critical evaluation of sales promotions as a component of oxycola i.m.c. campaign
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A Critical Evaluation Report on Sales Promotions as a Component of an I.M.C. Campaign submitted by Tom Jacob as the Individual Report assignment of Integrated Marketing Communications module of Liverpool John Moores University MBA in Apr 2009TRANSCRIPT
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Liverpool John Moores University
Critical Evaluation of Sales Promotions as
a component of OxyCola I.M.C. Campaign
Course Name: Module Name: Module Code: Submission Date: Submitted to:
Master of Business Administration Integrated Marketing Communications MGTMKM024 April 2009 Princewill Omorogiuwa
Submitted By: Tom Jacob
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Executive Summary
As any tool maker will tell you, it’s not the tool; it’s how you use it.... (An African Proverb)
Today’s highly competitive market and challenging economic conditions have prompted the
companies to turn to marketing to provide them with a competitive advantage. In order to
maximise the efficiency of marketing, it is essential that that the message communicated is
consistent. This is where the Integrated Marketing Communication comes into its own. A
planning process which sees the whole rather than the parts, it ensures that all forms of
communications and messages are carefully linked together, making sure that they work in
harmony. Sales promotions is an important component in this process.
Key sensitising issues considered are as follows:
Application of sales promotion theories in developing an communications campaign for OxyCola
Critical Evaluation of sales promotions as a tool for marketing communications mix
Critical review of the usage of sales promotion in OxyCola communications campaign
Bridging the gap between the theory and practice in sales promotion.
Development of appropriate solutions and conclusion
This summary report aims to bridge the gap between the sales promotion theories and their
practice in the real world. The conceptual aspects of these theories and their real world
usage are discussed in detail. The ongoing academic debates on the long term effectiveness
of sales promotions are also mentioned.
Different sales promotions techniques like Price Discounts & Special Offers, Sampling,
Contest & Competitions, Free Gifts and Cause related Promotions are reviewed with a
special emphasis on their use in the OxyCola campaign. The report looks to identify the best
sales promotional tools that can be used to build brand awareness, the primary promotional
goal in the case of OxyCola.
A critical evaluation of sales promotions suggests that it should be used to complement the
broader campaign strategy. Advantages of sales promotions like scalability and flexibility are
identified. At the same time, care should be taken to make sure that the long term
objectives are not be forsaken for short term benefits.
The report stresses the importance of using sales promotions alongside other marketing
initiatives like Public Relations and Advertising. These should be carefully linked together to
maximise the effect of the campaign
To sum up, sales promotions can be a great marketing tool if used correctly. And to do so, it
should be used in relation with the overall promotional and brand strategy and should
coincide with other marketing initiatives. If used cleverly, Sales promotion can indeed
provide OxyCola with the initial boost with which it can go on and become a successful
brand.
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Contents
Introduction Literature Review Sales Promotions: Tools and Objectives Sales Promotions: Applications in OxyCola Campaign Critical Evaluation of Sales Promotions Suggested Solutions Conclusion Reference
04 04 05 07 08 08 08
09
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Introduction
"People don't ask for facts in making up their minds. They would rather have one good, soul-satisfying
emotion than a dozen facts." (Robert Keith Leavitt 1939)
Introducing a new brand in to today’s competitive market is a tricky business, even for a well
established, market leading company. The job becomes much more difficult for an upstart
company like OxyCola, who will have to build the brand from scratch. To build a successful
brand image, it is important that OxyCola portrays a consistent brand personality that
people can relate to.
Integrated Marketing Communications is “a planning process designed to assure that all
brand contacts received by a customer or prospect for a product, service or organization are
relevant to that person and consistent over time.” (American Marketing Association 2009).
This process makes sure that the ‘noise’ made is consistent and will compliment the brand
values.
Promotions can be defined as ‘sum of activities which will enlighten the public about a brand
or a product’. In essence, it creates brand awareness and will keep the customer ‘in the
know’. A typical Promotional Mix will consist of Advertising, Personal Selling, Sales
Promotion, Direct Marketing, Sponsorships and Public Relations. (Kerin, Hartley &Rudelius
2003)
This report tries to critically evaluate -and thereby bring out advantages and limitations- the
concept of Sales Promotion. As the OxyCola Campaign was conceived as B to C campaign,
this report will be evaluating Consumer Sales Promotions only. The report will study
different tools used for consumer sales promotion & their evaluation techniques, its’
importance in the promotional mix, and the views of prominent authors in the field.
