Introduction

Promotion

• Promotion can be defined as any method that communicates to the target market about the right
product to be sold in the right place at the right price. Promotion is the activities people use to
communicate with others about their product or service and to convince them to use it. Everything
you do communicates something about your business. In tourism, this includes a wide variety of
activities including brochures, billboards, and newspaper ads. Promotion involves careful planning.
When you see or hear effective promotion it is merely the "tip of the iceberg." A great deal of work
went into planning the final product. But before talking about the planning process, we need to
review the tools of promotion.
• Promotion is a form of corporate communication that uses various methods to reach a targeted
audience with a certain message in order to achieve specific organizational objectives. Nearly all
organizations, whether for profit or not-for-profit, in all types of industries, must engage in some
form of promotion. Such efforts may range from multinational firms spending large sums on
securing high-profile celebrities to serve as corporate spokespersons to the owner of a one-person
enterprise passing out business cards at a local businessperson’s meeting.
• Like most marketing decisions, an effective promotional strategy requires the marketer understand
how promotion fits with other pieces of the marketing puzzle (e.g., product, distribution, pricing,
target markets). Consequently, promotion decisions should be made with an appreciation for how it
affects other areas of the company. For instance, running a major advertising campaign for a new
product without first assuring there will be enough inventory to meet potential demand generated by
the advertising would certainly not go over well with the company’s production department (not to
mention other key company executives). Thus, marketers should not work in a vacuum when
making promotion decisions. Rather, the overall success of a promotional strategy requires input
from others in impacted functional areas.
• Promotion includes personal selling, advertising, sales promotion, and public relations. There are
also different forms of each of these types of promotion such as broadcast, print, direct mail and
electronic advertising that offer different advantages, disadvantages, costs and paybacks. The same
message may be interpreted differently, based on the source of the message in terms of
trustworthiness and credibility.
• In addition to coordinating general promotion decisions with other business areas, individual
promotions must also work together. Under the concept of Integrated Marketing Communication
marketers attempt to develop a unified promotional strategy involving the coordination of many

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 different types of promotional techniques. The key idea for the marketer who employs several
promotional options to reach objectives for the product is to employ a consistent message across all
options. For instance, salespeople will discuss the same benefits of a product as mentioned in
television advertisements. In this way no matter how customers are exposed to a marketer’s
promotional efforts they all receive the same information.
• Another one of the 4P's is 'promotion'. This includes all of the tools available to the marketer for
'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications
has its own 'promotions mix.' Think of it like a cake mix, the basic ingredients are always the same.
However if you vary the amounts of one of the ingredients, the final outcome is different. It is the
same with promotions. You can 'integrate' different aspects of the promotions mix to deliver a
unique campaign.
• The tools in the promotional mix include:
1. Advertising - Any paid form of non-personal presentation and promotion of ideas, goods or
services by any identified sponsor.
2. Direct Marketing - The use of mail, telephone or other non-personal contact tools to communicate
with, or solicit a response from, specific customers and prospects.
3. Trials and Service Promotion – Short term incentives to encourage trial or purchase of a product
or service, such as discounted rates for services over a limited time period.
4. Public Relations and Publicity - Programmes designed to promote and/or protect a company’s
image, or those of its products, including product literature, exhibitions and articles in
professional or in-house newsletters.
5. Personal Selling - Face to face interactions with one or more prospective users, to generate
increased activity. In a library context this will include “academic detailing” – one-to-one
meetings with new or existing staff to brief them about a specific project or service.
6. Sponsorship - Financial or external support of an event or person by an unrelated organization or
donor, commonly used in the arts, sports and charities.

• The specific mix depends on a number of factors, including:

1. The promotion budget available
2. Stage of product in its life cycle
3. Nature of the competitive situation
4. The target audience
5. The nature of the product.

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Promotional Strategies

• In the sales profession, two effective ways to get business are to go out after it, or have it come to
you. The first you do by prospecting; the second through promotional strategies. Most salespeople
agree it's much more pleasant and less time consuming when prospects come to them. The beauty of
promotional strategies is: they plant a seed in your prospect's mind. In effect, you've made a
"reservation" to be considered for future business. If your prospect has had positive exposure to you
in advance, you will more easily establish the relationship, make the appointment and complete the
sale. Promotion can give you the name recognition you need.
• Most of us are familiar with market research as suppliers (or information providers) try to obtain
information from us (or library users) on what we require. Promotion is the reverse side of this.
Organizations use promotion to communicate with customers about products they offer. Promotion
is thus one half of the communication process with customers. Ideally it will work cooperatively
with market research (in an iterative feedback loop) so that the constantly changing requirements of
users are met by promotional activities that target (or even anticipate) these expressed needs.
• Such activities need to be managed. They require the allocation and expenditure of resources,
whether physical (promotional products) or intangible (staff time or use of existing facilities). As
such they cannot simply be allowed to grow organically – they require shaping and direction via a
promotional strategy.
• A successful promotional strategy multiplies the salesperson's presence and increases his
effectiveness. A properly executed promotional program can accomplish these objectives:
1. Introduce your product or service to new prospects
2. Smooth the way for setting appointments
3. Encourage more purchases by current clients
4. Stimulate off-season purchases
5. Compete with competitor's promotional efforts
6. Keep present, former and future customers informed of your services
7. Enlarge your market by increasing activity in a wider geographic area
• All promotional efforts aim to increase sales. While advertising and sales promotion do this directly;
publicity and public relations influence sales indirectly, by encouraging the buyer to think highly of
you, your company, and your products. Most people would rather buy from a person or company
they "like" even if they don't know them personally.
• If your company handles most of its own promotion, you should still think of yourself as a company
within a company. On a smaller scale, promotion is as important to the smaller company, as it is to
the larger corporation.

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 Types of Promotional Strategies

Promotional Strategies can be categorized as follows:
1. Personal Selling
2. Sales Promotion
3. Public Relations
4. Direct Mail
5. Trade Fairs and Exhibitions
6. Advertising
7. Sponsorship

1. Personal Selling
• Personal Selling involves direct face-to-face relationships between sellers and potential customers.
Personal Selling is an effective way to manage personal customer relationships. The sales person
acts on behalf of the organization. They tend to be well trained in the approaches and techniques of
personal selling. However sales people are very expensive and should only be used where there is
a genuine return on investment. For example salesmen are often used to sell cars or home
improvements where the margin is high.
• Personal Selling Skills
 First Impressions: Whilst you are assessing your client they are doing the same to you, and will
make similar assumptions based on hairstyle, hair colour, general neatness, clothing, make-up,
accessories and how closely you follow trends. These factors will contribute to your client's
ultimate decision to purchase based on your advice, or even to return or not. First and lasting
impressions are often made in the first 10 seconds of meeting a new person: quite a daunting
thought.
 Relationship Building: In order to establish a successful client/stylist relationship, the client must
feel comfortable and able to trust their stylist. Speaking with warmth and friendliness,
empathising and showing genuine interest with any arising problems, can develop this sense of
trust. You should appear interested and animated during conversations and this relationship must
be sincere. Aim to radiate professional warmth.
It is important not to be overbearing with timid clients or too vague with dominant clients, hence
correctly identifying client type is a skill that should be learnt as soon as possible. Look out for
body language in order to provide a clue; and use active questions in order to confirm your ideas
and also to ensure you understand your client's needs.

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 Greetings: Clients will feel more valued if they are made to feel important and welcome. As they
arrive greet them by name, or if unknown introduce yourself. Do not leave a client unsure of
where they should be or what they should be doing.
Encourage conversation by checking that the style, colour or form from their last appointment has
been a success; be prepared for a negative response and able to give an honest appraisal.
Similarly, check that your client is happy with using their finish products at home. If not, offer
alternative solutions and be prepared to explain why. These enquiries will help to make your
clients feel special, providing reassurance and building confidence and trust.
 Client Satisfaction: The essential ingredient for happy, satisfied customers is great-looking hair
that suits their lifestyle and can be successfully replicated in the home. The benefits of this are
many, including an increased sense of trust between client and stylist. With this firmly established
it is likely that a client will have more confidence in your recommendations. This is particularly
helpful when encouraging them to buy OTC products, as they will assume that your talent for
creating great hairstyles will be mirrored by your knowledge of products, so make sure it is!
 Timing: The perfect time to recommend finishing products to your client is during the final stages
of hairstyling when they can see the effect of a product on their hair. Discuss the end-styling
process and describe the products you are applying, what you hope to achieve and any additional
benefits. If more than one product is needed, and the client is reluctant to make an expensive
purchase, prioritise the most essential product. Make a note of what they bought and remind them
to add extra products to their collection on future visits. Clients may visit the salon between
appointments to purchase products: use their record card as a reminder of previous purchases and
styling needs.
 Demonstration: When selling a product it is essential to show the application benefits. First
demonstrate on their hair and explain, where relevant, different methods of application, how
much product to dispense and how to achieve the best results. The next step is to allow your client
time to experiment, to ensure that they are able to achieve the same effect before they go home.
The feel, look, smell and packaging are all vital in encouraging a client to buy finish products.
Describe these elements and use this time to explain fully all benefits, such as protection from the
environment, added gloss or long-lasting hold.
 Problems and Concerns: Show interest in any concerns your client may have regarding the use
and purchase of finish products. Once you are in possession of all the facts you will be better
placed to offer an appropriate solution. Use this opportunity to perform a full consultation and
diagnosis, you will then be able to target specifically and offer advice on problems. Use active
listening and open questions to ensure a successful diagnosis, for example:

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 Body Language: It is essential to be aware of your body language at all times when interacting
with clients. This is never more important than when you are encouraging them to buy products.
The key skills involve making eye contact, using the appropriate gestures and being aware of any
unconscious negative body language. Maintain openness with your client: sit facing them, use
open gestures and look interested.

2. Sales Promotions
• Sales promotion consists of a diverse collection of incentive tools, mostly short term, designed to
stimulate quicker and/or greater purchase of particular products/services by consumers or the
trade.
• Advertising offers a reason to buy. Sales promotion offers an incentive to buy. Sales promotion
tools for consumer promotion include cash refund offers, prices off, prizes, patronage rewards etc.
Sales promotion tools for trade promotion include prices off, advertising and display allowances
and free goods based on sales. Sales promotion tools aimed at salesmen of the company are
contests, incentives for sales in fixed periods, trips to tourist locations etc.
 Rapid Growth of Sales Promotion: In comparison to growth in advertising sales promotion has
grown more rapidly and in many consumer packaged goods company it now accounts for 65% to
75% of the total budget (Kotler, 1997).
 Purposes of Sales Promotion: Incentive type promotions are used to attract new buyers or triers,
to reward loyal customers, and to increase the repurchase rates of occasional users. There is risk
in putting a well-known brand leader on promotion more than 30% of the time.
 Major Decisions in Sales Promotions:
1. Setting the objectives
2. Selecting the tools
3. Developing the sales promotion program
4. Pretesting the program
5. Implementing and controlling the program
6. Evaluating the Results of the program

• Sales promotion tends to be thought of as being all promotions apart from advertising, personal
selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free.
Others include couponing, money-off promotions, competitions, free accessories (such as free
blades with a new razor), introductory offers (such as buy digital TV and get free installation), and
so on. Each sales promotion should be carefully costed and compared with the next best
alternative.

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• Sales Promotion refers to specific activities (such as point-of-purchase displays, brochures,
coupons) which can generate a specific purchase behavior.
• Sales promotions differ from overall promotion in that they are onetime activities. They involve
special sales, demonstrations, and other business stimulators that are temporary. Some common
promotions are: demonstrations, novelties/gifts, special events, coupons, exhibit booths,
incentives, celebrity appearances, discounts, promotional offers, holiday cards, open houses, and
sales. As an individual salesperson, think up new ways to promote sales, especially when your
company does not. Keeping an eye on the calendar and knowing when a product needs to be sold
most heavily will help you plan ahead. Begin your sales promotion early so that awareness has
been established when the season arrives. If your company is involved in sales promotions, take
advantage of them. If your company has a booth at a trade show, volunteer to work it. At the show,
exchange business cards with everyone you meet. Try to set appointments while you're at the show
rather than calling everyone later. If your company gives out calendars, stamp your name on them.
• Whether you're independent or represent a large company, you can generate many promotional
ideas. They create an immediate sales impact. Many promotional items have a long life and can
remind your clients and prospects about you and your product throughout the year, like wall
calendars.

3. Public Relations
• Public Relations is defined as 'the deliberate, planned and sustained effort to establish and
maintain mutual understanding between an organization and its publics' (Institute of Public
Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long-term
and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a
disaster. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan.
• Public Relations or Publicity is any free form of "mass selling." All of these methods try to inform,
persuade and remind the target audience about your product or service. They are complementary to
each other and should be integrated to maximize your results.
• Public Relations means relating to the public in a way that wins its appreciation. It involves
goodwill and community awareness. Its affect on sales is indirect and more difficult to analyze.
Sales do improve, however, because people like to do business with salespeople that take an
interest in the community. In determining your best public relations strategies, you should
consider:

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 a) Who are your "publics?"
They are groups of people who perceive you as a businessperson. Some publics act on their
perceptions and increase your sales; others just appreciate you. It is important to identify each of
your publics and develop strategies for improving your image with them. For example, if you sell
real estate, your publics could be bankers, mortgage companies, customers, the community at
large, other brokers, property managers, etc.
b) How can you reach these publics?
Many methods exist. Your choices might include: Contributions of time or money to particular
groups and activities, such as sponsoring Little League, bowling teams, sporting events, cultural
activities, charities, community development programs, and others.
 Public speeches - You can offer your services to a group who would like to hear you speak on
your area of expertise.
 Staged events - Your targeted publics may sponsor picnics, anniversary parties, ball games or
other events. Your presence at these occasions gives your public a chance to get to know you in
a relaxed, non-business setting.
 Trade Associations - Belonging to these and special interest groups provides good PR for
individuals and companies. Your membership shows that you care about the industry. You can
also develop many prospects from your participation.
c) What image do you want to convey?
Public relations can be more important to an individual salesperson than to a company. Your
image is an "intangible" asset that affects sales as much as your "tangible" assets (products). The
way people see you on a day-to-day basis is very important. Therefore, public relations should be a
way of life as well as a strategy for exposure. Professionalism is the best PR.

4. Direct Mail
• Direct mail is very highly focussed upon targeting consumers based upon a database. As with all
marketing, the potential consumer is 'defined' based upon a series of attributes and similarities.
Creative agencies work with marketers to design a highly focussed communication in the form of a
mailing. The mail is sent out to the potential consumers and responses are carefully monitored.
• For example, if you are marketing medical text books, you would use a database of doctors'
surgeries as the basis of your mail shot.

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5. Trade Fairs and Exhibitions
• Such approaches are very good for making new contacts and renewing old ones. Companies will
seldom sell much at such events. The purpose is to increase awareness and to encourage trial.
They offer the opportunity for companies to meet with both the trade and the consumer. Expo has
recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in
interest in such events.
6. Advertising
• Advertising is a 'paid for' communication. It is used to develop attitudes, create awareness, and
transmit information in order to gain a response from the target market. There are many
advertising 'media' such as newspapers (local, national, free, trade), magazines and journals,
television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus
sides).
• Advertising means a paid, persuasive presentation promoting you, your company, and/or your
product/service. Advertising is any paid form of "mass selling" or communication with large
numbers of potential customers at the same time. No matter how subtle or obvious your ad, the
desired outcome can be achieved only through:
 Education - Making prospects aware of yourself or your product and what you can do for them
 Preference Formation - Getting the prospect to like you and prefer your product to the
competition
 Generating an Inquiry - Advertising doesn't make a customer, you do. But, you must get
people to tell you of their interest. The size and nature of your business will determine which
advertising means you will use. If you're a sales consultant, it often doesn't pay for you to
advertise on TV or in newspapers. Trade journals can be a more effective medium. In
determining which sources would best fill your needs, ask yourself some questions:
1. What message do I want to convey? Should more emphasis be put on my product/service or
me?
2. What is my target audience? How can advertising expand it?Where will my target prospects
most likely see my message?
3. How much can I afford to spend on advertising this year? Can I afford not to advertise?
4. When is the best time to advertise?
• With answers to these basic questions, you can choose the best resources for advertising. The
following list is not all-inclusive: TV, radio, newspapers, direct mail, novelties, handbills/flyers,
trade magazines, billboards, shopper’s guides, consumer magazines, displays and brochures.

