Getting The Most Out Of

Advertising and Promotion

Section B-Group 3: Anshoo (008) | Soumodeep(110) | Rohit(154) |
Rohit(133) | Kumar Abhishek(118) | Abhishek(145)

It is difficult to get data that can measure the incremental sales of a product over
and above those that would have happened without the advertising or
promotion. The data correlate information on actual consumer purchases with
the information on the kind of television advertising those customers receive or
the frequency or type of promotion events they see. Now it is being realized that
single-source data provide an unparalleled opportunity to increase their
companys marketing productivity. We must continually examine the appropriate
balance between advertising and promotion, based on marginal-productivity
analysis. The search for fresh, innovative television advertising to boost sales of
established products should be constant. Using single-source test markets as
lead markets for national advertising campaigns can substantially lower the
risk of this approach. They should cut back on unproductive promotions in favor
of hard-to-imitate promotion events that directly contribute to incremental
profitability. Salesforce must demonstrate to retailers the consumer pull of its
companys advertising and promotion programs, as well as the effect these
programs have on retailer profitability. New strategies that benefit both retailer
and manufacturer must replace the traditional practice.

Whats Wrong with the Conventional

Wisdom
Marketing have rely on some assumptions that that advertising takes a long time
many months or, sometimes, even yearsto increase sales. Findings of a
research:
- increased advertising led to more sales only about half the time.
- Only 16% of the trade promotion events we studied were profitable
- managers have been spending too much of their marketing budgets on
promotion
To measure productivity of television ads, we use split cable market test. Split
tests run typically for both new as well as established product. It was found that
59% of new-product advertising tests showed a positive impact on sales,
compared with only 46% of the tests for established brands. Incremental sales
begin to occur within six months. f advertising changes do not show an effect in
six months, then they will not have any impact. Increased advertising returns
only half the money spent over the course of one year, it will break even on
average if the long-term effects are taken into account. 76%of the difference

observed in the test year persisted one year after the advertising increase was
rolled back.
Why Most Promotions Lose Money
Developed computer programs that measure the marginal productivity of
promotional events.1. Anywhere from 30% to 90% of the time, a consumer
product is not on promotion in a particular store. When we compute the
incremental sales generated from this excellent trade activity, the promotion
ends up costing 64 cents for each incremental dollar it generates. Forward
buying helps explain why promotions have bad effect. Promotions almost never
have a positive long-term effect on established brands. Another hidden cost of
promotions is competitive escalation. The flip side is de-escalationa cycle
where competitors refrain from undercutting each others profits through
promotions. Discontinuing a money-losing promotion not only stops a
manufacturers losses.
Fact-Based Strategies and Tactics
Managers can balance investments in advertising and promotion to improve the
contribution of each to long-term profit. Start with a zero budget and allocate
money incrementally to various advertising and promotion options. Identify the
option that marginally contributes most to the long-term profitability of the
product. The first challenge is to maximize the chances of getting productive
campaigns. Advertising can provide significant help when it fulfills its primary
role of communicating product news. Increasing weight behind effective newproduct advertising is a productive strategy. Test it at different weight levels in
test markets before the national rollout. Without compelling new copy,
approximately one-half of established-brand advertising does not produce any
incremental sales. On the other hand, fresh copy for established products can
prove extremely productive. These findings imply a very different form of
pulsing for many established products. We would recommend pulses of at least
six months.
A New Role for the Sales Force
Single-source data measure the effect of advertising and promotions on
consumers, not on the distribution of a given product by retailers. Sales force
must communicate to retailers that unproductive advertising with no consumer
pull has no value to the retailer or the manufacturer. Instead of viewing trade
promotions as a competitive payment to make sure the brand has distribution,
sales personnel have to demonstrate to retailers how specific promotions will
increase their incremental profits. Taking advantage of this opportunity will
require salespeople to have greater analytical abilities than they have needed in
the past.