Monday, September 13, 2010

MKT621 Assignment # 2 Solution

Semester “Spring 2010”
“Advertising & Promotion (MKT621)”
Assignment No. 02 Marks: 10
“Sales Promotion”
1: Develop a market share winning sales promotion campaign for the brand called
“Rawayat”. (4)
Sales promotion tools have become an important part of new brand introduction. The
level of initial trial of brand “Rawayat” can be increased through techniques such as
sampling, couponing and refund offers.
In-store sampling would be helpful for “Rawayat” to induce the purchase of brand in
which demonstrators set up a table or booth and customer taste the item. Promotional
incentives such as coupon or refund offers can also be included with a sample to
encourage repeat purchase after trial.
2: Develop a mode of advertising which could support the above sales promotion
campaign. (3)
Broadcast media (TV, Radio) and print media (Newspaper) can be used for “Rawayat” to
cover the mass market.
1. Television: TV commercial can be used to convey an image of the brand “Rawayat” as
well as develop emotional or entertaining appeals that help make a product interesting.
Television advertising makes it possible to reach large audience cost efficiently. Nearly
everyone regardless of age, sex, income or educational level watches TV. Because of its
ability to reach large audiences in cost-efficient manner, TV is popular medium among
companies selling mass consumption products.
2. Radio: “Rawayat” can be introduced via radio that is an inexpensive advertising
medium to produce. Radio requires only a script of the commercial to be ready by the
announcer or copy of a prerecorded message that can be broadcast by the station. The
cost for radio time is also very low. Reach of the message can be broaden by
broadcasting it on different stations.
3. Newspaper: Newspaper advertising remains the largest advertising medium in terms
of total advertising volume. Newspaper’s image strength is that it can be used efficiently
by advertisers on continual basis and newspapers have been redesigned to be more
interesting, easier and faster to read. News paper can cover a mass market.
3: Develop promotion budget by specifying the budgeting method for the above
campaign. (3)
A renowned FMCG (Fast Moving Consumer Goods) Company can use the following
methods to develop its promotional budget:
1) Percentage of Sales Method: The most commonly used method for setting
budget (particularly in large firms) is percentage-of-sales method in which
advertising and promotion budget is based on sales of the product. As “Rawayat”
is a new brand so its sales histories are not available, its promotional budget will
be set on the basis of estimated sales.
2) Objective & Task method: In this method budget is set driven by the objective
to be attained. This approach consists of three steps:
􀂃 FMCG Company wants to create awareness among its target market
􀂃 Specific tasks will be determined to achieve objectives like Advertise on
TV, Newspaper and Radio
􀂃 Costs will be estimated associated with tasks:
o Television advertisement = Rs. 4000
o Newspaper advertisements = Rs. 3000
o Radio advertisement = Rs. 2000
o Sampling= Rs. 1000
The both methods can be used in conjunction. Many firms now start the budgeting
process by establishing the objectives they need to accomplish and then limit the budget
by applying percent of sales method.
Note:
Sales promotion techniques and budgeting methods can vary from student to
student but a strong justification is required with each method.
Promotional Budget as a Percent of Estimated Sales
Expected Gross Revenue Rs.100,000
Percent of Gross Revenue for Promotion 10%
Total amount allocated to promotion Rs.10,000
Promotional Activities Cost Balance
Newspaper advertisements Rs. 3000 Rs. 7000
Television advertisement Rs. 4000 Rs. 3000
Radio advertisement Rs. 2000 Rs. 1000
Sampling Rs. 1000 -0-
Total promotional expenditures/balance
10,000 -0-

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