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Promotional Decisions

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Business Studies

Once new products and services are developed, they need to be introduced to the right customers. How can businesses make sure that customers know about their new products or services? Through promotion. Let's take a look at the different types of promotion in marketing.

What are promotional decisions?

Promotion refers to the process of making a product or service known to the customer.

Together with product, pricing, and place, it makes up the 4Ps of the marketing mix to help a business achieve its financial goals. Having the right promotional strategy not only enables the company to reach more customers and generate higher sales but also increase customer loyalty and market share.

Promotion decisions refer to the identification of promotional goals as well as resources and tools to achieve those goals.

Promotional decision process

Promotional decisions are broken down into the seven steps:

Seven-step process

Step 1: Defining problems

This step determines the need for a promotional strategy by taking into account the type of product or service to be promoted, the target audience, marketing budget, as well as branding messages.

Step 2: Establishing objectives

After the problems are defined, the next step is to determine the end goal or objectives of your promotional. This step answers the question: What do you promote a product or service for?

Some common promotional goals include:

  • Increasing the brand awareness

  • Bringing more customers onboard

  • Building relationships with existing customers

  • Breaking into a new market segment.

Step 3: Designing promotion mix

During this step, a promotion mix is created. A promotional mix is a combination of promotional strategies to be used in a promotional campaign. Examples include personal selling, email marketing, sales promotion, print ads, and social media advertising.

Step 4: Planning promotion program

In this step, you plan how long the promotional campaign will be carried out and what tools to be used. The budget, rules, and size of the promotion will be taken into account.

Step 5: Pre-testing

After the plan is complete, it's time to test it before implementing it full-scale. During the testing, marketers should pay close attention to the additional promotional costs, customer responses as well as unexpected issues that arise.

Step 6: Implementation

If the result of the testing proves positive, the plan is ready to launch full-scale. If not, more planning is needed to avoid extra costs during the implementation.

Step 7: Monitoring and evaluation

The performance of the promotional campaign should be monitored regularly for improvement. Marketers should consider external factors such as economic recession, seasonal variations, and natural disasters, which can affect the customer's decisions.

Types of promotion in marketing

Many types of promotional strategies can be adopted in a promotional campaign. The five most popular ones are:

  • Personal selling

  • Advertising

  • Direct marketing

  • Public relations

  • Sales promotion

Let's dive into each of these in further detail:

1. Personal selling

Personal selling is the process where a sales representative meets customers for the purpose of carrying out a transaction.

It can be conducted face to face or via telemarketing.

According to a theory proposed by Norval Hawkins, the sales process consists of 9 steps:

Steps of the sales process, StudySmarterSteps of the sales process, Studysmarter.de

2. Advertising

Advertising is a type of promotion where companies pay to get their messages across.

The message in advertising is directed to the mass audience instead of a specific individual like in personal selling.

Advertisements can appear in traditional media like press, magazines, and radio or digital media such as blogs and social media. Further ways of classification can be made based on the target audience, marketing type, and purpose.

3. Direct marketing

Direct marketing is the technique of pre-selecting a specific group of customers to promote your product to.

The promotional message can be delivered via texts, emails, newspapers, or TV commercials. Customers are also provided with a method for a direct response such as a hotline to place an order.

4. Public relations/Publicity

Public relations is the practice whereby companies gain attention by disseminating news and topics of public interest.

Public relations is usually done free, as opposed to advertising which involves a fee for third-party promoters. One related aspect of public relations is publicity or how the customer perceives your product and service. While public relations is an internal process, publicity is contributed by external parties.

5. Sales promotion

Sales promotion refers to short-term campaigns which create demand for a product or service.

Examples include contests, coupons, giveaways, trade shows, and exhibitions.

Where to promote your products and services?

Products can be promoted on both online and offline platforms. The offline platforms consist of the physical environment, traditional media, and sponsored events whereas the online platforms include different types of digital media.

  • The physical environment: Promotion can take place in physical environments like a brick-and-mortar store or live events. Here, a brand ambassador or promotional model will represent a company to interact with the customer.

  • Traditional media: The traditional form of media ranges from print media such as newspapers and magazines to electronic media like radio and television. Placing billboards and banners in high-traffic areas are also a common form of traditional advertising.

