Chapter Eight

Promotion Decisions
Upon successful completion of this chapter, you should be
able to
 Define what promotion is.

 Describe the marketing communication system

 Explain the goals / roles of promotion

 Discuss the elements of the promotional mix

 Identify and discuss the various elements of promotion mix

 Examine the advantages and disadvantages of each element

Meaning of Promotion
 The heart of every transactional exchange is communication
between parties. The buyer seeks certain basic information
about product features, price, quality, support service,
reputation of the seller, and so forth.
 Few goods or services, no matter how well developed,
priced, or distributed, can survive in the marketplace
without effective promotion.
 Promotion is the communication by marketers that informs,
persuades, and reminds potential buyers of a product in
order to influence an opinion or elicit a response.
 The marketing manager’s main promotion job is to tell
target customers that the right Product is available at the
right Place at the right Price.
 A modern company manages a complex marketing
communications system (see the ff figure). The company
communicates with its intermediaries, consumers and
various publics. Its intermediaries communicate with their
consumers and publics. Consumers have word-of-mouth
communication with each other and with other publics.
Meanwhile, each group provides feedback to every other
group. Fig 1. The Marketing communication system
 The Goals of Promotion
 Effective promotion will achieve one or more of three
goals: It will inform the target audience, persuade the
target audience, or remind the target audience. Often a
marketer will try to achieve two or more of these goals at
the same time.
1. Informing
 Informative promotion seeks to convert an existing need
into a want or to stimulate interest in a new product. It is
generally more prevalent during the early stages of the
product life cycle.
 People typically will not buy a product or service or
support a nonprofit organization until they know its
purpose and its benefits to them. Informative messages are
important for promoting complex and technical products
such as automobiles, computers, and investment services
PERSUADING
 Persuasive promotion is designed to stimulate a
purchase or an action—for example, to eat more Juice
or use Verizon wireless mobile phone service.
Persuasion normally becomes the main promotion goal
when the product enters the growth stage of its life
cycle. By this time, the target market should have
general product awareness and some knowledge of how
the product can fulfill their wants.

 Therefore, the promotional goal switches from

informing consumers about the product category to
persuading them to buy the company’s brand rather than
the competitor’s.
REMINDING
 Reminder promotion is used to keep the product and

brand name in the public’s mind.

 This type of promotion prevails during the maturity

stage of the life cycle.

 It assumes that the target market has already been

persuaded of the good’s or service’s merits.

 Its purpose is simply to trigger a memory. Crest

toothpaste, Tide laundry detergent, St. George beer, and

many other consumer products often use reminder
promotion. Similarly, Philips Magnavox could advertise
just the brand rather than the benefits of the product.
Informative promotion
 Increasing the awareness of a new brand, product

class, or product attribute

 Explaining how the product works

 Suggesting new uses for a product

 Building a company image

Persuasive promotion
 Encouraging brand switching

 Changing customers’ perceptions of product

attributes
 Influencing customers to buy now

 Persuading customers to call

Reminder promotion
 Reminding consumers that the product

may be needed
 in the near future

 Reminding consumers where to buy the

product
 Maintaining consumer awareness
The Promotion Mix
 A company's total marketing communications mix - called
its promotion mix consists of the specific blend of
advertising, personal selling, sales promotion and public
relations tools that the company uses to pursue its
advertising and marketing objectives. (promotion
Methods)
 The proper promotional mix is the one that management
believes will meet the needs of the target market and
fulfill the organization’s overall goals.
 Let us define the four main promotion tools:
1. Advertising:
 Advertising is any paid form of non-personal
(impersonal or one-way) presentation of ideas,
goods, or services by an identified sponsor.
 It includes the use of traditional media like

magazines, newspapers, radio and TV, signs, transit

cards (advertisements on buses and taxis and at bus
stops) and direct mail as well as new media such as
the Internet.
 While advertising must be paid for, another form of

mass selling—publicity—is “free.”

