200086 Lecture Notes - Lecture 6: Marketing Communications, Sales Promotion

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amberhippopotamus661

26 Apr 2019

School

UWS

Department

University of Western Sydney

Course

200086

Professor

anon

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Document Summary

Types of sales promotions sales promotion techniques. Below are some of the most common type of sales promotion techniques used across all industries. Fmcg, see a lot of these techniques being implemented simultaneously mainly because of the sheer volume of business as well as because of the competition in fmcg. Other businesses, like consumer durable, furniture etc also use a combination of these sales promotion techniques: discounts trade / consumer. The most common type of sales promotions is consumer discounts or trade discounts. I don"t even need to to explain this to everyone because we are bombarded with discount offers everyday. Be it e-commerce stores, retail stores or anything else. The reason discount is most used is because it actually works! If there is a 10% discount on the product for the consumer, then it is known as consumer discount.

Related Questions

Colombo Soft-Serve Frozen Yogurt CaseQuestions
After reading the Colombo Soft-Serve Frozen Yogurt Case Study(SEE BELOW) answer the first six questions below.Please type your answer to the questions below in a Word documentand send in through the designated drop box. Please be sure tofully answer each question. Most questions (with the exception ofquestion 3 and 4) will require at least three to five sentences toanswer.
1. Briefly summarize Colomboâs competitive environment
2. Describe General Millsâ strategy in response to the competitiveenvironment?
3. Finish filling out the numbers on the Profit/Loss statement forColombo Yogurt (attached) using ABC techniques. Be sure and watchthe Colombo Yogurt teaching clip that explains in detail how tobreak down the numbers on the Colombo Yogurt profit and lossstatement using ABC techniques.
4. Using the ABC analysis you completed on the worksheet answer thefollowing questions.
- Which segment has the most sales revenue?
- Which segment has the largest net income?
5. What does the ABC analysis reveal? Be sure and look at whatdrives the cost and be specific.
6. What changes would you suggest to help General Mills? Youranswer should reflect something that you observed by looking at theprofit/loss statement before and after the activityanalysis.

5- 2 Colombo Soft-Serve Frozen Yogurt
In 1994, General Mills Incorporated, a $6 billion consumer goodscompany, acquired Colombo Frozen Yogurt.
General Mills Inc. (GMI) believed they could add Colombo frozenyogurt to their existing product lineup to increase
net sales with little addition in marketing cost.
, Frozen yogurt is sold through two distinct segments - independentshops and impulse locations such as cafeterias,
icolleges, and buffets. Frozen yogurt is the main business for theshops whereas yogurt is incremental to the impulse
locations' main business. GMl's large sales force already servedthe impulse market.
The [mancial results in the first couple of years were mixed.Earnings increased slightly and then dropped each year
even though sales volume was relatively flat. In total,merchandising costs dropped, while pricing promotion rates
escalated. The GMI sales force focused on the impulse segments andpricing promotions were believed to be driving
volume increases. However, volume in the shop segment declined atalarming rates and there was widespread
dissatisfaction in the sales organization. While GMI knew sales bysegment, they didn't track costs by segment.
. Instead costs were allocated based on sales dollars. Thesituation was ripe for a clearer look using ABC methods.