The first part of essay is a literature review which attempts to bring out major theories and
concepts of sales promotion, and will enhance our understanding of the subject. The report
then discusses different sales promotional tools, their objectives and how they are
practically applied in the OxyCola Campaign. The report also explains how these theories
helped in the creation of an effective campaign. We will then look at the limitations of this
concept. This report will also try to understand the gaps between sales promotion theories
and their practice. The aim of this report is to look at ways of bridging the gap between
theory and practice of sales promotions.
Literature Review
Sales Promotions is traditionally defined as a ‘‘tactical, short term stimulant which will
increase customer awareness and there by sales’’ (Kumar 1998). But recent years have seen
a shift away from this way of thinking and Sales Promotions is now seen more of as a brand
building tool. Schultz, Robinson & Petrison (1997) interprets the role of Sales Promotion as
‘‘marketing and communication activities that change the price/value relationship of a
product or service perceived by the target, thereby (1) generating immediate sales and (2)
altering long-term brand value. Mullin & Cummins (2008) cites that ‘‘a good sales promotion
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will stop customers for a moment, cause them to think about the brand and product, move
them to make a decision to follow up the sales promotion’’
In practice, Sales Promotions is a collection of activities and techniques, which include deals,
discounts, coupons, loyalty programs, refunds, contests, sampling, gift offers and special
displays, which are used to ‘sell’ a product or a service to the customer (Brown 1993). Brown
believes that by itself, sales promotions cannot build long standing customer relationships,
but agrees that it can aid the process. Robinson & Carmack (1987) also back this argument
up by hypothesizing that sales promotions are at its’ most useful in the decision-making and
purchasing stages of the buying process. Blythe (2006) is also of the same opinion and states
that the customer will switch back as soon as the promotion ends.
Yeshin (2006) disagrees to the above stated views and states that Sales Promotions have
undergone a dramatic change in the resent years. He also argues that the fact that more
money is spent on sales promotions than any other tool signifies the importance of Sales
Promotion and stress the need of re-evaluating its’ fundamental role in the promotional mix.
The brand building qualities of sales promotions, particularly on overcoming cultural
challenges is discussed by Sandhusen (2000) as well.
Yeshin also states that it is impossible to understand the true value of sales promotion in
relation to the level of its costs as there is almost no published sources for sales promotion.
Schultz, Robinson & Petrison (1997) also acknowledges the need to scientifically measure
the results of sales promotions. Even though mathematical regression models exist (Fill
2002) to determine the contribution of sales promotions to the sales, it doesn’t take in to
account the attitude and behavioural changes in the customer.
Marketing Week (cited in Keillor, Owens & Hausknecht 2007, p.154) has likened sales
promotions to the ‘‘reality television of the marketing world’’ and warned that customers
might stop taking notice because sales promotions are now very common and customers are
becoming increasingly suspicious & hostile towards these techniques. Doole & Lowe (2007)
agrees and point out that sales promotions should constantly evolve and embrace new
techniques like product placement and viral marketing so that it can catch the imagination of
a customer. Weitz, & Wensley also supports this line of thinking and writes that ‘‘consumers
have become promotion elastic’’ and ‘‘larger and more lucrative incentives will be required’’.
Schultz & Schultz (2004) say that it is important to understand what promotions work for the
customers, so that the promotion efforts can be more targeted and ‘wastage’ can be
reduced. This line of thinking has initiated serious debates and is making waves in academic
circles where the ethics of such promotional activities are hotly argued. (Kerin, Hartley
&Rudelius 2003)
Sales Promotions: Tools and Objectives
Most Sales promotions are impersonal and complements and/or supplements other
initiatives like advertising and personal selling. Various sales promotional tools include deals
& discounts, event marketing, sampling, sponsorships, prize competitions, loyalty programs,
product placement and viral marketing.