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• Patterns have emerged which show that some sources are better for salespeople than others. The
most proven promotional methods in sales are, in this order:
1. Person to person contact
2. Telephone contact
3. Personal letter
4. Form letter
5. General promotional mailing
6. Display advertising
• One good strategy combines a personal letter of introduction prior to personalcontact. The benefits
of personal contact are obvious each contact has a high impact. Both methods can be utilized
appropriately and successfully.

7. Sponsorship
• Sponsorship is where an organization pays to be associated with a particular event, cause or image.
Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the
event are then associated with the sponsoring organization. These elements of the promotional mix
are then integrated to form a unique, but coherent campaign.

8. Publicity
• Publicity means getting exposure through the news media, utilizing announcements prepared by
companies or the media of newsworthy stories or events. Publicity also can mean feature articles in
magazines. This coverage or "free advertising" can have spectacular results. Publicity often
succeeds where advertising fails:
 Credibility - When people read an article in the paper or hear a story on the news, they
automatically assume it is authentic and originated by the media.
 Subtlety - Your message reaches many prospects who would otherwise resist contact. Prospects
"ingest" your message as news rather than as "advertising."
 Dramatization - Publicity can convey, "we are your neighbors, struggling with you and doing
our part to improve life around us." Publicity, especially on a local level, helps create a feeling
of community.
• Publicity takes many forms. Your company or a public relations firm prepares press releases.
These brief, newsworthy stories highlight you or the company in a way that interests the public.
The difficulty is getting the media to use the story. To have your press releases published regularly,
you must have expertise in publicity as well as good connections with the news media.

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• Feature Articles make excellent publicity. Written by staff or freelance writers for trade
magazines, professional journals, and consumer magazines, they cover you or your business in
more depth than a press release. If you're unique in some way, you may provide an interesting
subject for a feature article that can be linked to your profession. In time your business will
increase due to the publicity.
• Photographs are good publicity vehicles. Newspapers often print unusual, humorous and
interesting photographs. If you have a photograph that shows you or your company in an
interesting light and is appealing from a journalistic viewpoint, send it to your local newspaper or
trade journal.
• It is rare to find a product or service that "speaks for itself" and doesn't need promotion. As
professional salespeople, we must recognize that, and actively promote products as well as our
service or ourselves. Promotional strategies will not only get you in the door, they'll bring the
business to your door.

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 Developing a Promotional Strategy

Developing an effective promotional strategy demands more than just being aware of the tools of
promotion. Promotion is an ongoing process that requires much planning. A strategy is simply a
careful plan. The effectiveness of your strategy depends on more than how much money you put
into it. Effectiveness results from the thoroughness of your planning and the consistency with
which you carry it out. The following nine steps outline an easy to follow procedure for
developing an effective promotional strategy.

Step 1-Figuring out who you are

 Establishing your Identity. When people talk about developing a promotional image, they
often forget about first developing their identity. Identity and image are not synonymous.
Identity is what you really are. Image is how others see you.
 This is an important distinction because how you see yourself may not be how you are seen by
the public. To manage how others see you, first clarify your identity. You can then project it in
such a strong way that identity and image are the same.
 To accomplish this step, make a list of all your characteristics including such things as
facilities, location, price, and attractions.

Step 2 - Deciding on your product

 Developing a Them. The list of characteristics that make up your identity will be a long one.
You cannot and should not promote all of these characteristics. You need to decide on what
part of your identity you want to promote. This will be the theme for your promotional
strategy.
 A theme is the one main idea, or message you want to communicate with your promotional
efforts. The theme must be intimately tied to your identity.
 To determine a theme, ask yourself the following questions. "What is there about my facility
that would be appealing to visitors?" 'What can I tell them that would make them want to come
and visit us?" "What makes my facility unique?"

Step 3-Deciding who you want to attract

 Identifying Your Target Audience. Deciding on your identity and theme is the foundation for
your strategy. Build on this foundation by deciding on who you want to reach. You must
decide on and contact your target audience, those people you want to reach with your

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 information. Do you want to attract local or non-local visitors? Repeat or first-time visitors?
Families or singles? Young or old? Deciding on who you want to attract is important.
 To reach your target audience, you must identify their needs and how they obtain information
about recreation and tourism opportunities. Different groups have different needs. Senior
citizens have different needs than do young adults. Handicappers have different needs than do
non-handicappers. When you are developing your message you should address some of these
needs.
 Different groups also get information from different sources. Some groups get information
through informal sources, such as past visitors or local people. Others go through formal
sources such as travel agencies. Some choose personal sources, such as friends or neighbors,
while others will go through non-personal sources, such as reading every brochure they see.
Identifying these sources of information is important so that you can find your target audience
and distribute your information directly to them.

Step 4 - What do you want to accomplish with your strategy

Establishing Your Objectives. Before going any further, decide what you want to accomplish
with your promotional strategy. This means establishing objectives that are very specific based on
what you want the outcome of your strategy to be. Objectives should have the following
characteristics:
 They should identify who you are trying to reach.
 They should state how much change you want to accomplish through your promotion.
 They should state how much time it will take to accomplish your objectives.
 They should state what you want people to do because of your promotion.

Step 5 - Actually getting your message across

Developing Your Message Content. An important part of your content is your theme. Do not try
to get across two or more ideas in the same message. This does not work, and will hinder your
message. All information in your message must center on your theme. Your theme has to bind
your message together. Keeping the content centered on your theme will also help limit the
amount of information you present. This will help keep your message short and to the point.
There are two types of information that you can use: informative and persuasive. Informative
messages tell people something without regard to their response. Persuasive information tries to
convince people to do something. There are also two types of persuasive information. The first
type, rational persuasive information, uses logical arguments based on supportive evidence.

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 The second type, motivational persuasive information, appeals to people's needs and desires.

Step 6 - Deciding how to say it
 Developing Your Message Structure. Putting your message together is called message
structure. How it is put together depends on what type of information you are using. For
persuasive messages, it will depend on whether you are using rational or motivational
information.
 A rational message has three parts. The first part is the claim of the message. This is what you
want people to believe is true of you. The second part is the evidence, or facts, that you use to
support your claim. The third part is the warrant. The warrant is a general hypothetical
statement That ties the evidence and the claim together. It is the "glue" that holds the message
together and helps it make sense. With rational messages, you need to decide if you want to use
a one-sided argument or a two-sided argument.
 A one-sided argument only presents the pro side of the argument, while a two-sided argument
presents both sides. Which one you use will depend on which one meets your needs and the
type of audience. Generally, one-sided arguments are better with audiences already favorable
to your message. Two-sided arguments are best with audiences who are opposed to your
argument, are better educated or have already been exposed to counter arguments.
 For motivational messages, there are two parts: the claim and the appeal. Again, the claim is
what you want people to believe is true of you. The appeal is a statement aimed at your
audience's particular needs or desires to motivate them to do what you want.
 When using rational or motivational messages, make sure the promotional tool you are using is
credible with your audience. This is especially true if you are using a spokesperson. Your
spokesperson must be competent and trustworthy in the eyes of your audience. He/she should
be likeable and appear to fit in with your message.
 Informational messages are different from persuasive messages. For them, organization is the
key. Since this is an informative message, all your information needs to be presented in a
logical and orderly manner.
 Finally, whether using informative or persuasive messages, there is one problem that always
arisesÄwhere to place your punchline, the key to your message. This will depend on the type of
audience you have. If you have a captive audience and a lot of time, place it at the end of your
message as a climax. If your audience is non-captive, place the punchline at the beginning of
your message to get and keep their attention.

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Step 7-Deciding how to present it

 Developing Your Message Format. Formatting your message is the next step. Format refers to
how your message will appear to people when you distribute it. The media or the method used
to convey your message will determine your format.
 The number of types and combinations of media available to use is almost endless. You are
only limited by your imagination. Examples include television, radio, employees, community
calendars, and newspaper feature or human interest stories. A good way to decide what you
want to use is to look at what others are already using.
 Take any ideas that you like and adapt them to your format, but do not directly copy them and
make sure that you are adapting the ideas to your needs.
 Second, learn the good and bad points of various media, including their limitations. Find out
what best suits your needs and what will allow you to meet your audience's needs. Finally,
check to see what will be most cost-effective. Once you select the media you want to use, the
actual message must be put together. Pay close attention to the nonverbal aspects of the
message. Things such as graphics, color selection, type style and size will have a big effect on
how people perceive your message. It is important that these things relate to your theme,
message, and audience for the maximum effect. Finally, your message must be united. Each
part of your message must relate directly to your theme.

Step 8-Taking your message to your audience

 Choosing your Delivery System. Most businesspeople in the tourism industry would agree that
coming up with a good promotional message is only half the battle. The other half is getting
your message to your target audience. Thus, the delivery system you choose is very important.
A delivery system is how you distribute your message and your media. There are two types of
delivery systems. The first type is the formal delivery system, one that you plan to use or in
which you have control over the content of the message, such as television, radio, newspapers,
newsletters, and catalogs.
 The second type is the informal delivery system. An informal delivery system is one that you
do not have control over, such as word-of-mouth, friends, family members, and repeat visitors.
Whether formal or informal, each system is composed of a message and the media that is used
to present it. Many times your choice of media goes with your delivery system (promotional
ads in newspapers, for instance). With some forms of media, such as brochures and exhibits,
this is not always the case.
 Many times people overlook how they intend to distribute their brochure or display their

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 exhibit. Know in advance how you will use these items. Overlooking how you intend to
distribute any kind of media can cause it to become ineffective. Finally, different audiences
obtain information from different media. A thorough understanding of what media your target
audience uses is essential to distribute your message effectively.

Step 9-How is it going?

Evaluation. Creating and implementing a promotional strategy can drain your resources if you do
not regularly evaluate the strategy to see how effectively it is working. This is where your
objectives come in handy. To evaluate your strategy you need only to determine whether you
have made progress in meeting your established objectives. Generally, it is good to wait one year
after implementing your strategy to see if it works because promotional effects can be cumulative.
Always be ready to make changes. First, remember that promotion is a process. The nine steps
outlined here are guides to develop an effective promotional strategy. The process is the same
whether you are promoting a business, community, or region. Second, remember that the only
promotional strategy worth anything is the one that is cost-effective. Know your budget and
understand the resources available so that you do not create a "monster" that uses resources but
does not return visitor dollars.

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 Target Audience
• Targets of Promotional Strategies
The audience for an organization’s marketing communication efforts is not limited to just the
marketer’s target market. While the bulk of a marketer’s promotional budget may be directed at the
target market, there are many other groups that could also serve as useful target of a marketing
message. Targets of a marketing message generally fall into one of the following categories:

Members of the Organization’s Target Market – This category would include current
customers, previous customers and potential customers, and as noted, may receive the most
promotional attention.

Influencers of the Organization’s Target Market – There exists a large group of people and
organizations that can affect how a company’s target market is exposed to and perceives a
company’s products. These influencing groups have their own communication mechanisms that
reach the target market and the marketer may be able utilize these influencers to its benefit.
Influencers include the news media (e.g., offer company stories), special interest groups, opinion
leaders (e.g., doctors directing patients), and industry trade associations.

Participants in the Distribution Process – The distribution channel provides services to help
gain access to final customers and are also target markets since they must recognize a product’s
benefits and agree to handle the product in the same way as final customers who must agree to
purchase products. Aiming promotions at distribution partners (e.g., retailers, wholesalers,
distributors) and other channel members is extremely important and, in some industries,
represents a higher portion of a marketer’s promotional budget than promotional spending
directed at the final customer.

Other Companies – The most likely scenario in which a company will communicate with
another company occurs when the marketer is probing to see if the company would have an
interest in a joint venture, such as a co-marketing arrangement where two firms share marketing
costs. Reaching out to other companies, including companies who may be competitors for other
products, could help create interest in discussing such a relationship.

Other Organizational Stakeholders – Marketers may also be involved with communication
activities directed at other stakeholders. This group consists of those who provide services,
support or, in other ways, impact the company. For example, an industry group that sets industry
standards can affect company products through the issuance of recommended compliance
standards for product development or other marketing activities. Communicating with this group
is important to insure the marketer’s views of any changes in standards are known.

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 Communicating With Target Audience
• Effective communication
Effective communication occurs when a message being sent is understood by the person receiving
it. The receiver will also know how and when to respond to the message. Figure below illustrates
the key elements of communication. As Figure below shows, any communication can be broken
down into several distinct components.

 Sender – the individual, group or organization wanting to communicate ideas about the product.
 Message – the use of text, images, sounds, etc. to convey ideas and information about the
product.
 Medium – the platform used to deliver the message, such as television, radio magazines, the
internet and face-to-face
face communication.
 Receiver – the individual, group or organisation the message is intended for. The receiver
recei
interprets the message and attempts to understand its meaning.
 Feedback – the receiver’s response to the message. This could be made using a variety of
different media or might simply be an action (including ignoring the message).
 Noise – anything that gets in the way of the receiver understanding the sender’s true message.

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 Objectives
• Objectives of Promotional strategies:
Any promotion strategy has one or more objectives. Typical objectives include:
 Improving customer awareness and knowledge of a product
 Improving the image of a business
 Generating or increasing sales
 Improving customer loyalty to a product or a business
 Altering customer perceptions of a product.

• To achieve any of these objectives, customer attitudes towards a business and/or its products have
to be altered. It is unlikely that any single promotional activity will achieve a campaign objective
– a promotional mix is required. When outlining a promotional mix, it is sensible to consider a
variety of promotional activities that might be available to the business within the budget. The
final selection and sequencing of promotional activities will depend on the budget and customer
attitudes. However, initially, it is sensible to think in general terms and outline a number of
different promotional mixes. These mixes will differ because they use different promotional
activities, and/or they present the promotional activities in a different sequence. For example, a
campaign, whose objective is to raise awareness about a new product, might use an exhibition and
a PR event. However, which should come first? Should the activities take place simultaneously?
Should the PR event act as an initial message, to gain interest in the product, with the exhibition
providing detailed product information to interested potential customers?
• The most obvious objective marketers have for promotional activities is to convince customers to
make a decision that benefits the marketer (of course the marketer believes the decision will also
benefit the customer). For most for-profit marketers this means getting customers to buy an
organization’s product and, in most cases, to remain a loyal long-term customer. For other
marketers, such as not-for-profits, it means getting customers to increase donations, utilize more
services, change attitudes, or change behavior (e.g., stop smoking campaigns).
• However, marketers must understand that getting customers to commit to a decision, such as a
purchase decision, is only achievable when a customer is ready to make the decision. Customers
often move through several stages before a purchase decision is made. Additionally before
turning into a repeat customer, purchasers analyze their initial purchase to see whether they
received a good value, and then often repeat the purchase process again before deciding to make
the same choice.

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• Promotion involves making sure that customers are aware of the products that the organization
makes available to them. More specifically, your promotional strategy will include one or more of
the following objectives:
 To provide information
 To increase demand
 To differentiate the product
 To accentuate the value of the product
 To stabilize existing activity levels
• Such objectives must be accompanied by an appropriate promotional mix (Rowley, 1998). The
promotional mix combines different channels or routes to communicate a promotional message.
From a range of possible tools in your “toolkit” you will select an appropriate promotional mix.
• The type of customer the marketer is attempting to attract and which stage of the purchase process
a customer is in will affect the objectives of a particular marketing communication effort. And
since a marketer often has multiple simultaneous promotional campaigns, the objective of each
could be different.
• Types of Promotion Objectives
The possible types of objectives for promotional strategies may include the following:
 Build Awareness – New products and new companies are often unknown to a market, which
means initial promotional efforts must focus on establishing an identity. In this situation the
marketer must focus promotion to: 1) effectively reach customers, and 2) tell the market who
they are and what they have to offer.
 Create Interest – Moving a customer from awareness of a product to making a purchase can
present a significant challenge. As we saw with our discussion of consumer and business
buying behavior, customers must first recognize they have a need before they actively start to
consider a purchase. The focus on creating messages that convince customers that a need exists
has been the hallmark of marketing for a long time with promotional appeals targeted at basic
human characteristics such as emotions, fears, sex, and humor.
 Provide Information – Some promotion is designed to assist customers in the search stage of
the purchasing process. In some cases, such as when a product is so novel it creates a new
category of product and has few competitors, the information is simply intended to explain
what the product is and may not mention any competitors. In other situations, where the
product competes in an existing market, informational promotion may be used to help with a
product positioning strategy.

