Promotion is one of the four activities traditionally included in the marketing mix (the other three being product, price, and place). Promotion aims to increase the customer’s familiarity with the product by using a vast array of techniques and tools. Activities included in the promotion mix consist of personal selling, sales promotion, public relations, direct mail, trade fairs, advertising, and sponsorships. Each of these methods has an impact on the customer’s awareness of the product, comprehension, and conviction to purchase the item and the probability that all these actions will translate into a purchasing action by the client. During the course of the promotion activity, the company manages both the promotion budget size and how that budget is allocated. Maximizing this budget through low-cost methods is one of the keys of a successful promotional campaign (through word-of-mouth or viral marketing, for example).
Promotion is separated into two categories: above-the-line promotion describes activities that directly target customer sensibility (such as advertising and personal selling), while below-the-line promotion is usually much more subtle (such as product placement and public relations).
Above-The-Line And Below-The-Line Promotion
Above-the-line promotion refers to activities the firm performs to promote its product by directly targeting the potential customer. Advertising is one of the main methods companies use to engage in above-the-line promotion. The main advantage of advertising is that the firm is able to reach multiple buyers simultaneously, resulting in a low total cost per user, but there is the likelihood of reaching many consumers who will not convert into buyers. For example, some companies purchase ads in generalist newspapers; although the ad is read by thousands of people (generating a low cost per consumer), only a small percentage could actually be considered to be potential customers. Hence, companies increasingly target consumers through specialized media (like specialized magazines) to increase the chance of being read by a potential customer.
The other major technique used for above-the-line promotion is personal selling; this occurs when the firms employs dedicated staff to sell its product. Targeted selling, while highly efficient, is often offset by the high cost per contact, as the firms need to retain and train an adequate sales force.
Below-the-line promotion encompasses all activities the firm engages in to promote its product in a much more subtle manner. Examples of such activities include product placement (wherein the firm pays for its product to be featured prominently in a media setting), public relations (wherein the firm deploys various public-related efforts to garner public attention), or sponsorship (wherein the firm sponsors an event in exchange for visibility).
In all cases, companies that use below-the-line promotions must be careful to keep the balance between having too much or too little visibility. A careful balance is necessary to assure that below-the-line promotions do not become too prominent, which will generate criticism. For example, some recent movies and television series have been criticized for having movie story lines influenced by product placement to the point of affecting the content of the show and annoying consumers.
Objectives And Evaluation
Promotion is mainly used to stimulate sales for the company by convincing customers to purchase the product, but a company might engage in promotional activities with other objectives in mind. For example, some promotional campaigns are used to increase customer awareness of the company’s offerings; this is especially true when the company is a new entry in a market. Other campaigns intend to provide information to the customer; rather than stimulating sales directly, this type of campaign will target customers who are at the decision-making stage and are comparing the different products. Finally, some promotional campaigns are used to reinforce the brand to increase the opportunity for repeat purchases by customers, increasing the relationship with the company.
Companies find it very important to measure the return on investment (ROI) that each dollar invested in promotion will generate for the company. Hence, if a company can demonstrate a promotion’s influence on sales, it will be able to justify further budget increases. It is important to be able to justify the returns and not blindly invest money in no measurable activities.
The most common way of measuring the effect of promotions is analyzing sales or market share data over a set period. Hence, if over a set period, sales have not changed following a promotional activity, the company might conclude there is no effect in continuing this activity. It is also possible to measure success by doing a consumer survey to measure the level of satisfaction or experimenting on markets by targeting two geographies differently (for example, running an ad campaign in some cities and then comparing sales in both geographies). These two methods are more costly and are often used by larger corporations.
- George E. Belch, Michael A. Belch, and Michael Angelo Guolla, Advertising & Promotion: An Integrated Marketing Communications Perspective (McGrawHill Ryerson, 2008);
- Kenneth Manning and David E. Sprott, “Multiple Unit Price Promotions and Their Effects on Quantity Purchase Intentions,” Journal of Retailing (v.83/4, 2007);
- Thomas C. O’Guinn, Chris T. Allen, and Richard J. Semenik, Advertising and Integrated Brand Promotion (South-Western, 2009);
- Larry Percy and Richard H. Elliott, Strategic Advertising Management (Oxford University Press, 2008);
- Paul Peter and James H. Donnelly, Jr., A Preface to Marketing Management (McGraw-Hill Irwin, 2000);
- Jan-Benedict E. M. Steenkamp, Vincent R. Nijs, Dominique M. Hanssens, and Marnik G. Dekimpe, “Competitive Reactions to Advertising and Promotion Attacks,” Marketing Science (v.24/1, 2005).
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