Business Report  

Posted: December 22nd, 2022

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Business Report  

Sales slumps worry companies because they erode the significant source of revenue. Declining sales can be caused by many factors ranging from poor economic performance in the targeted markets to ineffective marketing. Companies create products and services that should generate revenues and profits. However, poor sales of products and services endanger the performance of a business and the survival of the business entity. Inadequate and ineffective marketing can disconnect potential customers from the goods and services on offer because the consumers are not only unaware of the offerings but are also not persuaded enough to purchase the products and services on offer (Agostini, Filippini and Nosella 164). For a young startup in the retail industry, inferior branding and awareness creation on the goods and services offered by the retailer can cause sales to fall. The high competitiveness in the retail sector, alongside the changing lifestyles and preferences of consumers, calls for innovative and effective advertising campaigns that would persuade the market to make purchases. The use of advanced technologies and accurate identification of customers’ preferences can improve customer targeting and reverse sales slumps in the retail company. This report analyses the advertising approaches used by retailers to identify which ones are effective and which ones are not. After that, emerging trends in advertising that are new to the company are discussed. Finally, recommendations on effective advertising strategies that would boost sales are recommended to the company’s management.  

Approaches used by companies

Retailers use various strategies to promote their products in the marketplace. Many retailers still use traditional advertising in their marketing campaigns. Brick-and-mortar stores are still used by retailers to present products to customers. As such, customers place adverts on print media such as newspapers and magazines, on billboards, and television. Covert advertising in which brands and products are embedded in media and entertainment such as films, games and sports are commonplace in the retail sector. Besides, celebrities are used to endorse retail outlets and the products therein. Celebrity endorsements are often included in advertisement campaigns in television and the print media (Ting, et al. 4). However, the effectiveness of these approaches is challenged by the reduction in the number of people who pay attention to such advertisements. Therefore, traditional channels work best when used alongside modern channels in an omnichannel advertising strategy (Verhoef, Kannan and Inman 175). The traditional channel should be a component of an integrated marketing communication, in which all forms of messaging and communication are interlinked seamlessly and carefully. However, traditional advertising is ineffective if it is used in isolation because it attracts little attention from the prospective customers. Moreover, strategies such as celebrity endorsement fail when the use scandalous personalities who project the wrong brand image or use personalities whose fame is detached from the products or the targeted customers.  

Sale promotions are commonly used by retailers to generate short-term flash revenues and hopefully increase brand and product awareness in the market. Sale promotions comprise price discounts, gifts, contests, coupons, vouchers, and free samples of new products, among many others. Sales promotions are effective when they award a service rather than a product that is highly valued by the customers. Services that are relevant and give instant gratification to the customer boost sales instantly. Similarly, discounts are effective when they provide an extra of the same product or are bundled with another product that is valued by the customers (Yan, et. al. 48). Alternatively, sweepstakes are associated with the purchase of certain products to give instant giveaways or a chance to win a grand prize. Raffles with assured gifts, gratify customers instantly and maintain brand engagement. However, sales promotions fail when they use and send the wrong message to the customers. For instance, regular discounts denote the retailer as a discount brand. Therefore, customers make purchases on when they are on a discounted offer. Also, rewards that are not exciting enough or difficult to get once they have been won discourage customers and damage the reputation of the retailer and the brand.

Sales promotions yield sales improvement if they excite customers enough to persuade them to make purchases, avail bundled products that have sufficient variety to satisfy the diverse needs of customers, and gratify consumers instantly (Yan, et. al. 49). As such, they work for short-term boost in sales. However, sales promotions do not work when there are used repetitively because they may degrade the brand, send the wrong message about the promoted products, and consume more finances than they return in sales revenues. As such, sales promotions do not guarantee long-term increase in revenues.   

