Planning promotion mix in Marketing and case study.Fourth session.

Problem:
How to plan the promotion mix when promoting sales?

Learning objectives:
1)What are the roles of the different promotion tools in Jamil's case?
2)What would be worthwhile doing with € 5.000,- or € 12.000,-?
3)How to find information for estimating the costs?


Keywords - definitions
Promotion Mix: the specific mix of advertising, sales promotion, public relations, personal selling and direct marketing tools that the company uses to persuasively communicate customer value and build customer relationships. (Kotler, 696)

Advertising: any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. (Kotler, 696)

PR:  is building good relations with the company’s various publics by obtaining favourable publicity, building up a good corporate image and handling or heading off unfavourable rumours, stories, and events.(Kotler, 696)

SP: Sales Promotion is short-term incentives to encourage purchase or sale of a product or service.(Kotler, 697)

Direct mail: sub-category of Direct Marketing, that suppose sending an offer, announcement, reminder, or other item directly to a person at a particular adress.(Kotler, 697)

Online-marketing: A form of marketing which uses the internet, utilizing company Web sites, online ads and promotions, e-mail, online video and blogs.(Kotler, 695)

Guerilla marketing: Guerrilla Marketing is about taking the consumer by surprise, make an indelible impression and create copious amounts of social buzz. It is an advertisement strategy concept designed for businesses to promote their products or services in an unconventional way with little budget to spend. It could be a youtube video or a viral post in social media, which would benefit your company. (drip.co)

Zero-budget-marketing: marketing without any budget or with unsufficient costs compared to other marketing methods.

1) To begin with I would like refer to value ,which I mentioned in my first article of this cycle. Promotion mix is only part of a broader set of marketing and company decisions. It's job is to help communicate the brand's value proposition to target customers.
According to our case, Jamil has "very tiny shop, selling Indian home decorations".  And when an enterpreneur make a choise, which marketing tool to use, it should be based on efficiency to his concrete business. So, it may be completly obvious, that using TV advertising would not help to Jamil's business, it would spend way too much money and would not get to his target auditory.
Here are steps of the promotional program, according to Kotler: 
1. Identify target audience and characteristics, and perception of product, context etc. 
2. Define communications objectives (not aware, awareness, interest, evaluation, trial, adoption). Seeking cognitive, affective or behavioral response. 
3. Establish budget (affordable / % sales / competitive / objective and task) 
4.  Message startegy and execution
4.  Which source to use? Select media (communications channels)  and timing.

5. Measure the impact, return on advertising.

We have previously discussed about importance of identifying target audience and characteristics.
In our case  Jamil already has a budget which he intend spending to increase sales.

There are several allocation methods used in developing a budget. The most common are listed below, accordingly to Haitham Al Khammash work:

Percentage of Sales method

Objective and Task method

Competitive Parity method

Market Share method

Unit Sales method

All Available Funds method

Affordable method

Also, no matter, which message Jamil wants to deliver to his target clients, he need to understand, what he want to achieve (sales objective). It determins furthermore the main advertising objective, which is a specific communication task, with a specific target audience, during a pecific period of time. Advertising objectives could be "to inform", "to persuade", or "to remind".
Here are some communication objectives:

I believe, that Jamil's business has narrow market and a competition in home decoration items is not extreme, so it would be better for him to set an aim to inform people about his shop, in order to increase sales.

But what are the ways, how we can reach our consumers (communication channels)?
According to M.B. Wood and also to Kotler&Armstrong, there are five major promotion tools:
-Advertising - any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. (Kotler, 696)
-Sales Promotion - short-term incentives to encourage purchase or sale of a product or service.(Kotler, 697)
-Personal selling- interactions with the customers via sales force of company to engage them, make sales or build customer relations (Kotler, 447)
-Public relations -building good relations with the company’s various publics by obtaining favourable publicity, building up a good corporate image and handling or heading off unfavourable rumours, stories, and events.(Kotler, 696)
-Direct and digital marketing is a direct interaction with carefully segmented clients or client communities to obtain immediate responce and enforce customer relationship.

Case.
In Jamil's case I would reccomend to try all possible options of using free promotional instruments or almost free tools and then try more classical advertising approaches.Probably home decoration items is not a single or impulse acqusition, so if Jamil's clients would know somehow about new arrivals in his shop, it would increase his sales. 
Some of free instrument could be:
-Create profile page or add information about your business on every social media, e.g. Facebook, LinkedIn, Twitter page. 
-Update those profiles,so people would get used to receive some information about your products and even could share it( funny Indian decoration items)
-Post valueable content in groups\communities related to design
-Make a video guide in your shop and upload it on Youtube or Vimeo
-Find local communities or talkboard forums and post information there
-Find ethnical or expat communities and attend some meetings to share information about your shop

Advertising is great way to let people know about your product.
I would reccomend to begin with a different attraction items near his shop. It could be information on boards or advertising in mailboxes of nearby houses, like an example of direct mail marketing. Quality made plastic signs could create and intrest of people walking by.

Sales promotional tools could include: 
• samples 
• Coupons 
• rebates 
• cash refunds 
• product warranties 
• prizes 
• frequent user programs 
• free trials 

Jamil could invest his money in sales promotion to create word of mouth. Usually Chinise and Indian goods have reputation of bad quality, so additional warranty, from my perception, could increase trust to his items. Special offers or small gifts may change for good customer experience and satisfaction. Also the culture of different promotional tools increase client's intrest to return in this shop.

