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Promotion and Price Analysis.

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Select a product or service. Find examples of how this product or service is being promoted via at least three of the following sources:
Print, television, radio, internet, point of purchase, direct mail, telemarketing, publicity:

Identify the promotional message(s) and provide a detailed description of how this message(s) is being conveyed via the selected sources. Analyze how the message(s) positions the product or service to appeal to its target audience. Identify where the product or service is in the its product life cycle and describe how this life cycle stage affects the pricing strategy. If possible, document your examples.

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1. Select a product (i.e., Coca-Cola) or service. Find examples of how this product or service is being promoted via at least three of the following sources: Print, television, radio, Internet, point of purchase, direct mail, telemarketing, and publicity:

Fifty Years of Coca-Cola Television Advertisements

First Experience

The Coca-Cola Company launched an ambitious new international ad campaign in January 2000. Using the slogan "Coca-Cola. Enjoy," the campaign was designed to appeal to people all over the world by persuading them that Coke adds a touch of magic to the special moments in their lives. Believing that Coke is one of life's most common and affordable pleasures in many countries, the company conceived of the new slogan as an invitation to consumers throughout the world to enjoy Coca-Cola and life's simple pleasures. The theme was global, but the campaign used local resources in different countries to create individual commercials relevant to local tastes and cultures. And to unify the campaign with as much flexibility as possible, its creators developed a melody adaptable to a wide range of musical styles. Even as the campaign began, there were 140 versions of the tune set to words in forty languages.

The ads in the "Coca-Cola. Enjoy" campaign express its theme by trying to create images showing how Coca-Cola adds something special to everyday life. One spot by Leo Burnett USA, called "First Experience," (which appeals to first experience - and uses the exact words - possibly because the target population have somewhat primitive existences - no electricity, etc.) follows a boy anticipating what a Coca-Cola will taste like by comparing it to a kiss. The spot was set in a small village outside Ouarzazat in a remote part of Morocco. The entire cast was from the village, which has no electricity, no television, and no Coca-Cola. The commercial was directed by John Madden, who directed the films Mrs. Brown and Shakespeare in Love.

Note: Using global slogan "Coca-Cola. Enjoy" trying to create images that Coca-Cola, adds something special to your life (i.e., 'first experience - linking coca-cols to kiss)

John Madden also directed "Snowflakes," (i.e., appeals to first experience) another spot by Leo Burnett USA. It shows a woman first as a young girl twirling in the snow and then as an adult on a beach, enjoying the moment?and a Coca-Cola. The actress playing the young girl is Italian and was cast in Milan, while the woman she grows up to be is played by a Greek actress who was cast in Athens. The commercial itself was filmed in two different areas in the Italian Alps and on a stage in Milan. (Again, using the slogan "Snowflakes" - appealing to the idea that Coca-Cola adds something special into your life - using image of young girl twirling in the snow, and that Coca-Cola is linked to growing up into a Greek goddess, etc. targets both younger and older generation, especially girls and women) (http://inventors.about.com/gi/dynamic/offsite.htm?site=http://memory.loc.gov/ammem/ccmphtml/colahist.html).

Snowflake - Beach (SEE ATTACHED RESPONSE)

From http://memory.loc.gov/cgi-bin/query/r?ammem/cola:@field(DOCID+@lit(kocx9364)

Polar Bear - Northern Lights

From http://memory.loc.gov/cgi-bin/query/r?ammem/cola:@field(DOCID+@lit(kocl332j_01))
In 1993, The Coca-Cola Company made a dramatic shift in its advertising by introducing the "Always Coca-Cola" campaign, by Creative Artists Agency and later Edge Creative. The campaign was a diverse one, with an initial run of twenty-seven commercials designed to appeal to specific audiences. The ads ran around the world and included a variety of innovative technical approaches, such as computer animation. One such commercial, "Northern Lights," introduced what would become one of the most popular symbols of Coca-Cola advertising: the animated polar bear. When asked to develop an innovative commercial for Coca-Cola, creator and freelance writer/director Ken Stewart thought about drinking Coke at the movies. Mr. Stewart thought his yellow Labrador Retriever resembled a polar bear when it was a puppy and thought about how polar bears would go to the movies. Mr. Stewart brought the two concepts together in the commercial, "Northern Lights," which depicts a magical place where polar bears watch "movies" (the ...

Solution Summary

This solution selects a product and provides examples of how this product is being promoted via at least three of the following sources: print, television, radio, internet, point of purchase, direct mail, telemarketing, publicity. It identifies the promotional message(s) and provides a detailed description of how this message(s) is being conveyed via the selected sources. It also analyzes how the message(s) positions the product or service to appeal to its target audience. It then identifies where the product or service is in the its product life cycle and describes how this life cycle stage affects the pricing strategy. References are provides for the examples. Supplemented with external resource on the product of choice.

