Marketing Mix: Promotion Notes

Marketing Mix: Promotion

• Marketing Mix: Promotion

• MKTG1001 Marketing Principles

• The University of Sydney Business School

Product Life Cycle Strategy

• Product Strategy

  • Launch: Focus on quality and uniqueness.

    • Example: Tesla Model S initial launch.

  • Growth: Improve features and expand product line.

    • Example: Nestlé Kit Kat introduces new flavors.

  • Maturity: Diversify with variations or move into new categories; focus on brand loyalty.

    • Example: Apple iPhone offers multiple models (Pro, Max, SE).

  • Decline: Streamline product line; discontinue weak items.

    • Example: Microsoft phases out older Windows versions.

• Price Strategy

  • Launch: Skimming or penetration pricing.

    • Example: Sony PlayStation 5 launched at a premium price.

  • Growth: Penetration pricing to gain market share.

    • Example: Samsung Galaxy Watch priced to compete with Apple Watch.

  • Maturity: Price matching; may maintain premium pricing; promotional pricing and bundling.

    • Example: McDonald's value meals and combo offers.

  • Decline: Discount pricing to clear inventory.

    • Example: Zara end-of-season clearance sales.

• Distribution Strategy

  • Launch: Selective distribution; build relationships.

    • Example: Dyson products initially sold in premium retailers.

  • Growth: Build more intensive distribution; expand to more channels and regions.

    • Example: Starbucks opens new stores in emerging markets.

  • Maturity: Intensive distribution; maximize availability.

    • Example: Coca-Cola available in supermarkets, vending machines, and restaurants.

  • Decline: Reduce distribution; focus on profitable channels.

    • Example: GoPro reduces retail presence and focuses on online sales.

• Promotion Strategy

  • Launch: Heavy promotion to build awareness and trial.

    • Example: Apple's launch events and teaser ads for new products; Red Bull sampling.

  • Growth: Reduce advertising given growing demand but emphasize brand differentiation.

    • Example: Nike's "Just Do It" campaigns highlighting performance and identity.

  • Maturity: Increase promotion to encourage brand switching, reminder advertising, and loyalty programs.

    • Example: Woolworths Rewards program.

  • Decline: Minimal promotion; focus on loyal customers.

    • Example: Netflix offers retention deals to long-term subscribers.

Integrated Marketing Communications (IMC)

• IMC involves carefully integrating and coordinating the company’s many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands.

Goal of IMC

• Integrate messages/communications across the various promotional tool choices.

Importance of IMC

• Ensures all promotional tools and messages are strategically aligned with the positioning.

• Ensures promotional tools carry a message that is consistently delivered across different media channels.

• Provide media exposure to multiple customer touchpoints to maximize brand awareness.

• Builds brand recognition, trust, and emotional connections with consumers.

Tag Heuer Integrated Marketing Campaign

• Message strategy: "Tag is for adventurous people that don’t crack under pressure."

Promotional Tools

• Marketers communicate with their target audience using a range of promotional tools.

• The promotion mix is the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.

  • Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.

  • Sales promotion is a short-term incentive to encourage the purchase or sale of a product or service.

  • Personal selling is the personal interaction by the firm’s sales force for the purpose of engaging customers, making sales, and building customer relationships.

  • Public relations involves building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

  • Direct and digital marketing involves engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships.

IMC Tools

• TV ads

• Newspaper, magazine ads

• Radio ads

• Internet and search ads

• Comparison sites and directories

• Events

• Sponsorships

• In-store displays

• Sales promotions

• Trade promotions

• Direct email and SMS

• Transit and outdoor ads

• Media releases

• Bloggers and sponsored posts

• YouTubers

• Other Influencers

• Own YouTube channel

• Product placement (TV/movies)

• Sales team

• Newsletters and brochures

• Social media platforms

• SEO

• Frontline staff

• Hospitality

• Telemarketing

• Publicity

• Website

• Own Publications

Promotional Mix Strategies

• Marketers have two broad promotion mix strategies they use:

  1. Push Strategy: A promotional strategy that involves ‘pushing’ the product through the distribution channel to final consumers by targeting intermediaries such as wholesalers, retailers, or distributors. The goal is to encourage these partners to stock and promote the product to customers, using trade promotion tools and personal selling. The producer promotes the product to channel members who, in turn, promote it to final consumers.

