promotion - sales promotion

Introduction

A good definition of sales promotion would be as follows:

“An activity designed to boost the sales of a product or service. It may include an advertising campaign, increased PR activity, a free-sample campaign, offering free gifts or trading stamps, arranging demonstrations or exhibitions, setting up competitions with attractive prizes, temporary price reductions, door-to-door calling, telemarketing, personal letters on other methods”.

More than any other element of the promotional mix, sales promotion is about “action”. It is about stimulating customers to buy a product. It is not designed to be informative – a role which advertising is much better suited to.

Sales promotion is commonly referred to as “Below the Line” promotion.

Sales promotion can be directed at:

• The ultimate consumer (a “pull strategy” encouraging purchase)

• The distribution channel (a “push strategy” encouraging the channels to stock the product). This is usually known as “selling into the trade”

Methods of sales promotion

There are many consumer sales promotional techniques available, summarised in the table below:

Price promotions

Price promotions are also commonly known as” price discounting”

These offer either (1) a discount to the normal selling price of a product, or (2) more of the product at the normal price.

Increased sales gained from price promotions are at the expense of a loss in profit – so these promotions must be used with care.

A producer must also guard against the possible negative effect of discounting on a brand’s reputation

Coupons

Coupons are another, very versatile, way of offering a discount. Consider the following examples of the use of coupons:

- On a pack to encourage repeat purchase
- In coupon books sent out in newspapers allowing customers to redeem the coupon at a retailer
- A cut-out coupon as part of an advert
- On the back of till receipts

The key objective with a coupon promotion is to maximise the redemption rate – this is the proportion of customers actually using the coupon.

One problem with coupons is that they may simply encourage customers to buy what they would have bought anyway. Another problem occurs when retailers do not hold sufficient stocks of the promoted product – causing customer disappointment.

Use of coupon promotions is, therefore, often best for new products or perhaps to encourage sales of existing products that are slowing down.

Gift with purchase

The “gift with purchase” is a very common promotional technique. It is also known as a “premium promotion” in that the customer gets something in addition to the main purchase. This type of promotion is widely used for:

- Subscription-based products (e.g. magazines)
- Consumer luxuries (e.g. perfumes)

Competitions and prizes

Another popular promotion tool with many variants. Most competition and prize promotions are subject to legal restrictions.

Money refunds

Here, a customer receives a money refund after submitting a proof of purchase to the manufacturer.
These schemes are often viewed with some suspicion by customers – particularly if the method of obtaining a refund looks unusual or onerous.

Frequent user / loyalty incentives

Repeat purchases may be stimulated by frequent user incentives. Perhaps the best examples of this are the many frequent flyer or user schemes used by airlines, train companies, car hire companies etc.

Point-of-sale displays

Research into customer buying behaviour in retail stores suggests that a significant proportion of purchases results from promotions that customers see in the store. Attractive, informative and well-positioned point-of-sale displays are, therefore, very important part of the sales promotional activity in retail outlets.

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promotion- push and pull strategies

"Push or Pull"?

Marketing theory distinguishes between two main kinds of promotional strategy - "push" and "pull".

Push

A “push” promotional strategy makes use of a company's sales force and trade promotion activities to create consumer demand for a product.

The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers.

A good example of "push" selling is mobile phones, where the major handset manufacturers such as Nokia promote their products via retailers such as Carphone Warehouse. Personal selling and trade promotions are often the most effective promotional tools for companies such as Nokia - for example offering subsidies on the handsets to encourage retailers to sell higher volumes.

A "push" strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools.

Pull

A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product.

If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers.

A good example of a pull is the heavy advertising and promotion of children's’ toys – mainly on television. Consider the recent BBC promotional campaign for its new pre-school programme – the Fimbles. Aimed at two to four-year-olds, 130 episodes of Fimbles have been made and are featured everyday on digital children's channel CBeebies and BBC2.

As part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher-Price to market products based on the show, which it hopes will emulate the popularity of the Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and distribute a range of Fimbles products including soft, plastic and electronic learning toys for the UK and Ireland.

