39 Promotion Decision
Rajwant Kaur
1. Learning Outcome
After completing this module, the students will be able to:
- Describe the concept of promotion
- Explain various components of promotion mix.
- Distinguish push and pull strategy of promotion.
- Suggest how effective promotion strategy may be developed
2. Meaning of Promotion
Promotion is a process of marketing communication which attempts to inform, persuade and remind its target markets, through personal and impersonal means, about company and its brand. It acts as a powerful tool and creates a link between marketer (company) and consumer. Marketing communication is necessary as superb product, best package and fair price cannot ensure sale of product unless people are made aware of its existence. Promotion can stimulate demand, capture it from rivals and maintain it.
3. Objectives of Promotion
Promotion is an important marketing strategy. Promotion aims at communicating marketing information to consumers and sellers. It persuades and convinces the buyer to influence his behaviour and prompt him to take the desired action. The key objectives of promotion can be summarized as to inform, persuade and remind:
(i) To inform : Company makes use of promotional tools to inform target market about:
(a) New product, brand, new pack size or new feature of product
(b) Reduction in price, new offer like buy one get one or more quantity at same price
(c) Opening of new outlet in the region like Reliance, Big Bazar
(d) Working of product though demonstration
(e) New packaging of the product
(f) New or multiple uses of the product
(g) Introduction of new technologies in the market
(h) Genuineness of product or company when some wrong or negative perceptions have emerged as happened in case of Maggi Noodles
(i) Competitive advantage of the product or service
(ii) To persuade: Promotional strategies aim at influencing buyer’s behaviour to take a desired action. It focuses on :
(a) Insisting consumers to buy now as happens in case of limited stock offers
(b) Initiating brand switching in the favour of company i.e. capturing customers of rival firms
(c) Stimulating demand and creating brand preference
(d) Insisting consumer to stay loyal to brand i.e. creating brand loyalty
(iii) To remind : There is stiff competition in consumer goods market and companies have to consistently remind the customer about brand, product and its competitive advantage. The companies aim to:
(a) Remind occasion of use as Cadbury chocolates advertisement reminds customer about its use on Raksha Bandhan
(b) Remind brand to maintain brand recall
(c) Remind need to buy to fulfil near future demand. This is particularly true in case of seasonal goods like woollen clothes, water coolers.
4. Promotion Mix
Promotion mix consists of a group of communication tools which marketing executives use to communicate with their target audience. The marketer tries to create a most favourable blend of all promotion elements to influence buyer’s behaviour and his process of decision making. Sales can be promoted through an effective promotion mix.
Advertising, sales promotion, personal selling, public relations are important elements of promotion mix. Different elements of promotion-mix are used by the companies depending on the marketing objectives and certain other factors.
4.1 Advertising : Advertising is paid form of communication of goods, services or ideas by an identified sponsor which is directed at mass audience. The sponsor/ advertiser (seller) pays for time or space used in media in which his advertisement appears. Magazines, newspapers, radio, television, posters, hoardings, direct mail are different media used by advertisers to influence and induce the viewers, readers or listeners to buy the advertised products.
4.2 Sales Promotion: Sales promotion refers to short term special selling efforts to accelerate sales. It is a promotional activity which provides monetary and non-monetary incentives to spark an immediate reaction from target consumers (consumer sales promotion) and dealers or firm’s salesperson (Trade promotions). Consumer Sales promotion pulls a product or service by stimulating demand and trade promotions push a product or service by arousing enthusiasm among channel members to sell more of a particular brand. Sales promotion influences purchase behaviour and provides immediate incentive to buy. Sales promotion tools provide marvellous results when supported by advertising and personal selling.
4.3 Personal Selling: Personal selling refers to direct personal contact between a sales representative and one or more prospective customers to influence the customer in a purchase situation. It involves securing information about buyer’s unsatisfied needs and wants by the salesman and supplying information about goods and services to the prospective buyer. Sales talk and product demonstrations play an important role in personal selling.
4.4 Public relations and Publicity: Public relations and publicity aim at protecting and promoting company’s image through number of programmes and activities. Publicity and public relations increase effectiveness of promotion as consumers are now more interested in evaluating company brand or product on the basis of what is written about it in the media.
