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 prewritten message in the advertisement.

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 to enlarge 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,

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 include encouraging 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 Samples Activity 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.

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 Provide a price reduction after purchase rather than Offers at the retail shop; Consumer sends a specified proof (Rebates) of purchase to the manufacturer who refunds part of the purchase price by mail. Price Packs Offers to consumers of savings off the regular price of (cents-off a product, flagged on the label or package. A deals) 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 as an incentive to purchase a particular product. A withpack 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 providing rewards related to the programs consumers frequency and intensity in purchasing the companys products or services. Prizes Prizes are offers of the change to win cash, trips, or (contests, merchandise as a result of purchasing something. A sweepstakes, contest calls for consumers to submit an entry to be games) 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 Values in cash or in other forms that are proportional Awards 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 Explicit or implicit promises by sellers that the warranties product will perform as specified or that the seller will fix it or refund the customers money during a specific

Tile-in Promotions CrossPromotions Point-ofPurchase (P-OP) Displays and Demonstration s

period. Two or more brands or companies team up on coupons, refunds, and contests to increase pulling power. Using one brand to advertise another noncompeting brand. P-O-P displays and demonstrations take place at the point of purchase of sale.

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.

ii)

Younger female generations who have aspirations to become a pilot will definitely be attracted by the catchy ad given below :

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.

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.

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.,