Promotion Analysis



Promotion Analysis

Consider the different channels through which a company might market its products: direct mail, large and small retail stores, outlet stores, and other retailers (where competition is not a factor).

Brands and Competitive Advantage

The value of a brand can never be quantified precisely; however, it can be impactful. Many companies actually carry a factor (sometimes called customer goodwill) on their financial books that represents what the primary corporate brand means in dollars and cents. Goodwill can literally be worth millions of dollars. Consider the following examples:

A few years ago, Toyota and Chevrolet manufactured the same car (Corolla and Prism, respectively) on the same assembly line in the U.S. The cars were exactly the same except for the nameplates. Chevy charged hundreds of dollars less for that car, yet the Toyota outsold the Chevy by tens of thousands of units because of the value of the Toyota Corolla brand and its history.

In the early 1980s, Audi was accused of producing cars that mistakenly accelerated on their own. Company executives were interviewed on television and responded with rebuttals, stating that the problems were caused by driver error. It is hard to tell your customer-base that they are bad drivers and maintain any kind of customer loyalty. Audi was nearly driven out of the American market. It took the company years to recover.

Some containers of Tylenol, a very trusted brand of pain reliever and the market leader (40% share), were found to be tinged with cyanide, and people died because of it. Tylenol, seeking to maintain trust in a situation over which they had absolutely no control, pulled every single capsule off every single shelf. Months later, in new tamper-proof packaging, they re-entered the market and ultimately regained their market leadership position (and their consumers' trust in the brand).

Brand values such as these take a long time to build and a significant effort to maintain. We should not underestimate the value of a brand. Marketing management has to support a brand name with the right mix of name, term, logo, and any other features that will make it distinctive from other, similar products. Marketers also have to know when to use the brand, such as in a line extension (Diet Coke) or when not to use it (Toyota's new line of cars, called Scion). Some of the world's best known brands have huge value in their respective markets. This brand value helps support the price associated with the products and services of the organization. Consider the brand value of familiar companies such as Sony, Coke, Disney, and so on.

Customers respond to brands in a variety of ways, with various degrees of brand loyalty, recognition, preference, and even insistence. Marketing research should be collected and interpreted in order to predict these traits. The degree to which consumers exhibit these traits is referred to as the brand equity of a product or company.

There are three basic categories of brands: private distributor brands, manufacturer brands, and generic brands. Your local food store carries all three types of branded products on its shelves in different price categories and with different profit margins. The store brand carries the store name as a private distributor brand, while a generic may have no name other than the description of the product (such as corn). Manufacturer brands of corn include Del Monte, Hunt's, Green Giant, and others.

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Marketers seek and achieve competitive advantage throughout the entire marketing process in each area of the four Ps. "Creating competitive advantage is the central goal of competitive strategy. As the marketing concept has been widely adopted in the last decade, it has become the dominant conceptual foundation for the development of competitive strategies. According to that view, buyers know what they want, and the objective of competitive strategy is to five it to them. Competitive strategy in other words is customer driven" (Iacobucci, 2001).

Porter's Five Forces Model demonstrates a view of competitive forces in the marketplace that affect an organization's decision processes and ability to compete in the marketplace.

Consumer Behavior and Customer Relationship Management

The process consumers undertake when purchasing products is complex and loaded with ambiguities. For some products (houses, cars, computers, education), we search long and hard for important information upon which we will base a buying decision; other products we buy on impulse (Trident gum, The National Enquirer). Generally, the greater the investment required for the purchase, the greater the amount of time that will be devoted to the purchasing decision process. For any business, it is imperative to know how the consumer undertakes this process and how to develop a marketing effort that will assist that process at any given point.

The proliferation of technology in recent years has created tools that allow easier means of tracking customer buying habits and to subsequently find ways to develop relationships with those customers. is a terrific example of this. Visit the Web site, read a book review or two, buy a book or two, and Amazon will instantly develop a profile of you, compare that profile to others who have read or bought the same kind of books, and then make recommendations for other books that you would probably like to read. This kind of customer profile can be done digitally; it cannot be done as effectively by the bookstore clerk at your local bookstore.

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The five parts of the consumer buying process are:

1. Problem Recognition.

2. Information Search.

3. Evaluation of Alternative.

4. Purchase Decision.

5. Postpurchase Behavior (Kotler, 2000).

Our decisions are influenced by our lifestyles, family, friends, attitudes, learning, perceptions, motives, and personality. Consumers, once they have recognized a need, search for information. Depending on the importance of the decision, they search a variety of sources including reference groups, friends, family, media and direct searches via the Web or visits to a retail store.

On the other side of the buying process is the organization and its customer relationship management (CRM) system or processes. CRM is an organizational model used by businesses today to build lasting customer relationships. Studies have consistently shown that the cost of gaining a new customer is many times the cost of maintaining a satisfied customer. What distinguishes the CRM model is that it changes an organization's processes and systems to focus on customer satisfaction. CRM processes and technologies are used to gather information about consumers, identifying which customers and market segments are most profitable for the organization; what the most cost-effective ways are to acquire them; how to retain them for as long as possible; and how to secure customer loyalty. There are a host of CRM systems and technologies on the market today to assist businesses in optimizing their customer relationships, thus enhancing the organization's profitability and increasing revenues.

Strategy Formulation

In a complete market analysis, the assessment of the opportunity will provide a picture of all of the forces that may come into play in marketing: segment definition, size, growth, and possible competitive response. The firm's strategic direction will be to produce a product or service with differentiating factors that stand out in the customer's mind, and to position the product or service well for changes that will take place in the selected market segment.


Iacobucci, D. (2001). Kellogg on marketing. New York, NY: Wiley. Porter, M. E. (1998). Competitive strategy: Techniques for analyzing industries and

competitors. New York, NY: Simon & Schuster. Kotler, P. (2000). Marketing management. Upper Saddle River, NJ: Prentice Hall.

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