Transcript Sales promotions

IB Business Management
4.5 PROMOTION
Learning Outcomes
• To understand and be able to apply the following
aspects of promotion: (A02)
> above the line promotion
> below the line promotion
> Promotional mix
• To be able to analyse the impact of changing
technology on promotionla strategies e.g. viral
marketing, social media and social networking.
(A03)
• To understand guerilla marketing and analyse its
effectiveness as a promotional method
Essential Question
What is the most
effective
promotional mix?
Promotion
• Promotion refers to methods of communicating messages
to the market with the intention of selling a product
What is Promotion?
Promotion is all of the activities involved in informing
and persuading potential customers to buy a product
It is not just advertising
Promotion Objectives
• To inform
• To persuade
• To remind
Types of Promotion
Promotion can be:
• ABOVE THE LINE – Direct Advertising through
consumer media (TV, newspapers, radio, billboards)
• BELOW THE LINE – All other forms of promotion
(PR, sales promotion, social networking)
Advertising
• Any form of paid communication used to develop
awareness, perception or attitudes about a business
or its products
.
• A successful advertising campaign
must be distinct from the
competition
Advertising
True or False?
TV commercials during Super
Bowl XLV in 2011 are
estimated to have cost $1
million for a 30-second spot
False…… It actually cost $3million
More than $500 billion a
year is spent on advertising
worldwide
True
The average child in America
watches over 40,000 television
commercials in a year, or over
100 a day
True
Starbucks spent $9million
on advertising in 2006
False…… They actually spent $95 million
The newest form of marketing
is called ‘Viral Marketing’ and
involves using blogs and
emails to advertise a product
True
Facebook makes $4billion a
year from advertising
True
Microsoft allegedly paid the
Rolling Stones $20 million to
use their hit “Start Me Up” in
its Windows 95
advertisements
False…… It actually a mere $9million!
Here are some successful
adverts
What makes them successful?
5 features of a good advert
Discuss and agree in pairs what the most important
features of a good advert are
The features of a good advert are…….
•
•
•
•
•
Homework – My favourite
advert
• Bring an advert to share with the rest of the class.
• Who do you think the product is aimed at?
• Why do you think it’s effective?
Advertising Media
What methods can a firm use to
advertise?
Above the Line Promotion
Firms must choose advertising media:
• Television
• Cinema
• Newspapers – Local or National
• Magazines
• Radio
• Posters/Billboards
• Leaflets/flyers
• Internet
• Outside Advertising
Types of Promotion
Media Type Advantages
Television
+ Uses power of
moving pictures &
sound
Radio
+ Less expensive than
TV
+ Listeners can be
exposed to ad during
other activities
Disadvantages
- Very expensive
- Message can be missed
due to DVR or channel
surfing
- Audio only
- Lower attention levels
Types of Promotion
Media Type Advantages
Disadvantages
Newspaper
+ Very inexpensive
+ Longer life than TV
and radio
- Often overlooked
- No sound or movement
- Thrown away after a
day
Magazines
+ High-quality color
images
+ Longer life than
newspaper
- Must be submitted
months in advance
- More expensive than
newspaper
- Clutter
Billboards
+ High rate of local
exposure
+ Inexpensive
- Cannot include too
much information
Choice of Media
When choosing an advertising media a firm
must take into account several factors:
• Cost
• Target audience
• Marketing budget
• Size of the market
• Geographical dispersion of the market
• What competitors are doing
• Impact
• Legal constraints
Task
• What advertising media would you use for these
products, and why?
Below the Line Promotion
The use of non-mass media promotional
activities, allowing the business to have
direct control. No commission is paid to
external media agencies.
BTL Promotional Strategies
• Branding – developing a personality or persona
that makes the product or business instantly
recogniseable
• Slogans – catchy memorable phrases to grab
attention
• Logos – linked to branding and a visual symbol to
represent the product or business
• Packaging – should fit with the brand. Bags can
promote – ‘bagvertising’
• Word of mouth – fast and free but can be + or –
• Direct marketing – selling direct to customer with
no intermediaries through telephone, mail, email
• Sales promotions – temporary ways to boost sales
through price reduction, BOGOF, free samples,
competitions. Loyalty rewards for frequent customers
e.g. Starbucks, frequent flyer miles
• Point of sales – promotion at the location where the
customer buys the product e.g. large displays, posters
to try and get customers to buy products they would
not normally buy
• Publicity – promotion by attracting media coverage
but could be + or -
• Sponsorship – offering financial funds and
resources to support an event or another organisation
• Public Relations – gaining positive media coverage
without paying for it – press conference, newspaper
article
Which type of BTL
Promotion?
