Advertising and Sales Promotion-1

Assignment – A

1. Explain Push and Pull promotional strategies? Discuss which suits best for McDonald.

2. Discuss the role of advertising agency in big market players like Coke and Pepsi?

3. Define market segmentation and product life cycle?

4. Write short notes (on any three of the following)

( a ) Target Marketing ( b ) Sales promotion

( c ) Direct Marketing ( d ) Trade Promotions

( e ) Market Positioning

5. “Internet is the best source of media of New Millennium”. Do you agree? Discuss.

Assignment – B

1. Creativity in advertising is the ability to produce original ideas. Discuss its importance.

2. Discuss the strategy for promotion and advertising for new product launch by any service industry.

3. Event marketing today gives an edge and new direction to companies to promote their products in market. Discuss.

4. Please read the case study “Free Flights Promotion Ends in Disaster” and answer questions given at the end.

Case Study FREE FLIGHTS PROMOTIONS ENDS IN DISASTER

The Hoover Company’s attempts to sell more vacuum cleaners by offering an incentive of free flights have become a legendary disaster in the field of sales promotions. An examination of the case is useful for highlighting some of the problems of planning, implementing, and monitoring sales promotions.

During the early 1990s, Hoover was faced with a period of economic recession in which discretionary expenditure on consumer durables was held back. In these conditions, most vacuum sales were replacements for worn out machines or first time buys for people setting up home. The challenge was to increase the sales of machines bought to upgrade existing equipment.

The company came up with the idea of offering free airline tickets to America for anybody buying one of its vacuum cleaners. For many people, a holiday in the USA, may have been perceived as an unnecessary and unaffordable luxury during a period of recession, but one that might be justified if it came free with the purchase of an ‘essential’ vacuum cleaner.

The immediate result of the sales promotion was to boost the company’s sales of vacuum cleaners to more than double the level of the previous year. So far so good, but then serious problems set in. The first problem occurred when Hoover could not satisfy demand for its vacuum cleaners and had to resort to paying its staff overtime rates of pay in order to increase supply. It should be remembered that the initial objective of the promotion was to utilize existing spare capacity rather than adding to that capacity. The company had carried out insufficient research prior to launching its incentive. Had it done so, it may have reached the conclusion that the incentive was too generous and likely to create more demand than the company could cope with.

A second problem occurred during subsequent periods when sales feel to below their pre-incentive levels. Many people had simply brought forward their purchase of a vacuum cleaner. Worse still, many people had bought their cleaner simply to get the free tickets, which at £ 70 for a cleaner with a free £ 250 ticket made sense.

These people frequently disposed off their cleaner as they had no need for it. The classified ads of many local newspapers contained many adverts for ‘nearly new, unused’ vacuum cleaners at discounted prices and this further depressed sales of new machines once the sales promotion had come to an end.

A third and more serious problem occurred when large numbers of buyers tried to use their free flight vouchers. All sales promotions are based on an assumption of take-up rates, which can be as low as 5-10 per cent. Anything higher and the cost of the incentives actually given away can wipe out the benefit arising from increased sales. In this case, Hoover had carried out insufficient pre­testing of the sales promotion in order to assess the likely take-up rate and was surprised by the actual take-up which subsequently occurred. In an attempt to control costs, the company became notorious for its attempts to ‘suppress’ take-up of free flights.

Many claimants complained that telephone lines were constantly busy and, when they did get through, they were offered the most unattractive flights possible. It was reported that Claimants from the south-east of England were only offered flights departing from Scotland and those from Scotland only offered flights from London, done to reduce the attractiveness of the free offer. These activities attracted high levels of coverage in the media and left a once highly respected brand as one with a perception of mistrust. Five years after the initial debacle, the Hoover Holiday Pressure Group continued to be an awkward reminder for the company.

The free flights promotion eventually cost Hoover a reported £ 37 million in redemption charges, without bringing about any long-term growth in sales. With appropriate pre-testing, these costs could have been foreseen. Worse still, the company’s brand image had been tarnished in a way that would take many years-if ever-to recover from.

Questions to be answered:

1. What are the inherent problems for a company such as Hoover in assessing the effectiveness of sales promotion activity?

2. Identify a program of research that Hoover could have undertaken in order to avoid the costly failure of its free flights promotion.

3. What alternative methods of promotion might have been more suitable to achieve Hoover’s objective of utilizing spare capacity during a period of economic recession?