4.4.1. Publicity : It is non personal communications through media such as interviews, press conference, photographs, corporate film, press release. Media space used for publicity is not bought by the sponsor. American Marketing Association has defined Publicity as “non-personal stimulation of demand for a product, service, or business unit by planting commercially significant news about it in a published medium or obtaining favourable presentation of it on radio, television, or stage that is not paid for by the sponsor”1.
4.4.2 Public Relations: It includes certain activities like event sponsorship, cause related marketing programmes and consumer training programmes.
- Event sponsorship: Companies usually sponsor those events which are sufficiently newsworthy to attain wide coverage. They can become part of well-known events like film award functions, cricket match or they can create an event exclusively for the company or brand like Bournvita Quiz contest. Those events create stronger ties with brand.
- Consumer education and training programmes : Companies organize seminars and training programme to educate customers and to create brand preference. For example, LG run Microwave cooking classes to educate customer about the use of microwave oven.
- Social Cause related marketing: Under corporate social responsibility campaign, companies usually support social cause programmes and donate large funds for these programmes to create a favourable image in the mind of target audience.
Each element of promotion mix differs in its ability to influence buyer’s behaviour. Hence, it is important to analyse the utility as well as limitation of each element before using it. Moreover, other factors like promotion objectives, funds, cost and nature of product should also be considered while selecting promotion tool to attain the desired results.
5. Difference between Advertising and Sales Promotion
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Marketing Definitions : A Glossary of Marketing Terms, compiled by the Committee on Definitions of the American Marketing association, R. S. Alexander, Chairman, 1960.
6. Difference between Advertising and Personal Selling
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7. Promotion as a tool of communication
Promotion is a tool of marketing communication. It presents messages to target market through various channels of communication. The messages are meant to create favourable response of target audience towards company’s product or service. The company attempts to get feedback from consumers to know effectiveness of communication. Consumer’s response, reaction and interpretation of message can be understood with the help of audience surveys, dealers, salesman or other consumer information channel. This feedback helps the company in improving and modifying its product or service. The marketing communication process comprises of:
(i) Sender
(ii) Encoding of message
(iii) Message channel
(iv) Decoding of message
(v) Receiver
(vi) Feedback
Communication process starts from sender. Sender means the person who intends to convey his ideas and thoughts. In marketing, sender is the firm who tries to inform, persuade and remind the target market about firm, its product offerings and services.
Ideas are encoded by the sender to create message. In marketing, message can be encoded by marketer or advertising agency. Encoding means conversion of ideas into a message by using words, symbols, or sounds. Marketer should encode the message in a way that can appeal five senses. Message is transmitted through some channel such as T.V., Radio, store displays, phone, press, product demonstration and so on. Marketer must select the channel which is most suitable to the message. Message is always directed to someone. In marketing communication, it is meant for the target group to whom marketers want to influence. The receiver/ customer is supposed to have received message when it enters his frame of reference. The channel distortions, also known as media noise, can interfere with the reception of message. Message may get distorted due to light, climate, physical surrounding or competitive advertisement. There can be ineffective reception of message due to customer’s state of mind or physical discomfort. The target market decodes the message as per its knowledge and understanding. Decoding is interpretation of the language, tone and symbols of the message. Interpretation of message is affected by age, gender, culture, attitude and belief of the consumer. Each consumer finds his own meaning to the message.
It is important to take feedback to assess effectiveness of promotion as communication tool. Feedback indicates who are the receivers, how they have interpreted the message and what are the responses. The feedback of communication will be quick and direct in case of interpersonal communication. However, in case of impersonal communication, it will be indirect. In such cases, feedback can be obtained through audience surveys, consumer information channels or marketing research. The effectiveness of communication can be measured through number of people who saw the communication, recall of communication, brand awareness and purchase intention.
Promotion as a communication tool becomes effective when marketer understands consumer’s frame of reference, encodes the message as per customer’s attitudes and beliefs, uses suitable channel to convey message as well as to ensure best reception and secures feedback. Marketers must attune themselves to the responses and adjust their communication programmes.
8. Promotion as a tool to stimulate demand
Promotion tries to influence consumer’s attitudes, beliefs, preferences and buying behaviour. The effectiveness of promotion lies in consumer’s response to messages which may be represented by actual purchase or change in behaviour.
Response Hierarchy Models developed by management thinkers or experts are used to study how consumers respond to messages. These models outline the different stages of consumer involvement and response to the messages.
