Chapter I[1]

CHAPTER ONE

1. Executive Summary

Promotion is one of the core element of marketing mix, in order to stay and will grow with

the modern world business activities it need a well designed and organized promotional

strategy and communication. To communicate effectively companies should have a

promotional plan to introduce their products with the consumers. “Most useful product will

be failure if no one knows it available”. Stanton (I bid, P.459).

In addition to producing a quality product success in modern business activities requires

setting reliable price, establishing proper out let and establish active promotional strategy.

To addressing the taste and preference of consumer in a uniform manner and use the finding

as on input in the product process AMWF has planned to produce and promote demand

driven product allocated 1.5 million birr for promotion. So this study is concerned in

assessment of promotion effectiveness on AMWF. It examines the company promotion

activities and promotion strategy with the composition of the total promotional budget.

Secondary data gathered from the company, and primary data obtained through interview

and questioning analyzed and organized using tables, pie charts, graphs and by using

quantitative and descriptions.

The result of this study indicated that the promotion effort of AMWF is significant. Even if,

the company had budgeted enough budget the impacts on the sale volume, market share was

not as it expected.

General comments: the company needs, market research and market survey in order to

identify the need and want of the target audience and target customer before launching the

promotional plan and redesign the message accordingly.

The company should also segments its customer based on the segmentation variable, then

choice the right media based on the segmented customer rather than use a uniform media to

the whole customer. So, if the company applied this suggestion it will be success.

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2. Back ground of the Factory

Ambo Mineral Water Factory is situated 130 kms West of Addis Ababa and 5 kms for away

from the two of Ambo. The foundation in the modern time Ambo Mineral Water was

conceptualized in 1951 E.C by the imperial government of Ethiopia. The place suitable soil

for agriculture, but also due to the beautiful of the widely reputed. Thermo-mineral springs

which were used together with their saline soils for livestock watering and feed mix long

before their the rapeutic characteristics was publicized in the 1960’s E.C. Ambo Mineral

Water Factory has seventy three years of service on the beverage industry of Ethiopia.

Government owns this plant since 1963; it is the biggest mineral water bottling and

distributing company in the country.

The factory produces two kinds of products differing in their gas to (co2) content: these are

full and half carbonated water. The full carbonated one is which contains high gas the half

carbonated water contains less gas. Also the factory uses three different sizes of bottles for its

products (500ml, 330ml and 750ml). In addition to local markets, the factory produces for

overseas market and becomes successful in Saudi Arabian, Yemen and Djibouti and England

markets.

Source: Profile of Ambo Mineral Water Factory

3. Statements of the problems

In order to increase and market share, it is much expected to make the promotion more

effective, on the other hand successful promotion must include the four promotion mix at the

right place in the right condition.

3.1 Symptoms

After completing of the advertising campaign there may be some symptoms indicates the

failure of the promotion strategy. Those are:

Decrease in sales volume or no change.

Steel there is customer complain (if there is before).

Decrease in marketing share or no change.

Bad image of the company is continued or exist (it was before the promotion

strategy).

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3.2 Causes

The possible causes for the above symptoms could be:

The company does not identify clearly their target audience as well as their target

customers.

They may not transmit the right message.

They do not use the right (effective) media.

They do not have sufficient budget for their promotional activities.

3.3 Suggested Courses of Action

The company can make an effective promotion if they apply the following actions.

The company should set an enough amount of money to their promotional activity.

Clearly identify the target audience and target customer.

Identify the right message to be transmitted to their target audience and or target

customer.

Use the media that is reachable and that can reach comparatively a high number of

their target audience.

4. Research Objective

This study is designed in order to achieve the following general and specific objectives.

4.1 General objectives

To assess the promotion effectiveness of Ambo Mineral Water.

4.2 Specific Objective

To determine those factory that influence the promotion effectiveness

To find out problems in relation to the promotion effectiveness and its ways of

implementation.

To give possible suggestion and recommendation to the identified problems.

To have the company an effective promotion they should answer the following questions.

Does the company select appropriate promotion mix?

Does the company allocate enough budgets for promotion?

Does the company set and implement promotion strategy properly?

Does the company select the right target audience in its promotion?

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Does the company communication the right message?

Does the company measures and evaluate the result of its promotion and take a

corrective action?

5. Scope of the Study

This study mainly focuses to measure the effectiveness of promotion on the success of

AMWF. It also concerned with the promotion mix that are used by the company. The study

will take a 3 year sales data and promotional expenditure to compare each other.

6. Limitation of the Study

Research work is no requires available of sufficient time, money and other resources. In

addition, we could not get all secondary data as we have expected to our study and we

could not easily contact the company officials specially the General Manager and

distributors. Furthermore, customer’s reluctance to fill the questionnaire and also lack of

research prepared before that are related to our topic.

7. Important of the Study

The main purpose of this study is to investigate the factors affecting the effectiveness of the

promotion. It also attempts to find out the problem areas that the promotion program or mix

being practiced and aims at providing suggestion and recommendation.

Identify the most prominent factors, pointing out the exiting problems with adequate

emphasis and providing all the possible suggestion and recommendation that will enable the

promotion mix designers and implementers of Ambo Mineral Water Factory to be aware of

the problem area and to make the possible modifications, improvements and up dating the

promotion mix it self.

