Effectiveness of promotional schemes free essay sample

This study is based on the effectiveness of promotional schemes. The study was conducted in various parts of Mumbai with a sample size of 25 people. The project was mainly concentrated on the promotional schemes of Big Bazaar. Questionnaires were prepared with respect to the Big Bazaars promotional schemes. The study had many constraints as it is a very vast topic and it’s difficult to find out the overall interest of the customers due to time constraints and money. The respondents were eminent personalities and business people which I had targeted the most. This is done because most of the middle class and lower class people always look for the promotional offers. But the upper class people normally do not bother so much. So this study was to find out the acceptance of the promotional schemes with respect to the upper class people also. The study was difficult because of my target respondent due to their time constraint and the availability of the permission to do the research work. So I express my gratitude towards all the people who had helped me in completing my project INTRODUCTION One of the most difficult marketing decisions facing by the companies is how much to be spending on promotional activities. John Wanamaker, the departmental store magazine, said, I know that half of my advertising is wasted but I dont know which half. Thus it is not surprising that industries and companies vary considerably in how much they spend on promotions. Promotional expenditures might amount to 30-50% of sales in case of cosmetics industry and only 10-20% in the industrial equipment industry. Within the industry, low and high spending companies can be found. Promotion is one of the market mix elements, and a term used frequently in marketing. A promotional plan can have a wide range of objectives, including: sales increases, new product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of a corporate image. The term promotion is usually an in expression used internally by the marketing company, but not normally to the public or the market phrases like special offer are more common. An example of a fully integrated, long-term, large-scale promotion is My Coke Rewards and Pepsi Stuff. The UK version of My Coke Rewards is Coke Zone. TYPES OF PROMOTIONAL MIX These are the types of promotional plans or mix which are mainly used. 1) Personal Selling 2) Advertising 3) Sales Promotion 4) Direct Marketing 5) Publicity Meaning of Promotion The term promotion is the term and includes mainly three type of sales activity: 1. Mass impersonal selling methods (Advertising). 2. Face to face personal selling (Salesman ship). 3. Activities other than personal selling and advertising such as point of purchase display (P. O. P. ) show and exhibitions, demonstrations and other non-securing selling efforts. This form of activity is called ‘Sales Promotion’ There are two types of promotion blends:- 1. Pull Blend. 2. Push Blend. Both of these are closely related to the channel of Distribution. 1. A pull blend is one in which mass impersonal, sales efforts are given the greatest emphasis. The purposes of pull blend is to pre-sell to the final consumers so that they demand the product at the retail level of distribution. The firm adopting this strategy would spend more on advertising and sales promotion rather than in personal selling. These efforts pull down the product from the manufacturer. 2. A push blend emphasizes personal selling. Naturally firms adopting this method develop a strong sales force at both the distributor and the dealer level. This method would tend to push the product through the channel of distribution. The Importance of Promotional Marketing Strategies Owners of small and medium-sized businesses need to be keenly aware of the importance of promotional and marketing strategies. Promotional and marketing strategies help your organization utilize the skills of your employees and stakeholders and can help you develop creative approaches to sales and customer service. The Marketing Plan Promotional and marketing strategies are often first brainstormed and written as part of an organizations marketing plan. If your small business doesnt have a marketing plan, you should seriously consider developing one. Most marketing plans include the current or expected strategies you have for your products, the price points of those products, how you intend to distribute the products, and your advertising and marketing tools. A marketing plan is also important for developing a promotional strategy as it helps your business identify its target markets and to set measurable goals. It is vital to the success of the organization that you implement a marketing plan that aims for growth and positive change in the bottom line. Understanding Your Clients Promotional and marketing strategies can also assist your business in understanding and connecting with clients and customers. If your marketing plan is loosely structured, you might not have much success at targeting products to the right demographics. Having a solid and well-thought-out marketing plan can help you identify gaps in the marketplace and provide feasible solutions for your clients. If you operate an ice cream business in a neighborhood where no other ice cream shops exist, it might be easier to attract clients than in a town where there are other ice cream options. In this case, understanding that your clients want sprinkles and waffle cones might help you sell more ice cream and keep your customers coming back for more. Developing Financial Goals Promotional and marketing strategies are