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 Stimulate Demand – The right promotion can drive customers to make a purchase. In the case
of products that a customer has not previously purchased or has not purchased in a long time,
the promotional efforts may be directed at getting the customer to try the product. This is often
seen on the Internet where software companies allow for free demonstrations or even free
downloadable trials of their products. For products with an established customer-base,
promotion can encourage customers to increase their purchasing by providing a reason to
purchase products sooner or purchase in greater quantities than they normally do. For example,
a pre-holiday newspaper advertisement may remind customers to stock up for the holiday by
purchasing more than they typically purchase during non-holiday periods.
 Reinforce the Brand – Once a purchase is made, a marketer can use promotion to help build a
strong relationship that can lead to the purchaser becoming a loyal customer. For instance,
many retail stores now ask for a customer’s email address so that follow-up emails containing
additional product information or even an incentive to purchase other products from the
retailer can be sent in order to strengthen the customer-marketer relationship.

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 Budget
• Given a limited budget, difficult choices have to be made, and expensive media may be
immediately ruled out of consideration. Even when a budget seems generous, often the
objectives of the promotion strategy are such that substantial promotional effort is required if
they are to be achieved. This means that, while the size of a campaign budget might dictate
which types of promotional activities can be used, difficult decisions have to be made
irrespective of how money has been allocated. In all campaigns, the marketing team will be
looking to use promotional activities which make the most impact and deliver the best value for
money. It is sensible to complete a detailed budget for a promotion campaign which sets out the
method, timing and cost of each element of the campaign’s promotional mix. In order to carry
out what-if calculations, the budget should be constructed using a computer spreadsheet.
• Using spreadsheets to plan campaigns
 Spreadsheets are useful because they can be set up to carry out what-if calculations. For
example, what if a decision is made to use a national newspaper to carry an advert rather than
a local newspaper? If the spreadsheet is set up correctly, all that would need to be altered
would be the daily rate charged by the newspaper. The impact on the total cost of the
campaign would be automatically calculated. The cost of each promotional activity can be
split into fixed and variable costs. Spreadsheets can simply calculate the variable cost by
multiplying the unit cost by the number of times the promotional activity is used.
 The estimated total cost of the promotion campaign would be calculated by adding up the total
costs (fixed plus variable) of the campaign’s individual promotional activities. It would also
be sensible to budget for contingencies such as increased design or labour costs. A
spreadsheet could do this very simply, by calculating the contingency as a certain percentage
(say, 10 per cent) of the budget. The total cost of the promotion campaign, including the
contingency, is then compared with the allocated budget. The aim is to balance the two.
 Consider, as a further example of its usefulness, how a spreadsheet could be set up to take into
account discounts for bulk orders. For example, you might get a 10 per cent discount if more
than 1000 A5 fliers are ordered from a printer. Again, it is straightforward to enter a formula
so that a spreadsheet applies a discount when a particular threshold is reached.

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 Affecting Buyer Behaviour

Personal
Age, location, income, etc.
Recent events in your life
Degree of interest in the
product

Influences
Social on buyer Psychological
Family and culture the way Motive for purchase core
we behavior reason
were brought up for wanting to use a product
Friends their attitude towards Personality type outgoing,
the product introvert, etc.
Culture the sets of beliefs Attitudes core values
and values determine
we accept and see as being our feelings about events
our own and products

• Promotional tools are designed to communicate effectively, by providing information to

potential customers. In addition, they attempt to affect buyer behaviour by, Creating and raising
awareness creating, enhancing and/or changing the product’s image. In both cases, the focus is
on perception. The promotional strategy aims to shape customers’ perceptions of a business and

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 its products. In other words, promotional tools are being used to influence the purchasing
decisions of consumers by creating a favourable view of a business and its products. Making
purchasing decisions is a complex process.
• Figure above illustrates the three main influences on buyer behaviour. It indicates that the
decision to purchase a product can be a very complex one, especially if the product is expensive
(such as a house) or of significant interest to a consumer (such as buying clothes to wear at a
party). Promotional tools, such as advertising and sales promotion, need to focus on some of the
influences listed in Figure above if buyer behaviour is to be altered. The choice of influence
depends on the product being promoted and the audience being targeted. Sometimes
promotional tools will be used in emotive ways, by acting on our feelings and targeting emotions
such as fear and happiness. At other times, promotional tools will be used to inform rather than
persuade, to provide rational facts and figures rather than appeal to our emotional identity. A
fashion clothing business+-, launching a new range of clothes would possibly focus on these
aspects of buyer behaviour:
 Social – focus on the attitudes of friends and use advertising showing groups of people with
apparently similar age and background characteristics
 Psychological – communicate the values represented by the range of clothing and to which
the buyer might aspire, such as “independent”, “edgy” or “casual”
 Personal – promote key aspects or benefits of the product likely to appeal to the target age
group, such as price ranges or the style of the clothing. When promoting a new range of
fashion clothing, it’s likely that the social and psychological factors will be most important;
with psychological factors are likely to be most dominant, because fashion is often based an
abstract ideas – “style” or “cool” – rather than a functional product.

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 Production Requirements and Costs
• Decisions about which media to use in a promotion strategy involve balancing several factors.
The effectiveness of any particular medium has to be weighed against the costs of using that
medium. In this topic, we consider the production requirements, costs, and benefits and
limitations of three important groups of promotional media:
1. Print media
2. Audiovisual media – film, video, television and radio
3. New media – websites, e-mail and mobile phones.
1. Print media
Print media covers a wide range of promotional materials. As Figure below shows, this includes
advertisements in newspapers and magazines, leaflets, brochures and direct mail, and billboards
and other outdoor sites.

Newspaper

Other
Outdoors Magazines
such as Bus
Shelters

Printed
Media

Billboards Direct Mail

Leafleting

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• Production requirements
Any business wishing to produce printed promotional material – whether designing a leaflet,
newspaper advertisement or a billboard, needs to follow four steps once it has developed a rough
outline or idea for the material.

Step 1 - Identify the design requirements of the organisation printing the promotional
material. Often work must be submitted using particular software and/or templates; if colour
printing is being used, additional design requirements will be stipulated

Step 2 - Produce first drafts of the material. This work can be done in-house by the business or
can be undertaken by a design agency. A design agency should certainly be used if the
business has no staff with graphic design qualifications and experience.

Step 3 - Produce a proof version. Check the draft for content accuracy and visual appearance.
It might take several drafts before the designers produce an acceptable proof.

Step 4 - Approve a perfect proof. Check the initial proof version for errors to produce a
perfect proof. It is the responsibility of the business to check the accuracy of the perfect proof
before it is printed.
• Costs

Print costs depend on several factors. These include: the use of colour – black and white is less
expensive than full colour, but the price gap has fallen in recent years the size of the
print-run – the larger the print-run (the number of copies printed), the cheaper the unit cost
(see Figure 10.10 for an example) the size of the promotional material – the cost of a 48 sheet
billboard is obviously much higher than an A4 leaflet; a full-page advert in a national
newspaper is more expensive than a small listing in a local newspaper the use of design and/or
advertising agencies costs can be reduced considerably if design work is carried out in-house,
however the quality and effectiveness of the finished promotional material is likely to suffer
as a consequence.
• Benefits and limitations

The true cost of printed promotional material is not only determined by the design and
printing costs. A business needs to consider the costs of distribution, of sending promotional
materials to customers or buying advertising space (in say newspapers or on billboards).

A vital consideration is the coverage and frequency of the printed promotional material.
Coverage is measured by the proportion of the target audience that views the promotional
material; for example, the number of people within the targeted age group who buy a
particular magazine compared with the total population in that targeted age group.

Frequency is the number of times the promotional material might be viewed; for example, the
number of times an advert is carried by a newspaper.

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Ideally, to produce a useful cost indicator, the total cost of designing, printing and distributing
any promotional material should be divided by the number of people viewing the material.
For example, hiring Posters on Wheels to drive around a city centre during peak shopping
times might have a high cost, but the coverage and impact could be much greater than
distributing leaflets to local housing estates. The wider the coverage and the greater the
frequency, the greater the possible impact of any promotional material. However, wide
coverage and high frequency usually comes at a price, driving up the total cost of producing
and distributing the promotional material. The final choice of print media depends on the
business’s objectives and the amount of money allocated to the promotion campaign. Figure
below summarizes the key benefits and limitations of some print media:
Method Benefits Limitations
1. Newspaper Many people read newspapers. Can Discarded very quickly. Limited printing
define the type of person reading the capabilities quality of graphics can suffer and
newspaper by age, income group, etc. limit the design of the advertisement.
Adverts can be placed without too
much notice, say one to two weeks.
Published daily or weekly.
2. Magazines Easy to identify the readership of High initial advertising costs compared to other
magazines, especially with specialist print media. As most are monthly publications,
publications. Good printing advance notice needed when placing an advert.
capabilities with high-quality graphics Could be kept for too long, resulting in
possible. Kept for long periods out-of-date promotional messages
resulting in repeated exposure.
3. Billboards Low cost given repeated viewing. Can Message can’t be complicated as only a few
and other be seconds devoted by the reader. Doesn’t often gain
outdoor located close to where target market full attention. Can’t easily control who views the
sites lives, works or travels. Always message.
displaying
the message.
4. Radio Readily accessible by target audience, Obviously limited to audio messages. Prestige of
at home or on the move. Relatively low the medium has declined. Attention span of
cost compared to television and listener is limited – people listen to the radio and
cinema, a 30-second slot on a national do other things at the same time. Once the audio
station might cost around Rs.112500 message has been played, it’s gone – message
for a peak listening time slot. Message does not persist.
can be quickly modified. Plenty of
regional stations.
5. Television Reaches a very large audience. High High initial cost. As with radio, a “perishable”
initial cost, but low cost per viewer. message. Audience size can fluctuate. Space
Benefits from using sound and vision – extremely limited during peak viewing times.
some adverts can be highly memorable. Increasing use of videos and other recording
High prestige. Regional television technologies means that viewers can skip adverts.
stations afford some selectivity of Viewers can also switch channels during the
audience. Stations also have some age advertising breaks.
group and income level.

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2. Audio and moving images
The most high profile use of audio and moving images in promotional media is in radio,
television and cinema advertising. However, promotional activity in this area isn’t limited to
paid advertising. Many businesses produce promotional videos and DVDs, for direct distribution
to customers or for use in installations in retail shops and at exhibitions and trade shows. An
increasing number of businesses also use audiovisual elements on their websites.
• Production Requirements

Promotional campaigns using audio and moving images require careful planning. As with
print media, a systematic approach to planning and executing the campaign is essential. This
is certainly the case when producing moving image promotional media, such as television and
cinema advertisements. It requires a variety of demanding skills to produce audio and moving
images. In general, therefore, all audio and visual work is likely to be carried out by specialist
agencies. However, any organization commissioning an audiovisual promotional campaign
needs to manage and control the process, and it should ensure that these stages are followed.
A rough outline of the promotion should be produced. This needs to take into account the
overall objectives of the strategies. This should help to determine the messages that need to be
conveyed, and the characters and events that might be involved.

A script (audio) and storyboard (moving image) should be produced. These are used to direct
the production of the soundtrack and/or moving image. The audio or moving image piece
needs to be recorded and edited. A rough cut, or draft version, is then reviewed by the
customer. A final cut is then produced. The final cut is stored using an appropriate format,
such as DVD, web server, digital audio tape, film and video tape.The finished product is
distributed to appropriate locations, such as particular radio stations, television channels and
cinemas, and/or uploaded to websites. Broadcast time slots, if required, should have been
booked in advance.
• Costs

The cost of producing and broadcasting promotional material using audio and/or moving
images depends on factors such as:
 The quality of the final production
 The length of the final product
 The delivery method
 Timing and location.

High-quality radio, television and cinema advertising is much more expensive to produce
than material intended for more limited distribution across the internet or on a video display
unit in a supermarket. Production standards are much higher for television and cinema
advertising, and the editing and image processing costs are also higher.

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Note that as the running time of the material increases, so will the final cost of production.
These costs can escalate and it’s vital that the production has clear targets regarding content
and duration. Advertising rates depend on the platforms being used. The internet presents an
almost costless platform (if the company runs material on its own website). By comparison,
advertising on television seems expensive. Distributing material on DVD is relatively
inexpensive, even after original production (filming) costs are taking into account, and can be
an attractive option. Advertising rates also depend on the timing and location of the broadcast.

Advertising on radio or television at peak listening and viewing times costs more than at
periods when the audience is much smaller. Similarly, showing advertisements in busy, inner
city cinemas is more expensive than running a campaign in rural cinemas.
• Benefits and limitations

As with printed promotional materials, the true cost of a particular distribution channel for
audiovisual promotional material depends on coverage and frequency. Although it is possible
to produce audio and moving image material inexpensively and distribute it at virtually no
cost across the internet, the coverage (the percentage of the target audience viewing the
website hosting the material) and the frequency (the number of times the website is viewed)
may be low.

For television and radio advertising, it is sensible to think in terms of the cost per 1000
viewers of, say, placing 30, 15 and 5 second advertisements. In this way, true comparisons
can be made. Figure above summarizes the key benefits and limitations of radio and television
media. Note that for many smaller businesses with limited promotional budgets, the use of
radio, cinema and television advertising might be prohibitively expensive. The high initial
cost of most cinema and television advertising will rule these methods out for many
businesses.
3. New media
Businesses are always looking for new and more effective ways to get promotional messages across
to their target audiences. The technologies underpinning the internet, e mail and mobile phones
offers new avenues for promotional activities.
• Websites

The science fiction movie Minority Report, released in 2002, featured interactive video
advertising screens. These screens, located in public places, had the ability to identify
individuals and address them by name. Today, e-commerce websites can perform a similar, if
less spectacular, by using small files, or cookies, stored on our computers.

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The technology works as follows, when you visit a website you have previously visited, your
cookie file is read and your identity is revealed to the website.

The website uses this information to communicate with the central web server, drawing down a
profile of your buying behaviour, the web server can then deliver individual promotional
messages which it hopes are tailored to your interests. For example, Amazon’s website does this
with the message: “we have recommendations for you”. Web servers can also record the
particular web pages that users browse or click through. Promotional materials appearing on web
pages, or as separate pop-up windows, encourage you to click on them to get more information;
the web server then records these events for later analysis. This analysis helps to build a profile
of individuals’ interests and browsing habits. In turn, businesses can use this information to
improve their online promotional activities and their understanding of buyer behaviour.
• Email and mobile telephone technologies

E-mail and mobile telephone text messaging can provide very accurate channels of
communication. Businesses can purchase lists of e-mail addresses covering a particular target
group, such as a list of individuals within a certain age and income group that have bought
particular products in the past. These lists can be used to bulk e-mail carefully designed
promotional messages to people who should be interested in the offer.

The success of this approach depends on the accuracy of the e-mail address list. If it is
inaccurate, or too general, then the promotion campaign will be ineffective. To counteract this
problem, many businesses use opt-in lists. These e-mail lists are comprised of users who have
actively agreed (or opted-in) to receive further e-mail communications. Bulk text messaging is
also being used to send promotional messages to target audiences. Given the use of text
messaging by teenagers and young adults, this is likely to be an effective medium for products
targeted at these age groups. Now 3G networks also makes it possible to use picture messaging.

The production requirements and cost of new media varies according to the scale of the
operation and particular technologies used. It is virtually costless for a business to place
promotional messages on its own existing website – the website has already been established and
promotional graphics for web pages are not difficult to produce. However, it does cost time and
money to establish a website, as well as to gain the skills and technologies needed to target
website users with specific promotional messages. Delivering e-mails and text messages to your
target audience is not very expensive.

It can, however, be expensive to obtain accurate e-mail and telephone lists. Bulk e-mails also
suffer from the same “junk mail” problem as direct mail. Text messages lack any real visual
impact, but this can be overcome by using newer picture messaging.

