Promotion is a term used frequently in marketing and is one of the elements of marketing mix. It refers to raising customer awareness of a product or brand, generating sales and creating brand loyalty.
It involves an entire set of activities that communicate about the product, brand or service to the user.
The basic idea behind promotion is to make people aware, attract and induce to buy the product, in preference over other similar products available in the market.
The promotion tool of marketing mix comprises communication tactics used by the marketers to educate consumers, increase demand and differentiate brands.
Promotion has been defined as “Coordinated Self-initiated efforts to establish channels of information and persuasion to facilitate or foster the sale of goods or services or the acceptance of ideas or points of view.”
Learn about:-
1. Introduction to Promotion 2. Meaning of Promotion 3. Objectives 4. Nature 5. Importance 6. Factors Affecting 7. Methods
8. Difference between Push Strategy and Pull Strategy 9. Budget 10. Control Process 11. Role of Communication Process 12. Benefits and Limitations.
What is Promotion: Meaning, Objectives, Nature, Importance, Methods, Benefits, Limitations and Other Details
What is Promotion – Introduction (With Definitions)
The modern age is the age of severe competition. Therefore, manufacturers have to think of new and unfamiliar ways of communication about their products to the customers. Demand creation is an imperative need of business. Sales do not take place automatically without promotion or marketing communication even though a product is superb.
In essence, promotion involves the creation and expansion of demand. After product development, it is introduced in the market and its demand is created through promotional activities. Promotion is just like the spark plug in the marketing mix of a firm.
Promotion is a term used frequently in marketing and is one of the elements of marketing mix. It refers to raising customer awareness of a product or brand, generating sales and creating brand loyalty. It involves an entire set of activities that communicate about the product, brand or service to the user.
The basic idea behind promotion is to make people aware, attract and induce to buy the product, in preference over other similar products available in the market. The promotion tool of marketing mix comprises communication tactics used by the marketers to educate consumers, increase demand and differentiate brands. Promotion aims at keeping the product in the minds of the customers and helps stimulate demand for the product.
Promotion is the process of marketing communication involving information, persuasion and influence. Promotion has been defined as “Coordinated Self-initiated efforts to establish channels of information and persuasion to facilitate or foster the sale of goods or services or the acceptance of ideas or points of view.” Thus promotion is persuasive communication to inform potential customers of the existence of products, to persuade them that those products have want satisfying capabilities.
As such, promotion message has two basic purposes:
1. Persuasive communication
2. Tool of competition. Promotion is responsible for awakening and stimulating consumer demand for the product.
Some Important Definitions of Promotion as a Tool of Marketing Mix:
Promotion compasses all the tools in the marketing mix whose major role is persuasive communication. — Philip Kotler
Promotion includes advertising, personal selling, sales promotion and other selling tools. — Stanton
Promotion is the personal or impersonal process of assisting and of persuading a prospective customer to buy a product or service or to act favourably upon the idea that has commercial significance to the seller.
What is Promotion – Meaning of Promotion from Different Perspectives
The word promotion is used in more ways than one. Before understanding the meaning of promotion from marketing point of view, it is more appropriate to understand the different meanings of promotion.
In common parlance the word promotion is defined as an activity that supports the furtherance of a cause, venture, or aim. It also refers to engaging in publicity of a product, organization, or venture to increase sales or public awareness.
In terms of a career, a promotion refers to the advancement of an employee’s rank or position in a hierarchical structure.
In terms of job – promotion usually includes a new job title, a greater number of responsibilities and a pay increase. They might also include an expansion of benefits and managerial authority over other employees. Job promotions are usually based on performance or tenure.
In terms of Product – promotions are designed to increase sales of a product or service. Promotional tactics include coupons, buy one, get a second one free, straight discounts, and simple advertising etc.
In terms of sales – promotion refers to a different sort of advancement. A sales promotion entails the features via advertising, a discounted price etc. Of a particular product or service Generally, promotion refers to an activity which involves communicating with the public, in an attempt to influence them toward buying the organization’s products and/or services.
To sum up, promotion is an action taken by a company’s marketing staff with the intention of encouraging the sale of products or service to their target market. For example, product promotion performed by a typical business might take the form of advertising the product in question via print or Internet advertisements, direct mail or e-mail letters, trade shows, telephone and personal sales calls, TV and radio commercials, billboards, posters etc.
What is Promotion – 12 Main Objectives
The following are the main objectives of promotion:
i. To create product and brand awareness – Several sales promotion techniques are highly effective in exposing customers to products and brands for the first time and can serve as key promotional components in the early stages of new product and brand introduction. This awareness is the basis for all other future promotional activities. Promotional activities motivate the customers to try new products and brand and the dealers also to push the new products and brands.
ii. To create interest – Sales promotions are very effective in creating interest in a product. In fact, creating interest is often considered the most important use of sales promotion. In the retail industry an appealing sales promotion can significantly create customer interest.
iii. To provide information – Promotional activities provide substantial information about the product to the customers. This goes a long way in converting interest into actual sales.
iv. To stimulate demand – Effective promotional activities can stimulate demand for the product by convincing the customers to buy the products.
v. To reinforce the Brand – Promotion can be used to reinforce or strengthen the brand in the minds of the customers. This will ensure repeat sales of the product in the long run.
vi. To attract new customers – Sales promotion measures also play an important role in attracting new customers for an organization. Usually, new customers are those persons that are loyal to other brands. Samples, gifts, prizes, etc. are used to encourage consumers to try a new brand or shift their patronage to new dealers.
vii. To induce existing customers to buy more – Promotion activities can increase the purchases made by the existing customers by making them consume more quantity or consume on more occasions.
viii. To help the firm to remain competitive – Companies undertake sales promotion activities in order to remain competitive in the market. Therefore, in the modern competitive world no firm can escape sales promotion activities.
ix. To increase sales in off-seasons – Sales of the products naturally reduce during the off-season. Therefore promotional activities can be implemented during the off-season to maintain or even increase the sales. Techniques such as off-season discounts, off-season offers can achieve this.
x. To add to the stock of the dealers – Dealers like wholesalers and retailers usually deal with a variety of goods. Their selling activity becomes easier when the manufacturer supplements their efforts by sales promotion measures. When a product or service is well supported by sales promotion, dealers are automatically induced to have more of such items.
xi. To Keep Existing Customers – A sales promotion can be geared toward keeping existing customers, especially if a new competitor is likely to enter the market.
xii. To clear inventory – Promotional techniques can be effectively used to clear unsold inventory by giving effective offers.
