CHAPTER 9THE PROMOTION MIX

THE THREE BASIC OBJECTIVES OF PROMOTION THE GOLDEN RULES (OF PROMOTION)

Set Basic (or broad) Objectives First There are Specific Objectives Develop the Promotion Mix (or Integrated Marketing Communication) Informal Communications (including social media) And Keep Within Budget

PROMOTION METHODS: USES AND LIMITATIONS Advertising Publicity Personal Selling Sales Promotion

PROMOTION MIX DECISION FACTORS AFFECTING THE PROMOTION MIX

Product Characteristics Size of the Budget Promotion Objectives Product Life Cycle Push and Pull Promotion Product Adoption Process

PERSUASIVE COMMUNICATION Credibility of the Source Nature of the Message Effectiveness of the Medium Target Audience

01. THE THREE BASIC OBJECTIVES OF PROMOTION

Promotion, or marketing communication, is used to Inform, Persuade or Remind customers.

Informative promotion aims to provide ample product information to educate first time buyers.‐ Informative advertisements tend to be wordy — and should be ideally placed on websites.

There is usually an element of persuasion in most promotional mess ages. Persuasion attempts to change the customer’s mind, attitude, beliefs, action or behavior. “Hard sell” promotion is highly persuasive.

Customers may need to be reminded of the product and its benefits. This applies to established brands in order to maintain top of mind awareness or recall. Despite being one of the‐ ‐ world’s most established and well known brands, Coca Cola is still being heavily promoted.‐ ‐

02. THE GOLDEN RULES (OF PROMOTION) Set Basic (or broad) Objectives First There are Specific Objectives Develop the Promotion Mix (or Integrated Marketing Communication) Informal Communications (including social media) And Keep Within Budget

2.1 Set Basic (or broad) Objectives First

A given marketing situation requires a particular objective to be set. (Information)For example, marketing a new product requires the target markets to be adequately informed of the product’s existence and benefits. Microsoft, announce the launch of its new Windows® 7 operating system. Gillette with its new 5 blade Fusion razor. ‐

In another situation, consumers may need to be persuaded to act (e.g. to trial a new brand). Coca Cola gave out millions of sample cans of its C2 in the US. A salesperson has to be rather‐ convincing and credible in order to persuade a consumer to adopt the less popular but more efficient front loading washing machine (as opposed to the common top loader). ‐ ‐

2.2 There are Specific ObjectivesIn most cases, basic objectives are sufficiently detailed for the planning of the promotion mix. However, in more complex situations, these objectives could be expressed more specifically to determine the best promotion methods to use.For example, “to encourage trial use” is a more specific version of the persuasive objective and can best be achieved through sales promotion. Similarly, “to maintain a long term buyer seller relationship” is a ‐ reminder objective that can be addressed using personal selling (faceto face).‐Other specific promotion objectives include create awareness & interest, position the brand, build brand loyalty, change opinions, educate customers, encourage brand switching, draw attention, etc.

2.3 Develop the Promotion Mix (or Integrated Marketing Communication)A promotional campaign is usually planned for the following 12 months and during that period multiple objectives are required.Example: create mass awareness and interest, encourage evaluation and trial within 2 weeks, build buyer seller relationships and reposition a brand. ‐Each promotion method has its own uses and limitations and a combination of these promotion methods is required to meet different objectives. It is this combination that is often referred to as the promotion mix, and should include all the 4 methods of promotion. Each element is allowed to work independently but not separately from each other — they must work collectively to achieve the set objectives —known as integrated marketing communication or IMC.

2.4 Informal Communications (including social media)Can be more effective than formal promotion. Communications can take place between

individuals — peers, family members, colleagues and so on. Such method of spreading the message is known as informal promotion or word‐of‐mouth. It is largely uncontrolled and is spread through social interaction – especially via social media like Facebook. It is the most effective form of promotion mainly because of its credibility factor, with the exception of social media.

She may have actually used that brand and certainly does not have a vested interest in it. Publicity is also another credible and effective form of mass promotion.

2.5 And Keep Within BudgetEffectiveness is about output, but efficiency is also concerned with input — in this case, promotion expenses or costs. Businesses operate on a budget, often limited and fixed. The promotion budget may have to be stretched in order to meet all the objectives set out for the year. Efficient promotions are those that work but with minimal wastage. Because promotion is about reaching customers, wastage happens when the wrong people are targeted.