On the other hand, it will also give the opportunity for the company to distinguish the right

assumptions from the wrong one’s that are suggested about the promotion. And this enables

to have great success on their promotion.

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Hence among other things, the result of this study contributes for successful implementation

of the promotion mix; the study will also serve as a spring board for similar studies.

8. Research Design/Methodology

Our research use exploratory research, descriptive as well as casual research design

To define the research problem, collect information, on company background and to

gather other secondary data we will use exploratory research.

In order to know the customer intention to the promotion we use descriptive research

design.

And also casual research design uses to identify the cause and effective of promotional

expenditure and its result.

9. Sample Selection

We have stated on the proposed to collect information from the General Manager, marketing

manager, promotion export and distributor of AMWF through interview and questionnaire

and also from the customer through questionnaire. But in the reality due to different reason

we couldn’t conduct the General Manager and distributors. So, to finalize the study the

sample frame was narrow down to the Marketing Managers promotion expert and customers

of AMWF.

10. Data Collection Instrument and Procedure

Gathering both quantitative and qualitative data from primary and secondary sources

involves administering a well structured questionnaires and personal interview. In order to

collect relevant information for the study, the following data collection procedures will be

utilized.

a. Orientation on how to collect data will be provided to 5 data collectors or members

b. The self administered questionnaires will be distributed to selected respondents in

face to face situation in order to avoid refusals and to give explanations when ever

needed.

c. The questionnaires will be collected from respondents

d. Interviewing customers of Ambo Mineral Water

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e. Information will be recorded

f. The gathered data will be analyzed

g. The data we collected will be evaluated based on the literature review

h. Finally we will give conclusion and recommendations.

11. Ethical Consideration

This questionnaire and the data that we will gather from the company and customers are part

of our survey that we are under taking to assess information for research we are intended to

produce under the title “Assessment of promotion effectiveness: the case of Ambo Mineral

Water” .

Information you provide is used only for research purpose.

This study is entirely devoted to add certain value to the company’s promotional effort, it

is not interested to abuse or exposed the company’s secret.

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CHAPTER TWO

Literature Review

2.1 Definition of Promotion

Promotion is concerned with effectively communicating the result of marketing strategy to

target audience. But is a real sense every thing the company does has promotional potential.

Promotion is an active explicit form of marketing communication. Promotion highlights the

marketing elements in order to increase the reason that consumers will buy and become

committed to a product.

Promotion as a marketing function concerned with persuasively communicating to target

audience the component of marketing program in order to facilitate exchange between the

marketer and the consumer to help satisfy the objective of both. (Burnett 2002, P.6).

“Promotion is primarily concerned with persuasive communication to the target audience.

Finally, promotion is goal directed. For all marketers the objective of promotion is to create

brand awareness, to deliver information, to educate, and to advance a positive image. The

ultimate goal is to sell the products or service”. (Burnett, 2002, P.7)

According to Stanton, (1994, P.456) “ Promotion is the element of an organization’s

marketing mix that serves to inform, persuade and remained the market of a product and/.or

the organization selling it, in hopes of influencing the recipients’ feelings, beliefs, or

behavior”.

Therefore, promotion is essential for several reasons. There is a great distance between the

consumer and producers and so a product may pass through many hands or agents in order to

reach to the ultimate consumers. Therefore, producers must inform to the middle men,

ultimate consumer and business users about the product. Wholesalers, in turn, must promote

the product to retailers, and retailers also communicate with consumers. As the number of

potential consumer’s growth and the geographical dimensions of a market will also expand,

so the problem of marketing communication also increase. According to Stantan (I bid, P.

459), “the most useful product will be a failure if no one knows it is available”.

Another function of Promotion is Persuasion. The intense competition among different

industries as well as among different firms, in the same industry they puts numerous pressure

on the promotional programs of sellers. The basic objective of product design is to satisfy a

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basic physiological need requires strong persuasive promotion. Since consumers have many

brands to choose, then the company or firm must have transmitted a unique message to

differentiate its product by the consumer easily. To convince consumers that the products

benefits are exceeded than its competitor, persuasion is even more important. Producers

should be reminded to the consumer about the products availability and potential satisfaction.

The producers in hope of attracting new consumers and establishing new market area for

products must transfer many messages every day. Given the intense competition for

consumer’s attention, even an established firm must constantly remind customers about its

products in order to retain a place in their minds. Therefore, much promotion is intended

simple to affect competitors’ active marketing activate by keeping the firm’s products in

front of a market.

According to sak onkvist and John J.shaw (1997 P,534), the purpose of promotion is both to

communicate with buyers and to influence them. Effective promotion requires an

understanding of the process of persuasion and how this process is affected by environmental

factors. The potential buyer must not only receive the desired information but should also be

able to comprehend that information. Furthermore, the information must be sufficiently

potent to motivate this buyer to react positively.

2.2 Promotion Mix Strategy

In their communication program organizations use one or more of the four basic types of

promotion mix. Each promotion tool has unique characteristics and cost marketers

understand these characteristics in selecting their mix of tools (Evans 1997, P.503).

