Effectiveness Of Promotional Strategies

Introduction

Promotional strategies are the means of attracting new and retaining existing customers. Organizations chalk out various strategies from time to time to grab greater market share which in turn leads to profit which is the whole sole aim of the companies. The study was conducted for Cadbury, UK. Cadbury is world’s largest confectionary company and is head quartered in London. Cadbury was acquired by Kraft Foods in 2010 and it was the integration of these two companies which made it the largest confectionary company in the world. Cadbury employs more than 71000 people around the world and had revenue of 5384 million GBP in the year 2008.

The present day organizations use a variety of strategies to attract the customers and thereby retain their market position. Most of the companies use a blend of promotional mix which can include advertisements, public relations, sales promotions, internet marketing etc. For deciding the right promotional strategy, the correct medium must be chosen so that the target market can be reached in the best possible way. Therefore the company must give importance while deciding upon the medium of promotion because they can have a large impact over firm’s future. Marketing is a crucial activity for a business because it has the capability to enhance as well as ruin it. A well-designed and well-structured marketing campaign could explain about the product or service of the company as well as the customer benefits from it in the most suitable way. But selecting the most suitable promotional strategy is a difficult and critical task. Mostly companies use a mix of strategies on the basis of their purpose, price, and several other factors.

Background Information and research rationale

Promotional strategies play a crucial role in the sales of a company in today’s highly competitive and dynamic business environment. Since sales can be considered as the life-blood of every business and without sales no organization can survive, hence it is highly essential for an organization to develop a suitable promotional strategy for it. The main objective behind a sales promotion is to improve the sales of an organization through predicting and altering the buying behavior of the target market. But this is a challenging job since customers now have numerous alternatives for a product. Promotional strategies are hence very much significant since it not only improve sales or business but also helps the firm to attract new customers while retaining the existing ones. An organization can use a variety of promotional strategies but before that the management must understand the real nature of their business and then identify the most suitable strategy. Hence a firm must not underestimate the role played by promotional strategies in boosting its business.

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Organization Description

Cadbury is world’s largest confectionary company and extends it presence to all the continents in the world. The most popular brands of the company are Schweppes, Halls, Trident, and Dairy Milk etc. It is the second largest gum company and third largest beverages company in the world at present. The parent company of Cadbury PLC is Kraft Foods. Cadbury now owns more than 70% of confectionary market in countries like India. The company had a net income of 364 million British pounds in 2008. Cadbury has eight factories and more than 3000 employees in United Kingdom. Apart from chocolate, Cadbury also is the owner of Maynard and Halls is having tie-ups with several confectionary manufacturers.

Review of literature

Sales promotion can be considered as any strategy or activity intended to increase the business or trade and thereby boost the sales (Shimp. 2003). Promotion is a form of communication with the target customers. Rather it can be considered as a form of persuasive communication aimed at changing the buying behavior of the customers. A right promotional strategy will be helpful to the firm in making the customers understand the fact that it has the right product or service for them. Thus the promotional strategies have mainly three objectives:

Making the customer aware about the product or service

Persuading the customer to purchase the product

Remind the customer about the product and make them think in favor of it.

Researches done on this field suggest that billions of dollars are wasted per year for ineffective promotional techniques (Ambler & Vakratsas, 1996). Hence it is crucial for every company to formulate the most effective promotional strategy for it. As a first step towards selecting the promotional strategy, the company must decide upon the communication objectives (Zeithaml and Bitner, 2000). The objectives that need to be communicated comprise of awareness, knowledge, liking, preference, conviction and purchase. Promotion can be defined as “activities people use to communicate with others about their product or service and to convince them to use it.” Whatever that is communicated to the public must be regarding the business. The communication can be done in a variety of ways including brochures, newspaper ads, television ads etc. As per the description provided by Totten and Block (1994), “Sales promotion refers to many kinds of selling incentives and techniques intended to produce immediate or short-term sales effect”. There are mainly two types of promotional strategies: Push strategy and Pull strategy. In a push strategy, the company takes the product directly to the customer in order to increase their awareness of the product. This can involve aggressive personal selling or trade advertising (Lamb et.al 2008). Other major push strategies are:

Making negotiations with the sellers over keeping the product

Having an efficient supply chain so that sellers get their goods whenever they need

Making the cover or packaging more attractive in order to induce purchase

Point of sale displays

If a company is following a pull strategy, it will come out with techniques that would motivate or induce the customers to buy the product. Consumer advertising, cents-off campaign and gift coupons etc are some of the common techniques used in this strategy. Word of mouth marketing is another effective pull strategy. Customer relationship management (CRM) is another technique that most companies now adopt in order to attract as well as retain their customer base. Coupons are used usually in the trial period of a product since customers easily get attracted towards it and hence help in initial purchase (Robinson and Carmack, 1997; Cook, 2003). But many other theorists like Gilbert and Jackaria (2002) have come up with contrasting statements saying that coupons have the least impact over product trial. Many studies also views coupons as an effective sales tool (Peter and Olson, 1996; Gardener and Trivedi, 1998; Darks, 2000; Fill, 2002). Another factor which has an effect over product trial is price promotion (Brandweek, 1994). As per the research conducted by Chandon et.al (2000), customers who belong to high-promotion prone category are more likely to be influenced by sales promotion. They are attracted by sales promotions for reasons further than price savings.

