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PROMOTION

PROMOTION
communication that facilitates exchanges by influencing the audience to accept a product

The basic objectives of promotion are to:

  • inform
  • persuade
  • remind

If you opened a new restaurant, how much business could you expect in the first week without promotion?  If passers-by did not know what was your menu or what were your prices, why would they try your new business?  If you merely put a sign outside advertising your menu and prices, people might then feel more comfortable with visiting you.

However, if you offered a special deal, such as buy one meal and get one free, you might attract even more people by motivating them to try your business.  Although you could not afford to give away too many meals, offering such an incentive at the start might be a good way to attract people who would otherwise not try your restaurant.  In giving away a free meal, the hope is that once you persuade someone to try your product, they will like it and will return many more times in the future.

Many times, promotion neither informs prospective customers of anything they don't already know nor provides any persuasion (attitude change).  Prospective customers who see an ad along the highway that says, "Eat at Joe's" might already know what is on your menu and might already know that they like what you have to offer.  Nonetheless, such a sign reminds people periodically about your business, and maintains it in "top of mind awareness."


PROMOTION MIX
the combination of one or more promotional alternatives:

  • advertising
  • personal selling
  • sales promotion
  • publicity (and public relations


ADVERTISING
any paid form of nonpersonal communication about an organization, good, service, person, or idea by an identified sponsor

PERSONAL SELLING
two way flow of communication between a buyer and seller for the purpose of making sales and building customer relationships

SALES PROMOTION
short term incentives to encourage purchase or sales of a product

PUBLICITY
nonpersonal, indirectly paid presentation about an organization, good, service, person, or idea


PUSH vs. PULL PROMOTIONAL STRATEGIES

Channel Push Strategy
promoting a product only to the next intermediary down the marketing channel

Channel Pull Strategy
promoting a product directly to final consumers to build strong consumer demand that pulls products through the marketing channel


PROMOTION BUDGETING

  • all you can afford
    allocate remaining funds after other needs have been met
    • If I open a new pizza shop, I know that I have to promote heavily at start-up.  Whatever profit I make, I probably should invest this back into promotion for the first few months of operation.

  • incremental
    a percentage is added or subtracted from the prior periodís budget
    • If an ongoing advertising strategy has been working over the years, I might simply add to the budget every year to account for inflation.

  • competitive parity
    budget is set according to competitor actions or industry standards
    • If I ask a bank for a loan to start a pizza shop, the banker won't feel comfortable with an "all you can afford" budget in a marketing plan.  To realistically estimate ongoing promotion costs after initial start up, I could estimate the promotional expenses of competitors by researching their ads in the Yellow Pages, in the newspaper, on the radio, and such.  If they are running successful businesses, then I should probably expect to spend the same on my promotion activities and should report this in my marketing plan (citing competitors as the justification).

  • percentage of sales
    budget is tied to revenues (e.g., commission payments)
    • If my products are promoted by salespeople who are paid commission, then expenses are a function of sales; a budget is set from a sales forecast.

  • objective and task
    budget is based on the cost of activities required to meet some particular goal
    • If I know the typical performance of an average salesperson, then I know how many more salespeople need to be hired in order to achieve any particular level of increase in sales.  If I know the typical response to couponing, then I know how many coupons to distribute and how many will be used in order to achieve some particular level of increase in sales.


LEGAL ENVIRONMENT

  • full disclosure
    requirement that promotion provides information necessary for a prospective buyer to make an informed and safe decision

  • substantiation
    requirement that advertisers must provide evidence for the truth of their claims

  • deceptive advertising
    promotion which has the capacity to deceive a measurable proportion of the public

  • cease and desist order
    ruling that an advertiser must stop a promotion that is deemed to be deceptive

  • corrective advertising
    ruling that an advertiser must conduct an advertising campaign to correct consumer impressions that were formed by previously misleading advertising

  • fine
    a monitary penalty for deceptive promotion


15 JUL 05