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 Customer Attitude
• All promotional strategies rely on effective communication. It is important in planning
promotional strategies and deciding on the appropriate media to use in a campaign that businesses
consider the attitudes of their target customers. If businesses get the tone of the message wrong, or
use an inappropriate medium, then the target group is unlikely to “hear” the message and the
communication will be ineffective. Understanding customer attitudes is crucial, therefore, in any
promotion campaign.
• Tone, structure and content
It is important to ensure that the tone, structure and content of any message is appropriate. For
example, the tone and structure of a printed advertisement designed to create a sale will be very
different to one that aims to alter customer perceptions of a product. The promotional activity
should always be designed to achieve specific promotional objectives.
• Selecting appropriate media
The message of a promotional activity needs to be delivered to its intended audience. The
promotional activity should therefore be delivered through media most likely to target the
intended audience. The chosen medium should be cost effective and capable of delivering the
promotional activity’s message. Suppose that a business wants to promote its sale, in which it is
offering 50 per cent price reductions on some goods. This could be delivered by e-mail or the
business could place adverts in national newspapers. E-mail might be appropriate if the offer is
restricted to a few products aimed at a niche market. A national newspaper might be appropriate if
the offer applies to several products and is pitched at a mass market.
• Engaging the audience
Individuals are increasingly facing information overload. During our working hours, we are
subjected to a large volume of messages. To cope with this excess of information, we
subconsciously reject messages that appear either irrelevant or unappealing. Suppose, for
example, you receive a text message promoting the launch of a new product. Two to three
seconds might be devoted to scanning this text message before deciding to keep or delete it. Most
people need an immediate incentive before they consider that a message is worthwhile reading or
interpreting. Promotional messages need to engage with the target audience and attract their
interest and attention. Messages aimed at young people might “say” save money, appealing
directly to their wallets, but they are just as likely to be effective if they “say” have fun or
experience something new. The willingness to interpret a message also depends on the
environment in which the promotion is delivered.

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 Research and Analysis
• In developing a promotion campaign, market research should be carried out to provide information
on customer attitudes towards promotional activities and media. This could involve both primary
and secondary market research. Secondary market research should be considered first as, given
reliable sources, this information will be immediately available, and key trends will have been
identified by researchers and analysts. However, secondary sources have potential drawbacks:
A business might have a unique target audience which secondary sources fail to profile the only
secondary information available may be out of date and the business feels that it needs up-to-date
information the price of the secondary information is high inrelation to the business’s financial
resources.
• If any of these circumstances apply, then primary research should be considered. Some businesses
will, in any case, be forced down the primary research route because the information the require is
very specific and will not be available from secondary sources. Primary research should be
considered if a business wishes to verify the validity of secondary research in relation to its target
customers’ attitudes. It is also a good option if the business has a source of internal customer data,
such as customer sales records, which could be analysed to provide useful information. If primary
research is required, the business should consider how the data will be collected. In the context of
promotional activities, these methods are particularly important:
 Customer Questionnaires – using, for example, closed questions to rank the relevance of
particular sales promotion techniques
 Consumer Panels – for example, organizing several panels, each with particular socioeconomic
and age groupings, to discuss the impact of a planned advertisement
 Personal Interviews – using, for example, openended questions to reveal attitudes towards the
use of particular imagery and cultural references within a moving image advertisement.
• Once the primary data has been collected, it should be analysed to identify key trends and patterns
the grouping of data by customer characteristics is particularly important. Without this level of
analysis, primary research into customers’ attitudes will be of little value, as a business would not
be able to relate any findings to specific customer groups that may be the target audience for
individual campaigns.
• Getting the right mix
The promotion campaign surrounding Finding Nemo is a good illustration of the way in which a
business can use a variety of promotional activities to communicate with its target customers. By
using several promotional activities, it was possible to target different segments of the market for

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 the film. The specific combination of promotional activities within a single campaign is known as
the campaign’s promotional mix. Sophisticated marketing campaigns will use many different
promotional activities within the mix. However, any campaign’s promotional mix can draw from a
range of promotional activities, including:
 Sales promotion
 Merchandising
 Personal selling
 Exhibitions
 Advertising
 Public relations.
• The challenge is to get the mix of promotional activities right. This is a crucial element of a
successful promotion campaign. The exact make-up of a campaign’s promotional mix requires
careful consideration: rely too much on one type of promotional activity and the message might
only reach a relatively limited range of customers; use too many promotional activities and the
message might be confusing and difficult to decode. Several factors help to determine the nature of
any campaign’s promotional mix. These include:
 The objectives of the campaign
 The campaign’s budget
 The target customers’ attitudes towards different promotional activities.
• An effective promotional mix will balance the demands of these factors. The objectives of the
campaign are paramount, but the choice of promotional activities will be heavily influenced by the
size of the campaign budget. The attitudes of particular customer segments will also influence the
choice of promotional activities and the media used to deliver them.
• The choice of the most appropriate promotional mix should be made after considering these
competing factors. Careful analysis and evaluation, based on valid research of promotional
activities and customer behaviour, is required if the promotional mix is to support the campaign’s
objectives. In this topic, we consider the importance of the campaign’s objectives and its budget.
In Topic 8, we investigate the significance of the target customers’ attitudes towards different
promotional activities.

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 Attention, Interest, Desire and Action
• Altering buyer behaviour
Promotional activities attempt to influence the decisions of consumers by creating a favourable
view of a business and its products. A systematic approach to altering buyer
b behaviour can be
taken by using the AIDA model (see Figure below).
). Used chiefly within advertising, AIDA is a
way of thinking about the key steps an individual needs to take before purchasing a product. It can
be applied to all promotional activities and helps when considering the timing of promotional
activities in a promotion campaign. Consider what each AIDA stage means in terms of buyer
engagement by looking at a campaign to promote a new nightclub:

 Attention – gaining an initial awareness of the

the product and establishing knowledge about the
product, for example, by using a PR event to announce the opening of a new nightclub
 Interest – moving from awareness of the product to establishing a willingness to investigate
purchasing the product, say by half-page
page advertisements in a local newspaper
 Desire – moving from a general interest in the product to an intention to purchase, perhaps
linked to coupons on A5 leaflets distributed to homes, for free drinks on opening night
 Action – closing the sale by turning
turning an intention to purchase into a confirmed sale, through in
this case personal sales outside the nightclub on opening night.
night It is likely that additional
promotional activities would be required to alter behaviour in the long run – to take the audience
through the stages of desire (“I really shouldn’t drink to excess”) and action (“Never again!”).

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• Using AIDA
Any promotion campaign relies on an effective promotional mix. The AIDA model helps in
selecting the best combination of promotional activities. In particular, it provides a procedure for
ensuring that the final promotional mix takes into account the target customers’ attitudes towards
different promotional activities.
1. Attention
If the target audience is not aware of the product and/or business, it is essential to gain the target
audience’s attention. The first element of an effective promotional mix is a promotional activity
(or set of activities) that can get attention for the product or business. This promotional activity
will “kick off” the campaign, and it will be the first entry in the campaign’s Gantt planning chart.
As this promotional activity, or set of closely connected activities, will set the tone for the rest of
the campaign, you need to carefully consider:
 The tone and content of the message being communicated
 The type of promotional activity best suited to gaining the attention of the target audience
 How the promotional activity will be delivered – the medium or media that will be used
 How often to repeat the message – the frequency of the promotional activity.

• The choices you make, in each case, will be determined by the objectives of the promotion
campaign, the nature of the product and the target customers’ attitudes towards different
promotional activities. If a product has a mass market appeal, and the target audience spans a
wide range of socioeconomic groups, then the message should be universal. In this case,
advertising on television and/or in national newspapers would appear to appropriate. As the
message may well be a simple one, frequency would not have to be high if the advertisement
delivered its message forcefully by, for example, using humour or fear.
• If a product has a less universal appeal and is designed for a niche market, then a more targeted
approach to gaining attention is required. Direct mail could be appropriate if a reliable mailing list
is available. The message would have to appeal to the concerns of the target customers and rely
more on information than emotion, although the exact nature of the product would be crucial here.
• Whatever the nature of the product’s market, however, the aim here is to get the attention of the
target audience. This means focus on activities that can spark that interest. Some promotional
activities are unlikely to be appropriate when attempting to gain the attention of the target market.
These include sales promotion, merchandising and personal selling. These promotional activities
address target customers who are already aware of the product. They work best when potential
customers already have an interest in finding out more about the product. For example, while
“cold calling” can sometimes work, personal selling is far more effective when the customer

35 | P a g e
approaches the salesperson by, for example, walking into a store and requesting assistance, or
ringing a customer helpline. Exhibitions, advertising and PR are often more appropriate when the
objective of the promotional activity is to gain the attention of the target market. Advertising and
public relations are particularly suited to this stage of the AIDA model. An exhibition, while
capable of gaining the attention of the target audience, relies on individuals attending the event
and therefore assumes a level of awareness which might not be present. An advertising campaign
followed by an exhibition, however, would be appropriate.
2. Interest

The AIDA model illustrates the importance of sequencing promotional activities. This is
certainly the case when moving the target audience from the attention stage to the interest
stage. To move an individual to the interest stage requires promotional activities that are
capable of engaging. They need to appeal to the personal, psychological and social influences
on and individual’s buying behaviour.

Understanding the motives behind a potential buyer’s behaviour is crucial for this stage of the
AIDA model. At this stage, PR events may be less successful than more focused activities such
as direct mail shots and exhibitions. Personal selling could be highly effective if the target
audience initiates contact with the sales force.

If, for example, potential customers respond to an advertisement which successfully gained
their attention and provided a telephone or e-mail contact. Merchandising, in the form of
in-store displays, could perform a similar function, but sales promotions assume a high level of
interest by the target customers and are more appropriate for the desire and action stages of the
AIDA model.
3. Desire

At this stage the focus should shift from establishing a willingness to investigate the benefits of
a product to providing genuine incentives to make a purchase. The promotional activities
should be very focused and address specific influences on buyer behaviour. The message
should be about why purchasing would provide very real benefits.

The promotional activity should aim to convince potential customers that they will lose out if
they do not purchase the product. Advertising can be effective at this stage of the AIDA model.
It can instil a degree of urgency in the target market. However, personal selling, sales
promotion and merchandising are ideal ways to establish the desire to purchase a product –
given a willingness to investigate purchasing a product, these promotional activities can
communicate specific benefits and address the particular needs of individual customers.

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4. Action

The final stage of the AIDA model focuses on the task of convincing the target market that
they should purchase the product. The desire to purchase should have already been established,
so the final elements of the promotional mix aim to turn this desire into a financial transaction,
a change in behaviour or a change in attitude towards a product or business.

Sales promotion, merchandising and personal selling are all capable of achieving this change.
They are focused promotional activities which can be designed to provide that final push to get
customers commit to the purchase.

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 Case Study - Pizza Hut
• Company Profile
Pizza Hut is one of the flagship brands of Yum! Brands, Inc., which also has KFC, Taco Bell, A&W
and Long John Silver’s under its umbrella. Pizza Hut is the world’s largest pizza chain with over
12,500 restaurants across 91 countries. In India, Pizza Hut has 137 restaurants across 36 cities,
including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune, and Chandigarh
amongst others. Yum! is in the process of opening Pizza Hut restaurants at many more locations to
service a larger customer base across the country
• Pizza Hut Story
 1958: The legacy of Pizza Hut began, when two college-aged brothers from Whichita, Kansas,
Frank and Dan Carney opens first Pizza Hut restaurant after borrowing $600 from their
mother.
 1959: Pizza Hut is incorporated in Kansas and the first franchise unit opens in Topeka, Kansas.
 1968: International market entered with opening of Pizza Hut restaurant in Canada.
 1969:Red roof adopted for restaurants.
 1972:Pizza Hut, Inc. listed on New York Stock Exchange under the symbol PIZ.
 1977:Pizza Hut, Inc. stockholders overwhelmingly approve merger with PepsiCo, Inc. for an
undisclosed sum.
 1986:Delivery service, as a new concept, is initiated
 1996:Pizza hut comes to India with a dine in restaurant Banglore that has special vegetarian
pizzas.
 1997:Pizza hut opens a dine-in restaurant in Delhi.
 2007:Pizza hut brought out our Thick n Thin Pizza and began to re-franchise our dine-in
restaurants.
• SWOT Analysis
 Strengths:
1. Good Quality Food (Hygiene)
2. Brand Name
3. Food worth its Price
4. Good Service
 Weaknesses:
1. Parking Facilities
2. Advertisings are very less

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 3. Fewer Outlets
4. No Social Welfare
 Opportunities:
1. More outlets should be open.
2. Sitting Area should be broader.
3. Environment should be more attractive.
4. Attractive offers should be introduced.
 Threats:
1. Competitors like US Pizza, Dominos, etc.
2. Instant Fast Food Packets.
3. Housewives are interested in making Pizzas & other Fast Food at home.

• Promotional Strategies
Promotion is a form of corporate communication that uses various methods to reach a targeted
audience with a certain message in order to achieve specific organizational objectives. Nearly
all organizations, whether for-profit or not-for-profit, in all types of industries, must engage in
some form of promotion. Such efforts may range from multinational firms spending large sums
on securing high-profile celebrities to serve as corporate spokespersons to the owner of a
one-person enterprise passing out business cards at a local businessperson’s meeting. Like most
marketing decisions, an effective promotional strategy requires the marketer understand how
promotion fits with other pieces of the marketing puzzle (e.g., product, distribution, pricing,
target markets). Consequently, promotion decisions should be made with an appreciation for
how it affects other areas of the company. For instance, running a major advertising campaign
for a new product without first assuring there will be enough inventory to meet potential demand
generated by the advertising would certainly not go over well with the company’s production
department (not to mention other key company executives). Thus, marketers should not work in
a vacuum when making promotion decisions. Rather, the overall success of a promotional
strategy requires input from others in impacted functional areas.
• Types of Promotion
1. Advertising
2. Sales Promotion
3. Events/ Experiences
4. Public Relations
5. Personal Selling

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• Product

Worldwide and in India, Pizza Hut has come to become synonymous with the ‘best pizzas
under one roof’. This is because at Pizza Hut the belief is that every pizza has its own magic,
thus making it a destination product – which everyone seeks. It is this belief that has ignited
the passion to create, innovate and serve the finest product the industry has to offer, while
setting standards for others to strive to replicate. Pizza Hut is committed to providing
uncompromising product quality, offering customers the highest value for money and giving
service that is warm, friendly and personal. A critical factor in Pizza Hut’s success has been
its unique dining experience. Crewmembers at Pizza Hut strive each day to provide ‘customer
mania’ - the kind of service that ensures that every visit of the customer is a memorable one.

In fact, to ensure stringent international bench-marks in the quality of products and services at
all its restaurants across the world, Pizza Hut has a mystery shopper program in which an
unknown official visits a restaurant and evaluates it on certain defined parameters called
C.H.A.M.P.S. that stand for Cleanliness, Hospitality, Accuracy, Maintenance, Product
quality and Speed. Based on the report submitted by the official, the restaurants are rated and
in the rare case of finding under performers, they are kept under strict vigil.

A critical factor in Pizza Hut’s success has been a menu that has constantly evolved and
expanded to cater to the changing needs and specific preferences of customers in different
parts of the world. In having understood the pulse of the customers in India, Pizza Hut has
clearly established itself as a brand with an Indian heart. Besides offering an extensive range
of vegetarian pizzas, it was the first pizza chain to open a 100% vegetarian restaurant in India
in Surat and later in Ahmedabad and Chowpatty, where it offers a Jain menu sans all
root-based ingredients.

Over the years Pizza Hut has also developed and successfully introduced a range of products
especially suited to the Indian palate. These products like Chicken Tikka, Spicy Korma, Spicy
Paneer and the Masala and Tandoori pizzas have been a tremendous success. What has also
given Pizza Hut a competitive edge is that in addition to an extensive range of internationally
renowned pizzas like The Italian, the proprietary Pan Pizza and Stuffed Crust, in India the
menu offers the option of a complete meal. It includes appetizers, a Salad Bar - where the
customers can make their own fresh salads, a range of soups, pastas and dessert.
• Market
Pizza Hut was among the first multinational brands to enter the food retail sector in India. When
the first Pizza Hut restaurant opened in Bangalore the quick service industry was at a nascent
stage and the pizza category was dominated by a sole regional player who had a marginal
presence.

