Promotion (HSC SSCE Business Studies): Revision Notes

Promotion

Introduction to promotion

Businesses need to communicate with their customers to increase sales. Promotion refers to the methods a business uses to inform, persuade and remind its target market about products. Effective promotion can change customer behaviour by providing information or persuading them to make a purchase.

The promotion mix

Many people mistakenly think promotion only means advertising. However, promotion mix describes the various promotion methods a business combines in its promotional campaign. The four key elements are:

1. Advertising
2. Personal selling and relationship marketing
3. Sales promotion
4. Publicity and public relations

Businesses typically combine two or more of these elements depending on their product type and target market.

Elements of the promotion mix

Advertising

Advertising is a paid, non-personal message communicated through mass media. It remains essential despite the wide range of products available because effective advertising campaigns directly increase sales and profits.

The three main purposes of advertising are to:

• Inform customers about products
• Persuade customers to purchase
• Remind customers about the brand

Advertising media

Advertising media encompasses the many forms of electronic and print communication used to reach audiences. Common types include:

• Print publications — newspaper and magazine advertisements
• Television advertising — extensive reach across large geographical areas
• Radio advertising — broadcasts from various stations targeting specific demographics
• Outdoor advertising — billboards, posters, electronic displays, neon signs, skywriting, painted signs, or transport advertising
• Direct mail — catalogues, brochures or leaflets mailed to households
• Window display — retailers displaying products in shop windows to attract customers
• Internet advertising — online delivery of advertising messages
• Telemarketing — direct telephone contact with customers

Businesses select advertising media based on several variables:

• Type of product and its market positioning
• Size and characteristics of the target market
• Marketing budget available
• Cost of the advertising medium
• Product's position in the product life cycle

Recent advertising trends

Video marketing has become one of the fastest-growing advertising forms, with approximately $87\%$ of businesses now incorporating video into their marketing strategies. Despite overall growth in online advertising of $5.6\%$ year-on-year in 2020, the COVID-19 pandemic caused a dramatic $35\%$ drop in advertising spending from April 2019 to April 2020.

The pandemic affected different media channels unequally:

• Television: $-33\%$
• Digital: $-27\%$
• Outdoor: $-61\%$
• Radio: $-45\%$
• Press: $-35\%$
• Magazines: $-52\%$

Personal selling and relationship marketing

Personal selling

Personal selling involves activities where a sales consultant directly interacts with customers to make a sale. This represents the human element of promotion. For expensive, complex or highly individualised products, personal selling often serves as the main promotional strategy because these products require personal contact to familiarise customers with features and benefits.

Although expensive, personal selling offers three unique advantages:

1. Customisation — messages can be tailored to individual customer circumstances
2. Relationship building — personalised assistance creates long-term relationships resulting in repeat sales
3. After-sales service — sales consultants can provide ongoing support regarding product features, installation, warranties and servicing

By listening to customer needs and offering informed recommendations, businesses increase customer satisfaction, generate repeat business and build positive reputations. The success of many marketing plans depends heavily on the competency of the sales force.

Relationship marketing

Customers increasingly expect individualised treatment. Relationship marketing involves developing long-term, cost-effective and strong relationships with individual customers. The ultimate aim is creating customer loyalty by meeting individual needs, thereby encouraging repeat purchases.

Loyalty programs represent a highly successful relationship marketing strategy. These rewards-based programs offer benefits to customers who frequently make purchases or spend specified amounts. Introduced in the early 1990s with Coles flybuys, loyalty programs have become widespread. Research shows that $80\%$ of shoppers buy more from businesses whose loyalty cards they hold, and $55\%$ choose businesses with loyalty programs over similar competitors.

Sales promotion

Sales promotion involves using activities or materials as direct inducements to customers. This promotion element aims to:

• Entice new customers
• Encourage trial purchases of new products
• Increase sales to existing customers and stimulate repeat purchases

Sales promotion primarily increases the effectiveness of other promotional activities, especially advertising.