also important for guiding your business into the development of financial goals. Financial goals are two-fold: They are related to your sales targets and also to your expenses budget. Sales targets are initially set as part of the marketing plan but might change over time according to changing market conditions, increases in product price, or increases or decreases in consumer demand. Monitoring expenses is also part of financial goal development. If your business tends to spend more than it brings in, youll have a serious problem maintaining long-term business viability. However, if the business is able to closely monitor its outflows, only spending what it absolutely needs to, youll be better equipped to increase the profit margins. Strategic Planning Another important aspect of promotional and marketing strategies involves strategic planning. Strategic planning is a concept that encompasses marketing, promotion, sales, and financial goals and is essentially about developing goals for your business. Having a strategic plan for your business means having plans in place to deal with both expected and unexpected situations. If you know that your mortgage will balloon by 5 percent next year, a strategic plan will outline how youll increase sales or decrease expenses to meet this additional outflow. A strategic plan might also include solutions to what-if scenarios. This means having a plan B for months when profits are down or expenses are unusually high. Sales and promotional strategies are important here because they allow you to ramp up marketing and to increase the bottom line without sacrificing efficiencies or service. Objectives of Promotional Strategies Small companies use promotional strategies to achieve many objectives. These objectives may be short- or long-term in nature. Marketing and advertising directors or managers are usually responsible for implementing company promotional strategies. They may use distribution tactics to push products at retail stores, or pull tactics aimed at drawing consumer to their outlets. Whatever the case, promotions can include advertising, direct mail, billboards, trade shows and even in-store promotions. Dispensing Product Information One promotional strategy objective is dispensing product information. Small companies often distribute brochures, catalogs, sales letters, videos and other information to market their products. They also use in-store videos or instructions to demonstrate more complicated products such as computer software, vehicles or educational courses, for example. Businesses also distribute promotional materials with their websites so people can view literature or online videos at their leisure. Consumers need information to assess various products and make purchase decisions. Advertisers use product information to educate consumers on various product features and benefits. Increasing Customer Traffic Some promotions are used to generate more customer traffic. For example, fast food restaurants often feature certain meals at reduced prices. These meals may be advertised in commercials to drive people into the fast food restaurants for lunch or dinner. Businesses may also reward regular customers with frequency card or loyalty programs. These promotions are designed to increase customer visits by rewarding them according to their expenditures. For example, a barber shop may offer customers a free haircut on the seventh visit. A company typically earns a large percentage of its sales from repeat business. Building Brand Awareness Small companies usually implement promotional strategies to increase brand awareness. Brand awareness is the percentage of people who recognize a brand from a specific company, according to marketing expert Dave Dolak. It is a metric that is relative to other competitive companies. In other words, companies strive to build brand awareness so their products are chosen over other brands. Brand awareness usually increases over time through repeat advertising and other key promotions. Increasing Sales and Profits Companies primarily promote their products to drive sales and profits. They may use product sales, coupons and bogo or buy-one/get one free offers to increase sales short-term. But they will need to emphasize product quality and customer service in their messages to increase long-term sales and profits. Businesses usually have specific attributes or core competencies that set themselves apart from competitors. To be successful, the images marketers wish to portray must be commensurate with actual company operations. The Advantages of Marketing Promotional Strategies Promotion places the employees in a position where an employees skills and knowledge can be better utilized. It creates and increases the interest of other employees in the company as they believe that they will also get their turn. It creates among employees a feeling of content with the existing conditions of work and employment. It increases interest in acquiring higher qualifications, in training and in self-development with a view to meet the requirements of promotion. Promotion improves employee morale and job satisfaction. Ultimately it improves organizational health it creates awareness of the existence of the product or service offered. It can provide customers with information about the product that may be useful to them, and therefore produces an incentive for them to buy your product, or use your service. It also helps increase the market share. The Disadvantages of Marketing Promotional Strategies Marketing promotions might jeopardize short-term revenues, but the goal is to improve long-term profits. For