Promotion:
Promotion is the Process by which a company inform potential or existing customers about their products and encourage them to buy those products.
Methods of Promotion:
Sponsorship, Public relations, Advertising and Sales promotion are all methods of promotion:
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Sponsorship; e.g. of sporting events, charity events or school events, where the business gives said event a set amount of capital, and n exchange they display the name o the business, a new product etc.
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Public relations; Is when the public’s awareness of the company is raised and the company is seen as generous, e.g. contributing cash to famine relief or war-torn areas
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Advertising; Is usually used o introduce a new product and encourage sales, it can also be used o remind the pubic about an existing product and boost falling sales, if a business is struggling in a certain segment of the market, advertising can be used to boost sales in that particularly area, to target a new segment of the market, or to provide information about new/ existing products or events
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Sales promotion; This is used to persuade the customer to purchase the product. Examples of sales promotion could be;
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Offers, (like buy one get one free),
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Discounts (10% off etc)
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Free samples with things like food,
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Loss leaders (reducing price of a product to boost initial, or falling sales even if a temporary loss to the company is likely)
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Free gifts with the product, (e.g. cars and free insurance, Mac Donald’s adding toys to happy meals etc)
- Price reductions
- Coupons/ Vouchers
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After sales Service (E.g. servicing deals for cars, guarantees etc
Place:
Getting the goods to a place where they are going to sell most successfully.
This means that manufacturers must consider not just where to sell their product to maximise profit, but also how to get the product to that place in good condition. They must take into account:
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The most appropriate sales outlet for that product
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The most appropriate channel of distribution to use
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The most appropriate method of transportation for that particular product.
Decisions about the type of sales outlet to use will depend on the type and value of the goods being sold and the socio-economic or cultural class of the area
E.g. there is no point in placing very expensive goods in a poor area where people could not afford to buy them.
There are four main parties in distribution:
- Manufacturer/ Producer
- Wholesaler
- Retailer
- Consumer
To gather my information, I decided to contact the leading potato crisp distributors in Northern Ireland; Walkers, Tayto and KP. I also gather information on advertising costs on the U.T.V Website. The reason I chose Walkers, Tayto and KP respectively is that they are the three biggest producers of potato crisps, and the reson I chose to research advertising costs on UTV is that it has the greatest penetration though out Northern Ireland. With n impressive 34% of peak rime viewing being UTV and a 100% coverage in Northern Ireland
I was only able to receive information form Walkers, Tayto an UTV. I have examined Tayto’s and Walkers’ information using the 4 Ps:
Product:
Tayto’s information about their products is collected by a marker research company that they employ called A. C. Nielsen C. Ltd. This information is then used to support them with their marketing strategies.
An example of how this works in practice would be a situation like; if Tayto are aware of an increase in demand for a particular flavour of crisp, they may choose to promote their own brand in order to raise their share of this particular part (or “segment”) of the market.
Tayto also use a method involving school children. This involves the children filling out questionnaires etc after trying some of the products that Tayto have to offer. The questionnaires can relate to flavour, texture etc of the potato snack being tested.
Tayto have a third method of market research also; when they give out factory tours, the tourists are given a free sample of a snack and asked to give their opinion, this method is particularly good at the launch of a new product.
Walkers do not hire external businesses to conduct they’re research, they have an internal Research and Development Department. This department talks to the customers regularly to identify what is important to them, or what changes they would like to be made etc, and then implement the findings with their products and factories. The Research and Development Department work closely with the Marketing and Sales Department to make sure that all developments benefit the customer and the business. Consumer testing is a very significant part of they’re research.
Once Walkers have identified an opportunity in the market for a new product, research and development is given a brief to develop this product. They will conduct consumer testing to determine the optimum texture, flavour, size, colour etc of the snack. Testing several to identify the consumer’s preference does this. Once the final product has been tested and approved by a panel of customers, Research and Development will define how it can be produced in the factory. Marketing carry out final consumer testing prior to launch, which includes product and packaging design preference.
Price
The cost of the raw materials, packaging and overheads determines the price that Tayto need to charge for their products.
Other factors, which influence the price of a product, are competitors’ price and the target market. If the target market is the adult population, the price of the product may be higher and Tayto will be able to spend more on packaging and advertising the product, however, if the product is to be targeted at children, the price will be lower and Tayto will have to spend less on packaging and advertising.
Walkers claim to keep their products at a high quality and competitive price by leveraging. They do this by buying large quantities of raw materials, which enables them to negotiate competitive prices. The savings are re-invested into the business and passed on to the customer.
The Finance Department at Walkers are responsible for ensuring Walkers manufacture and sell their products at the lowest cost possible.
