pack is two related products together (such

as a toothbrush and toothpaste).

Premium (gifts) Merchandise offered at a relatively low cost or free asan incentive to purchase a particular product. A with-

pack premium accompanies the product inside or on

the package. A free in-the-mail premium is mailed to

consumers who send in a proof of purchases, such as

a box top or UPC code. A self-liquidating premium is

sold below its normal retail price to consumers who

request it.Frequency

programs

Programs providing rewards related to the

consumers frequency and intensity in purchasing the

companys products or services.Prizes

(contests,

sweepstakes,

games)

Prizes are offers of the change to win cash, trips, or

merchandise as a result of purchasing something. A

contest calls for consumers to submit an entry to be

examined by a panel of judges who will select the

best entries. A sweetstakes asks consumers to

submit their names in a drawing. A game presents

consumers with something every time they buy

bingo numbers, missing letters which might help

them win a prize.Patronage

Awards

Values in cash or in other forms that are proportional

to patronage of a certain vendor or group of vendors.Free trials Inviting prospective purchasers to try the product

without cost in the hope that they will buy.Product

warranties

Explicit or implicit promises by sellers that the

product will perform as specified or that the seller will

fix it or refund the customers money during a specific

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period.Tile-in

Promotions

Two or more brands or companies team up on

coupons, refunds, and contests to increase pulling

power.Cross-

Promotions

Using one brand to advertise another noncompeting

brand.Point-of-

Purchase (P-O-

P) Displays and

Demonstration

s

P-O-P displays and demonstrations take place at the

point of purchase of sale.

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3) Collect five print ads (of different products) and comment on what has

been highlighted in each ad also mention whether that ad is effective

or not.

Answer :

i) Mr Amitabh Bachchan is a well known actor in India who

mesmerized his fans by his acting talent and became more

popular through TV game show Crorepathi. He is father of

another popular actor Mr Abishek Bachchan and father in law of

Miss World Ms Ishwarya Rai. He is used as celebrity endorsement

to avert the crisis of brand reputation. Definitely It is a crowd

pulling ad.

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ii) Younger female generations who have aspirations to become a

pilot will definitely be attracted by the catchy ad given below :

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iii) Car manufacturer FORD is one of the competitors to another

car manufacturer TOYOTO. TOYOTO is going to launch one

more new variant called ETIOS soon. So, Ford dealer is trying to

attract the customers by giving an inspiring advertisement in

dailies to customers to enroll them to buy a Ford Car with

fabulous discounts & prizes. This ad will definitely make

customers who are in a dilemma whether to buy a car now &

utilize the offer or after seeing Etios.

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iv) Now-a-days most of the customers are brand conscious because

of the awareness created on quality, environment friendly

products, CSR initiatives taken by the manufacturer etc., If all

major brands are available under one shopping roof means this

ad will definitely pull those customers. It will satisfy multiple

tastes also.

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v) Customers who are between middle & lower middle class band

are very much conscious about the money spent by them to buy

any items. Attractive advertisements with the prices of their

products mentioned as below will definitely pull the mass market

crowd & try to retain them by giving regular discounts, lucrative

offers & services etc.,

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