NIKE: RUNNING OVER THE COMPETITIONNobody takes the admonition “Just do it” more seriously than Nike, the company for whom the slogan was written. Whether it's entering a new sport, moving into a new geographic market, or developing a new product, Nike approaches its mission with the dedication and singlemindedness of an athlete training for competition. And whatever the task, the goal is always the same: To turn in a peak performance, one that leaves no doubt as to who the best is. That's because at Nike, winning isn't merely a corporate philosophy—it's the company's business. “This brand is all about building products for athletes, high-performance products, very authentic products, innovative products, bringing new technology to athletes so they can perform better— at a higher level in their sport,” says Bill Zeitz, global director of advertising development at Nike. Liz Dolan, the company's marketing director, puts it in even more basic terms. “We have a really incredibly simple mission, which is, ‘serve the athlete.’ If you're in product development that means you have to make sure that the products really work, that they're really great for whatever sport you are assigned to. If you're in the communications area, it means that you have to communicate with an authenticity about the sports experience, what athletes know to be true of what it feels like to win a basketball game, or run a marathon, or whatever.” This near-obsession with authentic athletic performance comes naturally to the Beaverton, Oregon, company started in the 1960s by Phil Knight, a sports enthusiast and runner who believed the needs of serious athletes were being neglected by Adidas and Puma, the German companies that dominated the athletic shoe industry. With the help of Bill Bowerman, his former track coach at the University of Oregon, Knight set out to develop a shoe that would make a difference in a runner's performance. The rest, as they say, is history. Nike has become a dominant player in sports apparel. With track, basketball, tennis, and other traditional sports in the “win” column, Nike recently has turned its attention to building its franchise in soccer, cricket, rugby, hockey, and in-line skating, among others. After all, Dolan explains, being a global sports brand requires an intensely local focus. Being a global brand is extremely important to Nike because its home market, the United States, is nearing saturation. According to John Horan of the newsletter Sporting Goods Intelligence, sporting-goods chains have overexpanded and profit margins are threatened. When Nike announced that its second quarter earnings in 1997 would not live up to Wall Street's expectations, its stock dropped 13 percent. With these spurs at home, Nike has to look overseas there it has only 27 percent of sales compared to 43 percent in the U.S. to generate additional revenues. But going overseas is not a sure win for Nike. “Understanding what sports the people in [a] country play, and then being great at those sports... that's always the challenge. In the U.K., for instance, we are a really good basketball brand, but they don't play that there. And we are a really good tennis brand, but they kept telling us. ‘Other than the two weeks during Wimbledon, nobody in the U.K. really cares about tennis.’ So in the U.K. soccer is what they play. Rugby is when Nike couldn't find equipment for testing the best stud configurations and traction in cleated soccer shoes.what they play. Further. with the rights to sell official soccer balls and sports apparel. Spain. Adidas retains sponsorship of many top teams and players. In addition. Within two years of entering the market for snowboard boots in 1995. for . Nike spent $20 million in a sealed bid process to sponsor the Italian national team. advertising. As the number of teenagers in the United States grows from 25 million in 1997 to over 31 million in 2010. Nike has applied the same technical skill and drive to soccer shoes that it applied to the basketball shoes. It has also spent millions on global advertising campaigns and signed leading national soccer stars such as Eric Cantona (captain of the national champion Manchester United soccer team in the U. In the spring of 1997. the contract contains a clause that allows Nike to retain sponsorship of half of the League's teams as it expands. Reebok. It also sponsors World Cup 1998.S. And there's competition at home from firms such as Vans. In return. a small California company that aims directly at the teenage market by targeting the California adolescent—an Internet-surfing latchkey kid. snowboarding. Nike will also have access to training clinics in Brazil and to the infrastructure of the game.” says Peter Csandai. The goal is to create the world's best soccer shoe. surfing. In the United States. Umbro. effectively undermining the event's official sponsor. and what does it really mean to you when you watch it?’ The brand attributes for Nike in the U. it sponsored a worldwide soccer tour that featured top teams. Nike's main competitor in the U.S. has also signed contracts with at least 30 professional soccer clubs throughout the globe. Why Brazil? It won the 1994 World Cup soccer match.75 million a year to sponsor 5 of the league's 10 teams. this move could prove shrewd. which cost the company a breath-taking $200 million.” Outside the United States soccer is the main sport. First. an Adidas spokesman.K.. it bought up all the billboards around stadiums where matches were held. So we had to really concentrate on being great at two sports that were not really something that came from our American tradition at all. and mountain biking. the competition isn't yet ready to roll over and play dead. are the same—we really want to be the authentic sports brand—but the sports that are the building blocks for that are very different in the U. The contract is a 10-year deal that includes appearances in Nike-produced exhibition matches and community events. ‘What does this sport really mean to you when you play it. These kids are not into team sports. and France. instead they are attracted by individual sports such as skateboarding. “We don't think that anybody can get near to us on the product side. than they would be in the United States or than they would be in Japan. Nike has signed a multiyear contract with major league soccer that calls for it to spend $3.) to highly lucrative contracts. Adidas has invaded Nike's home turf.K. but that won't be easy. During last year's European championships. Brazil's soccer federation. and Nike has pursued the soccer player and fan with a vengeance. For example. it decided to build its own. teams and featuring players from those teams in its U.K. the teams will participate in five annual friendly soccer games that Nike is arranging. including the national teams of Germany. and to which Nike retains the television rights. Overseas. sponsoring three U. But nothing matches Nike’s sponsorship agreement with the Confederacao Brasil de Futebol.S. Nike will supply Brazil's national teams with sports kits. That took years of product development and talking to consumers about. Questions 1. Describe the company’s global soccer marketing mix? 3.S.K. Finally.5% of the market share while Reebok held 11. Adidas is a distant second with $3 billion. this ad drew angry letters from many offended fans. Despite a slight decline from prior years. the closest competitor. and New Balance. Puma. “Nike is going in and almost encouraging teams to break contracts. Nike appears to have changed the economics of the game. Identify Nike's markets and Nike’s positioning in these markets? 2. but so far its efforts have produced only $200 million in annual sales. Utah. president of Puma North America. Signing bad boy Eric Cantona generated a lot of criticism and infuriated the soccer establishment in the U. Even the Brazil deal has been heavily criticized. and especially Adidas. It has a long way to go before it scores a match-winning goal in the global soccer market. As part of that deal. Asics. Australia. Gorman. held 15. some of its actions haven't left fans cheering either. In 1998.S. What marketing recommendations would you make to help Nike achieve its quest for global soccer dominance? How serious is the threat of a firm like Vans? Is Nike likely to be successful in global soccer? Sol: 1.2%. including Fila. Timberland. Nike had to pay Umbro an undisclosed amount to cover the remaining two years of its contract with the Brazilian federation. Not surprisingly. which has been part of the sport for decades. not just the last few years like Nike.S. While Nike’s market share is still in the lead. Nike intends to be the number one supplier of soccer gear by World Cup 2002. not all soccer athletes are convinced Nike is better. Nike continues to have the greatest market share in the U.” says James R. it is expected to increase with new products. it’s in a position to make a move on Nike. Nike has taken the lead in e-commerce by being the first to market with its e-commerce web-site. market . Competition is not Nike's only problem. each hold approximately 3-5% of the remaining market share. Distribution through E-commerce – Strength. Nike’s market share is expected to do especially well as a result of sponsoring the summer Olympics in 2000 in Sydney. So. Still. Speedskating team in the 2002 Winter Olympics in Salt Lake City. Many pro players continue to get their equipment from companies such as Umbro. Nike flew eight of soccer's hottest players to Tunisia to film an advertisement in which the athletes competed against the devil. Nike launched its e-commerce site in April 1999 by offering 65 styles of shoes to the U. Nike remains the biggest player in the game.4% in 1998. with over $8 billion in sales in 1997. In 1996. the 2002 World Cup in Japan and Korea. and the U. With its free spending. Converse. Identify Nike's markets and Nike’s positioning in these markets? Ans: Nike’s global market share was an impressive 30. The remaining competitors.example. Vans has become the third largest company in the business. Adidas. branded athletic footwear market. among others. Products . celebrity endorsements. Nike enables itself to become established while competitors rush to join us. The Nike name and associated trademarks have appeared everywhere from players' shirts. at times we expanded into markets for which we were not strategically suited.Strength Though Nike leads the apparel division among industry competitors. but also by clothing and accessories retailers such as Old Navy and