Promotion:
Tayto use a variety of ways to promote their products e.g. advertising Agencies, which are used for promotions on television, radio, newspapers and billboards.
Television advertising is very expensive but you can reach millions and target people who watch particular programmes, for example, by six thirty pm on a Thursday evening 75% of adults will have viewed UTV and 1.3 million people in Northern Ireland watch UTV each week.
Radio is cheaper and you can still target listeners of particular programmes, but it is sound only and audiences are usually smaller.
Newspapers know a lot about their readership so it is easy to target effectively and will often be read more than once by more than one person.
Tayto have also developed other forms of advertising; they have product tasting in stores where customers get to try their products, (new or existing), they sponsor many charitable/ sporting events, they offer tours of the, “Tayto castle”, where customers get to see where and how they’re product is made and receive free samples.
They also employ promotional vehicles to transport they’re goods, e.g. lorries with the smiling face of, “Mr. Tayto”, on the side, Vending machines with the same corporate symbol and they have advertising on the internet also.
Different methods of advertising are used at various times of the year, for example, Tayto focus on outdoor advertising during March to September. The advertising methods at this time are billboards, shows and exhibitions for example, “The Agricultural Show” at Balmoral.
From September to March however, advertising is focused on indoors such as TV, radio and sampling within stores.
All other types of advertising and promotions are still carried on throughout the year and at different times Tayto use promotions like ‘2 for 1’ offers and ‘50% extra free’ to entice customers.
Walkers have used the famous footballer Gary Lineker, to promote their products for many years now, and once changed they’re salt and vinegar crisp packaging to read “Salt and Lineker”
They picked Gary Lineker because he is one of Britain’s favourite celebrities, he is an ex-Leicester City football player and Walkers are also sponsors of the Leicester City Football Club.
Walkers use other means of advertising such as radio, cinema and posters. Walkers Doritos are Sponsors of the ITV Movie Premiere, which communicates with a mass market.
Walkers recognise the importance of working alongside retailers of all sizes to ensure snacks gain the visibility needed to drive sales.
Savoury snacks are often bought on impulse therefore, good merchandising is very important
I also obtained the advertising costs on U.T.V via their website in the form of a table of sample costs by length for advertising on UTV.
This is a standard day-to-day sample table of costs for advertising however there are many other factors that can affect the cost of advertising on television, e.g. Time of year.
Also when it comes to advertising on television, there are many factors that a business must consider when advertising. Target audience is a huge factor in television advertising costs, this is also linked to time of day and possibly even time of year, for example if the advertisement is aimed at school kids, advertising during the morning or early afternoon, would be a waste of money as although the advertising cost is less, most of the children who the advertisement is aimed at would be in school.
I also acquired a diagram of the penetration of UTV in Northern Ireland:
Place:
Tayto use their own fleet of Vans and Lorries to distribute their products from the manufacturer to the retailer and to the wholesaler. They also supply directly to the consumer using vending machines, this is also a clever method of advertising as the vans are marked externally with Tayto’s name and corporate symbol (Mr. Tayto)
Tayto also supply their products through the internet where they get hundreds of orders from America and Japan requesting their crisps.
Walkers’ products are produced at six factories, which are located throughout the UK and reach the customers via seven distribution centres located throughout the country.
Walkers products are transported around their distribution network 24 hours a day and then on to the customer by a fleet of more than two hundred vehicles.
Walkers employ approximately 400 staff who are responsible for the sales in supermarkets, newsagents, independent grocers and petrol forecourts.
Walkers help retailers to increase their sales by giving advice on products and the range of display equipment available. This can maximise the impact on the customer therefore increasing the sales of the products.
Questionnaire:
Please tick only one answer box on each of the following questions;
Or fill in answer where necessary in the spaces provided:
Please insure your answers are honest and accurate, to the best of your knowledge
1) To what age bracket do you belong?
5-10 11-20 21-30 31- 45 46-60 60 and over
16.6% 16.6% 16.6% 16.6% 16.6% 16.6%
2) What Gender are you?
Male Female
50% 50%
3) Do you eat Potato Crisp Snacks?
Yes No
100% 0%
If your answer to previous question was, “no”, please do not fill out any more questions….
4) How often would you say you eat potato crisp snacks?
Everyday 19.4%
3-5 times a week 33.4%
2-3 times a week 27.8%
Once a week 19.4%
Other 0%
5) What is your preferred potato crisp brand?
Tayto 44.4%
Walkers 16.8%
KP 27.8%
Golden Wonder 5.5%
Doritos 5.5%
Other 0%
6) What is your preferred potato crisp flavour?
