Download - IB Business and Management Unit 4.5: Promotion Lesson 1: Objectives of Promotion (pp. 557-574)
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
g
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