2.2.1 Advertising: is defined as any paid form of non-personal communication regarding

goods, ideas, services, organizations, peoples and place that is transmitted through

various mass media by business firm, government and other non-profit organizations

and individuals who are identified in advertising messages as sponsor. The sponsors

are generally controls the message.

Advertising can reach message of geographically dispersed buyers at a lower cost per

exposure and it enables the sellers to repeat a message many times. Beyond its reach, a large

scale advertising says something positive about the seller’s size popularity and success.

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Because of advertising’s public nature, consumers tend to view advertising products as more

legitimate, advertising is also very expressive; it allows the company to dramatize its

products through the artful use of usual, print, sound and color. On the one hand, advertising

can be used to build up a long term image for a product on the other hand advertising can

trigger quick sales.

Possible advertising objectives

Informative Advertising

Telling the market about a new product

Suggestion new uses for a product

Informative the market of a price change

Explaining how the product works

Describing available services

Correcting false impressions

Reducing consumers fears

Building a company image

Persuasive Advertising

Building brand preference

Encouraging switching to your brand

Changing customers’ perception of

product attributes

Persuading customers to purchase

new

Persuading customer’s receive a

sales call.

Reminder Advertising

Reminding customers that the product

may be needed in the near future

Reminding consumer where to buy it

Keeping it in customers mind

during off-seasons

Maintaining its top of mind

awareness

2.2.2 Personal Selling: is personal presentation by the firm sales forces for the purpose

of marketing sale building customer relationship. Personal selling involves oral

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communication with one or more prospective buyer by paid representatives.

Although, personal is the most effective tool at a certain stage of the buying process

particularly in building up buyer’s preference, continuous and actors it involves

personal interaction between two or more people. So, each person can observe the

others need and characteristics and make quick adjustments at heart in order to build

along term relationship.

Finally, with personal selling, the buyers usually feel a greater need to listen and

respond, even if the response is a polite “No thank you”.

2.2.3 Sales Promotion: it’s a short term incentive to encourage purchase or sale of

products or services. It involves paid marketing communication activities (other than

advertising, personal selling or public relation) that are intended to stimulate customer

purchase and dealer effectiveness. It include trade shows, premiums, incentives, give

away, demonstrations, coupons, trade allowance point of purchase, rebates, trials

offers and sample,

“The effectiveness of sales promotion be tempered by psychological barriers and this fact is

applicable to middlemen as well as consumers. Sales promotion is effective when a product

is first introduced to a market”, (Sak antivist and John J.show, 1997).

2.2.4 Public Relation: public relation is very believable news stores, features to

readers than add do. Public relation can also reach many prospects who avoid sales

people and advertisements the message gets to the buyers as “news” rather than as a

sales directed communication. And, as with advertising, public relations can

dramatize a company or product. Marketers tend to under use public relation or to use

it as an offer through get a well through out public relation campaign used with other

promotion mix element can be very effective and economical.

Public relation build goal relations with the company various public by obtaining

favorable publicity build up a good “corporate image” and handling on heading off an

favorable humors stories and events. It include any communication to faster a favorable

image for good, services, organizations, people, place, and ideas among their publics

such as consumers, investors, governments, channel members, employees and the general

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public it may be non personal or personal paid or unpaid, and sponsor controlled or not

controlled. Publicity is the form of public relations that entails non-personal

communication passed on via various media but not paid for by an identified sponsor.

2.3 Promotional Strategies

In designing promotional mix, producers aim their efforts at both middlemen and end user.

The promotion aimed at middlemen and end users. The promotion aimed at middlemen is

called a Push strategy while that directed at end users in called a pull strategy. The pulling

and pushing strategies are described by Boon (1995, P.581-583) as follows:

2.3.1 Pulling Strategy

Is a promotional effort by a seller to stimulate the final-user demand, which then exert

pressure on the distribution channel when marketing intermediaries stock many competing

products and show little interest in any one of them, a pulling strategy may be necessary to

motivate them to handle a product. In such instances, this strategy implemented with the

objective of building consumer demand so that consumers will request the product when they

go to retail stores.

The most commonly used elements of promotion in the pulling strategy are advertising and

various forms of sales promotion such as premiums, samples or in-store demonstrations.

2.3.2 Pushing Strategy

Is a promotional effort by sellers to a number of the distribution channel to stimulate personal

selling of good or service, thereby pushing it through the marketing channel. It relies more

heavily on personal selling. Here, the objective is to promote the product to the member of

the distribution channel rather than to the final user. This can be done through cooperative

advertising allowances trade discounts, personal selling efforts by the firm’s sales force, and

other dealer supports. Such a strategy is designed to gain marketing success for the firm’s

product by motivating representative at wholesalers and/or retailers to spend extra time and

effort promoting the product to their customers.

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2.4 Steps in Developing Effective Communication

According to kotter and Armstrong (2006, P. 432-440), steps in developing an effective

integrated communications and promotion program. The marketing communicators must do

the following.

2.4.1 Identifying the Target Audience

A marketing communicator starts with a clear target audience in mind. The audience may be

potential buyers or current users, those who make the buying decision or those who influence

it. The audience may be individual, group, special publics, or the general public. The target

audience will heavily affect the communicator’s decisions on what will be said, how it will

be said, where it will be said, and who will say it.