What is Promotion – Nature
1. Creates Awareness:
Promotional activities expose an adequate number of target consumers to the messages and create awareness about the product. For this purpose, such promotion media is chosen which will reach adequate numbers of target consumers. Print, electronic, outside or online media can be used as per nature of the product and target audience.
2. Attention Grabbing:
The promotional campaigns draw the potential customer’s attention towards the product. The customers are not aware about the new product and it is only through promotional activities that they can be informed about the product, its features and utility.
3. Creates Interest:
It is not enough to get the attention of the customer. The aim of promotion is to make the potential customers interested in knowing more about the product. Customers will be interested only in those products that they actually need, so the promotional messages should emphasise on how the featured product can fulfill their needs.
4. Informative:
The target markets needs to know about the functions and characteristics of the product so that they can relate their needs with it. Promotion is done to provide the necessary information and details to the prospective buyers of the product. The information given to the customers should also enable them to differentiate the product from those of competitors.
5. Induces Action:
The ultimate goal of all marketing activities is to make a sale. An effective promotional strategy will grab the attention of the would be consumers, create interest in their minds, provide enough information about the product to help them in taking the purchase decision and finally induce them to take action, i.e. purchase the product.
What is Promotion – Importance of Promotion in the Present Marketing Context
The importance of promotion in the present marketing context is as follows:
1. Motivates Agencies:
It offers the opportunity to motivate agencies. The combined thinking of a team is better than the sum of the parts (and unleashes everyone’s creative potential).
2. Participation:
Everyone owns the final plan, having worked together on the brainstorming and implementation, avoiding any internal politics. Likely, this can overcome the divisive nature of individual departments i.e., ‘fighting their own corner’.
3. Measurability:
One of the most significant benefit is the delivery of better measurability of response and accountability for the communications program.
4. Interaction:
Promotion secures better communication between agencies and creates a stronger bond between them and the client company. By providing a more open flow of information it empowers the participants in the communication program to concentrate on the key areas of strategic development, rather than pursue individual and separate agendas.
5. Consistency of Message Delivery:
The planning process in a holistic manner if approached, companies can empowers that all components of the communications program deliver the same message to the target audience.
Significantly, this demands the adoption of an overall strategy for the brand, rather than developing individual strategies for the separate tools of marketing communications. The avoidance of potential confusion in the minds of consumers is a paramount consideration in the development of effective communications programs.
6. Client Relationships:
For the agency, it issues the opportunity to play a significantly more important role in the development of the communications program and to become a more effective partner in the relationship.
By participating in the totality of the communications requirements, rather than having responsibility for one or more components, the agency can embrace a more strategic stance. This, in turn, provides significant power and provides important advantages over competitors.
7. Corporate Cohesion:
Promotion can be used as a strategic tool in communicating a company’s corporate image and its product/service benefits. This has important consequences both on an internal and an external level.
As consumers increasingly gravitate towards companies with whom they feel comfortable, it becomes important to secure that the overall image projected by the organisation is favourably received.
This calls in turn, the development of a cohesive communications program within the organisation to ensure that all people working for the company completely understand the organisation’s goals and ambitions and externally to present the company in the most favourable light.
What is Promotion – 5 Major Factors Affecting Promotion Decisions
Before taking a decision on its promotion strategy for foreign markets, a firm has to consider a large number of factors.
Some of them are:
Factor # 1. Corporate Objectives:
The objectives of the firm affect the promotion decision to a great extent. A firm may have different objectives in different foreign markets or different firms may have different strategy in the same market. Firm’s level of commitment to international operations will determined its promotion strategy.
The objective of the firm in international marketing may be to create its image on a long term basis or it may be to maximise its cash resources or profitability in a short time and then withdraw itself from the market. A firm may want to sell its product only to a few customers whereas another firm would like to reach to the masses.
The promotion strategy would be different in each case. A firm’s promotion strategy wanting to sell only to a few customers will be quite different from a firm wanting to sell its product to the masses or to develop its own image in the market. Thus corporate objective shall determine the promotion strategy of a firm. It is so why different firms use different strategies in their international operations.
Factor # 2. Nature of the Product or Services Offered:
The nature of the product or the services offered by the firm is another factor that will determine the promotion strategy of a firm. Certain products are standardised and their promotional themes are also standardised. In such cases standardised promotional strategy can be used throughout the world.
For example soft drinks like coca cola, satisfy the same basic need-thirst of the consumers in different countries. Hence it is possible for a firm selling soft drink to use common promotional themes in all the markets. Besides, there are certain other standardised products which are used in the same form, with slight modifications.
The promotional themes and programmes may be used in the standardised form or with slight modifications. As against these products, there are certain other products which are not standardised such as – ready-made garments. Such products are differentiated from market to market.
As these products do not satisfy the same need in all markets of the world, the standardised promotional strategy cannot be used. To illustrate, garments in France satisfy the fashion need whereas in developing countries, they meet the basic clothing need. Here the standardised promotional strategy cannot be used in the two markets. A firm dealing in garments should design different promotional strategies and themes for different markets.