 All advertisements (Ads, for short) have four (4) features:
 A verbal and /or visual non-personal message
 An identified sponsor
 Delivered through one or more media
 Payment by the sponsor to the medium carrying the
message.
 Although some advertising is directed to specific

individuals (as, for example, in the use of direct mail),

most advertising messages are tailored to a group, and
employ mass media such as radio, television, newspaper,
and magazines.
Its Nature
 The many forms of advertising make it hard to

generalize about its unique qualities. However,

several qualities can be noted:
 One of the primary benefits of advertising is its

ability to communicate to a geographically

dispersed large number of people at one time. LC/e
 The public knows who is behind the advertising

because the sponsor is openly identified in the

advertisement. Also, payment is made by the
sponsor to the media that carry the message. The
case of sponsor and payment differentiate
advertising from propaganda and publicity.
 Advertising enables the seller to repeat a message
many times, and it lets the buyer receive and
compare the messages of various competitors.
 Large-scale advertising by a seller says something

positive about the seller's size, popularity and

success.
 Advertising is also very expensive, allowing the

company to dramatize its products through the artful

use of print, sound and colour.
 On the one hand, advertising can be used to build up

a long-term image for a product (such as Coca-Cola

ads). On the other hand, advertising can trigger
quick sales (as when a department store advertises a
weekend sale).
Advertising also has some shortcomings:
 Although it reaches many people quickly,
advertising is impersonal and cannot be as
persuasive as company salespeople.
 Advertising is only able to carry on a one-way

communication with the audience, and the audience

does not feel that it has to pay attention or respond.
 In addition, advertising can be very costly. Although

some advertising forms, such as newspaper and

radio advertising, can be done on smaller budgets,
other forms, such as network TV advertising,
require very large budgets.
 Types of Advertising:
 Advertising types can be classified in to
different categories according to different
basis.
[Link] on audience: B-2-C and B-2-B
advertising
 Business –to-consumer advertising: the ads

target individual buyers

 Business-to-business advertising : the ads

target business customers

2. Based on demand: Primary and selective advertising
 Primary demand advertising: aim at stimulating demand for

generic category of a product like coffee. This type of

advertising is used when the product is in the introductory
stage. This is called pioneering advertising. Its objective is
to inform, rather than persuade, the target market.
 Selective demand advertising: intended to stimulate demand

for individual brands like Yirgachefe, Harrar, Jimma coffee

etc. This is essentially competitive advertising—that pits
one brand against another. This type of advertising
typically is used when a product has gone beyond the
introductory stage of its life cycle. The objective of
competitive advertising is to persuade the potential
customers, and it emphasizes particular benefits of the brand
being advertised.
2. Public Relations
 Concerned about how they are perceived by their

target markets, organizations often spend large sums

to build a positive public image.
 Public relations is the marketing function that

evaluates public attitudes, identifies areas within the

organization the public may be interested in, and
executes a program of action to earn public
understanding and acceptance.
 Public relations helps an organization communicate with its
customers, suppliers, stockholders, government officials,
employees, and the community in which it operates.
 Marketers use public relations not only to maintain a
positive image but also to educate the public about the
company’s goals and objectives, introduce new products,
and help support the sales effort.
 PR is a non-personal stimulation of demand for a product,
service, or business unit by planting commercially
significant news about it in a published medium (i.e.,
publicity) or obtaining favorable presentation of it through
vehicles not paid for by the sponsor. Although commissions
are not paid to the various media, there are salaries and
other expenses that mean that public relations is not a
costless form of promotion.
 Publicity is any unpaid form of non-personal
presentation of ideas, goods, or services. Of course,
publicity people are paid. But they try to attract
attention to the firm and its offerings without having
to pay media costs.
 For example, movie studios try to get celebrities on

TV talk shows because this generates a lot of

interest and sells tickets to new movies without the
studio paying for TV time.
 Publicity is mention in the media. Orgs usually have

little control over the message in the media, at least,

not as they do in advertising. Regarding publicity,
reporters and writers decide what will be said.
 Public relations or PR offers several unique qualities. It is
all those activities that the organization does to
communicate with target audiences which are not directly
paid for.
 PR is very believable: news stories, features and events
seem more real and convincing to readers than ads do.
 Public relations can reach many prospects who avoid
salespeople and advertisements, since the message gets to
the buyers as 'news' rather than as a sales-directed
communication.
 And, like advertising, PR can dramatize a company or
product. The Body Shop is one of the few international
companies that have used public relations as a more
effective alternative to mass TV advertising-
 The Institute of Public Relations defines public
relations as follows:
“The planned and sustained effort to establish and
maintain goodwill and mutual understanding
between an organization and its publics”
 What is meant by the term “publics” in the above

definition?
 A business may have many “publics” with which it

needs to maintain good relations and build goodwill.

