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TO FIND OUT THE EFFECTIVENESS OF

PROMOTIONAL STRATEGIES FOR ORGANISATIONAL


SUCCESS

Shruti
INC Shimla
Abstract

Promotional strategies are means of attracting new and retaining old 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 the telecommunication company.

Objectives
Primary
1) To know the best promotional mix for promoting services.
2) To divide the resources effectively among various sources of promotional
activities.
3) To device the most effective way of communication.

Introduction

The Indian telecom industry is one of the fastest growing industries and facing a tough
competition to succeed and retain their position but with so many different companies
offering similar products, it is very difficult for the companies to differentiate themselves
from others to create an identifiable image which potential customers will easily
recognise. This aim is accomplished using promotional campaigns. These strategies
concentrate on AIDA model. The model is based on the hypothesis that to grab market
share the first need that arises is to capture the attention of population which would arose
an interest about the service in available market which in it turn leads to desire to own
that service and finally will lead to buying which is termed as action.

Figure 1.1
Organisations can make use of blend of promotional mix which comprises of
advertisement, public relations, sales promotion, personal selling, direct mail, internet
marketing. For spreading awareness about the organization, its product and services a
medium has to be selected and this selection depend upon the market being targeted. Its
very important for any organization to be very particular and objective while making
their decision regarding the choice of medium. All marketing activities are a money game
and if not played well may force the player to quit the market. If it can provide you with
scope of expansion then on the other side of the coin it can also ruin the business for once
and for all, if the company fail to get their ideology in rhythm with their customers. Well
designed advertising campaigns describe, in a creative way, the features of the product or
service being offered and the benefits customers will receive when they purchase it.

Choosing which promotional strategy to follow is critical. Organisations have to select


one or blend of these based on purpose, price, coverage and suitability. The company has
to look at the costs and the benefits of each strategy.

Review of literature
According to Shimp (2003), sales promotion refers to any incentive used by a
manufacturer to induce the trade (wholesalers, retailers or other channel members) and/
or consumers to buy a brand to encourage aggressive sales. It has been suggested that
billions of dollars are wasted on ineffective promotion annually (Ambler & Vakratsas,
1996). Therefore, formulating more effective promotion strategies is important for all
types of organizations. Zeithaml and Bitner (2000) suggested that one of the steps in
developing effective promotion is determining the communication objectives. These
objectives include awareness, knowledge, liking, preference, conviction, and purchase.
According to Maureen H. McDonough and Gary A. Ackert- Promotion is the activities
people use to communicate with others about their product or service and to convince
them to use it. Everything you do communicates something about your business. This
includes a wide variety of activities including brochures, billboards, and newspaper ads.
Nelson Oly Ndusibi study evaluated the effectiveness of sales promotional strategies
namely, coupon, price discount, free sample, bonus pack, and in-store display in the
purchase of low involvement products. The study also revealed that certain demographic
factors such as education and income of consumers could potentially confound the
observed relationships hence, these factors were controlled. A total of 312 consumers
were surveyed using structured questionnaire. The results show that price discounts, free
samples, bonus packs, and in-store display are associated with product trial. Coupon does
not have any significant effect on product trial.

In the study of Nelson the framework provides new insights into the understanding of
sales promotional strategies and their impacts on customers' behavioural responses in low
involvement product setting. In addition, it helps to explain the role of familiarity with
sales promotion tools. Consumers respond more to free sample, price discount, in-store
display, and bonus pack than coupon. This is an important contribution to the body of
knowledge in this field.

Totten & Block (1994) stated that the term sales promotion refers to many kinds of
selling incentives and techniques intended to produce immediate or short-term sales
effects. Typical sales promotion includes coupons, samples, in-pack premiums, price-
offs, displays, and so on.

Coupons have been used to produce trial (Robinson & Carmack 1997). According to
Cook (2003), coupons are easily understood by the consumer and can be highly useful for
trial purchase. Gilbert and Jackaria (2002) concurring to the popularity of coupon
reported that coupon is ranked last as the promotional least widely used by consumers
and least influence on product trial. Other studies (e.g. Peter & Olson 1996; Gardener &
Trivedi 1998; Darks 2000; Fill 2002) have reported the importance of coupons as a sales
tool.