  • Sponsored events: Sponsorship is the act of paying an event, person, or organization to promote your products or services. One example is that companies fund athletes and clubs to acquire ad spaces in sporting events.

  • Digital media: Digital media is a way of interacting with the customer via the Internet and social networking platforms. For example, Gmail, blogs, Facebook, Instagram, LinkedIn, and Youtube. Unlike traditional advertising, advertising on these channels can be organic or paid. The main advantage of virtual promotion is borderless distribution, which allows the company to reach as large an audience as possible. However, there’s also the risk of system crash or information overload.

Factors affecting promotional decisions

Here are some factors that might influence your promotion decision:

The stage of the product life cycle

There are four stages of a product’s life cycle: introduction, growth, maturity, and decline. These stages influence the type of promotional strategy.

  • In the introduction stage where awareness is low, companies may have to pay a lot of marketing expenses to create a demand.
  • As customer awareness grows, the focus of marketing shifts to differentiating the product from the competitors.
  • The maturity stage is the time for building customer loyalty and maximizing sales.
  • During the decline stage, companies should invest more in reinforcing a positive brand image.

Promotional Decisions, Factors affecting promotional decisions, Product Life Cycle, StudySmarterProduct Life Cycle, StudySmarter

Product types

Different types of products require different promotional tools.

Popular consumer goods like Coca-Cola beverages and McDonald's hamburgers can benefit greatly from commercials whereas personal selling is more suitable for high-end products like cars or jewellery.

Competition

The level of competition in the market also affects your promotional effort.

In paid search advertising, companies pay to rank higher for a certain keyword on the search engine. As there are multiple keywords with different search volumes and levels of difficulty to rank, markers have to invest a lot of time and effort in finding the right keyword for their campaign.

Marketing budget

Marketing budgets also influence the type of promotion.

To avoid marketing on the wrong promotional channel, it’s important to learn about your target customer’s true needs and wants. This can be done through market research and mapping out a customer journey.

Typically, there are five stages to a customer’s journey:

  1. Need recognition

  2. Information search

  3. Consideration of alternatives

  4. Purchase decision

  5. Post-purchase evaluation

Knowing which stage your target audience will not only help you choose the right method of promotion but also deepen customer connection.

Regulations and economic strength

Regulations also affect the promotion of your product or service. One example is TV commercials about tobacco products are banned in some countries and violations of this regulation can lead to heavy fines.

Another important consideration for a promotional strategy is the strength of the economy.

People in weak economies tend to expect discounts or coupons for a product or service. The lack of incentives can deter them from buying.

Types of promotion strategies

Decisions on how a promotion campaign should be carried out also depend on the type of promotional strategies used. Overall, there are three ways to promote your products:

  • A push strategy sells directly to customers, excluding other distribution channels. Some examples include trade shows and direct selling.

  • A pull strategy builds up customer demand in less “pushy” ways such as advertising, sales promotion, and referrals.

  • The last promotion strategy combines both the push and pull factors.

Only large brands can afford the expensive forms of advertising like TV commercials or sports event sponsorship. Smaller businesses with limited funds may employ less costly approaches such as personal selling and public relations.

Promotional Decisions - Key takeaways

  • Promotion refers to the process of making a product or service known to the customer. Its goal is to increase brand awareness, build customer loyalty, and generate more sales.
  • Promotional decisions are decisions to make about promotional activities and tools to achieve the marketing goals.
  • There are seven steps to making a promotional decision: 1. Problem definition 2. Establishment of objectives 3. Design of promotion mix 4. Plan sales promotion program 5. Pre-testing 6. Implementation 7. Monitoring and evaluation.
  • There are five common types of promotion in marketing: personal selling, advertising, direct marking, sales promotion, and public relations.
  • Your products can be promoted on both online channels (digital media) and offline channels (stores, sponsored events, traditional media).
  • There are many factors that might influence your promotional decisions, including the stage of the product life cycle, product type, marketing budget, target market and competition, regulation, and economic strength.

Promotional Decisions

The promotion decision process is the process of creating, launching, and monitoring a promotional campaign. This consists of seven steps: 

  1. Problem definition
  2. Establishment of objectives
  3. Design of promotion mix
  4. Plan sales promotion program
  5. Pre-testing, 
  6. Implementation
  7. Monitoring and evaluation. 