  2. Pull Strategy: A promotional strategy in which the producer directs its marketing activities (primarily advertising, online and social media, consumer promotion, other promotional tools) towards final consumers to induce them to buy the product. It’s focused on creating consumer demand so that customers actively seek out the product.

Advertising

• Advertising

Major Advertising Decisions

• Objectives setting

  • Communication objectives

  • Sales objectives

• Budget decisions

  • Affordable approach

  • Percent of sales

  • Competitive parity

  • Objective and task

• Message decisions

  • Message strategy

  • Message execution

• Media decisions

  • Impact and engagement

  • Major media types

  • Specific media vehicles

  • Media timing

• Advertising evaluation

  • Communication impact

  • Sales and profit impact

  • Return on advertising

Setting Advertising Objectives

• An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time.

• Advertising objectives can be classified by their primary purpose, i.e. whether the aim is:

  • to inform (informative advertising)

  • to persuade (persuasive advertising)

  • to remind (reminder advertising).

Possible Advertising Objectives

• Informative advertising

  • Communicating customer value

  • Building a brand and company image

  • Suggesting new uses for a product

  • Informing the market of a price change

  • Telling the market about a new product

  • Describing available services and support

  • Explaining how a product works

  • Correcting false impressions

• Persuasive advertising

  • Building brand preference

  • Encouraging switching to a brand

  • Changing customers' perception of product value

  • Persuading customers to purchase now

  • Persuading customers to receive a sales call

  • Convincing customers to tell others about the brand

• Reminder advertising

  • Maintaining customer relationships

  • Reminding consumers that the product may be needed in the near future

  • Reminding consumers where to buy the product

  • Keeping the brand in customers' minds during off-seasons.

Communication Objective Examples

• To announce the brands repositioning to the [social sport participant].

• To increase brand awareness amongst the target audience from $62\%$ to $85\%$ by end December 2025.

• To raise intention to purchase from $30\%$ to $48\%$ amongst the target audience by end December 2025.

• To increase sales by $8\%$ amongst the target audience by end December 2025.

• To encourage grocery distributors to carry our brand across $70\%$ of its metropolitan stores by end December 2025.

Setting the Advertising Budget

• Affordable Method: Companies using the affordable method set the promotion budget at the level the company can afford. Unfortunately, this method completely ignores the effects of promotion on sales

• Percentage-of-Sales Method: The percentage-of-sales method means that the promotion budget is set at a certain percentage of current or forecasted sales. For example, they may be allocated $5\%$ of sales revenue to invest in promotion mix. Limitation is it views sales as a cause of promotion, rather than as a result

• Competitive-Parity Method: Companies using the competitive-parity method set the promotion budget to match competitors’ outlays.

• Objective-and-Task Method: The objective-and-task method means that the promotion budget is set by defining specific objectives and determining the promotional tasks required to achieve these objectives. The budget is set to cover the costs of these tasks. However, it can be difficult to determine which specific tasks will achieve the stated objectives

Developing the Advertising Strategy

• Advertising strategy consists of two main elements: creating advertising messages and selecting advertising media.

• The goal is to create and manage brand content across a full range of media, whether they are paid, owned, earned or shared.

Creating the Advertising Message

• There are three main steps in creating effective advertising messages:

  • plan a message strategy (what do you want to say to consumers?)

  • develop a compelling creative concept or ‘big idea’ that will bring the message strategy to life in a distinctive and memorable way. (the creative team's interpretation of the message strategy)

  • decide the execution style. (the approach, style, tone and format chosen for executing the message)

Executional Styles

• Slice of life = showing normal/typical people in everyday situations

• Lifestyle = demonstrating how the product is a key part of a particular lifestyle

• Fantasy = an extreme or unusual use of the product

• Mood/image = using moods such as love, peacefulness, excitement, joy, and so on

• Musical = using jingles or something that looks like a musical

• Personality symbol = using a recognizable character, such as Ronald McDonald or a regular spokesperson

• Technical expertise = demonstrating superior products or skills

• Scientific evidence = using scientific information or a recognized expert

• Testimonial or endorsement = using a celebrity or a well-known opinion leader to promote the brand

Creating the Advertising Message Example: Apple

• Campaign: Shot on iPhone

• Message strategy: The best camera is the one you have with you

• Big Idea: Empower everyday people to become creators - Apple turns its users into the stars of the campaign, showcasing their real photos and videos to demonstrate the iPhone capabilities

• Executional style: Slice of Life.

