20. Promotion Flashcards
Promotion objectives
- Increasing sales by raising consumer awareness of a product, which is especially important for newly launched ones.
- Demonstrating the superior specification or qualities of a product compared with those of competitors, often used when the product has been updated or adapted in some way.
- Creating or reinforcing the brand image or personality of the product.
- Improving the public image of the business, rather than the product, through corporate advertising.
Two types of Advertising promotions
1. Persuasive advertising
* adverts trying to create a distinct image or brand identity for the product. They may not contain any details at all about the product.
* try to create a perceived difference in the
minds of consumers.
2. Informative advertising
* adverts that give information about a product to potential purchasers,
rather than just trying to create a brand image. This style of advertising is most effective when promoting a new product that consumers are unlikely to be aware of, or when communicating a substantial change in price, design or specification.
Advertising methods
Print advertising
This includes advertising in newspapers, magazines and specialist publications.
- It can be directed at particular towns or regions, or consumers who read particular special interest magazines.
- It provides hard copy, which can be cut out and kept by the consumer for future reference.
limitations: - It is expensive to gain national coverage.
- much less effective with younger consumers than digital communications.
Broadcast advertising
This is advertising on TV and radio, and in cinemas.
- Adverts have visual appeal and can create a brand image through the actors used.
- National or even international coverage is possible.
- It can linger in the memory of consumers for a long time if visually dramatic.
Broadcast advertising has limitations: - It is expensive to buy media time.
- It is expensive to design and produce the adverts.
- There is no permanent hard copy.
Outdoor advertising
This includes advertising on billboards and bus shelter posters.
- It is low cost compared to other media.
- It can be located in prime positions with many potential consumers passing by.
- It can be read/seen more than once.
Outdoor advertising has limitations: - The best locations are the most expensive.
- It can be damaged or vandalised.
- Many passers-by will not notice this type of advertising.
Product placement advertising
Products are featured in TV shows and films.
- The chosen shows or films will be targeted at a particular type of consumer.
- This creates a desirable image if the product is associated with famous actors or shows.
- It is not explicit advertising. Some consumers assume the product is being used because it is
desirable, not because a business has paid for the placement.
Product placement advertising has limitations: - The show, film or actors may become less popular.
- It is very expensive if the show or film is well known.
Guerrilla advertising
Products are advertised at surprising and unconventional events to make the public take notice.
- It is low cost
- It can be creative, inventive and can appeal to young consumers.
- It encourages word-of-mouth communication between potential consumers.
- A staged event can receive free publicity from the media.
Guerrilla advertising has limitations: - The message may be misunderstood.
- It may be considered irresponsible and lead to a negative backlash.
- It may be remembered for the wrong reasons.
Sponsorship
This involves payment by a business to become associated with an event, an individual or a sports team. It could lead to the business logo appearing on a team’s shirts, for example.
Advantages include:
* the good publicity of being associated with big sporting and other events
* global press and TV coverage of the largest events
* the success of the team or individual can lead to greatly increased interest in the brand.
Sponsorship has limitations:
* It can be very expensive
* Failure of the event, team or individual can reflect badly on the brand.
Advertising methods: which one to use?
The advertising method chosen depends on:
1. Cost - Marketing managers must compare the cost of each method, including the cost per target consumer. If one TV advert costs $1m and the number of potential consumers for a product who watch the programme is 5 million, then the cost per consumer is $0.20.
2. The consumer profile of the target audience – age, income levels, interests: Advertising decisions
must consider the target market.
3. The message and image to be communicated- Written forms of communication are likely to be most effective for giving detailed information about a product. This information can be referred to more than once by potential consumers. If an image creating advert is planned for a new range of clothes or sports equipment, then a dynamic and colourful TV advert or YouTube video could be more effective.
4. Other aspects of the marketing mix- The **links and integration between the other parts of the marketing mix **and the advertising method chosen could be crucial to success. The use of exclusive and glossy women’s magazines to advertise a new budget range of ready-cooked meals could be
counterproductive.