Price promotion does influence new product trial (Brandweek, 1994). Shimp (2003) and
Fill (2002) are other extant researchers who have documented a link between price
promotion and product trial. Product trial involves actually trying or using a product
(Kardes, 1999). According to Peter and Olson (1996), trial ability refers to the degree to
which a product can be tried on a limited basis or divided into small quantities for an
inexpensive trial. Chandon, et al. (2000) indicated that sales promotion may be attractive
to highly promotion prone consumers for reasons beyond price savings. They concluded
that highly promotion prone consumers might try a new product that has promotion.
Thomas (1993) argued that the magnitude of planned distribution and promotion
expenditures (advertising, sales promotions, sales force, and so on) could affect initial
trial of the brand.

Methodology
RESEARCH METHOD
In order to investigate the objectives of this study and answer the hypotheses, that
promotional strategies are effective and concrete pillar of organisational success the
descriptive and explanatory research method was employed. The questionnaire survey
technique was used to collect data and the questions were self constructed. The choices of
questions for this investigation include questions on personal background; age- lowest
range was 16 and above; occupation-employed, student, service, businessman and
unemployed; and area of residence. The other questions were on variables used to assess
the customer buying decision. The rating scale varied from “to a great extent to not
much”.
RESEARCH FRAMEWORK
This study investigates the impact of promotional activities in spreading the awareness
about the company then relating the satisfaction of customers and finally estimating the
success rate for the same. The study starts with the following hypothesis:
H1: There is a significant positive relationship between communication by means of
electronic medium and product trial.
H2: There is a significant positive relationship between communication by means of print
medium and product trial.
H3: There is a significant positive relationship between communication by means of
hoardings and product trial.
H4: There is a significant positive relationship between communication by means of
word of mouth and product trial.
H5: There is a significant positive relationship between communication by means of
canopy activity and product trial.
H6: There is a significant positive relationship between communication by means of on
shop activity and product trial.
H7: There is a significant positive relationship between customer satisfaction and
success.

Conceptual framework structure of this study

Medium of spreading
Awareness

- Print Media
Promotional - Electronic Media
Schemes - Branding and imaging Product Trial
- Word of mouth
- Canopy activity
- On shop activity

Success Satisfaction

Result and Analysis


A total of 100 questionnaires were administered and collected within Himachal Pradesh.
The data collected was analyzed with the Statistical Package for Social Science (SPSS).
Table below represents the descriptive statistics of demographic variables.

Variable Sub- variable Frequency Percentage (%)


Age Under 16 0 0
Above 16 100 100
Occupation Agriculture 17 17
Service 25 25
Student 40 40
Unemployed 15 15
Business 3 3
Location Within Himachal 100 100
Outside Himachal 0 0

Only the respondents of the age above 16 were considered as the teenagers below this age
were dependent on their elders for purchase decisions and have very little contribution of
their own in buying decision. Secondly the respondents of only Himachal were asked to
fill up the questionnaires as the sampling method adopted was convenience sampling.
Aircel followed cost leadership strategy which suited the needs of students. The aim of
thesis was to investigate the objective of the study as well as to test the two hypotheses
firstly the effective promotional medium has a positive relation with product trial of the
schemes offered by the organization and secondly the level of satisfaction received by the
product trial is directly related to success. These hypotheses are tested by making use of
multivariate regression analysis.

Relation of different promotion strategies and product trial


Promotional strategies implies promoting the service/ plan through different
communication tools like electronic medium, print, hoardings, word of mouth and canopy
activity. According to the hypothesis these mediums influence the rate of product trial.
The Correlation analysis Model was employed to predict the relationships in the
construct. The promotional strategies also termed as means of spreading awareness forms
the part of independent variables (X), whereas product trial forms the independent
variable (Y).

Correlations
Correlations
VAR00001 VAR0000
2
VAR000 Pearson 1.000 .661
01 Correlation
Sig. (2- . .153
tailed)
N 6 6
VAR000 Pearson .661 1.000
02 Correlation
Sig. (2- .153 .
tailed)
N 6 6

Factor Analysis
Correlation Matrix

VAR00001 VAR00002
Correlation VAR00001 1.000 .661
VAR00002 .661 1.000

Communalities
Initial Extraction
VAR00001 1.000 .831
VAR00002 1.000 .831

Extraction Method: Principal Component Analysis.

