Chapter 25 Is the marketing budget well spent?
From the viewpoint of society and the consumer
Billions of dollars are spent worldwide each year on all forms of promotion, including advertising. there
are many observers who argue that this is a waste of resources and this money would be more
effectively spent, in the interests of the consumers, in other ways.
From the viewpoint of the business
The main aim of advertising and sales promotion is not always to increase sales in the short term – it
could be part of a longer-term “brand building” exercise, where the benefits will be spread over many
years. Whatever the original aim of a campaign, it is vital for the business to assess the degree of success
– and this is not always an easy to do. How can this be done?
1. Sales performance before and after the promotion campaign. By comparing the sales of the
product – and the sales trend – before the campaign was launched with the daily and weekly
sales during and after the campaign, some conclusions could be drawn. The results of this
comparison could then be used to calculate the promotional elasticity of demand
2. Consumer awareness data. Each week market research agencies publish results of consumer
“recall” or awareness tests based on answers to a series of questions concerning the
advertisements they have seen and responded too. This gives the advertising agencies and their
clients rapid feedback on the progress of a campaign, whether the advertisements or sales
promotions have been seen and remembered
3. Consumer panels. These were discussed in the market research chapter – they are useful for
giving qualitative feedback on the impact of promotions and the effectiveness of
4. Response rates to advertisements. This is more than just checking on sales levels. Newspaper
and magazine adverts often have tear-off slips to request more details and even TV adverts can
ask for consumers to ring in.
Consumer markets and industrial markets
So far everything we have seen is consumer market. Industrial products – goods and services sold to the
industry, not to consumers – also need promoting. However, the relative significance of the methods
used is likely to vary substantially between these two types of markets. Trade – or industry – focused
promotional campaigns are unlikely to use commercial TV, radio or national newspaper advertising.
Promotion and the product life cycle
The quality, design and colour of materials used in packaging of products can have very supportive role
to play in the promotion of a product. Packaging can perform the following functions:
- Protect and contain the product - Give information, depending on the product, to consumers about contents, ingredients, cooking
instructions, assembly instructions and so on
- Support the image of the product created by other aspects of promotion
- Aid the recognition of the product by the consumer.
Distinctive packaging can help to form the basis of a promotional theme, which will endure as long as
the product – the bright red of coca-cola cans is feature of advertisements for the product
However, expensive and wasteful packaging may add unnecessarily to costs that could reduce a
product´s competitiveness. In addition, with increasing environmental pressures, packaging is seen to be
too ostentatious or wasteful may spark off a negative consumer reaction.
Why are “place” decisions an important part of the marketing mix?
Place decisions are concerned with how products should pass from manufacturer to the final customer.
Several different channels of distribution are available for firms to use. The channel of distribution refers
to the chain of intermediaries a product passes through from producer to final consumer. Here are some
reasons why the distribution channel choice is important:
- Consumers may need easy access to a firm´s products to allow them to try them and see them
before they buy, to make purchasing easy and to allow, if necessary, for the return of goods.
- Manufacturers need outlets for their products that give as wide a market coverage as possible,
but with a desired image of the product appropriatel