2.4.2 Determining the Communication Objectives

Once the target audience has been defined, the marketing communicator must decide what

response is sought. Of course, in many cases, the final response is purchase. But purchase

communicator needs to know where the target audience how stands and to what stage it

needs to be moved. The target audience may be in any of six buyer-readiness stages, the

stage consumer normally pass through on their way to marking a purchase. These stages

include awareness, knowledge, linking, preference, conviction, and purchase.

The marketing communicators target market may be totally un aware of the product, know

only its name, or know only a few thing about it. The communicator must first build

awareness and knowledge.

2.4.3 Designing a Message

Having defined the desired audience response, the communicator turns to developing an

effective message. Ideally, the message should get attention, hold interest, arouse desire,

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Awareness Knowledge Linking

Preference Conviction Purchase

and obtain Action (a frame work as the AIDA model). In practice, few messages take the

consumer all the way from awareness to purchase, but the AIDA frame work suggests the

desirable qualities of a good message.

In putting the message together, the marketing communicator for must decide what to say

(message content) and how to say it (message structure and format).

2.4.3.1 Message Content

The communicator has to figure out an appeal or theme that will produce the desired

response. There are three types of appeals, rational, emotional and moral.

Rational appeals: relate to the audience’s self interest. They show that the product will

produce the desired benefits.

Emotional appeals: attempt to stir up either negative or positive emotions that can

motivate purchase. Communicators may use positive motional appeals such as love,

pride, joy, and humor. Communicators can also use negative emotional appeal, such as

fear, guilt, and shame that get people to do thing they should (brush their teeth, buy new

tires) or to stop doing things they shouldn’t (smoke, drink too much, eat unhealthy

foods).

Moral appeals: are directed to the audience’s sense of what is “height” and “proper”.

They are often used to urge people to support social causes such as cleaner environments.

2.4.3.2 Message Structures

The communicator must also decide how to handle three message structure issues.

The first is whether to draw a conclusion or leave it to the audience. The second message

structure issue is whether to present the strongest arguments first or last. The third

message structure issue is whether to present a one sided argument (mentioning only the

product’s strengths) or a two sided argument (touting the product’s strengths while also

admitting its shortcomings).

2.4.3.3 Message format

The marketing communicator also needs a strong format for the message. In print

advertising, the communicator has to decide on the headline, copy, illustration, and color.

If the message is to be carried over the radio, the communicator has to choose words,

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sounds, and voices. If the message is to be carried on television or in persons then all

these elements plus body language have to be planned. Presenters plan their facial

expressions, gestures, dress, posture, and her styles. If the message is carried on the

product or its package, the communicator ha to watch texture, scent, color, size and

shape.

2.4.4 Choosing Media

The communicator now selects channels of communication. There are two broad types of

communication channels personal and non personal.

Personal communication channels: two or more people communicate directly with each

other. They might communicate face to face, over the telephone, through the mail, or

even though internets “chat”. Personal communication channel are effective because they

allow for personal addressing and feedback.

Some personal communicator channels are controlled directly by the company. But other

personal communications about the product may research buyers through channel not

directly controlled by the company. These might include independent experts consumer

advocates, consumer buying guides, and other moving statements to target buyers or they

might be neighbors, friends, family members, and associates talking to target buyers. This

last channel known as Word of mouth influence, has considerable effect in many product

areas.

Other companies create opinion leaders people whose opinion are sought by others by

supplying influence with the product ion attractive terms or buy educating them so that

they can inform other. Buzz marketing involves cultivating opinion leaders and getting

them to spread information about a product or services to others in their communities.

Non personal communication channels: are media that carry message without personal

contact or feed back. They include major media, atmosphere, and events. Major media

include print media (newspapers, signs, posters) and online media (E-mail web sites).

Atmospheres are designed environments that create or reinforce the buyer’s learning’s

toward buying a product. Events are staged occurrence that communicates messages to

target audiences.

Non personal communication affects buyers directly in addition, using mass media often

affects buyers indirectly by causing more personal communication leaders and then from

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these opinion leaders to others. Thus, opinion leaders step between the mass media and

their audience and carry messages to people who are les exposed to media. This suggests

that mass communicators should aim their messages directly at opinion leaders, letting

them carry the messages to others.

2.4.5 Selecting the Message Source

In either personal or non personal communication, the message’s impact on the target

audience is also affected by how the audience views the communicator. Messages

delivered by highly credible source are more persuasive. Thus, many food companies

promote to doctors, dentists and other health cares provides to motivate these

professionals to recommend their products to patients. And marketers hire celerity

endorsers well know athletes, actors, and even cartoon characters to deliver their

message.

2.4.6 Collecting Feed Back

After sending the message, the communicators must research its effect on the target

audience. This involve asking the target audience members whether they remember the

message, how many times they saw it, what points they recall how they pelt about the

message, and their past and present attitudes toward the product and company. The

communicator should also would like to measure behavior resulting from the message

how many people bought a product, talked to other about it, or visited the store.