Abercrombie & Fitch. Aggressive advertising campaigns. Nike increased its e-commerce presence by launching NIKEiD in November 1999. However. As a result. An example is the decrease in brands made available due to declining sales of in-line skating and roller hockey products at Bauer Nike Hockey. . Nike demonstrated an example of Nike’s brand presence at the 1999 NCAA Basketball tournament when 42 of the 64 teams participating wore shoes provided. Speedskating team in the upcoming 2002 Winter Olympics. Nike’s future plans include opening an online shop for the Japanese market next year followed by global rollout. Advertising and Promotion – Strength. and quality products enhance the brand. By being the first to market. we have had to make strides to appeal to a fashion savvy market. Our apparel line is not only being challenged by our typical industry competitors such as Adidas and Reebok. Due to increased emphasis by consumers on fashion in relation to sportswear. NIKEiD enables online consumers to design key elements of the shoes they purchase.S. This brand power translates into bottom-line revenues. Continuous marketing research could prove to be key in assessing the market.for purchase. pants. and hats to stadium banners and walls. we have initiated a more aggressive program to review product collaborations that are outside of our core basis of products. we have had to exit two manufacturing operations at our Bauer Nike subsidiary. including the Nike name and the trademark Swoosh. The program represents the first time a company has offered mass customization of footwear. The desire to prevent situations such as these from continuing to occur. Nike is planning on initiating five structures within the apparel division to focus on the following areas: o Women o Men o Kids o sports graphics and caps o strategic response independently We are also spending more time on continuing to support and develop programs to gain a better understanding what our customers would like to see in the market. Nike has not claimed to be leading the race among the apparel industry as a whole. perhaps gradual changes could have been made so that the end result may not have been as finite in nature. We had to terminate 51 employees. Some examples are our sponsorship of the 1999 Women's World Cup Soccer Tournament and our sponsorship of the U. Had we anticipated the decline sooner.Weakness Nike has had much success as a result of collaborating with other companies within the sports and fitness industry. are considered to represent one of the most recognizable brands in the world. Products . Nike's most recent brand-building endeavors are focused on strengthening our association with women?s sports. Nike’s brand images. Nike’s products are considered to be of higher quality and as a result have higher prices relative to our competitors. Product Nike offers a wide range of shoe. protective gear. apparel and equipment products. Price . through Nike Team Sports. The marketing mix or the 4 Ps of Marketing are Product. who tend to be collection-driven. who tend to be item-driven. presenting another weakness with room for improvement. They also market head gear under the brand name Sports Specialties. Because of such research. 2. hockey sticks and hockey jerseys and accessories. Place (distribution) and Promotion. at times our consumers may not agree. Price.to lower-price-point products. we are placing a renewed emphasis on emerging technology and innovation towards the development of new products. holding the lion share of 33% of the global market.Strength Nike primarily conducts marketing research on a continual basis to assist in maintaining our company’s position as the leader in the athletic footwear and apparel industry. we have decided to revamp our apparel division. Inc. manufactures and distributes ice skates. Nike's 4Ps are the following: 1. To mitigate any future problems in our high quality/high price lines. all of which are currently its top-selling product categories. It is the largest seller of athletic footwear in the world. One of the most important consideration is its marketing mix. in-roller skates. This presents a weakness. a revolutionary new line of athletic shoes.: Nike implemented a number of marketing strategies to sell its products. They sell small amounts of plastic products to other manufacturers through Nike IHM. While the prices are realistic given the nature of the products we offer to our consumers. Their brand Cole Haan carries a line of dress and casual footwear and accessories for men. Nike started selling sports apparel. Marketing Research . women and children. skate blades. Nike will be organizing the internal business by gender as opposed to sport category and conducting increasing amounts of research addressing the buying habits of men. better known as the 4Ps. Inc. Bauer Nike Hockey Inc. we are dedicating our time and money to better develop our competitive position at all price points to build strengths at each of these levels. an area in which we can still greatly improve. Describe the company’s global soccer marketing mix? Ans. The company has production facilities in Asia. Despite the fact that in the past we may have overlooked the mid. sales facilities in almost 200 countries. 