MANAGEMENT OF BUSINESS - UNIT 2

Module 2 - Fundamentals of Marketing

Topic 9: Promotion Strategy

The Concept and Objectives of Promotion

Promotion is the last "P" of the marketing mix and is equally important as the other three.
Having a very good product without anyone knowing about it is like not having the product at
all. Promotion is the means through which a firm informs, persuades and reminds the
target market about the product. It is the way in which it communicates with its target market
in a bid to influence customers' buying decisions.

A firm undertaking promotion will want to achieve the following OBJECTIVES:

 Informing - the firm aims to disseminate information to its target market about a product
or its experience.
 Persuading - the objective here is to convince customers to purchase the firm's products
instead of products from competing firms. The firm will spend time saying why its
product is a better choice.
 Reminding - this is where the firm aims to reinforce information that was given about a
product.
 Building a brand image - promotion could also be used to create a brand image. This
could help the firm to gain customers who are loyal to the brand.
 Stimulating demand for the product - the firm may aim not just to create an interest in
its product but to get people to actually purchase it.

The firm's promotional mix can be classified into two broad costs categories:

1. Above-the-line-promotion - which includes the use of advertising.

2. Below-the- line-promotion - which includes personal selling, sales promotion and
publicity.

The promotional strategy that is used often depends on its cost and effectiveness in achieving the
firm's objectives.

Tools of Promotion

When talking about promotion some people still only think of advertising. In fact, the terms are
even used interchangeably. However, the Marketing Department has a number of
promotional tools available to it, including advertising, sales promotion, personal selling
and publicity which are discussed below:

1. ADVERTISING
Advertising is any paid form of presentation and promotion of ideas, goods or services by a
sponsor. There are FOUR key elements within this definition.

i. Advertisements have to be paid for and so there is a cost involved.

ii. There is clear identification of the firm that is responsible for advertisement
iii. Advertising is a non-personal activity, without much, if any, interaction among humans.
iv. An advertisement is normally created to last for a while, that is, it is usually long term.

The firm will choose to use different types of advertisement depending on the objectives it wants
to achieve or the market conditions that exists. THE TYPES OF ADVERTISEMENT THAT
ARE OFTEN USED ARE:

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 a. Informative
The aim of this type of advertising is to generate interest by customers in a product.
The firm may also want to provide consumers with enough information about the
product so that they can make an informed purchased. This type of advertising is
often used to give technical details about a product, to make the public aware of any
upcoming event or give information about business opportunities for example,
employment or retail estate.

b. Persuasive
This is used to influence consumers' buying decisions. The firm will attempt to
convince the buyer that its product is the one to purchase. The firm will highlight
those attributes about the product that makes it appealing to the consumer. This
type of advertisement is often used by people who sell insurance. Think of the things you
have at home and really don’t use but you purchased them because you were persuaded
to do so. If you do have such items you may have been a victim of persuasive
advertising.

c. Competitive
There is no significant difference between competitive and persuasive advertising. In
fact, most persuasive advertising includes some aspects of competitive advertising. In
theory, though competitive advertising is where the firm highlights the strong and
better aspects of the product and compares them with those of its competitors. This
is done in a bid to show the consumer why its product is a better buy than buying a
competitor's product. The use of a competitor's name in an advertisement is restricted in
some countries and so firms will often imply who the competitor is rather than say so
expressly.

d. Collective
This type of advertising involves firms cooperating to advertise a product or service
regardless of who gets the sale. It often used the products that are very important for
society's consumption, such as antiretroviral drugs or advertisements encouraging people
to use condoms. These advertisements do not specify a brand but instead simply
communicate the importance of the product.

e. Reminder
This type of advertisement involves brief messages that are geared towards
reminding target consumers about a product or where to buy the product. Its aim
is usually to keep the product in the minds of the consumers and maintain good
relationships with them.