The promotion program or the product offer might be changed based on feed back in

marketing communications. For example the research shows 90 percent of all consumer

in an area recall seeing consumer electronic products ads aware of what the company

offers. 70 percent of those aware of it have bought the product and 80 percent of those

who bought were satisfied. One can conclude from this result that the promotion program

created awareness and the product gave the satisfaction expected.

2.5 Setting the Total promotion budget.

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Promotional budgets may differ not only in amount, but also in composition. Industrial

firms generally invest large proportions of either budgets in personal selling than in

advertising. While the reverse is usually true of most producers of consumer goods.

According to Kotter and Armstrong (2005, P.440-441), four common methods used to

set the total budget for promotion

Summary

Method Description Advantage Disadvantage

Affordable - Setting the promotion budget at the level

management thinks the company can

afford

- Easy to use it use for a

small business

- It use for short term

promotion budget

- Ignore the effective of

promotion on sales

- It leads to uncertain annual

promotion budget

- Difficult to apply in long

range market planning

Percentage

of sales

- Setting the promotion budget at a certain

percentage of current or forecasted sales

or as a percentage pf the unit sales price

- Simple to use and

helps management to

know the relationship

between promotion

spending, selling price

and profit

- If the percentage of

forecasting wrong budget

will be also wrong

- Long range plan is difficult

with year to year to year

- It does not provide any

based for choosing a

specific percentage

Objective

parity

- Setting the promotion budget to match

competitors out lays

- Monitor the

competitors adverting

- There is no evidence that

budgets based on

competitive parity prevent

promotion war.

- There is no ground for

believing that the competitor

has a better idea of watch a

company should be

spending on promotion

Objective

and task

- Developing the promotion budget by

1. defining specific objectives

- It forms management

to spell out its

Difficult to use, often it is

hard to figure out which

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2. Determining the tasks that must be

performed to achieve these objectives and

3. Estimating the cost of performing this

task. The sum of these cost is the

proposed promotion budget

assumption about the

relation ship between

dollars spent and

promotion results

specific tasks will achieve

stated objective

2.6 Measuring of Promotion effectiveness

“There tasks must be completed in order to measure the result of promotion.

1st – standards for promotional effectiveness must be established. This means that market

planner must have a clear understanding of exactly what the promotion is intended to

accomplish. For measurements purpose, the standard should be identified in specific and, if

possible quantitative terms.

2nd - Actual promotional performance must be monitored. It is usually necessary to conduct

experiments in which the effects of other variables are either excluded or controlled.

3rd – Measuring promotional efficiency to compare performance against the standards”.

(Burnett, 2002, P.30).

2.7 Standards to measure promotion effectiveness

A) Sales volume: sales volume analysis is the simplest type of sales performance

measurement and probably the most often used. Volume analysis can be appraised in

terms of both effectiveness and efficiency, but for our study we select only the

effectiveness, in terms of effectiveness actual sale change after some period of a

promotion activity must compare to the previous of before a given period of promotion

B) Customer Altitude: a better measure is the change in product awareness,

comprehension, or attitude resulting from the promotion campaign (after allowing for

the impact of other promotional tools). Here the main thing that should give an

emphasis is customer attitude to wards the product changes in the buyer redness stage

and the product life cycle.

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C) Market share: maintain the current market share and increase future market share must

be supported promotion effort.

2.8 Effectiveness of Promotion Tools in the product life cycle stage

Types of

promotion

Product life-cycle promotion objective

Introduction Growth Maturity Decline

Advertising - Build product

awareness among early

adopters and dealers

- primarily advertising

Build awareness and

interest in the mass

mark et

Stress brand

difference and

benefits

Reduce to level

needed to retain

hard core loyal

Sales

Promotion

- Use heavy sales

promotion to entice trial

- Reduce to take

advantage of heavy

consumer demand

Increase to

encourage brand

switching

Reduce to

minimal level

According to Kotler and Armstrong (2004 P -483), promotion objective should vary with

Stage of product life cycle. When product stages shifts frame one stage to another stage, the

objective promotion also shift accordingly.

Source (Kotler and Armstrong 2003, P.340)

Objectives of promotion are Promotional tools

A. Create awareness ……………Advertising, Public relation and personal selling

B. Create understanding ………. Advertising public sales promotion personal selling

C. Change attitude ……………. Advertising public sales promotion personal selling

D. Pce enforcement …….……..Advertising public sales promotion personal selling

Source: promotion hand out prepared by Ato Abnet Agegnhu

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Promotional Emphasis

Introduction

- Advertising

- Public relations

- Sales promotion

Growth

- Personal selling

- Sales promotion

Maturity

- Advertising

- Sales

promotion

Decline

- Sales promotion

Promotion spending level

Sales volume

Time

Source: (Burnett 2002, P.85)

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Profit Margin

Dol

lar

CHAPTER THREE

Data Analysis and Interpretation

In chapter two we have discussed about the communication process of promotion strategy

and overall promotional planning and strategy. As we have been focused that success in

marketing and the cooperating objective could be depend on the promotional planning and

strategy.

This section deal and give more emphasized on assessment and analyzed the promotional

activity of AMWF with compare to the promotional budget.

