Internal factors
The main internal factors that affect the promotional activity are the initial aims and objectives that businesses set themselves. For example, there are such products as SAINSBURY’S energy drink which is almost exactly the same as ‘Redbull’ energy drink, for which there’s no such aim to promote this product on a large scale, because they are only targeting a certain area where they are located, as they sell SAINSBURY’S energy drink called ‘Blue Bolt’ in their own supermarkets only. In this case, the promotional activity that SAINSBURY’S carries out in terms of promoting this particular product is very limited and its main aim will be to target those people who live in the area where their business is located, and those customers’ who don’t have brand loyalty to ‘Redbull’ and are trying to search for the cheapest option. This, therefore not only allows ‘Sainsbury’s’ to benefit from the promotion carried out by ‘Redbull’ and cut their own costs of promoting ‘Blue Bolt’ energy drink, but also increase their competitiveness and share on the market, which might be a threat to ‘Redbull’.
There are also some other examples of such companies as ‘Coca-Cola’ that so well established, that they can actually cut their promotional spendings or decrease the number of sources that they use to advertise their products at, because it will still be well known anyway, which will allow them to save some money on advertising, whereas if there’s a company which has a similar product to Coca-Cola’s but which has just entered the market, it might be too difficult to compete which will be a constraint and it might be forced out of the market. Similarly, other firms such as ‘Subway’ also have takeaways but their initial aims and objectives were to spread everywhere as much as possible, so that there’s a ‘Subway’ takeaway in every town in the UK, and the promotional activity that they carry out was also influenced by these aims and objectives, because they are advertising their products in all different places. Some businesses such as oil producing companies e.g. ‘Surgutneftegaz’ are very big businesses with large profits, however, they don’t have an aim or objective to carry out a particular promotional activity to make their business well known on the market. This company doesn’t need to carry out big promotional campaigns, because consumers are more interested in finding such companies and buying oil and gas products from them, or co-operating with this company and supplying them with electric equipment. Such companies just appear to be well known, because they produce very demandable products on the market that significantly affect an economy of some countries, and there are very few such companies on the market which have as much oil and gas resources as ‘Surgutneftegaz’.
Other internal factors that can influence promotional activity of the business are the aims and objectives that the business sets for their promotional campaign. For instance, the aim for the business can be to target students and sell their products to them by offering them a good deal. This can be done by offering free laptops to students if they pay for the 2 year internet contract. The main aim of such promotion is to increase the number of their young customers who will be dependent on their service for a certain period of time and who are then likely to continue using their service, by offering them some good deals or allowing them to spread the cost of buying a new laptop over two years by allowing them to pay monthly. Such aim will, therefore, influence the way that promotional campaign is run and such things as the design of the promotion, which will be made in order to attract particular audience.
For other companies that produce a high range of consumer products, the product life cycle of which is relatively short, the market research that they carry out may influence their type of promotional activity quite significantly. For example, those companies that produce toys such as ‘Lego’ might carry out a survey and ask children to answer some questions about what type of ‘Lego’ they would like to have and etc. Such companies are then likely to stick to the information that they’ve obtained from their market research, and this will also influence their type of promotional activity, because it will be targeting children and promoting the features of the product that children will be most interested in.
The size of promotional budget can also be a significant factor that will influence the type of promotional activity that businesses do. For example, such businesses as small newsagents don’t usually have huge promotional budgets and are, therefore, unlikely to advertise their news agency on a TV, Radio, Internet or other media sources, because it may be too expensive for them to do. However, there may also be other companies such as ‘WH Smith’ which has a chain of newsagents, which do advertise in a variety of different media sources, using internet and newspapers in particular, because they have larger promotional budgets and are able to afford this. Therefore, their promotional activities are slightly different to the ones carried out by small newsagents, and are on a larger scale which effectively makes such businesses as ‘WH Smith’ more popular than the others, because they have an opportunity to use more effective promotional activities encouraging more customers than others.
