Promotion mix

promotion or communication

1. Promotion Mix 1

2. Meaning Modern marketing calls for more than just developing a good product, pricing it attractively, and making it available to the target market. Despite of these functions marketers must communicate their consumers about the product, price and its availability. Matching the specific needs and wants of the buyers, putting price on the product and making product available to the market only cannot help organizations achieve their objectives of profit unless buyers are communicated about the product, its price and availability. All the activities of an organization associated with communicating about its product, price and availability is promotion. Promotion is the component or element of marketing mix that is associated with informing, persuading and reminding the market about the product and offers, price, and availability which directly or indirectly affect the consumer behavior and organizational sales. According to Philip Kotler :-" Promotion includes all the activities the company undertakes to communicate and promote its products to the target market ". promotion is a tool used by company in order to communicate products' features, quality, prices, ingredients, design, utility, benefits and so on to the actual and potential customers and channel members. It consists of advertising, personal selling, publicity, sales promotion and public relation function. These tools are used to increase sales, build brand value and recognition, strengthen market positioning, and lunch new products . 2

3. Promotion Mix A company’s total marketing communication mix – also called as promotion mix consists of the specific blend of advertising, sales promotion, public relation, personal selling, and direct marketing tool that the company uses to pursue its advertising and marketing objectives. Advertising: any paid form of non-personal presentation and promotion of ideas, goods or services by and identified sponsor. Sales promotion : Short term in incentives to encourage the purchase or sale of a product or service. Public relations: building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image and h andling or heading off unfavorable rumors, stories and events. Personal selling: personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships. Direct marketing: direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships through the use of telephone, mail, fax, e-mail, internet and other tools to communicate, directly with specific consumers. 3

4. Factors Affecting Determination of promotion Mix Promotion Objective Promotion Budget Nature of Market Nature of Product Product Life Cycle Promotion Strategy (push, pull, interpersonal, Mass communication) 4

5. Promotion Objective For clear information objective – Advertisement and propagation For assurance objective – Personal Selling and Advertisement For order/demand objective – Personal selling and Sales promotion For reminding objective - Advertisements Nature of Market Small Market – One way method/Personal selling Big market – More than one medium Consumer Market – Advertisement and Sales promotion Industrial Market- Personal sales and Promotional Sale 5

6. Nature of Product For Consumer goods – Advertisement For Industrial goods- Personal selling For low priced goods –Advertisement and Sale promotional For high priced goods-Personal Selling and Local advertisement For Special goods – Personal selling and propagation Product life cycle @ Introduction stage –Advertisement and propagation @Growth Stage-Advertisement @Maturity- Rapid Advertisement @Decline – Personal selling, Sales Promotion and Propagation 6

7. Advertisement 7

8. 8

9. Advertising/ Advertisement Advertising is nothing but a paid form of non-personal presentation or promotion of ideas, goods or services by an identified sponsor with a view to disseminate information concerning an idea, product or service . This is a powerful element of the promotion mix. Essentially advertising means spreading of information about the characteristics of the product to the prospective customers with a view to sell the product or increase the sales volume. 9

10. The main features of advertise are as under: It is directed towards increasing the sales of business. Advertising is a paid form of publicity It is non-personal. They are directed at a mass audience and nor at the individual as is in the case of personal selling. Advertisement are identifiable with their sponsor of originator which is not always the case with publicity or propaganda. 10

11. Objective / Functions of advertising Preparing Ground for New Product New product needs introduction because potential customers have never used such product earlier and the advertisement prepare a ground for that new product. Creation of Demand The main objective of the advertisement is to create a favorable climate for maintaining of improving sales. Customers are to be reminded about the product and the brand. It may induce new customers to buy the product by informing them its qualities since it is possible that some of the customers may change their brands. Facing the Competition Another important objective of the advertisement is to face to competition. Under competitive conditions, advertisement helps to build up brand image and brand loyalty and when customers have developed brand loyalty, becomes difficult for the middlemen to change it. Creating or Enhancing Goodwill:  Large scale advertising is often undertaken with the objective of creating or enhancing the goodwill of the advertising company. This, in turn, increases the market receptiveness of the company’s product and helps the salesmen to win customers easily. 11

