Compass College

Pearson BTEC Level 5 HND Diploma in Hospitality Management

Unit 18: Advertising and Promotion in Business

Assignment 2 An analytical report on the advertising and promotion of a

catering company

3.1 Sales promotion activities

Sales promotion is one of the below-the-line (BTL) advertising techniques,

which is an immediate or delayed incentive to purchase. It may be in form of cash or
some benefit in kind, and having a short duration. It is cost-effective for targeting a
limited and specific group of customers..

The most effective sales promotional activities for Caf de Coral are discount
coupons and in-store promotion display, as they are able to capture the full spectrum
of value for money expectation as well as quality demand in the mind of the
customers. Coupons offers small discount (say $3 for over $30 purchase) to target at
value concerned customers, while in-store display draw customers attention to higher
quality products and to satisfy their higher hierarchy of need in terms of palate.

From the noticeable success of Caf de Corals value meal offer, it can be seen
that the target mass fast food market is very responsive to value for money offer.
Customers are attracted by these offers and the response rate to purchase is high.
Coupons may be presented in both traditional print media such as newspaper and
magazine, and also on digital means such as QR code or download from social media,
eg. Facebook like function.

For in-store display (point-of-purchase) promotional offer, customers are drawn

directly by visual display to current offer of quality exotic product such as French
spring chicken, Hoikaido fish fillet, etc. This promotion appeals to customers choice
of requirement of their palate on top of the value consideration. This technique may
be used to generate trials of newly launched products.

Sales promotion is getting more important to Cafe de coral nowadays for many
reasons. First, Cafe de Coral is facing fierce competition in a mature and highly
competitive mass fast food market. Sales performance can hardly boosted by
advertising alone and need sales promotion. For example, customers are exposed daily
to large amount of Above-the-line advertising through mass media about other

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competitive brands, and many new food concepts/brands are gaining considerable
foothold in the fast food market, although in smaller scale netwotk. This also lead to
brand proliferation, adversely reducing the competitive advantage of Cafe de Coral.
For example, according to the Euromonitor International's Fast Food in Hong Kong,
China report 2012, the large amount of new fast food outlets, such as noodle fast
food (Tams spicy noodle), middle eastern /kebabs (Ebeneezers), gourmet burger
(MOS-burger), pizzeria & pasta (PHD), sandwich (Pret-a-manger), convenience store
fast food (7-11, Circle K) altogether takes out a handsome slice in the fast food
market. In addition, Cafe de Coral is also facing declining brand loyalty, as customers
tend to switch to another product based on price, value and convenience. For example,
the current Cafe de Coral Club 100 programme only offers small rebate ($10) only
after 5 qualified purchases each week, meaning that the customers will eat every
working day lunch in order to gain a small benefit. It is not sufficient enough to attract
loyalty by itself alone.

3.2 Sponsorship

Sponsorship is a commercial activity offered by the sponsor in terms of funds,

service or resource to the sponsee, in order to exploit an association with the target
audience. The relative effectiveness of the sponsorship relationship is highly
dependable on the degree of fit and congruence between the sponsor and the sponsee,
for example, with a functional-based similarity.

For Cafe de Coral, program sponsorship may be effectively used to build up a

positive image of the brands product on caring for the community, in terms of
nutritional value and corporate social responsibility (CSR) on kitchen waste. For
example, Cafe de Coral may set up a sponsorship program with research institutes of
Universities, or Food & Environment Bureau, by providing funding, or actual meals
in research on nutrition, diet, etc. particularly on areas of diabetes, obesity and heart
disease. The research results may even be feed back to its menu, benefiting millions
of elderly who are prone to these diseases. Another programme may be set up with
environmental groups on treatment of kitchen waste, supplying funding or actual
kitchen waste at agreed branches, for example, to allow the sponsee to collect and turn
kitchen waste to fertilisers. These will enhance greatly the CSR aspect of Cafe de
coral, and build up a responsible and caring image of the corporation, who really care
about the health and environment of the customers through conducting their business.

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4.1 Process for formulation promotional budget

The process of budgeting for promotion and advertising may be top-down or

bottom-up. The top-down approach commences with a set budget from top
management as the spending limit - although flaw but commonly used by marketers to
exercise strong control. Examples include the affordable, competitive parity,
percentage of sales and ROI budgeting methods. On the contrary, the bottom-up
approach build up from the bottom (also known as Build-up approach), with
promotional objectives to be identified first, then promotional activities to be planned
simultaneously with cost estimation, finally budget to be approved by top
management. While the top down approach gives the management maximum control
but not linked to promotional objectives or strategies, bottom-up approach allows
budgeting to be formulated with communication objectives in IPS and also provide
greater participation from middle management or working levels to create better team
morale. Example such as Objective and Task method. Quite often, marketers use a
combination of methods to achieve a balance of goals.

For Cafe de Coral, the bottom up approach is more appropriate. Following the
Objective and Task method, the marketing department may set the promotional
objectives, in line with sales figures and corporate objectives. The promotional plan is
then designed with Cafe de Corals communication objectives, then determine tasks
required and budget is estimated to attain these goals. It is an interactive process
where promotional mix strategy can be implemented to acheived the stated objectives.
The management endorses and vets each step and provides direction for adjustment as
needed. As part of a publically listed company of Cafe de Coral Holdings, the
accountability of management must be observed strictly. Final approval of the budget
will need to be checked against past spending, percentage of sales, ROI etc. So a
combination of methods may be used here. Lastly, a program to monitor spending and
evaluate effectiveness must also be considered at the same time.