The models assume that consumers respond to marketing message in Cognitive (learn), Affective (Feel) and Connative (do) sequence. Attention or awareness is the first stage of response. Marketers through promotion try to draw the attention of consumers to messages. But it alone will not lead to action. Marketers through personal selling or sales promotion create opportunities for customers to get a feel of the product. It creates interest and stimulates their desire to acquire the products. Through different promotional tools customers are convinced of product’s superiority over competitor’s products which compel them to act.
It must be remembered that these models do not explain how promotion affects all types of purchase situations. But still these models are popular and are used to measure effectiveness of promotional efforts. These are also useful to evaluate effectiveness of each component of promotion-mix and media-mix in terms of their ability to create demand or influence buyers’ behaviour.
9. Factors affecting promotion mix
Promotion is important tool to create and maintain demand. Favourable corporate image can be developed through promotion. There are various promotion tools available. A company should use an appropriate tool by considering following factors:
- Nature of Product: Industrial products are customized to buyer’s specification. Personal selling is best suited to sell these products. Advertising will not serve purpose in such cases. However, some companies dealing in industrial goods have used advertising to build or protect corporate image. Industrial goods can be promoted through sales engineer or journals. Consumer products can be categorized as convenience, shopping or specialty products. Specialty products should be promoted through selective media like journals, personal selling. Convenience products are mass selling consumer goods that can be promoted through radio, newspaper or television. Even sales promotions can be initiated for such products.
- Target Market : Sex, age and background of target market will determine the use of promotion tool. Toys or cosmetics can be promoted through television. Press media is not suitable to sell products which are meant for children. A convenience product targeted at rural market would call for the use of customer education. In such markets, advertising supported by personal selling will help in boosting the sales. It will serve as communication tool and also support the distribution channels. Niche market products are meant for loyal, educated and concentrated group of customers. The promotion strategy in this case will focus on building long term relationship. Selective and informative advertising will work for such product.
- Stages in Product Life Cycle : Promotional strategy will be influenced by product’s stage in life cycle. During the introductory stage, there is need to create awareness and knowledge about product. Promotion strategy should be such as to trigger a need and establish product utility. Product displays and publicity supported by advertising can be relied upon to promote such product.
The purpose of promotion will be different when product reaches growth stage. As the product is known to the consumers, therefore, the focus will be to build brand preference through advertising. In this case, there will be shift from creating awareness to increasing customer base. Public relations and sales promotion can be used to support advertising.
Product at maturity stage faces tough competition and declining sale. To retain customers for matured product, firms can focus on consumer sales promotion and trade promotion. Huge expenditure on advertising will prove a sheer waste at this stage.
As product move to decline stage, only sales promotion techniques can be resorted to.
- Availability of Funds : The new entrants may lack funds to use advertising, personal selling, or sales promotion tools. They can go for publicity to create awareness among customers. If established firms do not face any financial crunch they can adopt any promotion tool.
- Type of buying decisions: Promotional tool is determined by the type of buying decisions. Complex decisions require assurance and conviction. Personal selling is best suited in such cases. Even company’s website can also play a significant role in providing information and assisting buyers in decision making.
Simple routine nature buying decisions require reminder communication to maintain brand recall. Consumer sales promotions are used to keep customer interested in brand. Trade promotion can also be used to get good shelf space at retail outlet.
- Push and Pull Strategy : Push strategy aims at assisting dealers in increasing sales whereas the purpose of pull strategy is to encourage customers or end users. A company that wants to use pull strategy should use advertising or sales promotion. But a company which is opting push strategy must go for personal selling. However, a company can use a combination of different promotion tools when push and pull strategy is followed by it.
10. Promotion strategy
Strategy lays down the broad principles and programmes by which company tries to secure an advantage over competitors. Promotion strategy chalks out the communication programme to be followed for achieving marketing objectives. Promotion strategy aims at stimulating demand, creating brand awareness and developing brand loyalty. A company can use a pull or push promotion strategy or it can use a combination of both.
A pull strategy relies heavily on marketing communications to stimulate demand and ‘pull’ the customer into the retail store. Under pull strategy, all efforts of promotion are directed at the target market, i.e. consumers and then consumers demand the desired products from the retailer. The retailers in turn demand the products from the wholesalers who are compelled to stock those products by approaching the manufacturer. Thus, the request for the product starts from consumers and finally moves to the manufacturer.
