Master of Business Administration – MBA Semester 4

MK0007 – Advertising Management & Sales Promotion

2 Credits BKID B0860
Assignment Set- 1
30 Marks
Note: Each question carries 10 Marks. Answer all the questions.
1. What is the difference between media planning and media buying? Briefly describe the
various tasks of media planners and buyers.(10 marks)

Media planning is generally the task of a Media Agency and entails finding the most
appropriate media products for a clients brand or product. ,it determines how to use time and
space to achieve advertising objectives. One of those objectives is always to place the advertising
message before a target audience. The job of Media Planning involves several areas of expertise
that the Media Planner uses to determine what the best combination of media is to achieve the
given marketing campaign objectives. ). Media planning is systematic and complex. But in fact, a media plan
may be quite simple and somewhat haphazard.
In the process of planning the Media planner needs to answer questions such as:
How many of the audience can I reach through different media? On which media (and ad vehicles)
should I place ads? Which frequency should I select? How much money should be spent in each
medium?

In answering these questions the Media Planner then comes to an optimum Media Plan that enables
him/her to deliver on the clients objectives

Media Planners help ad agencies choose the best outlet or medium to reach the customer they
want. They plan, schedule, book and purchase space in the print media (newspapers, magazines)
or outdoors (billboards, kiosks and bus panels) and time (TV & radio, internet). The media planning
exercise may also involve conducting some targeted brand or need-specific research to assess
recall and viewer ship/readership of a campaign. 

Media Buying is a sub function of Advertising management. Media Buying is the procurement of the
best possible placement and price of a piece of media real-estate within any given media. The main
task of Media Buying lies within the negotiation of price and placement to ensure the best possible
value can be secured.. Media Buyers are individuals responsible for purchasing time and advertising
space for the purpose of advertising here. When planning what to buy, they must evaluate factors
based on but not limited to station formats, pricing rates, demographics, geographic, and
psychographics relating to the advertisers particular product or service objectives. The Media Buyer
needs to optimize what is bought and that is dependent on budget, type of medium (radio, internet,
TV, print), quality of the medium (target audience, time of day for broadcast, etc.), and how much
time and space is wanted. Media Buyers can purchase spot, regionally, or nationally.
One of the most important media planner jobs is that of media buyer, also referred to as
a media planner. This job requires an individual to work with a client to determine the needs and
goals of a campaign. Additionally, this person must work with the advertising department to create
copy, scripts or entire commercials for the client. Finally, this person often must negotiate
with media outlets such as television stations, newspapers and websites to get the finished product
out to the public.

The job of media planner is different because of its management responsibilities. Media planner

soften handle complex and high-dollar clients, but they mostly focus their attention on running
the media department. This job requires getting updates from the media planners on various
projects, monitoring the budget and helping to develop the company's strategy with other
management team members.

2. Compare the different approaches to setting advertising budgets, in terms of their

relative advantages and disadvantages.(10 marks)

1. Percentage of Sales Method: Due to its simplicity, this method is most commonly used by small
businesses. When using this method, an advertiser takes a percentage of either past or anticipated sales
and allocates that percentage of the overall budget to advertising. Critics of this method, however, charge
that using past sales for figuring the advertising budget is too conservative and that it can stunt growth.
However, it might be safer for a small business to use this method if the ownership feels that future returns
cannot be safely anticipated. On the other hand, an established business, with well-established profit
trends, will tend to use anticipated sales when figuring advertising expenditures. This method can be
especially effective if the business compares its sales with those of the competition (if available) when
figuring its budget.

2. Objective and Task Method: Because of the importance of objectives in business, this method is
considered by many to make the most sense, and is therefore used by most large businesses. The
benefit of this method is that it allows the advertiser to correlate advertising expenditures to overall
marketing objectives. This correlation is important because it keeps spending focused on primary business
goals.

With this method, a business needs to first establish concrete marketing objectives, which are often
articulated in the ‘selling proposal’ and then develop complimentary advertising objectives, which are
articulated in the ‘positioning statement.’ After these objectives have been established, the advertiser
determines how much it will cost to meet them. Of course, fiscal realities need to be figured into this
methodology as well. Some objectives (expansion of area market share by 15 percent within a year, for
instance) may only be reachable through advertising expenditures that are beyond the capacity of a small
business. In such cases, small business owners must scale down their objectives so that they reflect the
financial situation under which they are operating.