5. Legal constraints- A widespread ban on tobacco advertising in Formula One grand prix racing forced many sponsors to use other media for presenting their cigarette advertising. In some countries, there are restrictions on the use of TV advertising aimed at children, claiming that it exercises too much influence over young minds.
Sales promotion methods
aims to achieve short-term increases in sales, whereas advertising often aims to achieve returns in the long run through building customer awareness of and confidence in the product.
- price offers – temporary reductions in price, such as 10% reduction for one week only
- loyalty reward programmes – consumers collect points, air miles or credits for purchases and redeem them for rewards
- money-off coupons – redeemed when the consumer buys the product
- point-of-sale displays in shops
- BOGOF – buy one, get one free
- games and competitions on packaging.
Methods of sale promotion
1. Price offers
temporary reductions in price, price discounting. The objective is to encourage existing customers to buy and to attract new customers
* Price reductions will reduce the gross profit on
each item sold.
* There could be a negative impact on the
brand’s reputation from the discounted price.
2. Money-off coupons
Coupons can appear on the back of receipts, in newspaper adverts or on an existing pack of the product.
* These could just encourage consumers to buy
what they would have bought anyway.
* The number of consumers using coupons
might be low if the price reduction is small.
3. Customer loyalty schemes, such as air miles or
customer loyalty cards
The aim is to encourage repeat purchases and discourage consumers from buying from competitors. Loyalty cards give the business much information about consumers’ buying preferences, which helps in customer relationship marketing.
* The discount cuts the gross profit on each purchase.
* There are administration costs (e.g. informing consumers of loyalty points earned, and the costs may outweigh the benefits from increased consumer loyalty).
* Most consumers now have many loyalty cards from different retailers, so their loyalty impact is reduced.
4. Money refunds
These are offered when the receipt is returned to the manufacturer.
* These involve the consumer completing and posting a form, which might be a disincentive.
* The delay before a refund is received may act as a disincentive.
5. Buy one, get one free (BOGOF)
This encourages multiple purchases, which reduces the demand for competitors’ products too.
* There could be substantial reduction in the gross profit margin.
* Consumers may conclude that the normal price is too high.
* Consumers may think goods are being sold off because they cannot be sold at normal prices, which may impact on reputation.
* Current sales might increase, but future sales could fall as consumers have stocked up on the product.
6.Point-of-sale displays
Maximum impact on consumer behaviour is achieved by attractive, informative and wellpositioned displays in stores.
* The best display points are usually offered to
the market leaders – products with high market
share.
* New products may struggle for the best
positions in stores unless big discounts are
offered to retailers.
Direct promotion methods
1. Direct mail- is sent out by post.
* This is low cost and well-defined areas/regions can be targeted.
* It is easy to evaluate the success of a campaign by checking response rates (e.g. tear-off slips).
Limitations:
* Many potential consumers now prefer digital communication.
* The mailing may be viewed as junk mail and quickly thrown away.
2. Telemarketing - This includes all marketing activities conducted over the telephone (often from customer call centres), including selling, market researching and promoting products.
* Telemarketing can be outsourced to an agency.
* This is lower cost than personal selling.
* It is easy to monitor the response/rejection rate.
Limitations:
* Many consumers object to cold-calling.
* It is very easy for consumers to reject a telemarketing message.
3. Personal selling
With this method, a salesperson is employed to sell to each individual customer.
* Sales success rates are often high with skilled direct sales employees.
* It is often used for expensive industrial products. This is often one of the key differences between consumer marketing and business marketing.
* It is effective with expensive and complex products that require specialist knowledge.
Limitations:
* Customers may complain about being pressured into buying, especially if the sales employees are paid a high bonus for each sale made.
* Sales employees need to be well trained. They should avoid selling to a reluctant consumer who later regrets the decision.
* This is a high-cost method of promotion and selling.
Benefits of digital promotion
1. Worldwide coverage – a website allows businesses to find new markets and trade globally, increasing potential market size.
2. Relatively low cost – a well-planned and well-targeted digital marketing campaign can reach the
right customers at a much lower cost than traditional forms of advertising.
