Promotion is the communication methods used to achieve a firm s promotional objectives The promotional mix can be split into 2 groups: Communication

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1 Promotion Promotion is the communication methods used to achieve a firm s promotional objectives The promotional mix can be split into 2 groups: Non Controllable Non Controllable Communication Recommendation Word of mouth People's Perception Controllable Controllable Communication Advertising Sale Promotions Personal Selling Publicity Business Studies Online: Slide 1

2 Promotional Objectives The methods of communication used will be determined by the promotional objectives Possible objectives include: To create product awareness To provide information To generate enquiries To evoke desire for a product To overcome prejudices/perception To remind people of a product s benefits To allay cognitive dissonance e.g. reassure Business Studies Online: Slide 2

3 Promotion This refers to the promotional communication methods used by a firm Promotional activity is usually classed as either above the line or below the line : Above the line promotion gives firms less control over the recipients as it aims at mass markets through independent media such as TV Below the line promotion gives greater control over the recipients allowing them to target particular groups for example through the use of direct marketing Business Studies Online: Slide 3

4 Advertising This involves the use of a media to send a message. It is extremely expensive! There are a number of different media, including: Newspapers (regional and national) Magazines Cinema Billboards (Posters) Radio Television Bus Advertising Taxi Advertising Roundabout Advertising Parking Ticket Advertising Business Studies Online: Slide 4

5 Newspapers National Can cover whole country Reader can refer back Detailed information can be given Relatively cheap Limited use of colour Readers can ignore little to get their interest Local mainly as above but: Good for regional campaigns More expensive per reader Business Studies Online: Slide 5

6 Magazines Can cover whole country Reader can refer back Detailed information can be given Can target specific audiences Competing products advertised as well Advertising space must be booked well in advance Business Studies Online: Slide 6

7 Cinema Good for regional campaigns Limited use of age targeting Increasing audiences Audiences mainly up to 30 years old Message may not be seen often Business Studies Online: Slide 7

8 Billboards Can cover whole country Relatively cheap Can encourage impulse purchases Can be used to reinforce other media Limited information can be given Difficult to measure effectiveness Business Studies Online: Slide 8

9 Radio Can target audience Growing number of stations Can be used for local or national Non visual Message is short lived Listeners may ignore adverts Business Studies Online: Slide 9

10 Television Can cover whole country or specific regions Repeats reinforce the message Detailed information can be given Can target specific audiences Expensive! Message may be short lived Problem of Channel Hopping Business Studies Online: Slide 10

11 Use of Media The most commonly used media are shown below: Share of Display Advertising by Medium (Q3, 2005) Magazines 14.7% Cinema 1.8% Radio 6.8% Newspapers 24.0% TV 42.8% Outdoor 9.9% (Source: RAB) Business Studies Online: Slide 11

12 Selecting the Right Media Advertising is VERY expensive, so it is important to use the right media Firms must consider: Reach The number of people who are exposed to a media schedule at least once during a given time period Frequency The number of times within a time period that a person will be exposed to a media schedule Impact The qualitative value of an exposure through a given media Cost different media have very different costs! Business Studies Online: Slide 12

13 The Cost of Advertising (1) Typical TV costs are ADVERTISING SPONSORSHIP Dayparts Daytime Early Peak Late Peak* Late Night Carlton 0925 Regions 1715 London , close Broad Audience: Transmissions: Adults 2 x 60 min pw Central West 150 Country 550 Wales and 400 the West Credits Available: 1 x 15 front credit 6 x 5 break bumpers 1 x 10 end credit Sponsorship Cost: 40,000 per show Scottish *costs exclude Coronation Street (All sources: Carlton Media) Business Studies Online: Slide 13

14 The Cost of Advertising (2) Typical national newspaper costs are: Newspaper: The Sun News of the World National Full Page: Mono (1 day): 39,856 + VAT 40,598 + VAT Colour (1 day): 49,396 + VAT 53,000 + VAT Circulation: 3,612,464 Typical regional newspaper costs are: Newspaper: Mono: Circulation: 177,614 Express & Star (All regions) (Source: News Group Newspapers Ltd) 22 + VAT per single column centimetre (Source: Express & Star) Business Studies Online: Slide 14