3. Competitive Parity Method: While keeping one’s own objectives in mind, it is often useful for a business
to compare its advertising spending with that of its competitors. The theory here is that if a business is
aware of how much its competitors are spending to inform, persuade, and remind (the three general aims
of advertising) the consumer of their products and services, While it is important for small businesses to
maintain an awareness of the competition’s health and guiding philosophies, it is not always advisable to
follow a competitor’s course.

4. Market Share Method: Similar to Competitive Parity Method, this method bases its budgeting strategy on
external market trends. With this method, a business equates its market share with its advertising
expenditures. Critics of this method contend that companies that use market share numbers to arrive at an
advertising budget are ultimately predicating their advertising on an arbitrary guideline that does not
adequately reflect future goals.

5. Unit Sales Method: This method takes the cost of advertising an individual item and multiplies it by the
number of units the advertiser wishes to sell.
6. All Available Funds Method: This aggressive method involves the allocation of all available profits to
advertising purposes. This can be risky for a business of any size; for it means that no money is being used
to help the business grow in other ways (purchasing new technologies, expanding the work force, etc.). Yet
this aggressive approach is sometimes useful when a start-up business is trying to increase consumer
awareness of its products or services. However, a business using this approach needs to make sure that its
advertising strategy is an effective one, and that funds which could help the business expand are not being
wasted.

7. Affordable Method: With this method, advertisers base their budgets on what they can afford. Of
course, arriving at a conclusion about what a small business can afford in the realm of advertising is often a
difficult task, one that needs to incorporate overall objectives and goals, competition, presence in the
market, unit sales, sales trends, operating costs and other factors.

3. What are the differences between advertising objectives and sales promotion
objectives? Give five examples of consumer sales promotion techniques, with a specific
example of each.(10 marks)

Advertising objectives :Each advertisement is a specific communication that must be effective,

not just for one customer, but for many target buyers. This means that specific objectives should be
set for each particular advertisement campaign. Advertising is a form of promotion and like a
promotion; the objectives of advertising should be specific. This requires that the target consumers
should be specifically identified and that the effect which advertising is intended to have upon the
consumer should be clearly indicated.

The objectives of advertising were traditionally stated in terms of direct sales. Now, it is to view
advertising as having communication objectives that seek to inform persuade and remind potential
customers of the worth of the product. Advertising seeks to condition the consumer so that he/she
may have a favorable reaction to the promotional message. Advertising objectives serve as
guidelines for the planning and implementation of the entire advertising programme.

Objectives of Sales Promotion The basic objectives of sales promotion are:

 i) To introduce new products ,To induce buyers to purchase a new product, free samples may be
distributed or money and merchandise allowance may be offered to business to stock and sell the
product.
 ii) To attract new customers.New customers may be attracted through issue of free samples,
premiums, contests and similar devices.
iii) To induce present customers to buy more
Present customers may be induced to buy more by knowing more about a product, its ingredients
and uses.
iv) To help firm remain competitive. Sales promotions may be undertaken to meet competition from
a firm.
 v) To increase sales in off season.Buyers may be encouraged to use the product in off seasons by
showing them the variety of uses of the product.
 vi) To increase the inventories of business buyer, Retailers may be induced to keep in stock more
units of a product so that more sales can be effected.
consumer sales promotion techniques and examples :
Price discounts or price-off deals: A price deal for a customer means a reduction in the price of
the promoted product and the consumer saves money on purchase.

Example: Colgate fresh energy ice blue gel (Colgate India) 50 gm pack, Rs. 5.50 off on normal
price, now available at Rs. 12.50 only. 
Price pack deals:Price pack deals are also called value packs. They can take any of the two
forms:        

1.Bonus pack and 2.Banded pack.

Bonus pack :In case of a bonus pack, an additional quantity of the same product is offered free
when the standard pack size of the product is purchased at the regular price.

