Chapter 16: PROMOTION

Chapter 16: PROMOTION

Layout of Chapter:

1.                  Promotion ·        Promotional objectives ·        The Promotion Mix 2.                  Advertising ·        Types of Advertising ·        Advertising Media

3.                  Personal Selling 4.                  Sales Promotion ·        Consumer Sales Promotion ·        Trade Sales Promotion 5.                  Publicity 6.                  Developing the Promotion Mix

1.                  PROMOTION

The communication of positive, persuasive information about an organization or its products with the intent of directly or indirectly influencing exchanges is called promotion.

The fourth element in the marketing mix, promotion supports product, pricing, and distribution decisions. It is crucial for the success of any firm.

# Promotional Objectives

Firms set promotional objectives that will help meet their broader marketing and organization objectives. Promotional programs can be built around a single objective or multiple objectives.

a)     Informing

¨      What products are available

¨      Where they can be purchased

¨      Price

¨      Example: Square Toiletries is informing people by its promotional activities that a full line of toiletries are available at convenience stores around the country (at given prices).

b)     Increasing Sales

¨      Encouraging prospective customers by reminding, coupons, promotional methods etc.

Example: Shoe companies increase their sales by giving people 20– 50% discount for purchasing a second pair.

c)      Stabilizing Sales

¨      For seasonal products, which require extra promotions to maintain a balanced sales volume throughout the year.

d)        Positioning the product

¨      Emphasizing certain features to create a specific image for the product and add to its appeal.

Example: letting people know the superiority of Surf Excel over the other detergents.

e)     Building a public image

¨      Publicity and to a lesser extent, advertising provide effective vehicles for image building.

Example: Akij group, SQUARE, Dutch Bangla Bank and a number of other companies are trying to build a good public image by helping the flood victims now.

# The Promotional Mix

The combination of advertising, personal selling, sales promotion and publicity used to promote a specific product.

A promotion mix may contain any or all of the four elements, depending on the firm’s objectives, promotional strategy, product characteristics, and target market characteristics.

2.                  ADVERTISING

A paid form of non-personal communication to a target audience through a mass medium such as television, newspapers or magazines.

Advertising can be quite expensive, especially using national media with immense audience. But firms find advertising to be cost effective. It can reach a vast number of people at a low cost per person.

# Types of Advertising

Three (3) major categories.

a)     Primary-Demand Advertising

Advertising used to create demand for all products in a product group without mentioning any particular brand or producer.

For example, “wash your hands before and after eating anything” message is sponsored by BRAC without mentioning any soap brand.

b)     Selective (brand) Advertising

Advertising used to sell a specific product or brand.

For example, Lever brothers, the manufacturer of LUX soap spends millions of dollars each year to persuade consumers to choose that brand.

Comparative Advertising identifies competitors and claims the superiority of the sponsor’s brand. For example, Tide detergent claims its superiority over the other brands.

c)      Institutional Advertising

Advertising used to build goodwill and create a favourable public image rather than promote specific product.

A form of institutional advertising used to address a public issue is called Advocacy Advertising. Firms, industry groups, non-profit organization, and even individuals use advocacy advertising to explain controversial topics and influence public opinion.

# Advertising Media

Ø      Newspapers: low cost, greater coverage; but short life span.

Ø      Television: appealing, allows creativity in ad, can reach vast audience (if most people have TV); but expensive.

Ø      Direct mail: less expensive; but used for limited products.

Ø      Radio: low cost, wide coverage; but message has extremely short life.

Ø      Magazines: more permanent, and colorful; not suited for immediate messages and also expensive.

Ø      Outdoor displays: inexpensive and useful in high-traffic areas; but only brief message can be communicated and it is criticized for detracting people from the natural scenery.

3.                  PERSONAL SELLING

Person to person communication with one or more prospective customers in order to make a sale. E.g. often used in Bangladesh for selling life insurance policies or credit cards.

4.                  SALES PROMOTION

An activity that offers customers or marketing intermediaries direct incentives for purchasing a product. E.g. 20% discount at Amin Jewelers for Eid. Sales promotion is used for two major categories: (a) Consumer Sales Promotion and (b) Trade Sales Promotion.

(a) Consumer Sales Promotion

Activities that encourage customers to buy certain brands or to shop at a particular store.

Most common methods are:

      Coupon- a sales promotion technique which reduces the price of a product by a stated amount at the time of purchase. E.g. Coupons from different companies in the newspapers, magazines that allows enjoy a % off during a purchase.

      Rebate- an extra discount or refund given to consumers who buy a product and supply proofs of purchase.

      Free Sample- a free package or container of a product given as a sales promotion technique.

      Premium- a gift to consumers for purchasing a certain product. E.g. toys with Corn-Flakes

      Trading Stamps- tokens given out by retailers based on the amount of purchase; redeemable for gifts.

      Contest- consumers complete for prizes on the basis of some skill. e.g., LUX contest, win the chance to go to Mumbai to meet Aishwarya.

      Sweepstakes- consumers enter a drawing for prizes.

(b) Trade Sales Promotion

Activities a firm directs to wholesalers, retailers or sales people to encourage them to stock or sell its products.

Few common methods are:

v     Point-of-Purchase Displays– promotional materials such as signs, posters and free standing shelves used in retail stores.

v     Trade Show– a temporary exhibit where manufacturers display products to potential customers and gather names for a list of prospects. E.g. Computer Fair or UK Education Fair at Sonargaon.

v     Trade Allowance– a discount a manufacturer gives for performing certain functions or making purchases during a specified time period.

v     Premium or Push Money- additional compensation provided to salespeople to encourage them to sell a product.

v     Sales Contest- a competition designed to stimulate sales efforts by salespeople, distributors or retailers.

5.                  PUBLICITY

A non personal form of communication transmitted in news story format and not paid for directly by a sponsor.

Publicity is actually part of public relations.

Public Relations

A set of communication activities designed to create and maintain a favourable image for a firm.

Various methods are used for publicity.

• News release – brief report, a page or two – that announce an organization’s national, regional, or local events.
• Feature article – a longer, more detailed story about a firm, its products, or its people.
• Captioned photograph – a picture, along with a short explanation, can be effective in informing customers about new products or stores.
• Editorial film.
• News conference.
• Sponsorship of events, or even people such as amateur athletes or teams.

6.                  DEVELOPING THE PROMOTIONAL MIX