To assess the promotional activity of the company, the study was made in the ways of data

connection method. Those are, one secondary data collection process, we have collected a

three years sales data with promotion expenditure in order to see the cause and effect of each

other, and we have also gather the promotional activity of the company.

The second one was surveying the promotion expert and the marketing official of the

company through interview and questionnaires.

3.1 Communication activities of the Company

To design communication objectives of the company it was made concerning to the

communication process in promotional activities. Claims of the question raised to determine

the effort made in this activities show that the activity targeted to assessment of message and

media. But has the promotion expert of the company told as they didn’t have any record data

about complained and feedback of the potential audience. Because of this reason the

communication cannot be support to the promotional program. In the selection of message

media vehicle and objective of the communication, this is because the customer of the

company was not clearly segmented geographically demographically and social class as we

know customers of the A.M.W.F includes all the society as a whole.

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3.2 Promotional planning in the Company

In addition to providing quality product success in modern business requires setting reliable

price, establishing proper outlets and active promotion.

A.M.W.F planned to produce and promote its product based on demand driven.

3.3 Objective Analysis of Company Marketing and Promotion

- To maintain the current market share of 96% and increase the sales

volume

- To attain a minimum of 34% of ROA

- To reduce container break age from the current level down

- To work to words attaining the fill production sales capacity

- To increase the export market share to 2% of total sales

- To expand the capacity and diversity the product to meet the demand

of domestic and foreign marked

- To increase sales volume, to retain customer and also to achieve

minimum sales target

- To introduce our product for the export

- To achieve sales target and to introduce the product with the newly

growth population

- To maintain the market share of the product

- To balance sales objectives

- To increase customer awareness both local and abroad

- To attract new customers

Since the company objective is the over all (corporate objective) the remaining two

objectives, these are marketing and promotion objectives are derived from it. As presented in

the above what the three objectives share is that they need to increase sales of the both the

21

Company objective

Marketing objective

Promotion objective

domestic and foreign market and mainly, to maintain their market share specially in local

market share.

3.4 Setting Promotional Budget

In assessment of promotional budget of the company, questions where raised and

answered;

Does the company allocate enough budgets for promotion?

Does the company use strategic method to set the budget?

A.M.W.F sets 1.5 million birr for every budget year for promotion. In amount of absolute

value the budget setting for promotion is much enough, but the method of setting budget

decision is not follow scientific method. In setting promotional budget for large company

lists advisable to follow based on the tasks and objective method, but A.M.W.F set its budget

based on affordable method.

These types of setting promotional budget are suitable for small companies. Three year

budget analysis of A.M.W.F where represented as follows.

Table 3.1 Comparison of Budget and Actual expenditure for promotion

Year Total budget Actual use

1996 E.C 1, 500.000 380560.80

1997 E.C 1, 500.000 1, 120, 880.67

1998 E.C 1500.000 1089,216.18

3.5 Promotional Campaign

To assess the promotional effectiveness and activity of the company, we have gather three

years data and analyzed them as follow.

Table 3.2 Promotional Campaign by the Promotional mix and their Expenditure in the

last three year.

22

Promotional mix

and their tools

Amount of Expenditure in each year

1996 E.C 1997 E.C 1998 E.C

Advertising

Bulletin 74000 98, 350.00 106, 455.00

Poster, broacher

and calendar

70061.80 138 451.67 143, 430.00

TV and radio 145872 435, 195.47 390 606.00

Sales promotion

Trade show 42, 595.00 122 930.00 142, 846.02

Public relation

Sponsorship 86, 865.00 325 955.00 305, 579.16

Total 380560. 80 1120 880.67 1089, 216.18

The above data on table 3.2 show the company gives more emphasis on advertising among

the promotion mix those are bulletin, posture, broacher, TV an radio.

It is also use public relation and sales promotion by participate in different trade shows

government and non-government association we have understand that from the interview we

conducted as well as from the documents the company we gathered the factory do not have a

budget for personal saving.

In summary we have put in the pie chart the total expenditure for the different promotion mix

of the last three year in percentage with the corresponding promotion mix.

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promotion mix & their percentege of expenditure ( three years)

62%25.27%

11.73%1

2

3

Advertising

Public Relation

Sales Promotion

3.6 Sales Analysis

Sales data in Quantity (three years)

Table 3.3 the comparison of expected planned to sale end actual sales

Year Description Planned

To sale

(in liter)

Actual

Sale (in liter)

Implement

(In %)

Comparison

With the

Previous

Year (in %)

1996 E.C Local sale 41, 027, 000 31, 586, 464 77 85

Foreign sale 533, 000 141, 163 25.5 234

Total 41, 580, 000 31, 727, 627 76.3 85

1997 E.C Local sale 42, 004, 000 31, 126, 938.14 74.1 1.45

Foreign sale 566, 000 108, 651.6 19.2 2.33

Total 42, 570, 000 31, 235, 589.74 73.4 1.56

1998 E.C Local sale 37, 733, 800 31, 861, 810 84.44 2.36

Foreign sale 381, 220 33, 000.6 8.66 (66.63)

Total 38, 115, 0001 31, 894, 810.6 83.68 2.11

From the above table 3.3 we could observed that are planned sales and actual sale of in the

last three budget year of the company was performed as follow.