In addition to this, there are some businesses for which the timescale is relatively significant when deciding what type of promotional activity to use. For instance, there are some businesses that are able to afford to carry out relatively expensive promotional activities in the short term, but in the long term due to a limited finance or if it’s a seasonal business. For example, for those firms producing ice-cream the time-scale can actually be quite important in terms of choosing an appropriate promotional method as well as saving some costs of promotion. Instead of promoting their products during the whole year, they may only promote their products during the times of the year when the weather is hot and at times when people consume ice-cream most frequently, however, it depends on the country and its climate. Such companies may save money on promotion and not advertise their products at all throughout the year, and when it comes to summer start heavily advertising their products on a TV, magazines and supermarkets. An example of a similar product is warm clothing such as jackets, coats, jumpers and etc. which are usually advertised more frequently just before the winter when it starts becoming very cold. There are also businesses producing equipments and products to set up fireworks. It is also a very seasonal business which is most popular during the winter or some special events such as Olympics and the timescale for some of such businesses is relatively important, because they have limited budgets to be spent on promotion of their products.
External factors
One of the external factors which may significantly affect the types of promotional activities used by businesses and the way they’re run is a social factor. An example of a social external factor that has positively affected one of the most successful businesses such as “Facebook” or “MySpace” is the moving trend towards social websites where people can socialise and talk to each other no matter where they are. The main change in the social trend was that with an increased use of internet by people, they needed an alternative to all chats or such things as ‘ICQ’ where they can’t express themselves by uploading their pictures, favourite music, books or such that they can on “Facebook” and “MySpace”. People also started socialising more often on-line rather than in reality, because in the internet they can find and talk to all their friends as well as look at their pictures, and such websites also allow people to create their webpage which is similar to allowing people to create their little ‘world’ where they can express themselves in all different ways and have their own circle of the people they know. This has effectively affected the way people promote their products nowadays, because due to this change in the social trend and increased use of social networks such as “Facebook”, businesses can now promote their products on such websites and even target particular gender or age groups or even the groups of people who have the same interest. So, if there’s a business such as ‘Apple’ which produces all types of electronic products, they now have to change their promotional activities slightly and promote their products in the social networks on the internet, in order to keep up with this changing trend and move towards the new area where there are big numbers of people or potential customers, who can be affected and encouraged to buy their products.
Another factor is a cultural factor. Nowadays, there are less and less people who care as much about culture as about some other things. People go less to such places as museums to look a the paintings, people don’t visit theatres or opera quite as often as night clubs and pubs. This changing pattern in the culture, also means for businesses that it is a tough time for them to promote their goods and services. It now maybe much more difficult for the theatre to attract people attention and to encourage people to pay money and go to the theatre, rather than cinema for instance. This also affects their promotional strategy and any promotional activities that such businesses as theatres carry out. Now they might have to think of the other things of attracting people to go to the theatres.
The main and most common factor which influences the type of the promotional activity used within the business is an economic factor. Due to a current financial crisis there are less people buying luxury goods, such as expensive mobile phones, cars, flats or houses. Due to the fact that many people lose their jobs, people become afraid, lose their confidence, and spend less money on luxury goods. As during the time of the world financial crisis, as it is now, the demand for such products falls, it affects the promotional activities of the businesses, because they generally spend less money on promotion, try to decrease the number of promotional activities that they carry out, or use cheaper methods of promoting their products, for instance stop advertising on a TV or Radio and advertise in the magazines or in the internet only.
Another external influence on the promotional activities of certain businesses can be ethical and environmental. Some companies, when they promote their products such as “Starbucks” and “Lipton tea” inform their customers that they provide jobs in Less Economically Developed Countries (LEDC’s), by employing people to work on coffee and tea plantations, and say that they pay them a fair price for their work, or pay farmers a fair price for their crops. Other companies, such as “Apple” and “McDonalds” assure their consumers that the package they use for their products is made of recycled resources, that can then also be recycled to be used again, which decrease the waste of non-renewable resources on the planet, or like assures the “Toyota” car producer with its electro-hybrid ‘Prius’ car, emit less CO2, and, therefore, not damage the planet as much as some other firms, encouraging their consumers to believe, that by buying the products they help poor families and workers, use re-newable sources of energy, and cause less pollution due to lower CO2 emissions, which should in theory make our planet greener and a better place.