2. and women.Weakness In general. We see much potential in the lower price points and plan to meet the needs of those markets. Nike is a global sports shoe giant company. athletic bags and accessory items in 1979. with specifically targeted product lines. specifically the Nike Alpha Project.Pricing . and customer service and other operational units worldwide. 3. Nike’s brand images. Nike?s pricing strategy makes use of vertical integration in pricing wherein they own participants at differing channel levels or take part in more than one channel level operations. Promotion Promotion is largely dependent on finding accessible store locations. SPONSORSHIP AND THE MARKETING MIX Introduction . Renaldo. the Nike name and the trademark swoosh.S. and Tiger Woods for Golf. licensees and subsidiaries. Independent distributors need not adapt to local pressures because the 4Ps of marketing are managed by distributors. The pricing is based on the basis of premium segment as target customers. work-in-process. Nike sells its product to about 20. This can control costs and influence product pricing. 2. Reduce inventory at all levels of production: raw materials. loyal customer base and its great marketing techniques all contribute to make the shoe empire a huge success. Nike has a number of famous athletes that serve as brand ambassadors such as the Brazilian Soccer Team (especially Ronaldino. 4. and finished goods. Nike’s brand power is one reason for its high revenues. and in almost 200 countries around the world. Nike also sponsors events such as Hoop It Up and The Golden West Invitational. Nike as a brand commands high premiums. Lance Armstrong for cycling. etc. Place Nike shoes are carried by multi-brand stores and the exclusive Nike stores across the globe.000 retail accounts in the U. and Roberto Carlos). Q-3:. Work with 3rd party shipping agents to manage the flow of orders from factories to distribution centers. 3. What marketing recommendations would you make to help Nike achieve its quest for global soccer dominance? How serious is the threat of a firm like Vans? Is Nike likely to be successful in global soccer? Ans. make it one of the most recognizable brands in the world. processes. Nike’s quality products. Hire independent industrial engineers and analysts to work with manufacturing facilities in order to maximize efficiency of operations: shop layout. Work with suppliers to implement the next generation of electronic data interchange (EDI) technology in an attempt to achieve just-in-time inventory. It also avails of targeted advertising in the newspaper and creating strategic alliances..: 1. Lebron James and Jermane O Neal for basketball. Nike sells its products through independent distributors. 4.Nike’s pricing is designed to be competitive to the other fashion shoe retailers. In the international markets. It has been the leading car seller in UK for twenty-eight years. Each different vehicle is targeted at a certain part of the market. Ford produces a range of Champions League special edition cars. This is called non-price competition. It can therefore target the groups accurately. The Ford dealership network is the largest in Europe. New technology and multiple channels mean that traditional ATL communications are becoming weaker tools. Price Ford has three aims while pricing its products: To cover costs To make a profit To compete with other firms UEFA sponsorship also allows it to compete without using price. Advertisements are shown at matches. Ford uses the slot either side of TV breaks to show brand messages. sponsorship and public relations (PR). Questions: 1 Identify the target market of Ford. promotion and place. that many of its target customers are also interested in football. It is based in the US but operates all over the world. in the Indian context Ans. for instance. It has been the leading car seller in UK for twenty-eight years. These are more attractive to its target buyers and can have special features. Ford knows. It is an official sponsor of the UEFA Champions League. through its market research. Focus. Ford’s main above theline spending has been on TV. Marketing aims can be reached by effectively using parts of the marketing mix. through its market research. The UEFA sponsorship combines both types and helps Ford to cover all of Europe. For instance.1: Ford is a global firm that makes cars and commercial vehicles. The UEFA sponsorship lets Ford use many communication channels to reach these groups. Each will appeal to a certain market segment. These are targeted at the football audience it knows is watching. Highlight the advantages and disadvantages of sponsoring a cricket match. price. Place This refers to where the cars are sold. The first is paid for directly. The Ford brand is promoted before and after the game. It also helps it to develop a strong brand image and improve its brand value. and at half-time. The football sponsorship allows Ford to spread the brand message across the globe. 