Common sales promotion techniques include:

• Limited time offers — coupons, discount codes or vouchers offering discounts for stated periods. These create urgency and trigger fear-of-missing-out (FOMO)
• Free gifts — products offered to customers for purchasing items
• Refunds — partial purchase price returned to customers who submit vouchers with proof of purchase (commonly used for power tools and kitchen appliances)
• Samples — free items or product containers (e.g., taste tests in supermarkets)
• Point-of-purchase displays — special signs, displays and racks installed by manufacturers in retail outlets, typically at aisle ends to gain attention and use floor space efficiently
• Contests and giveaways — competitions to gather customer information or motivate product trial
• Deals — buy-one-get-one-free offers that help businesses clear overstocked inventory while maintaining profit margins

Publicity and public relations

Publicity

Publicity consists of any free news story about a business's products. Unlike advertising, publicity is free and its timing is not controlled by the business. The main aims are to:

• Enhance product image
• Raise product awareness
• Highlight favourable business features
• Reduce any negative image

Public relations (PR)

Public relations (PR) encompasses activities aimed at creating and maintaining favourable relations between businesses and customers. PR exposes businesses or ideas to audiences using often unpaid third parties as outlets. This occurs through working with media, making speeches at special occasions, or attention-seeking gestures such as donations or giveaway sales reported by others.

PR can be more effective and cheaper than paid advertising. Four main ways PR assists businesses in achieving increased sales objectives:

1. Promoting a positive image — reinforcing favourable consumer attitudes and perceptions regarding the business's reputation
2. Effective communication of messages — using advertising, sales promotions, publicity and personal selling to convey information about the business and products
3. Issues monitoring — protecting sales by providing early warning of public trends that could affect sales, allowing remedial action before harm occurs
4. Crisis management — protecting business reputation from negative rumours and adverse publicity that might result in lost sales

The communication process

Marketing managers must communicate clearly, efficiently and concisely to target markets. If the communication process becomes distorted or inefficient, messages become distorted, potentially causing lost sales. Effective communication is essential for successful promotion.

Channels are methods used for carrying messages. Common promotional communication channels include print and electronic media advertising.

Noise refers to any interference or distraction affecting any or all stages of the promotional communication process.

Customers may be more willing to purchase products when messages are communicated through respected and trusted channels, such as opinion leaders or word of mouth.

Opinion leaders

An opinion leader is a person who influences others. Their opinions are respected and they are often sought for advice. Marketing managers use opinion leaders as information outlets for new products or to endorse existing ones. Actors, athletes, musicians and models are regarded by some groups as opinion leaders, making celebrity endorsement a common marketing strategy.

Celebrity endorsement is powerful when target audiences align with chosen ambassadors. Endorsements can open huge followings because ambassadors typically have large social media followings — referrals from them can be powerful, generating instant followers and engagement.

Word of mouth

Word-of-mouth communication occurs when people influence each other during conversations. Consumers tend to trust word-of-mouth more than business-sponsored commercials, especially when messages come from friends or opinion leaders. This trust stems from perceiving friends as more reliable than businesses advertising their own products.

Businesses increasingly use social media platforms such as Facebook and Twitter to engage in word-of-mouth communication. Friends' recommendations can powerfully influence decisions, especially when many competing products exist.

Social media influencers

Social media influencers are users who have established credibility in specific fields and can influence their audiences. Many brands, particularly in fashion and lifestyle sectors, have replaced big-name celebrity sponsorships with regular people who have powerfully engaged social media followers.

Research from Twitter shows:

• $49\%$ of consumers seek purchase advice from social media influencers
• $20\%$ of surveyed people stated that influencer tweets encouraged them to share recommendations
• Almost $40\%$ of Twitter users made purchases based on influencer endorsements

Many companies spend millions annually on influencer marketing. Beyond sending free products, some companies pay influencers per post to try products and share experiences. For many brands, this costs less than celebrity endorsement.

Why a mix of promotional strategies is important

Businesses must use multiple promotional strategies because each element of the promotion mix offers different benefits. Using a combination allows businesses to cater to the needs of everyone in their target market. Businesses should not aim to satisfy only one type of buyer — the goal is attracting as many potential customers as possible. Since different promotion mix elements appeal to different customer types, businesses need combinations.

Different promotion mix elements may influence the same customer in various ways, assisting their purchase decision.

Therefore, to achieve better target market responses, businesses need to adopt as many promotion mix components as possible. These components should be coordinated and complement each other to help achieve marketing objectives.

Remember!