ib business management 4.5 promotion. learning outcomes to understand and be able to apply the...
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IB Business Management
4.5 PROMOTION
Learning Outcomes• To understand and be able to apply the
following aspects of promotion: (A02)> above the line promotion> below the line promotion> Promotional mix
• To be able to analyse the impact of changing technology on promotionla strategies e.g. viral marketing, social media and social networking. (A03)
• To understand guerilla marketing and analyse its effectiveness as a promotional method
Essential Question
What is the most effective
promotional mix?
Promotion• Promotion refers to methods of communicating
messages to the market with the intention of selling a product
What is Promotion?
Promotion is all of the activities involved in informing and persuading potential customers to buy a product
It is not just advertising
Promotion Objectives• To inform• To persuade• To remind
Types of Promotion
Promotion can be:
• ABOVE THE LINE – Direct Advertising through consumer media (TV, newspapers, radio, billboards)
• BELOW THE LINE – All other forms of promotion (PR, sales promotion, social networking)
Advertising• Any form of paid communication used to develop
awareness, perception or attitudes about a business
or its products.• A successful advertising campaign
must be distinct from the competition
Advertising
True or False?
TV commercials during Super Bowl XLV in 2011 are
estimated to have cost $1 million for a 30-second spot
False…… It actually cost $3million
More than $500 billion a year is spent on
advertising worldwide
True
The average child in America watches over 40,000
television commercials in a year, or over 100 a day
True
Starbucks spent $9million on advertising in 2006
False…… They actually spent $95 million
The newest form of marketing is called ‘Viral Marketing’ and involves
using blogs and emails to advertise a product
True
Facebook makes $4billion a year from advertising
True
Microsoft allegedly paid the Rolling Stones $20 million to use their hit “Start Me Up” in
its Windows 95 advertisements
False…… It actually a mere $9million!
Here are some successful adverts
What makes them successful?
5 features of a good advert
Discuss and agree in pairs what the most important features of a good advert areThe features of a good advert are…….• • • • •
Homework – My favourite advert
• Bring an advert to share with the rest of the class. • Who do you think the product is aimed at?• Why do you think it’s effective?
Advertising Media
What methods can a firm use to advertise?
Above the Line Promotion
Firms must choose advertising media:• Television• Cinema• Newspapers – Local or National• Magazines• Radio• Posters/Billboards• Leaflets/flyers• Internet• Outside Advertising
Types of PromotionMedia Type
Advantages Disadvantages
Television + Uses power of moving pictures & sound
- Very expensive- Message can be missed due to DVR or channel surfing
Radio + Less expensive than TV+ Listeners can be exposed to ad during other activities
- Audio only- Lower attention levels
Types of PromotionMedia Type
Advantages Disadvantages
Newspaper + Very inexpensive+ Longer life than TV and radio
- Often overlooked- No sound or movement- Thrown away after a day
Magazines + High-quality color images+ Longer life than newspaper
- Must be submitted months in advance - More expensive than newspaper- Clutter
Billboards + High rate of local exposure+ Inexpensive
- Cannot include too much information
Choice of Media
When choosing an advertising media a firm must take into account several factors:
• Cost• Target audience• Marketing budget• Size of the market• Geographical dispersion of the market• What competitors are doing• Impact• Legal constraints
Task
• What advertising media would you use for these products, and why?
Below the Line Promotion
The use of non-mass media promotional activities, allowing the business to have direct control. No commission is paid to
external media agencies.
BTL Promotional Strategies• Branding – developing a personality or persona that
makes the product or business instantly recogniseable
• Slogans – catchy memorable phrases to grab attention
• Logos – linked to branding and a visual symbol to represent the product or business
• Packaging – should fit with the brand. Bags can promote – ‘bagvertising’
• Word of mouth – fast and free but can be + or –
• Direct marketing – selling direct to customer with no intermediaries through telephone, mail, email
• Sales promotions – temporary ways to boost sales through price reduction, BOGOF, free samples, competitions. Loyalty rewards for frequent customers e.g. Starbucks, frequent flyer miles
• Point of sales – promotion at the location where the customer buys the product e.g. large displays, posters to try and get customers to buy products they would not normally buy
• Publicity – promotion by attracting media coverage but could be + or -
• Sponsorship – offering financial funds and resources to support an event or another organisation
• Public Relations – gaining positive media coverage without paying for it – press conference, newspaper article
Which type of BTL Promotion?
Publicity• Information that is provided to the public by the media
or other sources at no cost to the business, such as TV or print news stories about a business or product.