ADVERTISING MEDIA

The choice of advertising media is also very important to the process. Given that a firm has a
number of options available to it, care must be given to ensure that the most effective and cost-
efficient method is used. Simply by observing on a daily basis you will be able to identify a
number of media that are used for advertising. Some of these include television, radio, posters,
flyers, newspapers, billboards, cinema, exhibitions and trade fairs and the increasingly popular
internet. In the last decade or so, it has been observed that a number of firms are making use of
the internet especially with the proliferation of social network sites such as Facebook, Twitter
and Skype. The use of these networks for advertising has enable firms to reach the global market
with their product offerings. This is further magnified by the vast improvements that have been
seen over the years in transportation of cargo to the Caribbean. This means that people within
the region can order products from anywhere are found the world and have them shipped to their
doorstep. See table 1 overleaf for the advantages and disadvantages of advertising media.

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Advertising Media Advantages Disadvantages

Television  Gives good coverage of  It is usually very expensive

Radio
Posters and Billboards
Newspapers and Magazines 
 Cheaper than some other
Cinema
Exhibitions and trade fairs
Internet
mass marketing
 Gives a combination of
sight, sound and motion
 Demonstrations of the
product in use can be given
 The message is reinforced
by repeated viewing
 Less expensive than
television
 Fairly wide market coverage
 Offers the use of sound
 Consumers have more firms
to choose from (selectivity)
 Can reach a fairly wide
audience
 It offers repeated viewing
 Can influence impulse
buying if strategically
placed
 Ideal for short and quick
messages
Fairly wide coverage
media
 High credibility
 Can be passed along to
other readers
 Firm can give description of
the product
 Bring together sounds,
video and movement
 Firm can target different age
groups
 Can single out the target
audience, eg: movie goers
 May encourage business to
business trading
 Some product testing might
be possible
 Can target industry players
 Can reach a wide audience
based on the size of the
show or exhibition
 Cost is relatively low
 Can reach a global audience
 Has the capability for
interaction between the firm
and audience
 Ad can be seen immediately
once it is placed
 The ad is easily updated
especially during prime time
 The message is sometimes
short lived
 There may be a time lag
between viewing the
advertisement and visiting
the firm
 Consumers cannot see the
product being advertised.
 May not always capture the
attention of the audience
 Offers limited options for
creativity
 The stations may fragment
the market reducing the size
of people actually listening
 Costs may vary based on
where the billboard is
placed.
 Susceptible to natural
disasters
 The message has to be short
 There might be a lag
between placing the ad and
actual publication
 Quality may not be as good
as television
 Some newspaper ads may
be costly depending on the
day of the publication
 The audience is limited to
those who attend.
 The message may never be
seen again.
 Cost can be high at times
 Poor recollection of
advertisement after the
movie
 Can be time consuming
 Transportation costs to the
show can be expensive
 There is the possibility of
limited audience being
reached
 Requires internet connection
which might not be readily
available
 Impact might not be as great
as television
 Some sites are expensive to
advertise on

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The choice of media used for advertising may depend on the following factors:

 Desired market coverage - the media used will depend on the size of the market
and the desired market coverage of the firm. Some media, such as flyers or
billboards, will not be able to reach a wide cross-section of the targeted
population as would television, radio or newspaper.

 The level of costs involved - this is always going to be a concern for the
management of any firm. how much money are they willing to spend and what is
the likely result? Some firms may choose to use a cheaper form of medium,
especially in the initial stages, and then migrate to more expensive and possibly
more appealing media as the firm starts to grow.

 Frequency of transmission - some media do not allow for repeated transmission.

An advertisement that will run repeatedly over a specified period of time will
need to be communicated through a medium that will facilitate such a desire.
The media used in this situation could include television, radio or newspapers.

 The nature of the message - the message being communicated could be oral,
written, visual or electronic, or a combination of any of these. The media used
will depend on how the message will be communicated.