Factor # 3. Media Availability:
A media which is easily available in domestic country need not necessarily be available in the foreign market. Though one may generalise that identical media are available in most industrialised countries, one should keep in mind that they may vary in institution quality and communications value.
In such circumstances, the promotional message, theme and other properties of the media may be adjusted. But the task of international marketer is compounded where a certain type of media is just not available. For example, in some developing countries, television is not available for commercial communications.
India has recently introduced the commercial service on TV network. In such cases, TV cannot be used as a promotion media. Countries having low rate of literacy, may not have sufficient number of journals for advertisements.
Hence, the marketer cannot make use of journals and may have to be shifted to other available media. The information about media may be available from international advertising agencies, country’s diplomatic missions and advertising agencies’ associations and the marketer should collect the information before drawing its promotion policy.
Factor # 4. Financial Considerations:
Financial resources of the firm may have serious constraint in deciding the promotion policy. A firm, not having sufficient financial strength, cannot use a strategy involving a heavy expenditure. As against this, a firm having a good financial background may use any method which may prove useful to the firm.
For example, most firms from developing countries like India do not rely more on advertising because it is expensive. They prefer direct mailing to customers in foreign countries or to participate in fairs and exhibitions. These firms, at times resort to consortia advertisements, in foreign markets.
Such advertisements are often placed by the Commodity Boards or the Export Promotion Councils. But firms having large financial resources, on the other hand, prefer to use advertising and other sales promotion methods to promote their products in world markets. Thus, financial resources of a firm put a limit on the promotion policy and promo tools of the firm.
Factor # 5. Environmental Constraints:
Finally, the firm should evaluate the environmental factors like the level of economic development of a country, the disposable income of the people, consumer’s preferences and attitudes towards advertising and sales presentation, competitor’s promotion strategies and the legal requirements in a given foreign market.
Broadly, a firm should assess the cultural and legal side of the environment and the competitor’s strategies followed in that market:
(i) Cultural Environment:
The culture of the people in a given market influences their attitudes towards the promotion programme of a company. If people believe that the advertisement is nothing but a bundle of lie, the Promotor should avoid this tool. People in some country are against foreign goods because they violate their cultural traditions; the firm would have to adopt a promotion programme which would remove this bias.
The marketer should make endeavour to educate the people on the benefits which would accrue to them through the product use over their traditional products. The better way in such cases may be to localise the product. The marketer may sell the product to the agents or distributors in the foreign markets and they may sell it under their brand names in the manner most suitable to the country’s culture.
Attitude of the people towards their traditions or the image of a particular product cannot be changed overnight. The people are to be educated to benefits of the product and it is a long-drawn programme. This strategy is beneficial only if the marketer develops a market on long-term basis and has sufficient funds to invest in such long term programmes.
(ii) Legal Constraints:
The legal requirements as regards promotion techniques must also be fulfilled by a marketer. Legal system in a target foreign market may be different from that of the domestic country which may seriously affect the promotion decision of the firm. The international marketer must have a clear understanding of such requirements before going for a particular promotion strategy or drawing up a promotion programme. Although these legislations vary from country to country, one may observe that there are certain common restrictions in varying degree in almost all countries.
These are:
(a) There are specific prohibitions on advertisements on certain products like wine, cigarettes and tobacco, and certain types of drugs etc. Most countries require that Cigarette Company must warn their consumers against the injurious effects of smoking hence it is statutorily compulsory to print ‘smoking is injurious to health’ on all packs and advertisements.
(b) Certain words or expressions that may be mis-interpreted by consumer or may deceive them are prohibited to use.
(c) Some countries, mainly Islamic countries, ban advertisements which are viewed as obscene.
(d) There are legislations which prohibit the promoter to make tall claims about their products. In countries where such legislations do not exists the trade has developed its own code of advertising which acts as a self-disciplinary system of control.
(e) In certain countries, requirements on packaging such as – inscribing the name, address, weight and contents of the inside product, should be strictly observed.
The above legal requirements and there may be certain others which may be peculiar to the target market, must be observed by an international marketer before designing a promotion policy for the market. Any carelessness to such provisions may cause harassment to the marketer.
(iii) Competitors’ Promotional Strategy:
In designing its promotion policy or strategy for the target market, a firm should not ignore the promotion strategies, policies, programmes and promo tools undertaken by the competitors in the market. The firm should study them and then decide on the promotion policy which is better or if not better, it should at least the similar to competitors’ policy. This, however, depends very much on the company’s resources, culture and attitude of the people, etc.
Thus, the international marketer must consider the above factors into consideration before jumping to any promotion policy. He must not base promotion decision on his hunches or intuition. He should not do what others are doing. He must study and evaluate all the factors relevant to reach a decision for the promotion of his product in the target market.
What is Promotion – Top 5 Methods of Product Promotion
The promotion mix is the combination of promotion methods that a firm uses to increase acceptance of its products.
The five methods of promotion are:
1. Advertising
2. Personal selling
3. Sales promotion
4. Publicity
4. Public relations
Some firms use one of these promotion methods to promote their products, while other firms use two or more. The optimal promotion mix for promoting the product depends on the characteristics of the target market.
Each of the four promotion methods is discussed in detail below:
Method # 1. Advertising:
Advertising is a non-personal sales presentation communicated through media or non-media forms to influence a large number of consumers. It is a common method for promoting products and services. Although advertising is generally more expensive than other methods, it can reach many consumers.
Large firms commonly use advertising agencies to develop their promotion strategies for them. Many firms such as Anheuser-Busch, General Motors, and ExxonMobil spend more than $100 million per year on advertising. Procter & Gamble spends more than $3 billion a year on advertising.