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Economic Demand analysis and estimation

A direct relation exists between the price of one product and the demand for:
a. complements.
b. substitutes.
c. normal goods.
d. inferior goods.

PROBLEM (show all your calculations)

Demand Analysis. The South Park DVD (season three) has been a slow seller during recent months. An analysis of monthly demand shows:

Q = 5,000  160P

where Q is DVD sales and P is price.

A. How many DVDs could be sold at a $25 price?
B. Calculate the point price elasticity of demand at a price of $25.

Demand Analysis. KRDY-FM is contemplating a T-shirt advertising promotion. Monthly sales data from T-shirt shops marketing the "Listen to KRDY-FM" design indicate that:

Q = 15,000  800P

where Q is T-shirt sales and P is price.

A. How many T-shirts could KRDY-FM sell at $15 each?
B. What price would KRDY-FM have to charge to sell 5,000 T-shirts?
C. At what price would T-shirt sales equal zero?
D. How many T-shirts could be given away?
E. Calculate the point price elasticity of demand at a price of $15.

Demand Analysis. The San Diego Zoo is contemplating a stuffed panda bear advertising promotion. Annualized sales data from local shops marketing the "Can't Bear it When You're Away" bear indicate that:

Q = 50,000  1,000P

where Q is Panda bear sales and P is price.

A. How many pandas could the zoo sell at $30 each?
B. What price would the zoo have to charge to sell 25,000 pandas?
C. At what price would panda sales equal zero?
D. How many bears could be given away?
E. Calculate the point price elasticity of demand at a price of $10.

5. Optimal Price. Last week, Discount Food Stores, Inc. reduced the average price on the 22 ounce size of Dishwashing Liquid by 1%. In response, sales jumped by 8%.

A. Calculate the point price elasticity of demand for Dishwashing Liquid.
B. Calculate the optimal price for Dishwashing Liquid if marginal cost is 70¢ per unit.

6. Optimal Price. Last week, Wally's Burgers, Inc. reduced the average price on the 1/2-pound Papa burger by 1%. In response, sales jumped by 2%.

A. Calculate the point price elasticity of demand for Papa burgers.
B. Calculate the optimal price for Papa burgers if marginal cost is $1 per unit.

7. Arc Price Elasticity. Assume that amazon.com dropped the price on a men's Seiko watch (SGF719) from $120 to $60, and sales jumped from 50 to 100 units per day.

A. Calculate the implied arc price elasticity of demand.
B. Is a further price decrease warranted? Why or why not?

8. Arc Income Elasticity. Glenco Motors sells an average of 20 Toyota Camry XLE four-door sedans per month. Evanston Toyota sells twice as many. Based upon data obtained in the financing process, Glenco customers earn an average household income of $100,000 per year, while Evanston customers earn $125,000 per year.

A. Calculate the implied arc income elasticity of demand.
B. How would you characterize demand for these Toyota Camrys?

9. Income Elasticity. Deluxe Carpeting, Inc., is a leading manufacturer of stain-resistant carpeting. Demand for Deluxe products is tied to the overall pace of building and remodeling activity and, therefore, is sensitive to changes in national income. The carpet manufacturing industry is highly competitive, so Deluxe demand is also very price-sensitive.

During the past year, Deluxe sold 28 million square feet of carpeting at an average wholesale price of $16 per square foot. This year, GDP per capita is expected to fall from $57,000 to $51,000 as the nation enters a steep recession. Without any price change, Deluxe expects current-year sales to fall to 20 million units.

A. Calculate the implied arc income elasticity of demand.
B. Given the projected fall in income, the sales manager believes that current volume of 28 million units could only be maintained with a price cut of $2 per unit. On this basis, calculate the implied arc price elasticity of demand.
C. Holding all else equal, would a further increase in price result in higher or lower total revenue?

10. Price Elasticity. Z-Best Pizza recently decided to raise its regular price on medium pizzas from $9 to $12 following increases in the costs of labor and materials. Unfortunately, sales dropped sharply from 8,100 to 4,500 pizzas per month. In an effort to regain lost sales, Z-Best ran a coupon promotion featuring $5 off the new regular price. Coupon printing and distribution costs totaled $100, and caused only a modest increase in the typical advertising budget of $2,400 per month. The promotion was judged a success as it proved highly popular with consumers. In the period prior to expiration, coupons were used on 40% of all purchases and monthly sales rose to 7,500 pizzas.

A. Calculate the arc price elasticity implied by the initial response to Z-Best's price increase.
B. Calculate the effective price reduction resulting from the coupon promotion.
C. In light of this price reduction, and assuming no change in the price elasticity of demand, calculate Z-Best's arc advertising elasticity.
D. Why might the true arc advertising elasticity differ from that calculated in Part C?

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