Download 4.5 - Promotion

IB Business
and
Management
Unit 4.5: Promotion
Lesson 1: Objectives
of Promotion (pp.
557-574)
Think about it
“
Advertising is the art of convincing
people to spend money they don’t have
for something they don’t need.” - Will
Rogers (1879-1935) comedian
 What did Rogers mean by this quote?
 Are we constantly being deceived?
Focus Questions
 1.
What are the objectives of promotion?
 2. List and explain the types of promotion.
 3. What is above and below the line
promotion?
 4. What is included in the promotional mix
Promotion


methods of communicating messages to the
market when selling a firm’s product.
promotion includes:





sales promotion
branding
raising publicity (awareness)
advertising campaigns
Promotion is important during which stage of a
product’s life cycle?


LAUNCH
Marketers must forecast probable impact on sales
and then make the promotional budget. This is not
easy.
Promotion
 Objectives


of promotion :
inform: to alert the market about a firm’s
product.
persuade: to encourage customers to make a
purchase.
 Product
differentiation
 Comparison advertising

remind: used to retain customer awareness and
interest of an established product.
 These
objectives will be in line with marketing
department’s objectives, which are based on
corporate objectives.
 Most types of promotions are….? PERSUASIVE
Types of Promotion
 Fours




types of promotion :
1. Above-the-line (ATL): use of mass media
sources (TV, radio, magazine).
2. Below-the-line (BTL): use of non-mass
media (free samples, buy1 get 1).
3. Pull promotion: used to stimulate (pull)
demand. (ATL)
4. Push promotion: rely on intermediaries
such as wholesalers and retailers to ‘push’
the products to customers. (BTL)
Above-the-line Promotion
 ATL
- any form of paid-for promotional
technique through independent media. Such
as:
TV
Radio
Newspaper
Internet
Magazines
Cinema
Outdoor
Advertising
Above-the-line Promotion
 Advantages:


ATL can reach a large audience of customers
Customers more aware of ATL b/c they are more
interesting/appealing
 Disadvantages:



Promotion through mass media may not appeal
to the right market segments
Many advertisements are ignored (ie. People
change channel during commercials, annoying
pop-up ads on internet)
Cannot determine effectiveness of ads b/c
communication is one-way
ATL Promotion - TV
 First
American tv ad – 1941
 UK television advertising industry worth
$10billion/yr
 Most spending on this form of promotion than all
the others
 Advantages:


Can reach a global audience
Can meet specific needs ie. Aimed at children
during children’s tv shows
 Disadvantages:

Huge costs
 During
the Super Bowl, 1 commercial can be
$2.6million for 30 seconds
ATL Promotion - Radio
 Advantages:


Reaches a large audience
Significantly cheaper than tv ad.
 Disadvantages:


Can only communicate audio messages, no
visuals. People remember better w/ audio +
visual
Audiences have lower attention to audio rather
than visual (tv)
ATL Promotion - Cinema
 Going

to the movies is income elastic
More visitors go to movies therefore cinema is a
growing medium for ads.
 Advantages:



Can directly target the audience based on the
movie
Size of movie screen exerts more impact
Audience is more likely to watch bc they cannot
leave or switch channel
 Disadvantages:

Limited audience
ATL Promotion - Newspaper

Advantages:






Can reach a wide audience
Much cheaper than tv ad.
Can keep the ad around for awhile and can read the
important info. at a later time
Can better target different markets than tv (ie. Teaching
jobs in The Educational Supplement or different socioeconomic classes based on the type of paper they read)
Many newspaper firms have websites – can target wider
audience
Disadvantages:


High costs, esp for small businesses
Very short shelf life (people won’t read yesterday’s paper)
ATL Promotion - Magazines
 Advantages:




High photo-quality color images to attract
Target specific market segments thru specialist
magazines (Vogue, PC Gamer)
Can refer to info at a later date (like newspaper)
Longer shelf life than newspapers
 Disadvantages:



Static, one company places many diff ads in the
magazine
Magazines have too many ads, so some are
skipped over – advertising clutter
Long lead-time from when ad is submitted until
published
ATL Promotion – Outdoor
Advertising




Billboards, banners, posters
Sporting events, shopping malls, roadside, on
vehicles
Used by car manufacturers, food producers,
clothing firms, tourism/leisure
Advantages:



Advances in billboard technology so can have more
ads on each billboard and images and sound
High rate of exposure
Disadvantages:



Difficult to monitor effectiveness b/c it is hard to
target markets
Prone to damage (bad weather, vandalism, graffiti)
Too much clutter – high levels of competition
Below-the-line Promotion
 BTL
promotion refers to all forms of non-media
promotion activities. Business has direct control over
the production of all its advertisements. Such as:
Branding
Word-ofmouth
Sales
Promotions
Slogans
Direct
Marketing
Sponsorship
Logos
Direct
Mail
Packaging
Publicity
Point-ofsales
Promotion
Below-the-line Promotion
 We
said before, ATL is paid for advertising to
external media agencies
 BTL


pays no commission to these external media.
Instead business has control over production of ads
BTL is usually cheaper than ATL
Below-the-line Promotion - Branding
 Successful
brands are instantly recognizable
 Virgin,
Microsoft, Sony, Nike use branding to
promote their company/products
 These
types of companies use extension
strategies to launch new products under
brand name
Below-the-line Promotion - Slogans
 Memorable

catchphrases
Concise message that represents essence of a
business or product
 Many
slogans have become so well known they
are synonymous with the brand
 Successful slogan can give business competitive
advantage
 Slogan should be:




Memorable
Creates desire
Creates positive image
Outlines benefits of product
Below-the-line Promotion - Logos
A
form of branding that uses a visual symbol
 Logos
are used by NPO’s as well such as:
 Companies
spend millions of dollars coming
up with the right logo
Below-the-line Promotion - Packaging
 Almost
every manufacturer/retailer makes
carrier bags with the company name/logo on
the bag
 Customers
who reuse these bags are helping
the company promote
 “Bag-vertising”
Below-the-line Promotion –
Word-of-mouth

Spreading info through oral communication

Possibly the most effective form of promotion bc there
are no direct costs from the company

However, can also be damaging if bad words spread
about a company

Similar method, peer-to-peer (P2P) – relies on
electronic transfer of messages usually thru internet

Viral Marketing – using internet for promoting
Below-the-line Promotion –
Direct Marketing
 Sell
a product directly to customer. Does not
use intermediary (store).
 EX: telemarketing, email, mail
 Advantages:


Business can have larger share of profits
Can do marketing their own way
 Disadvantages:


Cost of producing and distributing promotional
material ie. Brochures, catalogues, menus
Most people ignore this ‘junk’ mail
Below-the-line Promotion –
Direct Mail
 Example
of direct marketing
 Local
restaurants and fast-food companies
use this method
 Drawbacks:



People may ignore
Wastes resources
May not target right audience
Below-the-line Promotion –
Sales Promotions
 Temporary
ways to boost sales
 Types:





BOGO
Discount coupons
Free samples
Customer loyalty schemes
Win prizes
 Drawback:


Can be costly
Only short term strategies
Below-the-line Promotion –
Point-of-sales
 Promotion
at the place/location where
the customer buys the product

EX: supermarkets – while customers wait in
line – impulse buys, displays, posters
Below-the-line Promotion –
Publicity
 Promoting
a business through media
coverage without directly paying for it
 EX:
celebrities photographed wearing
designer shoes/clothes – free promotion


Ferrari gave away car to celebrity
This type of publicity can be more beneficial
than tv ads.
Below-the-line Promotion –
Sponsorship
 Business
provides financial funds to support an
event/organization in return for publicity
 EX:
Arsenal Football Club received $178million
from Emirates Airline in return for Arsenal
naming their field “The Emirates Stadium”
Promotional Mix
 “Set
of tools that a business can use to
communicate effectively the benefits of its
products or services to its customers.”
 In
other words, a range of above and below
the line methods used to market a product.
Promotional Mix
 When




deciding on a promotional mix use AIDA :
Attention: should raise awareness of the product
Interest: should keep customers interested
Desire: should generate a desire or feeling of
‘need’ for the product
Action: should encourage customers to take
action
 Another




approach is FAB:
Features
Advantages
Benefits
Explains what the product will do for the customer
Promotional Mix
 When
creating a promotional strategy
marketers should consider a combination of
factors:




cost of promotional medium
nature of the product
product’s position in its life cycle
legislation
 Using
a single promotional technique is
unlikely to be effective; instead use many:
4 Key Elements of Promotional Mix

1. Advertising:
 “ the science of arresting the human intelligence
long enough to get money from it.”
 form of promotion that is paid-for

Tv, radio, billboards, email, in-store displays
 advertising
can be informative or persuasive, or
both.
 advertisement should be original and creative
 most businesses use advertising agencies to make
their ads
4 Key Elements of Promotional Mix

2. Personal selling:
 relies on sales representatives directly helping and
persuading potential and existing customers to
make a purchase.
 EX: sales presentations, face-to-face meetings with
clients (health insurance), telemarketing, door-todoor sales
 Benefit:
 tailored
to the individual needs of the customers.
 can help company build positive, long relationship w/
customer
 Disadvantage:
 these
sales agents can be expensive to hire
4 Key Elements of Promotional Mix
 3.
Public relations (PR) :
 aimed
at establishing and protecting the desired
image of an organization.
 concerned with getting good press coverage.
 PR experts will get media to report events in a
positive way
 EX: having a presence at exhibitions, launch party,
press conferences, radio/tv interviews, donating to
charities
 PR is a long-term strategy and relied on when
business faces a crisis
4 Key Elements of Promotional Mix
 4.
Sales promotion :
 short-term
incentives designed to stimulate sales
of a product.
 EX: discount coupons, prize draws, samples
 Advantages:
 can
help gain short term competitive head start
 get rid of excess or old stock
 encourages customer loyalty
 attract new customers
 Disadvantage:
 costly
Promotion and Business Strategy
 Often
takes several attempts for a
promotional message to be noticed

Therefore, promotion can be very expensive
 Some
critics believe this is wasteful and the
money could be spent elsewhere
 Levi
Strauss had tv commercial that increased
sales 800%/yr
 Promotion
relies creativity of marketers
Promotion and Business Strategy
 Guerrilla
marketing – promotional strategy to
raise maximum exposure by using minimum
input and/or unconventional methods


uses ‘shock’ technique
Supporters believe it is more effective and
cheaper
 Marketers
 Ex:
must obey laws
cigarettes, fast food, box 4.5e
 Unethical
promotions do exist and laws have
been passed to protect consumers