12. Objective / Functions of advertising Informing the Changes to the Customers Whenever changes are made in the prices, channels of distribution or in the product by way of any improvement in quality, size, weight, brand, packing, etc., they must be informed to the public by the producer through advertisement. Neutralizing Competitor’s Advertising Advertising is unavoidable to complete with or neutralize competitor’s advertising. When competitors are adopting intensive advertising as their promotional strategy, it is reasonable to follow similar practices to neutralize their effects. In such cases, it is essential for the manufacturer to create a different image of his product. Barring New Entrants From the advertiser’s point of view, a strongly built image through long advertising helps to keep new entrants away. The advertisement builds up a certain monopoly are for the product in which new entrants find it difficult to enter. In short, advertising aims at benefiting the producer, educating the consumer and supplementing the salesmen. Above all it is a link between the producer and the consumer. 12

13. Types of Advertising 13

14. Types of advertising Print Advertising -  The print media has been used for advertising since long. The newspapers and magazines are quite popular modes of advertising for different companies all over the world. Using the print media, the companies can also promote their products through brochures and fliers. The newspaper and magazines sell the advertising space and the cost depends on several factors. The quantity of space, the page of the publication, and the type of paper decide the cost of the advertisement. So an ad on the front page would be costlier than on inside pages. Similarly an ad in the glossy supplement of the paper would be more expensive than in a mediocre quality paper. Broadcast Advertising -  This type of advertising is very popular all around the world. It consists of television, radio, or Internet advertising. The ads on the television have a large audience and are very popular. The cost of the advertisement depends on the length of the ad and the time at which the ad would be appearing. For example, the prime time ads would be more costly than the regular ones. Radio advertising is not what it used to be after the advent of television and Internet, but still there is specific audience for the radio ads too. The radio jingles are quite popular in sections of society and help to sell the products . 14

15. Types of advertising Outdoor Advertising -  Outdoor advertising makes use of different tools to gain customer’s attention. The billboards, kiosks, and events and tradeshows are an effective way to convey the message of the company. The billboards are present all around the city but the content should be such that it attracts the attention of the customer. The kiosks are an easy outlet of the products and serve as information outlets for the people too. Organizing events such as trade fairs and exhibitions for promotion of the product or service also in a way advertises the product. Therefore, outdoor advertising is an effective advertising tool. Covert Advertising -  This is a unique way of advertising in which the product or the message is subtly included in a movie or TV serial . There is no actual ad, just the mention of the product in the movie. For example, Tom Cruise used the Nokia phone in the movie Minority Report. Public Service Advertising -  As evident from the title itself, such advertising is for the public causes . There are a host of important matters such as AIDS, political integrity, energy conservation, illiteracy, poverty and so on all of which need more awareness as far as general public is concerned. This type of advertising has gained much importance in recent times and is an effective tool to convey the message. 15

16. Advertising Budget “ Money does matter a lot.” Advertising Budget is the amount of money which can be or has to be spent on advertising of the product to promote it, reach the target consumers and make the sales chart go on the upper side and give reasonable profits to the company. Before finalizing the advertising budget of an organization or a company, one has to take a look on the favorable and unfavorable market conditions which will have an impact on the advertising budget. The market conditions to watch out for are as follows:  Frequency of the advertisement  Competition and Clutter  Market Share of the Product  Product Life Cycle Stage 16

