IB Business and ManagementUnit 4.5: Promotion Lesson 1: Objectives of Promotion (pp. 557-574)

Think about it “ Advertising is the art of convincing

people to spend money they don’t have for something they don’t need.” - Will Rogers (1879-1935) comedian

What did Rogers mean by this quote? Are we constantly being deceived?

Focus Questions 1. What are the objectives of promotion? 2. List and explain the types of

promotion. 3. What is above and below the line

promotion? 4. What is included in the promotional

mix

Promotion methods of communicating messages to the

market when selling a firm’s product. promotion includes:

sales promotion branding raising publicity (awareness) advertising campaigns

Promotion is important during which stage of a product’s life cycle? LAUNCH Marketers must forecast probable impact on

sales and then make the promotional budget. This is not easy.

Promotion Objectives of promotion :

inform: to alert the market about a firm’s product.

persuade: to encourage customers to make a purchase. Product differentiation Comparison advertising

remind: used to retain customer awareness and interest of an established product.

These objectives will be in line with marketing department’s objectives, which are based on corporate objectives.

Most types of promotions are….? PERSUASIVE

Types of Promotion

Fours types of promotion : 1. Above-the-line (ATL): use of mass

media sources (TV, radio, magazine). 2. Below-the-line (BTL): use of non-

mass media (free samples, buy1 get 1). 3. Pull promotion: used to stimulate

(pull) demand. (ATL) 4. Push promotion: rely on

intermediaries such as wholesalers and retailers to ‘push’ the products to customers. (BTL)

Above-the-line Promotion ATL - any form of paid-for promotional

technique through independent media. Such as:

TV

Newspaper Magazines

Radio CinemaInternet

OutdoorAdvertisin

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Above-the-line Promotion Advantages:

ATL can reach a large audience of customers Customers more aware of ATL b/c they are

more interesting/appealing Disadvantages:

Promotion through mass media may not appeal to the right market segments

Many advertisements are ignored (ie. People change channel during commercials, annoying pop-up ads on internet)

Cannot determine effectiveness of ads b/c communication is one-way

ATL Promotion - TV First American tv ad – 1941 UK television advertising industry worth

$10billion/yr Most spending on this form of promotion than

all the others Advantages:

Can reach a global audience Can meet specific needs ie. Aimed at children

during children’s tv shows Disadvantages:

Huge costs During the Super Bowl, 1 commercial can be

$2.6million for 30 seconds

ATL Promotion - Radio Advantages:

Reaches a large audience Significantly cheaper than tv ad.

Disadvantages: Can only communicate audio messages, no

visuals. People remember better w/ audio + visual

Audiences have lower attention to audio rather than visual (tv)

ATL Promotion - Cinema Going to the movies is income elastic

More visitors go to movies therefore cinema is a growing medium for ads.

Advantages: Can directly target the audience based on the

movie Size of movie screen exerts more impact Audience is more likely to watch bc they cannot

leave or switch channel Disadvantages:

Limited audience

ATL Promotion - Newspaper

Advantages: Can reach a wide audience Much cheaper than tv ad. Can keep the ad around for awhile and can read the

important info. at a later time Can better target different markets than tv (ie. Teaching

jobs in The Educational Supplement or different socio-economic classes based on the type of paper they read)

Many newspaper firms have websites – can target wider audience

Disadvantages: High costs, esp for small businesses Very short shelf life (people won’t read yesterday’s

paper)

ATL Promotion - Magazines Advantages:

High photo-quality color images to attract Target specific market segments thru specialist

magazines (Vogue, PC Gamer) Can refer to info at a later date (like newspaper) Longer shelf life than newspapers

Disadvantages: Static, one company places many diff ads in the

magazine Magazines have too many ads, so some are

skipped over – advertising clutter Long lead-time from when ad is submitted until

published

ATL Promotion – Outdoor Advertising Billboards, banners, posters Sporting events, shopping malls, roadside, on vehicles Used by car manufacturers, food producers, clothing

firms, tourism/leisure Advantages:

Advances in billboard technology so can have more ads on each billboard and images and sound

High rate of exposure Disadvantages:

Difficult to monitor effectiveness b/c it is hard to target markets

Prone to damage (bad weather, vandalism, graffiti) Too much clutter – high levels of competition

Below-the-line Promotion BTL promotion refers to all forms of non-media

promotion activities. Business has direct control over the production of all its advertisements. Such as:

Branding

Word-of-mouth

DirectMarketing

Slogans

Direct Mail

Publicity

Sponsorship

Logos Packaging

Point-of-sales

Promotion

Sales Promotion

s

Below-the-line Promotion We said before, ATL is paid for advertising to

external media agencies

BTL pays no commission to these external media. Instead business has control over production of

ads BTL is usually cheaper than ATL

Below-the-line Promotion - Branding

Successful brands are instantly recognizable

Virgin, Microsoft, Sony, Nike use branding to promote their company/products

These types of companies use extension strategies to launch new products under brand name