Total Variance Explained


Initial Eigen Extractio
values n Sums
of
Squared
Loading
s
Component Total % of Cumula Total % of Cumulative
Variance tive % Variance %
1 1.661 83.065 83.065 1.661 83.065 83.065
2 .339 16.935 100.00
0
Extraction Method: Principal Component Analysis.

Component Matrix
Component
1
VAR0000 .911
1
VAR0000 .911
2

Extraction Method: Principal Component Analysis.


A) 1 components extracted.

Rotated Component Matrix


A) Only one component was extracted. The solution cannot be rotated.

The value of (Person’s product moment correlation coefficient) r is .661 which means
that the strength of the relationship between two variables is quite strong. Hence from the
test it can be concluded that the proper promotional mix influences the buying decision of
the customers and they go for the product trial, which is a good sign for the company and
the company can convert its potential customers into loyal ones by understanding their
expectations and then finally providing them with the service which exceeds their
expectations.

Relationship between Customer Satisfaction and success.


The second hypothesis which forms the base of the study says that if a customer is
satisfied with the product trial then he will go for further re buy and become brand loyal
thus increasing the market share of the company. According to the study conducted, very
few of the customers who were satisfied would like to continue with the plans whereas
majority would like to shift to new brand/plan if they feel that there is some better plan
which can fulfill their needs more efficiently and effectively. It can’t be concluded that
customer satisfaction will definitely result in success of the organization, though it is
important to have high customer satisfaction for success of the organization but it can’t
be termed as whole sole factor of success. In addition to attain high customer satisfaction
the company should also focus on chalking out innovative and cost effective plans and
schemes then promote it through most efficient medium to be at competitive edge.

Effectiveness of various promotional strategies


Promotional strategies launched from time to time by the organizations help in attracting
unexplored market segment. Chalking out promotional strategies means nothing unless
they are communicated to targeted market and are able to create curiosity among them.
Almost for everyone keeping themselves aware of current affairs, job opportunities and
business news is essential so the respondents adopt the most economical way and that is
through newspapers. Considering this print media have maximum coverage it is
accessible in most urban to most rural areas and comes in really affordable prices. 92%
people have access to print media followed by electronic media, on shop activity and
lastly hoardings.

Electronic medium which is comprised of TVs, radios and internet is second most
accessible medium which is used by housewives, service, businessman and student
category its one of the favorite medium and has communication made by this medium has
a long lasting impact on its users thus making it most influential medium. In addition to it
the medium have the capability to address large masses instantaneously. Every media has
its own range of reach and using that medium involves certain cost hence a proper trade
off has to be maintained between its cost and benefits. This will provide a proper
direction to funds flow of company and will also help in monitoring the flow so that
company is able to spread the awareness about itself and not much of its resources get
exhaust. It’s not only important to see that the customers have access to a particular
media but this is also equally important that targeted masses make use of that media.

Mostly the targeted market came to know about the plans or promotional schemes
through electronic medium, followed by word of mouth then print media, canopy activity
hoardings and lastly on shop activity. But their impact don’t follow the same sequence
instead the order is word of mouth, electronic media, hoardings, print media, on shop
activity. People rely mostly on the experience of their know ones and have a firm belief
that they will not cheat them hence most of the buying decisions are made after
consulting a trustworthy and experienced person. Electronic media communicate what
the company actually wants to tell its targeted market in a very effective way. The
features which differentiate it from other mediums are:
• 3-D effects
• Ability to speak
• Addressing large masses instantaneously
According to psychologists humans remember moving pictures more that the still ones.
The medium drain out a lot of company’s funds and on the other hand prove to be most
effective tool in communicating about the scheme. The benefits earned from this medium
are far more then the cost involved in this medium.
Other mediums have their own benefits for example print medium and hoardings are able
to reach masses even at places where there is no electricity. They provide a backup to
electronic ads and in addition to it they can be referred by customers as many times as he
wants and as per his convenience. Once the electronic ads arose the curiosity about the
service then its through print and hoardings medium that customers are further attracted
towards the company and its products/services.