3. PROMOTION METHODS: USES AND LIMITATIONS

(Detailed discussion in the next chapter). However, their uses and limitations (advantages and disadvantages, etc.) will be examined here first — because the promotion mix is concerned with the application of these methods. Each method has its own characteristics and is used to achieve specific promotion objectives. It is very important to understand what each method can and cannot do effectively. Promotion is expensive and a “shot in the dark” approach amounts to wastage.

3.1 AdvertisingAdvertising is any paid form of non personal presentation and promotion of products and ideas by an‐ identified sponsor, i.e., the advertiser. Uses and advantages.

It can communicate a single standard message to the masses at a low cost per person reached. Through audio visual media such as television and cinemas, advertising can be ‐ expressive or

dramatic. The idea is to get and hold attention Gradually over time, regular advertising can pre‐sell the product or brand to potential

customers, i.e., raise their awareness of, and interest in, the advertised product. We may have a strong view on the heavily advertised Calvin Klein brand, yet many of us haven’t actually owned or used any of his designer products.

Its versatility makes advertising the most used of the 4 methods of promotion. Advertising can achieve many different objectives such as raising awareness, creating interest and positioning a brand. It’s because of such versatility that marketers are sometimes falsely led to believe that advertising is a panacea for all disappointing sales.

Limitations. Advertising is impersonal. It’s a one way communication process whose impact may not be‐

immediately gauged. It works but it is hard to measure the result — mainly because there may be a lag time

between exposure and action. A product may be advertised today but the increased sales may come months later. The only situation where advertising effect is more measurable or certain is where the response is expected immediately (commercial on TV where the customer is expected to call up ‐ now or visit the store soon)

By definition, advertising has high total costs because it uses the mass media. Advertising is intended to reach the masses.

Advertising is a passive form of promotion because it is impersonal and is easily avoided — change the channel, turn the page.

It is also known for its bias — not as credible as publicity or word of mouth. Advertising comes‐ ‐ from the advertiser — a business whose intention is to sell products. The educated public is suspicious of advertisements that bend the truth

3.2 PublicityWhen a mass medium highlights an event or a story about a company or its products, publicity is generated. When a scheduled TV program, radio program or an article features a celebrity, product or company, publicity is generated. Uses and advantages.

Journalists specialize. They are seen as experts in their own specialty area. When a motoring editor reviews a new motor vehicle, his/her views are seen as credible and objective — at least more so than most advertisements. The integrity and independence of the mass media is paramount and should not be compromised.

Many mass media are “sympathetic” towards businesses that are heavy advertisers in their medium and will try to avoid reporting negative news about them.

Publicity itself is free — but getting it may not be. The media do not seek payment from anyone for the publicity (news) that they generate. By the same token, they shouldn’t be able to be bought by business for favors such as good news or “non news”. ‐

Because publicity is news, it gets the attention of the reader or viewer. Advertisements are rather obvious and could easily be avoided. Publicity is news — we read the newspaper or

watch the evening news for news. We read magazine stories or articles and these often contain information about companies, products or brands — positive or negative.

Limitations. A business will not have much control over the timing of the publicity story, or its actual

content. Some information may be left out completely or edited to suit. Although, information is fed to the media (by the business or its PR agent), the independent media is ultimately responsible for the final content or its accuracy — reporting it as they deem fit.

It’s unlikely that the media will give continued or repeat coverage of the same event. The mass media is usually interested only in current newsworthy events.

3.3 Personal SellingPersonal selling is any face to face promotion of the company and its products to the customers. ‐ ‐Job titles can be misleading. Personal selling is an activity or task — not a job title. A senior loans officer, when explaining the different types of loans to a customer, is involved in personal selling. Universities and colleges have agents to recruit overseas students — they are engaged in personal selling. They use personal selling again to maintain a strong relationship with these customers for a life long business.‐

Uses and advantages. Personal selling is the only promotion that is personal and can be personalized. It can be

effective because of the persuasiveness of the sales staff. The seller can even adapt the flexible presentation (or message) to suit the situation — even

allowing the customers to experience the product hands on. ‐ Because of its personalized nature, face to face selling can be employed to foster a ‐ ‐ seller‐buyer

relationship. (like fitness centers, banks, colleges, hairdressers) Obtaining immediate customer feedback (response). Want anecdotal responses from the

customers? Ask the sales staff.

Limitations. Personal selling is very expensive if salaried sales representatives are used. A sales staffer can

only conduct so many dealings with customers a day — a limited market. Salary or partial salary is necessary in order for these representatives to perform non selling tasks like‐ preparing reports or obtaining feedback.

3.4 Sales PromotionTrade sales promotion activities are usually short term incentives designed to induce retailers into‐ “stocking and supporting” certain products or brands. Most retailers are very particular about the products that they carry — goods well bought are half sold. Unsold stock is their burden and they become conservative buyers as a result. Suppliers (manufacturers or importers) reward these retailers for not only stocking their brands but also supporting them — better and more shelf space, etc. Consumer sales promotion includes the various incentives given directly to consumers to encourage them into “action” — to sample or switch brands or purchase impulsively. A retailer’s sales promotion includes incentives to attract shoppers, increase the size of purchase and build store loyalty.

Uses and advantages. Sales promotion incentives can be very effective (or persuasive) because of the reward factor.

They are quick to work — obtaining an immediate response. Customers who act quickly and accordingly are rewarded. Discounted merchandise induces customers into buying impulsively. Free samples encourage a quick product trial, and so on.

Limitations. An incentive given is less effective if offered continuously. Sales promotion works better over a

short period. The regular offering of incentives will only encourage customers to delay a purchase until there is a “special

It is okay for consumers to stock up on chocolate biscuits if they are on special, it’s not the same with toilet paper. Stocking up of chocolate biscuits will increase consumption — buy more, eat more. But hoarding toilet paper will hopefully not lead to more consumption — the consumer simply postpones buying for the next 6 months or so!

Moreover, incentives are not cheap to provide, especially when regular customers take advantage of special deals intended for new customers. For example, a Pizza Hut’s $6.95 voucher for a large pizza may be given to meet competition. However, very loyal customers living nearby take advantage and they too use the voucher.

4. PROMOTION MIX DECISION

Promotion campaign or plan should consist of a combination (mix) of the different methods of promotion — or integrated marketing communication (IMC). This promotion mix is given a budget, and the marketer has to decide on the best way to allocate the budget to the various promotion

methods and their variations:

1. Consumer Advertising — advertisements directed at the consumer though the mass media. Among other objectives, the main idea is to stimulate consumer demand by getting these end‐users to “pull” the product through the distribution channel. Hence, a “pull” promotion.2. Trade Advertising — suppliers advertise directly to the retailers.Trade advertisements appear in trade or industry magazines, and websites.3. Direct Marketing Activities — using a combination of mail outs, personal visits, telephone ‐calls and advertising emails to reach specific target customers. These high cost activities ‐rely on accessing the right target customers with the hope that they will respond.

4. Publicity — publicity itself is free, but public relations activities are often managed professionally by contract PR firms. Even if done in house (by the public affairs department, ‐etc.), it’s a cost. Universities’ open days or expositions are all publicity oriented events.‐

5. Sponsorship — is a hybrid of advertising and publicity. Sponsoring an event, a team or an individual serves to promote the company and its products. Naming‐rights is a form of sponsorship and is common in sports (team, venue, competition,

etc.). 6. Consumer Sales Promotion — are short term incentives or inducements given to the ‐consumers to “act”.7. Trade Sales Promotion — are incentives or inducements offered to retailers to encourage them to “stock and support” the product.8. Personal Selling — normally the salesforce’s budget is separate from the promotion budget because traditionally, the salesforce is managed by the sales department — which is a separately managed cost center from the marketing ‐ department.

5. FACTORS AFFECTING THE PROMOTION MIX

5.1 Product Characteristics Convenience products are bought on a self‐service basis with almost no promotional input

from the retailers. In this case, the manufacturer should spend more on consumer promotion (publicity, advertising, consumer sales promotion) to provide product information and incentives directly to the consumers

Shopping products require some or extensive in‐store promotion, mainly because consumers are not too familiar with these products. In such cases, the manufacturer should promote more to the retailers (trade promotion) to get them “on side”, i.e., support the brand.‐

Specialty brands are products insisted on by the target market and therefore require relatively limited amounts of promotion. Direct marketing activities can effectively reach this relatively small market. Some form of personalized selling is usually necessary for the marketing of

Unsought products. Recall that these products are extremely difficult to sell because of low consumer interest or desire. It’s hard to persuade someone healthy to buy life insurance.

5.2 Size of the Budget

Obviously, the size of the promotion budget affects the composition of the promotion mix. For example, national advertising and sales promotion activities are limited to businesses with a sizeable promotion budget.

Promotion ObjectivesEach promotion method has its own uses and limitations and, therefore, is suitable only for some objectives, i.e., different objective, different method. Some of these specific objectives will be identified in the next chapter under their respective promotion methods.

