Lesson Objective: by the end of the lesson, students should be able to:
- Explain promotion
- Distinguish between the various forms of promotion.
- State the functions of promotion in marketing.
MEANING OF PROMOTION
Promotion is an element of marketing mix. It consist of all communication efforts aimed at generating sales and or building a favourable attitude for an organiSation and its goods or services.
Promotion is no longer enough for a
business to have great products. Lots of businesses have this tool. Customers need to know a lot about the product and be persuaded to buy. That is the role of promotion.
Promotion is all about communication. Because promotion is the way in which business makes its products known to the customers, both current and potential.
Communication plays an important role marketing. Communication perform the function of informing the target customne about the nature and type of the firm’s product and services, their unique benefits, uses and features as well as the price and place at which these products can be purchased. The nature of marketing communication is persuasive since it aims at influencing the consumer
behaviour in favour of the firm’s offering.
These persuasive communications are
commonly called “Promotion“. In the
context of marketing, promotion refers to the applied communication used by marketers to exchange persuasive messages and information between the firm and its various prospective customers and general public.
Marketing communication is the essential element of the promotion function of marketing. Effective marketing depends on effective management of its promotion
function. Effective promotion comes
through effective communication.
FORMS OF PROMOTION
The following are the forms of promotion:
1. Price-off: One of the most powerful
sales promotion techniques is the short-term price reduction. Lowering a product’s selling price can have an immediate impact on demand, though marketers must exercise caution since the frequent use of this technique can lead customers to anticipate the reduction and, consequently, withhold purchase until the price reduction occurs again.
2. Coupons: Coupons are sales
promotions that usually offer a discounted price to consumer, which encourages trial.
Most consumers are quite familiar With this form of sales promotion, which offers purchasers price savings or other incentives when the coupon is redeemed at the time of purchase. Coupons are short-term in nature since most (not all) carry an expiration date after which the value may not be received. Also, coupons require consumer involvement in order for value to be realized. In most cases involvement consists of the consumer making an effort to obtain the coupon (e.g., clip from newspaper) and then presenting it at the time of purchase.
FORMATS FOR DELIVERING COUPONS
Coupons are used widely by marketers across many retail industries and to reach consumers in a number of different delivery formats including:
(a) Free-Standing Inserts (FSI): Here coupon placement Occurs loosely (i.e., inserted) within media, such as newspapers and direct mail, and may or may not require the customer to cut away from other material in order to use.
(b) Cross-Product: This consists of
coupons placed within or on other
products. Often a marketer will use
this method to promote one product
by placing the coupon inside another major selling product. For example, a pharmaceutical company may imprint a coupon for a cough remedy on the box of a pain medication. Also, this delivery approach is used when two marketers have struck a cross
promotion arrangement where each
agrees to undertake certain
marketing activity for the other.
c. Printout: A delivery method that is
common in many food stores is to
present coupons to a customer at the
conclusion of the purchasing process. These coupons, which are often printed on the spot, are intended to be used for a future purchase and not for the current purchase which triggered the printing.
(d) Product Display: Some coupons
are nearly impossible for customers
to miss as they are located in close
proximity to the product. In some
instances coupons may be contained within a coupon dispenser fastened to the shelf holding the product while in other cases coupons may be attached to a special display where customers
can remove them.
e. Internet: Several specialized websites, Such as HotCoupons.com, and even some manufacturer’s sites, allow customers to prat out coupons.
These coupons are often the same
ones appearing in other media, such
as newspapers or direct mail. In
other cases, coupons may be sent
via email, though to be effective the customer’s email program must be able to receive HTML email (and not text only) in order to maintain required design elements (e.g., bar code).
f. Electronic: The Internet is also seeing the emergence of new non printable coupons redeemable through website purchases. These electronic coupons are redeemed when the customer enters a designated coupon code during the purchase process.
3. Rebates: Rebates are partial refunds that are offered by the manufacturers. Often manufacturers will use mail-in rebates as incentives for purchasing. The consumer must purchase the product at full price and then fill out paper work and mail in the receipt in order to receive some money back. Rebate programs allow marketers to promote a company’s product at a reduced post-rebate price, offering a substantial savings to its customers, but also requiring that a set of conditions be met to qualify.
4. Sampling: Companies will often
send or hand out samples of products in order to attract customers who may not have purchased their products otherwise. Beverage companies may target college students and hand out soft drinks on campuses, or a food company may set up a stand in a grocery store so that consumers can sample their new chips.