Legislative and regulatory factors, can also influence the types of promotional activities externally. For example, there are some funny examples of unsuccessful regulations and legislations on such products as alcohol and cigarettes in Russia. As the government passed on a legislation to prohibit businesses to advertise alcohol on a TV with the use of people. They also prohibited any adverts of spirits like ‘Vodka’ on a TV at all times, and even on the posters, radio, in the newspapers or magazines, companies can no longer use the name ‘Vodka’, because they are allowed to promote the brand, but no the actual product. However, some businesses were able to go around this problem, and advertise ‘Vodka’ as water the name for which in Russian is: “Smirnoff water”. Such companies as MU shouldn’t give up
There may also be some external factors such as the types of promotions used by competitors as well as the level of competition on the market, which might cause some constraints upon the new businesses coming into market, which will make it harder for small companies with relatively low or limited promotional budgets to compete and advertise their products. For example, if there’s a new luxury car introduced on the market such as Maybach, it might struggle to compete with such companies as Bentley and Rolls-Royce as previously shown in one of the advert examples, and my experience shows that Maybach produced by Mercedes-Benz did struggle to compete with the other luxury car producers at least in the short run, and it yet still doesn’t have as large sales of their luxury cars, also due to some external factors such as brand loyalty, which is created by well known companies in the existing competitive market with the highest level of competition.
In terms of technology some, companies such as Honda might highly benefit from technology, and their new hybrid and electro engines in particular, as there are other car producers such as Mercedes-Benz and BMW, which do a lot of research and are currently trying to come up with a similar product, but so far such companies as Toyota and Honda are likely to be the first ones in the world to introduce new electron cars in the beginning of 2010, which implies they might be able to cut their promotional costs in the future, because by the time other car producers introduce similar products into the market, companies like Honda will already be well-established companies in that particular market and will certainly have some brand loyalty as they will have more experience in producing such cars. Similarly, Apple was one of the first companies to introduce a phone with a touch screen, quick internet access, camera, GPS navigator, mp3 player, planner, and video player allowing to watch movies, on the market. It has combined all of the features which have been so popular and widely used in the mobile phone industry over the past few years. This allowed Apple to create a brand loyalty, whereas other companies such as Samsung and BlackBerry who soon followed and introduced similar products missed out, because they’re not considered to be as original as iPhone introduced by Apple, which at a time was something new on the market. Therefore, in the Long term Apple doesn’t have to spend as much money on advertising their iPhone and other products, and can now afford to save some money on that, as they were the first company to come up with a new product and introduce a new technology, so this might also be an external constraint for other companies in the same or similar market, who don’t have this new technology, and therefore, might need to advertise more heavily in order to make their products as popular as the ones produced by Apple.
Task Two
Promotional activity that takes place in my business
Apple carries out the following promotional activities:
A
dvertises
its products on the internetAdvertises its products on their own website
Advertises their products on a TV and posters in the cities and towns
Advertises its products in the cinemas
Magazines
Linked promotion, giving out vouchers + iTunes
Allowing customers to come to the store and actually try out their products
Samples
Branding
Apple’s iPod advert on the iTunes website
Apple’s stores
Apple’s stores inside, and their method of promotion in action
Apple’s posters with iPod adverts Apple’s iPhone advert in the cinema
Apple’s on-line internet advert Apple’s advert in the magazine
Action Plan
Before I undertake my research, firstly I’m going to set objectives for my research.
For my secondary research I’m going to find out the following:
Different promotion strategies that companies use, including the company, for which I will develop a new promotion.
Various products that companies promote.
How companies target their promotional activities at particular groups of people according to their gender, age and interests.
The number of planes and workout the average number of seats in the airplane in the world leading airlines.
Find out how many flights occur annually or how many people fly per year.
For my primary research I’m going to find out the following:
How often people fly and what airlines they use.
How many people use air miles.
How many people use headphones when they fly.
Particular target group for my product.
Whether people read in-flight magazines on the plane and whether or not they buy any products from such magazines.
Whether people recognise certain brand logos.
People’s preference to particular headphone makers.
The brand people associate my product with when they look at it without the actual logo or brand name written on the headphones.
Particular factors influence people’s choice when they want to purchase headphones.
Whether people would like to rent headphones on the plane and how much they would be willing to pay for this rent.
Promotional offers, which encourage people to buy headphones.
Find out and create a new promotional strategy which has never been used before by the company I chose.
In order to carry out this primary research, I will design a questionnaire; find a mixture of those people at school who fly very often and those who do fly, but not as frequently as some other correspondents, to make my data targeted but less bias. This will allow me to create pie chart diagrams and find out what particular groups of people fly most often, and how likely they are to buy my product, and how likely my promotional strategy is to encourage them to buy a new product from the company I chose. Find out about any internal and external factors, and to what extent they influence my correspondents’ choice, when it comes to buying the headphones.