The actual sale use 77%, 76.3% and 83.68% respectively for the budget year of 1996 E.C,

1997 E.C, and 1998 E.C.

Finally we have summarized that the actual sale perform of the budget year of 1997 E.C was

less effective as compared to its planned expect to sale;

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Pie Chart 3.1 Expenditure for Promotion Mix’s

Like table 3.3 reveals the trend of the sales volume is not stable means do not have a

uniform increasing or decreasing, it fluctuates differently.

Comparison sale with the promotional expenditure

year with corsponding budget60.283

39.348

66.6

3.81 1.121 1.192010203040506070

1 2 3

year

sale

s&p

rom

oti

on

ex

pen

dit

ure

in

bir

r(00

0,00

0) Series1

Series2

Graph 3.1 Promotion Budget of the last three years

The above bar graph shows that, the comparison of promotional expenditure with the sales

volume of the company for the last three year from this graph we understand that the

increment of promotional expenditure did not have any impact on the sale volume. Especial

in the year 1997, we observed that even if the company increases its expenditure on

promotion by three times of the previous year, but the actual sales is still below that of the

previous year.

3.7Assessment of the promotion objectives of the company compare to

product life cycle

The company promotion objective of the last three years was almost the same that was:

To achieve sales target

To maintain current market share

Balance sales objective

To increase customer awareness both locally and abroad

To attract new customers, but the 1997 objectives

25

Promotion expenditure

birr

Sales in birr

Was some what different, it was because there is declining sales volume. The reason for the

declining was the intensive selling promotion of soft drink companies for retrieves their

declining sales. As a result the reaction of AMWF was to make a continuous promotion

activity in order to maintain its market share and to return its customer who is shift to soft

drink.

3.2.1 Characteristics of Respondents

We have designed 12 questionnaires and distribute it to the total sample size 40, who are

found at different age and education level and we were collected, all of them what we

distributed. But we have got 2 questionnaires returned not correctly filled, but 38

questionnaires were returned correctly filled.

Table 3.5

Age

Characteristics Sex Total Percentage

< 18 - 2 2 5.26

18 – 25 1 3 4 10.52

26 – 35 3 3 2 15.8

36 – 45 6 10 16 42.1

>46 - 10 10 26.32

Total 10 28 38 100

Ed

uca

tion

Below 10th grade - 7 7 18.42

10th and 12th complete 1 6 7 18.42

Certificate 3 2 5 13.16

Diploma 2 4 6 15.79

1st Degree 2 4 6 15.79

1st Degree and above 2 5 7 18.42

Total 10 28 38 100

In order to identify the customer of the factory we have taken the three characteristics

those are: Age, Sex and Education level. As we get from the questionnaire we represent in

the above table.

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a) Age: from our total sample ≤ 18 age are 5.26%, between 18 and 25 are 10.52%,

between 26 – 35 are 15.8, between 36 and 45 are 42.1 finally above 46 are 26.32.

b) Sex: from the total 38 respondent 28 are males about 74% and females are 10 that

cover 26% of the total sample.

Education: like presented in the table almost all sample are crose in number that is 18, 42,

18.42, 13.16, 15.79, 18.42 for below 10th grade, 10th and 12th complete, certificate, diploma,

1st degree and 1st degree and above respectively.

3.2.2 Analysis of the impact Promotion on the Consumers

We got that all the respondents who are drinking Ambo Mineral Water are not be care on the

promotion of the company but most of them drink it because of “word of mouth” of the near

by peoples or the society, but since they have seen the promotion they have give some

response for it, it is presented net.

Table 3.4 the reaction of Customers for the Advertising (%)

Questions Responds in percentage

Yes No

Was the advertising attract

and control your attention 90% 10%

Did you understand the

message of the advertising 40% 55%

Is that Ambo Mineral Water

is your only choices 70% 30%

Table 3.5 reveals that almost all the respondent that is 90% of them have attracted and give

their attention to the advertising but they were attracted because of its drama or music but

more that of them (55%) do not understand the message that the promoter need to transmit.

In addition the table shows that 70% of the respondents drink Ambo because it is their choice

but 30% of them drink because they do not have another alternative.

27

c) From the questionnaire we have distributed we got that all of the respondents

exposed to the company advertising, but the media they exposed was different as

presented in the following bar graph.

The bargraph reveals that

almost all the customers

have coverage by TV and

radio mass media but the

remaining print media cover

only 30% of the population.

Graph 3.2 Advertising Media of A.M.W.F and there exposure (%)

By sponsorship the company can achieve only 20% of the population. There fore, most of

the respondent are attended the advertising of AMWF on TV and Radio. So it is good to

promote the product of A.M.W.F by TV and Radio in order to reach the message on many

exposures at a time.

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3.2 customer coverage by midea

0%

50%

100%

150%

1 2 3 4 5

midea

cove

rage

in

pers

enta

ge

1. TV

2. Radio

3. Print Media

4. Sponsor relationship

5. Other

CHAPTER FOUR

Conclusion and Recommendation

4.1 Conclusion

Promotion Mix

Selecting the right promotion strategy from the promotion mix. Which is compatible with the

product stage and company objective is the character of effective promotion.