Salt and vinegar 22.2%
Cheese and onion 16.7
Smoky Bacon 11.1%
Roast Chicken 8.3%
Steak and onion 5.6%
Prawn Cocktail 8.3%
Chilli 11.1%
Cheese 5.6%
Sour Cream and Onion 11.1%
Other
7) Which size of potato Crisp container would you be more likely to purchase?
Large, Multi-pack bag(s) 33.3%
Medium, single sale bag(s) 33.3%
Large, single sale bag(s) 22.2%
Small Cardboard Tube(s) 8.4%
Large Cardboard tube(s) 2.8%
Other 0.0%
8) What are your favourite shapes/ types of Crisp?
Regular 50.0%
Crinkle/ Rough cut 25.0%
Round 2.7%
Puffs 13.9%
French fries 2.7%
Other 2.7%
9) Where do you usually buy your crisps?
Supermarket 11.1%
Vending machine 16.7%
Corner store 11.1%
Garage 13.8%
Other 2.8%
10) What usually motivates you to buy your potato crisps?
Impulse 30.6%
Health Consciousness 11.2%
Offers/ Freebees 19.4%
Competitions 11.1%
Free Samples 8.3%
Celebrity endorsement 2.8%
No reason 16.7%
Other 0.0%
11) Which media would you respond best too?
Television 52.8%
Billboards 19.4%
Radio 11.1%
Movie Theatre 13.9%
Newspapers/ Magazines 2.8%
Other 0.0%
12) What, in your opinion is a reasonable price for a standard, medium sized, single sale bag of Crisps?
21p – 25p 22.1%
26p – 30p 11.1%
31p – 35p 33.3%
36p – 40p 16.7%
41p – 45p 2.7%
46p + 11.1%
13) What kind of packaging material do you prefer?
Foil 11.1%
Paper 11.1%
Plastic/ Cellophane 16.7%
Cardboard tube 61.1%
Other 0.0%
14) Which flavour(s) of crisps would you associate with the following colours?
Dark Blue
Light Blue
Dark Green
Light Green 63% of people related colours
Red to walkers’ Style of packaging
Orange
Purple
Pink
Black
White
Yellow
Brown
15) What do you think of new Ideas in crisps?
Open and willing to try them
19.44%
Weary, would be more likely to buy your usual brand, style or flavour of crisps
80.56%
Questionnaire Rationale:
Gender?
I asked this question to segment my market into equal parts of males and females. To gather stratified and therefore more accurate and relevant information
Age?
I asked this question to further segment my market. I wanted to ascertain whether, for example, female teenagers eat more crisps than 31-45 year old men; this would effect where and when, and for how much I sell my new product.
Do you eat potato crisp snacks?
I asked this question to try and determine how big my target market is.
How often do you eat potato crisp snacks?
I asked this question to find out how popular crisps are, i.e. how many I should aim towards the certain age groups, genders etc.
Favourite brand of crisps?
I asked this question to determine who the main competitors in the market are, and find out how many people like certain brands. Also I will look into why they like them.
Favourite flavour?
I asked this question to determine what flavour(s) I would need to make in order for my product to be a success
Preferred container?
I asked this question to see what container people preferred, as the packaging can greatly influence the buyer for impulse buying etc.
Where do you usually buy your crisps?
I asked this question to determine place of purchase so I would know what destinations are popular for consumers to buy at; and I would know what types of places to distribute my product.
What sales promotion techniques appeal to you?
I asked this question to find out what offers appeal to people the most, so that I would have some idea of what works when it comes to promotion.
What method of advertising appeals to you the most?
I asked this question to determine what method of advertising would entice people the most.
How much are you willing to pay for a standard packet of crisps?
I asked this question to find out roughly what pricing bracket ideally I would be selling my product at in order to maintain good sales
Preferred packaging?
I asked this question to find out what colour etc, consumers would like the packaging to be so that I could determine the best packaging for my snack
Preferred shape of crisp?
I asked this question to ascertain whether crinkled or smooth etc are preferred. This would affect how I make my potato snack, going with the most popular shape in order to boost sales
What colours do you associate with certain flavours?
I asked this in order to determine what colours I should have certain flavours of my crisps in order to aid the purchase of the product.
Are you open to new ideas?
I asked this to see if my product is likely to be successful upon launch
Conclusion
Product
From my questionnaire I find that salt and vinegar is the clear favorite when it comes to flavour of crisps. I will therefore make more salt and vinegar than other flavours. The next popular flavours were cheese and onion, chili and sour cream and onion. I will make slightly more of these flavors than the other flavours e.g. smoky bacon,
Salt and vinegar 22.2%
Cheese and onion 16.7
Smoky Bacon 11.1%
Roast Chicken 8.3%
Steak and onion 5.6%
Prawn Cocktail 8.3%
Chilli 11.1%
Cheese 5.6%
Sour Cream and Onion 11.1%
This way, less money will be spent on flavours that won’t sell as well e.g. Cheese.
