Download The Promotional Mix

PROMOTION IN MARKETING
Promotion is one of the four Ps of the Marketing Mix (Product, Place, Price, & Promotion). As such it is
any activity that helps in the exposure or sale of a product. Promotion is persuasive communication.
Companies use promotional techniques to enhance their public image and reputation, and to persuade
people to value their products. Nonprofit and charitable organizations rely on promotional activities to
educate the public about an issue or cause. They also use it to advocate for changing laws or policies.
The goals of promotional activities are summarized by the phrase for the acronym AIDA—first attract
Attention, then build Interest and Desire, and finally ask for Action.
As You Read
Contrast Distinguish between the different types of promotion.
Product promotion is a promotional method used by businesses to convince prospects to select their
goods or services instead of a competitor's brands. Promotional activities explain the major features and
benefits of the product, identify where it is sold, advertise sales, answer customer questions, and
introduce new offerings. Product promotion also helps businesses foster good relations with existing
customers. These positive relations enhance customer loyalty.
“Companies
use promotion to build awareness and inform people
about their products.”
Institutional promotion is a promotional method used to create a favorable image for a business, help it
advocate for change, or take a stand on trade or community issues. As part of institutional promotional
efforts businesses maintain Web sites to provide news, product and general information, and to answer
questions. Institutional promotions do not directly sell a product. However, these activities do build
goodwill to enhance a company's reputation and foster a favorable image for the company. This image
may also help sales efforts.
Reading Check
Recall What are two types of promotion?
Promoting a Business
Institutional promotion is an important type of promotion. How does endorsement by a research
company benefit a business?
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TYPES OF PROMOTION IN THE PROMOTIONAL MIX
The promotional mix is the cost-effective combination of personal selling, advertising, direct marketing,
sales promotion, and public relations strategies used to reach company goals. Each of the five basic
categories in the promotional mix plays a vital role in promoting businesses and their products.
Through advertising, direct marketing, sales promotion, and public relations, companies communicate
with customers in many ways other than direct contact. Personal selling, on the other hand, requires
direct personal contact with the customer.
PERSONAL SELLING
Personal selling requires sales representatives to generate and maintain direct contact with prospects
and customers. Direct contact like this can take the form of personal meetings, in-home demonstrations,
e-mail and telephone correspondence.
Personal selling is one of the most expensive forms of promotion. Typically, personal selling takes place
after other promotional activities have been tried.
ADVERTISING
Advertising is a form of nonpersonal promotion in which companies pay to promote ideas, goods, or
services. These promotions are presented through a variety of media outlets.
Advertising can be found everywhere, on billboards, business cards, brochures, Internet, magazines,
newspapers, phone directories, grocery store receipts, radio, television, sports arenas, cars and buses,
restaurant menus, and Web sites. With advertising, a company engages in a one-way communication to
the customer and prospective customer.
DIRECT MARKETING
Direct marketing is a type of promotion that companies use to addresses individuals directly and not
through a third party medium (such as television, radio, or the Internet). One traditional form of direct
marketing is direct mail, which is sent via standard mail to a home or business. Another form is
telemarketing in which customers are called on the phone and asked directly for goods or services.
Direct marketing is a special type of advertising. How does direct
marketing differ from advertising?
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Promotions are also done through e-marketing to reach consumers who use the Internet to shop and
research information. E-marketing is any promotion that is delivered via the Internet. It includes search
engine marketing (paid search), Web site optimization, e-mail marketing, mobile phone applications
(apps), and the use of social media.
Social media is electronic media that allows people with similar interests to participate in a social
network. Social networks, such as Facebook ®, MySpace®, LinkedIn®, YouTube®, and Twitter®, help
businesses reach prospective customers.
The goals of direct marketing are to generate sales or leads for sales representatives to pursue. Direct
marketing gives recipients an incentive to respond by visiting a store or Web site, calling a toll-free
number, returning a form, or sending an e-mail. Targeted customers receive special offers or incentives,
such as money-off coupons, limited-time sales, special merchandise offers, loyalty points for future
purchases, and free delivery.