In 2001, BBC Worldwide (the commercial division of the BBC) achieved sales of £90m from its children's brands and properties last year. The demand created from broadcasting of the Fimbles and a major advertising campaign is likely to “pull” demand from children and encourage retailers to stock Fimbles toys in the stores for Christmas 2002.

http://tutor2u.net/business/marketing/promotion_pushpull.asp

promotion - public relations

Introduction

The Institute of Public Relations defines public relations as follows:

“The planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics”

What is meant by the term “publics” in the above definition?

A business may have many “publics” with which it needs to maintain good relations and build goodwill. For example, consider the relevant “publics” for a publicly-quoted business engaged in medical research:

• Employees
• Shareholders
• Trade unions
• Members of the “general public”
• Customers (past and present)
• Pressure groups
• The medical profession
• Charities funding medical research
• Professional research bodies and policy-forming organisations
• The media
• Government and politicians

The role of public relations is to:

• Identify the relevant publics
• Influence the opinions of those publics by:
o Reinforcing favourable opinions
o Transforming perhaps neutral opinions into positive ones
o Changing or neutralising hostile opinions

Public relations techniques

There are many techniques available to influence public opinion, some of which are more appropriate in certain circumstances than others:

Consumer communication

Customer press releases
Trade press releases
Promotional videos
Consumer exhibitions
Competitions and prizes
Product launch events
Celebrity endorsements
Web sites

Business communication

Corporate identity design
Company and product videos
Direct mailings
Web site
Trade exhibitions

Internal / employee communication

In-house newsletters and magazines
Intranet
Notice boards
Employee conferences
Email

External corporate communication

Company literature (brochures, videos etc.)
Community involvement programmes
Trade, local, national and international media relations

Financial communication

Financial media relations
Annual report and accounts
Meetings with stock market analysts, fund managers etc
Shareholder meetings (including the annual general meeting

Given the wide range of techniques used in public relations, how is it possible to measure the effectiveness of public relations?

It is actually quite difficult to measure whether the key messages have been communicated to the target public. In any event, this could be quite costly since it would involve a large amount of regular research. Instead, the main measures of effectiveness concentrate on the process of public relations, and include:

• Monitoring the amount of media coverage obtained (press cuttings agencies play a role in keeping businesses informed of this)

• Measuring attendance at meetings, conferences

• Measuring the number of enquiries or orders received in response to specific public relations efforts.

http://tutor2u.net/business/marketing/promotion_public_relations.asp

promotion - personal selling

Introduction

Personal selling can be defined as follows:

Personal selling is oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale"

Personal selling is one of the oldest forms of promotion. It involves the use of a sales force to support a push strategy (encouraging intermediaries to buy the product) or a pull strategy (where the role of the sales force may be limited to supporting retailers and providing after-sales service).

What are the main roles of the sales force?

Kotler describes six main activities of a sales force:

(1) Prospecting - trying to find new customers

(2) Communicating - with existing and potential customers about the product range

(3) Selling - contact with the customer, answering questions and trying to close the sale

(4) Servicing - providing support and service to the customer in the period up to delivery and also post-sale

(5) Information gathering - obtaining information about the market to feedback into the marketing planning process

(6) Allocating - in times of product shortage, the sales force may have the power to decide how available stocks are allocated

What are the advantages of using personal selling as a means of promotion?

• Personal selling is a face-to-face activity; customers therefore obtain a relatively high degree of personal attention

• The sales message can be customised to meet the needs of the customer

• The two-way nature of the sales process allows the sales team to respond directly and promptly to customer questions and concerns

• Personal selling is a good way of getting across large amounts of technical or other complex product information

• The face-to-face sales meeting gives the sales force chance to demonstrate the product

• Frequent meetings between sales force and customer provide an opportunity to build good long-term relationships

Given that there are many advantages to personal selling, why do more businesses not maintain a direct sales force?

Main disadvantages of using personal selling

The main disadvantage of personal selling is the cost of employing a sales force. Sales people are expensive. In addition to the basic pay package, a business needs to provide incentives to achieve sales (typically this is based on commission and/or bonus arrangements) and the equipment to make sales calls (car, travel and subsistence costs, mobile phone etc).

In addition, a sales person can only call on one customer at a time. This is not a cost-effective way of reaching a large audience.

http://tutor2u.net/business/marketing/promotion_personalselling.asp

promotion- the promotional mix

Promotional mix

It is helpful to define the five main elements of the promotional mix before considering their strengths and limitations.