Publicity
• Information that is provided to the public by the media or
other sources at no cost to the business, such as TV or
print news stories about a business or product.
• Cannot be controlled by the business,
thus it is not always positive
Public Relations (PR)
• Business activities aimed at establishing and
protecting the desired image of an organization.
• PR is concerned with getting good press coverage
without paying for it.
• Businesses hold press conferences or submit press
releases to the news media.
Sales Promotion
• Short-term incentives designed to temporarily
stimulate sales, such as coupons, contests,
sweepstakes, giveaways and free samples.
• Attracts new customers.
Point-of-Sale/Merchandising
• Promotion occurs at the place where
the purchase is made (check-out line,
in-store displays)
Sponsorship
• Business pays to be associated with an event or
organization in return for publicity and/or prime
advertising space
Suggest a promotional strategy for the
following situations... (include above the
line and below the line strategies)
Cadbury want to increase
sales of dark chocolate by
20% in the next 3 years
A car dealership are below their sales
target and need to increase sales this
month
A gardener
wants to attract
more clients in
his local town
M&S want to get rid of the old fashioned
image of their clothing range
Push vs. Pull
Pull promotion
• promotional technique used to stimulate demand for a product (to
pull or attract customers into buying). Includes above-the-line
promotional activities.
Push promotion
• promotional methods that rely on intermediaries, such as retail
stores, to push products to the customers. Includes below-theline promotions such as price reductions.
Promotional Mix
The set of tools that a business can use to
communicate effectively the benefits of
its products or services to its customers
The right blend of ATL and
BTL to achieve:
• Awareness
• Interest
• Desire
• Action
Deciding on the best promotional
mix depends upon:
• COST – is the method cost effective?
• PRODUCT – some products suited to certain
promotion types e.g. films – TV, radio and internet
• PRODUCT LIFE CYCLE – the stage in the cycle will
influence the promotional mix e.g. decline stage may
necessitate sales promotion to shift remaining stock
• LEGISLATION – laws may prevent use of some
methods for certain products e.g ban on all
cigarette promotion in Europe
Task
• Analyse one of our case study companies and
evaluate the ATL and BTL methods of promotion they
use. Refer to the following four elements of the
promotional mix
1. Advertising
2. Personal Selling
3. Public Relations
4. Sales Promotion
• Why do you think they use this mix?
• Do you think it is effective?
• Would you recommend adapting the mix to increase
effectiveness – if so how?
Technology and Promotion
What do you think this refers to?
Promotion and the Internet
• New technologies have created new opportunities
and new approaches for businesses to promote
their products
• Web banners and online search engines are now
often used to promote brands.
• Key technological trends imapcting promotion are:
1. Viral marketing
2. Social media marketing
3. Social networking
Viral Marketing
(P2P marketing)
• Similar to word of mouth marketing but using
technology – ‘word of mouse’
• Rapid spread of information about a product or
service through use of internet tools e.g. email,
messaging, social networking
Social Media Marketing
• The practice of gaining internet traffic through
social media websites such as facebook, twitter,
youtube…
• The strategy aims to create engaging content that
encourages people to share with others (usually
friends) through blogs, websites, instant messaging.
• Trusted third party source
• Can spread very quickly
• Very cost effective
• BUT no control over what is written or shared about
the product/brand  false info could spread (PR
disaster)
Social Networking
• Any platform used by individuals to build social
relationships between people – Google+, Instagram,
Facebook, LinkedIn, Twitter
• Usually free for the user
• Funded by selling online advertising space
• Cost per click basis
• More effective tool for monitoring effectiveness of
promotional campaign as ‘traffic’ can be monitored
as well as sales per click for example.
Guerrilla Marketing
(stealth marketing)
Achieving conventional goals such as
profit and joy through the use of
unconventional methods.
OR
Grabbing the attention of customers
through unusual or shocking techniques
Advantages
• Cost effective – useful strategy for business with
small marketing budget. (80:20 rule)
• Larger businesses could adopt this cheaper
strategy and reduce costs  higher profit margins
• Can lead to viral marketing and rapidly grab the
attention of many people at no extra cost
• Can promote creativity and act as a way of
differentiating from competition
Disadvantages
• Does not always reach the right target market due
to scattershot approach  little or no impact on
sales
• Can be invasive and add to clutter leaving potential
customers annoyed rather than excited
• Can be deceptive, confusing or distasteful resulting
in negative publicity
• Opportunity cost can be large – the time taken to
develop original campaign vs the sales generated
• Can go wrong – payment of fines and negative
reputation
Promotion – CUEGIS?
CONCEPT
CHANGE
CULTURE
ETHICS
GLOBALISATION
INNOVATION
STRAETEGY
RELEVANCE TO PROMOTION THEORY
Quiz Time