  • It portrays real people in real situations – traveling, celebrating, exploring, and capturing moments with their iPhones.

  • It reflects everyday experiences that viewers can see themselves in, making the product feel accessible and essential

Creating the Advertising Message Example: Coca-Cola

• Campaign: Coke – Happiness Factory (Vending Machine)

• Message strategy: Coca-Cola brings happiness

• Big Idea: There’s a magical world behind every vending machine - Coca-Cola imagines a whimsical, hidden universe inside a vending machine where fantastical creatures work together to deliver a bottle of Coke, turning an everyday moment into something extraordinary.

• Executional style: Fantasy.

  • The ad is set in a completely imaginary world filled with animated characters, surreal landscapes, and magical machines.

  • The fantasy style helps elevate a simple act—buying a Coke—into a mythical adventure, reinforcing the emotional value of the product.

Selecting Advertising Media

• Advertising media refers to the vehicles through which advertising messages are delivered to their intended audiences.

• The main steps in advertising media selection are:

  • deciding on reach and frequency (reach: % of target exposed to ad at least once during a specific time period; frequency: How many times in that period the target may see the message)

  • choosing among major media types (e.g., Magazines, TV, digital, outdoor, radio etc)

  • selecting specific media vehicles (e.g., Vogue Magazine, Instagram etc)

  • deciding on media timing

Main Media Types

IMC: Various Promo Tools

• Advertising and PR sets the scene.

• Sales promotion provides value-adding incentives to buy.

• Trade promotion ensures that the product is displayed advantageously in stores.

• Direct and digital marketing aims to gain subscribers, or to open dialogue and develop an ongoing relationship with potential customers that will bring about a sale or a series of sales transactions sooner rather than later.

• The key point is that there is continuous interaction and not simply episodic one-way communication and purchase activity.

Evaluate the Effectiveness of the IMC Program

• Marketers use a variety of ways to monitor and evaluate the company’s communication efforts.

• Various types of sales promotion are the easiest to evaluate as they often occur over a fixed, short period.

• Advertising has lagged or delayed effects, more difficult to clearly link to sales.

  • Measure brand awareness, recall of product benefits communicated, and image of the brand before and after an ad campaign.

  • Return on investment

Consumer Promotions

• Consumer Promotions

Sales Promotions

• Sales promotion refers to the short-term incentives to encourage purchases or sales of a product or service now.

• Growth in Use of Sales Promotions

  • Product managers are under pressure to increase current sales

  • Companies face more competition

  • Competing brands offer less differentiation.

  • Advertising efficiency has declined due to rising costs, clutter

  • Consumers have become more deal-oriented

Sales Promotions Targets

• Sales promotions are targeted towards:

  • final buyers (consumer promotions)

    • urge short-term customer buying

    • enhance customer brand involvement.

  • retailers and wholesalers (trade promotions)

    • encourage retailers to carry new items and more inventory

    • promote the company’s products.

Major Consumer Promotion Tools

• Samples:

  • Description: Offering free samples to consumers in stores or at events.

  • Advantages: Directly engages consumers and allows them to taste the product before purchasing, which can significantly increase trial rates.

• Discount Coupons:

  • Description: Providing coupons for a discount on products

  • Advantages: Encourages consumers to try the product at a reduced price, making them more likely to trial a new product and share their experience with others. Also used with mature products to stimulate consumer interest and sales.

• Contests & Sweepstakes:

  • Description: Running contests or giveaways on platforms like Instagram or Facebook to give consumers a chance to win something

  • Advantages: Generates buzz and excitement around the product, encourages user-generated content, and increases brand visibility.