Although advertising can be expensive, it can increase a product’s market share. One reason for Frito- Lay’s increase in market share over time is its heavy use of advertising. Frito-Lay typically spends more than $50 million a year on advertising.
Advertising is normally intended to enhance the image of a specific brand, institution, or industry. The most common reason is to enhance the image of a specific brand. Brand advertising is a non-personal sales presentation about a specific brand. Some brands are advertised to inform consumers about changes in the product.
GNC (General Nutrition Centers) spends more than $80 million per year on brand advertising. The Gap and The Coca-Cola Company also spend heavily on brand advertising. Amazon(dot)com uses extensive brand advertising on its own website.
Common strategies used to advertise a specific brand are comparative advertising and reminder advertising. Comparative advertising is intended to persuade customers to purchase a specific product by demonstrating a brand’s superiority by comparison with other competing brands.
Some soft drink makers use taste tests to demonstrate the superiority of their respective soft drinks. Volvo advertises its superior safety features, while Saturn advertises that its price is lower than that of its competitors and that its quality is superior.
Reminder advertising is intended to remind consumers of a product’s existence. It is commonly used for products that have already proved successful and are at the maturity stage of their life cycle. This type of advertising is frequently used for grocery products such as cereal, peanut butter, and dog food.
A second reason for advertising is to enhance the image of a specific institution. Institutional advertising is a non-personal sales presentation about a specific institution. For example, firms such as IBM and ExxonMobil sometimes advertise to enhance their overall image, without focusing on a particular product they produce. Utility companies also advertise to enhance their image.
A third reason for advertising is to enhance the image of a specific industry. Industry advertising is a non-personal sales presentation about a specific industry. Industry associations advertise their respective products (such as orange juice, milk, or beef) to increase demand for these products.
The important features of advertising are identified as follows:
a. A service paid for- Advertising, unlike publicity, is a service that is paid for by the advertiser. It is a paid form of communication. It ceases to qualify as advertising if its cost is paid for by anyone other than the organisation whose product or service is being advertised.
b. Impersonal presentation- It is a form of non-personal presentation directed at a wide audience rather than a particular individual. The advertiser and the consumer do not come into contact with each other.
c. Identified sponsor or advertiser- The sponsor or the company who is being provided the service gets always identifiable due to the impact of advertising. If it cannot be identified, the activity ceases to qualify as advertising. In that case, it can be termed as propaganda or publicity only.
d. Promotes ideas, goods and services- The scope of advertising is wide in the sense that it promotes not only tangible goods, but also company services and ideas.
e. Informative and persuasive- An important feature of advertising is that not only it informs consumers about the products, services as well as their benefits, utility; it also serves to persuade potential consumer to buy these products and services. It stimulates human desires, thereby generating the demand for the product.
Objectives of Advertising:
There can be many objectives of advertising by a company.
Some of the major objectives are given below:
a. To create demand- The basic objective of advertising is to attract potential customers and motivate them to buy the products.
b. To ensure loyalty of customers- By focusing the company’s commitment to quality through advertising, the company makes certain that its existing customers do not shift their preference to other brands.
c. Introduce new product- Another objective of advertising is to keep the buyer informed about the new products and services introduced in the market. It is through advertising that customers are informed about the utility, quality, features, benefits and price of the new products.
d. To create and maintain image and goodwill- Constant and regular advertising builds a good impression, goodwill and positive image of the producer. When a brand has a good image in the market, it enjoys a prosperous business. This also creates the right marketing environment to introduce new products with ease.
e. To educate customers- Advertising seeks to educate customers regarding the proper usage of the product so as to provide maximum utility and prevent any loss, physical or otherwise, to the customer.
Method # 2. Personal Selling:
Personal selling is a personal sales presentation used to influence one or more consumers. It requires a personal effort to influence a consumer’s demand for a product. Salespeople conduct personal selling on a retail basis, on an industrial basis, and on an individual basis.
The sales effort on a retail basis is usually less challenging because it is addressed mostly to consumers who have already entered the store with plans to purchase. Many salespeople in retail stores do not earn a commission and thus may be less motivated to make a sale than other salespeople.
Selling on an industrial basis involves selling supplies or products to companies. Salespeople this capacity are normally paid a salary plus commission. The volume of industrial sales achieved by a salesperson is highly influenced by that person’s promotional efforts.
Selling on an individual basis involves selling directly to individual consumers. Some insurance salespeople and financial planners fit this description. Their task is especially challenging if they do not represent a well-known firm, because they must prove their credibility.
Features of Personal Selling:
Personal selling can be better understood by the following features:
a. It is a promotional method using skills and techniques for persuasion and building relationships with potential and actual consumers.
b. Personal selling is through face-to-face meetings and contact with customers.
c. It uses a personalised approach that is tailored to meet the individualised needs of the customer.
d. It utilises aggressive sales techniques.
e. It is a multi-stage process starting with prospecting and ending with selling. This result in consumer satisfaction.
f. The salesperson who successfully performs the job of personal selling is rewarded with financial incentives.
g. The consumer is rewarded with benefits of consuming the product purchased.
Objectives of Personal Selling:
Some important objectives of personal selling are as listed below:
a. Reinforcing the brand- Most personal selling is intended to build long-term relationships with the customer. A strong relationship can only be built over time. Meeting with the customer on a regular basis allows the sales staff to repeatedly hold a discussion on their company products and brand promotion.
b. Building relationship- Personal selling intends to build up an on going and long term relationship with the customer. The process does not end with the sales.
c. Creating interest- Personal selling involves person-to-person communication. It seeks to create greater interest in the product. It also encourages the spread of product awareness by sales professionals.
d. Stimulating demand- The most important objective of personal selling is to convince the customer to make a purchase.
