Marketing Steategy

Promotion of your product in NewShoes can target consumers, or it can target dealers. Consumer promotion is designed to pull customers into stores to purchase your product. Promotion decisions are entered for each region in which you are marketing your shoes.

Advertising attempts to make consumers aware of your product so they know to look for it when they are shopping for shoes. Your decision simply sets the budget for advertising; the media and message are chosen for you to best fit the region. You can enter a budget from $0 to $9,999,999, but expenditures over $2 million in a market will have little effect on sales.

Consumer sales promotion attempts to motivate customers to buy a product using rebates, contests, and premiums (i.e., prizes). You enter a budget for consumer sales promotion in each market, and the money will be spent on activities that are most appropriate for the region. Allowable inputs are from $0 to $9,999,999, but amounts over $1 million in a market do little to generate additional sales.

Each NewShoes market responds differently to consumer promotion. Review the market descriptions, and answer the following questions:

1. Which market responds best to advertising?

2. Where are you most likely to emphasize consumer sales promotions?

3. Which market does not respond to consumer promotion very well?

4. What happens if you spend $4 million on advertising in a region? $1.5 million on consumer promotion?

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Student or Team Name:

5. A firm thinks its consumer promotion expenditures are too high and wants to cut $500,000 from the budget. Management estimates it will lose 10,000 units in sales if it does. If gross margin is $40 per unit, does cutting the promotion budget make sense?