Both print and electronic direct marketing allow a business to engage in one-way communication with its
customers about product announcements, special promotions, bulletins, customer inquiries, and order
confirmations. However, as a result of consumer complaints about unwanted electronic direct mailings,
Congress passed the CAN-SPAM
Act of 2003. This act requires senders of unsolicited commercial e-mail to give recipients a way to opt out
of e-mails. It also prohibits the use of deceptive subject lines and headers. In addition, it requires
businesses to provide valid return addresses on their e-mails.
The Federal Trade Commission banned many pre-recorded, automated telemarketing solicitations, or
“robocalls,” in 2009. However, certain automated calls from charitable organizations, politicians, and
healthcare providers are permitted. Telephone calls made by humans for selling products and services
are also allowed unless the phone number is listed on the National Do Not Call Registry.
SALES PROMOTION
According to the American Marketing Association (AMA), sales promotion represents all marketing
activities—other than personal selling, advertising, and public relations—that are directed at business or
retail customers to boost sales. Sales promotions include coupons, money-off promotions, competitions,
product samples, and point-of-purchase displays. The objectives of sales promotions are to increase
sales, inform potential customers about new products, and create a positive business or corporate image.
Electronic Appeal An e-mail message costs about $7 per response versus $48 for traditional
direct mail.
PUBLIC RELATIONS
Public relations (PR) activities help an organization to influence a target audience. Public relations
campaigns try to influence general opinion and create a favorable public image for a person, organization,
or a company, its products, or its policies. An example is a campaign to encourage business to sponsor
the Children's Miracle Network, a national network of children's hospitals. Sponsors are featured in
publications, print ads, mentioned during radio fund-raisers, and also help distribute paper miracle
balloons for customer donations at local outlets. Public relations staff try to cultivate a positive image with
reporters who may cover a specific industry.
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FIGURE 17.1
News Release
Step-by-Step Directions News releases sent through postal mail to the media should be double-spaced
and typed on letterhead stationery. Margins should be about one-and-one-half inches to allow the editor
to make notes. Always submit copy that is clean, legible, and free of spelling errors. News releases
published on a Web site are limited by the design of the Web page, but must also identify the company
and follow the rules listed below. What kind of news goes in a news release?
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WRITING NEWS RELEASES
Although there are many media tools, one of the most important ones is the news release. A news
release is an announcement sent to the appropriate media outlets (see Figure 17.1).
The release announces newsworthy developments about a company's goods or services, distribution
channels, facilities and operations, partners, revenues and earnings, employees, and events.
As you can see from the figure, there are many parts of the news release that do not change. It is
important for companies to format their news releases correctly. This format makes it easier for the
audience to find and use information.
USING SOCIAL MEDIA
Businesses also use social media to interact with customers and get feedback on the company, its
products, and services. People communicate and maintain a degree of personal control through the
Internet, cell phones, and input devices. Social networks provide businesses with a way to obtain
opinions and speak directly with potential and existing customers. The potential to reach prospective
customers is tremendous. For example, Facebook allows businesses and organizations to create unique
profiles, sign up fans, send messages, and create status reports. Businesses can reach more than 400
million users on Facebook.
PUBLICITY
Through news releases and social media, businesses gain publicity.Publicity involves bringing news or
newsworthy information about an organization to the public's attention. This process is known as
placement.
In addition its use by businesses, publicity can also make the public aware of certain people, specific
products or services, efforts by nonprofit or government agencies, and arts and entertainment
opportunities. A public rally for a political issue or candidate is aimed at raising publicity among voters at
election time. When a recording artist is interviewed on the radio, that singer or band is trying to publicize
their music.
A publicity campaign can be launched to achieve various goals. The main function of publicity is to
develop a positive perception or awareness of the organization and its products in the marketplace. The
right kind of publicity can create and maintain a company's positive image. However, negative publicity
can devastate it. People like to do business with respectable companies. Companies engage in such
image-building activities as sponsoring cultural events, awarding scholarships, and donating money, land,
or equipment for public use.