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 Pizza Hut went on to play a significant role in pioneering and developing this category in India.
Since then the market has sustained considerable growth. A dramatic shift in lifestyle trends,
substantial increase in disposable income, a burgeoning middle class and the entry of a
significant number of international and national players has contributed to a boom in the
industry. The market has become greatly competitive and the customer has become more
discerning and adventurous. This however has not affected Pizza Hut’s comfortable reign over
the Indian pizza industry and the ever-increasing number of loyal customers who have made it
possible for Pizza Hut to aggressively extend its presence.
• Promotion Of Pizza Hut

The strength of Pizza Hut’s success globally lies in a marketing strategy that builds
connections with customer’s everyday in different parts of the world. Many customer service
initiatives have been uniquely developed for India and have been greatly instrumental in
building an emotional bond with the customer. For instance the crewmembers at Pizza Hut
break into a Boogie at restaurants in Delhi and Mumbai and do the Bhangra in Chandigarh
and Amritsar. While a bell hangs at each Pizza Hut restaurant, which is rung by customers
who as they leave wish to thank the servers for yet another memorable visit.

In India, eating out is perceived as a form of entertainment. Which is why Pizza Hut servers
not only serve our customers great food, they also sing and dance for them. And many of
Pizza Hut’s customers would, we are certain, love to participate in this process. Giving them
an opportunity to showcase their talent – they conceived the Jig n Jeeto contest. Organized in
Delhi for the first time, it received a phenomenal response with super star Fardeen Khan
judging the show. Pizza Hut hopes to continue this contest as a tradition for the years to
follow.

Pizza Hut’s communication has also always struck a chord with the Indian customer. Its very
first television commercial in India featured a boy and girl, who meet at a Pizza Hut restaurant
in a traditional arranged marriage setting. They lose their inhibitions when the pizza arrives.
When the sequel went on air featuring the same couple, now married, with the girl’s father
consoling her over a pizza as her bridegroom waits outside the restaurant to escort her after
their wedding - the customer’s involvement was so complete that several wrote in to inquire
whether the couple had children. The more recent campaign that was launched with the
introduction of the Tandoori pizzas featured a typical Indian wedding procession abandoning
the bridegroom when enticed by delicious aromas from a Pizza Hut restaurant. While the
famous ‘Good times start with great pizzas’ slogan has been prominent in the communication,
the focus has remained on the best and most distinct pizzas.

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Pizza Hut laid more emphasis on its “restaurant dining experience”. Pizza Hut localizes it
menu to capture local Indian Market. In 2000 Pizza Hut launched its innovative Pizza Pooch
menu and Pizza Pooch Birthday Party package exclusively for kids in the 6-10 age groups. It
positioned itself as family restaurant and also concentrated on wooing kids

• Online promotional strategies

Pizza Hut provides many services online such as:

Birthday reminder service- here people can save the birthday date of their friends, relatives ,
and pizza hut will remind you the birthday date and birthday parties discount and u can book
online.

E-coupon and discount offer available to online customers.

Hot line number – pizza hut hot line number also provide at online which is 39883988.

Even customer can do online order of pizzas.

• VIP CLUB

A VIP (very into pizza) club made where people can register their email,mobile number
where pizza hut provide them latest pizza news, discounts and offers at email ,mobile phones.

• Promotional Strategies Achievement of Pizza Hut

Pizza Hut is the world’s largest pizza chain with over 12, 500 restaurants in more than 91
countries, serving over 1.7 million pizzas to nearly 4 million customers across the world every
day. The acknowledged worldwide leader of the pizza industry since 1971, Pizza Hut has
established itself as the market leader of the category in India with a 48% share (internal
survey).

Pizza Hut’s constant Endeavour to provide extra value – whether it is pizzas which are
available to suit every price range, new promotions or the introduction of innovative product
ranges - that puts a ‘Yum’ on every customer’s face - has allowed it to increase its presence in
India to the current 70 restaurants across 18 cities.

Pizza Hut has built a reputation of excellence that has earned it the loyalty of its customers and
respect of industry experts. Not only have the offerings from Pizza Hut been voted number
one in countless customer surveys, Pizza Hut’s accomplishments as an innovative business
leader have been cited by publications such as Restaurant Business, Fortune and The Wall
Street Journal.

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• Brand Values

Pizza Hut is all about giving a unique and unforgettable dining experience by offering the best
and most distinct pizzas and impeccable service, in a relaxed and friendly ambience. Pizza
Hut is fun, friendly and familiar – it gives a sense of belonging, of comfort and an experience
that allows friends and families to share a good time over great pizzas – wherever and
whenever. The truth about Pizza Hut pizzas is that they act like a catalyst, a bonfire that brings
people together

Pizza here made by the dough for the crust, is made out of whole meal flour and not of plain
flour (maida), as is largely believed and is kneaded several times a day at each Pizza Hut
restaurant. For the delicious toppings only freshly cut vegetables and whole unprocessed meat
is used.

Pizza Hut holds the record for the world’s largest pizza (six feet in diameter), which was
baked and served at the grand opening of a Fort Worth, Texas Pizza Hut restaurant.

Pizza Hut uses more than 700 million pounds of whole wheat each year, representing the
annual yield from nearly 500,000 acres of wheat and it uses more than the equivalent of 525
million pounds of tomatoes annually. If the slices of the more than 700 million pounds of
pepperoni used per year by Pizza Hut were to be laid side by side, they would create a path
that would stretch around the world twice and go to the moon!

• Recent Developments
As a part of its continuing efforts to provide its customers with maximum value in India, Pizza
Hut launched the Tandoori range of pizzas, which have a distinct Indian flavour and offer an
innovative and exciting combination of toppings. These pizzas are served with a sliver of lemon
to enhance the overall experience of relishing each scrumptious mouthful. Pizza Hut’s
leadership in innovation was further reinforced with the introduction of the Chicken Stuffed
Crust pizza last year, which has a ring of succulent chicken baked right into the crust making it
the most delightful experience.
The latest offering from the Pizza Hut stable was the delicious Chettinad pizza, a mouthwatering
combination of the world’s best pizzas with strong flavours of the Chettinad region. An initiative
from Pizza Hut that met with tremendous success was the ‘Kids Eat Free’ promotion, which was
introduced last year to coincide with the summer vacations. This was the first time in India that a
quick restaurant chain offered a free pizza to all children, 12 years and below

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• Price and Promotional war between Domino’s and Pizza Hut
Company Price Range (Rs)
Domino’s 39-265
Pizza Hut 75-350

Domino’s was spending 50% of its total marketing budget on special offers and discounts along
with delivered direct mailers and pizza training classes. Domino’s also had a tie-up with
Discovery Channel under which the channel advertised its pizzas while Domino’s put the
channel’s name on its mailers. Domino’s conducted Pizza making classes for school students. In
1998, it offered a clock to all its customers who had bought Rs.15,000 worth of pizzas
throughout the year. Said a company official, “Database marketing is an important part of our
strategy. In 1998, Pizza Hut also launched a promotional campaign to attract the customers. It
had a ‘Pan In Your Name’ contest where it offered a free pizza to anybody with the word Pan in
his/her name – For example, Pankaj or Panandikar. In April 2000, Pizza Hut launched its
innovative Pizza Pooch Menu and a Pizza Pooch Birthday Party package exclusively for kids in
the 6-10 age group.In March 2000, Domino’s slashed prices of Pizza by 40%. The price of a
regular Pizza with three toppings was cut from Rs.225 to Rs.130. In October 2000, Domino’s ran
a scheme, where it gave away two pizzas for the price of one, within five days of placing an
order. During the same time, Pizza Hut launched a ‘one rupee pan deal’ scheme. Under the
scheme, for every pan Pizza purchased, another was given away for Re.1. In November 2000,
Pizza Hut introduced a scheme called ‘barah nahin to tera (if not served in 12 minutes, it is yours
free)’. The scheme offered a speed lunch in 12 minutes for Rs.89. One second over 12 minutes
guaranteed that the customer would get it free.

• Brand building through advertising

Domino’s and Pizza Hut initially restricted their ad strategy to banners, hoardings and specific
promotions. In August 2000, Domino’s launched the ‘Hungry Kya? (Are You Hungry)’
sequence of advertisements on television. A company official said, “We realized that a Pizza
couldn’t be slotted – it could be a snack; then again, it could also be a complete meal” The only
definitive common link between Domino’s Pizzas and eating was the hunger platform.
The launch of ‘Hungry Kya?’ campaign coincided with Domino’s tie-up with Mahanagar
Telephones Nigam Ltd. (MTNL) for the ‘Hunger Helpline’. The helpline enabled the customers
to dial a toll-free number (1600-111-123) from any place in India. The number automatically
hunted out the nearest Domino’s outlet from the place where the call was made and connected
the customer for placing the order.

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 The number also helped Domino’s to add the customer’s name, address and phone number to its
database.This was followed by Pizza Hut’s first campaign on television in July 2001, which said,
‘Good times start with great pizzas.’ The ad was aired during all the important programs on Star
Plus, Sony, Sony Max, Star Movies, HBO, AXN, and MTV. Pizza Hut planned to spend
between Rs.70-75 million on the ad campaign in 2001. Said Pankaj Batra, “The first ad
campaign on TV defines Pizza Hut as a brand, and what it offers to its existing and potential
customers. Once the awareness of this message is high, we will focus on other facets of the brand
and its offerings.”

• Summary

Pizza Hut is a complete family restaurant.

People are highly satisfied with the services and quality of the food served at Pizza Hut..

Most of the People visiting Pizza Hut are between 19 to 25 years of age.

People feel that prices of Pizza Hut are high.

Pizza Hut: Serving from 95 outlets in 24 cities of India. US$ 25 million investment

A major player in the Indian fast food and beverage sector, holding about 50 per cent of the
organised pizza market

Factors for success: Offering value food. Moving beyond metros. Aggressive marketing and
tie-ups with local and popular brands. Developing the local supply chain.Customizing
product offerings

For Pizza Hut, India is: one of the top 5 growth markets worldwide

• Recommedations

Increase advertisements in all media.

Try to include low calorie Pizzas in the menu.

Try to reduce the price with the same quality & quantity.

Try to include students menu which starts with affordable price.

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 Case Study - LG ELECTRONICS

• LG INDIA

LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South Korea
was established in January, 1997 after clearance from the Foreign Investment Promotion
Board (FIPB).

In India for a decade now, LG is the market leader in consumer durables and recognized as a
leading technology innovator in the information technology and mobile communications
business. LG is the acknowledged trendsetter for the consumer durable industry in India with
the fastest ever nationwide reach, latest global technology and product innovation. One of
the most formidable brands, LGEIL has an impressive portfolio of Consumer Electronics,
Home Appliances, GSM mobile phones and IT products.

The trend of beating industry norms started with the fastest ever-nationwide launch by LG in
a period of 4 and 1/2 months with the commencement of operations in May 1997.

LG set up a state-of-the art manufacturing facility at Greater Noida, near Delhi, in 1998, with
an investment of Rs 500 Crores. This facility manufactured Colour Televisions, Washing
Machines, Air-Conditioners and Microwave Ovens. During the year 2001, LG also
commenced the home production for its eco-friendly Refrigerators and established its
assembly line for its PC Monitors at its Greater Noida manufacturing unit.

The beginning of 2003 saw the roll out of the first locally manufactured Direct Cool
Refrigerator from the plant at Greater Noida.

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In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune, Maharashtra that
commences operations in October 2004. Covering over 50 acres, the facility manufactures
LCD TV, GSM Phones, Color Televisions, Air Conditioners, Refrigerators, Microwave
Ovens & Color Monitor.

Both the Indian manufacturing units have been designed with the latest technologies at par
with international standards at South Korea and are one of the most Eco-friendly units
amongst all LG manufacturing plants. LG has been able to craft out in ten years, a premium
brand positioning in the Indian market and is today the most preferred brand in the segment.

Since 2001, LG has two joint ventures with Royal Philips Electronics: LG Philips Display
and LG Philips LCD. LG has entered into a joint venture with Nortel Networks and has
created LG-Nortel Co. Ltd.

LG also has a joint venture with Hitachi, Hitachi-LG Data Storage, which manufactures
optical data storage products like DVD-ROM drives, CD writers, etc. LG has owned the LG
Twins baseball club since 1989. LG acquired American television manufacturing company
Zenith in 1999.

• Market Scenario

In just over 10 years, LG Electronics has established dominance over the Indian white goods
market, edging out traditional multinational companies and Indian competitors. LG
Electronics India has attained a very good reputation in the market for their multi-purpose
refrigerators. The company’s competitors include Videocon, Samsung, Whirlpool and some
other local brands of India. The company accounts for the largest share of the $4 billion
consumer durables, electronics and appliances market, with LG claiming the preferred brand
position for virtually everything from televisions to microwave ovens and washing
machines. Over the past decade, LG has consistently seen double-digit growth rates and are
convinced they will maintain, if not surpass, those levels in coming years as well.

LG’s success is a function not just of what the company did, but also of what their
competitors didn't do. The super-premium price and positioning of technologically superior
Japanese brands like Sony and Panasonic made them inaccessible to most of the Indian
market. On the other hand, lower-priced Indian brands offered old-generation products; they
did not invest sufficiently in R&D because they were not able to launch new products
quickly enough to amortize those costs.

LG's entry strategy was to establish its presence across the country, offering a range of
affordable but feature-rich products.

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Margins in the consumer electronics industry are traditionally very low, and the company
didn't try to push them up. Instead, it clung to the "value-plus" platform, counting on volume
to bring in revenues. The largest consumer Electronics Company in India by sales, LG plans
to make significant inroads in these markets through channel expansion, set up a services
network and roll out a slew of entry-level products.

LG Electronics India Managing Director Moon B Shin said rural markets are expected to be
much less affected than urban by the slowdown. According to the director, the electricity
situation is becoming better in rural India and even the agriculture loan waiver package will
provide surplus cash to farmers in the current context, the rural markets are a goldmine for
the company.

The contribution of rural sales to LG's turnover in 2008 has been around 35%. The company
is planning to invest Rs. 400 Crore on marketing this year compared to Rs 350 Crore in 2008,
according to the director. The company’s investment in Research and Development sector
will remain the same.

LG is also looking at enhancing its manufacturing capacity by some 30%.The company is
planning to deploy innovative processes in their plants which will translate in greater and
will help them to save costs and bring out new products at competitive price.
An Overview of LGEIL’s Financial Performance in India

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• The challenges faced by LG when entered in Indian market
 Low brand awareness about LG in India.
 One of the last MNCs entered in India.
 (Samsung, Panasonic entered in 1995 in India).
 High import duty
 Competition from local market players and other MNCs in consumer durable segment.
 Price sensitiveness of the Indian consumer

• Promotional Strategies

LG Electronics have hiked its promotional expenditure by 15-20% and would largely focus
on new products. The company has earmarked 40% of its Rs 100 crore promotional
expenditure for the festive season spread between the months of August and December. For
LG Electronics, it is a huge line-up of new products across different categories that will fetch
good volumes for the company.

LG India’s overall advertising and promotion budget is indicated to be over Rs 100 crore
across product categories. LG gave immense importance to its promotion and advertising
activities. In 2004, the company spent nearly Rs. 1.3 billion (5% of its revenues) towards
advertising. Analysts commented that LG's promotion and advertising of its durables
segment were similar to that of an FMCG company. Unlike many Indian brands which
advertised seasonally (2-3 months during the festival season i.e. September, October and
November), LG advertised all round the year...

LG also plans to invest around $40 million in 2009 towards such product development. It
expects all such initiatives will enable it to maintain its targeted 15% plus growth rate. LG
grew by 14% in 2008 and clocked a turnover of Rs 10,750 crore. It is now aiming for a
Rs13,000 Crore turnover in 2009.

TODAY Consumer durables sector is characterized by the emergence of MNCs, exchange
offers, discounts, and intense competition. The market share of MNCs in consumer durables
sector is 65%. MNC's major target is the growing middle class of India. LG, SAMSUNG the
two Korean companies has been maintaining the lead in the industries with LG being leader
in almost all the categories.