On shop activities are also have a significant role in generating business as these are the
last adds to which customers come in contact before buying the product/service.
According to psychologists humans are more under the influence of fresh exposure as
compared to past ones and this is called as recency effect. Thus depending upon the
product and targeted customers medium of advertisement should be selected.
If we talk about electronic medium most of the people generally watch TV for a limited
period of time approximately for 1-5hrs hence it is very important for the company to
make sure that their ads are telecasted at right time so that they are able to spread the
awareness among masses within minimum budget. This condition is not applicable when
some major events are telecasted such as cricket tournament, football matches, some
award function etc. In case of radio and internet respondents don’t bother about time
whenever they get time they switch to that medium. To utilize available budget this need
to be taken a point of.
Newspaper, part of print media is also an effective medium of advertisement, maximum
people have access to newspaper and as seen here 73 people out of 100 read newspaper
daily so this makes it more or less sure that the advertisements printed in them will surely
make their way to targeted customers and spread the awareness about the company and
its product and services among people. In addition to it, it is also an economical way of
spreading the awareness among the masses. There is no body among the targeted
customer who fails to read the newspaper so probability of not going through the ad is
very less. A small ad in newspaper may not catch the attention of reader, its human
tendency to get attracted towards bigger things as compared to small ones so the
advertisements have to be big and catchy enough to catch the attention of the reader and
arose their curiosity towards the company its products, services and schemes. Money
spend today on big ads in newspapers TV will definitely generate business tomorrow.

For having maximum coverage it’s very important to select the right medium. A right
medium implies the one which is most famous among people. From the graph below it is
clear that business magazines is read by most of the people. Thus giving ads on that
magazine can be fruitful. It’s followed by competition magazines. This magazine is read
mostly by students who are targeted customer and most beneficial from point of view of
AIRCEL. Sports magazine and Femina is shares the third and fourth respectively. Femina
is famous among housewives and girls student. Firstly deciding who are targeted
customer then the medium of advertisement is selected followed by selection of
magazine. The ads in addition of being catchy should be appropriately placed. Only then
the desired results will be yielded. Similar things should be investigated in terms of other
print media and electronic medium.
In accordance with the survey people usually have certain favorite brands but they don’t
mind to try a product if low call rates/free SMS pack/price discount /good customer
service /Innovative schemes/ differential plan, so to persuade a customer to try their
product the company should concentrate more on chalking out these plans and if these
needs of the customer are satisfied they feel that they are getting a good buy and
influence others as well to try out the product.
If we talk about the satisfaction level of respondent most of them rank their satisfaction at
a level of 3 which means that the product has neither been able to overachieve or under
achieve the expectations of the customers. The customers may or may not switch to
different company. This was followed by expectation level of 2 which means that the trial
has not been able to gain the loyalty of customers. Very few people stick to 1 plan for a
long time instead they are always waiting for a new more economical scheme to come so
that they can make for most of their money.
The schemes of mobile service provider forms a part of convenience goods the company
like Aircel which is a relatively new player in the field should very well know how to
play with the minds of customers by making proper use of all the available promotional
tools available to maximize their success in terms of market share.

Discussion of Implications
This research has important implications on theory. The framework provides new insights
into the understanding of sales promotional strategies and their impacts on customers’
behavioral responses. In addition, it helps to explain the role of awareness of sales
promotion tools. Consumers respond more to low call rates, free SMS pack, price
discount, good customer service, innovative schemes and differential plans. A plausible
explanation for the weak influence of canopy activity is either lack of promotion of
motivation for trial on behalf of the person responsible for canopy activity or lack of
confidence of customers on retailers. He is just interested in inventory turnover rather that
selling only one brands plan. Shopkeepers have number of plans of different brands to
sell which make them brand insensitive. This can be overcome by concentrating more on
retailer satisfaction and motivation. Feeling of sense of belongingness should be
developed in him.

This research shows the linkages among various promotional tools and product trial, and
further of satisfaction and success of the organization which thereby helps to better
understand how consumers respond to various promotional tools offered by marketers.
This is an important contribution to the body of knowledge in this field and in telecom in
particular.

The results also have important implications for practitioners. One of the major
implications of this research is that firms can increase sales by offering the right
promotional tools to stimulate product trial. Therefore organisations should carefully plan
their promotional scheme and way of communicating them, and allocate promotional
budget over the different promotion tools, giving preference to the more effective tools.
Promotions that are communicated through electronic medium, print medium, hoardings
and word of mouth are likely to be more effective than on shop.