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Price Discounts & Special Offers
This sales promotion technique exploits human psychology and the customer is attracted
not by the immediate need of the product, but by the ‘opportunity to buy on the cheap’
(Keillor, Owens & Hausknecht 2007). Cash incentives are used effectively by super markets
who ‘bait’ the customer with an exceptional price discount on one item, with the
expectation that the customer will buy other products as well. Another type of price
discounts is the incorporation of additional products (buy one get one free). This promotion
is used to push sales and/or achieve seasonal targets. The obvious disadvantage is the
decrease in the profitability (without taking in to account the economy of scale factor)
Sampling
An expensive promotion technique, sampling involves introducing a new customer to the
brand by allowing him to trial the product. This is very effective, particularly in the case of a
new brand, as the customer gains first hand information & feel of the product. Schultz,
Robinson & Petrison (1997) argues that sampling can persuade those customers who would
not have tried the product otherwise. They also point out that sampling will only work if the
product is noticeably superior to the ones already in the market. This can be a possible pit-
fall as ‘superiority’ is qualitative and will depend on the customer perception.
Contest & Competitions
Comparatively low cost (when set against the trade volume), these promotional tools try to
motivate the potential buyer by offering him/her a chance to win a substantial prize. This
can be anything from a dream holiday to a luxury car. These tools are at their most effective
at the point of sale. The disadvantages include low level of participation and legal problems -
some countries require the participants to demonstrate some kind of skill- (Yeshin, C.I.M
1998).
Free Gifts
This sales promotion technique is used to promote and create awareness of the brand. This
can either be distributed randomly (t-shirts and caps) or can be coupled with the product
itself. One of the most common examples is the ‘Happy Meals’ offer by McDonalds. This
promotion can create goodwill among the customers. Another technique is to use sequential
gifts offers like collectables, which has an added advantage of creating brand loyalty (Yeshin,
C.I.M 1998). A major problem with this type of promotion is the difficulty to identify items of
sufficient perceived value.
Cause related Promotions
Used mainly to project the brand image and personality, this sales promotion technique
allows the brand to be portrayed alongside ‘good-causes’ and share a bit of the lime light.
The brand can create an emotional bond with the customer as this promotion creates a
‘caring’ and ‘considerate to the others’ image. One example is the recycling program run by
the electronic retailer Currys. This can also give the customer a ‘value-added product’,
emotionally and/or practically. (Brody 2004)
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Sales Promotions: Applications in OxyCola Campaign
One of the main promotional goals of the I.M.C campaign designed by MMAT Inc. for
OxyCola was brand awareness. As the brand and the product are new to the market, it is
critical that the brand and its values are promoted heavily. A secondary objective was to
facilitate the trial of the product by the target audience. The promotional mix -particularly
the sales promotions- for OxyCola was designed with this in mind.
Price Discounts
Most customers prefer cash discounts over any other type of promotions (Keillor, Owens &
Hausknecht 2007). The product was introduced in to the market with a 25% price discount
on the RRP. This will be an adequate incentive for a customer to try the product out. This will
be complimented by a ‘4 for the price of 3’ scheme which will again encourage the customer
to buy the product in bulk. This promotion aided the overall promotional goals, because it
made sure that the customer will check out the product.
Sampling
According to Copley (2004) most customers are reluctant to check out a product brought to
the market by an upstart company. Sampling can be the answer to this attitude as the
customer is put in to a win-win situation. OxyCola samples will be distributed in Gyms Tube
Stations and Universities. It is also considered to be an efficient way to promote the brand
values as the customers are gaining first hand information about the product. Sampling will
help to achieve the promotional goals of the I.M.C. campaign because it increases the brand
awareness and at the same time facilitate a trial of the product.
Free Gifts
Classy white T-Shirts and Caps with OxyCola logo on it will be distributed to the members of
the target market, especially in the trendsetting areas of London like Mayfair and Tottenham
Court Road. It is important to note that these free gifts are distributed randomly. This has
two advantages. 1) It will increase the brand awareness and enhance the brand equity of
OxyCola (Yeshin, C.I.M 1998) and 2) it will encourage repeated buying and thereby create
customer loyalty. This will help the overall goals of the campaign by increasing the
awareness of the OxyCola brand.
Cause related Promotions
This is an important part of the OxyCola campaign as cause related promotions can capture
the customer imagination. OxyCola will support the non-smoking and healthy living
initiatives by the NHS and other NGOs. It will also support the London Mayor’s continued
push for using push-cycles for short distance journeys. This will reinforce the brand image
and personality of OxyCola. This will also generate lot of PR for the company and the target
audience - health conscious and trendy people- will relate themselves to the efforts made by
the company, which in turn will create a loyal customer base.