15 The Cost of Advertising (3) Typical cinema costs are: Package Type: Release Type: National Film Release Blockbuster Example: Mission Impossible 3 6 week Cost: 104,231 No. of Cinemas: Approx 115 Typical poster costs are: (Source: Pearl & Dean) Package Type: National 48 Sheet Number of panels: week Cost: 325,000 + VAT (Source: J C Decaux) Business Studies Online: Slide 15

16 The Cost of Advertising (4) Typical parking ticket costs are: 12 per 1000 tickets (Source: adverticket.com) Typical taxi advertising costs are: Package Type: National Number of taxis: Month Cost: 554,400 (Source:taximedia.com) Business Studies Online: Slide 16

17 Sales Promotions Sales promotions can be divided into 2 broad areas: Promotions Into The Pipeline These are promotions aimed at those involved in distributing a product, e.g. retailers Promotions Out of The Pipeline These are promotions aimed at end users, usually to encourage them to make a purchase Business Studies Online: Slide 17

18 Promotions Into the Pipeline There are a number of these: Dealer Loaders eg 4 free packs in a case of crisps Dealer competitions eg prizes to most successful dealers Promotional gifts eg diaries, alcohol to influence decisions Point of Sale (POS) eg provide displays or posters Publishing dealers names eg Available from. Extended credit encourages them to stock goods Sale or return reduces risk of being left with surplus stock Staff training where manufacturer provides training Trade Exhibitions used to demonstrate products Business Studies Online: Slide 18

19 Promotions Out of the Pipeline There are a number of these: Bonus Packs offer more for the same price eg 10% extra free Coupons money off Sample Packs free to encourage people to try Trial Packs sold cheaply to encourage people to try Price Reductions expensive since existing customers pay less Premium Offers otherwise known as BOGOFF Competitions to arouse interest Loyalty Cards to encourage loyalty! Charity Promotions good publicity, popular with youngsters Demonstrations at POS, but often expensive POS Displays designed to attract attention Merchandising positioning products on shelves Sponsorship common in sport and increasingly in TV Business Studies Online: Slide 19

20 The Effects of Sales Promotions There are many possible effects, but the main ones are: Increased SHORT TERM sales Most have little impact on brand loyalty Often will not increase market size, but can be used to affect market shares A good tool to inject new life into a brand Business Studies Online: Slide 20

21 Personal Selling This encompasses direct marketing which involves: Selling door to door Although this is still used, it is declining in popularity with businesses. It is commonly used by companies including: Avon Kleeneze Double Glazing firms Direct mail A growing part of marketing Nearly 2.5 billion was spent on direct mail in 2004 Internet A new area which has grown very quickly over a short space of time Business Studies Online: Slide 21

22 Using Direct Marketing If a firm decides to use direct marketing it must: PREPARE sales staff (whether telesales or door to door) must be trained and know what they are selling PROSPECT identify interested customers, otherwise resources will be wasted on sending junk mail PRESENT product must be made appealing, whether selling door to door or through direct mail Business Studies Online: Slide 22

23 Advantages & Disadvantages of Direct Marketing Advantages include: It allows direct communication with customers Can cut costs, and improve services (eg Direct Line) Can target customers accurately Disadvantages include: Can be expensive if response rates are low Can be easily ignored Can annoy and alienate customers Business Studies Online: Slide 23

24 Publicity (Public Relations) Publicity (PR) can be described as: The art of arranging the truth so that people like you As such it involves converting negative feelings into positive ones: Negative Hostility Prejudice Apathy Ignorance Positive Sympathy Acceptance Interest Knowledge Business Studies Online: Slide 24

25 Methods of PR Publicity is different from the other forms of promotion in that it can not always be controlled! There are a number of ways in which positive publicity can be obtained: Charitable donations / Community relations Hospitality Press releases Visits / Open days Sponsorship Corporate Videos / Flash animations Minor product changes Magazines & Educational services Business Studies Online: Slide 25

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