example, a promotional effort might convince people to try your product or service for the first time. If they like what your business offers, they’ll keep coming back after the promotion ends. But even tried-and-true marketing and promotional strategies can backfire, so monitor each campaign carefully to minimize your risk. Failure An obvious disadvantage to a promotional strategy is its potential for failure. For example, you could invest time and money designing and advertising a sale, and sacrifice normal profits during the promotion, only to achieve moderate results. Worse, your long-term benefits might not offset the costs of the promotion. Careful research and expert advice from a marketing consultant can help maximize your chances for success, but nothing’s guaranteed. Decreased Value The longer a sales promotion lasts, the more likely you will decrease the perceived value of your product or service. For example, if a restaurant offers a steep discount for children’s meals to attract families, parents might balk at paying more after they get used to the low prices. Keep promotions short to prevent long-term damage to your overall pricing strategy. Predictability If your promotions occur in a predictable pattern, potential customers might wait for a sale rather than buy the product or service at full price now. For example, if a retail clothing store offers a sizable discount on most holidays, sales will be low between holidays, and relatively few customers will ever pay full price. Bargain Hunters New customers might learn to love your product or service and become long-term clients. Or they might abandon you as soon as the promotion is over and continue to hunt for bargains. Converting bargain hunters to permanent customers depends on developing brand loyalty. For example, if your excellent customer service or high-quality products impress them, they are more likely to stay with you after prices return to normal levels. Celebrity Endorsements The benefit of using celebrities to endorse your brand is you can capitalize on the goodwill they elicit from the public. The disadvantage is your brand identity is vulnerable to their public relations problems. Research celebrities carefully to increase the chances their public images will always be worth your investment. NATURE OF PROMOTION PRICE PROMOTIONS-NON-PRICE PROMOTIONS OFFER DEFINITION OFFER DEFINITION Price off offers a discount to the normal selling price of a product Extra product offers an increased quantity of the product without an increase in normal retail price Coupon offers a certificate that provides a price reduction at point of purchase Premium offers a free gift in addition to the main purchase Rebate offers cash back from the manufacturer on a purchase Contest provides a chance to win a large prize through skill Discount Offers the customers a certain percentage of discount Sweepstake provides a chance to win a large prize based on chance SALES PROMOTION Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Techniques or devices used in sales promotion include:– Coupon Prize Promotion Bundling Price Down Free Sample Premium Bonus packs Various promotional schemes are distributed in the following manner also Consumer-promotion tools Sales-promotion tools Business-promotion tools THE CHALLENGE OF CONDUCTING EFFECTIVE PROMOTIONS Promotions are fact of life and a common currency in FMCG. Many would argue that consumers now have a basic expectation that much of what they buy, from groceries to lifestyle goods, will be subject to a promotional offer at some point or other. In the current economic downturn, the consumer expectation of valuable promotions has been increased as they expect retailers and manufacturers to share their pain. The current squeeze is a perfect storm of cost and demand drivers in a combination not seen before and it is causing consumers to consider affordability above all else in their purchasing decisions. Intense competition has driven the increased use of promotion mechanics over the last twenty years. Typically, in western economies, FMCG manufacturers have tended to invest around 15-25% of their total marketing budget in promotions. Recent history and current events suggests this spending will be seen to increase further, as Consumption slows, in order to sustain sales levels. Consumer expectation is further enforced by newer transactional vehicles, such as the internet, where additional discounts have been offered against high street store prices by vendors keen to increase sales volumes whilst reducing infrastructure and distribution costs. This combined with the provision of price comparison web sites by third parties such as mysupermarket. com and by retailers themselves (Tesco, Asda etc) further increases the marketers’ challenge from the well informed consumer Customer. It is highly unlikely that we will see the demise of promotions in the foreseeable future. The whole philosophy is too deeply entrenched in the retailers’ competitive arsenal and the practice is likely to increase markedly, with the greater burden of the cost falling on the Major brand manufacturers. Driven by category competition, retailer and consumer pressure and the increasing popularity of own brand and budget lines, CPG manufacturers will need to drive even more innovative promotions to protect market share and brand value. By the same token, retailers will need to balance short term gains on volume sales on own brand and economy lines, against the longer term impact on the profitability to them of established brands. All of these challenges have to be addressed in an environment where many organizations have reacted to events by implementing restructuring and cost reduction activities, thus putting additional pressure on finite resources. BIG BAZAAR Type Public Industry Retailing Founded 2001 Headquarters Mumbai, Maharashtra, India Products Hypermarket Revenue 11000 crore (US$1. 