Unlike advertising, the placement of publicity is free. For example, a one-minute story on the evening
news about a company costs nothing. However, a few seconds of advertising time on the same broadcast
can cost thousands of dollars.
Cost is not the only advantage of publicity. Newspapers, television and radio news programs, and
customer-generated responses through social media are usually viewed as more objective than
advertisers. People are more likely to pay attention to and believe news stories and customer feedback
than advertisements. Publicity might appear as a media story or as part of a larger story or report. These
formats make the information appear more credible to many people.
The disadvantage of publicity is that its content, unlike paid advertising, is not controlled by the business
that issues it. The media select the context and story angle and decide when and how to present the
content.
Short-post forums on Twitter, YouTube videos, and customer-generated online opinions on social
networking sites can quickly spread negative or unverified stories. This kind of negative publicity is likely
to get as much attention as positive stories about company products or community contributions.
Businesses work to generate positive publicity and avoid negative publicity through effective public
relations.
Reading Check
Recall What are the major types of promotion in the promotional mix?
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FIGURE 17.2
Developing a Promotional Mix
Strategies to Reach the Goal The promotional activities that marketers choose for promoting a particular
product form the promotional mix. How do the elements in a promotional mix work together?
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THE CONCEPT OF PROMOTIONAL MIX
Most businesses use more than one type of promotion to achieve their promotional goals. They use a
cost-effective mix of promotional strategies that include advertising, selling, sales promotion, direct
marketing, and public relations strategies. This mix assures them that their product will be widely
recognized.
Once a product is recognized, it is easier to sell. These sales generate revenue for the company. It uses
this revenue to offset the cost of using the promotional strategies. Companies learn which strategies are
most effective in their promotional mix through this process.
How do companies develop a promotional mix? A business establishes a promotional mix by following a
process that begins with identifying thetarget market. This process continues through a series of steps
and ends with the company measuring the results of the mix. Figure 17.2shows the process in
developing a promotional mix. It is represented as a cycle because a promotional mix must be on-going
and continuous. The strategies in the mix are designed to complement one another. Information that is
learned in one cycle of the mix is applied to the next cycle.
MARKETING CASE STUDY
Ladies and Gentlemen & The Beatles: Rock Band!
The popular music video game Rock Band® got a high-profile reintroduction with
“The Beatles: Rock Band.” In this game, players take on the roles of the Fab Four. It was not only the first
Beatles game, it was also the first time the band's music became available in digital format. This allowed
for some special advertising opportunities.
From Liverpool to You
Ads for the game utilized artful images from the game itself. The game features colorful animations of the
band and how the musicians changed over time. A commercial also showed everyday people inserted
into iconic parts of Beatles imagery. One ad showed people walking across Abbey Road. The promotion
also referenced the new Beatles boxed CD sets, which were released at the same time as the game.
English Language Arts
Collaborate With a partner, create a basic promotional mix for this product, incorporating creative,
nontraditional ideas. Present your ideas to the class using presentation software or poster boards.
NCTE 12 Use language to accomplish individual purposes.
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For example, the process starts with a target market. Imagine that you work for a company that designs,
manufacturers, and sells hiking equipment. It has national name brand recognition. Your company plans
to introduce a totally new and improved lightweight backpack. Since your objectives are to introduce a
new product, build awareness and create sales, your message must reach hikers and outdoor
enthusiasts about the benefits of buying your new product. Your promotional mix must include methods
for meeting all of these goals.
The marketing department selects the best promotional activity to reach the target market. It then
develops a budget for advertising, direct marketing, and sales promotional activities. The selected
promotional activities must complement one another, and they must be able to reach the potential market.
They must also be realistic in terms of the budget for the promotion.
Advertising and direct marketing create awareness of a business's product. At the same time, public
relations helps cultivate a favorable image and brand recognition. Sales promotional activities stimulate
sales, reinforce advertising, and support selling efforts. Finally, personal selling builds on all of these
previous efforts by completing the sale. Your company's budget will give you an idea of how to fund each
of these areas of promotion.
