LO – to understand and be able to explain the role of Promotion

The British International School Shanghai

So what is promotion?

List your ideas

Promotion refers to all the ways of spreading information about a product, brand or company

Advertising on radio, TV, cinema, newspapers, internet

Sponsoring events, sales promotion, merchandising, trade shows and PR – all these combined is the Promotional Mix

4 key parts of the Promotional Mix Advertising Sales promotion Public relations Personal Selling

You must get the mix right!

The pipeline…

INTO the pipeline refers to: Methods used to sell into the

distribution system Aimed at wholesalers and retailers NOT

final customers E.g Dealer loaders = 20 for the price of

10, display units, dealer competitions, extended credit, sale-or-return etc

All types of promotion aimed at the distributors of your product – NOT the consumer…

Promotion OUT of the pipeline…These help in promoting and selling to the final

customer Free samples Trial packs Coupon offers Price reductions Competitions Demonstrations Point of sale materials

All the key methods of promotion aimed at the end user

The 4 forms of promotion

The following are the 4 main ways businesses promote:

1 Sales promotion

Designed to increase sales through media and non-media methods, specifically in the short term.

(if it was a long term drop in price it would be a pricing strategy, not a promotional technique)

BOGOF – buy one, get one free, 3 for 2 etc Coupons/vouchers/gift cards/points etc Point of sale displays Competitions Free gifts or samples

2 Personal selling

Oral communication (often face to face) where the aim is to make a sale.

Initially the seller will try and build a relationship by looking for what the customer needs

They will ‘sell’ (talk about) the benefits of the product that meet those needs/wants

The final stage is to ‘close’ the sale – the seller must ‘ask for the order’

3 Public relations

Managing the flow of information from the business to its ‘public’ in order to build the reputation of a company and its brands

Any activity which does this is termed PR Publicising a charity event Informing customers about a new product Advertising to show the company in a

positive light Sponsorship

4 Advertising

Widely used form of above the line promotion

Can be done via the following media: TV, radio, internet, posters, newspapers,

billboards, leaflets, flyers, digital billboards (Times Sq.)

Aims to get attention and make consumers aware of your products, demonstrating how good they are

It can be used to ‘remind’ customers

Above and below the line ADVERTISING!

In a nutshell, ATL promotions are tailored for a mass audience BTL promotions are targeted at individuals according to needs or

preferences. While ATL promotions can establish brand identity, BTL can

actually lead to a sale. ATL promotions are also difficult to measure well, while BTL promotions are highly measurable, giving marketers valuable insights into their return-on-investment.

Promotional activities carried out through mass media, such as television, radio and newspaper, are classed as "above the line" promotion. "Below the line" promotion refers to forms of non-media communication or advertising, and has become increasingly important in the communications mix of many companies, not only those involved in fast moving consumer goods, but also for industrial goods.

"Through the line" refers to an advertising strategy involving both above and below the line communications in which one form of advertising points the target to another form of advertising thereby crossing the "line".

1 What is Promotion?

Promotion may be defined as:a communication with actual or potential

customersb the application of advertising to increase

salesc the attempt to develop the public image of

the businessd the method of getting goods to market

2 Which of the following is an example of above-the-line promotion?

a sales promotionb direct mailingc advertising in a magazined sponsorship

3 Which of the following is not an example of a sales promotion?

a money-off couponsb BOGOFc point-of-sale displayd personal selling

4 A large firm selling industrial goods is least likely to use which of the following forms of promotion?

a trade fairsb advertising in specialist

magazinesc personal sellingd TV commercials

5 In the marketing mix, place is concerned with:

a channels of distributionb location of manufacturing activityc niche marketingd mass marketing

6 Which of the following is the most likely disadvantage of direct selling?a The intermediary takes a profit mark-up.b The producer loses control over the

marketing mix.c Storage and stock costs have to be paid

for by the producer.d The producer has delivery costs to the

retailer.

7 Viral marketing includes:

a the use of sms text messagesb direct selling to the consumerc sponsorshipd the use of intermediaries to transfer the

good to a wider audience.

Answers 1 to 3

1 Promotion is not just about advertising; other techniques include direct selling and

sponsorship. Promotion may be summed up as the firm’s attempt to communicate with actual or potential customers.

Correct answer: a

2 Above-the-line promotion involves advertising through the media.

Correct answer: c

3 Sales promotion is the use of short-term incentives to purchase.Correct answer: d

Answers 4 to 7

4 A firm selling industrial goods needs to choose promotional methods to communicate with customers – other businesses. TV commercials are unlikely to represent an effective form of promotion to reach business customers. TV is primarily used for consumer goods and services.

Correct answer: d5 Place is often confused as relating to location. In marketing-mix terms, it is

about the channels of distribution that a firm uses.Correct answer: a

6 Selling directly to the consumer means that the manufacturer will have to store, stock and pay for the associated costs. Where intermediaries are used, then some of the cost for stockholding passes to the intermediary.

Correct answer: c7 Viral marketing is a recent development in marketing and involves the use

of marketing techniques that make use of social networks. The aim is for a marketing message to be spread, rather like a virus, from person to person. Examples of viral promotions include the use of video clips and text messages. The film Cloverfield made much use of viral marketing to create interest in its release.

Correct answer: a

PLACE - Distribution

This P makes products available to customers where and when they want them

Up 20% of production costs can be taken up with freight charges Moving raw materials to the producer Transporting finished goods

The distribution channel is the means by which the organisation and the customer are brought together at a certain place and time to buy and sell goods In a shop On the internet TV shopping

Organisation to Customer and what goes in between… Manufacturers – make the product Wholesalers – stores in bulk to sell to retailers Retailers – sell to the end customers Channels:

A – Manufacturer – consumer B – Manufacturer – company warehouse -

company shops – customer C – Manufacturer – wholesaler – retailer –

customer D – Manufacturer – retailer – customer E – Manufacturer – E-tailers

CASESTUDYDistribution can be expensive internationally: the longer the supply chain, greater the cost. Coca-Cola’s 4th biggest market is China, one day, possibly the largest.

1. Why would Coca-Cola want to set up a bottling plant in China rather than export bottles of Coca-Cola to China?

2. Illustrate how the supply chain was shortened when Coca-Cola set up its own bottling plants in China

In the 1970’s China had one brand of soft drink, distributed nationally. It was difficult for foreign companies to enter the market. Coca-Cola started by exporting to China and selling in retail outlets such as hotels. Over time, they developed a relationship with the Chinese government. Bottling plants were set up that were owned by the government. The next stage was to set up a joint venture bottling plant, owned by Coca-Cola and the government. Eventually, Coca-Cola was allowed its own bottling plants. This way the company could produce cheaply and use local supplies or raw materials. By 2008 Coca-Cola had 40 bottling plants in the country. It now produces tea, coffee and bottled water, as well as Coca-Cola itself and many other soda drinks.

Mark, Jo, Danny, Simon, Pierre, Hailey, Nadine & Mel