17. Advertising Budget considerations Frequency of the Advertisement This means the number of times advertise has been shown with the description of the product or service, in the granted time slots. So here, if any company needs more advertising frequency for its product, then the company will have to increase its advertising budget. Competition and Clutter The companies may have many competitors for its product. And also there are plenty of advertisements shown which is called clutter. The company has to then increase their advertising budget. Market Share To get a good market share in comparison to their competitors, the company should have a better product in terms of quality, uniqueness, demand and catchy advertisements with resultant response of the customers. All this is possible if the advertisement budget is high. Product Life Cycle Stage If the company is a newcomer or if the product is on its introduction stage, then the company has to keep the budget high to make place in the market with the existing players and to have frequent advertisements. As the time goes on and product becomes older, the advertising budget can come down as then the product doesn’t need frequent advertising. 17

18. Methods for setting Advertising Budget Percentage Of Sales:  In this method, the budget is decided on the basis of the sales of the product from previous year records or from the predicted future sales. This is a pure prediction based method and best applicable to the companies which have fixed annual sales. But if in case there is a requirement for more promotional activities then this method has a disadvantage because there will be decrease in advertisements as the budget is fixed. Affordability:  this method is generally used by the small companies . Only the companies which have funds and can afford advertising opt for this method. The companies can go for advertising at any time in whole year whenever they have money to spend. The amount spent also varies from time to time as per the advertisements takes place. Best guess:  This method is basically for newcomers who have just entered the market and they have no knowledge or say they are not aware of how the market is and how much to spend on advertising. Thus, this method is applied by the higher level executives of the company as they are the only experienced people. 18

19. Advertising Media Newspapers Advertisers can choose from a wide range of different types of newspapers, including local, regional or national titles published in daily, evening, weekly or Sunday editions. Newspapers target different readerships with a mix of content, often including sports, entertainment, business, fashion and politics in addition to local, national or world news. Advertisers can buy different sizes of advertising space, from small classified ads with text only, to display ads featuring text, photographs, illustrations and graphics in sizes up to a full page or even a double-page spread . Magazines Magazines offer advertisers extensive choices of readership and frequency. Consumer magazines cover a wide range of interests, including sport, hobbies, fashion, health, current affairs and local topics. Many business and trade magazines provide coverage of specific industries, such as finance or electronics. Others cover cross-industry topics, such as communications or human resources, while still others focus on job-specific areas, such as publications for executives, marketing professionals or engineers. Publishing frequency is typically weekly, monthly or quarterly. As with newspapers, advertisers can take advertising spaces from classified ads to full page ads in black and white or color. 19

20. Advertising Media Billboards and Posters Advertising on billboards and posters gives advertisers the opportunity to reach consumers on the move. Putting posters in retail malls, for example, helps advertisers reach consumers close to the point of purchase. Posters or billboards in train stations, airports or busy town centers have the potential to reach large groups of consumers. Advertisers can change the messages on billboards and posters at a frequency of their choice. Direct Mail Advertisers use direct mail to reach smaller target audiences or selected prospects. Direct mail often take the form of a letter, brochure or flyer sent via the postal service. Advertisers can compile their own list of prospects and customers for the mailing, or rent a mailing list from a specialist firm. Active media Active media for advertisement includes TV and Radio. These media are more interactive to the target audience. It can support audio and video effect in advertisement. But cost more in terms of expenses. 20

21. Sales promotion 21

22. An extra incentive to buy A tool to speed up sales An e xtra incentive to buy A tool to speed up sales Targeted to different parties Sales Promotion “A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.”

23. Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus Packs Price-off deals Frequency programs Cooperative advertising Trade allowances Training programs Contests, dealer incentives Point-of-purchase displays Trade shows Sales Promotion Tools Consumer-Oriented Trade-Oriented Event marketing Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus packs Price-off deals Loyalty programs Trade allowances Training programs Contests, dealer incentives Point-of-purchase displays Trade shows Event marketing

24. FREE SAMPLES These are distributed to attract consumers to try out a new product and thereby create new customers. Some businessmen distribute samples among selected persons in order to popularize the product. Common examples - shampoo, washing powder, coffee powder, etc.