2. Ford knows. The second is publicity through. Part of Ford’s strategy is to use sponsorship. it has thirty-five sites in nine countries. This helps it reach out to target customers all over Europe. Promotion Promotion is often split into ‘above-the-line’ and ‘below-the-line’. In Europe. Land Rover and Volvo. Dealerships are planned so that everyone has one within reach. Product Ford’s products are cars and commercial vehicles. Sponsorship A strategy is a set of plans designed to help a business reach its aims.Ford is a global firm that makes cars and commercial vehicles. These are often listed as product. Critically evaluate the impact of the marketing mix elements on the target market. Its famous brands include Ka. that many of its target customers are . It helps Ford to compete. Today. If an organisation underestimated demand and customers cannot purchase products because of it. These are impact of the marketing mix elements on the target market:1. Product Ford`s car mainly targeted football interested customers. its price will come second. distribution network comes third and effective promotion and advertising comes in the end. however the marketing mix most commonly remains based on 4 P`s. make profit for survive in market and to compete with other firms. The marketing mix framework was particularly useful in the early days of the marketing concept when physical products represented a larger portion of the economy. These are targeted at the football audience it knows is watching. These are product.also interested in football. The marketing mix is defined as the 4 P's of marketing. For instance if the company's strategy is to be the market leader through effective advertising. Despite its limitations and perhaps because of its simplicity. with marketing more integrated into organization and with a wider variety of products and markets. . The organization's strategy helps these decisions to get implemented in the industry. Place This refers to how an organisation will distribute the product or service they are offering to the end user. it means how much customers want to pay for the product? Price should be reasonable to cover costs of the product. Ford`s main promotion tool is sponsoring the football match. This refers to where the cars are sold. Advertisements are shown at matches. Advertisement is shown at matches. Its made both type of products cars and commercial vehicles. place and promotion. profitability will be affected. While the other 3 P`s lost much their meaning in today’s market. 3. promotion has become the most important P`s to focus on. 4. The Ford brand is promoted before and after the game. and at half-time.advertising. All the factors of marketing mix help to accomplish the overall strategy. The football sponsorship allows Ford to spread the brand message across the globe. then the product specification will come first. selling. 2. the use of this frame work remains strong. Each product has a target market. price. Today. Price Price is second component of marketing mix. Promotion How are the chosen target groups informed or educated about the organization or the product? This include all the weapons of the marketing like. public relation etc. Efficient and effective distribution is important if the organisation is to meet its overall marketing objectives. sales promotion. The organisation must distribute the product to the user at the right place at the right time. Ford uses the slot either side of TV breaks to show brand messages. people who love crickets match can easily targeted through sponsoring match. It’s a sport car. It’s an expensive method of promoting product. its easy to reach them by sponsoring cricket match.2: These are the advantages of Sponsoring a Cricket Match: It helps to reach out targeted customers all over the world. Ford produces a range of Champions so its good to promote the ford through sponging a cricket match. COOL HEADS .Ans. In India Most people like to watch cricket specially youth of India so. It helps to develop a strong brand image and improve its brand value. These are the disadvantages of Sponsoring a Cricket Match: Its only reaches to those people who love cricket match. Rather. health magazines. amongst the leading pharmaceutical companies in the country. The company promoted its coffee with Choco-coffee brand name. The company has 50 stockists covering all of the country and has the sales force of about 150 representatives. The company could achieve only 25% of its sales target in the first year and it remained almost static for the next year.Heads. has set up a place for itself. Suggest a sales promotion plan for increasing the sales volume of the company. In 1995. distribute and market pharmaceutical soft drinks. Despite heavy advertisement and canvassing by its representatives. Marketing research department of the company also gave the green signal to the project after conducting a brief survey. its representatives gave discount coupons to the stockists for passing over to their customers for buying their coffee. sugar.discount per packet of 400 grams. and should be a big success. the product was unable to attract customers. The product was heavily advertised in the newspapers. The buyer was entitled to Rs. 3. The company in the last decade with the help of effective market strategies.for a pack of 275 grams. What do you think are the reasons for the failure of the company to achieve its target? 2.to Rs. 74/-.Cool-Heads was established in 1985 to manufacture. 