Promotional decisions need to take into account the stage of the product life cycle, product type, marketing budget, target market and competition, regulation, and economic strength. 

Promotional decisions are decisions to be made about activities and tools to promote a company's products and services. 

Pricing affects promotion decisions in that it determines the type of promotional campaigns as well as the time and effort required for the promotion. For example, sales promotions work better for consumer goods such as shampoo and soap while personal working is more suitable for high-end products like a car or jewelry. More effort will also be needed to convince a customer to purchase a car than a bottle of shampoo. 

Final Promotional Decisions Quiz

Question

What is promotion?

Show answer

Answer

Promotion refers to the process of making a product or service known to the customer.

Show question

Question

What are the three other components of the marketing mix besides promotion?

Show answer

Answer

Product, price, place

Show question

Question

What are the seven steps of making a promotional decision?

Show answer

Answer

1. Defining the problem

2. Establishing objectives

3. Designing promotion mix

4. Planning sales promotion program 

5. Pre-testin

6. Implementing the decisions

7. Monitoring and evaluating


Show question

Question

Give examples of promotional goals

Show answer

Answer

  • Increasing the brand awareness

  • Bringing more customers onboard

  • Building relationships with existing customers

  • Breaking into a new market segment. 

Show question

Question

What is a promotional mix?

Show answer

Answer

A promotional mix is a combination of promotional strategies to be used in a promotional campaign. 

Show question

Question

Name 5 types of promotion in marketing

Show answer

Answer

  • Personal selling

  • Advertising

  • Direct marketing

  • Public relations

  • Sales promotion

Show question

Question

Personal selling can be conducted face-to-face or via telemarketing. 

Show answer

Answer

True

Show question

Question

The massage in advertising is directed to a specific individual. 

Show answer

Answer

True

Show question

Question

Give examples of direct marketing

Show answer

Answer

Messages sent via SMS text, email, newspaper, TV commercials. 

Show question

Question

Sales promotion is a ... promotional campaign to create a demand for a product. 

Show answer

Answer

long-term

Show question

Question

Where can a product be promoted?

Show answer

Answer

Traditional media, digital media, sponsored events, physical environment. 

Show question

Question

What is the main advantage of promoting a product via digital media?

Show answer

Answer

Borderless distribution - companies can deliver their marketing message to as large an audience as possible. 

Show question

Question

What are the potential risks of promotion via online platforms?

Show answer

Answer

System crash and information overload

Show question

Question

What factors affect promotional decisions?

Show answer

Answer

  • product life cycle
  • product type
  • marketing budget
  • target market and competition
  • regulation and economic strength.

Show question

Question

What is the difference between push and pull strategies?

Show answer

Answer

A push strategy sells directly to customers, excluding other distribution channels. Some examples include trade shows and direct selling. 


A pull strategy builds up customer demand in less “pushy” ways such as advertising, sales promotion, and referrals. 

Show question

Question

In the introduction stage where awareness is low, companies may have to pay a lot of marketing expenses to create a demand. 

Show answer

Answer

True

Show question

Question

What is the physical environment for promoting a product?

Show answer

Answer

a brick-and-mortar store or live events.

Show question

Question

Define direct marketing

Show answer

Answer

Direct marketing involves pre-selecting a specific group of customers to promote a company's products to

Show question

Question

Give examples of traditional media used for promotion

Show answer

Answer

newspaper, magazines, TV and radio 

Show question

Question

Blogs and social media are examples of ... used in promotion.

Show answer

Answer

digital media

Show question

Question

Which type of promotion gains customer attention by disseminating news and topics of public interest?

Show answer

Answer

Public relations

Show question

Question

Which type of promotion is directed to the mass audience?

Show answer

Answer

Advertising

Show question

Question

Direct marketing promotional messages can be delivered via SMS texts, emails, newspapers, and TV commercials. 

Show answer

Answer

True

Show question

Question

Advertisements can be classified based on ... 

Show answer

Answer

Promotion channels (traditional/digital), target audience, marketing types, and purposes. 

Show question

Question

During the growth stage, the focus of marketing shifts to ...

Show answer

Answer

differentiating the company's products from the competitors. 

Show question

Question

What is the main goal of marketing in the maturity stage of product life cycle?

Show answer

Answer

Build customer loyalty and maximise sales

Show question

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