Advertising

Advertising is any paid form of non-personal communication of ideas or products in the "prime media": i.e. television, newspapers, magazines, billboard posters, radio, cinema etc. Advertising is intended to persuade and to inform.

The two basic aspects of advertising are the message (what you want your communication to say) and the medium (how you get your message across)

Direct marketing

Direct marketing creates a direct relationship between the customer and the business on an individual basis.

Personal Selling

Personal selling refers to oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale".

Sales Promotion

Sales promotion refers to the provision of incentives to customers or to the distribution channel to stimulate demand for a product.

Public Relations

Public relations is the communication of a product, brand or business by placing information about it in the media without paying for the time or media space directly

Factors that determine the type of promotional tools used

Each of the above components of the promotional mix has strengths and weaknesses. There are several factors that should be taken into account in deciding which, and how much of each tool to use in a promotional marketing campaign:

(1) Resource availability and the cost of each promotional tool

Advertising (particularly on television and in the national newspapers can be very expensive). The overall resource budget for the promotional campaign will often determine which tools the business can afford to use.

(2) Market size and concentration

If a market size is small and the number of potential buyers is small, then personal selling may be the most cost-effective promotional tool.

A good example of this would be businesses selling software systems designed for supermarket retailers. On the other hand, where markets are geographically disperse or, where there are substantial numbers of potential customers, advertising is usually the most effective.

(3) Customer information needs

Some potential customers need to be provided with detailed, complex information to help them evaluate a purchase (e.g. buyers of equipment for nuclear power stations, or health service managers investing in the latest medical technology). In this situation, personal selling is almost always required - often using selling teams rather than just one individual.

By contrast, few consumers need much information about products such as baked beans or bread. Promotional tools such as brand advertising and sales promotion are much more effective in this case.

promotion - direct marketing

Introduction

Direct marketing is concerned with establishing an individual relationship between the business offering a product or service and the final customer.

Direct marketing has been defined by the Institute of Direct Marketing as:

The planned recording, analysis and tracking of customer behaviour to develop a relational marketing strategies

The process of direct marketing covers a wide range of promotional activities you may be familiar with. These include:

• Direct-response adverts on television and radio
• Mail order catalogues
• E-commerce (you bought this marketing companion following tutor2u’s direct marketing campaign!)
• Magazine inserts
• Direct mail (sometimes also referred to as “junk mail”)
• Telemarketing

Direct mail

Of the above direct marketing techniques, the one in most widespread use is direct mail.

Direct mail is widely thought of as the most effective medium to achieve a customer sales response.

Why?

• The advertiser can target a promotional message down to an individual level, and where possible personalise the message. There are a large number of mailing databases available that allow businesses to send direct mailing to potential customers based on household income, interests, occupation and other variables

• Businesses can first test the responsiveness of direct mailing (by sending out a test mailing to a small, representative sample) before committing to the more significant cost of a larger campaign

• Direct mailing campaigns are less visible to competitors – it is therefore possible to be more creative, for longer

However, direct mail has several weaknesses:

• A piece of direct mail is less “interactive” than a television or radio advert, although creative packaging can still stimulate customer response

• Lead times to produce direct mailing campaigns can be quite long

• There is increasing customer concern with “junk mail” – the receipt of unsolicited mail which often suggests that the right to individual privacy has been breached.

The Direct marketing database

Direct mailing is based on the “mailing list” – a critical part in the direct marketing process. The mailing list is a database which collects together details of past, current and potential customers. A properly managed mailing database enables a business to:

• Focus on the best prospective customers

• Cross-sell related products

• Launch new products to existing customers

How is the mailing database compiled?

The starting point is the existing information the business keeps on its customers. All forms of communication between a customer and the business need to be recorded so that a detailed, up-to-date profile can be maintained.

It is also possible to “buy” mailing lists from elsewhere. There are numerous mailing list owners and brokers who sell lists of names. The Internet, directories, associations and other sources are good sources.

http://tutor2u.net/business/marketing/promotion_direct_marketing.asp

advertising- why and what?

Why and what should a business advertise?