Retailers are increasingly using digital advertising that leverages new media because of its broad reach, cost-effectiveness and measurability. Websites and the use of social media are commonplace in the retail industry. Digital advertising is beneficial when it engages and calls for action from the customer (Tiago and Veríssimo 705). Effective online channels not only persuade the customer to make purchases but also facilitate the payment and collection of goods by the customer. Moreover, online advertising can avail enormous volumes of customer data that can be used to target customers more accurately and personalize advertisements based on the customers’ attributes. Besides, online technologies enable the measurement of the effectiveness of the advertising campaign through the metrics they generate. However, digital advertising is ineffective when unsolicited advertisements keep interrupting the browsing experience of computer and mobile users. Moreover, lack of analysis of the online metrics such as traffic and sales can hamper the evaluation of the effectiveness of digital marketing. Therefore, digital advertising works best when it targets specific segments of customers accurately and keeps them engaged. Also, digital advertising is works well when it generates viral word-of-mouth (WOM), also known as electronic work of mouth (e-WOM), which makes customers to be brand ambassadors of the retailers and their products (Roumieh and Garg 2). This lowers the cost of advertising because the customers are not paid for their advertising service. Besides, friends and family influence each other’s buying decisions, improving the advertising outcomes. However, digital advertising will not work when it is intrusive into people’s privacy, excites customer expectations beyond what the firm cannot offer, is met by negative sentiments from customers, and does not engage the consumers sufficiently.      

New trends

Technological advancements and changing consumer attributes have instigated new trends in the advertising industry that entrench the shift from traditional approaches towards digital advertising. Mobile technologies have enabled people to get and interact with advertisements while on the go. Likewise, augmented reality (AR) is improving the shopping experience of consumers (Ting, et al. 4). Besides, the millennials and Generation Z are a new generation of consumers who despise being interrupted, prefer multitasking and are very particular about their tastes and preferences (Hays). Therefore, artificial intelligence (AI) is the new trend that is increasingly being adopted by advertisers because it enables better targeting of consumers through the personalization of advertisements (Ting, et al. 4). Targeting advertising is gaining popularity in the industry because of its ability to accommodate the different types and preferences of consumers. Since potential customers are very particular about products and services that meet their unique needs, artificial intelligence uses machine learning to unearth the unique customer characteristics and preferences. It also helps tailor advertisements for individuals based on this information. Besides, artificial intelligence improves the accuracy of advertising campaigns by eliminating speculations and ambiguity, especially in programmatic advertising. Likewise, AI enhances the quality of the content, which remains central in advertising effectiveness (Hays). However, due to increased privacy concerns among consumers, contextual advertising that is enabled by artificial intelligence is gaining popularity. This allows the characteristics and interests of the targeted consumers to be determined without withholding personal data.

Also, videos have become more popular, especially among Generation Z, who make up a significant proportion of the targeted customers. Considering that 74 % and 41 % of American consumers watch videos weekly and daily, respectively, while Gen Z watch an average of 68 videos daily, consumers can be better targeted using advertisements rich in video content (Davies). Generation Z, who make about a third of all consumers, prefer being engaged in the advertisements considering that they are very creative and value the opinions of their peers highly. Therefore, co-created advertisements made using crowd-creation involving Gen Z are likely to drive up sales among this cohort, whose buying decisions are influenced by peers. Indeed, user-generated content and influencers will continue featuring in advertising more to capture the interest of consumers (Tiago and Veríssimo 706). 

On-demand viewing is encouraging advertisers to innovate direct-to-consumer (DTC) advertising over the television, mobile devices and digital media players using internet technologies (Davies). Innovative advertisers are now streaming campaigns through smart televisions and over-the-top (OTT) applications, which the targeted consumers can access at their convenience. Moreover, over-the-top (OTT) ad streams can be accessed from any location and while the targeted consumer is on the move.  

Recommendations

To evaluate the advertising campaign used by the company, the following is recommended.

Firstly, the firm needs to measure the effectiveness of the advertising campaign. This can be done by determining the influence the campaign has had on the number of customers. For instance, the change in the number of customers entering the firm’s store should be determined by comparing the number before and after the advertising campaign. Besides, the difference in sales volumes before and after the campaign should be determined. If more customers visited the physical store or the online shop after the campaign, the advertisement initiative was effective. Moreover, the number of new and return customers before and post-campaign should be compared. However, if the increased store visitations do not correlate to sales volumes after the campaign, the reduction in sales may be attributed to factors different from the advertisement campaign.