TODAY'S FROZEN YOGURT MARKET STRUCTURE:
When Colombo Yogurt Company began marketing soft-serve frozenyogurt in the early 1980's, their main
distribution was through independent yogurt shops. In the early90's, they faced competition from franchise
operations such as TCBY and Freshens that replaced many of theindependent yogurt shops. And the market
changed as Foodservice operators such as cafeterias, colleges, andbuffets started to add soft-serve yogurt to their
business. By the late 90's, these Impulse locations accounted for2/3 of the soft-serve market.
:In the late 90's, Shop sales began to increase with the additionof distinctive new products such as smoothies,
boosters, and granitas. The Shops make their living from thesoft-serve business and must innovate or go out of
business (as thousands have done in the last decade). On the otherhand, the Impulse locations make their living
from other items and the soft-serve trade is only performancetopspin. These firms are unwilling to take any risk
(new equipment or extra labor) to serve highly differentiatedproducts like smoothies or granitas.
THE GMI-COLOMBO MARKETING PLAN:
The GMI Foodservice Division markets brands such as Cheerios,Yoplait, Betty Crocker, Gold Medal Flour,
Hamburger Helper, Pop-Secret, and Chex Snack to Food ManagementFirms, Hospitals, and schools. Colombo
yogurt was added to this product lineup and the Foodservice salesforce covered both Shop and Impulse locations.
Salesforce: Colombo's salesforce was merged into the Foodservicesalesforce. Customers were reassigned to
salespeople who already serviced that geographical area. Thesalespeople varied in their reaction to the product.
Some found shops easy to sell to while others avoided the shopsdespite the possible lost commission. Many spent a
lot of time helping their impulse customers understand how to usethe machinery.
. Merchandising Promotions: Colombo traditionally charged the Shopsfor merchandising that was large scale and
; eye popping (neon signs). The Shops used these signs to drawcustomers inside. GMI chose not to charge for
merchandising and to provide the same large scale merchandising toboth Shops and Impulse locations. Shops were
very interested in the kits while many Impulse locations didn'teven hang them up.
Pricing Promotions: Pricing promotions are a mainstay ofGMI'simpulse location approach. GMI's salesforce
generally used these promotion events as an opportunity to visittheir accounts and take advantage of the occasion to
meet service needs and sell other products that may not befeatured.
5-8
Chapter 05 - Activity-Based Costing and Customer ProfitabilityAnalysis
r"' GMI made price promotions available to both segments of themarket. While the deals were typically around $5 per
case, they averaged $3 per case against all the volume shippedduring the year. GMI marketing knew price was not a
major decision factor for Shops and they did not target pricingpromotions to them. However, Shops were aware of
the promotions and took advantage of them.
THE BUSINESS STATUS - PRE-ABC:
PROFIT AND LOSS BY SEGMENT - PRE-ABC
Cost of Goods Sold is made up of$14,250,OOOfor ingredients,packaging, and storage and $3,000,000 for pick/pack
and shipping. Since the product is the same across segments, thecost to produce should be the same. However,
pick/pack and shipping costs were found to vary with whether or notthe order was for a full pallet. Full pallets cost
$75 to pick and ship whereas individual orders cost $2.25 per case.There are 75 cases in a pallet and the segments
, differ in their utilization of full pallets as shown below.,
ABC ANALYSIS OF MERCHANDISING:
t :
Merchandising costs consist mainly of kits costing $500 each.A
review of where the kits were sent indicated that
3,450 kits were sent out and 90 of them were sent to shops.
ABC ANALYSIS OF SELLING, GENERAL AND ADMINISTRATIVE:
Since sales representatives service several products, their costsare allocated to the various products based on gross
sales dollars. GMI gave diaries to 10% of the sales force inrandomly selected markets of the country and asked
! them to track their time in activity classifications for 60 days.The diaries indicated that sales reps spent almost 3
!times as much time on the yogurt than GMI had estimated. The totalallocation to Yogurt jumped from $1,185,000
to $3,900,000. Of their time spent on Yogurt, only 1%of the timewas spent on the shops.
5-9
- - - ---
Category Impulse Segment Yogurt Shops
Total
Sales in cases 1,200,000 300,000 1,500,000
Sales revenue $23,880,000 $5,970,000 $29,850,000
Less: Price Promotions -$ 3.600.000 -$ 900.000 -$ 4.500.000
Net Sales $20,280,000 $5,070,000 $25,350,000
Less: Cost of Goods Sold -$13.800.000 -$3.450.000-$17.250.000
Gross Margin $ 6,480,000 $I,620,000 $ 8,100,000
Less: Merchandising -$ 1,380,000 -$ 345,000 -$ 1,725,000
!Less: SG&A -$ 948.000 - $ 237.000 - $ I.I 85.000
;Net income $ 4,152,000 $1,038,000 $ 5,190,000
ABC ANALYSIS OF COST OF GOODS SOLD:
""
Impulse Segment YOgurtShops Total
Cases in full Pallets 60,000 240,000 300,000
Individual cases 1,140,000 60,000 1,200,000
Total cases 1,200,000 300,000 1,500,000

pinksheep92

The purpose behind much of advertising is to influence each of the five Consumer Decision Making process (Problem Recognition, Information Search, Evaluation of Alternatives, Product Choice (i.e. Purchase) and Outcomes (i.e. Postpurchase). Each stage of the Consumer Decision Making process has techniques that help consumers to manage the stage and then move onto the next one successfully. Eventually, the consumer moves to purchase (where we get excited to make the sale) but don't underestimate how important the last stage (post purchase) is to making additional sales in the future. Below are guidelines that show basic techiniques used to target and manipulate each Consumer Decision Stage through advertising.