Examples: Godrej Colour Gloss triple action shampoo, offers 20% extra free. 100ml +20ml.
Sunsilk shampoo (HLL) 400ml bottle gives 33% more free.
Dettol shaving cream  get 40% extra free.
Banded pack: The Banded pack is when the marketer develops special packs of the product
containing more quantity but the price is proportionately low. This technique is often used to
introduce a new large size of the product or to encourage continued usage and also to increase
consumption. Another variation of this technique is “buy 1 get 1 free” or some similar offer, it could
be “same for less” or “more for the same.”
Example:Fair & lovely face cream – buy 3 get 1 free,

2. Refunds And Rebates:

Refund is the repayment of total money paid for purchase, while the rebate represents repayment of
only part of the money paid for the purchase. Refund offers seems to work very well in guaranteeing
the trial of a product or service since there is no risk involved for the customer because of the
promise of total refund of the purchase amount.

Refunds and Rebates play an important role in the consumer durable segment because the product
price is reduced to a great extent because of the rebate offer.

Example:“TajMahal Tea” guaranteed its taste by openly telling the public of its offer that “ if donot
like at any point return full money”
After having launched it new product Whisper Ultra Thin, confident about the product quality and
confident about offering the promised product, to increase its trail and usage, had started the money
back offer.

3.Coupon:A coupon entitles a buyer to a designated reduction in price for a product or service.
Coupons are the oldest and most widely used form of sales promotions. Coupons bear an expiry
date and cannot be redeemed after the cut off date.

The main Advantages of coupons are:

1.Encourage brand switching

2.Stimulate trial for a product

3.Take off the attention from price

Fair and Lovely dark circle removal cream to create more product trials has coupons in the
newspapers and magazines which avail you of Rs.10/- off on a 40 gm pack.

4. Contests And Sweepstakes: Contests and sweepstakes can draw attention to a brand like no
other sales promotions technique.A contest has consumers compete for prizes based on skill or
ability. Winners in a contest are determined by a panel of judges or based on which contestant
comes closest to a predetermined criterion for the contest. Contests were very often used earlier
where people has to write slogans, poems, stories etc. generally “I like the product because …” and
the best ones won prizes. But off lately, contests are becoming less and sweepstakes increasing.
People are more willing to play on luck rather than participate by showing their abilities.

A sweepstake is a promotion in which winners are determined purely by chance.

Consumers need only to enter their names in the sweepstakes as a criterion for winning. Some
popular types of sweepstakes also use “scratch-off cards”.

Contests and sweepstakes often create excitement and generate interest for a brand, but the
problems of administering these promotions are substantial. One problem is that the game itself may
become the consumer’s primary focus, while the brand becomes secondary. The technique thus
fails to build long-term affinity for the brand.

Example:Britannia khao world cup jao campaign has taken the market by a swing.

Under the offer you collect points available on Britannia biscuit packets and exchange 100 points for
a scratch card, which has various gifts and the 100 world cup tickets. The offer was actually
introduced during the last world cup and had shown phenomenal results. Sale increased
tremendously; there was an increase in the sales by 25%, claims the company.  So it is being done
this year too. This year too the contest is showing good results.   

5.Sampling:Getting consumers to simply try a brand can have a powerful effect on future decision-
making. Sampling is a sales promotion technique designed to provide a consumer with an
opportunity to use a brand on a trial basis with little or no risk. Saying that sampling is a popular
technique is an understatement. Sampling is particularly useful for new products, but should not be
reserved for new products alone. It can be used successfully for established brands with weak
market share in specific geographic areas.

Examples: Lakme has in-store trail products. Since it in the cosmetics market it is very essential to provide
samples, many stores in Mumbai from time to time have Lakme sampling offers. Where they allow you to try
the product and then buy it.

scents and certain deodorants give the prospective customers sample spray for sales promotions.

Shampoo sachets with Magazines etc.

 
Master of Business Administration – MBA Semester 4
MK0007 – Advertising Management & Sales Promotion
2 Credits BKID B0860
Assignment Set- 1
30 Marks
Note: Each question carries 10 Marks. Answer all the questions.
1. Distinguish between five different forms of advertising, giving a specific example of each.(10
marks).

2. Discuss the relative advantages and disadvantages of sales promotion, as compared to

advertising.(10 marks).

3. Select an advertisement for any product of your choice from a newspaper or magazine and
analyze the advertising strategy in terms of a) Objective b) Target audience c) Consumer
benefit and product attributes d) Proof e) Tone and manner. Attach the ad with your response.
(10 marks).