 The nature of the product - a product can be classified as a consumer or producer

product. The firm may find it easier and more effective if it advertises consumer
goods using media such as television, radio or newspapers, while advertising
producer goods in trade or business magazines and journals. Likewise, some
products, such as appliances and electronics, may be advertised with videos so
that consumers can see a demonstration of what they are capable of doing.

Using advertising as a promotional strategy has a number of BENEFITS for the firm

 It is a good source of information for consumers

 If successful, it can increase sales significantly.
 Mass production as a result of advertising can create employment
 It can be used to introduce new products to the market.
 It can be used to reach a wide audience

There are some DRAWBACKS to using advertising as promotional strategy:

 It is impersonal and so cannot take account of consumer feedback or queries.

 Advertisements can be misleading
 It is a more expensive way of promoting a product.
 The cost of advertisement is sometimes incorporated into the price of the product, making
it more expensive
 People are sometime persuaded to buy products for which they do not have any need.

2. SALES PROMOTION

This is usually a short-term form of promotion. It is where people in the target market are
given incentives by the firm to encourage them to purchase its products. Sales promotion
can be directed at wholesalers, retailers or consumers. Aims of sales promotion often include:

 Increasing product usage

 Attracting potential customers

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  Generate sales revenue through the actual purchase of the product.
 Entering an existing market with a new product or creating a market for the market.
 Attracting customers from competing firms and products.

This method is usually used in collaboration with other methods such as advertising and personal
selling, as these are more long-term tools. A firm undertaking sales promotion has a number of
techniques available to it. The firm will choose the technique that best fit its objective at the
time. These sales promotion techniques may include:

a. Coupon
This is a document given by a firm which is redeemable in terms of discount on a
future purchase. Coupons encourage shoppers to become repeat purchasers of the firm's
products. They can be given upon purchase of a product, sent in the mail or placed in a
newspaper or magazine. Use of this tool is not as widespread in the Caribbean as in the
United States but it is nevertheless being used here.

b. Sweepstakes
Some people may see this as a form of gambling. It is where people are given a
chance to win a prize by answering a question correctly. This is used from time to
time by our mobile telephone providers or radio stations.

c. Samples
This is particularly useful when a product is just being introduced to the market. Firms
give samples of the product in a bid to encourage people to try it and then buy it.
This is often used in the manufacturing industry, in particular the food industry.

d. Free gifts
These are given upon the purchase of the product. They are usually little tokens of
appreciation for using the firm's product. This type of promotion was popular with
furniture giant Courts. The value of the gift often reflects the amount of money that was
spent on the product.

e. Contests
These are also common in the region. This is where people compete to win prizes.
Usually a fee is charged but firms may ask that customers present, a certain amount of
wrappers or add a certain amount of credit to their phone or pay their bill on time to
qualify to enter.

f. Two for one deals

These are often seen in retail outlets in promotions such as buy one get one free. Movie
cinemas have also used this strategy to improve numbers of patrons on nights that were
usually slow - for example, two adult tickets for the price of one on Monday nights.

Advantages of Sales Promotion

 Usually effective in boosting sales in the short run.
 Gives firms an idea of which products are liked or not by potential customers
 Can help the firm to gain entry into an existing market
 Can help to build the brand image of the firm.
 Usually less expensive than advertising.

Disadvantages of Sales promotion

 The effect is usually short lived and may not attract long-term buyers of the
product.
 If done incorrectly it has the potential to damage the firm's brand image

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 3. PERSONAL SELLING

This promotional tool is a direct two-way communication between the salesperson and
potential buyer of the product. This can be done via the telephone, face to face or through
internet "chat." With the improvements in communications technology firms can also add to
these face-to-voice communication via cellular phone or 'video chat' on the internet. It follows
that salespersons do not have to travel to exact location of the potential buyers but can
communicate using one of these forms of technology.