3. Easy to track and measure results - techniques of measuring response rates make it easy to establish how effective a promotion campaign has been. Detailed information about how customers use a website or respond to advertising is available, which helps to improve the effectiveness of future campaigns.
4. Personalisation – Each customer can be made
to feel that only they are being sent a special offer.
5. Social media communication builds customer loyalty – involvement with social media and quick
responses to customers’ messages can build customer loyalty and create a reputation for being easy
to converse with.
6. Content marketing – digital marketing allows a business to create engaging campaigns using content marketing. This means producing varied content such as images, videos and articles, which can help a business gain social currency, especially if it goes viral.
7. Website convenience increases sales – the conversion rate of visits to websites (when customers buy something) is higher than with other forms of selling. It is more convenient too, unlike other forms of media which require people to get up and make a phone call or go to a shop.
Limitations of digital promotion
1. Time-consuming – unless a digital promotion agency is used (which can be high cost), tasks such as optimising online advertising campaigns and creating marketing content can be time-consuming. The success of promotions needs to be judged against the cost of preparing them.
2. Skills and training – employees must have up to-date knowledge and expertise to carry out digital marketing with success. Tools, platforms and trends change rapidly. Employees may need training to keep their skills at the right level.
3. Global competition – Standing out clearly against a large number of competitors can be difficult and costly. Search engine optimisation is one way of trying to do this.
4. Complaints and feedback – unhappy customers can quickly send out negative messages about a business or its products. Any negative feedback or criticism of a brand can be visible to the target audience through social media and review websites. It is essential for a business to respond quickly and effectively to such criticism.
Measuring success of promotions
1. Sales performance before and after the promotion campaign: By comparing the sales of the product before the campaign was launched, with the daily and weekly sales during and after the campaign.
2. Consumer awareness data: Each week, market research agencies publish results of consumer recall or awareness tests, based on answers to a series of questions concerning the advertisements they have seen and responded to. This gives businesses rapid feedback on the progress of a promotion campaign.
3. Consumer panels: These are useful for giving qualitative feedback on the impact of promotions and the effectiveness of advertisements.
4. Response rates to advertisements: Newspaper and magazine adverts often have tear-off slips for consumers to request more details. Even TV adverts can ask for consumers to ring in, perhaps with the chance of winning a competition. Websites can record the number of hits and video-sharing sites can record the number of times an uploaded advert has been viewed.
5.Social media feedback: The rapid response rate of social media users to new products or new promotions is perhaps now the most widely used measure of marketing success or failure.
The role of packaging in promotion
Packaging can perform the following functions:
* protect and contain the product, both during transportation and in stores
* give information – depending on the product – to consumers about the contents, ingredients, cooking instructions, assembly instructions and so on
* support the brand image of the product created by promotional campaigns
* make the product attractive and help the consumer to recognise it.
Cheap and unattractive packaging of goods such as clothes or chocolates will destroy any quality and status image that the firm is attempting to establish. Distinctive packaging can help to form the basis of a promotional theme, which will endure as long as the product.
In contrast, expensive and wasteful packaging may add unnecessarily to costs, which could reduce a product’s competitiveness. In addition, with increasing environmental pressures, packaging that is seen to be too ostentatious or cannot be recycled may result in a negative consumer reaction. For this reason, the use of recycled and recyclable materials in packaging is increasing and this helps to support the image of sustainable brands.
The role and benefit of branding in promotion
A brand is the name given by a firm to a product or a range of products. The aims of branding products include:
* aiding consumer recognition
* making the product distinctive from competitors
* giving the product an identity or personality that consumers can relate to.
Benefits
* It increases the chances of brand recall by consumers, for example, when several similar products are available.
* It clearly differentiates the product from others, including reinforcing the difference by promotion.
* It allows for the establishment of a family of closely associated products with the same brand name.
* It reduces the responsiveness of consumer demand to a price increase. Consumers often have preferences for well-known brands and are prepared to pay a high price for them. This gives the business a high profit margin.
* It increases consumer loyalty to brands, which is a major marketing benefit.