25. Free Premiums : Only require purchase of the product Self-liquidating Premiums : require consumer to pay some or all of the cost of the premium Free Premiums : Only require purchase of the product Premium : an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers Premiums Two Types of Premiums

26. COUPONS Sometimes , coupons are issued by manufacturers either in the packet of a product or through an advertisement printed in the newspaper or magazine or through mail. These coupons can be presented to the retailer while buying the product. The holder of the coupon gets the product at a discount. Best example for this is coupons distributed by the pizza restaurants like dominos, pizza hut, etc

27. Contests and Sweepstakes Contest: a promotion where consumers compete for prizes or money on the basis of skills or ability. Winners are determined by judging entries or ascertaining which entry comes closes to some predetermined criteria Sweepstakes/games: a promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are chosen by random selection from a pool of entries or generation of a number to match those held by game entrants.

28. BONUS REWARDS/ POINTS Certain retail shops will have a scheme which will require the customer to be a member of the shop and to acquire membership card for the same. And every time the customer makes a purchase bonus points are added to the card and at the end of the year gifts are given for the points earned. Example – coffee day bonus points card, Moore super markets, R eliance fresh.

29. MONEY BACK OFFER/ REFUNDS Under this scheme customers are given assurance that full value of the product will be returned to them if they are not satisfied after using the product . When customers doubt the quality or reliability of your product or service, offer a money-back guarantee. Give a detailed explanation of eligible returns and refunds available for customer reference . Eg : T elebrands shopping

30. PRICE OFF DEALS / DISCOUNTS

31. Exchange offer Bonus offer Price-off offer Scratch and win offer

32. TRADE PROMOTION

33. What is Trade Promotion? Marketing or Promotional activities undertaken to promote a new or existing product, increase sales of existing products, expand market share or create brand awareness among the distribution channels wholesalers, retailers, etc . The word Trade Promotion encompasses virtually all forms of Product Promotion and Demand Creation. Trade shows, special pricing, sales incentives, discounted or free display fixtures, demonstrations and freebies such as tickets to sporting events, movies or novelties (pens, paperweights, calculators), etc are few examples of promotional activities.

34. Trade Sales Promotion Objectives of Trade Sales Promotion: Gain/maintain distribution Influence resellers to promote product Influence resellers to offer price discount Increase reseller inventory Defend against competitors Avoid reduction of normal prices

35. Trade Shows Trade Shows Contests and Incentives Contests and Incentives Trade Allowances Point-of-Purchase Displays Sales Training Programs Cooperative Advertising Tools of Trade-Oriented Promotions Buying Allowances Promotional Allowances Slotting Allowances Buying Allowances Promotional Allowances Trade Allowances Point-of-Purchase Displays Sales Training Programs Slotting Allowances

36. Trade Contests Used to achieve sales targets. Funds known as “spiff money.” Rewards can be prizes or cash. Can be designed for various channel members. Some organizations do not allow trade contests because of possible conflict of interests.

37. TRADE INCENTIVES Cooperative merchandising agreement (CMA) Corporate sales program (CSP) Producing plant allowance (PPA) Back haul allowance (BHA) Cross-dock or Pedal runs Premium or bonus pack

38. TRADE SHOWS Ranks 3rd in B-to-B marketing expenditures. Manufacturers spend huge amounts of money per show .... Largest trade shows all over the world are: International CES ( consumer electronic and technology shows ) The Super Show ( Texas car & vehicle shows ) Miami International Boat Show & Strictly Sail International Housewares Show Mid-America Trucking Show E gs in India are auto expos (last year jan 5 to jan 11 ), vivah mumbai ( 2-4 th august), food fairs etc .

39. Trade Allowances Off-invoice allowance : a per-case rebate paid to retailers for an order. Drop-ship allowance : money paid to retailers who bypass wholesalers or brokers for pre-planned orders. Slotting fees : money paid to retailers to stock a new product. Exit fees : money paid to retailers to remove an item from their inventory