Expenditure on promotions would be at least four per cent of the targeted turnover of Rs
12,000 crore in 2007. With an aim to capture 40 per cent of the Rs 3,000 crore digital
consumers electronic and white goods market next calendar year, LG Electronics India will
come out with a range of products and raise expenditure on promotional schemes.

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According to the newly appointed head of company’s marketing and sales Mr. Ajay Kapila,
to boost the company’s sales, LGEI will increase outlay on promotional scheme from Rs 5
crore this year to Rs 18.2 crore next year. Almost 40 per cent of that expenditure will be spent
on advertising and rest on other awareness programmes for the company’s products.

At the same time, LG expects to capture 35 % of the refrigerator market in the company by
introducing new promotional offers and schemes.

India represents the $12-billion Seoul-headquartered LG Electronics’ first market where a
LG-branded PC is being sold. Globally, it is a supplier to major brands. LG India has
engaged Lowe Lintas to handle its personal computer range. The company officials declined
to comment on the expenditure to promote ‘MY PC’ range of PCs.

The company, having a turnover of Rs 9,500 crore and market share of 26 per cent, is
investing Rs 360 crore on brand-building and other marketing initiatives and around Rs 140
crore on research and development, besides launching new platforms in information
technology and related areas.

LG Electronics is one of the leading companies in the field of electronics with a global
presence in many countries. LG Electronics is making technical advances and identifying
business opportunities through various associative relationships with some of the world's
leading companies. In Feb. 2007 LG Electronics and Yahoo formed a strategic alliance.
Yahoo mobile services will be available from LG mobile. This service is targeting 10 million
LG mobile phones in over 70 countries.

In Mar. 2007 LG Electronics and Google formed a strategic alliance. Both companies
worked together to release, market, and offer LG mobile phones with Google services
(search engine, map, email, and blogs.)
• R&D potential

LG has the research and development facilities in Bangalore and Pune. Both the unit carry
out R&D department for the domestic as well as the parent company it also dose customize
R&D for the specific countries to which it export product.
• Stock Clearance

LG has clearly demonstrated its ability to keep a close eye on meeting specific needs of
existing and potential consumers. For example, in India, its ability to cater to the needs of
that market has paid off. Knowing that many of its customers are vegetarians, it decided to
apportion a larger space in its refrigerators to store fresh vegetables and fruits instead of
having a larger freezer compartment. Mobile ringtones and TV sets for that market also tend
to be louder, and the design of other products are more colorful too, notes Nam.

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LG has a vast variety of products, in refrigerators too they have a wide variety There are
more than 75 models that LG can offer to their customer in refrigerators but since the
technology keeps upgrading in every 2-3 months there is quite a possibility that the demand
for the old models of LG refrigerator are no longer in demand … this tends to create loss in
the company’s financial position. Therefore to cope with the situation, they come up with
promotional offers such has exchange offers like exchange old refrigerators pay extra cash
and take a brand new refrigerator home. Other such offers are where schemes are launched as
in if the customer buys a specific model of LG refrigerators then he gets a DVD player of
Onida free. In this way, both the products have comparatively more sales and there is no dead
stock.
• Distribution and Marketing

The company has number of dealers and warehouses. They have LG exclusive shopee. For
the marketing of the products a number of activities are followed

Exhibitions are conducted from time to time.

Society and college activities are conducted.

Hoarding, Posters, banners are used so as to grab the attention of the costumers.

Day to day advertisement in leading newspaper.

Discount at festival time.

For dealer relationship they arrange dealer meeting at several time in the year

LG divide dealer in gold silver etc. category to know the performance of the dealers.

They have their sales persons at various sub dealer store and at mordent trade store for
particularly for the promotion of the LG product.

LG also uses the radio FM for the promotion activities. Also provide capon and scratch card
for festive season.
• LG’s Innovative Promotional Strategy includes

Launch new technologies in consumer electronic and home appliances.

LG was the first brand to enter in cricket in big way a way, by sponsoring the 1999 world cup
followed it up in 2003 as well.

LG brought in four captains of the Indian cricket team to endorse its products. LG invested
more than US$ 8 million on advertising and marketing in this sport.

LG has differentiated its product using technology and health benefits. CTV has “Golden
eye technology” Air conditioner has “Health air system” and microwave ovens have the
“Health wave system”.

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• Brand Ambassador

LG Electronics India Private Limited (LGEIL) signed on Abhishek Bachchan exclusively
for its home appliances. The alliance is part of LGs strategy, wherein the company will be
giving the home appliance division a brand new identity, youthful image and customer
connect. It is also the first time that LG has signed on a brand ambassador to launch new
positioning, lending a differential appeal to the whole category.

LG has signed the contract with Abhishek during which the star will endorse the entire range
of home appliances of the company. LG planned to utilize this association for various
communication channels such as print and television ads, outdoor publicity, road shows and
strategic events amongst others.
• LG's Product Line

Since its initial years in India, LG has focused on bringing out new models regularly in its
product range. In its first year of operation in India, LG launched 70 models across a range of
products. In 1997, it introduced its Golden Eye Technology TV, which had a light sensitive
natural algorithm 'eye.' It also introduced new generation refrigerators and ACs after entering
the Indian Market.
• Product localization

Product localization is the key strategy used by the LG. It came out with Hindi and regional
language menus on its TVs.

LG introduced the low-priced “Cineplus” and “Sampooma” for the rural market.

LG was the first brand to introduce gaming in TVs in continuations of its association with
cricket LG introduce cricket game in CTVs
• Strategies adopted by the organization
LG follows 10 commandments which are as follows.

Foster working environment-5S Environment

Fast execution is key to success

Transparent and fast communication-open communication

Update market -knowledge –Demographics

Win –Win relationship with the trade partners

Customer is the king

Even Billing –Road to ach supplier A

Be in touch with the market (70% Market, 30% Office).

Plan and Execute annual marketing Calendar-Time to market.

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 The company will use prints and electronic mediums for advertising their product. Besides
advertising with the print and the electronic media, LG will use hoardings, gates, buntings,
danglers, posters etc to advertise in towns and other cities besides the metros. LG will be
advertising across all media categories. Apart from this they have a specific e-Portal
LgezBuy.com were they would be advertising the festive campaign 'Mangal Hi Mangal'
offer. LG has the 'Mangal Hi Mangal Offer' focusing on super premium offerings for key
markets. The super premium offerings from LG will entail a hi-tech product portfolio of
flagship products from key categories like Tromm front loading washing machines, Whisen
Artcool AC's, DIOS refrigerators, New Gen Karaoke systems, X-Note laptops, and other
Internet enabled products. The offer promises assured gifts on every purchase of an LG
product, along with extended warranty on select products.
 LG plans to expand its network throughout the country with its range of home appliances and
consumer electronic products. The company is planning to come up with more 'India-centric'
products and consolidate its position in all the product segments.
 The marketing strategy for the festive seasons is to do a well-planned mix of brand and
product communication. LG will now highlight the easy usability, superior technology,
benefits to consumers and unique features of their products. LG focuses on the premium
product offerings and consumer offer that would double up its marketing offer for the festive
season. This year's marketing efforts include a considerably strengthened product lineup
coupled with attractive consumer offers.
 According to LG, the festival season has gained so much importance in the planning of white
goods companies because the festival period is considered very auspicious by most Indian
consumers who do their major household buying during this festival period. Therefore, it is
the best time to come up with offers and schemes. All the players focus on the same so the
competition to offer the best products at best prices increase and advertising plays a major
role in it. Also, both company and individuals give gifts to friends, relatives and employees,
which drive growth for white goods companies. This is the reason why such companies
undertake additional expenditure in an effort to catch the consumer's attention.
 LG is spending the highest amount on advertisements. The festival season is also the time
when company uses a sizeable part of their advertisement spending. According to sources,
This year LG’s Marketing Services would be spending around Rs 60-70 crores for promotion
of their goods during the festival period which is predicted to bring about a turnover of
around Rs. 1600 Crores. And the buying process becomes all the more lucrative with the
mindboggling number of freebies, schemes, prizes.

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• Innovative Marketing

LG is known for running innovative and customer-friendly schemes every month. These not
only help in keeping up the momentum of distributors but also results in higher brand recall.
To create a pull factor, LG keeps coming out with different bundling propositions. This
results in greater push for LG products. For its channel partners, the company has a unique
point-based incentive scheme. They offered gifts on every purchase of an LG product

An advertising blitzkrieg followed. And the momentum hasn't let up since. LG is one of the
most aggressive advertisers in the white goods industry, spending close to 5 per cent of its
revenue on marketing activities -- that's Rs 130 crore (Rs 1.3 billion) last year.

A close tie up with cricket ensured the brand building exercise would score well on consumer
recall apart from signing on leading Indian cricketers, LG also launched a cricket game on
one of its television models. Point of sales promotions was also extensively advertised to
ensure customers were tempted to visit the stores.

Importantly, for LG, a nationwide launch meant just that. A penetrative distribution strategy
ensured that products were available even in smaller towns and cities, breaking the chain of
urban dependency that plagues most white goods manufacturers.

Since 1997, when LG entered India, it has emphasized on marketing.

The company spends around Rs 600-700 million on advertising during the World Cup. Soon
after its entry into India, LG realized that it needed to be innovative to capture the market. LG
expanded throughout the country to far-flung towns and semi-urban markets. It sent vans
across the country, covering a distance of 5000 km every month, to increase brand awareness
among the trade and the customers...

Of all the elements of marketing mix, LG seemed to have put more emphasis on promotion
and advertising. Some analysts are of the opinion that the cornerstone of LG's strategy was
its heavy advertising.

As a result of the promotional expenditure and good reputation in the market LG electronics
have achieved many awards from National as well as international Bodies

• Major Key Success Factors

Innovative marketing - LG was the first brand to enter cricket in a big way, by sponsoring the
1999 World Cup and followed it up in 2003 as well.

Local and efficient manufacturing to reduce cost - To overcome high import duties, LG
manufactures PC monitors and refrigerators in India at its manufacturing facility at Noida,
Delhi.

Commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs.

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Product localization - Product localization is a key strategy used by LG. It came out with
Hindi and regional language menus on its TV.

Regional distribution model - This has resulted in quicker rotation of stocks and better
penetration into the B, C and D class markets.

Leveraging India’s IT advantage - LG Electronics has awarded a contract to develop IT
solutions to LG Soft India (LGSI). The project involves development and support for ERP,
SCM, CRM and IT-enabled services for LG.
• The following chart displays the Vision, Growth Startegy, Core Competency and
Corporate Culture at LG Electronics India Limited

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 Case Study: CavinKare
• Success is a journey not a destination. CavinKare began with a young mind choosing the road
less taken. In 1983 with a single product, CavinKare started out as a small partnership firm. The
Company that began its journey as Chik India Ltd was renamed as CavinKare Pvt. Ltd (CKPL)
in 1998. With innovative Entrepreneur C.K. Ranganathan at the helm, CavinKare emerged into a
successful business enterprise.
• Smart marketing and clear product positioning not only ensured CavinKare's growth but also
helped the company broaden its product portfolio extensively. The company now markets ten
major brands. Over the years, CavinKare has achieved a competitive edge with sound
understanding of mass marketing dynamics. The company offers quality Personal care (hair
care, skin care, home care) and Food products borne out of a keen understanding of consumer
needs and keeping up company's the values of innovation and customer satisfaction.
• Today, CavinKare, having established a firm foothold in the national market, is increasing its
popularity in the international arena. A dedicated Research & Development centre, equipped
with latest equipment and technologies, constantly supports the various divisions in their
endeavour. The Company, which primarily relied on contract manufacturing for many years has
now set up its own world class plant at Haridwar to cater to the demand of both domestic and
international market.
• CavinKare has touched a turnover of over 5000 million INR in 2006-2007. The Company has
employee strength of 576, an all India network of 1300 Stockists catering to about 25 lakh outlets
nationally. CavinKare's astute professionalism, innovative products and consistent quality are
results of its significant corporate practice.
• “ To succeed we believe that we need total commitment and highest standard of ethical and
corporate behaviour in order to provide the best for our consumers, stakeholders and
employees”. - C.K. Rananathan
• The Innovative Entrepreneur:
C K Ranganathan, chairman and managing director of CavinKare, has shown the world it is
possible to beat the multinationals even in the most difficult market of fast moving consumer
goods. Ranganathan's journey, which started from a small town of Cuddalore in Tamil Nadu, has
been an amazing one. A business which he started with only with Rs 15,000 is now worth Rs
500 crore (Rs 5 billion). He learnt the first entrepreneurial lessons from his father, Chinni
Krishnan, who started a small-scale pharmaceutical packaging unit, before moving on to
manufacture pharmaceutical products and cosmetics.

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 His father, Chinni Krishnan, an agriculturist, was also into pharmaceutical business. As he was
poor in academics, he wanted him to either do agriculture or start a business. His siblings were
good in studies -- two of them became doctors and another a lawyer. He was the odd one out.
While his siblings studied in English medium schools, he was put in a Tamil medium school. He
used to suffer from an inferiority complex because of his poor academic record. Studies did not
interest him, but rearing pets did. When he was in the fifth standard, he had a lot of pets -- more
than 500 pigeons, a lot of fish and a large variety of birds. He used to earn pocket money out
of pet business at that time. Perhaps, the entrepreneurial spirit in him showed its first streak.
• The origin of the concept of sachets
His father died as he entered college. His father had come out with the sachet concept a couple of
years prior to his demise. He felt liquid can be packed in sachets as well. When talcum powder
was sold only in tin containers, he was the one who sold it in 100 gm, 50 gm and 20 gm packs.
When Epsom salt came in 100 gm packets, his father brought out salt sachets of as low as 5 gm.
Whatever I make, I want the coolies and the rickshaw pullers to use. I want to make my products
affordable to them,' he used to say. Selling things in sachets was his motto as he said, 'this is
going to be the product of the future.' But my father could not market the concept well.
He moved from one innovation to another but never thought of marketing strategies. He was a
great innovator, but a poor marketer.

• Joining the family business

After his father's death, his brothers took charge of the family business. In 1982, when he joined
them after his studies, they had launched Velvette Shampoo. Within eight to nine months, he left
the business because his ideas clashed with theirs. As he was in the manufacturing unit, he did
not know anything about marketing or finance. But, his inferiority complex notwithstanding,
he was somehow confident of doing business better.

• Starting his own business with Rs 15,000

He had left my brothers saying that he did not want any stake in the property or business. That
was a defining moment for him. He had saved Rs 15,000 from his salary and that was all he had.
Yet he was confident of achieving success. He did not feel anything about riding a bicycle after
having got used to cars. For a week, he could not make up his mind as to what business to do. He
knew only two things; making shampoo and rearing pets.

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 He didn't want to venture into the shampoo business as it would initate a fight with his brothers.
However, he decided to do the same later as he could only make shampoo. He rented a
house-cum-office for Rs 250 a month against an advance of Rs 1,000. He took another place
for the factory for a rent of Rs 300 a month and against an advance of Rs 1,200. He bought a
shampoo-packing machine for Rs 3,000.

• How Chik Shampoo was born

He named it Chik Shampoo after his father. The product did not succeed immediately; he
learnt many things during the process. In the first month, he could sell 20,000 sachets and
from the second year, he started making profits.He moved to Chennai in 1989 but his
manufacturing unit continued to be in Cuddalore. It took him three years to get the first loan
because banks asked for collateral. He did not have any. But one particular bank gave him a
loan of Rs 25,000 which they rotated and later upgraded to Rs 400,000, Rs 15 lakh (Rs 1.5
million), etc. The bank manager wrote in the loan application. 'This person does not have
any collateral to offer but there is something interesting about this SSI unit. Unlike others,
this company pays income tax!'

• How Beauty Cosmetics became CavinKare

As they planned to expand to new products, they thought the name Beauty Cosmetics would
be restrictive. In 1998, they ran a contest among their employees for a name and one of them
suggested CavinKare; with C and K spelt in capitals. CK, his father's initials. Moreover,
Cavin in Tamil means beauty and grace. So the brand CavinKare was introduced.

• Perfumes for the poor

They wanted to cater to those who cannot afford (high priced) perfumes. Good perfumes came at
a huge price -- they were beyond the means of ordinary people. So, they decided to come out
with a Rs 10 pack Spinz. They were successful in that too.