Below are some issues that you will want to consider as you evaluate each of the five chosen advertisements. Please remember that your goal is not simply to answer these questions, but to provide insights into the consumerâs decision making process that you feel would be useful to a marketing manager (e.g., if an ad triggered the consumerâs decision to purchase the product). Other areas to comment on would be level of involvement, etc.

Consumer Decision Making Stage:	Considerations for Stage:	Common Ad Techniques:
Problem Recognition	What problems does this product solve for the consumer? â¢ What triggered the decision to purchase this product? â¢ Was this the first time the consumer purchased such a product? Define and discern the Actual and Desired States	Ask a question (Whatâs for dinner tonight?) Show before (actual state) and after (desired state) Use the word ânewâ or âintroducingâ to initiate curiosity.
Information Search	â¢ Did the consumer seek information about the product and about various brands? How was this information collected, and how much information was collected? â¢ Was the consumer searching for any advertisements for the product? What was the consumerâs reaction to these advertisements?	Match amount of information with type of product. Direct consumers to website, free kit or other information venues. Show role models that âlookâ like the target market. Show the entire line of product offerings (all the flavors and colors, etc.) Testimonials, etc.
Evaluation of Alternatives	â¢ How many alternatives were considered? How were they selected?â¢ What features and characteristics of the product were most important to the consumer? Salient and Determinant defined attributes. â¢ How important was the brand of the product to the consumer?	Featuring specific variables that the product is known for (ex. Volvo=Safety). This is known as âpositioningâ a product. Competitive method (brand compares themselves to âleading brand or categoryâ) Comparative method (brand compares themselves to another brand by name (Coke vs. Pepsi)
Product Choice	â¢ Did any other people play a role in the decision process? Describe theroles that each person played. â¢ How was the final choice determined? How carefully was the decision made? â¢ Where did the consumer make the purchase? Why? â¢ Did the consumer pay full price for the product?	Tell consumers where and how the product is sold. Offer many ways to pay for the product. Divide payments. Offer sales promotion (coupons, rebates)
Post-Purchase Evaluation	â¢ How is the product used and consumed? How does the consumer feel when he or she uses the product? â¢ What is the meaning of this product to the consumer? Does it merely serve a function for the consumer, or does it say something about who the consumer is? Does the Ad encourage repeat purchase or loyalty to the brand- how?	Show awards the brand has won. Show how a brand should be consumed. Allow consumers many ways to return the product. Allow consumers to easily provide feedback. Reward consumers loyalty

This assignment asks you to find one ad that addresses each of the needs of the five stages (in other words five different ads). This means that there must be five different ads for the total project, one for each stage (all ads are different from one another). Create a Power Point Presentation that shows how the advertiser is addressing the needs of the consumer for the specific Consumer Decision Making stage.

*Be aware that there is a helpful power point demonstration in a conference opened this week marked as "Advertising and the Consumer Decision Process (Ad Examples)". This is informative only and does not need to be commented on.

First, show the ad in a slide and then follow-up with a slide which explains (bullet form) why the ad slide targets the Consumer Decision Making process stage. ALL ADS MUST BE STILL ADS (NO VIDEOS or LINKS). Therefore the ad MUST be able to be copied and pasted within the power point slide (NO LINKS). Here is the format of the presentation:

Slide 1: Name, date

Slide 2: Problem Recognition Ad

Slide 3: Explanation why it addresses this stage

Slide 4: Information Search Ad

Slide 5: Explanation why it addresses this stage

Slide 6: Evaluation of Alternatives Ad

Slide 7: Explanation why it addresses this stage

Slide 8: Product Choice (Purchase) Ad

Slide 9: Explanation why it addresses this stage

Slide 10: Outcomes (Postpurchase) Ad

Slide 11: Explanation why it addresses this stage

Slide 12: Conclusion

In the conclusion of the slide presentation choose which ad is most effective (overall) and why.