Channels of distribution
Direct selling - There are no intermediaries, so this is also referred to as the zero intermediary channel. used when the goods are bought infrequently but in large quantity, when they are bulky and expensive to transport, or when they have been purpose-built for a particular customer.
Single-intermediary channel -
Manufacturer-> retailer -> consumer
used for consumer goods and where goods can easily be transported to the whole country
Two-intermediaries channel -
Manufacturer -> wholesaler -> Retailer -> Consumer
Direct selling (including e-commerce)
* Advantages
- No mark-up or profit margin is taken by intermediaries.
- The producer has complete control over the marketing mix.
- It is quicker than other channels so may lead to fresher food products.
- Direct contact with consumers offers useful market research.
Direct selling (including e-commerce)
* Disadvantages
- All storage and inventory costs have to be paid by the producer.
- There are no retail outlets so consumers cannot see and try before they buy.
- It may not be convenient for consumers.
- No after-sales service is offered by shops.
- It is expensive to deliver each item to consumers.
Single-intermediary channel
* Advantages
- Retailers incur the cost of holding inventories.
- Retailers display the products and offer after-sales service.
- Retailers should be in locations that are convenient to consumers.
- Producers focus on production, not on selling the products to consumers
Single-intermediary channel
* Disadvantages
- The intermediary takes a profit mark-up, making the product more expensive to consumers.
- Producers lose control over the marketing mix.
- The outlet is not exclusive as retailers sell competitors’ products too.
- Producers pass on delivery costs to retailers.
Two-intermediary channel
* Advantages
- Wholesalers hold the goods and buy in bulk from producers.
- It reduces producers’ inventory costs.
- Wholesalers pay for the costs of transport to retailers.
- Wholesalers buy in large quantities and sell in small quantities.
Two-intermediary channel
* Disadvantages
- Another intermediary takes a profit mark-up, making the product more expensive to consumers.
- Producers lose further control over the marketing mix.
- It slows down the distribution chain.
E-commerce
* Benefits
- Companies can reach a worldwide audience for a small proportion of traditional promotion budgets.
- Businesses can keep accurate records on the number of clicks or visitors, and quickly measure the success rate of different web promotions.
- Computer and smartphone ownership is increasing in all countries of the world.
- Selling products on the internet involves lower fixed costs than traditional retail stores.
- Dynamic pricing – charging different prices to different consumers – is easier
E-commerce
* Disadvantages
- Some countries have low-speed internet connections and, in poorer countries, computer ownership is not widespread.
- Consumers cannot touch, smell, feel or try on tangible goods before buying, which may limit their willingness to buy certain products online.
- Product returns may increase if consumers are dissatisfied with their purchases once they have been received.
- Websites must be kept up-to-date and userfriendly, and good websites can be expensive to develop.
- Worries about internet security (e.g. consumers may wonder who will use information about them or their credit card details) may reduce future growth potential.
Importane of distribution channel
- Consumers can benefit from easy access to products. This allows them to see and try products before they buy, makes purchasing easy and allows, if necessary, for the return of goods.
- Manufacturers need outlets for their products that give a wide geographical market coverage. However, they also want the desired image of the product to be promoted effectively.
- Retailers, which sell goods to the final consumer, add on a mark-up to cover their costs and make a profit. If price is very important to consumers, using few or no intermediaries is an advantage as the manufacturer should be able to charge a lower price.
The impact a product has on consumers is explained by human psychology – as complex beings we are influenced by a range of different messages before we decide on taking an action, such as buying a product.
Consumers will avoid buying products with a confusing and inconsistent marketing mix. This results in low long-term sales. Far better to have a clear and unambiguous message about the product, relayed through all elements of the marketing mix.
The best-prepared marketing plans can be destroyed by just one part of the marketing mix not being consistent with the rest. The most effective marketing-mix decisions will, therefore, be:
* based on marketing objectives and affordable within the marketing budget
* integrated and consistent with each other and targeted at the appropriate consumers.
You may be asked to recommend and evaluate the marketing mix for a product. The best answers will include suggestions for a fully integrated marketing mix, clearly aimed at achieving a marketing objective.