Secondly, the number of customers showing interest in the company and its products before the advertising campaign should be compared against the numbers after the campaign. This can be done by comparing the number of inquiries and online traffic before and after the campaign. Other online metrics that can be used to evaluate customer interest include bounce-rates, social media engagement, search engine referrals, and firm and product reviews (Ansari and Riasi 23). Google analytics should be used by the firm to measure these metrics. If the promotional campaign increased the consumers’ interest but did no persuade then to make purchases, the sales slump may be attributed to poor conversion rates. As such, the advertising campaign may have been badly designed such that it did not help convert prospective customers into buyers. Alternatively, the reduction is sales may not be associated to the advertising campaign but to factors related to the brand or products.

Thirdly, the value of the brand and its products in the collective minds of consumers before and after the advertising campaign should be measured. This should be done using perception surveys conducted physically or online. While physical surveys are challenging and expensive to execute, online surveys are recommended for their cost-effectiveness, speediness, and broad reach. These surveys should be conducted before and after the advertising campaign to discern any changes in the perceptions of customers.     

Conclusion

Retailing firms experience a reduction in sales that can endanger company performance and survival in a highly competitive industry. Ineffective advertising may cause sales slumps due to lack of innovativeness, inability to excite prospective customers to make purchases, and failure to change customers’ perceptions about the company and its offerings. However, measuring the effectiveness of an advertising campaign can unearth some of the causes of slowing sales in the firm. Such measurements should reveal the changes in the conversion of prospects to buyers, the efficiency of the sales conversion process, and the changes in customer perceptions about the firm and its products. An effective advertisement campaign should generate customer interest, increase customer traffic, persuade customers to make purchases and facilitate the payment for and collection of purchased goods. Various tools, including big data analytics, can help evaluate and improve the effectiveness of the firm’s promotional campaigns. Altogether, if the advertising campaign of the firm generated customer interest and drove traffic to the firm’s stores but did not excite customers enough to make purchases, it may have been poorly designed. Alternatively, the causes of slumped sales may lie elsewhere other than the advertising strategy if sufficient interest and traffic were generated. Issues related to the firm’s brand or its products and the shopping experience may have led to sales reduction. 

Works Cited

Agostini, Lara, Roberto Filippini, and Anna Nosella. “Brand‐building efforts and their association with SME sales performance.” Journal of Small Business Management, vol. 53, 2015, pp. 161-173.

Ansari, Azarnoush, and Arash Riasi. “An investigation of factors affecting brand advertising success and effectiveness.” International Business Research, vol. 9, no. 4, 2016, pp. 20-30.

Davies, Krystle M. “Digital advertising trends to watch in 2019 and beyond.” Forbes. 28 May 2019. https://www.forbes.com/sites/forbescontentmarketing/2019/05/28/digital-advertising-trends-to-watch-in-2019-and-beyond/#22d5aee1ee68.

Hays, Katherine. “Advertising trends you should consider in 2019.” Entrepreneur. 17 January 2019. https://www.entrepreneur.com/article/326236.

Tiago, Maria Teresa Pinheiro Melo Borges, and José Manuel Cristóvão Veríssimo. “Digital marketing and social media: Why bother?” Business Horizons, vol. 57, no. 6, 2014, pp. 703-708.

Ting, Hiram, Kim-Shyan Fam, Yoong-Wai Chan, and Jun-Hwa Cheah. “Editorial–Ten trends shaping the future of marketing: Considerations for the academics.” Asian Journal of Business Research Volume, vol. 9, no. 1, 2019, 1-10.

Verhoef, Peter C., Pallassana K. Kannan, and J. Jeffrey Inman. “From multi-channel retailing to omni-channel retailing: introduction to the special issue on multi-channel retailing.” Journal of Retailing, vol. 91, no. 2, 2015, pp. 174-181.

Yan, Ruiliang, Chris Myers, John Wang and Sanjoy Ghose. “Bundling products to success: The influence of complementarity and advertising.” Journal of Retailing and Consumer Services, vol. 21, no. 1, 2014, pp. 48-53.

Roumieh, Ahmad, and Lalit Garg. “E-marketing strategies exploiting social media for Islamic banking.” International Journal of Emerging Technology and Advanced Engineering vol. 4, no. 2, 2014, pp. 1-9.