• Point of Purchase Promotions:

  • Description: Special displays, point-of-sale promotions, or demonstrations that take place at the point of purchase

  • Advantages: Captures consumer attention at the moment of purchase and can influence impulse buying.

• Cash refunds (or rebates):

  • Description: allows consumers to recover part of the purchase price via mail-ins to the manufacturer.

  • Advantages: Stimulates product trial of new products and purchase of existing products

• Loyalty Program Bonuses:

  • Description: Offering a consumer discount or free product for multiple purchases over time.

  • Advantages: Encourages repeat purchases and builds brand loyalty.

• Price Packs:

  • Description: Offering consumers savings off the regular price of a product. Offer is often printed on the packaging. E.g., two for the price of 1

  • Advantages: Stimulate short term sales

• Premiums:

  • Description: goods offered either for free or at a low price when you purchase a product e.g., toy in a happy meal

  • Advantages: can stimulate trial and repeat purchase and increase short-term sales

Sweepstake McDonalds Monopoly

• An objective focussed on generating excitement and repeat purchase at a chance of winning.

Consumer Promotions - Cautions

• Consumer promotions must be used carefully - The sale promotion must also contribute to the central value proposition.

• Too many promotional offers lead to:

  • Buyer conditioning where consumers expect an offer.

  • If the sales promotion does not contribute to the VP then you run the risk creating confused brand perceptions.

  • Don’t let a sales promotion take the focus off brand image building.

  • Make sure you reconcile short term versus long term planning.

• Sales promotions should be thought of as part of an Integrated Marketing Communications blend in which all the elements convey a consistent message.

Consumer Promotions Contribute to the Brand

• Kellogg’s Special K: Positioned around benefit of: Keeps you looking good.

• Special K is offering a premium; a Pilates video and book. Notice that the offer is consistent with the overall brand promise to women in their 30’s and 40’s who want to get back their old body shape when they were young and trim.

• Expedia: Positioned as an inspiring travel companion that helps you discover unforgettable journeys with ease and confidence.

• They are waiving the booking fee of $50$. Notice how the advertising talks to the experience of what you could do with the $50$ in New York or London etc. The payoff is the discount on the experiences the customer seeks.

Trade Promotions (Push Strategy)

• Trade Promotions

Major Trade Promotion Tools

• Slotting allowances

  • Description: one-time fees that firms must pay on a per store basis to place new products in grocery stores, convenience stores, and most mass merchandise stores.

  • Advantages: Paying slotting allowances help manufactures to make their product more widely available to their target audience.

• Point-of-purchase (POP) display allowances

  • Description: provided as incentives to retailers to display a manufactures product prominently, typically over Provides as incentives to retailers to display a manufactures product prominently, typically over a promotional period. That could be branded POS selling the product benefit; A large blow up of the product; a branded fridge etc. They may have different POS for different distributors. They may tailor the POS to a distributor or provide better POS to higher sellers of their product.

  • Advantages: POP displays offer a variety of benefits, including increasing consumer awareness of products, increasing impulse purchases, reinforcing mass advertising and increase off-shelf merchandising space to further improve product visibility in-store.

• Price-off allowances (also called off-invoice allowances):

  • Description: are simply discounts given to a retailer or wholesaler on items purchased during a certain trade promotion period.

  • Advantages: This could encourage retailer to buy more stock that they can use to fill the POS displays over the promotional period to improve impact, and help getting more prominent shelf space for your product. By example, placed higher on the shelf with more facings. Or even dual shelf space in-store - placed near complimentary products - chocolates near flowers etc.

• Free goods:

  • Description: free extra cases of merchandise given to resellers who buy a certain quantity, or who feature a certain flavor or size.

  • Advantages: Often seen when a new product is launched to encourage the store to stock the new product and to use POS displays to help build awareness and impulse purchases.

• Advertising allowances:

  • Description: compensates retailers for advertising the product in local advertising media or assists with cooperative adverting. This could be used in local newspapers, local TV, flyers, floor ads, shopping cart ads, in-store television or co-operative etc.

  • Advantages: Builds brand awareness for retailer and the brand. Reduces advertising costs for both parties.