Assignment – C

1. Promotion is a communication package in marketing which aims to exchange between buyer and seller:
a. Product
b. Skill
c. Price
d. Information
2 . One of the tools of Sales promotion available to a marketer is:
a. Personal Selling
b. Planning
c. Pricing
d. Information
3 . Key role of an advertising manager is to plan the:
a. Advertising Campaign
b. Budget
c. Promotion mix
d. All of the above
4 . Segmentation of buyers on the basis of their income is known as:
a. Demographic segmentation
b. Income segmentation
c. Class segmentation
d. Psychographic segmentation
5 . The main role of advertising is:
a. To be persuasive to buy
b. Art and designing of the advertisement
c. Conveying right information to the customer
d. Highlighting our product vis-à-vis competitors’
6 . Campaign Planning is governed by following parameters:
a. Total advertising budget
b. Media availability
c. Consumer Profile
d. All of the above
7 . Psychographic segmentation signifies segmenting market on the basis of:
a. Social traits
b. Income status
c. Place of living
d. All of the above
8 . Sales promotion budget is calculated on the basis of:
a. Value to customer
b. Stage in Product Life Cycle
c. Sales revenue
d. All of the above
9 . Sales promotion objective at the stage of maturity is to:
a. Inform
b. Persuade
c. Remind
d. All of the above
10 . Trade promotion refers to:
a. Contests
b. Push money (spiffs)
c. Buying allowance
d. All of the above
11 . Promotion accomplishes the task of:
a. Reminding
b. Persuading
c. Informing
d. Awareness
12 . Personal Selling to prospective customers so as to generate sales is made in the form of:
a. Written communication
b. Advertisement
c. Promotion
d. Oral Communication
13 . Pull and Push strategy are directed at:
a. Manufacturers
b. Consumers
c. Retailers
d. Dealers
14 . Marketing position involves:
a. Identifying market opportunities
b. Display of product
c. Dealer Network
d. Manufacturing stock
15 . Advertising Campaign is an organized series of advertising messages with:
a. Identical or similar message
b. Price strategy of product
c. Informing about the product
d. All of the above
16 . Advertising agency helps marketing department in:
a. Budgeting
b. Media promotion
c. Advertising strategy
d. All of the above
17 . Segmentation is a process of:
a. Classifying market
b. Identifying market
c. Defining market
d. Targeting market
18 . Atomization strategy helps in:
a. Choosing target market out of total segments
b. Makes an automatic flow of supply of goods
c. Makes an automatic buyer of product
d. All of the above
19 . Geographic segmentation is:
a. The Simplest
b. Less expensive
c. Division by location
d. All of the above
20 . Advertising process involves:
a. Creative writing process
b. Designing process
c. Budget process
d. All of the above
21 . Broadcast promotional tools are:
a. Newspapers
b. Magazines
c. Radio, Television
d. All of the above
22 . Telemarketing deliver promotional offers on:
a. Internet
b. Phone
c. Brochures
d. All of the above
23 . Post sales activities are conducted for:
a. Testing volumes of sales
b. Testing customer satisfaction
c. Brand awareness
d. All of the above
24 . Corporate advertising is also called as:
a. Office advertising
b. Institutional advertising
c. Mass advertising
d. All of the above
25 . Company having high value of sales reflects:
a. High customer satisfaction
b. High turnover
c. High revenue
d. All of the above
26 . Sales promotion enables us:
a. To create brand awareness
b. To interact closely with the customer
c. To increase the sales
d. All of the above
27 . Basic function of Sales Manager is:
a. Increase volumes
b. Make budget
c. Confirm quality of product
d. All of the above
28 . Newspaper advertising helps in:
a. Capturing a large number of people
b. Rating awareness at low cost
c. Getting a quick information to customer
d. All of the above
29 . The promotional activity involves pre-working on:
a. Budget
b. Media
c. Inventory
d. Message
30 . The promotional objectives at maturity stage of life cycle is termed as:
a. Informing
b. Persuading
c. Reminding
d. All of the above
31 . The most effective communication mode is:
a. Internet
b. Media
c. Mailers
d. Word of mouth
32 . Advertising and sales promotion induces:
a. Action
b. Awareness
c. Persuasion
d. All of the above
33 . Marketing communication is a periodic interaction between:.
a. The buyers and sellers
b. The marketing department
c. The marketing & sales department
d. All of the above
34 . For large audience effective means of advertising is:
a. Mass Communication
b. Market Communication
c. Corporate communication
d. All of the above
35 . Interpersonal communication carries:
a. 2way message flow
b. Advertising Strategy
c. Budgeting strategy
d. All of the above
36 . Advertising is a paid form of non-personal communication of:
a. Ideas
b. Goods and services
c. Add on benefits
d. Competitive advantages
37 . The process of interpreting the message in copy and visuals is called:
a. Encoding
b. Decoding
c. Bar-coding
d. All of the above
38 . One of the 4P of Marketing Mix are:
a. Product Advertising
b. Promotion
c. Public Relations
d. Personal Selling
39 . Non-product advertisement aims to:
a. Create favorable image
b. Work for non profit organization
c. Work on low cost
d. All of the above
40 . Brand Building, Advertising and Sales Promotion are:
a. Synonyms
b. Antonyms
c. Tools of Marketing
d. Concepts of marketing