Salespeople who sell on an industrial or individual basis generally perform the following steps:
(i) Identify the target market.
(ii) Contact potential customers.
(iii) Make the sales presentation.
(iv) Answer questions.
(v) Close the sale.
(vi) Follow up.
(i) Identify the Target Market:
An efficient salesperson first determines the type of consumers interested in the product. In this way, less time is wasted on consumers who will not purchase the product, regardless of the sales effort. If previous sales have been made, the previous customers may be an obvious starting point.
Industrial salespeople can identify their target market by using library references and the Yellow Pages of a phone book. If they sell safety equipment, they will call almost any manufacturer in their area. If they sell printing presses, their market will be much more limited.
Individual salespeople have more difficulty identifying their market because they are unable to obtain information on each household. Thus, they may send a brochure to the “resident” at each address, asking the recipient to call if interested. The target market initially includes all households but is then reduced to those consumers who call back. Specific subdivisions of households that fit the income profile of typical consumers may be targeted.
(ii) Contact Potential Customers:
Once potential customers are identified, they should be contacted by phone, e-mail, direct mail, or in person and provided with a brief summary of what the firm can offer them. Interested customers will make an appointment to meet with salespeople. Ideally, the salespeople should schedule appointments so that their time is used efficiently.
For example, an industrial salesperson working the state of Florida should not make appointments in Jacksonville (northeast Florida), Miami (southeast), and Pensacola (northwest) within the same week.
Half the week would be devoted to travel alone. The most logical approach is to fill the appointment schedule within a specific area. Individual salespeople should also attempt to schedule appointments on a specific day when they are near the same area.
(iii) Make the Sales Presentation:
A sales presentation can range from demonstrating how a printing press is used to explaining the benefits of an insurance policy. Industrial salespeople usually bring equipment with them.
They also provide free samples of some products to companies. The sales presentation generally describes the use of each product, the price, and the advantages over competing products. The presentation should focus on how a particular product satisfies customer needs.
Potential customers normally raise questions during the course of the sales presentation. Salespeople should anticipate common questions and prepare responses to them.
Most salespeople prefer to make (or “close”) a sale right after the sales presentation, while the product’s advantages are still in the minds of potential customers. For this reason, they may offer some incentive to purchase immediately, such as a discounted price.
A key to long-term selling success is the attention given to purchasers after the sale is made. This effort increases the credibility of salespeople and encourages existing customers to call again when they need additional products. Salespeople should also follow up on potential customers who did not purchase the product after a sales presentation.
These potential customers may experience budget changes and become more interested in purchasing the product over time. E-mail facilitates the follow-up communication between the purchasers and the salespeople.
A common goal of many sales representatives is to become a sales manager and manage a group of sales representatives. For example, a company with 40 sales representatives around the country may split the geographic markets into four regions. Each region would have 10 sales representatives who are monitored by a sales manager.
Sales managers require some of the same skills as sales representatives. They need to have knowledge of the product and the competition. In addition, they must be able to motivate their representatives to sell. They must also be able to resolve customer complaints on the service provided by representatives and reprimand representatives when necessary.
Some people are better suited to selling than managing salespeople. There is a distinct difference between motivating consumers to purchase a product and motivating employees to sell a product.
Since sales managers do not perform the daily tasks of selling the product, they can concentrate on special projects, such as servicing a major customer’s massive order of products. They should evaluate the long-term prospects of the product and consider possible plans for expanding the geographic market. Information from their sales representatives may help their assessments.
Method # 3. Sales Promotion:
Sales promotion is the set of activities that is intended to influence consumers. It can be an effective means of encouraging consumers to purchase a specific product.
Sales promotion has the following major features which are listed below:
a. Supports Advertising and Personal Selling – Sales promotion supports advertising and personal selling. It acts as a connecting link between the two. Companies follow up advertising campaigns with sales promotion campaigns. Sales promotion gives strength and support to personal selling. The price inducements given during sales promotion help the sales force to generate sales.
b. Stimulates Sales – A unique sales promotion feature is that it stimulates sales at the point of sale, i.e., where the sale actually takes place. It appeals to the consumers, through price discounts, or other inducements, when they are in the process of buying, and induces them either to buy in larger quantity or in terms of other promoted products of the same brand. Both ways it brings in more sales revenue for the producer.
c. Acts as a Marketing Tool – Sales promotion acts as a very effective marketing tool, highlighting the qualities and unique selling points that serve as powerful magnets to draw the consumers’ attention to the product. Packaging, pricing and consumer satisfaction as a result of usage of the product are highlighted by an effective sales promotion campaign.
d. Stimulates Dealer Effectiveness – Dealers are positively affected and are more supportive of brands that are frequently supported by well-organised sales promotion campaigns. The reason is that sales promotion helps the dealers in popularising brands and they are able to attain company sales targets. It assists them in getting larger trade discounts and other incentives thus increasing their operating profit.
Objectives of Sales Promotion:
The main objectives of sales promotion are identified below:
a. Product Differentiation – Use of sales promotion techniques helps to differentiate one brand from other competing brands especially where all products offer essentially the same features and benefits. A common sales promotion method is to offer products at a slightly reduced price for a short period of time.
b. Attract Customers and Push up Sales – Sales promotion is used to attract customers during periods of low sales. This helps in drawing the customer attention to that product and also helps to support sales.
c. New Product Introduction – Sales promotion is used to introduce a new product into the market. By offering a new item and promoting its sale, the marketer persuades the existing customers to give the new product a try, while it also attracting new and potential customers.
d. Phasing Out a Product – Sales promotion is extensively used to sell out remaining stock of old products or brands that the company intends to phase out of its portfolio.
e. Increase Off-Season Sales – Business organisations encourage the purchase of their products during off-season through sales promotion. That is why they offer discounts and off-season price reductions of many products in the market during period of slack sales. Products like air-coolers, fans, refrigerators, air-conditioners, and room heaters have seasonal demand. Business organisations focus to maintain a stable demand of these seasonal products throughout the year.