Before undertaking an advertising campaign, marketers should be able to answer two key questions:

(1) Why are we advertising?

(2) What are we advertising?

On the face of it these seem like two fairly obvious questions. But they are significant. Advertising can be a very expensive promotional tool. It is widely believed that much advertising spend is wasted. So careful consideration about “Why” and “What” can pay dividends.

Why advertise?

The following may be good reasons why a business is advertising:

• To create awareness, customer interest or desire

• To boost sales (moving the demand curve to the right)

• To build brand loyalty (or to maintain it at the existing level)

• To launch a new product

• To change customer attitudes – perhaps trying to move a product more “upmarket” or to dispel some widely held perceptions about the product

• To support the activities of the distribution channel (e.g. supporting a “pull” strategy)

• To build the company or brand image

• To reminds and reassure customers

• To offset competitor advertising – businesses may defend market share by responding to competitors’ campaigns with their own advertising

• To boost public standing: companies can boost their public standing with advertisements that link them with generally approved campaigns such as care for the environment

• To support the sales force – advertising can make the job of the sales force easier and more effective by attracting leads from potential customers and perhaps motivate them by boosting the profile of the business

Take a look through any magazine and select a sample of adverts. Which of the above reasons do you think are behind the adverts you choose? Don’t forget that some adverts aim to achieve multiple objectives.

What to advertise?

Factors that help answer the “what are we advertising”? focus on what the advertising message should be. In general, there are really only two kinds of effective advertising message:

Firstly, does the business/product have a Unique Selling Proposition (“USP”)

A unique selling proposition is a customer benefit that no other product can claim

In reality these are rare, although that does not stop marketers from claiming them for their products.

Secondly, does the thing that is being advertised “add value” and if so, how?

For example, advertising for washing powders will focus on the “added value” created by whitening agents or the fact that a particular formulation will last longer than the competition (take a look at the Fairy web site to see if you can spot the other “added value” features claimed for its products)
Whatever is advertised, it is important that the message is:

• Seen
• Read
• Believed
• Remembered
• Action upon by target customers

http://tutor2u.net/business/marketing/promotion_advertising_whywhat.asp

advertising- media

Advertising media

There is a huge variety of media available through which a business can conduct an advertising campaign. What are the main types of media and what considerations should a business make in choosing between them?

The starting point in the selection of appropriate advertising media is a “media analysis”. This can be defined as:

"An investigation into the relative effectiveness and the relative costs of using the various advertising media in an advertising campaign"

Before committing an advertising budget it is necessary to carry out marketing research on:

- Potential customers

- Their reading habits, television-watching habits

- How many times the advertisers wish the potential customers to see an advertisement

- How great a percentage of the market they wish to reach, etc.

These elements all need to be considered and balanced to plan a campaign that will effectively reach its target audience at a reasonable cost.

A useful distinction can be made between “published media” and “visual/aural media”.

Published media include:

• National daily newspapers
• Sunday newspapers
• Local and regional newspapers
• Consumer magazines
• Specialist magazines
• Trade and professional press
• Internet

Visual and aural media include:

• Television (terrestrial and digital)
• Radio
• Cinema
• Billboards
• Transport
• Direct mailing

http://tutor2u.net/business/marketing/promotion_advertising_media.asp

advertising - effectiveness?

Judging the effectiveness of advertising

How can the effectiveness of an advert be judged?

The answer depends on what objectives or tasks were set for the advert.

The table below sets out some possible objectives/tasks and how the effectiveness of the advert might be measured:

Advertising objective	How success can be measured
Stimulate an increase in sales	- Number of enquiries from advert - Number of enquiries converted into sales
Remind customers of the existence of a product	- Test customer awareness both before and after the advertising campaign - Number of enquiries
Inform customers	- Test customer awareness - Number of requests for further information
Build a brand image	-Sales -Test customer awareness of brand recognition and perceived values
Build customer loyalty and relationship	- Levels of repeat purchase - Levels of customer retention
Change customer attitudes	- Measure demographic profile of purchases - Measure type of goods ordered by new purchasers - Compare with previous data

promotion - advertising: introduction

The Institute of Practitioners in Advertising (IPA), the body which represents advertising agencies, defines advertising as:

"The means of providing the most persuasive possible selling message to the right prospects at the lowest possible cost".

