Marketing term paper
Promotion and establishment of demand curve
Promotion involves activities such as advertising, sales promotion, personal selling, public relations and even direct marketing. Sales promotion comprises of different incentive tools that are majorly short-term and whose aim is to stimulate buyers to so as to fasten the buying process or even increase the sales’ quantity. Promotion can elicit a direct effect on a company’s consumers buying behavior and more so sales promotion which has a direct impact on the decision of the buyer to buy products or services. The promotion process, therefore, leads to increased demand for a product or services especially over the short-term (Anderson & Aryal, 2015). The increase in the demand of the product or service will lead to a shift of the demand curve to the right.
Promotion and changes in Price Elasticity of Demand
Promotion activities undertaken by a firm may take different forms; either an increase in awareness of products through displays, demonstration and campaigns; and using incentives to lure customers in buying products through rebates or coupons. A firm may run such a program using higher prices strategy or even increased prices for customers who are already existing and acquisition of new customers through rebates (Fibich et al. 2005). In such a scenario, there is a relationship between promotion and prices. Increasing awareness are programs ran concurrently with a decrease in prices. The aim is to achieve maximum consumer awareness and in such a situation, there correlation between promotion and prices is negative (Fibich et al. 2005). In both scenarios the quantity’s demanded elasticity is shown by the responsiveness of demand of the products due to change in prices.
Promotion activities help in stimulating demand during the off-peak season for organizations like tourism firms. These activities help in attracting customers for the services provided and ensure that the resources are not under-utilized when the demand is low. Promotion activities such as discounts ensure that that a stream of customers is maintained and that carrying costs are do not become unbearable (Fibich et al. 2005).
Establishing advertising method budget
Percentage of sales method
This method is more applicable in a market whose sales pattern is stable and hence predictable. The firm may set their advertising budget in a way that it is consistent with a given proportion of sales and which helps in preventing advertising wars that can have negative effects on profits. The percentage set mat also varies with the prevailing sales’ condition. There is also a clear relationship between advertising costs and the sales (Shimp & Andrews, 2013).
Objective and Task method
Thus method comprises of setting some marketing goals on the basis of the tasks to be completed through the advertising process. The aforesaid tasks may be financial or involving marketing activities that arise out of the campaigns. The financial tasks are normally aimed at achieving a given rise in profits or sales. Hence, the marketers are called upon to establish advertising budgets through definition of their objectives and determining tasks whose performance will lead to attainment of the objectives and estimation of the cost involved in performance of the said tasks. In this approach, the tasks to be performed have to be aligned with the goals of the firms and the firm’s past performance (Shimp & Andrews, 2013).
Competitive parity method
The method is mostly used when there is a good establishment of patterns in predictable sales. The basic assumption in this approach is that the industry has an average expenditure that will work well for major firms in that particular market. A firm will, therefore, set the budget only on the basis of expenditures incurred by its competitors. The expenditure by the competitors is perceived to be the best for the industry and the sustained competitive parity help in averting promotion wars in the market. The major defense advance for this method is that it helps in checking the efforts or attacks employed by competitors (Shimp & Andrews, 2013). The amount of funds spent by one firm is not a reflection of how much it will spend comfortably so that the marginal costs equals the marginal benefits. Therefore, there is no clear relationship between the size of a given form and the budget outlay. The major advantage arising from this method is that it’s simple and can be used securely. The organization has to gather important data relating to competitors and follows them is it is easy to do so. A major shortfall of the program is that there is no uniqueness for the firm, which is forced to have similar identity with competitors in the industry. The method also encourages a firm to not pay attention to effectiveness of the funds used in the process and preventing an organization with unique competitive advantages from expanding its market share by increase the budget beyond the market average (Shimp & Andrews, 2013).
Affordable method
The basis of this approach is that the budget is based on the residual in the firm after catering for other expenses. This method does not try to relate the objectives of marketing and the advertising levels. This means that in a normal year, a lot of funds can be wasted while fewer sales can be expected in a bad year (Shimp & Andrews, 2013).
Role of integrated marketing communication in relationship marketing
The aim of relationship marketing is normally to create a connection between the customer and a brand that is emotional and strong. The goal of this connection is to bring about a continuous business and a passage of information from buyers that can lead to marketing leads. Integrated marketing communication enables a firm to enhance brands relationship with customers and other relevant shareholders. The integrated marketing communication normally places its focus on development of a brand through databases creation through which market needs of the customer are monitored and responded to (Percy, 2014). The process uses the information in the database to link messages that are constantly and consistently refined to the target customers in an understandable way. For instance, the information in the database depends on obtaining direct response normally in form of using direct mails by using a list that is segmented by various features such as age, household members and income. A firm is able to have a message that is more specific and personalized which increases the chances of the marketing effort in reaching the intended customer and hence, induce a response (Percy, 2014). This improves interactions with the customer and hence, enhances the brand loyalty. This integrated marketing communication may take various forms such as in person, mails or phones and even creating a relationship through an online platform. With increasing information in such a platform, the access to information about a brand can be tailored to a particular person and hence influence their views on the product. The process is able to combine a two-way communication with consumers by tracking their activities and offering information that is tailored to their needs considering their activities. The collection of consumers’ demographic data and promoting products in line with such information makes advertisement’s mass customization and other market communication methods possible (Percy, 2014).
Integrated marketing communication concept
This concept comprises of a marketing strategy that aims at linking the conventional strategies of marketing with modern strategies so as to create a tool that is reliable and efficient in conveying the brand of a firm to intended stakeholders. This kind of linkage ensures that communication process harnesses the most effective modern and tradition approaches in communication. It involves effective communication that allows messages to be passed with good clarity and without disruption. Such kind of communication enhances the relationship between forms and the targeted customers and audience. The overall effect is to improve the interaction between the firm and the customer and thus, ensuring that the relevant information which is personalized is conveyed to them (Percy, 2014). The aim improved relationship between the customer and the firm is maintained which allows potential clients to be convinced of the product offered by a firm. A firm that places its focus on traditional marketing – transactional marketing - aims at increasing quantity of individual sales. The firm with the traditional approach may have acquisition cost of the customer that is not significant. The marketing strategy of the firm may convince the customer to choose their brand one time but lacks a strong relationship with him or her to bring them back (Percy, 2014).
References
Anderson, K., & Aryal, R. N. (2015). Growth and Cycles in Australia's Wine Industry: A Statistical Compendium, 1843 to 2013. s.l: University of Adelaide Press
Fibich, G., Gavious, A., & Lowengart, O. (2005). The dynamics of price elasticity of demand in the presence of reference price effects. Journal of the Academy of Marketing Science, 33(1), 66-78.
Shimp, T. A., & Andrews, J. C. (2013). Advertising, promotion, and other aspects of integrated marketing communications. Mason, Ohio: South-Western Cengage Learning. 220
Percy, L. (2014). Strategic integrated marketing communications. Routledge. 6-11