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• CavinKare’s Innovative Strategy:
CavinKare’s strong belief in innovation has been the main reason for its survival in the market.
The company is well known as a pioneer in sale of sachets in the market. From time and again it
has been known to introduce products to unreached masses. The following products expanded
their reach amongst customers:

Chik Shampoo:
Just a mention of Chik Shampoo today gives rise to varied perceptions. To the rural and semi
urban population of India, it is the preferred daily shampoo. To the market and its players, the
second largest selling shampoo in the country. To the competition, a case study in competitive
strategy. And to us, our raison de etre. In a highly competitive FMCG category that seemed
impenetrable to most marketers. Chik Shampoo identified a humongous opportunity in rural and
semi urban India and created waves with its entry into these markets. Combining innovative
sachet packing, strategic pricing (At Re.1 and 50p) and a strong and motivated distribution
network, Chik Shampoo transformed the very nature of shampoo packaging and usage.

Target Market:
Chik Shampoo has always targeted both, girls and women in rural and semi urban India.
The brand has gained their confidence and become a household name by catering to their
continuously evolving requirements and preferences.

Strategy For Success:
 Rural penetration,
 Live demonstrations,
 Advertisements in movie theatres,
 Introduction of sachets of small quantity

How Chik Shampoo conquered the rural market
Multinational companies sold products in big bottles and not in sachets and they sold only
from fancy stores. They did not look at the small kirana stores, nor did they look at the rural
market. Cavinkare went to the rural areas of South India where people hardly used shampoo.
They showed them how to use it. They did live demonstration on a young boy. They asked
those assembled to feel and smell his hair. Next they planned Chik Shampoo-sponsored
shows of Rajniknath's films. They showed advertisements in between, followed by live
demonstrations. They also distributed free sachets among the audience after these shows.
This worked wonders in rural Tamil Nadu and Andhra Pradesh. After every show, their
shampoo sales went up three to four times. Today, the Indian rural market is growing at
a pace double than that of the urban market.

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Chik Shampoo No. 1 in South India:
When Chik entered the market, Velvette Shampoo was being marketed aggressively by
Godrej. But a scheme of his became extremely successful --they exchanged five sachets of
any shampoo for a Chik Shampoo sachet, free. Later, they altered the scheme -- they
started giving one free Chik Shampoo sachet in lieu of five Chik Shampoo sachets only.
Soon, consumers started asking for Chik sachets only. The sales went up from Rs 35,000 to
Rs 12 lakh (Rs 1.2 million) a month. When they introduced jasmine and rose fragrances, the
sales went up to Rs 30 lakh (Rs 3 million) per month and with actor Amala as the model, our
sales rose to Rs 1 crore (Rs 10 million) a month! Each idea of theirs was rewarded by his
customers. There has been no looking back since then. Cavinkare’s market share increased
and in 1992, they became the numero uno in South India. It took nine years for Mr.
Raghanathan to overtake his brothers' business.

Innovative marketing strategy used for Chik Shampoo:
“During 1999, the penetration level of Chik Shampoo was not aggressive. Hence the company
went back to the consumer to understand their basic needs that would help Cvai Kare to drive
the sales growth and gain good market share in the shampoo market. Cavin Kare also
discovered that soap usage was the biggest barrier and people did not see the need for using
Shampoo. As part of the consumer study, the company tried to convey the message to the
consumer that soap usage was bad for the hair and when a product exists specifically for hair
it should be used. The consumers responded by stating that their fathers and grandfathers have
used only soap and their hair continued to maintain good health. So the argument that Soap
was harmful did not bear merit to them. However they did agree that Shampoo usage gave soft
and silky hair. However their perceived value on hair wash was very less and they did not
want to spend more out of their pockets to buy Shampoo. The study also revealed that though
the aspiration to use shampoo was there, the need to spend more did not appeal. To arrive at a
solution for this situation, Cavin Kare introduced the 50 Paise shampoo sachet, which easily
satisfied a single wash. It was a calculated risk took, since the existing volumes of 1 rupee
shampoo sachets was also in the market but when sales started picking up for the 50 paise
shampoo, the 1 Rupee Shampoo also picked up pace once the consumer started making a
habit of using Chik shampoo and Cavin Kare gained a good margin. Another situation where
innovation was required was the economy value consumers saw between using shampoo
sachets and shampoo bottles. 65-70% of the shampoo sold in India is through sachets and only
30% is through bottles. Sachet sells more due to the phenomenal value it offers to the
consumer.

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Product Diversification:
It is believed that the continuous pursuit of perfection is perfection in its true essence. At
CavinKare, this belief has been put into practice with comprehensive understanding, utmost
dedication and care. From being a player with a single offering, Chik Shampoo has penetrated
the Indian market with a wide range offering of four refreshing fragrances. The brand spread
its shoots with Chik Black, Chik Jasmine, Chik Egg and Chik cool. Added to its successful
sachet packing and pricing at Re.1 and 50p, the Company expanded its market share with
the introduction of bottles sized-60 ml, 120 ml,250 ml & 500ml.

Launching Meera Herbal powder and NYLE Shampoo
They continued with Chik Shampoo for seven years before venturing into anything else.
Meera Herbal powder was actually not their idea. Shaw Wallace already had a herbal product
but it was marketed very poorly. They felt there was a demand for herbal products and they
made a good product. Mr. Ranganathan felt he should be the leader if theirs was a good
product. In the third month itself, they topped the market. In six months, they had 95 per cent
market share, while Shaw Wallace had only 4-5 per cent.

Launching a fairness cream
They decided to launch Fairever in 1997 as Mr. Ranganathan saw a huge demand fairness
cream. Now, they are the second largest player in the market.Research states that when a
product is good, consumers do not shift to a new brand. The CavinKare team told him not to
venture into the fairness cream market as the consumers were quite satisfied with the existing
products. But they went to launch the product containing saffron -- which is traditionally
used to get a fair complexion. In six months, sales galloped. This was followed by Indica hair
dye. Two and a half years ago, they launched Ruchi pickles in sachets and became number
one there too. CavinKare sells close to 5,000 tonne of pickles per annum and it hopes to
double this in two to three years. The process from then on has continued wherein CavinKare
has added many variants to its products and expanded its market share.

CavinKare in FOOD INDUSTRY:
Apart from expansion in the skin care products, CavinKare also entered the food segment by
buying of Ruchi Agro foods. In November 2003, the Chennai-based CavinKare Pvt Ltd.
(CavinKare), the Rs 2.64 billion (bn) hair, skin and personal care company, announced the
acquisition of the Andhra Pradesh-based Ruchi Agro Foods' pickle brand, 'Ruchi,' for Rs 150
million (mn). The acquisition also included the Ruchi Agro Foods' pickle manufacturing plant
(with a capacity of 130 to 150 tonne per month) and machinery in Gudur, Andhra Pradesh.
Ruchi was the first major brand acquired by CavinKare, since its inception in 1983.

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The acquisition was aimed at boosting the branded food business, which the company had
entered in September 2003, through its Chinni's brand of pickles.The 'Ruchi' brand was the
market leader in Tamil Nadu (a Southern state in India) and was also a major player in other
states in South India. The brand was expected to give CavinKare a firm footing in the food
market in the region. According to sources in CavinKare, the "Ruchi" brand would be promoted
as a premium brand, while "Chinni's" would cater to the mass market.
CK Ranganathan (Ranganathan), chairman and managing director, CavinKare said, "The price
of Chinni's is half that of Ruchi and we will position both brands to capture the entire market and
also take Ruchi nationally."
CavinKare, which began as a small regional player in the early 1980s, emerged as major fast
moving consumer goods (FMCG) player in India in the early 21st century, competing directly
with multinational companies (MNCs) like Hindustan Lever Limited (HLL)and P&G Home
Products Limited (P&G), in various product segments like skin, hair and personal care.

Strategies used:
The main strategy of Cavin Kare is to strengthen the distribution and marketing. The company
made its brand available to the customer through out the country. Continuous concentration upon
Research and Development is an added advantage to the company which has dedicated staffs.
Their main job is to understand the needs of the target audience and to bring more innovative
products
 Critical Analysis Of Marketing Strategy:
CalvinKare has adopted an approach of constant innovation in marketing to reach its untapped
potential customers.
 Advantage:
The advantage of the strategy adopted was that it could reach those masses of people which were
unheard off. The company was successful in:

Educating the people regarding the use of product,

Creating demand for its shampoo in segments where none existed,

Reaching lower classes who could not afford big bottles of shampoo,

Diversifying in more than one segment,

Giving the customer constant new variants of products,

Serving the customer base in more than one segment (i.e. skin care, hair care and food
industry)

Capturing the untapped rural segment.

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 Disadvantage:
The main criticism of the marketing strategy comes from the fact that it avoided the rich masses
of the segment. Its initial products were designed to serve the poor masses and rural market and,
therefore, it has been positioned as a brand of the masses and not a brand of niche category. The
products offered by CavinKare appeals to general masses but do not appeal to rich classes. It has
lost this part of share to companies like Amway, P & G and others who exclusively serve upper
and rich classes. CavinKare has failed to build such products which are rightly priced to meet
demands to the exclusive class. It has spread itself as a medium ranged product but does not offer
exclusive products. Moreover, by emphasizing more on sale of sachets, it missed out on sales
which it could have done had it sold only in big bottles. It missed out on, thus, selling more
volumes of products. The company has introduced five new variants in the “CHIK” Shampoo
range and in this attempt it has cannibalized its own product. CavinKare failed to introduce an
anti dandruff shampoo in the market, thereby, losing a major amount of its market share to anti
dandruff shampoo producers. The company was slow to recognize the trend and shift towards
anti dandruff range. Though, the company did introduce the anti dandruff, it had lost a portion of
share already. The company entered a segment of food and pickles which needed the company to
market for a new set of customer base. Though it still targets the rural market, the base for skin
care and food & pickles is different.
 Recommendations:

For Responsible Hair and Skin Care Marketing:
CavinKare should indulge in marketing for the niche segment. It should also derive strategies
wherein it can position itself as a exclusive brand without losing on its image as a brand for local
people. It should diversify its product portfolio to include products of high and mid range.
Besides this, it should utilize other means for reaching the customer i.e. internet and kiosks. The
products should be more widely available. Nowadays each brand is available in sachets.
Therefore, to distinguish itself it should offer attractive sachets which capture attention even in
malls. It should also concentrate on opening centres wherein the customer can use its product
before buying. Various live demonstrations should be held and new customers should be
encouraged.

For Responsible Food Marketing:
Consumers rely on product advertisements and food labels for nutritional education. The
American Association of Advertising Agencies states that responsible food marketing strategies
should: (1) avoid vague, false, misleading, or exaggerated statements; (2) avoid incomplete or
distorted interpretations of claims made by professional or scientific authorities; and

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(3) Avoid unfair product comparisons. Advertisers must also consider the long-term
consequences or potential for harm stemming from their claims. While these recommendations
are important in developed countries, they become even more critical in international marketing
campaigns.
It is also important for consumers to recognize their role in evaluating health claims and product
comparisons. While advertisers are aware of the need for truth in advertising, sometimes their
desire to sell products over-shadows an accurate disclosure of product attributes. Advertisers
should bear in mind that inaccurate or vague health claims have the potential to cause economic
hardship, illness, and even death. Lastly, marketing strategies used in developing nations should
be subjected to the highest standards of truth in advertising.

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 Case Study: Samsung Electronics
• Scenario in the consumers Durables sector
Prior to liberalization, the Consumer Durables sector in India was restricted to a handful of
domestic players like Godrej, Allwyn, Kelvinator and Voltas. Together, they controlled nearly 90%
of the market. They were first superceded by players like BPL and Videocon in the early 1990s,
which invested in brand-building and in enhancing distribution and service channels. Then, with
liberalisation came a spate of foreign players from Samsung to LG Electronics to Sony to Aiwa.
Both rising living standards, especially in urban India, and easy access to consumer finance have
fuelled the demand for consumer durables in the country. Also, the entry of a large number of
foreign players means the consumer is no longer starved for choice. But this has also resulted in an
over-supply situation in recent times as growth levels have tapered off.

• Major players
The major players in the consumer durables industry, operating in different sectors such as air
conditioners, washing machines, refrigerators & television include: Blue Star Ltd., Mirc
Electronics Ltd., Whirlpool of India Ltd., Philips (India) Ltd., BPL Ltd., Sony Corporation Ltd.,
Samsung India Ltd., LG Electronics India Ltd., Videocon International Ltd.

• Entry of Samsung in India

Emerging Markets (EMs) with large consumer bases and untapped demand constitute the major
growth opportunities for the multinationalsand global companies. However, not all companies are
successful in establishing a foothold, leave alone operating profitably, in such markets. For most, it
takes years of struggle before they can even breakeven. Marketing is difficult in such EMs because
of little or no market data, non-existent or poorly developed distribution systems, lack of regulatory
discipline, and where regulations exist, a propensity to change them frequently and unpredictably.
Samsung entered India in December 1995 as a 51:49 joint venture with Reasonable Computer
Solutions Pvt. Ltd (RCSPL), owned by Venugopal Dhoot of the Videocon group. In 1998, RCSPL
diluted its stake in Samsung to 26% and in November 2002, the FIPB cleared Samsung's proposal
to buy RCSPL's remaining (23%) stake. With Samsung buying the total stake of RCSPL, it became
a wholly-owned subsidiary of its South Korean parent company. In spite of being a latecomer to
India, Samsung was able to become one of the top consumer electronic companies in India, an
emerging market was due to a combination of several aspects: Product innovation, Promotion,
Pricing, distribution and Positioning; wherein Samsung primarily focused at.

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• The three-pronged objectives of Samsung are
1. Strengthening their channel relationships,
2. Enhancing their product portfolio and
3. Creating the best service infrastructure, to gain more mindshare."

• Positioning
Many multinational companies adopt a “less developed countries” mindset, assuming that these
markets are at an earlier stage of the same development path followed by the developed countries.
To take the example of the automobile industry, Ford and GM launched their outdated models like
Ford Ikon and Opel Astra in the Indian market. When these models did not sell well, the companies
changed course and decided to launch newer models in India. In the case of Samsung, the company
from the very beginning launched its whole range of high technology products, which included
CTVs, audio and video products, information technology products, mobile phones and home
appliances in India. It introduced products such as the ‘Bio’ range in CTVs, high-powered Woofer
series of colour televisions in 21-inch and 29-inch conventional and 21-inch flat TV segments. And
not to forget the lateset DNie television.
By positioning itself on the technology platform, Samsung was able to differentiate itself from its
competitors. Differentiation today is the key for a brand to be preferred by the consumers, when
there are so many other brands within the same product category. Without differentiation, its loyal
customer base cannot be created or sustained. But to be a true differentiator, a company must
provide features that are meaningful to customers. Which is what exactly Samsung has been doing.
• Promotion
Offering advanced technology products and positioning itself on the technology platform will not
help a company sell its products if it fails to communicate properly with the potential customers. To
raise brand awareness and create strong, favorable and unique brand associations, Samsung
adopted various marketing strategies like celebrity endorsements, corporate advertisements,
highlighting its technological superior goods and many promotional schemes.
• Advertising
Samsung is involved in aggressive marketing and advertising of its product to develop
attitudes, create awareness, and transmit information in order to gain a response from the target
market. Their main advertising channels include 'media' such as newspapers (local, national,
free, trade), magazines and journals, television (local and national) cinema, outdoors
advertising (such as posters, bus sides). The initial advertisements communicated presence of
Samsung in worldwide markets and its dominance in those markets.

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To increase its brand awareness, Samsung went in for celebrity endorsements. Initially, the
company signed Hindi film actress, Tabu, to endorse its brand. Till 2002, Samsung’s ads
focused on the technological supremacy of its products. But by late 2002, in addition to the
technology plank, the company started advertising on the plank of ‘passion for country’ and
sports (cricket and football). Its latest ambassador is John Abraham for its mobile phone and
Rahul Dravid for its Television range.
• Sales Promotion

Along with advertisements, Samsung also focuses on promotional schemes to increase its sales.
In October 2001, Samsung launched its highly successful promotional scheme, the Samsung
Phod ke Dekho Offer. This offer instantly boosted the sales of the company generating sales of
Rs. 2.75 bn from this offer. The campaign was launched on an all India basis during the festival
season. Under the scheme, consumers who bought any Samsung product were given a tamper
proof plastic coconut with three coins in it. One out of every 10 coconuts had a lucky coin with a
gift printed on it. As a part of the campaign, Samsung’s brand ambassador, Tabu interacted with
the customers and dealers of Samsung in Bangalore and Chennai and handed over the lucky
coconuts to select Samsung customers. The prizes included products from the Samsung range.