Respondents
Only a particular group of people will be targeted. In my research I will be targeting only those people who fly-both groups of those people who fly very often and relatively often. The sample size of my questionnaire is going to be 25 people. Therefore the method of sampling, which is going to be used in my primary research, will be stratified random sampling as only those people, who fit the segment, in this case, those people who fly, will be involved in my questionnaire. The respondents are going to be asked at the school campus, and in the houses where both day pupils and boarders leave.
These people will be asked a variety of different questions aimed to identify the objectives set for my primary research e.g. find out how often people fly, what airlines they use and whether they recognise certain headphones brands. Respondents will be contacted and asked the questions via personal interview, as it will be more difficult to do it via telephone or postal questionnaire, and the respondents will be less likely to respond, if using these methods of contacting them.
The questionnaire will be designed in a simple way, consisting of 15 questions. It will also include a table where all responses will be recorded. These design and methods will help to make it easier to ask people questions, as they in most cases will only have to circle an appropriate answer or rate something, which should lead to a higher response from those people, who will be targeted.
In addition to this, as the second part of my primary research, I’m going to carryout a focus group, gathering potential consumers used in a market research, to identify their response to particular promotional methods, which will help me to determine the effectiveness of each promotional method, help me to decide what promotional method I’m going to use for my product and chosen business and well as help me design my two final pieces of promotion. Such method as Focus group for my primary research is going to help me to obtain some qualitative data from a group of potential consumers between 4 and 6. I will ask them to sit and answer some of my questions as well as ask them to make some notes and annotations on the various examples of promotion used by different companies which they will be provided with, and in the end, discuss in details what particularly they liked about each promotion.
Topics which will be discussed, and questions which my participants will be asked in the Focus Group, are going to be the following:
I will ask them to rate a design of the headphones, which I’m planning to do my promotion for. However, the brand of my chosen business will not be shown.
They will be asked what particularly they like about the design of my headphones.
Then, they will be asked to rate four adverts by Sony, Philips, Bose and Raymond Weil, in terms of their design, attractiveness, and effectiveness and how memorable they are in terms of promotion.
They will be asked what particularly they like and dislike about each promotion.
They will be asked to write the message which they think each promotion was aimed to deliver to consumers.
They will also be asked to identify whether they have previously seen any better adverts and specify the names.
In the end the respondents will be asked to choose their favourite promotion out of those given to them, and explain their choice.
They will be asked how their chosen favourite promotion encourages them to buy the product.
They will also be asked what promotion they found the least useful and explain how they would improve it.
I believe that carrying out these types of market research and carrying out the activities described above, will help identify who my potential customers are, what types of promotion they like and the reasons for this, as well as help me select an appropriate type of research and decide what promotional method I’m going to use for my own product and chosen business.
Focus group
We would be glad if you could answer the questions given below.
1) How would you rate the design of the headphones given below? Please circle your answer.
Very attractive
Fairly attractive
Neutral
`Don’t like the design
If you put 1 or 2 for the previous question, what particularly attracts you in the design of these headphones? (e.g.: Simplicity, Colour, Shape)
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20) Which is your preferable advert from the ones given to you? Briefly explain why do you prefer this particular advert and what do you find special about it?
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21) Do you prefer TV adverts of the same company/brand or magazine adverts? (Briefly explain the reasons why you prefer a particular type of advert)
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22) How does it encourage you to buy the product? (The one you chose for question 20)
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23) Which advert did you find the least useful? Why?
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24) How would you improve it?
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Questionnaire
We would be glad if you could answer the questions given below. Please circle your answer.
How old are you?
(14-17)
(18-25)
(26-35)
(36-45)
Other…..(please specify)
Your Gender:
Male
Female
How often do you fly?
1-2 times a year
3-5 times a year
Other…………..(please specify)
What type of flights do you normally have?
Long distance ( 8+ hours)
Medium Distance ( 3 to 7 hours)
Short distance (up to 1 hour)
Which airlines have you flown within the last 12 months?
British Airways
Virgin Airlines
BMI
Easy Jet
Air France
Lufthansa
SAS
SWISS
KLM
Singapore Airlines
China Airlines
Other (please specify)……………………………………………………………
If you use air miles what do you usually spend them on?
Food and confectioneries
Alcohol and Cigarettes
Perfume and beauty
Toys
Electronics
Other (please specify)……………………………………………………………
Don’t use air miles
Do you read in-flight magazines?
