Promotion

Advertising

Colgate Palmolive is a long-established Australian company that manufactures a range of detergents, in addition to soaps, hair care products and toothpaste. Today Colgate Palmolive competes with 7 brands and by the end of 1987 had gained an estimated 33.9% share of the market.

Laundry detergent marketing is characterised by low levels of brand loyalty among customers. Colgate Palmolive's strategy to overcome this has been to introduce new products and spend high amounts of money in advertising. Advertising has been used to gain new brand awareness and maintain existing brand awareness and brand loyalty. Maintaining brand loyalty is regarded as a particularly important advertising role in the fast moving supermarket type of purchasing.

It is estimated that Colgate Palmolive spends between $5 million and S6 million annually on media advertising with a similar amount on sales promotion. The company launched its Dynamo brand as a premium brand using a "presenter" type of television advertising. It was a hard sell approach and it regularly topped the polls as the most disliked advertisement. However, Dynamo became one of the top four brands for an eight-year period. In 1987, the company adopted a new approach to advertising centred around the comedy character Sir Les Patterson, with the aim of maintaining brand name awareness while promoting the product's benefits.

Promotion

Swan Premium Beer

Although Alan Bond lost the race, the defence of the America's Cup provided the context for a most successful new beer launch- The $1 million consumer promotion, one of the biggest ever run in Australia, achieved a 20% sales increase over the previous quarter.

On offer were $250 000 worth of prizes, including 25 double trips to Perth staying on the Achilie Lauro to watch the Cup; also fifty Swan Premium America's Cup windsurfers, 100 Ken Done Black Swan resortwear collections, and thousands of other Swan accessories and sportswear. The promotion was supported by a $500 000 radio campaign. To spark consumer interest, entrants had several chances of winning a prize.

This promotion contributed to Swan Premium's 5% share of the national beer market, despite the difficulty of penetrating a mature market dominated by well-established local beer brands.

Publicity

When Coleco introduced its Cabbage Patch dolls, it held press parties for reporters and their children. A number of reporters wrote "human interest" stories about their children "adopting" the cute dolls. Those stories prompted introduction without Coleco doing any introductory advertising.

Personal Selling

Sola Optical is an Adelaide lens manufacturer that competes successfully in international markets. A key factor in Sola's success is that its salespeople have the right products to offer when they make sales calls. But that is not just luck. Sola's salespeople are trained as information specialists who seek and report on customer feedback. They work closely with opticians and optometrists who use Sola's products. They also help these specialists to ! inform their own customers of the products and provide proomotional material for that purpose. When one of Sola's customers says, "We need a product that will solve this problem", the Sola sales representative is right there to follow up with questions and invite suggestions. And the representative quickly relays the customer's needs back to Sola head office.

Product

Promotion Mix

toilet paper

breakfast cereals

roller-blades

CD’s

Reading: Pricing Strategies

Pricing strategies reflect where a firm wants to position its product's price with respect to the prices of competing products. There are three basic strategies that all organisations can pursue for existing products:

1. Pricing above the market

A firm pricing above the market is pricing its products higher than similar products sold by competitors. When a firm follows this strategy, its products must be distinct in the eyes of the customer. For example, IBM prices its products above the market because its products are perceived as durable, high quality, state-of-the-art and having excellent serviceability by well-trained IBM personnel. Well-known designer label such as Calvin Klein and Donna Karan price their products above the market because they are perceived to be durable, high quality fashion items.

2. Pricing below the market

Firms price below the market by adding a lower profit per unit or keeping costs lower than their competitors. When the profit per unit is small, the firm hopes to make it up by selling more of its product. A firm keeps costs low, by lowering quality or providing fewer services. Examples of pricing below the market are generic items sold in supermarkets.

3. Pricing with the market

When a firm prices with the market their prices reflect the current market price for that particular product. Most firms price close to the market price because their products are not so outstanding that they can price above the market, nor are their costs so low that they can price below the market.

- Danone's Pricing Strategy

When Queensland United Farmers (QUF) launched its new product, Danone yoghurt, the company went into a significant amount of research in relation to pricing. It wrestled for many months to understand whether to charge a premium price for the product compared to the competition, ie Yoplait, or discount it initially to penetrate the market.

Market research found that an opportunity existed for a premium-priced yoghurt and that consumers would be prepared to pay for a better yoghurt, mainly one with more fruit. Consumer perceptions of yoghurt are that it is a very inexpensive product and this lead to the feeling that yoghurt is ; underpriced in the market.

The Danone strategy was to have pricing remain at parity with Yoplait, on both full fat and low fat products and to use the 150g Danino product as a discounted product to give a price differential on the shelf.