Business Marketing

Table of content

Task 1, if Philip would be considering using below-the-line promotion techniques, evaluate which technique would suit him in his situation and why?

Price promotions are also commonly known as "price discounting". These can be done by a discount to the normal selling price of a product, or more of the product at the normal price.

Coupons are another, very versatile, way of offering a discount. Consider the following examples of the use of coupons:

- On a pack to encourage repeat purchase
- In coupon books sent out in newspapers allowing customers to redeem the coupon at a retailer
- A cutout coupon as part of an advert
- On the back of till receipts

The key objective with a coupon promotion is to maximize the redemption rate – this is the proportion of customers actually using the coupon. It must be ensured when a company uses coupons that the retailers must hold sufficient stock to avoid customer disappointment. Use of coupon promotions is often best for new products or perhaps to encourage sales of existing products that are slowing down.

Gift with purchase

The "gift with purchase" is a very common promotional technique. In this scheme, the customer gets something extra along with the normal good purchased. It works best for Subscription-based products (e.g. magazines) and Consumer luxuries (e.g. perfumes).

Task 2, currently Philip is aiming to sell one box of fruits and vegetables for $30 and give refund of $2 for every box returned by the customer. He has set target sales of 5000 boxes a month. Philip is interested in identifying an appropriate budget for advertising and promotion based on the cost of his products and packaging. His current cost of producing a box of fruits and vegetable is 40% of the selling price.

Cost of price, $30 x 40/100 = $12.
Promotion per unit, $12 x 5/100 = 60 cent.
Promotion per month, 60 cent x 5000 = $3, 000.
Annual promotion budget, $3000 x $12 = $36, 000.

Cost of price, $28 x...