The crisps themselves will be sold in mostly multi-packs for large stores and supermarkets and medium single sale bags for shops; these will include a range of flavours in proportion to my results on preferred flavours etc. Foil bags will be the containers as they are the most popular. The other types of packaging will not be produced initially, as more machinery and raw materials will be required to produce it. This will save on cost, an according to my results will maximize sales.
However, over time if the product proves successful, the tube and share-size packaging may be produced- but it will only make up a total of no more than 20% of the production, as they are not potentially as great sellers as the medium size single sale and multi-packs.
Also, as a small quantity of this packaging will be made, only the flavours, which people preferred with this packaging, will be sold, which will be salt and vinegar, chili, smoky bacon and sour cream and onion.
According to the questionnaire, there is no other packaging preferred. However as for the actual colour of the packaging, it will be in correlation to the results of the questionnaire. The majority of people in the questionnaire associated colours with the colours on walkers packaging, I will therefore follow the trend of Walkers’ colour of packaging as they were the most popular The results are as follows:
Cheese and Onion- Yellow Roast Chicken- Orange
Ready Salted- Red Prawn Cocktail- Pink
Salt and Vinegar- Green Barbecue Beef- Green
Smokey Bacon- Brown Pickled Onion- purple
The shape of my potato crisp snack will be the traditional shape to begin with, as it is the overall preferred shape and less money will be spent on specialized machinery, which will produce the different shaped snacks;
Also, as my product will be new to the market, money will have to be saved to cover the fixed costs. When profits are gained, special editions of the potato crisp snack will be launched, e.g. fries; the flavour of this new shape will be proportional to the amount of people who preferred this shape and a particular flavour, which is salt and vinegar.
Depending on the success of the new shape, the product may be sold for a limited time only. The other shapes will be rejected, as they are less preferred, unless future market research proves otherwise.
Price
The average price of a 35g packet of crisps will be 35p. However, in order to gain entrance into an already existing market I will use penetration pricing. As the results from the questionnaire show, there is very strong competition in the market, with Tayto and Walkers being the leaders. However, I will price my product low enough to attract customers but also to gain enough money to break even. After sales have improved, I will price my product a bit higher to gain more money to allow growth to occur, most probably competitive pricing.
Promotion
My main methods of promotion will be sales promotion- where the products’ lower price will be described as ‘special purchases’- and advertising. Advertising via television would attract the most customers according to the questionnaire. Through UTV, my product would be advertised between 9.30am and 5.29pm, as that is when the cost is lower, although it would be viewed less than any other time. This will ensure that sales will go up slightly. As advertising on billboards and newspapers is very expensive and, as the questionnaire results show, not as effective as TV, my product would only be promoted that way as my product gains more recognition and more money is coming into the business.
Place
My product will be sold in corner shops as single packets and in supermarkets as multi-packs. The channel of distribution is as follows:
Manufacturer to
Retailer to
Consumer
As my product is new on the market, retailers may not recognize it in wholesalers and therefore I believe it is wiser to advertise it to the retailer directly. However, once my product gains more credibility, it may be sold to wholesalers also. Distribution will be done by vans which will leased by the business, as they are a cheaper than distributing by freight trains and the product will only be sold within the country initially anyway.
Sources of information:
I used email and the Internet to contact walkers, KP and Tayto, but having only heard back from Tayto and walkers. This was the information I analysed.
I also produced 36 identical questionnaires which I distributed to a stratified sample of ages and genders and analysed these results.
I analysed all of these results using the four Ps, to great effect, and I also produced an excel spreadsheet of my results for the questionnaire
From Tayto I went to the following website:
http://www.tayto.com/flash.html -
From here I opened “Contact us/Find us”. This was easy to do and proved very effective
I also attended a trip to the Tayto castle with my business studies class, wherein we were told lot of useful information about Tayto, and we were also informed about the website I mentioned above, which proved to be of great use in m research.
Walkers sent me out information via post, this was also easy as all I had to do was type in my details and the information was sent right to my door.
I obtained my information on the advertising costs for U.T.V from:
http://www.utvplc.com/advertising.asp?sub=sv&sublk=avr
These methods proved very effective. They were quick and efficient, and although KP did not offer any information, U.T.V Tayto and Walkers’ information was made very easily accessible to me, so I believe the methods of email and post are the most effective as I was able to put them to great use
For advertising, I also contacted some local newspapers and the Belfast Telegraph, but I decided that the most effective form of advertising would be on television (U.T.V)
Other sources of information included textbooks such as “Business studies” By Alan Anderson, and information from My Business Studies Teacher.