7 billion) crores (in 2012) (Big Bazaar and Food Bazaar combined) Employees ~ 36000 people Parent Future Group Divisions ~ 214 Website http://www. pantaloonretail. in/businesses/big-bazaar. html EXAMPLE OF PROMOTIONAL SCHEMES BY BIG BAZAR Research Methodology Data Collection:- There are two main sources for collecting data. These are :- 1. Primary Data. 2. Secondary Data. 1. Primary Data: It is the data that is collected for the first time. It is fresh and the originally collected by the surveyor. In this Project Sales Promotion Schemes, I contacted 25 customers situated on the various parts of Mumbai nearby areas. The response was collected personally by me through a structural questionnaire, consisting of 18 questions. 2. Secondary Data: Secondary data is the one which is collected by the someone else and already used in some or the other form. Here the secondary data used was the theoretical aspects of promotional tools and the statistical method made use of. Sample:- A sample of 25 customers was chosen from Mumbai nearby areas. It was a non-probability sample. Limitation:- Due to time and money constrains the present study was confined only to a sample of 25 customers and that too of Mumbai nearby areas. SEARCH FINDINGS The findings of the effectiveness of promotional schemes are 1) People frequently go to Big Bazaar 2) The reason for the visit is due to the promotion offers and the location of the store 3) People come to know about Big Bazaar is through advertisements 4) Advertisement of the Big Bazaar is very attractive 5) The quality of the product of big bazaar is satisfactory only 6) Big Bazaar’s advertisements are attractive 7) The feeling is very great while shopping in Big Bazaar 8) The presentation is only average in Big Bazaar 9) The arrangement is only average in Big Bazaar 10) Pricing is clearly visible 11) Offers are also clearly visible 12) Range of products is also good 13) Offers are clearly displayed and informed in an appropriate manner 14) Discounts on the product are the main attractiveness 15) Customer service is average at Big Bazaar 16) Its easy to shop in Big Bazaar 17) The main attractiveness is the promotional offers 18) Shopping experience is excellent CONCLUSION We have already moved beyond established norms and sensitivities of our markets and shoppers to a completely different situation, therefore Detailed and up-to-date understanding of an increasingly difficult market place is critical to success. It is vital to know which shoppers represent the biggest risks (and opportunities! ) to brands. There is a need to balance response to short term pressures versus longer term brand objectives Where do you want your brand to be when things improve? More than ever, excellence in day-to-day business management is key – the need to maximize every shopper interaction is greater than ever through; New Product Development Merchandising In-store execution Promotions Media So to conclude Promotional schemes caters all segments of the people. So the growth of business is interlinked with the quality and promotional offers. QUESTIONNAIRE Name: Age: 18-30 ? 30-40 ? Above 40 ? Profession: Income: 3000-5000 ? 5000-7500 ? 7500-10000 ? 10000-15000 ? Above 15000 ? Q1. Do you frequently visit Big Bazaar? a. Yes b. No Q2. Reason for your visit? a. Promotional Offers b. Discount Offers c. Range of Items d. Location of the Store e. Others Q3. How do you come to know about Big Bazaar? a. Through Advertisement b. Through Friends Relatives c. Through Hoardings / Newspaper d. Other Medium Q4. Rate the Attractiveness of the advertisement of Big Bazaar? a. Very Attractive b. Less Attractive c. Not at All Attractive Q5. Rate the quality of item as per the advertisement of Big Bazaar? a. Highly Satisfactory b. Satisfactory c. Averagely Satisfactory d. Dissatisfactory e. Highly Dissatisfactory Q6. Does the advertisement of Big Bazaar attract you to purchase items from Big Bazaar? a. Yes b. No Q7. How do you feel while shopping in Big Bazaar? a. Great b. Good c. Not satisfied with the arrangement of products d. Not satisfied with the promotional offers available in the store e. Not satisfied with the range of products Q8. How do you rate the presentation of products in Big Bazaar? a. Good b. Average c. Poor Q9 How do you rate the arrangement of Products in Big Bazaar? a. Good b. Average c. Poor Q10 Is the pricing Clearly written on the Shelf? a. Yes b. No Q11 Do you think Offers are clearly presented through Displays in Big Bazaar? a. Yes b. No Q12. How do you rate the range of Products in Big Bazaar? a. Good b. Average c. Poor Q13. Do the Displays and Promotional offers informed in the store attract you? a. Yes b. No Q14. Which type of promotional activities attracts customers? a. Discounts b. Extra Offer c. 1+1 Offer d. Advertisements Q15. How do you rate the customer service of the company? a. Good b. Average c. Poor Q16. Do you think due to displays it is easy to shop in Big Bazaar? a. Yes b. No Q17. Does the Sales Promotion activities of Big Bazaar made you to visit Big Bazaar again? a. Yes b. No Q18. Your overall shopping Experience due to offers and discounts in Big Bazaar? a. Good b. Average c. Poor BIBILIOGRAPHY MEDIUM SOURCE MARKETING RESEARCH (BOOK) DONALDS TULL PERIODICALS FINANCIAL EXPRESS, BOMBAY MAGAZINE THE WEEK NEWSPAPER TIMES OF INDIA INTERNET GOOGLE ANNEXURE Visiting Cards