Elements of the promotional mix must be coordinated. For example, national advertising should be
reinforced by local promotional efforts. Many consumer product manufacturers give or sell retailers
decorations or in-store displays to reinforce a national campaign. The national and local efforts need to be
communicated to the store personnel. Being made aware of any coupons, rebates, contests, and featured
promotional items allows staff to encourage customer participation.
When promoted products are not available as advertised or the selling staff is uninformed about a
promotion, sales are lost and customers are dissatisfied. If these employees are informed of such
promotions, they will be able to more effectively engage their customers. This engagement leads to more
sales and more revenue.
The total promotional mix and each strategy in the mix must be measured on how well they met the
objectives. The results determine whether promotional strategies are revised, improved, or discontinued.
PROMOTIONAL BUDGET
In large companies, the marketing department has many roles. It determines the promotional mix,
establishes the budget, allocates resources, coordinates the campaign, supervises any outside
resources, and measures the results.
It is important to consider all aspects of the promotional mix when developing the promotional budget.
Determining the ideal budget is difficult. Often, a promotional budget is based on a percentage of sales.
Other times, it is based on an estimate of what competitors spend on advertising, direct marketing, and
sales promotion. There is no precise way to measure exact results of spending promotional dollars. This
lack of precision makes it difficult to determine the ideal amount for the promotional budget. Its overall
success is usually based upon whether the total effort led to increased sales.
It is vital for companies to study the effects of their promotional mix. It is like an experiment. They need to
isolate a variable and monitor its effects. After the promotion is done, the company can assess the impact
of the promotion and make a plan for the next time around.
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THE PUSH-PULL CONCEPT
Manufacturers often develop a promotional mix for each segment of the distribution channel. To promote
a product to large retailers that sell its products, a manufacturer might want to use a mix of advertising,
personal selling, and trade discounts. This type of promotion, known as the push policy, is used with
partners in the distribution channel. The manufacturer pushes the product through the distribution channel
to the retailer. The main purpose of the promotion is to convince a retailer to stock the products being
promoted.
This strategy is especially useful at trade shows and exhibitions, where cross-promoting is possible. It is a
helpful strategy for manufacturers whose products do not have strong brand identity.
The same manufacturer might use a different promotional mix of local and national advertising, in-store
displays, sales promotion, and public relations to reach consumers. The pull policy directs promotional
activities toward consumers. The idea is to entice (or pull) the consumer into the store (or Web site) to
buy the product. A typical pull marketing strategy would be to offer “half-off” deals or clearance sales.
This pull policy of promotion is designed to create consumer interest and demand. Consumer demand
pulls the product through the distribution channel by encouraging wholesalers and retailers to carry a
product. As mentioned, this strategy relies heavily on consumer advertising, premiums, samples, in-store
displays, and demonstrations.
After You Read Section 17.1
Review Key Concepts
1. Explain why promotion is an important marketing function.
2. Identify when to use product and institutional promotion.
3. Contrast the push and pull policies in promotional mixes.
Practice Academics
Social Studies
4. Customer-driven responses on Web sites, such as Facebook ®, MySpace®, and Twitter®, are
changing the way businesses promote goods and services. Investigate the concept of social media
and its affect on business. Write a paragraph on how business responds to customer-driven
comments.
Mathematics
5. An outdoor apparel company has established a promotional budget of $1,000 to be spent in the
following manner: $300 for a print advertisement in an outdoor magazine; $450 for an online
advertisement campaign; $150 for premiums (decal stickers imprinted with the company name);
$100 donation to a local outdoor program for children to build public relations. What percentage of
the total budget is spent on each promotional category?
Number and Operations Estimate before computing your answer to be sure your
calculations are accurate.
Starting Hints To solve this problem, divide each dollar amount spent by the total dollar amount of
the promotional budget, $1,000, to get a decimal. Multiply the decimal by 100 to determine what
percent of the budget each category requires.
For help, go to the Math Skills Handbook located at the back of this book.
NCSS V B Individuals, Groups, & Institutions Analyze group and institutional influences on people,
events, and elements of culture in both historical and contemporary settings.
NCTM Number and Operations Compute fluently and make reasonable estimates.