40/. His advisers suggested that such products enriched with cocas. It was supplied in a 400 g. It was purely an Indian company and had to face tough competition from multi-national companies during the initial years. The representatives of the company had very good rapport with super market and shops. coca and sugar. radio and television. He floated the idea of manufacturing and marketing Coffee with milk. Questions: 1. 90/. who it was believed could afford ‘choco-coffee’. For a . It was observed that launching of this product did not affect the market position of other branded coffee at all which was being sold at Rs. The ordinary coffee was available in the market at the rate of Rs. Can a change in the distribution channel bring improvement in the sale of the product? Ans. it was observed that the sales of the other brands of coffee have increased marginally consequent to the advertisement campaign by the Cool. milk and sugar.per kg. for promoting its products.1: There are number of reasons for the failure of the company to achieve sales target. 30/. The scheme continued for about six months. specially in view of its competitors brand. the Managing director of the company stressed the need for diversification and addition of new products to its existing product range. The thrust of choco coffee in the promotion campaign was that this coffee contains cocas. 5/. would be desirable. To promote the coffee. The target audience was middle class. Before launching of a product which is new since till now only coffee without coco. through super markets and shops. packet at the price of Rs. When the product is new as in one case sampling often moves a very successful strategy to include trial. Ans. In designing marketing channel. It is not correct always to use the existing distribution channel ‘as cool heads’ did to promote to Chocó coffee. 1. ‘Cool Heads” choose the same channel that is had to promote its soft drinks but for a new product by distinctive for samples or door to door convincing etc. d. Now product require sometime using different popes of marketing channels designing a channel system calls for analyzing customers needs.2: Sales Promotion includes incentives offering and interest creating activities which are generally short term marketing events. Price was too high according to target customer. establishing channel objectives and identifying what where. Ans. I would suggest ‘Premium’ and ‘sampling’ as two methods to be adopted in sales promotion. Sampling: The main objective of sampling in its induce initial product trail and let the customers have first hand experience of the product. The purpose of sales promotion is to estimates. a change in the distribution channel can bring about investment improvement in the rate of product. 2. Door to Door Retail shopping center Sample pack in stores. The marketing research conducted by the marketing team too brief that they are unable to identify the correct strategy. Trade fairs and exhibitions. Since the product is new and needs to be introduced first time in to the market mostly customers to taste the product very enthusiastic about trying new product rather they are vary so I suggest on path premium to promote. There are different methods to distribute samples could be:a. The advantage of an uncongenial channel is that the company will encounter. actually purchasing a product or service. suppose a produces has identified several channel and alternatives and wants to determine the one best suited to its needs. c. manufacturers have to decide what is ideal what feasible and what is available. In comparison to other similar offering their price was too low that lowered the product image. b. Each alternative needs and adaptive criteria.3: Yes. Premium: A premium (gift) is reward given to the consumer for performing a particular act.new product like that of ‘Cool Heads’ the company should search for innovative machinery channels. motivate and influence the purchase. . why when and how target customer buy in the first step in designing the marketing channel. which at £70 for a cleaner with a free £250 ticket made sense. The immediate result of the sales promotion was to boost the company's sales of vacuum cleaners to more than double the level of the previous year. In these conditions. It should be remembered that the initial objective of the promotion was to utilize existing spare capacity rather than adding to that capacity. The first problem occurred when Hoover could not satisfy demand for its vacuum cleaners and had to resort to paying its staff overtime rates of pay in order to increase supply. it may have reached the conclusion that the incentive was too generous and likely to create more demand than the company could cope with. many people had bought their cleaner simply to get the free tickets. but one that might be justified if it came free with the purchase of an 'essential' vacuum cleaner. A second problem occurred during subsequent periods when sales fell to below their pre-incentive levels. Hoover was faced with a period of economic recession in which discretionary expenditure on consumer durables was held back. and monitoring sales promotions. So far so good. For many people. These people frequently disposed of their cleaner as they had no need for it. unused' vacuum cleaners at discounted prices and this further depressed sales of new machines once the