Promotion (Edexcel GCSE Business): Revision Notes
Promotion
What is promotion?
Promotion is how businesses create awareness and generate interest in their products or services. Companies use various promotional techniques to encourage customers to want and buy what they're offering. Good promotion helps businesses build a recognisable brand and increase sales at different times throughout the year.
Effective promotion is essential for any business to succeed in competitive markets. Without promotion, even the best products may go unnoticed by potential customers.
Types of promotion methods
There are five main ways businesses can promote their products, each with their own advantages and disadvantages:
Advertising
What it includes: Television adverts, radio spots, magazine ads, posters, website banners, point-of-sale displays, leaflets and brochures.
Why businesses use it: Advertising can reach huge numbers of potential customers when the advert appears in the right place and uses appropriate media channels.
Potential problems: It can be very costly to run advertising campaigns, and it's often difficult to measure exactly how much extra sales the advertising generates.
Sponsorship
What it includes: Supporting sporting events, music festivals, and charitable causes like educational or environmental projects.
Why businesses use it: This gives companies significant exposure whilst linking their brand with positive causes that customers care about.
Potential problems: Sponsorship deals provide very limited space to explain what makes the company's products special or beneficial.
Sponsorship works particularly well for businesses wanting to reach specific demographics, such as sports brands sponsoring athletic events to target fitness-conscious consumers.
Product trials
What it includes: Giving away free samples, letting customers test products, and offering products alongside other purchases.
Why businesses use it: Customers can experience the product directly, which may convince them to buy it when they might not have tried it otherwise.
Potential problems: Giving away free products reduces immediate profits and can become expensive if many samples are distributed.
Special offers
What it includes: Buy-one-get-one-free deals, free prize draws, and discount sales.
Why businesses use it: These promotions can quickly increase sales in the short term and help clear excess stock from warehouses.
Potential problems: Constantly offering discounts isn't sustainable long-term because it reduces the profit margin on each sale.
Businesses must be careful not to over-rely on special offers, as customers may begin to expect constant discounts and refuse to pay full price.
Public relations
What it includes: Using consistent logos across all promotional materials so customers easily recognise and remember the brand.
Why businesses use it: This helps customers develop trust and loyalty towards the brand over time.
Potential problems: Building a strong brand reputation takes considerable time, and negative publicity can quickly damage the brand image.
Choosing the right promotion method
The promotional technique a business selects depends on the characteristics of their target market. Companies need to understand who their customers are, where they spend their time, and what types of messages appeal to them. For example, a business targeting young people might focus on social media advertising, whilst a company selling to older customers might prefer newspaper advertisements.
Practical Example: Targeting Different Markets
A luxury watch company might choose:
- For young professionals: Instagram advertising and influencer partnerships
- For older affluent customers: Magazine advertisements in prestigious publications
- For sports enthusiasts: Sponsorship of major sporting events
How promotion increases business success
When businesses carry out extensive promotional campaigns, they benefit because more people become familiar with their products. This increased awareness often leads to customers choosing their business over competitors. Consumers are generally more willing to purchase from and trust brands they have encountered before, rather than completely unknown alternatives.
The connection between promotion and sales works in a cycle - effective promotion builds brand recognition, which leads to increased customer trust, which ultimately results in higher sales revenue for the business.
This promotional cycle explains why established brands often maintain their market position even when newer competitors offer similar or better products at lower prices.
Key Points to Remember:
- Promotion creates awareness - It introduces customers to products they might not know about
- Different methods suit different situations - The choice depends on target customers and budget available
- All methods have trade-offs - Each promotional technique has both benefits and drawbacks to consider
- Brand building takes time - Consistent promotion efforts are needed to develop customer loyalty
- Promotion drives sales growth - Effective promotional campaigns typically lead to increased revenue