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Critical Evaluation of Sales Promotions
Like any other technique, sales promotions have its’ fair share of advantages and limitations.
One of the advantages is that it is extremely scalable and can be used at any given budget.
As OxyCola campaign was designed with a million pound budget in mind, this factor
becomes very important. Again, the flexibility-you can design the promotions with specific
goals-, of the different techniques was important as the campaign was used to promote the
brand awareness and introduce the OxyCola in the market. It is particularly noteworthy that
no other promotion can secure the trial of the product. Another benefit is the relatively
quick response (in terms of sales) time of the Sales Promotion
One obvious disadvantage is the difficulty to estimate the long term benefits of Sales
Promotion and its’ effects on the brand image. Can the price reductions of OxyCola win the
customer loyalty? It is also easy to lose focus of your overall brand strategy and use sales
promotions for short term gains. One example is the bulk buying promotion used by OxyCola
(4 for the price of 3), which didn’t aid the primary goals of the campaign, the brand
awareness. It can also create a negative impact on the brand itself.
Suggested Solutions
It is important to realise that the Sales promotions should always compliment and support
the main promotional goals of the campaign. It is very easy to get carried away and use
every trick in the book to maximize the short term gains. Every tool should be checked
against the goals before being used. This will also contribute to the budgeting efficiency of
the campaign. For example, sampling can use profiling and should target the gyms and posh
universities only.
Sales promotions should be used with great discretion, and care should be taken to make
sure that it is not run for too long. OxyCola sales promotions should coincide with the launch
of the product, and should be shortly withdrawn after that. Later on, one month long sales
promotions should coincide with summer and Christmas seasons. It is also understood that
sales promotions should be used in conjunction with other marketing initiatives to reap the
maximum benefits.
Conclusion
After the critical analysis of the issues, literature review and application of the theories in
the real world, this report comes to the conclusion that sales promotion is an important
promotion tool which can be very effectively used by OxyCola in its’ launch campaign.
Literature in the field provides a good understanding of the advantages and limitations of
Sales promotions. If used in relation with the overall promotional and brand strategy, sales
promotion can indeed provide OxyCola with the initial boost with which it can go on and
become a successful brand.
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Reference
Blythe, J. (2006), Marketing, Thousand Oaks: SAGE Publications.
Brody, R. (2004), Effectively managing human service organizations, Thousand Oaks: SAGE
Publications.
Brown, C. (1993), the sales promotion handbook, London: Kogan Page Publishers.
Copley, P. (2004), Marketing communications management: concepts and theories, cases and
practices, Oxford: Butterworth-Heinemann.
Doole, I., Lowe, R. (2007), International Marketing Strategy: Analysis, Development and
Implementation, Paris: Cengage Learning EMEA.
Keillor, D.B., Owens, D.L., Hausknecht, D.R. (2007), Marketing in the 21st Century: Integrated marketing
communication, Westport, CT: Greenwood Publishing Group.
Kerin, R. A., Hartley, S.W., Rudelius, W. (2003), Marketing: The Core, London: McGraw Hill
Professional.
Leavitt, R. K. (1949), Common Sense about Fund Raising, New York: Stratford Press.
Mullin, R., Cummins, J. (2008), Sales Promotion: How to Create, Implement and Integrate
Campaigns that Really Work, London: Kogan Page Publishers.
Robinson, W.A., Carmack, L.L. (1987), Best Sales Promotions: 6th Volume, Illinois: NTC Business
Books.
Sandhusen, R. (2000), Marketing, New York: Barron's Educational Series.
Schultz, D.E., Robinson, W.A., Petrison, L. (1997), Sales promotion essentials: the 10 basic sales
promotion techniques and how to use them, London: McGraw Hill Professional.
Schultz, D.E., Schultz, H.F. (2004), IMC, the Next Generation: Five Steps for Delivering Value and
Measuring Returns Using Marketing Communication, London: McGraw Hill Professional.
Weitz, B.A., Wensley, R. (2002), Handbook of Marketing, Thousand Oaks: SAGE Publications.
Yeshin, T., C.I.M (1998), Integrated marketing communications: the holistic approach, Oxford:
Butterworth-Heinemann.
Yeshin, T. (2006), Sales Promotion, Paris: Cengage Learning EMEA.