5.3 Product Life CycleThe promotion mix is different during each stage of the product life cycle because each stage has specific objectives. For example, to encourage early trial of the product, free samples or an introductory price may be offered. Also, in the early stages of the life cycle, trade support is crucial to “kick start” the market. The maturity stage is concerned with sustaining long term consumer demand for the product through‐ repeat purchases. Therefore, advertising is usually reduced to a reminder level.

Push and Pull PromotionPush promotion is a planned effort to increase retailers’ support for the product or brand. Likewise, pull promotion is a conscious effort to stimulate consumer demand. Ideally there should be a balanced push pull promotion.‐In practice, this is seldom the case for off brands or the lesser known brands. These brands can be‐ ‐ successful because they are there (in the shops) and priced to sell. Consumer demand is actually created in store — almost impulsively. Such brands save on pull promotion, but have plenty of “push”.‐On the other hand, the reverse can be risky — i.e., spending on pull promotion but not on push. In general, push comes first, i.e., supply first — unless the product or brand is so special that consumers are willing to be wait listed. This did happen with the delayed release of the Sony PlayStation 3 in‐ Australia.

5.4 Product Adoption ProcessPotential buyers must become aware of the existence of the new product first. Some will begin to show some interest in the product and may actually visit a retail outlet to evaluate or trial the product personally. This 4 stage model is known as the ‐ product adoption process (PAP).

Advertising and publicity are ideal for creating awareness and interest among the masses. Those few who visit a retail outlet for evaluation or trial will encounter personal selling. The decision to purchase may be influenced by some added incentive from sales promotion.

Ex: a bank introduces a new type of student loan. It will spend on advertisements to create awareness. Those interested enough to approach the bank for further information (evaluation) will be met by a staff member and personal selling takes place. A sales promotion incentive such as a discounted interest rate for the first 6 months may be offered to encourage the students to quickly take up the loan.

6. PERSUASIVE COMMUNICATION

Promotion is market communication, and in most communication there is a degree of persuasiveness. No matter how much information is conveyed to the customers, the ultimate intention is to persuade them into a particular course of action or behavior. Persuasive promotion is developed to influence, to convince.

Why are some advertisements more effective than others? It was carefully planned and executed based on a good understanding of the persuasive communication process. Marketers use this model to work out aspects of their promotion in order to increase its persuasive power over its target market.

6.1 Credibility of the SourceIf the source is credible likely to be persuaded, convinced or influenced or believable. Credibility is linked to expertise. Tiger Woods is paid millions to endorse Nike branded golf equipment and golf‐ ‐wear.

6.2 Nature of the Message Rational messages are information that contain mainly facts, hard evidence or factual

arguments to make the audience think, i.e., rationalize or reason. Marketing graduates earn an average of $40,000 in their first year of employment. 80% of these graduates secured a full‐time job within 3 months of graduation. Think about it!

Emotional messages are used to persuade customers emotionally — making them “feel” rather than “think”. We are easily persuaded by emotions. Emotional messages work well when promoting a social cause such as safe driving, anti smoking, a drug free life and so on.‐ ‐

The positive reinforcement approach is about rewarding good behavior. For example, the message, “lack of calcium can lead to osteoporosis” is fear appeal, whereas “enjoy a healthy lifestyle — drink more milk for stronger bones” is rewarding good behavior.

One‐sided versus two‐sided argument. The truth is that most advertisements or company promotions are biased. They are known to only present the positive aspects of the product and many of these are exaggerated.

Repetition. The promotional message, especially advertising, can be repeated over time

6.3 Effectiveness of the MediumSome types of media (face to face, TV, cinema) tend to be more effective than others — perhaps‐ ‐ because of the difference in target audience and the characteristics of the media such as the visual and aural experience. Generally, face to face is the most effective because the presentation is experienced by many of the‐ ‐ five senses. Media credibility is source credibility in the case of editorials. The medium’s credibility or integrity can rub off on the advertisements that it carries.

6.4 Target AudienceDifferent audience groups do respond differently to the same message. Their demographic and socio‐cultural differences must be considered when developing promotional messages, such as in advertisements or sales pitch. Intelligent people and those with high self‐esteem are not easily influenced. They tend to seek rational arguments based on facts. They are more “thinkers” than “feelers”. Children tend to be more easily persuaded by emotions — their reasoning ability is undeveloped. Presenting nutritional facts to them is a waste of time! Some non mainstream religious sects use the leader’s charisma and other inducements to lure new‐ followers. However, the gullibility or vulnerability of these followers stems from their low self esteem‐ or self respect.‐