4.2 Promotional plan for a new product launch

To launch a new product for Cafe de Coral, a promotional plan is designed as follow:

New product name: Korean fusion dinner

Background, Purpose and Objectives: As customers often eat weekly or few times a
week in Cafe de Carol, they will enjoy new flavor but still has to be acceptable by
their regular Chinese palate. Korean culinary elements are therefore introduced in
fusion style to offer a wider and refreshing choice. Cafe de Coral had just signed a
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master franchise agreement in July 2014 with JNT Co. Ltd (JNT) to bring a Korean
healthy food brand The Cup to Hong Kong. So this is an in-house resource to
capitalise and create a competitive advantage of more exciting choice especially for
regular customers. The goal is to boost sales revenue, and enhance customer loyalty
by reducing customer switching to other competitor due choice of food or variety
offered.

Target audience and positioning: Overall the target customers are customers looking
for better quality meal at dinner time, in the familiar and reputable brand Cafe de
Coral. Dinner is targeted here as most stores are reaching full capacity during lunch
time especially in office areas or school campuses. Also dinner meal can warrant a
higher price, as customers are normally willing to spend a bit more for a better meal at
dinner. This may also help to cover the higher cost of the new product, due to higher
promotional costs and product/raw material cost.

Intended Results: Sales revenue increased by 10% or more

Specific Tactics: coupons on print media, TV commercial, in-store poster promotion,

internet and mobile app marketing, including social media exposure

Required Resources: Marketing research support, advertising agency support, IT

support, staff training.

Key messages in promotion: exciting new taste with fusion Korean style

Overall promotion budget: not exceeding 5% of gross sales revenue. As it is difficult

to implement the Objective and Task method for new product without track record,
a payout plan may be develop based on expected rate of return for the initial weeks
and subsequent weeks after launching the new product, say 10% for 1st two week,
then 5% for the subsequent or remaining shelf life of the new product

Assignment of duty and responsibility: Marketing department to be responsible for

research on situation analysis, target audience, designing promotional plan, engaging
and liaison with advertising agency.

Evaluation: increase of sales revenue during dinner time to be recorded and analysed
to show effectiveness of the strategy. ROI may also be assessed to check promotion
budget effectiveness. Customers satisfaction survey may be conducted to seek
response in quality and pricing.

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The steps of formulating of the above plan are:
a. commence with conducting a situation analysis to set goals and objectives,
identify target audience and desired positioning, through literature review,
colleague review and formative research.
b. Then develop a strategic marketing mix.
c. Outline the promotional plan for evaluation and monitoring.
d. Establish budget and procure required resource.
e. Complete implementation plan.

4.3 Product placement, public relation & Word-of-mouth techniques for new
product launching

Product placement is a form of sales promotion and sponsorship, by including

the product or services in films or deliberate promotional exposure. It may build
awareness, reinforce brand images, produce high level of impact with high exposure
rates and likely to be approved by audience, as it overcomes the irritation associated
with advertisement. However some consider it unethical and unable to provide any
details. For Cafe de Coral, the Korean fusion dinner can be easily included in TV
drama series, in appropriate dinning scenes. However actual broadcast date is critical
as it must coincide with product launch timetable.

Public relation (PR) is a non-marketing management function but increasingly

linked to and complementary to marketing. PR primarily builds company image and
credibility, in order to maintain mutually beneficial relationship with the public, such
as good will in the community. It also offers a way to distinguish the company product
with others. For Cafe de Corals new product launch, PR activities such as product
publicity may assist to make the product known to target audience. For example, a
feature article in entertainment magazine or leisure section of newspaper describing
the new product as a shift of consumers taste to new flavour combining Korean
touch.

Word-of-mouth (WOM) refers to the source of information that the consumers

received verbally or through comments from friends, relatives, colleagues or even
unknown parties on social media, with an effect influencing their purchase decisions.
For Cafe de Corals new product launch, it plays an important role as the new product
is tried and accepted by the early customers then disseminate the information by
WOM to others. It may directly increase the others intention to purchase. Cafe de
Coral should encourage the positive response sharing by satisfying customers through
social media, such as using like function on Facebook pages. Also Point of Purchase
(POP) display may be used to offer discount for purchase of two new products in the
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same order, persuading customers to recommend the same product to their companion
on the spot of purchase.

4.4 Campaign effectivness measurement

The effectiveness of advertising and promotional campaign may be measured in

terms of its communication effect and sales effect. The importance in measuring these
effects are numerous. It acts a safety measure to allow timely adjustment in the
campaign, provides feedback to take remedial action, estimates the results so as to
avoid possible failure or wasting money. It may also used to justify the investment in
advertising, by additional profit in terms of Return-on-investment (ROI) as sign of
effectivness. It delivers the fundamental objectives of the campaign to the target
audience. It is also able to verify the effectiveness of the campaign by comparing the
changes in sales, consumer attitude, dealer display with the control market.

Measures of campaign effectiveness may be in terms of customers response and

sales volume. Both are good indicators to assess the effectiveness of the campaign.
Techniques employed include primary data collection via telephone survey, in-store
personal interview and internet survey on Cafe de Coral website or through mobile
apps. Incentives may be offered to customers responding to the survey, such as
discount coupon and/or free membership to loyalty club.
(2050 words)

Reference

Source URL (retrieved on 19th November 2014):

http://marketpublishers.com/report/services/restaurants/fast_food_in_hong_kong_chin
a.htmlEuromonitor International's Fast Food in Hong Kong, China report 2012

Terence A Shimp (2010), Advertising, promotion, and other aspects of integrated

marketing communications, Mason Ohio South-Western Cengage Learning 8th ed.

OGuinn, Thoma C (2012) Advertising and integrated brand promotion Mason,

Ohio South-Western Cengage Learning 6th ed

Chris Fill (2011) Essentials of marketing communications Harlow Prentice Hall

George E Belch (2009) Advertising and promotion: an integrated marketing

communications perspective McGraw-Hill

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