The following are the most common sales promotion strategies:
(i) Rebates
(ii) Coupons
(iii) Sampling
(iv) Displays
(v) Premiums
A rebate is a potential refund by the manufacturer to the consumer. When manufacturers desire to increase product demand, they may offer rebates rather than lowering the price charged to the retail store. Lowering the price to the retail store does not guarantee that the store will pass on the discount.
Thus, this strategy could result in lower profit per unit without increasing demand. A rebate ensures that consumers receive the manufacturer’s discount. Automobile manufacturers frequently offer rebates of $500 or more.
Coupons are used in newspapers, magazines, and ads to encourage the purchase of a product. They are also commonly packaged with a product so that consumers can use the coupon only if they purchase this same product again. Coupons used in this way can encourage consumers to repeatedly purchase the same brand. Consequently, consumers may become loyal to that brand.
Some coupons are not available until consumers make repeated purchases. For example, airlines offer free flights to frequent fliers, and some hotels offer a free night’s stay to frequent customers.
Promoting with coupons may be inefficient for some firms. General Mills had historically used coupons to promote its cereals. However, after learning from marketing research that 98 percent of all cereal coupons are not used, it decided to cut back on this promotion strategy. It reduced annual spending on some promotions by $175 million and focused on improving its product.
Sampling involves offering free samples to encourage consumers to try a new brand or product. The intent is to lure customers away from competing products. For example, Clinique samples are available in cosmetics departments of retail stores. Food samples are offered in grocery stores. Manufacturing firms also provide samples so that consumers can try out equipment. Samples are even sent through direct mail.
Samples are most commonly used to introduce new products. Firms recognize that once customers become accustomed to a particular brand, they tend to stick with that brand. Thus, the free sample is intended to achieve brand loyalty, or the loyalty of consumers to a specific brand over time.
Sampling of Services- Sampling is used for services as well as products. For example, in 1999 America Online (AOL) provided a limited amount of free online time to potential customers. This strategy allowed customers to experience the service that AOL provides and resulted in a large number of subscriptions to AOL’s online service. Subsequently, AOL merged with media giant Time Warner.
Many stores create special displays to promote particular products. The displays are used to attract consumers who are in the store for other reasons. Products are more likely to get attention if they are located at a point of purchase, such as by the cash registers where consumers are waiting in line.
Because there is limited room for displays, companies that want retail stores to display their products are typically willing to set up the display themselves. They may even offer a reduced price to retail stores that allow a display.
A premium is a gift or prize provided free to consumers who purchase a specific product. For example, Sports Illustrated magazine may offer a free sports DVD to new subscribers. A boat manufacturer may offer a free fishing rod to anyone who purchases its boats. Premiums offer an extra incentive to purchase products.
Method # 4. Publicity:
It is the non-personal stimulation of demand brought about by the positive coverage received by a product or brand. Issue of press releases, getting an honorable mention in the media, doing charitable activities for social good, taking up charitable causes, giving donations, etc. are all forms of public exercises. These are all designed with the objective of getting publicity for the organisation and its products and services.
Features of Publicity:
Some basic features of publicity are defined as under:
a. Third party involvement – Publicity requires third part involvement for spreading information and messages about goods or services of a firm. This third party involvement becomes necessary for the promotion of business firm and its products. It imparts an element of authenticity.
b. Publicity is free – No fee or charge is needed to be paid to the third party for the publicity of information about goods or services or the firm. The business firm does not incur any expense for the publicity materials communicated to the general public through mass media by the third party.
c. Wide and quick dissemination of information – Information about the business firm and its products is communicated to a very large number of viewers and readers by the flow of news and publicity both in print and electronic form in a very short span of time.
d. Free advertising – Positive publicity serves as free advertising for the business firm.
Objectives of Publicity:
Major objectives of publicity are listed below:
a. Building Product Awareness – The first objective of publicity is to generate consumer attention and awareness through media placements and special events. This results in increasing hype specially when a new product or service is being introduced by a company.
b. Stimulating Demand – A positive news report in a newspaper, a TV news show or a favourable mention on the internet often results in significant rise in product sales. The objective of publicity is to ensure constant positive coverage and thus gain through every increase in sales.
c. Creating Interest – Creating interest among the masses in the company’s product or service is another objective of publicity. It is the first stage towards creating a customer base for the company.
d. Providing Information – Publicity provides customer with detailed information about products and services. Publicity and information dissemination is done through newspaper articles, collateral materials, company newsletters and websites. It helps the customer gain an in-depth understanding of the product.
e. Reinforcing the Brand – Publicity is a way of building brand awareness by maintaining positive relationships with key audiences, thereby aiding in building a strong brand image. A strong image helps the company build its business which can prove helpful in times of crisis.
Method # 5. Public Relations:
The term public relations refers to actions taken with the goal of creating or maintaining a favorable public image. Firms attempt to develop good public relations by communicating to the general public, including prospective customers. Public relations can be used to enhance the image of a product or of the firm itself.
It may also be used to clarify information in response to adverse publicity. Many firms have a public relations department that provides information about the firm and its products to the public. Public relations departments typically use the media to relay their information to the public.
Firm commonly attempt to be very accessible to the media because they may receive media coverage at no charge. When employees of a firm are quoted by the media, the firm’s name is mentioned across large audience. Some banks assign employees to provide economic forecasts because the media will mention the bank’s name when reporting the forecast.
