1.Wicks and More need your help in making decision with regard to marketing communication campaign. The company would like to start with sales promotion campaign but doesn't have sufficient information to proceed. Would you please introduce sales promotio

Instructions: Please read the following case and answer question related to the case.

In 2007, Beckey Neal and Kim Neal opened a candle and gift shop in Tupelo, MS, selling their hand-poured candles. Over the course of seven years, Wicks and More grew to a multi-million dollar company, selling candles in more than 3000 boutiques and fine department stores throughout the United States. Wicks and More candle shop features a wide variety of candles, from simple scented candles to highly ornate candles that are used for decorations. Wicks and More shop also features candleholders, incense, and candle-lighters of all kinds.

There are four major uses for candles. The first is to serve a functional purpose, providing light when the electricity goes out. Many people keep stocks of candles on hand just for those times. Second, candles are used for decorations. Third, candles can be burned to provide a romantic environment. Scented candles add to the experience of the warm glow of a candlelit bedroom. Other candles provide the perfect light for a romantic dinner. Fourth, candles are used as part of religious ceremonies.

The owners of Wicks and More have just contacted a marketing consulting firm. They wanted to know if there is a way to make the store's marketing program more effective. Thus far, they had run ads in the newspaper and occasional spots on local radio. Most of the store’s radio advertising has been during the Christmas holiday season. Newspaper ads run all year.

The company provides the demographic information for Wicks and More’s current target market. Far more women buy candles than men. A typical customer is at least 20 years old. In terms of psychological characteristics, candle buyers tend to have a strong sense of fashion and decor. Many enjoy home decorating. Wicks and More’s customers have enough disposable income to shop for nicer home decorations. Many are affluent, though it is not unusual for a middle class income shopper to come into the store. People with lower incomes who want candles for power outages tend to buy them at Wal-Mart or a discount store.

Wicks and More have been in business for quite a few years now, and the company believes a more effective marketing program might help them build a stronger company.

1. Wicks and More need your help in making decision with regard to marketing communication campaign. The company would like to start with sales promotion campaign but doesn’t have sufficient information to proceed. Would you please introduce sales promotions tools that fit well with the company, and the potential advantages and disadvantages associated with sales promotion? (Your answers are expected to incorporate the discussion on Groupon case.)

Attached Groupon case:

Problem/s

There are two major issues that Groupon has been facing. The aggressive growing pain and the widespread competition with the different copycat. No one can deny the goodness of growth for a company. However, in Groupon’s case, the company has been growing so fast that the growth actually comes with a pain. In 2009, Groupon only had one operating country. In 2010 the number had increased to 35 and in 2011 there were 48 countries, more than 500 cities participate in Groupon deals. As the Groupon continually expands its daily deal empire globally,the management team have to resolve different challenges as well. From the mess of attempting the new service in Japan to the chaos of new personnel changes. From the increased cost of acquisition cost to the shrinking profit. All the potential concerns have slowed down the revenue growth. Right after Groupon became a public company, a $37 million loss was clearly shown in the first quarter financial analysis. On top of that, the boredom of the similar deals over time is something Groupon has been battling with (Winkler 2011). Winkler pointed out the issue of unsubscribing and the difficulties of replacing with more new subscribers when Groupon is already famous enough on the Internet. All the challenges mentioned above makes it more costly to increase new subscribers which are an essential way to market to more consumers. In 2011, it cost Groupon $5.23 to add a new email subscriber, while it only cost $2.52 in 2009 (Winkler,2011).

Alternative Solutions

Decreasing the marketing cost and trying new marketing strategy In Winkler’s article, he stated that “Groupon had chopped down the marketing cost. While it got the company closer to profitability, it may have been a reason sales growth versus the prior quarter slowed to 10%” (2012). As mentioned above, the cost of adding a new email subscriber is going up, this could be one factor in considering the profit and sales growth. Knowing that marketing spending takes up the huge chunk of the operating spending, it is crucial to analyze whether the money spend on marketing actually leads to more sales. On top of that, groupon has been focusing on mass e-mailing, and new email subscribers are some traditional marketing strategy. The marketing team can try out other marketing strategy instead heavily rely on mass email. For example, setting up a booth in community events/local festival, people who subscribe to Groupon email can spin the wheel for instant prize winning. Monthly voucher giveaway for new email sign up. In terms of marketing to the merchant, Groupon can actually consider loyalty program with the merchants too. To sum up, there are many other more possible marketing strategy and Groupon should not be limited to mass emailing only. Focus on new product development From the case study, it is clear that Groupon has been getting their hands on new product development. Groupon 2.0, Groupon Rewards, and Groupon Now! indeed opened up many more business opportunities. Fighting with various competitors in the market, Groupon needs to focus on business development and maybe some other brand partnership. Heavily relying on the daily deals is just not enough to keep up with the current consumers. Deals are going to be similar one way or the other, new product development is crucial in maintaining the Groupon’s competitiveness in the industry.

Evaluation of Alternatives

Decreasing the marketing cost and trying new marketing strategy

Cutting down the marketing cost might be effective for a short term. Groupon did actually decrease the marketing cost. Such move brought some positive effect that the company was closer to the profitability. However, in a long term, this might not be an effective way to resolve the issue. Especially in the case that Groupon is already famous enough, it got to the bottleneck point to consistently having more email subscribers. On the other hand, outreach events in the community can be a good attempt. But the concern will be onto converting the new email subscribers into new customers who actually will purchase the vouchers. Sometimes, people signed up for emails notification but never really complete any vouchers transaction. Focus on new product development We see ups and downs from launching the new product. There is both positive and negative feedback regarding the new launches. From the case study, it is important to notice that some of the new product actually derived from the initial daily deals concept. For example, instead of Groupon as the medium connecting the merchants and the consumers, Groupon Store will have the merchant to decide and run their own deals. The potential concerns for the new product are whether to continually implement the daily deals concept or going wild without the restriction of daily vouchers available. Groupon Store was soon shut down, while the Groupon Rewards did pretty well in the test markets. It takes more time and effort to explore and to well define the targeted market with the newest product line.

Recommendation/s

Based on the throughput analysis demonstrated above, regarding in the email subscription issue, the best recommendation is to specifically analyze how frequent and how many subscribers drop out the email list. In Winkler’s article (2012), he stated that “Groupon doesn't disclose how frequently users are clicking "unsubscribe" on its emails. As users drop off, it gets harder to replace them with new subscribers, especially given how large Groupon has already become.” Adjusting the marketing cost is one way, but in order to sustain the long-term growth, Groupon needs to find out what actually drives up the cost of adding each new email subscriber. Is it because Groupon has been losing far more old customers than adding the new ones in the list? Is it because those already signed up rarely purchase the daily vouchers? The incongruence growth of new email subscribers and the loss of the old ones is one important issue Groupon need to tackle on.