But AMWF spends its to full promotional budget 62%, 25.27% and 11.73% for advertising,

public relation, sales promotion respectively. So, as we have been the factor does not use

personal selling and given less expenditure for sales promotion.

4.1.1 Identification of target Audience and Customer

It is the first and the most thing identify the target audience and target customer before

starting any promotion activity. We found that they did not clearly identify their audience

and they do not also have any record about the customer’s complain and feed back. There

fore we conclude that the company is doing its promotion with out having a clear

understanding about the target audiences that would limit to do not collect feedback as well

as to do not measure the effectiveness of their promotion campaign.

4.1.2Designing of message

After identifying the target audience the next step will be designing the message that wills

feet with the customers. In our study we get that the company always design the message to

transmitted their customer but since that do not have enough knowledge about their

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customers it make their effort in significant. It is clearly presented in chapter three that more

than half of the respondents do not understand the message.

4.1.3Identification of Media

It is also decisive the identification of the right media to be used in transmitting the right

message to the right target audience, to make the promotion campaign more effective. The

company continuously identity the media to be used, but most of them are chosen with out

any plan, programs like sponsorship for TV, radio, magazines, exhibitions etc...

4.1.4 Setting promotion Objectives

Because the company objectives is the overall guide for preparing the other department

objectives, the marketing and the promotion objectives must feet with it. We found that the

promotion objectives and also the marketing objectives are also derived from company

objectives. Finally, we conclude that the promotion objectives are derived (fit) with the

corporate objectives. But in practical the marketing couldn’t achieve its objective through

promotion, because most of the time the company participates in promotion activity mostly

in sponsor is for social welfare.

4.1.5 Setting Promotional Budget

In order to achieve that objective of the promotion, the marketing, and the over all corporate

objective allocate enough budget with specific task must be accomplish. So, us we have

discoursed in chapter three, A.M.W.F allocate too much budget for promotion that is 1.5

million per year. But the method of setting budget is not much with the company promotional

activity. Because it did not identify the task and objective of the expenditure simply they set

their budget by what the company can afford. For this reason, the management couldn’t

identify the relationship between the expenditure and its result.

4.1.6 Standard to Measure Promotion Effectiveness

30

To measure promotion effectiveness the first think is established standard. And we have

stated earlier three main standards of these are:

a) Sales volume

b) Customer attitude and

c) Market share

a) Sales Volume: we have found from our analysis of the secondary data of the factory.

The promotion expenditure has insignificant impact on the sales volume. Especially,

when we see the total expenditure of 1997 E.C and its sales volume from the bar

graph 3.1 in chapter three, the expenditure was to much greater the expenditure of

1996 E.C but its sales is below the year of 1996 E.C in fact there are money reason

why the sale response is insignificant, like lack of production, but the problem that

are related to our topic are:-

The promotion activity was mainly focused on domestic aspect

Less amount of commission payment for distributor, and they would not

happy to work hard.

b) Customer Attitude: the attitude of customer must be investigate before and after,

a promotion activity and we have investigate that the AMWF didn’t conduct any

survey to know the customer attitude on the company and product.

c) Market Share: analysis of market share helps to know where the company is found.

We have gathered information from the company secondary data and from the

customer by questionnaire, AMWF a market hare of 96%. But it is not because of

promotion effort. It is:-

1. There is no strong competitor ion the country

2. Good image of the company

3. Because of quality products

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4.2 Recommendation

After completed the study we will motivate to suggest the following recommendation.

4.2.1 Promotion Mix

Promotion campaign with out selecting the right promotion element which is compatible

with the product stage made the efforts less result: so since the product stage of the

company is found more of at maturity stage, it is better to used advertising and sales

promotion rather than public relation.

4.2.2 Identify the target audience

Communication process with out identifying the right audience made the result

insignificant. For this reason the company must be identify the target audience and target

customers before launching the promotion and it is good collected feed back after

completing the promotion collected.

4.2.3 Setting the total promotion budget

Effectiveness of promotion can be measured based on the budget appropriated for the

purpose, we would provide the following suggestion concerning to budget.

Before setting promotional budget it is adveioble to identify specific objective

and task that can be performed and estimate their cost finally set the budget

rather than simply provide the money that the company can afford.

It is better to reduce promotional budget and assigned to the other marketing

activity. Especially, on marketing research and markets survey in order to know

32

the need and wants of customer and to redesign the promotional plan and

products.

Spend the expenditure to the right promotion mix and promotion element.

Designing promotion objective should be much with the product stage, that it is

better to use, to remind customer, to re-inforce, to buy more and to change

customer. Attitude,

As we have investigate from the customers respond AMWF did not need to

much advertising and promotion, because 96% of the market share is controlled.

It is advisable to focused its promotional activity at foreign rather than focus

locally.

We have examined the company spends more expenditure on bulletin

advertising. But since the customers are geographically social were not

segmented. So it is advisable to TV, radio and other mass media in order to get

large number of exposure at a time.

It is advised to segments the customer using the segmentation variable and

redesign its message to each segment customer and select the appropriate media

for them.

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