A push strategy relies heavily on the distribution channel to stimulate demand by ‘pushing’ the product. Under push strategy, manufacturer directs all promotional efforts primarily on the middlemen i.e., wholesalers and retailers. Product is pushed through the distribution channel. So flow of promotion and goods move from the producer to the wholesaler and from the wholesaler to the retailer and from the retailer to the consumer.
Most consumer goods manufacturers generally use a push-pull (mix) strategy to sell their products. The proportion of pull and push may differ according to the requirements of market situation. Salesmen are used to push the product through the marketing channel, while advertising and sales promotion pull the customers and support personal selling to accelerate sales. Thus, all tools of promotion work together.
10.1 Guidelines for designing effective promotion strategy
The strategy is competitive policy. It lays down the direction by which an organization tries to secure competitive edge, exhibit attractiveness to buyer and make efficient use of firm’s resources. A promotion strategy should be intelligently formulated and must pass through various stages as summarized below:
- Identify the target audience: The marketing executive should decide the target audience (in terms of usage and loyalty). Typical purchase behaviour of target audience should be assessed. Marketers may find loyal users, brand switchers, infrequent users of product or service. Different promotion strategy should be used for different categories of buyers.
- Determine the objective : It is essential to lay down the objective of promotion strategy. The purpose may be to create need, build awareness, provide knowledge, develop liking, build customer preference, develop conviction (confidence) or secure purchase. The most effective strategy can achieve multiple objectives.
- Design the promotion message: It is important to decide what to say (message content), how to say(message expressed) and who should say to attain a desired response. The management usually wants to convey appeals, themes or ideas through message for brand positioning and establishing points of difference. Therefore, message may relate to features and performance of product or services or image of brand as popular or traditional. The target customer may expect the message to be providing ego, sensory or rational satisfaction. For example, the phrase utterly buttery delicious in message for Amul Butter provides sensory satisfaction. Therefore, message should be carefully framed to appeal the audience. It is equally important that message should be expressed properly which demands creativity. The message can be expressed as informational appeal describing product or service features and uses or it can be transformational appeal describing non-product related image or benefit. Message in such appeals may depict the kind of persons using that brand or kind of experience resulting from the use of that brand. These type messages influence emotions that will motivate purchase. Further, the decision regarding message source (i.e. who should say the message) is important. Big business houses usually hire celebrities for their brand endorsements as they know that these popular sources have higher attention and recall value. Credibility, likeability, expertise and trustworthiness of message source can influence target audience response Hence, it should be carefully decided. The promotion message should be relevant, useful and credible to stimulate a better response.
- Selecting appropriate channel of promotion : It is important to choose appropriate channel to convey message after considering certain factors. The prevailing tough competition has made it difficult to rely upon just one channel. The marketers now prefer to use promotion mix to retain and attract customers. These involve personal communication channels like salesmanship or personal selling which are highly individualistic in nature and also impersonal channels like T.V., Radio, sales promotion which are directed at more than one person.
- Establishing the promotion budget : The company must estimate the likely expenditure on promotional activities. Industries or companies vary considerably on their expenditures. It may be high for consumer goods whereas low for industrial goods. Different methods are available to determine promotion budget. The company should use an appropriate method.
Among other things, it is equally important to take feedback and measure the effectiveness of promotion strategy so as to make necessary changes in communication programme and product offerings or services. Effectiveness of promotion can be measured in terms of increase in demand, brand awareness, or purchase intention.
11. Determining promotion budget
Setting promotion budget is an important decision. It involves financial commitments and has effect on sales and company’s image. There are lots of methods available to determine promotion budget. Some of them have been described as follows:
- Affordable : In this method, a company sets promotion budget on the basis of funds available. This method completely overlooks the role of promotion in increasing sales. Moreover, due to different annual promotional budgets, long term planning becomes difficult.
- Percentages of sales Method : Promotional expenditure may be determined on the basis of relationship between promotional expenses and sales revenue as indicated by specified percentage of sales either current or anticipated. This method encourages management to think in terms of relationship between promotion cost, selling price and profits. It is certain as company spends same percentage every year. But this method is less flexible as it does not allow to respond to market need. Moreover, planning of long term promotion programmes becomes difficult.
- Competitive Parity Method : This method envisages determination of promotion expenses in such a way that parity with competitor’s promotion expenses can be maintained. For this purpose, relevant data can be collected from industry publications, inter-firm comparisons published by industrial association and research studies. This method is not scientific as objectives, scale of operation and resources vary significantly among companies.