The companies decide upon these promotional strategies based upon their business nature, product or service, business image as well as the medium selected for reaching the target customer group (Jeannet and Hennessey, 2005). Timing is one crucial factor which determines the effectiveness of promotional strategies. The importance of these strategies changes as the purchase process advances (Kurtz et.al 2009)

Aims and Objectives of the research

Aim

To evaluate the effectiveness of promotional strategies adopted by Cadbury UK

Objectives

To identify the key promotional strategies adopted by Cadbury in UK

To evaluate the most effective strategy for promotion of Cadbury from the customer point of view

To suggest strategies that could generate business in the future

Research Questions

By means of conducting the research, the following questions are addressed:

What is the role of promotional strategies in a business?

What are the major strategies for promotion followed by Cadbury in UK?

Which strategy is the most effective for the company from the customer’s perspective?

What are the strategies for future growth and expansion?

Research Methodology

According to Walliman (2005) research methodology can be defined as “The scientific and systematic search for pertinent information on a specific topic”. The complete process of conceptualizing a research is called as research design. It is here that the data is collected and analyzed. For the current research, both qualitative and quantitative research is conducted. The research approach that is followed is diagnostic approach. Such an approach involves identification of problem related to the title of the research. The data required for the research is collected by means of structured questionnaires and this data is then analyzed using certain techniques.

Data collection methods

The research requires both secondary and primary data. Therefore a technique for collecting the necessary data must be chosen. These methods could help in meeting the objectives of the research. The present research requires both qualitative and quantitative methods for solving the research problem. Mostly, the secondary data collected is not enough to meet the research objectives and hence primary data needs to be collected. The results obtained from primary data tend to be much more accurate when compared to secondary results.

Primary data collection

As mentioned earlier primary data is collected in situations when the already available secondary data is insufficient to meet the research objectives and the problems (Davis, 2000). For collecting the primary data, the researcher will have to directly communicate with the samples. The data collected this way be in crude form and the researcher will convert it into a form that can be easily understood and can be used in decision making. There are many techniques for collecting primary data and the most prominent among them are questionnaires, interviews and surveys. The technique is chosen based on the nature of the research as well as research objectives. Some researches make use of more than one technique also.

The current research makes use of questionnaires and interviews mainly for collecting the feedback from the samples. Analyzing the literature collected is also done for this purpose. The present method is useful in obtaining information about promotional strategies adopted by Cadbury in UK. This way the researcher can formulate strategies that could help in enhancing the business of the company. A structured questionnaire is developed for this. The research makes use of deductive approach by adding certain questions that are capable of obtaining relevant details with regard to promotional strategies adopted by Cadbury in UK. The important facts are included in the questions in order to obtain maximum information from the samples.

Secondary Data Collection

This forms the most effective method in a lot of researches. Secondary data can be quite useful in fulfilling the research objectives thereby helping in answering the research questions. There exist numerous sources for collecting secondary information. Most of these sources will be prepared for purposes other than the present study. They might be used in earlier researches also. Therefore the data collected this way cannot be considered as genuine and precise at every point of time. Hence it is essential to carry out a critical review and analysis so as to solve the research questions. In many situations it is seen that secondary data is not sufficient for meeting the research objectives and sometimes deviate from the real concept behind the study. This forces the researcher to look out for more relevant primary research that provides precise solution (Ali, 2000). In most cases, the secondary research is done by looking in journals, books, databases, etc. The details about Cadbury can be obtained from company website as well as some other financial website. The data that is collected by these means are critically reviewed in order to meet the objectives.

Sampling methods

The present research is being conducted among the customers of Cadbury in UK. The samples for the study are selected from the customers who visited 3 shopping markets in UK. Convenient sampling is most suitable for this kind of study. In convenient sampling, the samples are chosen based upon the convenience of the researcher. In the current research, the customers are given with the questionnaires on first come basis. Interviews were conducted with some samples who were unwilling to fill up the questionnaire.

Sample size

The sample size is the total number of people who are chosen from within the population for conducting the study. The sample size of the current research is 100 which means 100 customers of Cadbury are given with the questionnaires for filling.

Sampling technique

This is the way by which a researcher selects the samples for his study. The samples include both recent as well as old customers of Cadbury. The recent customers could be helpful in identifying the new trends in promotion adopted by Cadbury while old customers could compare the traditional promotional strategies with the latest ones.

Data Analysis

The data collected is required to undergo analysis so as to get accuracy in the findings. Hence the raw data obtained from the respondents are analyzed using statistical techniques and interpreted to reach at judgments. Data analysis techniques are numerous and they are used as per the requirements of the researcher (Williams & Wragg, 2004). Data analysis is a crucial part of the research as it helps in transforming the crude data collected from respondents to an easily understandable form which can be used in decision making. The data in this research is analyzed using percentage method and it would help in generating proper results. The researcher must have a clear idea about the research and the facts used in it so as to make proper inferences.

Resource Requirements

The present research makes use of both primary and secondary resources for obtaining required data. Primary information was collected through questionnaires which were distributed to customers of Cadbury who visited three super markets in UK. A few interviews also needed to be conducted with the customers for obtaining their responses. Secondary resources include printed materials, articles, books, online databases etc. They were collected from the World Wide Web and university library. There are a number of websites which are capable of providing the relevant details for the researcher for conducting the study. Data collection is the most important task that must be accomplished by the researcher. It is on the basis of this data, that the research is framed and is conducted. This way the resources play a crucial role in data collection and also determine the end result of the research.