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Promotion

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What this topic is about <ul><li>What is promotion? </li></ul><ul><li>Effective methods of promotion for different types of product/business </li></ul><ul><li>Factors to consider when choosing the promotional mix </li></ul>

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Promotion = marketing communication <ul><li>Communication techniques aimed at informing, influencing and persuading customers to buy or use a particular </li></ul><ul><li>It involves communication about the product or service </li></ul><ul><li>Promotion is an element in the marketing mix </li></ul>

4.
The Many Uses of Promotion <ul><li>Increase sales </li></ul><ul><li>Attract new customers </li></ul><ul><li>Encourage customer loyalty </li></ul><ul><li>Encourage trial </li></ul><ul><li>Create awareness </li></ul><ul><li>Inform </li></ul><ul><li>Remind potential customers </li></ul><ul><li>Reassure new customers </li></ul><ul><li>Change attitudes </li></ul><ul><li>Create an image </li></ul><ul><li>Position a product </li></ul><ul><li>Encourage brand switching </li></ul><ul><li>To support a distribution channel </li></ul>

5.
Main Aims of Promotion <ul><li>The main aim of promotion is to ensure that customers are aware of the existence and positioning of products </li></ul><ul><li>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 </li></ul>

6.
Promotional mix <ul><li>The specific mix of promotional methods that a business uses to pursue its marketing objectives </li></ul><ul><li>The main elements of the mix are: </li></ul><ul><ul><li>Advertising (offline & online) </li></ul></ul><ul><ul><li>Sales promotion & merchandising </li></ul></ul><ul><ul><li>Personal selling </li></ul></ul><ul><ul><li>Public relations/publicity / Sponsorship </li></ul></ul><ul><ul><li>Direct marketing </li></ul></ul><ul><li>The elements must be integrated in a cohesive, consistent and logical manner </li></ul>

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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

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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?

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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

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Advertising <ul><li>Paid-for communication </li></ul><ul><li>Many different advertising media </li></ul><ul><ul><li>TV & radio, newspapers & magazines, online, cinema, billboards </li></ul></ul><ul><li>Consumers subjected to many advertising messages each day = hard to get through </li></ul><ul><li>Mass market advertising is very expensive </li></ul>

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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

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Personal selling <ul><li>Promotion on a person to person basis </li></ul><ul><li>Two way communications </li></ul><ul><li>Meeting with potential customers to close a sale </li></ul><ul><li>By telephone, at meetings, in retail outlets and by knocking on doors </li></ul><ul><li>Highly priced, low volume and highly technical products rely heavily on personal selling </li></ul>

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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

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Sales promotion <ul><li>Tactical, point of sale material or other incentives designed to stimulate purchases </li></ul><ul><li>Short term incentives to increase sales </li></ul><ul><li>Some promotions aimed at consumers; -others at intermediaries or sales force </li></ul>

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Examples of sales promotion <ul><li>Coupons </li></ul><ul><li>Money off </li></ul><ul><li>Competitions </li></ul><ul><li>Demonstrations </li></ul><ul><li>Free samples </li></ul><ul><li>Loyalty points </li></ul><ul><li>Free gifts </li></ul><ul><li>Point of sale displays </li></ul><ul><li>BOGOF </li></ul><ul><li>Merchandising </li></ul><ul><li>Trade in offers </li></ul>

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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

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Merchandising <ul><li>The process of maximising the effectiveness of retail distribution </li></ul><ul><li>Displaying products to maximise sales </li></ul><ul><li>Usually operates at the “point-of-sale” </li></ul>

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Public relations (“PR”) Activities that create goodwill toward an individual, business, cause or product

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Main Aims of PR <ul><li>To achieve favourable publicity about the business </li></ul><ul><li>To build the image and reputation of the business and its products, particularly amongst customers </li></ul><ul><li>To communicate effectively with customers and other stakeholders </li></ul>

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Typical PR Activities <ul><li>Promoting new products </li></ul><ul><li>Enhancing public awareness </li></ul><ul><li>Projecting a business image </li></ul><ul><li>Promote social responsibility </li></ul><ul><li>Projecting business as a good employer </li></ul><ul><li>Obtain favourable product reviews / recommendations </li></ul>

21.
Sponsorship <ul><li>Sponsorship takes place when a payment for an event, person, organisation is given in return some consideration of benefit </li></ul><ul><li>A specialised form of public relations </li></ul><ul><li>Common in the worlds of arts and sport </li></ul><ul><li>Sponsorship should benefit both sides </li></ul>

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Direct Marketing Promotional material directed through mail, email or telephone to individual households or businesses

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Why Use Direct Marketing? <ul><li>Allows a business to generate a specific response from targeted groups of customers </li></ul><ul><li>Allows a business to focus on several marketing objectives: </li></ul><ul><ul><li>increasing sales to existing customers </li></ul></ul><ul><ul><li>building customer loyalty </li></ul></ul><ul><ul><li>re-establishing lapsed customer relationships </li></ul></ul><ul><ul><li>generating new business </li></ul></ul>

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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

25.
Test Your Understanding http://www.tutor2u.net/business/quiz/promotion/quiz.html

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Promotion