• Cannot be controlled by the business, thus it is not always positive
Public Relations (PR)• Business activities aimed at establishing and
protecting the desired image of an organization.• PR is concerned with getting good press coverage
without paying for it.• Businesses hold press conferences or submit press
releases to the news media.
Sales Promotion• Short-term incentives designed to temporarily
stimulate sales, such as coupons, contests, sweepstakes, giveaways and free samples.
• Attracts new customers.
Point-of-Sale/Merchandising• Promotion occurs at the place
where the purchase is made (check-out line, in-store displays)
Sponsorship• Business pays to be associated with an event or
organization in return for publicity and/or prime advertising space
Suggest a promotional strategy for the following situations... (include above
the line and below the line strategies)
Cadbury want to increase sales of dark chocolate by 20% in the next 3 years
A car dealership are below their sales target and need to increase sales this month
M&S want to get rid of the old fashioned image of their clothing range
A gardener wants to attract more clients in his local town
Push vs. Pull
Pull promotion• promotional technique used to stimulate demand for a product (to pull or
attract customers into buying). Includes above-the-line promotional activities.Push promotion• promotional methods that rely on intermediaries, such as retail stores, to
push products to the customers. Includes below-the-line promotions such as price reductions.
Promotional Mix
The set of tools that a business can use to communicate effectively the benefits
of its products or services to its customers
The right blend of ATL and BTL to achieve:
• Awareness
• Interest
• Desire
• Action
Deciding on the best promotional mix depends upon:
• COST – is the method cost effective?• PRODUCT – some products suited to certain
promotion types e.g. films – TV, radio and internet
• PRODUCT LIFE CYCLE – the stage in the cycle will influence the promotional mix e.g. decline stage may necessitate sales promotion to shift remaining stock
• LEGISLATION – laws may prevent use of some methods for certain products e.g ban on all cigarette promotion in Europe
Task• Analyse one of our case study companies and
evaluate the ATL and BTL methods of promotion they use. Refer to the following four elements of the promotional mix
1. Advertising2. Personal Selling3. Public Relations4. Sales Promotion
• Why do you think they use this mix?• Do you think it is effective?• Would you recommend adapting the mix to
increase effectiveness – if so how?
Technology and Promotion
What do you think this refers to?
Promotion and the Internet
• New technologies have created new opportunities and new approaches for businesses to promote their products
• Web banners and online search engines are now often used to promote brands.
• Key technological trends imapcting promotion are:1. Viral marketing2. Social media marketing3. Social networking
Viral Marketing(P2P marketing)
• Similar to word of mouth marketing but using technology – ‘word of mouse’
• Rapid spread of information about a product or service through use of internet tools e.g. email, messaging, social networking
Social Media Marketing
• The practice of gaining internet traffic through social media websites such as facebook, twitter, youtube…
• The strategy aims to create engaging content that encourages people to share with others (usually friends) through blogs, websites, instant messaging.
• Trusted third party source• Can spread very quickly• Very cost effective• BUT no control over what is written or shared about
the product/brand false info could spread (PR disaster)
Social Networking
• Any platform used by individuals to build social relationships between people – Google+, Instagram, Facebook, LinkedIn, Twitter
• Usually free for the user• Funded by selling online advertising space• Cost per click basis• More effective tool for monitoring effectiveness of
promotional campaign as ‘traffic’ can be monitored as well as sales per click for example.
Guerrilla Marketing(stealth marketing)
Achieving conventional goals such as profit and joy through the use of
unconventional methods.OR
Grabbing the attention of customers through unusual or shocking techniques
Advantages
• Cost effective – useful strategy for business with small marketing budget. (80:20 rule)
• Larger businesses could adopt this cheaper strategy and reduce costs higher profit margins
• Can lead to viral marketing and rapidly grab the attention of many people at no extra cost
• Can promote creativity and act as a way of differentiating from competition
Disadvantages
• Does not always reach the right target market due to scattershot approach little or no impact on sales
• Can be invasive and add to clutter leaving potential customers annoyed rather than excited
• Can be deceptive, confusing or distasteful resulting in negative publicity
• Opportunity cost can be large – the time taken to develop original campaign vs the sales generated
• Can go wrong – payment of fines and negative reputation
Promotion – CUEGIS?
CONCEPT RELEVANCE TO PROMOTION THEORY
CHANGE
CULTURE
ETHICS
GLOBALISATION
INNOVATION
STRAETEGY