Download The Concept of Promotion

MARKETING ESSENTIALS
CHAPTER 17.1
The Concept of Promotion
Promotion is persuasive communication. Why do companies use promotions?
To inform people about their products and services. Also use promotional
techniques to enhance their public image and reputation and persuade people
that their products are valuable.
The goals of promotional activities are summarized by the phrase AIDA—which means
1st attract Attention, then build Interest and Desire, and finally ask for Action
A business uses product promotion to convince prospects to select its products or
services instead of a Competitor’s Brand. Promotional activities explain the major
features and benefits of the product or service, identify where it was sold,
advertise sales, answer customer questions, and introduce new offerings.
Product promotion also helps companies’ foster good relations with existing customers,
thereby enhancing their loyalty.
Institutional promotion
- used to create a favorable image for a business
- help it advocate for change or take a stand on trade or community issues.
Web sites are used to provide news, product and general information, and to answer
questions.
Types of Promotion in the Promotional Mix
There are five basic categories in the promotion mix and each plays a vital role in
promoting businesses and their products.
1. Personal selling
2. Advertising
3. Direct Marketing
4. Sales Promotion
5. Public Relations
Through advertising, direct marketing, public relations, and sales promotion, companies
communicate with customers in ways other than direct contact. Personal selling, on
the other hand, requires direct personal contact with the customer.
Personal Selling
Personal selling requires that a company employ sales representatives who generate
and maintain direct contact with prospects and customers. It is one of the costliest forms
of promotion. Direct contact can take the form of personal meetings, telemarketing,
email contact, and correspondence. Typically, personal selling takes place after—or
as a result of—other promotional activities.
Advertising
Advertising is a form of nonpersonal promotion. Companies pay to promote ideas,
goods, or services in a variety of media outlets. Advertising can be found everywhere,
Examples – Magazines, newspapers, television, and Web sites to gymnasiums and
city buses.
With advertising, a company engages in a one-way communication to the prospect or
customer.
Direct Marketing
Direct marketing is a type of advertising directed to a targeted group of prospects
and customers rather than to a mass audience.
The two forms of direct marketing are :
1) Printed Direct Mail
2) Electronic Direct Mail
The goals of direct marketing are to generate sales or leads.
Direct marketing generates a response from the targeted customer by making a special
offer, such as a coupon, discount, or special merchandise and delivery terms.
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. Both print and
electronic direct marketing allows a business to engage in one-way communication
with its customers about product announcements, special promotions, bulletins,
customer inquiries, and order confirmations.
What happened because 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,
prohibits the use of deceptive subject lines and headers, and requires businesses
to provide valid return addresses on their e-mails.
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 used to stimulate purchasing and sales.
The objectives of sales promotions are to increase sales, inform potential customers
about new products, and create a positive business or corporate image.
Public Relations and Publicity
Public relations (PR) activities enable an organization to influence a target audience.
Often, public relations campaigns try to create a favorable image for a company, its
products, or its policies. One of the goals of a public relations program is to cultivate
media relations with reporters who cover a specific industry.
What media tool is often used to generate publicity?
New Releases
A news release announces newsworthy developments about the company’s products or
services, distribution channels, facilities and operations, partners, revenues and
earnings, employees, and events.
What is the main function of publicity? Is to develop a positiveperception or
awareness of the organization in the marketplace.
Unlike advertising, the placement of publicity is FREE.
Cost is not the only advantage of publicity. Newspapers, television and radio news
programs, and reporters are usually viewed as more objective than advertisers
What is the disadvantage of publicity? Is that its content unlike paid advertising, is
not easily controlled by the business that issues it.
Businesses work to generate positive publicity and avoid negative publicity.
The Concept of Promotional Mix
To reach its promotional goals, an organization develops an effective promotional
mix— a combination of strategies and cost effective allocation of resources. Most
businesses use more than one type of promotion to achieve their promotional goals.
How do companies decide which mix will be most effective?
Identify the target market, to measuring the results and design strategies that
complement one another.
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.
What happens when promoted products are not available as advertised or when the staff
is uninformed about a promotion? Sales are lost and customers are dissatisfied.
Promotional Budget
In large companies, the marketing department has many roles.
* Determines the marketing mix
* Establishes the budget
* Allocates resources
* Coordinates the campaign
* Supervises any outside resources
* Measures the results
There is no precise way to measure exact results of spending promotional dollars. Often,
a promotional budget is a percentage of sales. The budget allowance is dictated by
revenue and includes operational costs.
The Push-Pull Concept
What is the push policy? To promote a product to large retailers that sell its
products, a manufacturer might want to use a mix of personal selling, advertising,
and buying discounts. It is only used with the next partner in the distribution
channel. The main purpose of the promotion is to convince a retailer to stock the
products being promoted. It relies heavily on personal selling and sales
promotion, especially at trade shows. It is a helpful strategy for manufacturers
whose products do not have strong brand identity.
Example Tradeshows
 Direct mail product announcements
What is the pull policy? Directs promotion towards consumers. It is designed to
create consumer interest and demand. Consumer demand can pull or encourage
retailers to carry a product. This strategy relies heavily on advertising that is
geared to consumers, premiums, samples, and demonstrations.
Example grocery stores often advertise leader items in the weekend fliers to attract
customers hoping that they would then buy some of the higher-priced
items.
 Online banner ads
 radio and TV ads
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