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

Result and Analysis

Product Trial

Promotional Schemes

Satisfaction

Medium of spreading Awareness

- Print Media- Electronic Media- Branding and imaging- Word of mouth- Canopy activity- On shop activity

Success

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

01

Pearson

Correlation

1.000 .661

Sig. (2-

tailed)

. .153

N 6 6

VAR000

02

Pearson

Correlation

.661 1.000

Sig. (2-

tailed)

.153 .

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

values

Extractio

n Sums

of

Squared

Loading

s

Component Total % of

Variance

Cumula

tive %

Total % of

Variance

Cumulativ

e %

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

1

.911

VAR0000

2

.911

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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