Kotler and Armstrong provide an alternative definition:

"Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services through mass media such as newspapers, magazines, television or radio by an identified sponsor".

There are five main stages in a well-managed advertising campaign:

Stage 1: Set Advertising Objectives

An advertising objective is a specific communication task to be achieved with a specific target audience during a specified period of time. Advertising objectives fall into three main categories:

(a) To inform - e.g. tell customers about a new product

(b) To persuade - e.g. encourage customers to switch to a different brand

(c) To remind - e.g. remind buyers where to find a product

Stage 2: Set the Advertising Budget

Marketers should remember that the role of advertising is to create demand for a product. The amount spent on advertising should be relevant to the potential sales impact of the campaign. This, in turn will reflect the characteristics of the product being advertised.

For example, new products tend to need a larger advertising budget to help build awareness and to encourage consumers to trial the product. A product that is highly differentiated may also need more advertising to help set it apart from the competition - emphasising the points of difference.

Setting the advertising budget is not easy - how can a business predict the right amount to spend. Which parts of the advertising campaign will work best and which will have relatively little effect? Often businesses use "rules-of-thumb" (e.g. advertising/sales ratio) as a guide to set the budget.

Stage 3: Determine the key Advertising Messages

Spending a lot on advertising does not guarantee success (witness the infamous John Cleese campaign for Sainsbury). Research suggests that the clarity of the advertising message is often more important than the amount spent. The advertising message must be carefully targeted to impact the target customer audience. A successful advertising message should have the following characteristics:

(a) Meaningful - customers should find the message relevant

(b) Distinctive - capture the customer's attention

(c) Believable - a difficult task, since research suggests most consumers doubt the truth of advertising in general

Stage 4: Decide which Advertising Media to Use

There are a variety of advertising media from which to chose. A campaign may use one or more of the media alternatives. The key factors in choosing the right media include:

(a) Reach - what proportion of the target customers will be exposed to the advertising?

(b) Frequency - how many times will the target customer be exposed to the advertising message?

(c) Media Impact - where, if the target customer sees the message - will it have most impact? For example does an advert promoting holidays for elderly people have more impact on Television (if so, when and which channels) or in a national newspaper or perhaps a magazine focused on this segment of the population?

Another key decision in relation to advertising media relates to the timing of the campaign. Some products are particularly suited to seasonal campaigns on television (e.g. Christmas hampers) whereas for other products, a regular advertising campaign throughout the year in media such as newspapers and specialist magazines (e.g. cottage holidays in the Lake District) is more appropriate.

Stage 5: Evaluate the results of the Advertising Campaign

The evaluation of an advertising campaign should focus on two key areas:

(1) The Communication Effects - is the intended message being communicated effectively and to the intended audience?

(2) The Sales Effects - has the campaign generated the intended sales growth. This second area is much more difficult to measure.

http://tutor2u.net/business/marketing/promotion_advertising.asp

promotion- introduction

It is not enough to have good products sold at attractive prices. To generate sales and profits, the benefits of products have to be communicated to customers.

Promotion is, therefore, about companies communicating with customers.

A business' total marketing communications programme is called the promotional mix and consists of a blend of:

• Advertising

• Direct marketing

• Personal selling

• Sales promotion

• Public relations tools

Promotion has several possible objectives and many pieces of marketing promotion aim to achieve several of the following objectives at the same time:

Inform

Management may need to make their audience aware that their product exists, and to explain exactly what it does. This is a particularly important objective for new products

Persuade

An important stage in creating favourable attitudes towards the business and its brands. Through persuasive promotion, management will seek to persuade customers and the trade that their brand has benefits that are superior to competitors

Image creation

Sometimes, promoting a brand image is the only way to create differentiation in the mind of the consumer (e.g. lager advertising)

Reassurance

Much promotion (particularly advertising) is about reassuring customers that they have made the right choice and encouraging them to stay loyal to a brand.

There are a large and growing number of promotional methods that businesses can use. The main instruments - advertising, direct response mailing, sales promotion, public relations and direct selling, are often mixed together as part of the promotional mix. Each has different strengths.
What is important is that the promotional mix is carefully planned and the results monitored to ensure that the total promotional cost is controlled.