sales promotion had come to an end. During the early 1990s. most vacuum sales were replacements for worn out machines or first-time buys for people setting up home. The company came up with the idea of offering free airline tickets to America for anybody buying one of its vacuum cleaners.FREE FLIGHTS PROMOTION ENDS IN DISASTER The Hoover Company’s attempts to sell more vacuum cleaners by offering an incentive of free flights have become a legendary disaster in the field of sales promotions. An examination of the case is useful for highlighting some of the problems of planning. . The company had carried out insufficient research prior to launching its incentive. Worse still. Many people had simply brought forward their purchase of a vacuum cleaner. Had it done so. but then serious problems set in. a holiday in the USA may have been perceived as an unnecessary and unaffordable luxury during a period of recession. The challenge was to increase the sales of machines bought to upgrade existing equipment. The classified ads of many local newspapers contained many adverts for 'nearly new. implementing. Anything higher and the cost of the incentives actually given away can wipe out the benefits arising from increased sales. Worse still. without bringing about any long-term growth in sales. Many claimants complained that telephone lines were constantly busy and. these costs could have been foreseen. In this case. The free flights promotion eventually cost Hoover a reported £37 million in redemption charges. What alternative methods of promotion might have been more suitable to achieve Hoover's objective of utilizing spare capacity during a period of economic recession? Ans. which can be as low as 5-10 per cent. when they did get through. These activities attracted high levels of coverage in the media and left a once highly respected brand as one with a perception of mistrust. Five years after the initial débâcle. Hoover had carried out insufficient pre-testing of the sales promotion in order to assess the likely take-up rate and was surprised by the actual take-up which subsequently occurred. In an attempt to control costs. Identify a programme of research that Hoover could have undertaken in order to avoid the costly failure of its free flights promotion. With appropriate pre-testing. It was reported that claimants from the south-east of England were only offered flights departing from Scotland and those from Scotland only offered flights from London. Case study review questions 1.A third and more serious problem occurred when large numbers of buyers tried to use their free flight vouchers. the Hoover Holiday Pressure Group continued to be an awkward reminder for the company. done to reduce the attractiveness of the free offer. 3. All sales promotions are based on an assumption of take-up rates.1: The inherent problems in using sales Promotion is the effectiveness of a Co. must establishes in its:A) Establishing sales promotion objective:- . the company became notorious for its attempts to 'suppress' take-up of free flights. the company's brand image had been tarnished in a way that would take many years-if ever-to recover from. What are the inherent problems for a company such as Hoover in assessing the effectiveness of sales promotion activity? 2. they were offered the most unattractive flights possible. lead time is the time necessary to prepare the program prior to launching it. not merely as a defensive ration when problem arises. Implementation planning must cover lead time and sell in time.The sales promotion objective must be desired from boarder promotion objectives which must be derived from more basic marketing objectives develop for the sales promotion very with target market. Competitor condition and each tools cost effectiveness many sales promotion tool are available which include. Sales promotion should be used as an offensive weapon in the brand’s marketing areenal. a) Consumer Promotion Tools b) Trade Promotion Tools c) Business and sales force Promotion Tools C) Presenting the sales promotion program:This is very important step in the entire sales promotion program – one which However seemed to be conducted to determine if the tools are effective and appropriate. The Policy says sales promotion is an integral part of the marketing mix. . the promotion planners must first consider the corporate policy with regard to sales promotion. B) Setting the sales tools:The Promotion Planner should take into account the type of market. PROBLEM DEFINATION EXPLORATORY OR INFORMAL RESEARCH DETERMINING RESEARCH OBJECTIVES FORMAL RESEARCH Planning process starts with situation analysis to start with.2: Effective research involves five basic steps that advertise take to collect relevant information. Ans. sales promotion objectives. The policy may exist in written form as may by part of the top management altitude towards sales promotion as followed over the years. E) Evaluating the sales promotion Results:Evaluation of the promotion’s results is crucial manufacturers can use 3 methods to measure sales (i) sales data (ii) consumer survey (iii) experiments. D) Implementing and Controlling the sales promotion program:Marketing managers must manage and prepare implementation and control planes for each individual promotion.