Promotion

What this topic is about

• What is promotion?• Effective methods of

promotion for different types of product/business

• Factors to consider when choosing the promotional mix

Promotion = marketing communication

• Communication techniques aimed at informing, influencing and persuading customers to buy or use a particular

• It involves communication about the product or service

• Promotion is an element in the marketing mix

The Many Uses of Promotion

• Increase sales• Attract new customers• Encourage customer

loyalty• Encourage trial• Create awareness• Inform• Remind potential

customers• Reassure new

customers

• Change attitudes• Create an image• Position a product• Encourage brand

switching• To support a

distribution channel

Main Aims of Promotion

• The main aim of promotion is to ensure that customers are aware of the existence and positioning of products

• Promotion is also used to persuade customers that the product is better than competing products and to remind customers about why they may want to buy

Promotional mix

• The specific mix of promotional methods that a business uses to pursue its marketing objectives

• The main elements of the mix are:– Advertising (offline & online)– Sales promotion & merchandising– Personal selling– Public relations/publicity / Sponsorship– Direct marketing

• The elements must be integrated in a cohesive, consistent and logical manner

Composition of promotional mix depends on:

Stage in the product’s life cycle

E.g. advertising & PR are often important at the launch stage

Nature of the product

What information do customers require before they buy?

Competition What are rivals doing ? What promotional methods are traditionally effective in a market?

Marketing budget How much can the firm afford?

Marketing strategy Other elements of the mix

Target market Appropriate ways to reach the target market

Two tests of promotional effort

Was it effective?

Did it achieve its objectives?How was response measured?

Was it efficient?

Were objectives achieved at the acceptable cost?Were any promotional overspends justified by better-than-expected sales?

Promotional effectiveness and efficiency

Effective Ineffective

Efficient Objectives achieved at lowest costs

Effective and cost efficient

Low promotion budget but objectives not achieved

Inefficient Objective achieved but at high cost

Expensive promotion which fails to achieve objective

Advertising

• Paid-for communication• Many different advertising

media– TV & radio, newspapers &

magazines, online, cinema, billboards

• Consumers subjected to many advertising messages each day = hard to get through

• Mass market advertising is very expensive

Advertising + / -

Advantages Disadvantages

Wide coverage

Control of message

Repetition means that the message can be communicated effectively

Can be used to build brand loyalty

Often expensive

Impersonal

One way communication

Lacks flexibility

Limited ability to close a sale

Personal selling

• Promotion on a person to person basis

• Two way communications• Meeting with potential

customers to close a sale• By telephone, at meetings, in

retail outlets and by knocking on doors

• Highly priced, low volume and highly technical products rely heavily on personal selling

Personal selling + / -

Advantages Disadvantages

High customer attention

Message is customised

Interactivity

Persuasive impact

Potential for development of relationship

Adaptable

Opportunity to close the sale

High cost

Labour intensive

Expensive

Can only reach a limited number of customers

Sales promotion

• Tactical, point of sale material or other incentives designed to stimulate purchases

• Short term incentives to increase sales

• Some promotions aimed at consumers; -others at intermediaries or sales force

Examples of sales promotion

• Coupons• Money off• Competitions• Demonstrations• Free samples• Loyalty points

• Free gifts• Point of sale

displays• BOGOF• Merchandising• Trade in offers

Sales Promotion + / -

Advantages Disadvantages

Effective at achieving a quick boost to sales

Encourages customers to trial a product or switch brands

Sales effect may only be short-term

Customers may come to expect or anticipate further promotions

May damage brand image

Merchandising

• The process of maximising the effectiveness of retail distribution

• Displaying products to maximise sales

• Usually operates at the “point-of-sale”

Public relations (“PR”)

Activities that create goodwill toward an individual, business,

cause or product

Main Aims of PR

• To achieve favourable publicity about the business

• To build the image and reputation of the business and its products, particularly amongst customers

• To communicate effectively with customers and other stakeholders

Typical PR Activities

• Promoting new products• Enhancing public awareness• Projecting a business image• Promote social responsibility• Projecting business as a good

employer• Obtain favourable product

reviews / recommendations

Sponsorship

• Sponsorship takes place when a payment for an event, person, organisation is given in return some consideration of benefit

• A specialised form of public relations

• Common in the worlds of arts and sport

• Sponsorship should benefit both sides

Direct Marketing

Promotional material directed through mail, email or telephone to

individual households or businesses

Why Use Direct Marketing?

• Allows a business to generate a specific response from targeted groups of customers

• Allows a business to focus on several marketing objectives:– increasing sales to existing customers – building customer loyalty – re-establishing lapsed customer relationships – generating new business

Direct marketing + / -

Advantages Disadvantages

Focus limited resources on targeted promotion

Can personalise the marketing message

Relatively easy to measure response & success

Easy to test different marketing messages

Cost-effective if customer database is well managed

Response rates vary enormously

Negative image of junk mail and email spam

Databases expensive to maintain and keep accurate

Test Your Understanding

http://www.tutor2u.net/business/quiz/promotion/quiz.html

Promotion