Yes
No
How likely are you to buy each of the following from an in-flight magazine?
Very likely
Likely
Maybe
Unlikely to buy
Never
D
o
you recognise the brand logos given below? (Please identify the name
of each brand)
1) …………….. 2)……………. 3) …………………….. 4)……………………..
5) ………………… 6) ........................... 7) ...................................
What company do you think could possibly produce the headphones shown below or associations with what brand or company do you have when you look at them?
Brand or a company/producer:………………………………………………………………
If you were to purchase new headphones which brand would you consider purchasing? (Choose up to 3 brands and rank them as: 1-favourite, 2-likely to buy, 3-maybe)
Bose-
Senheiser-
Sony-
Panasonic-
Apple-
Philips-
Bang & Olufsen-
Pioneer-
Thomson-
Shure-
Creative-
AKG-
Other (please specify)……………………………………………………………
Do you use headphones when you fly?
Yes
No
What factors would be the most important for you, if you were to purchase headphones? (Rank it as following: 1-Very important, 2- important, 3- consideration, 4-not very important, 5- not considered)
Price-
Sound quality-
Design-
Comfort and ergonomics-
Brand-
Other (please specify)……………………………………………………………
If high quality noise-cancelling headphones were available for rent as a part of flight entertainment, how much would you be prepared to pay?
£1
£1.01 - £2
£2.01 - £3
£3.01 - £4
Other……..(please specify)
Wouldn’t be prepared to pay for headphones rental
Don’t use headphones on a flight
When buying electronic goods what factors influence your choice?
Brand name
Money off coupons
Advertising
Discounts
Linked offers (e.g. buy an iPhone and get headphones for free)
Buy headphones and get a free iTunes voucher
Other (please specify)..............................................................................................
2) How would you rate the adverts given below?
a) Very encouraging to buy
b) Encouraging
c) Neutral
d) Doesn’t encourage me to buy it
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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What do you like about this advert?
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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What do you dislike about this advert?
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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5) How memorable were the adverts given to you? (Please rate them as follows:
1-Very memorable
2-Memorable
3-Not memorable at all
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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6) If you put 1 or 2 for the previous question, explain why do you think a particular advert is memorable for you?
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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7) Do you like the background and font used in each advert? (Please circle your answer)
Sony advert: YES/NO
Philips advert: YES/NO
Bose advert: YES/NO
Raymond Weil advert: YES/NO
8) If you said ‘YES’, what in particular do you like about the background of this advert?
Sony advert:
……………………………………………………………………………………
Philips advert:
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Bose advert:
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Raymond Weil advert:
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9) How well do you think each advert outlines the main strengths of the product or its main characteristics? (Rate them as follows:
1-Perfectly outlines the main strengths of the product
2-Relatively well
3-Outlines certain strengths and characteristics of the product, but not as well
4-Doesn’t outline any strengths or characteristics of the product
Sony advert:
……………………………………………………………………………………
Philips advert:
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Bose advert:
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Raymond Weil advert:
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Could you comment why you think so?
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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Do you think that use of people in this advert or use of celebrities would make it make attractive and encourage you to buy the product?
Sony advert:
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Philips advert:
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Bose advert:
……………………………………………………………………………………
Raymond Weil advert:
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What is this advert trying to tell or what is the message?
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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Do you like the phrases/text/slogans used in this advert? (If yes, why?)
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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Do you like the layout or design of this advert? (If yes, why? It isn’t in German, please look below the logo)
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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Do you think there are some other better adverts of the same company or brand? (What are they?)
Sony advert:
……………………………………………………………………………………
Philips advert:
……………………………………………………………………………………
Bose advert:
……………………………………………………………………………………
Raymond Weil advert:
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Do you like the background and font used in this advert? (If yes, why?)
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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17) How would you rank this advert out of 5? 1-useless, 2-poor, 3-satisfactory, 4-pretty good, 5- excellent
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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18) Do you think it’s an appropriate form of promotion for this particular product?
YES/NO
Sony advert: YES/NO
Philips advert: YES/NO
Bose advert: YES/NO
Raymond Weil advert: YES/NO
19) If you put ‘YES’, why do you think so?
Sony advert:
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Philips advert:
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Bose advert:
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Raymond Weil advert:
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Analysis of the focus group and data obtained from the focus group