Some public relations are not planned but results from a response to circumstances. For example, during the tragedy of September 11, Home Depot offered its support and was recognized by the media for its efforts.
The following are the most common types of public relations strategies:
(i) Special events
(ii) News releases
(iii) Press conferences
Some firms sponsor a special event such as a race. Anheuser-Busch (producer of Budweiser) supports many marathons and festivals where it promotes its name. 7UP promotes local marathons and has even printed the marathon logo and running figures on 7UP cans, which may attract consumers who run or exercise.
A news release is a brief written announcement about a firm provided by that firm to the media It enables the firm to update the public about its products or operations. It may also be used to clarify information in response to false rumors that could adversely affect the firm’s reputation. The news release may include the name and phone number of an employee who can provide more details if desired by the media.
There is no charge for providing a news release, but the firm incurs an indirect cost for hiring employees to promote news releases. Also, there is no guarantee that a news release will be publicized by the media.
A press conference is an oral announcement about a firm provided by that firm to the media. Like a news release, a press conference may be intended to enhance the firm’s image or to eliminate any adverse effects caused by false rumors.
A press conference is more personal than a news release because an employee of the firm makes the announcement directly to the media and may even be willing to answer questions from the media. There is no charge for organizing a press conference, but there is an indirect cost of hiring employees to perform the necessary tasks.
What is Promotion – Difference between Push Strategy and Pull Strategy of Promotion
(i) This involves taking the product directly to the customer via whatever means to ensure that the customer is aware of a brand at the point of purchase. It actually creates the demand for that particular product. It is useful when there is low brand loyalty for a general product category.
(ii) Push strategy emphasizes personal selling. Firms are adopting this method for their sales promotions.
(iii) Push strategy requires extensive use of sales force and trade promotion to push product through the channels.
(i) The manufacturer uses advertising promotion and other ways to persuade customers to demand the product from the intermediaries. The consumer will ask the retailers, retailers will demand from the wholesalers and the wholesalers will ultimately approach the producers.
(ii) Pull strategy is the one in which mass impersonal sales efforts are given the greatest emphasis. The purpose of the pull strategy is to pre-sell to the final consumers so that they demand the product at the retail level of distribution. These efforts will pull the customer towards the manufacturer.
(iii) Pull strategy requires considerable expenditure on advertising and sales promotion to build up the consumer demand.
What is Promotion – Promotion Budget: Meaning, Process, Types
A promotional budget is a specified amount of money set aside to promote the products or beliefs of a business or organization. Promotional budgets are created to anticipate the essential costs associated with growing a business or maintaining a brand name. The budget is often set according to a percentage of sales or profits in order to maintain an expected growth rate.
The advertising and marketing of a business tough time to predict, i.e., why a percentage method might be used. A promotional budget could be increased in anticipation of new product lines are set to be released in the near future. High promotional budgets can reduce profits during the period such assets are expended. Companies may allow for such higher costs based on an assumption that sales or awareness will increase among customers.
How Promotional Budgets are Spent?
Promotional budgets usually include money put towards advertising across mediums such as radio, television, Internet and print. A company’s promotional budget can include expenses for email campaigns, social media outreach and outdoor signage. The promotional budget might also go towards hiring outside experts and consultants, who develop the campaigns and place ads in appropriate media and locations. This can include contracting marketing intelligence firms to interpret data that shows how dollars spent on marketing translate into new or recurring business for the company.
The decision-making process at organizations continues to evolve when it comes to allocating funds for promotional budgets. Budgeting strategies change as public attention continues to shift away from older, traditional mediums such as print to focus more on digital, online and mobile media.
While the overall size of a company’s promotional budget might not have changed, the way the money is divided up may have. For instance, money previously dedicated to advertising through television might now include campaigns that reach people on the smartphones.
The shifts that occur with promotional budget trends can have a direct effect on media industries that rely on those proceeds. A reduction in advertising dollars for newspapers and other print media, as companies directed those assets instead to digital media and other outlets, contributed to a decline in the newspaper and magazine industries.
Companies regularly measure the return on investment from their promotional budgets. The results often have a significant impact on where companies continue to put their funds. For example, a company will likely change its strategy if a billboard campaign fails to attract attention at the same time social media marketing messages increase sales. In many cases, the promotional budget at the company will be adjusted to favour more investment in social media.
Many companies employ the affordable method for determining the promotion budget. The promotion budget is set in a manner which the company can afford. This method is a subjective assessment, as it pays little attention to the long-term promotional needs of a service. This method does not consider the role of promotion in sales volume. Employment of affordable method very often results in an uncertain annual budget, making the long-range planning difficult.
2. Percentage of Sales Method:
Under this method, promotion expenditure is determined as a percentage of sales.
The advantages of percentage of sales method are:
First, expenditure on advertising is closely related to the sales. So, the company can easily afford to spend a specified percentage of sale on promotion.
Second, this method facilitates an analysis of the relationship among promotion cost and selling price per unit. Third, this method ensures stability when competitors are also spending the same percentage of sales on promotion.
Under this method, advertising expenditure of the firm is equal to the amount spent by competitors. This method follows the policy of the competitors in respect of promotion budget. It is based on the assumption that competitor’s expenditure represents the prudence of the industry.
Since the promotion budget of one firm is in parity with the competitor, promotion war is avoided. However, this method has certain limitations. There is no assurance that competitors’ promotion budget represents collective wisdom of the industry. Companies vary in reputation, resources, objectives and opportunities. So, the promotion budget appropriate to one firm may not be appropriate to the other.
4. Objective and Task Method:
Under this method, marketers determine promotion budget by defining specific objectives, determining tasks to be performed to accomplish the objectives and estimating the cost of performing these tasks. This method is rational as it sets the promotion budget at a cost which is required to realize the objective of the company.