- Objective and task method : In this method, promotion objectives are determined first and then tasks required to be performed to achieve those objectives are determined. Finally, cost of performing these tasks is estimated. This method is flexible and scientific. It treats promotion expenditure as investment which is necessary to achieve objectives. It forces managers to prepare budget for each promotion campaign.
12 Summary
Promotion is a process of marketing communication which attempts to inform, persuade and remind its target markets, through personal and impersonal means, about company and its brand. It acts as a powerful tool and creates a link between marketer (company) and consumer. Company uses different tools of promotion which are described as promotion mix. Advertising, sales promotion, personal selling, public relations are important elements of promotion mix. Advertising is paid form of communication of goods, services or ideas by an identified sponsor which is directed at mass audience. Magazines, newspapers, radio, television, posters, hoardings, direct mail are different media used by advertisers to influence and induce the viewers, readers or listeners to buy the advertised products. Sales promotion refers to short term special selling efforts to accelerate sales. It is a promotional activity which provides monetary and non-monetary incentives to spark an immediate reaction from target consumers (consumer sales promotion) and dealers or firm’s salesperson (Trade promotions). Personal selling refers to direct personal contact between a sales representative and one or more prospective customers to influence the customer in a purchase situation. Public relations and publicity aim at protecting and promoting company’s image through number of programmes and activities. Thus, there are various promotion tools available. A company should use an appropriate tool by considering certain factors such as nature of product, target market, type of buying decisions and availability of funds.
Promotion is a tool of marketing communication. The marketing communication process comprises of Sender, Encoding of message, Message channel, Decoding of message, Receiver and Feedback. Different models are developed by management practitioners which are used to study how consumers respond to messages. These models assume that consumers respond to marketing message in Cognitive (learn), Affective (Feel) and Connative (do) sequence.
Promotion strategy chalks out the communication programme to be followed to achieve marketing objectives. Promotion strategy can be push strategy or pull strategy. Push strategy aims at assisting dealers in increasing sales whereas the purpose of pull strategy is to encourage customers or end users. A company can use a pull or push promotion strategy or it can use a combination of both. A promotion strategy should be intelligently formulated and must pass through various stages namely, identifying the target audience, determining the objectives, designing the promotion message, selecting appropriate channel of promotion and establishing the promotion budget. It is essential to take feedback and measure the effectiveness of promotion strategy so as to make necessary changes in communication programme and product offerings or services. Effectiveness of promotion can be measured in terms of increase in demand, brand awareness, or purchase intention.
Learn More
Few important sources to learn more about Promotion Decision :
- Burnett John. J.(1984). Promotion Management: A Strategic Approach, West Publishing Company.
- Dalrymple and Parsons. Marketing Management: Text and Cases, 6th Edition, John Wiley & Sons, Inc.
- Cannon, Tom. Basic Marketing: Principles and Practice, 3rd Edition, A.I.T.B.S. Publishers, Delhi.
- Bose,S. Biplab (2010) Marketing Management, Himalaya Publishing House, Mumbai.
- Gandhi,C J (1998). Marketing- A Managerial Introduction, Tata McGraw Hill, New Delhi
- Kotler, Philip (2002). Framework for Marketing Management, Pearson Education (Singapore) Pte. Ltd., Indian Branch, Delhi.
- Kotler, Philip; Keller, Kevin; Koshey, Abraham; and Jha Mithileshwar, (2009). Marketing Management: South Asian Perspective. 13th Edition. Pearson Education, New Delhi.
- Mohan, Manendra (1999). Advertising Management: Concepts and Cases, Tata McGraw-Hill Publishing Company Limited, New Delhi.
- Sherlekar,A.S.(1996). Marketing Management, Himalaya Publishing House, Mumbai.
- http://www.yourarticlelibrary.com/marketing/4-most-important-elements-of-promotion-mix-business-marketing/8796/
- http://www.slideshare.net/2cdude/promotion-mix-3936058?next_slideshow=1
- http://www.knowthis.com/types-of-promotion/promotion-choice-marketing-issues
Points to Ponder
- Promotion acts as a powerful tool and creates a link between marketer (company) and consumer.
- Company uses different tools of promotion which are described as promotion mix.
- Advertising, sales promotion, personal selling, public relations are important elements of promotion mix.
- A company should use an appropriate promotional tool by considering certain factors such as nature of product, target market, type of buying decisions and availability of funds.