5. Trade-in-promotions: This allow
consumers to obtain lower prices by
exchanging something the customer
possess, such as an older product that the new purchase will replace. While the idea of gaining price breaks for trading in another product is most frequently seen with automobile sales, such promotions are used in other industries, such as computers and golf equipment, where the customer’s exchanged product can be resold by the marketer in order to extract value.
6. Loyalty Programmes: These are sales promotion tool used to encourage and reward repeat purchases by acknowledging each purchase made by a consumer and offering a premium as purchases accumulate. The most popular loyalty programmes today are frequent-flier and frequent-traveler programmes used by airlines, hotels, and car rental services to reward loyal customers.
7. Trade incentives: These are sales
promotions used to motivate those in the marketing channel to support a brand or company. Such incentives are directed at wholesalers, retailers, and a firm’s internal sales staff. Companies use the same basic short-term reward system as a consumer sales promotion to accomplish their objectives.
8. Contests and Sweepstakes:
Consumers are often attracted to
promotions where the potential value
obtained is very high. In these promotions only a few lucky consumers receive the value offered in the promotion. Two types of promotions that offer high value are contests and sweepstakes.
Contests are special promotions awarding value to Winners based on skills they demonstrate compared to others. For instance, a baking company may offer free vacations to winners of a baking contest.
Contest award winners are often
determined by a panel of judges.
Sweepstakes or drawings are not skill
based but rather based on luck. Winners are determined by random selection. In some cases the chances of winning may be higher for those who make a purchase if entry into the Sweepstake occurs automatically when a purchase is made.
But in most cases, anyone is free to enter without the requirement to make a purchase.
A sub-set of both contests and sweepstakes are games, which come in a variety of formats such as scratch-off cards and collection of game pieces. Unlike contests and sweepstakes, which may not require
purchase, to participate in a game
customers may be required to make a
purchase. In the United states and other countries, where eligibility is based on purchase, games may be subjected to rigid legal controls and may actually fall under that category of lotteries, which are tightly controlled.
9. Point of Purchase (POP) display:
These are specially designed materials
intended for placement in retail stores.
These displays allow products to be
prominently presented, often in high traffic areas, and thereby increase the probability of the product to standout. POP displays come in many styles, though the most popular ones are those that allow a product to stand alone, such as in the middle of a
store aisle or sit at the end of an aisle (i.e. end-cap) where it will be exposed to neavy customer traffic.
For channel partners, POP displays can result in significant sales increases compared to sales levels in a normal shelf position. Also, many marketers will lower the per-unit cost of products in the POP display as an incentive for retailers to agree to include the display in their stores.
FUNCTIONS OF PROMOTION
Communicating information: The job of marketing is to identify consumer wants and then satisfy these wants with the right kind of products, at the
right place and at the right price. The
purpose of promotion in the marketing function is to convey to customers about the features of the product and how it will satisty consumer wants or any other relevant information needed by consumers
to affect sales. For example, if a
refrigerator manufacturer is planning to offer off-season discount, it is essential to will not be beneficial to either the consumer or the manufacture. Promotion is, thus, an essential part of the marketing function as it is purely communication.
Promotion is persuasive Communication: In any free enterprise system where firms develop and offer a wide range of new and better products, they are full of messages and distractions of all sorts.
Consumer often have to select the products from among a wide range of competing products. As consumers do not have time and energy to compare the competing products physically, they turn to advertisements for product information.
3. Promotion serves as a reminder:
Consider a customer who regularly buys Colgate Toothpaste or Lux Soap. Do marketers of Colgate Toothpaste or Lux Soap advertise to appeal to such customers? The answer is yes, because even the most loyal customers must be reminded that the product has served them well over the years and about the features that make the product attractive. This is
more so in an environment where competitors consistently attempt to attract the customers of competing brands with their own informative and persuasive message. Thus, in addition to informing and persuading, another important purpose of promotion is reminding customers. This is why even the manufacturers of well established products like Colgate, Lux,. Surf, Nescafe and Lifebuoy also advertise quite extensively to sustain customers preference for these products.
marketer will make his product more
attractive just before a price increase. With a more attractive product, the demand will maintain its elasticity even when the price or sales quantity drop a little.
1. What is promotion?
2. Explain the following forms of promotion:
- Trade-in promotions
- Loyalty Programmes
3. State five functions of promotion.
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