What is Promotion – Control Process in Promotion (With Principles)
Human beings have an inherent dislike for ‘control’ is a quote with which, the meaning of the word control begins, yet there is a need for control in every sphere of life.
Control cannot be viewed as a post mortem activity as once the event is over, no correction is possible. Therefore the best course of action is to combine planning and control together and following the three important principles of effective control –
ii. Current-control
iii. Post-control
For making the control process efficient in promotion it will be imperative for the marketer to do a complete micro analysis of the promotion plan by following ‘PERT/CPM’ ,as the case maybe ,and then carry out the monitoring process simultaneously which will enable the marketer to take right steps if anything appear to be moving in the wrong direction.
Most of the success is achieved with the pre-control and current-control techniques, but once the entire promotion is completed, a complete review should be done, to enable the company to avoid repetition of same mistakes.
For this the following three principles of planning are followed:
i. Principle of limiting factor
ii. Principle of navigational change
iii. Principle of timing
By following above stated principles, a company can achieve full success in its endeavour. Promotion, planning and control process are inter linked and effectiveness depends on efficiency of each process, healthy well-fed girl.
PERT – programme evaluation and review technique
CPM – critical path method
What is Promotion – Role of Communication Process in Promotion (With Dimensions)
The word communication has been derived from Latin word communicare, which means in English “to share”.
There are two types of communications, namely non-verbal and verbal communication.
These have been explained briefly below:
1. Non-Verbal Communication:
Non-verbal communication describes the process of conveying meaning in the form of non- word messages. Examples of nonverbal communication gestures, body language, facial expression, eye contact, and how one dresses. Speech also contains nonverbal elements known as paralanguage, e.g., rhythm, intonation, tempo, and stress. Research has shown that up to 55% of human communication may occur through nonverbal facial expressions, and a further 38% through paralanguage.
2. Verbal Communication:
Effective verbal or spoken communication is dependent on a number of factors such as words and, listening skills and clarification. Human language can be defined as a system of symbols and the grammars by which the symbols are manipulated. Communication plays a very significant role in promotion of a product.
It is a fact that nothing can succeed without communication. Particularly, in case of promotion, it is a message which must reach the masses for creating awareness; therefore, communication has to be very effective.
Communication in promotion has five dimensions, namely:
i. Message,
ii. Channels,
iii. Level of recipients,
iv. Objectives, and
v. Measures.
These have been explained briefly below:
i. Message – success of promotion is dependent on the appropriateness of the message, Chosen for this purpose.
Message here can be of following types:
a. Physical – a physical message is the product itself, for example, while promoting a new model of a car, facility of test drive is provided to the customer for the first-hand experience.
b. Verbal – this includes advertisements on the desired medium in the form of a jingle, a catchy tag-line etc.
c. Audio – these are meant for a mass reach, therefore, medium such as radio, loud speakers etc. are used for promoting the product.
d. Visual – visual message is a message that can be seen with eyes, such as the hoardings, billboards etc.
ii. Channels – next significant dimension is the channel which is selected for the purpose of promotion. Channel are innumerable such as Voice, Print, Busses, Mail, post, SMS, what’s app etc.
iii. Level of Recipient – it is very important to carry out a research on the type of target audience the company is aiming to reach. Therefore, the customer’s interests, educational background, IQ, level of knowledge & Capability must be kept in mind before deciding on a promotion strategy
iv. Objective – it is equally important to keep the main objective in mind while promoting the product. It is necessary that the objective and the actual promotion must be in sync for best results
v. Measure – measure as a dimension relates to the Feedback obtained from the customers after the promotion and then evaluating the Results with the targeted result.
What is Promotion – Benefits and Limitations of Promotion
Product promotion is one of the techniques that are used to promote services or goods with the short term and long term goals of increasing the sales. There are many companies which use various types of techniques to promote their products and services. The main factor for the growth of any type of business is product promotions. These days, it is difficult to imagine any business without promotion. It is very helpful for the entrepreneur to expand the business in various forms.
The promotion of the product attracts the customer to avail the benefits of the product as well as services. Therefore, for a small or big business, product promotion is very important for achieving success.
Following are some of the benefits of promotion:
1. It is helps to increase the customer base as well as increases sales of the products.
2. Product promotion creates a long-lasting impression on customers mind.
3. It is simple for the Company to promote business through corporate gifts.
4. Free samples can be used as a promotional product. These are greatly helpful in creating demand for the new product in particular.
5. Promotional products are not only useful for customers but also offer incentives for the employees and boost their morale.
6. Promotion helps in allowing the organization to penetrate the market.
7. It helps in sustaining the existing market.
8. Promotion keeps the product alive in the memory of the consumer.
9. It also helps in creating and expanding the market.
10. It is Helpful in the wider exposure of new services or products.
i. Positive product attitude – Sales promotion stimulates the positive attitude about the product in the minds of customers.
ii. Incentive to purchase – Promotion provides incentives to the customers to buy the product.
iii. Induces immediate action – Effective promotional activities induce immediate action on the part of the customers.
iv. Flexibility – Promotion itself is a very flexible technique and therefore can be used at any stage to achieve any sales related objective.
v. Overcome competition – Promotional activities enable a company to overcome competition.
Limitations of Promotion:
i. Temporary nature – The effect of promotion is very temporary. Therefore one has to keep repeating the promotional activities.
ii. Only a supplementary activity – Promotion as a stand-alone activity is not effective. Therefore it has to be done with other activities.
iii. Highly perishable – The effect of a particular promotional activity is very perishable.
iv. Clutter – Too much of promotional activities result in clutter and cause confusion in the minds of customers.
v. Expensive – All promotion activities require huge amounts of expenses.