The Phod ke Dekho offer was followed by another promotion scheme in May 2002, Dabake
Jeeto offer coinciding with the football World Cup. During the promotion every customer who
purchased company’s electronics or home appliances product got plastic football with an alarm
clock in it. The customer had to press the football from the top, and was given the free etched on
the tamper-proof anodized sticker. Under this campaign, Samsung gave out gifts worth Rs. 100
mn, which included Samsung digital flat TVs, frost free refrigerators, microwave ovens,
Karisma washing machines, mobile phones, cameras and Soccer 2002 official licensed T-shirts
from Adidas. This campaign notched up sales worth Rs.310 Crores during the period of the
Promotion.

The next major promotional campaign was the Phir Se Phod Ke Dekho offer. The offer was
launched during October-November 2002 generating a sales of Rs. 380 crores. It was a repeat of
the earlier ‘Phod Ke Dekho’ campaign.

On March 20, 2003 Samsung Launched 'Samsung Rang De Kismat Offer' for Frost Free
Refrigerators which entitled a customer to Lucky Gifts worth Rs 4 Crores, with the purchase of
any Samsung Frost free Refrigerator. This Promotion derives its name from the 'Rang de
Kismat' glass, which was handed over to a customer with the purchase of any Samsung Frost
Free Refrigerator. The Customer needed to pour chilled water into the glass and wait for the 'Bio'
logo on the Glass to change colour to find out the gift won by him/her.

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 There were Colour Codes for types of Gifts won by the Customer - For example, a Green 'Bio'
entitled a customer to a Samsung Microwave oven while a Red 'Bio' gets the Lucky winner a Gift
Voucher from Tanishq worth Rs 30,000. This offer was launched to capitalize on the sales of its
Frost free refrigerators in the summer months. The Company’s market share went up to 21% in
the Frost free refrigerator market after the offer.

Following its success with its 'Samsung Rang De Kismat Offer' Samsung India come up with
another innovative Consumer Offer “Samsung's Bundling Offer with Reliance IndiaMobile”
for the buyers of its Consumer Electronics and Home Appliance Products in the Delhi and NCR
Region on 25 July, 2003. A buyer of any Samsung Consumer Electronics or Home Appliance
products gets the option of walking away with a sleek, advanced Samsung Mobile Phone N191
model along with a Reliance IndiaMobile connection, without having to pay any activation
charges. Furthermore, the user gets free talk time worth Rs.600 over a 6-month period. All other
payment terms are the standard billing terms and conditions offered by Reliance IndiaMobile
depending on the package taken up by the customer.

On 6 October 2003 Samsung India Electronics Ltd launched its mega festival promotion called
‘Samsung Pinning Toh Winning Offer’ on an all India basis. In this Promotion, where the
consumer stood to win an assured gift on the purchase of any Samsung product, have gifts worth
Rs. 100 crores to offer as prizes. The offer entitled the buyer of a Samsung product, a card with a
unique 16 digit alpha-numeric code. All the consumer had to do is SMS “SAM” followed by the
16 character code to 8888 and s/he would immediately get a message showing what gift has been
won. The Gifts won in the Promotion include; Samsung Projection TVs, Samsung Mobile
Phones, Samsung Yepp Disc Players, Samsung DVD players, Titan Fast Track Glares, Touch
Screen Landline Phone, Trendy Portable Travel Iron and Britannica Encyclopedia 3 pack
CDs.This offer was basically launched to maximize its sales during the festival season.

Following its success with its ‘Samsung Pinning Toh Winning Offer’ Samsung India
Electronics Ltd launched ‘The $-DOLLAR Program’ for its IT Reseller and System Integrator
fraternity on June9, 2004. The program meant for the System Integrators (SI) was applicable on
Samsung monitors, Hard Disk Drives (HDD) and Optical Media Storage (OMS) products. Each
time a SI/reseller purchases Samsung products from a Samsung Star Elite or Samsung Storage
Preferred Partner (SSPP), the SI was issued a cheque. The cheque was of one of the four colors –
White, Blue, Silver, Gold – depending upon the products bought.

Samsung believes that its SIs and re-sellers play a pivotal role in business growth. They are the
ones who provide them the edge that they need in today’s competitive marketplace. This is why

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 they have spearheaded revolutionary programs for them ensuring healthy growth in revenues
and profitability.

The last sales promotion offer was launched on Feb 3, 2005 called “Fastest Finger First” which
was a nation wide contest to find India’s fastest SMSer. The message to be typed reads as
follows: “The razor-toothed piranhas of the genera Serrasalmus and Pygocentrus are the most
ferocious freshwater fish in the world. In reality they seldom attack a human". This SMS had to
be typed on the cellphone keypad, complete with punctuation marks and lower & upper case. No
predictive text (T9 Dictionary), QWERTY keyboards/ any keyboard was allowed.

• Sponsorship:-

Samsung used sponsorship of events like Olympic series to boost its sales. Samsung was the
global wireless communications sponsors at the Athens Olympics. Samsung used the strategy of
relating itself directly with the values of the Olympic games, which included attributes like
world class, global, excellence, fair competition and peace. The Olympic series of August5,
2004 was Samsung’s salute to the Olympic values.

Samsung was the sponsor of Lakme India Fashion Week held on April21, 2005. Team Samsung
cricketers - Irfan Pathan, Mohd. Kaif and Virendra Sehwag launched the World’s Best Handset,
Samsung D500 during the Samsung Show at the Lakme India Fashion Week. The theme for the
Samsung Show was ‘The Best Thing Says Everything’ in keeping with the positioning of
Samsung D500 - Samsung’s latest and path-breaking mobile phone which has been rated as the
‘World’s Best Mobile phone’ by the 3GSM Association World Congress held at Cannes in
February 2005.

Samsung sponsored Samsung & MTV Youth Icon 2005 on June10, 2005. The idea behind the
sponsorship was that the Samsung Mobiles were targeted at the fun loving, lifestyle oriented and
trendy youth of today. By associating with the Samsung & MTV Youth Icon, they are seeking to
further strengthen their relationship with the youth. Samsung mobiles make a style statement and
by partnering with the Youth Icon, this positioning is further re-inforced.

Samsung was even the sponsor of Samsung IIFA Awards held on June 13, 2005. Popular film
actress, Preity Zinta was awarded the ‘Samsung Diva’ award while Hrithik Roshan was
conferred the prestigious ‘Samsung Style Icon’ award at the Samsung IIFA Awards 2005.
Samsung India had carried out an online voting process on the Samsung India website between
May 20th - June 5th 2005 for selecting the recipient of the ‘Samsung Style Icon’ and ‘Samsung
Diva’ awards. The same was also promoted extensively on other sites like indya.com and
msn.com as well. The Company received a phenomenal response to this online voting contest.

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“The ‘Samsung Style Icon’ and ‘Samsung Diva’ awards which have been growing in
popularity year on year, the company uses the response level received every year as its
popularity indicator.

• Direct Mail
Samsung even uses Direct Mail concept for its product promotion. Samsung sends mail to target
consumers depending on the database i.e. the frequency of site visit and on their purchases.
Samsung is very actively involved in e- commerce.
• Distribution Channels

Samsung uses supply chain to enhance differentiation, increase sales and penetrate new markets
and channels. Its supply chain is beneficial in several ways. It helps the company to deliver
products to the customer faster. It efficient supply chain is transparent, so that all the players in
the supply chain have the right information at the right time about the movement of the products
within the chain. This means lower inventories, elimination of waste, and reductions of costs. In
addition to the intangible benefits like quick feedback from customers help in launching new
products.

Samsung has 24 state-level distribution offices and a direct dealer interface. The direct dealer
interface helps the company to get quick feedback from dealers, and enables it to launch
products according to consumer needs. To minimize time overruns, Samsung delivered its
products directly from its factories to its Regional Dispatch Centers (RDCs), and from there to
dealers. Samsung has sales and service networks all over India and 650 service points.

Samsung has implemented an innovative logistics system – Global Logistics Network
Systems (GLONETS). GLONET application is used on the B2B i.e. Business to Business
front for the vendors. This involved linking the key vendors, which form the bulk of Samsung’s
sourcing (26 domestic and 30 international) through Samsung’s GLONET. This system
enables Samsung to connect its purchase department with the Samsung headquarters and
international procurement offices through integrated ERP systems. The integrated ERP system
enables Samsung to purchase its requirements from its international procurement offices and
also from its Indian vendors. This application is also extended to order placement, production
plan sharing and invoicing, resulting in shorter business cycles and reduced inventory levels
and low waste. In addition to GLONETS, Samsung also believes in JIT (Just-in-Time)
concept to its dealers. To make delivery of products within 48 hours of the expected date of
delivery, the company has setup four RDCs, one at each regional location of the country.

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The distribution channel is structured very systematically wherein all the transactions and
business conducted is documented.

The program is based on incentives so that dealer payments can be made on time. The Company
supplies its goods to the Star Elite who supplies goods to the distributor who in turn sell the
goods via their own channel of retailers and distributors. The Samsung Brand shop network
complements the over 8500 retail points for Samsung products located across the length and
breadth of the country. Samsung plans to continue enhancing its penetration levels in the
country to reach out to more and more Indian consumers. They consider the Star Elite partner as
their actual product champion as their link with the end customer. As, they have been adding
value to the sale to the customer and guiding him to the right purchase decision at a fair price.

Shop-in-shop: Samsung is ensuring a presence in most big malls and multiplexes; even in the
multi-brand outlets, as the focus there is to create a shop-in-shop atmosphere.

The exclusive showrooms: Keeping its target customer to display Samsung products in a more
lifestyle ambience and to communicate the product benefits in a more interactive manner,
Samsung India has set up a widespread network of over 80 exclusive showrooms comprising
Samsung Digital Zone (focusing on high-end digital audio-video products such as MP3 players,
camcorders and LCD/plasma TVs). The Samsung DigitAllhome goes beyond the concept of a
Digital Plaza or a Brand Shop because in the DigitalAllhome, they are trying to create a more
interactive environment and providing a more lifestyle orientation to the display, so that the
customer can visualize the products in his/her own home settings. The Company plans to
supplement its existing Samsung Digital Plazas' (Brand Shops) by setting up 'Samsung
DigitAllhomes' in select cities. The Company will also be creating exclusive Samsung corners
in multibrand outlets this year.

The demands and needs within the distribution channel lead to the establishment of
MyMemoryStore.com. The site is more than an ordinary selling site, infact it is an industry
portal that allows the business partner to come in and track the relevant industry information
within the channel, meaning minimizing the inventory overhead.

Samsung is also planning to invest over $1 million in setting up a chain of exclusive outlets
called `Samsung Talkies'. The entire Samsung mobile range including the latest handsets will
be displayed at the outlets, which will be set up in more than 10 cities across India, including
Bangalore, Mumbai and Hyderabad.

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• Distribution Channel in 2005:

Post VAT they have modified in their policies a bit.

The most important step was to bring down channel inventory post the Budget impact and the
VAT impact. They made a conscious decision to bring down channel inventory, which was at
that point of time 60 days, today it is reduced to 11 days, which entails total inventory among
dealers, distributors, star elite and SI. This has been done to ensure that the channel stays
profitable.

Samsung India tied up with PlanetM for displaying its new audio range at the PlanetM Outlets
in Delhi, Mumbai, Kolkata, Pune, Chandigarh and Bangalore.

• Pricing:

Pricing also seemed to have played a significant role in Samsung’s success. Differentiation is
the key for a brand to be preferred by consumers, when there are so many brands within the
same product category. Samsung believes in providing good products at reasonable prices to its
customers. Samsung’s technology plank communications helped the company to gain market
share, even though it did not offers any discounts or exchange scheme when it entered India.
Samsung focuses on cost-cutting measures to keep its price low which helps to combat the
discount schemes of the local companies.

For e.g.- In 2001, due to high competition in the 20”CTV segment, Samsung had to resort to
price cuts. The company said that value engineering, new product lines and new chassis
development had contributing in combating price erosion. Samsung negotiated with its vendors
to reduce costs on cabinets, plastics, speakers, harness coils, remote controls, etc. Samsung’s
Brand image seemed to have helped it survive the price erosion. Dealers also agreed to lower
margins owing to company’s brand image.

Samsung in the year 2002, drastically reduced its operational costs which enabled the company
to keep low prices for certain products and extract higher profit margin from premium products.
This helped Samsung to post a turnover of Rs.30bn, a 2 growth from the year 2001.

Samsung is very transparent in functioning. It has a fixed MoP (Marketing Operating Price)
whereby the goods are sold to the distributors and to the customer’s at a fixed market price only.

The focus of its competitors is to penetrate in the rural and semi-urban mass markets. But
Samsung insists that it's a high end technology driven player. That's why the urban areas are still
a focus area for it and only 30 per cent of revenue comes from rural and semi-urban India. They
have always been a hi-end technology driven player and want to keep that equity.

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Not surprisingly, the target customer for Samsung products won’t be found in the
price-sensitive mass market. Adopting the lifestyle product platform, Samsung’s aiming for the
high-end premium market. Hence Samsung has always been keeping premium prices. Samsung
claims it’s never been a price warrior — its focus has always been on the premium market,
which is why it has remained a steady No. 2 or No. 3 player in most product categories.

It is difficult to achieve the ambitious targets keeping in mind the pricing strategy of Samsung.
But, they believe that it takes time to ensure your supremacy in market share. Once you get your
brand perception right in the minds of the consumers as a brand that delivers the best technology
and gives you value for money, then ultimately market share goes up.

Later on Samsung changed its policy a bit and instead of just remaining a high-end technology
driven brand it tried to change its image to sell products to the huge number of middle income
families in India. It started pricing its products on the “value for money” concept, keeping in
mind the price sensitivity of Indian consumers.

But still Samsung has the repute of being a premium brand, aggressive in launching newer
models with the latest technology and at economic costs throughout the world

• Pricing Strategy Post VAT

Post Budget, they have ensured that there is no discounting in the market and also the prices of
OMS had to be increased by 4 percent since price stability is of fundamental importance in
channel business. This is the biggest marketing stand that the brand could have taken as the
brand stands above individuals and the transactions that happen.
• Marketing Strategy:-

Samsung has to improve its after sales service inorder to retain customer and create brand
loyalty. The current policy adopted by Samsung is aggressive spending more on advertising and
marketing and less on retaining customers that is after sales service.

So the corrective strategy to be adopted by Samsung must be to spend more on retaining
customer rather than acquiring them as it costs 5 times more to the company to get to a new
customer rather than pleasing existing ones. Moreover it costs 16 times to take the new
customer to the loyalty stage.

They should have regional service centres in North, South, East, West where the complaints
can be received and processed quickly. Moreover they should employ and train the technicians
to provide quality and timely sales service.

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• Strategy To Expand Market Share:-

Currently Samsung ranks second in the Indian consumer durable market whereas LG ranks first.

The problem with Samsung is that it is a premium brand and focuses only on urban and
semi-urban markets whereas the rural market is neglected to a great extent which is why LG is
dominating in that market.

Samsung earns a revenue of only 30% from rural areas.

India being a country of villages, Samsung should focus more in the rural market in order to
increase its market share.

Samsung should come out with new economic products like LG had taken out “Sampurna”
television range aimed only for the rural market.

Hence Samsung could have come up with a conventional range of television models which
although are no very technologically advanced but fulfills the basic needs.

All these strategies are very practical promising higher gains with less cost pains.

Year Promotion Scheme

October 2001 “Phod ke dekho” offer

May 2002 “Dabake jeeto” offer
November 2002 Phir se phodke dekho” offer
March 2003 “Samsung rang de kismet” offer
October 2003 “Pinning toh winning” offer
June 2004 “The $-dollar programme” offer
February 2005 “Faster finger first” offer

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 Bibliography
• www.google.com
• www.pizzahut.co.in
• www.lgindia.com

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