Personal selling has been credited as being one of the most flexible and interpersonal tool of
promotion. This is so because during interaction the salesperson can answer any questions or
concerns that the buyer must have. It also gives the salesperson an opportunity of
communicating the salient information about the product that will generate a sale. An effective
personal selling technique is usually based on what has become known in the marketing sphere
as the PERSONAL SELLING STEPS:

i. Prospecting - potential customers are identified by the salesperson.

ii. Pre-approach - this is where the salesperson gathers as much information as possible
about the buyer before making the approach.
iii. Approaching the prospective buyer - this step involves the first meeting of the parties
to discuss the potential for purchase.
iv. Presenting - once the prospective buyer has confirmed his/her interest, the salesperson
can move to this step where the product is clearly presented to the buyer. The
presentation may include distinct features, benefits to be derived. etc.
v. Handling any objections - many queries, questions or objections during the presentation
stage must now be dealt with. The salesperson must seek to iron out the buyer's concerns
to ensure that the sale is completed.
vi. Closing the sale - at this stage the consumer is asked to make an order which will be
processed by the firm. The consumer will only place an order if he/she s convinced that
the product will meet his/her needs and satisfaction.
vii. Following upon the sale - some people tend to forget this step, however following up
after the sale can make a big difference in the future. The salesperson is expected to keep
in touch with the buyer after the sale and gather any feedback that might be given.

The ADVANTAGES OF USING PERSONAL SELLING as a promotional tool are:

 It is interpersonal and allows for immediate feedback.

 Salesperson can tailor the message to the individual's buyer's needs.
 It opens the way for negotiation which was not possible with advertising
 Can foster good and long-lasting relationship relationships with customers.
 Can be less expensive than advertising.

Some of the DISADVANTAGES OF PERSONAL SELLING are

 Having a very large sales force can prove to be very costly.

 It is not suitable for situations where there are large number of buyers.
 The level of success often depends on the quality of the salesperson. A poor and
untrained person might lead to poor sales.

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 4. PUBLICITY

It is important to point out that while the terms 'publicity and 'public relations' are used
interchangeably in some circles, they are actually quite different. Public relations
encompasses publicity and usually covers a wide cross-section of the firm's interactions
with the public. Public Relations is the building of relationships between the firm and
different groups of stakeholders, such as shareholders, employees, media houses and
customers. Some firms invest heavily in public relations since it can lay the groundwork for
marketing by generating awareness for a product or brand. One of the tactics or strategies used
by Public Relations Department to generate such awareness is publicity.

Publicity is anon-personal communication or message via the mass media but which is not
paid for directly by the firm. This message is usually communicated in the form of a news
story. In most cases, the firm will benefit from publicity because of some good deed and then
communicate this or may invite the media to view the activity. A number of firms are involved
in sponsoring events, community relations and support, giving assistance to the less fortunate
and making charitable donations, among other activities. From such activities, the firm could
improve its credibility and image in the public sphere.

Publicity keeps the firm in the public's eye and as such it has to be careful of its activities. The
fact is that the firm could be spending a lot of resources on advertising and it takes a while to
garner the requisite demand but one deed could cause it to lose millions of dollars. It is
important to point out, therefore, that publicity can be either bad or good. A firm being a victim
of bad publicity will want to bounce back as quickly as possible. In order to remain good in the
public's eyes, firms often create a Public Relations Department or section of another department.
The Public Relations Officer and staff will be responsible for planning activities and making
news releases that will improve the firm's image.

Advantages of Publicity

 Often less expensive than other forms of promotion.

 Can facilitate the building of brand loyalty
 Firms benefit from exposure and free advertisement
 Can build the firm's credibility, especially when it is done by a creative medium

Disadvantages of Publicity

 The firm may have little or no control over what is said about it in the media
 The cost of continuously sponsoring events accumulates and the firm may not recoup
such costs through increased sales
 May not be as effective as advertising which is more explicit and directed at a target
audience.