• Push money:

  • Description: is often used to motivate the sales force to sell older models, unpopular colors, or just to sell more product or demonstrate a certain item. Push money may take the form of cash bonuses, trips, or prizes.

  • Advantages: Helps clear aged stock when new models are introduced

• Promotional products

  • Include branded items such mugs, clocks, mouse pads, polo shirts, pens and the like that list the name and logo of an organization. Members of the sales force often use promotional products as favors that are given to prospects or existing clients to build awareness or create goodwill.

Advertising Allowances

• Cooperative advertising

  • Paid by the producer to drive traffic and induce purchase in a specific retailer

• Instore floor advertising

  • Coca-Cola is paying for some of McDonalds advertising expenses as a distributor of Coke

Public Relations

• Public Relations

• Public relations (PR) is the communication function that seeks to build good relationships with an organization’s publics including consumers, stockholders and legislators

• Basic goal of PR: Do something good and then talk about it

• When placed successfully, PR messages are more credible than advertising

• They can effectively “earn” free media

• Much harder for smaller brands

• PR is also used in crisis management, to protect the brand

PR Goals and Activities

Personal Selling

• Personal selling

• Good for late in the buying process

• Individualized information with interaction

• Important when an informed decision is made

• Builds personal relationships = customer loyalty

• Can be quite long-term (e.g. B2B)

• Is usually quite expensive

Digital Marketing

• IMC: various promo tools

• Both the new digital and more traditional marketing tools must be blended into a fully integrated marketing communications program.

Common IMC Digital Tools

• Digital marketing refers to the company’s efforts to market products and services and build customer relationships over the internet and cellular networks.

Online Advertising

• Uses digital platforms such as Google, Facebook, Instagram etc. to communicate a message to the target audience

Online Advertising Example

• Native online advertising: Shown through social media platforms but look more like advertorials.

• Native advertising is a type of advertising that matches the form and function of the platform on which it appears; the message seems to be a natural fit to the information customers are seeking. It is often used in social media streams and search ads, and as sponsored stories and blogs.

Social Media Marketing

• Social media networks (web communities of interest) are online social communities – blogs, social networking websites or even virtual worlds – where people socialize or exchange information and opinions.

• They provide companies with the opportunity to increase brand awareness through a combination of paid, owned, earned, and shared promotions.

Augmented Reality Advertising

• Augmented reality ads create a “try before you buy” situation = more informed decisions

• Likely to become quite common for: fashion, cosmetics, furniture

• a further concern for retailing

• Also results in greater engagement and more social sharing = brand awareness, brand connection/likeability

• The Kors ad allowed users to share their AR experience = WOM and new customers

• The sunglasses AR ad resulted in $14\%$ incremental lift in conversions

Volvo - Social Media and Promotion

• Volvo - Social media and promotion

PESO Chart

• Paid Media

  • Social media ads

  • Boosted content

  • Fan acquisition

  • Lead generation

  • Sponsored content

  • Paid publishing

  • Lead generation

• Owned Media

  • Content marketing

  • Videos, webinars

  • Visual Content

  • Audio, podcasts

  • Brand journalism

  • Employee stories

  • Customer stories

• Earned Media

  • Media relations

  • Influencer relations

  • Investor relations

  • Blogger relations

  • Link building

  • Word-of-mouth

• Shared Media

  • Community

  • Community building

  • Engagement

  • Detractors

  • Loyalists

  • Advocates

  • Brand ambassadors

  • User-generated content

Takeaways

• There are many options to choose from when constructing your promotion mix. These range across advertising, sales promotions, personal selling, public relations, and direct/digital tools.

• Then within each of these are many possibilities. For example, within advertising, one can think of many different media forms and within sales promotions one can again think of many different types.

• A key thing to consider in constructing your promotion mix is to first clearly specify your objectives that you want this promotion mix to achieve.

• Ensure all of the elements in your promotion mix operate in an integrated manner in that each element works to deliver the same consistent message across all elements of promotion mix.

• Make sure your overall promotion mix contributes to delivery of your value proposition.

• Focus on both consumer and trade promotions.