Second, the findings indicate that word of mouth has the strongest effect on product trial
compared to other sales promotional tools. This is because consumers believe their near
and dear ones the most. More the satisfaction of customers more is the sales of product
trial this is because not only the customers will further continue with this plan but also
influence others to buy it, hence increasing the market share.

Third, (as shown in the results) the medium of spreading awareness such as word of
mouth, electronic medium, print medium hoardings and on shop activity significantly
affect product trial, albeit the determinant power of on shop is the lowest among other
awareness spreading tools. Thus, one of the ways to improve the determinant power of on
shop activity is to give a specific sales target to the retailers and motivate them to achieve
it. As it’s less costly and may prove to be the most beneficial tool of spreading awareness.
Fourth, the findings show that on shop activity has no significant effect on product trial.
Thus, it is suggested that company should realize that they can have a competitive edge
by having a strong bond with the retailers, motivating them and making them feel that the
company value for them. This will motivate the customers to try more and more plans of
the same brand and then it’s the role of the company to see that they take a good care of
customers needs. This can also help the organization in cost cutting of the company and
thus increase the profit margin.

Conclusions
If sale is heart of the business then marketing is brain of business. Every organization
operates with a view of making profit and this is achieved by selling their products or
services. Same goes with mobile service providers also. They earn profit by selling their
post as well as prepaid connections to customers. But it’s not an easy task for a company
as there already so many players present in this field. Especially for AIRCEL it’s a
relatively new company. Airtel, BSNL, Reliance, Idea etc. at the time when Aircel
entered into the market had already grabbed a lot of market share by that time. Now a
question arises why a customer who has already subscribed a particular service should
switch to AIRCEL. For this the company has to differentiate its service from others and
have to prove that they are better players and will walk upto the expectations of the
customers.

Second question arises how to prove that they are better players. This is done by fighting
with competitors on price, network, customer care and schemes bases. Its very difficult to
beat a competitor like Airtel on network bases but its comparatively easy to snatch its
customers on bases of some schemes like Airce to Aircel free calls, sms at 10 paisa etc.
which form a part of promotional schemes. Customers usually get attracted towards such
schemes and become a part of the company. As per the survey the promotional strategies
influence the buying decision of customers to a great extent and thus increasing the
market share of the company.
There are various promotional tools available for communicating both about the company
as well as for boosting up the sales. For increasing up the sales various schemes are
launched from time to time and the customers are attracted for trying out the schemes by
making use of promotional mix. The maximum coverage is of newspaper (92%) whereas
minimum coverage is of magazines (30%) in spite of this fact maximum number of
potential customers came to know about the scheme from electronic medium (78%),
hoardings also form a good communicating tool. But most of the customers buy the
product after influencing from word of mouth. Hence it’s very important to have a
positive image in the market. The company should be able to over satisfy the customers
in order to leave a good trail on customers mind.

Most of the budget should be allocated for promoting through print media followed by
customer care service, electronic medium, hoardings, canopy activity, on shop activities.
Funds are the scarcest among all the resources of the organization. It should be spent with
utmost precaution.

The most effective way of communication is print media, electronic media, hoardings.
Word of mouth is not under the control of the organization but is a powerful tool for
increasing the market share and hence the success rate. People will speak what they feel
and feelings are developed from experiences. Good experience with the service offered
by the organization will lead to positive word of mouth whereas negative will certainly
have a negative effect.

Limitation and Recommendations for further studies


Like any empirical research, there are a few limitations to this study. First, only few
promotional tools (Electronic medium, print medium, canopy activity, hoardings and in
shop activity) was considered in this study leaving out other tools (personal selling,
public relation, direct selling). An interesting future research direction is to estimate the
effectiveness of these promotional tools in promoting telecom services. This future
research will help to increase present knowledge in this area by providing empirical
support for or refuting the above supposition. There is still an urgent need to investigate
the impact of other promotional tools on product trial because research in this area is still
inconclusive. Beside the five promotional tools that were examined in this study, future
research may investigate other types of sales promotions (e.g. contests, refund) on
product trial. In addition, studies that utilize data compiled by retailers that track buying
and sales promotion participation habits across various tools would add much value since
it is based on hard data rather than perceptions.

Secondly the study is done keeping in mind that the size of the market as a whole is
fixed. The customers using the telecom service neither increases nor shrinks. The future
study can be conducted taking into consideration that market size as a whole is also
increasing.

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