Below-the-line Promotion - Slogans Memorable catchphrases

Concise message that represents essence of a business or product

Many slogans have become so well known they are synonymous with the brand

Successful slogan can give business competitive advantage

Slogan should be: Memorable Creates desire Creates positive image Outlines benefits of product

Below-the-line Promotion - Logos

A form of branding that uses a visual symbol

Logos are used by NPO’s as well such as:

Companies spend millions of dollars coming up with the right logo

Below-the-line Promotion - Packaging

Almost every manufacturer/retailer makes carrier bags with the company name/logo on the bag

Customers who reuse these bags are helping the company promote

“Bag-vertising”

Below-the-line Promotion – Word-of-mouth

Spreading info through oral communication

Possibly the most effective form of promotion bc there are no direct costs from the company

However, can also be damaging if bad words spread about a company

Similar method, peer-to-peer (P2P) – relies on electronic transfer of messages usually thru internet Viral Marketing – using internet for promoting

Below-the-line Promotion – Direct Marketing Sell a product directly to customer. Does not

use intermediary (store). EX: telemarketing, email, mail Advantages:

Business can have larger share of profits Can do marketing their own way

Disadvantages: Cost of producing and distributing promotional

material ie. Brochures, catalogues, menus Most people ignore this ‘junk’ mail

Below-the-line Promotion – Direct Mail Example of direct marketing

Local restaurants and fast-food companies use this method

Drawbacks: People may ignore Wastes resources May not target right audience

Below-the-line Promotion – Sales Promotions Temporary ways to boost sales Types:

BOGO Discount coupons Free samples Customer loyalty schemes Win prizes

Drawback: Can be costly Only short term strategies

Below-the-line Promotion – Point-of-sales

Promotion at the place/location where the customer buys the product EX: supermarkets – while customers wait

in line – impulse buys, displays, posters

Below-the-line Promotion – Publicity

Promoting a business through media coverage without directly paying for it

EX: celebrities photographed wearing designer shoes/clothes – free promotion Ferrari gave away car to celebrity This type of publicity can be more beneficial

than tv ads.

Below-the-line Promotion – Sponsorship

Business provides financial funds to support an event/organization in return for publicity

EX: Arsenal Football Club received $178million from Emirates Airline in return for Arsenal naming their field “The Emirates Stadium”

Promotional Mix “Set of tools that a business can use to

communicate effectively the benefits of its products or services to its customers.”

In other words, a range of above and below the line methods used to market a product.

Promotional Mix When deciding on a promotional mix use AIDA :

Attention: should raise awareness of the product Interest: should keep customers interested Desire: should generate a desire or feeling of ‘need’

for the product Action: should encourage customers to take action

Another approach is FAB: Features Advantages Benefits Explains what the product will do for the customer

Promotional Mix When creating a promotional strategy

marketers should consider a combination of factors: cost of promotional medium nature of the product product’s position in its life cycle legislation

Using a single promotional technique is unlikely to be effective; instead use many:

4 Key Elements of Promotional Mix

1. Advertising: “ the science of arresting the human intelligence

long enough to get money from it.” form of promotion that is paid-for

Tv, radio, billboards, email, in-store displaysadvertising can be informative or persuasive, or

both. advertisement should be original and creativemost businesses use advertising agencies to make

their ads

4 Key Elements of Promotional Mix

2. Personal selling: relies on sales representatives directly helping

and persuading potential and existing customers to make a purchase.

EX: sales presentations, face-to-face meetings with clients (health insurance), telemarketing, door-to-door sales

Benefit: tailored to the individual needs of the customers. can help company build positive, long relationship

w/ customerDisadvantage:

these sales agents can be expensive to hire

4 Key Elements of Promotional Mix

3. Public relations (PR) : aimed at establishing and protecting the desired

image of an organization. concerned with getting good press coverage. PR experts will get media to report events in a

positive wayEX: having a presence at exhibitions, launch

party, press conferences, radio/tv interviews, donating to charities

PR is a long-term strategy and relied on when business faces a crisis

4 Key Elements of Promotional Mix

4. Sales promotion : short-term incentives designed to stimulate

sales of a product. EX: discount coupons, prize draws, samplesAdvantages:

can help gain short term competitive head start get rid of excess or old stock encourages customer loyalty attract new customers

Disadvantage: costly

Promotion and Business Strategy

Often takes several attempts for a promotional message to be noticed Therefore, promotion can be very expensive

Some critics believe this is wasteful and the money could be spent elsewhere

Levi Strauss had tv commercial that increased sales 800%/yr

Promotion relies creativity of marketers

Promotion and Business Strategy

Guerrilla marketing – promotional strategy to raise maximum exposure by using minimum input and/or unconventional methods uses ‘shock’ technique Supporters believe it is more effective and

cheaper Marketers must obey laws

Ex: cigarettes, fast food, box 4.5e Unethical promotions do exist and laws have

been passed to protect consumers