Question

 

Case Study I

The Fortune company deals with oil products which are supplied to public and private cosmetic companies. The CEO Mr. Usama of Fortune consistently used to cut the advertising budgets. To overcome this, his managers, on several occasions had presented Mr. Usama evidence of a solid link among, advertising, preference, market share & profit. Each time this occurred, the CEO would maintain his stand. Lately a manager brought to him a research article on advertising. It showed that the average industrial firm can increase its market share by 30 per cent, when it backs up the sales force with advertising. Mr. Usama, reflected on the range of his products/market situation and said “That’s only true sometimes and leaned back”.

 

Questions

(1) How does increase in advertising expenditure relate to increase in sales? Give five

reasons with proper justification for each reason. 

 

(2) a. You are required to identify the problems in the above case and suggest suitable solutions with proper justification. 

b. Do you think that marketing research can change the stand of CEO. Considering the above case mention any three importance of marketing research.

 

Answer 1

Answer(1): Increase in advertising expenditure relate to increase in sales- Yes this is true because of following reasons-

1. Advertisement creates awareness, uses, usage, benefits of products or services in the society.
2. Advertisement increases the market share and differentiate from competitors.
3. Advertisement increases growth in sales numbers. Company spends a lot money on advertisement so that sales can be increased.
4. Advertisement increases usage of the product and it makes the customers brand loyal.
5. Advertisement also works as corporate social responsibility, company create ad on social issues or betterment of the society also.

Answer(a): Problem is this case is that CEO is not understanding the importance of advertisement, he has been told the same by managers but still he is not understanding the seriousness and effectiveness of advertisement decision.

Solution- He should be given the evidence of importance of advertisement that has increased the sales, managers can take the data of competitor companies and then can compare their advertisement and sales with own company's ad and sales. Proper market research should be done to tell the CEO the importance of advertisement.

Answer(b): Yes, marketing research can change the stand of CEO.

Marketing research- It is a process of collecting, analyzing, interpreting and delivering the information related to something. It is for knowing the viability of a new product, advertisement, project etc.

Importance of marketing research- We can understand the importance of marketing research in following points:

• Marketing research is the best way to reach to the customers so that their needs, wants, desires, choices and preferences can be known.
• It is the best way to connect to the customers and increase the brand loyalty.
• It provides innovations and creativity to the company.
• It increases the sales and profits for company.
• It increases the customer base and decreases the unnecessary cost that would occur if proper marketing research would not have been done.