Logistics Run Down:

-No more than 18 slides in length (includes cover page and bibliography)

-Include a cover page and bibliography of sources. Outside sources (esp. learning resources from weeks covered) are encouraged to be cited and used.

-Organize and utilize the headings given above.

-No more than 2 grammatical/spelling errors are allowed (please proof before submitting).

-Text is required to be in Times Roman, 12 pt font, double space the text.

- Keep voice in business third person. Do not include visuals in text analysis, if need to add create an appendix and refer your reader to such.

SUMMARY: Sales of non-GMO foods are outpacing organic foods at U.S. grocery stores. This has important implications for the organic food industry which is responding with marketing to educate consumers. Organic foods are also non-GMO. Organic foods are certified by the U.S. Department of Agriculture which sets standards for the use of chemicals, antibiotics and animal welfare. The federal government regulates foods that are labeled organic, but not those labeled non-GMO. The distinction matters to companies because it can take years to be certified organic. It costs thousands of dollars initially and annual renewal is required. Non-GMO sales increased about 70% a year since 2013. This is significant to organic food companies because sales in one category can come at the expense of the other. Non-GMO and organic foods compete for shelf space. There is the perception consumers place a higher value on the non-GMO label than they do on certified organic foods. Non-GMO costs less and customers may feel it is just as good as organic. California Certified Organic Farmers developed a label to communicate that "Organic is non-GMO and more." Other cooperatives are considering marketing efforts to clarify that organic standards encompass non-GMO.

CLASSROOM APPLICATION: As consumer behavior changes, companies need to adapt. Organic foods are both non-GMO and they meet additional federal standards for certification which include the use of pesticides, antibiotics and animal welfare. Consumers seem confused about the differences between non-GMO and organic. This is important for organic food companies because the price of their foods is typically higher than those which are only non-GMO. Educating consumers is the goal of marketing efforts to clarify "Organic is non-GMO and more." The distinction is more important because of changes in consumer behavior which are driving shopping decisions. About 49% of consumers who responded to a poll thought non-GMO was important when shopping for food and beverages while 47% indicated the importance for organic. Consumers are interested in the safety and characteristics of the foods they buy and organic foods face new competition from efforts to market non-GMO foods.

QUESTIONS:
1. (Introductory) Define the term "non-GMO." Why would shoppers demand either non-GMO or organic foods?
2. Compare and contrast the standards and certification process for the non-GMO as compared to the certified organic label.
3. Discuss the efforts of organic food producers to market their products and educate shoppers about what organic certification entails.
4. Some producers think sales of non-GMO foods will boost sales of organic foods. Do you agree? Explain whyâ¦

Organic vs. Non-GMO Labels. Whoâs Winning?Organic and non-GMO companies push for prominenceâand meaning for their labels

Natural-foods makers have spent years going after the industry establishment. Now, they are taking on each other.Surging sales of foods marketed as made without genetically modified crops are outpacing sales of food labeled organic in U.S. grocery stores. That is frustrating some organic companies and farmers, who invest significant sums to meet government organic standards and to get their foods certified.

The organic industry is responding with marketing campaigns touting that its foodsâin addition to being made without genetically modified organisms, or GMOs, as such crops are knownâalso abide by other requirements.

For example, the U.S. Department of Agriculture, which has certified organic foods since 2002, requires that producers also keep out most synthetic pesticides and certain fertilizers, and that animals used to produce organic food can go outdoors year-round and arenât given hormones or antibiotics.

âOrganic is non-GMO,â said Cathy Calfo, executive director of California Certified Organic Farmers, a trade group that recently started promoting a new label to highlight the difference. âNon-GMO is not organic.

The federal government doesnât regulate non-GMO labeling. Instead, certification is done by private groups, mainly the Non-GMO Project. The Bellingham, Wash., nonprofit doesnât prohibit the use of synthetic pesticides on crops used as ingredients, or ensure animal-welfare standards. But it says it tests more stringently to ensure GMOs arenât inadvertently mixed into ingredients during transportation or production.