Jamil already have a shop, where his products are on sale, but he could also try to work with a business consumers and percuade them to supply some goods from him. It would require him to hire another employee or he could do it himself in the begginning. He should also teach his workers at encounter some greeting and storytelling technique.

Public relations tools could include: 
• news 
• speeches 
• events 
• public service activities 

From my opinion, Jamil would comparatively low benefit from those activities, as far as his business still not large enough to make such captial investments - to have a separate worker, which would be in charge of public relations. However, for a small business it is good to have a common idea, a mission which could representate this particular shop and make it unique in eyes of media and regular customers.

I am not sure in Jamil's case about digital marketing. It is hard to decline a fact of common digititalisation but for interior goods there could be few options. To create an internet shop and regularly update assortment (with good pictures and full description), but then it should be completly another division of his business, I even may assume, independant. Or his shop could be just presented virtually with main goal to make accent, so people would visit it. It would be also good if information about his shop could be easialy found in google or google maps and some other navigation devices.

3)How to find information for estimating the costs?
There are several allocation methods used in developing a budget. The most common are Affordable, Percentage-on-Sales, Competitive-Parity and Objective-and-Task methods, according to Kotler&Armstrong. However, there are more listed below, based on information from Haitham Al Khammash work:

Percentage of Sales method
Objective and Task method
Competitive Parity method
Market Share method
Unit Sales method
All Available Funds method
Affordable method
It is important to notice that most of these methods are often combined in any number of ways, depending on the situation. Because of this, these methods should not be seen as rigid but as building blocks that can be combined, modified, or discarded as necessary. Remember, a business must be flexible—ready to change course, goals, and philosophy when the market and the consumer demand such a change.       ·   

Percentage of Sales Method:
Due to its simplicity, the percentage of sales method is the most commonly used by small businesses. When using this method an advertiser takes a percentage of either past or anticipated sales and allocates that percentage of the overall budget to advertising. But critics of this method charge that using past sales for figuring the advertising budget is too conservative, that it can stunt growth. However, it might be safer for a small business to use this method if the ownership feels that future returns cannot be safely anticipated. On the other hand, an established business, with well-established profit trends, will tend to use anticipated sales when figuring advertising expenditures. This method can be especially effective if the business compares its sales with those of the competition (if available) when figuring its budget.

Objective and Task Method
Because of the importance of objectives in business, the task and objective method is considered by many to make the most sense and is therefore used by most large businesses. The benefit of this method is that it allows the advertiser to correlate advertising expenditures with overall marketing objectives. This correlation is important because it keeps spending focused on primary business goals.

With this method, a business needs to first establish concrete marketing objectives, often articulated in the "selling proposal," and then develop complementary advertising objectives articulated in the "positioning statement." After these objectives have been established, the advertiser determines how much it will cost to meet them. Of course, fiscal realities need to be figured into this methodology as well. Some objectives (expansion of area market share by 15 percent within a year, for instance) may only be reachable through advertising expenditures beyond the capacity of a small business. In such cases, small business owners must scale down their objectives so that they reflect the financial situation under which they are operating.

Competitive Parity Method
While keeping one's own objectives in mind, it is often useful for a business to compare its advertising spending with that of its competitors. The theory here is that if a business is aware of how much its competitors are spending to advertise their products and services, the business may wish to budget a similar amount on its own advertising by way of staying competitive. Doing as one's competitor does is not, of course, always the wisest course. And matching another's advertising budget dollar for dollar does not necessarily buy one the same marketing outcome. Much depends on how that money is spent. However, gauging one's advertising budget on other participants' in the same market is a reasonable starting point.

Market Share Method
Similar to competitive parity, the market share method bases its budgeting strategy on external market trends. With this method a business equates its market share with its advertising expenditures. Critics of this method contend that companies that use market share numbers to arrive at an advertising budget are ultimately predicating their advertising on an arbitrary guideline that does not adequately reflect future goals.

Unit Sales Method
This method takes the cost of advertising an individual item and multiplies it by the number of units the business wishes to sell. This method is only effective, of course, when the cost of advertising a single unit can be reasonably determined.

 All Available Funds Method
This aggressive method involves the allocation of all available profits to advertising purposes. This can be risky for a business of any size it means that no money is being used to help the business grow in other ways (purchasing new technologies, expanding the work force, etc.). Yet this aggressive approach is sometimes useful when a start-up business is trying to increase consumer awareness of its products or services. However, a business using this approach needs to make sure that its advertising strategy is an effective one and that funds which could help the business expand are not being wasted.

Affordable Method
With this method, advertisers base their budgets on what they can afford. Of course, arriving at a conclusion about what a small business can afford in the realm of advertising is often a difficult task, one that needs to incorporate overall objectives and goals, competition, presence in the market, unit sales, sales trends, operating costs, and other factors.

Sources:
- Kotler, P. & Armstrong, G. 2016. Principles of Marketing. Sixteen edition, Global edition. Pearson Education.
- Lovelock, C. Wirtz, J.& Chew, P. 2012. Essentials of Services Marketing. London: Prentice Hall.
- Wood, M. B. 2014. The marketing plan A handbook / Marian Burk Wood/ Fifth Edition. Pearson Prentice Hall, Cop. Upper Saddle River.
-Info Marketers: Unleash Your Sales With Guerrilla Marketing Tactics  article
https://www.drip.co/blog/tips-and-tactics/info-marketers-unleash-your-sales-with-guerrilla-marketing-tactics/
-Khammash, Haitham. 2015. The effect of using the concept of marketing communications on the quality of the marketing message.