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 areThe 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 PromotionMedia Type

Advantages Disadvantages

Television + Uses power of moving pictures & sound

- Very expensive- Message can be missed due to DVR or channel surfing

Radio + Less expensive than TV+ Listeners can be exposed to ad during other activities

- Audio only- Lower attention levels

Types of PromotionMedia 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

M&S want to get rid of the old fashioned image of their clothing range

A gardener wants to attract more clients in his local town

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-the-line 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. Advertising2. Personal Selling3. Public Relations4. 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 marketing2. Social media marketing3. 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 RELEVANCE TO PROMOTION THEORY

CHANGE

CULTURE

ETHICS

GLOBALISATION

INNOVATION

STRAETEGY

Quiz Time