The distinctions might seem like hairsplitting, but they matter for companies. Earning the Non-GMO Projectâs imprimatur or the USDAâs organic certification can take months or years, depending on the item and the applicant backlog. Each can cost thousands of dollars initially, and must be renewed annuallyâa significant expense for smaller producers. Prices for organic and non-GMO ingredients also are significantly higher than regular ones.

GMOs have become a focus of skeptical consumers. U.S. government agencies and international bodies including the World Health Organization long have said that GMOsâwhose DNA is altered to withstand pests or weedkilling spraysâare safe. But the technologyâs critics say it facilitates harmful use of pesticides and that GMOsâ safety for human consumption isnât proven.

That doubt has driven rapid growth for non-GMO foods, which this year are on pace to surpass those of food bearing the USDAâs certified organic seal, according to data compiled by research company Spins LLC.

ENLARGE Non-GMO sales soared by an average of about 70% annually from 2013 through this year, and are expected to top $13 billion this year. That is five times the rate for food tracked by Spins that bears the organic seal, sales of which total nearly $11 billion for the 52 weeks ended Nov 1. The Spins data donât include sales from Whole Foods Market Inc., a major seller of both categories.

The USDAâs organic certification applies to foods that are 95% or more organic. The Organic Trade Association, whose numbers include estimates of Whole Foods sales and some other retailers not measured by Spins, touts the much larger figure of $35.9 billion in 2014 for foods containing 70% or more organic ingredients.

One categoryâs growth can come at the expense of anotherâs, since specialty foods often compete for the same limited shelf space in supermarkets. Last year, foods labeled non-GMO claimed 3.7% of total food sales in U.S. grocery stores, more than the 3.5% for organic items, according to market-research firm Nielsen NV. About 49% of consumers polled by Nielsen called non-GMO an important factor in food-and-beverage shopping, versus 47% for organic.

Organic-food companies say many consumers are confused about the labelsâ different attributes. Vernon Peterson, owner of Abundant Harvest Organics in Kingsburg, Calif., says he often receives inquiries about the peaches, persimmons and other crops that his company distributes to customers including Kroger Co. and Whole Foods.

âEven though we [are] a 100% organic company, I get a question or two a week, âis any of your produce genetically modified?ââ he said. âWe see the consumer putting a higher value on the non-GMO than the organic label.â

Megan Westgate, executive director of the Non-GMO Project, said the ârelationship between non-GMO and organic is probably the most politically sensitive thing we deal with, and weâre careful not to undermine consumer trust in the organic label.â She said consumer confusion around the definition of organic predates the Non-GMO Project, but she acknowledged that some organic-food producers have expressed concerns about her group infringing on their turf.

âWe see the consumer putting a higher value on the non-GMO than the organic label.â

âVernon Peterson, owner of Abundant Harvest Organics

Rising non-GMO food sales are âa two-edged sword,â said Oren Holle, a longtime organic farmer in Bremen, Kan. While some consumers may migrate from those to organic foods, Mr. Holle said he worries about âa perception out there that if I buy the non-GMO itâs a little less costly when you run up to the checkout counter, and itâs just about as good.â

Mr. Holle last year participated in an online-video campaign trumpeting organic foodâs purported superiority over items that are only non-GMO. The Organic Farmersâ Agency for Relationship Marketing Inc., a cooperative that funded the campaign, is now discussing marketing materials that brand organic as âthe real non-GMO.â

California Certified Organic Farmers, based in Santa Cruz, Calif., debuted its new label in March that boasts âOrganic is non-GMO & more.â The labels are designed to attract shoppers looking for non-GMO foods while highlighting organicâs curbs on synthetic fertilizers and pesticides, said Ms. Calfo.

Mr. Peterson hopes the new label, which he has added to Abundant Harvest products, will clarify things. âWhen you have a confused public, itâs never good,â he said.

Some bigger organic brands are more sanguine. George Siemon, chief executive of Organic Valley, the largest U.S. cooperative of organic farms, said that while some consumers may find non-GMO easier to understand, it ultimately will boost organic-food sales by drawing more attention to how food is produced.Still, Mr. Siemon said that Organic Valley is considering adding a non-GMO label to some of its products.

200086 Lecture Notes - Lecture 6: Marketing Communications, Sales Promotion

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