For example, consider the relevant “publics” for a
publicly-quoted business engaged in medical
research:
 • Shareholders, Employees
• Trade unions, • Members of the “general public”
• Customers (past and present), • Pressure groups
• The medical profession
• Charities funding medical research
• Professional research bodies and policy-forming
organizations
• The media, • Government and politicians
 The role of public relations is to:

• Identify the relevant publics

 Influence the opinions of those publics by:
o Reinforcing favorable opinions
o Transforming perhaps neutral opinions into positive
ones
o Changing or neutralizing hostile opinions
 Public relations techniques

 There are many techniques available to influence public

opinion, some of which are more appropriate in certain

circumstances than others:
a. Consumer communication
 Customer press releases, Trade press releases,

Promotional videos, Consumer exhibitions

Competitions and prizes, Product launch events
 Celebrity endorsements, Web sites
B. Business communication
 Corporate identity design, Company and product

videos, Direct mailings, Web site, Trade

exhibitions
C. Internal / employee communication
 In-house newsletters and magazines

Intranet
Notice boards
Employee conferences
Email
D. External corporate communication
 Company literature (brochures, videos etc.)

Community involvement programmes

Trade, local, national and international media
relations
E. Financial communication
 Financial media relations

Annual report and accounts

Meetings with stock market analysts, fund managers
etc
Shareholder meetings (including the annual general
meeting
 Given the wide range of techniques used in public
relations, how is it possible to measure the
effectiveness of public relations?
 It is actually quite difficult to measure whether the key

messages have been communicated to the target public.

In any event, this could be quite costly since it would
involve a large amount of regular research. Instead, the
main measures of effectiveness concentrate on the
process of public relations, and include:
• Monitoring the amount of media coverage obtained
(press cuttings agencies play a role in keeping
businesses informed of this)
 •
 Measuring attendance at meetings, conferences
 • Measuring the number of enquiries or orders

received in response to specific public relations

efforts.
4. Personal Selling
 An oral presentation in a conversation with one or more

prospective purchasers for the purpose of making sales.

 It includes several different forms, such as sales calls by a

field representative (field selling), assistance by a sales clerk

(retail selling), having an Avon representative call at your
home (door-to-door selling), and so forth.
 Personal selling involves direct spoken communication

between sellers and potential customers. Face-to-face

selling provides immediate feedback—which helps
salespeople to adapt.
 Although some personal selling is included in most

marketing mixes, it can be very expensive. So it’s often

desirable to combine personal selling with mass selling and
sales promotion.
 Traditional methods of personal selling include a
planned presentation to one or more prospective
buyers for the purpose of making a sale.
 Recently, both business-to-business and business-to-

consumer selling focus on building long-term

relationships rather than on making a onetime sale.
 Compared to advertising, personal selling has

several unique qualities;

a. It involves personal interaction between two or
more people, so each person can observe the other's
needs and characteristics and make quick
adjustments.
b. Personal selling also allows all kinds of relationships
to spring up, ranging from a matter-of-fact selling
relationship to a deep personal friendship. The
effective salesperson keeps the customer's interests at
heart in order to build a long-term relationship.
c. Finally, with personal selling the buyer usually feels
a greater need to listen and respond, even if the
response is a polite 'no thank you'.
These unique qualities come at a cost, however. A
sales force requires a longer term commitment than
does advertising - advertising can be turned on and
off, but sales force size is harder to change. Personal
selling is also the company's most expensive
promotion tool,
4. Sales Promotion
 Refers to promotion activities—other than
advertising, publicity, and personal selling—that
stimulate interest, trial, or purchase by final
customers or others in the channel.
 Sales promotion may be aimed at consumers, at

middlemen, or at a firm’s own employees.

Examples are listed in the following exhibit.
 Relative to other promotion methods, sales
promotion can usually be implemented quickly and
get results sooner.
 In fact, most sales promotion efforts are designed to

produce immediate results.

Exhibit 1: Examples of Sales Promotion Activities
 Sales promotion is generally a short-run tool used to
stimulate immediate increases in demand.
 In fact, marketers often use sales promotion to

improve the effectiveness of other ingredients in the

promotional mix, especially advertising and
personal selling.
 Research shows that sales promotion complements

advertising by yielding faster sales responses.

 Sales promotion includes a wide assortment of tools

coupons, contests, price reductions, premium offers,

free goods and others - all of which have many
unique qualities: