Chapter 8

PROMOTIONAL STRATEGIES
When planning communication strategies a company’s concern is that its communication must reach and
impact (influence) the target audience most cost effectively. The money they spend on advertising must
give them an effective return and achieve whatever goal the company has set to achieve through their
communications.

Problem is that while TV advertising is the most effective medium, it has its problems.

a) People watching the communication maybe the wrong audience. E..g. clothing ads for premium
segment of society may be watched by children, old ladies, lower income strata and others who are
not the target audience.
b) The target audience may have gone to the toilet during the commercial break or to the kitchen for
a snack and missed the advertisement.
c) People switch channels as soon as ads start, to see what’s interesting in other channels.
d) Increasingly, technology allows people to record their favourite programmes while they are out or
when they cannot see the programme and during replay, they skip the ads.

In the eighties one could safely advertise in a magazine such as India Today or Business India and expect
to get a good share of the target audience. Magazines also had the benefit of longer shelf-life over
newspapers. And in special editions, the shelf-life may last even six months or more.

Now there are specialised magazines for almost every kind of consumer interest: for auto enthusiasts, auto
racers, PC lovers, software geeks, the fashion crazy, house & office interiors, electronics, finance
investments, finance traders, agriculture, women only, and many others. This proliferation of focussed
magazines is good for marketers who have clearly segmented their markets. They can expect much more
serious readership of their specifically targeted ads.

Internet technologies and social networking websites are providing many innovative and cost-effective
solutions. In most cases consumers themselves take the initiative by voluntarily showing up (visiting a
website) and interacting with what they find online and sharing what they like with their friends and online
community members. In such “hits” you have their full attention.

There are specialised industry-specific search engines that are free for users provided they register. The
registration collects all the details of the individual and his company, his contact details, areas of interest,
and other data that could be useful for the companies in the search engine membership.

Now mobile advertising and other forms of digital advertising have become very attractive. Advertising
can be very localised. Thus, a restaurant can find ways to advertise digitally and target customers within
specific geographic areas.

Video games is also a medium of advertising for a number of products. Online video games (as well as off-
the-shelf) are a huge and fast growing segment. Game producers can introduce into the script of the game
and plot (for example) a truck carrying a DHL sign. People may be drinking a particular brand of juice,
driving a particular brand of car or motorcycle, and the protagonists may include brand names in their
conversations/dialogues.

188
Because of all these developments industries now adopt integrated marketing communications (IMC)
strategies to improve their communication effectiveness.

INTEGRATED MARKETING COMMUNICATION (IMC)

Marketing communications form one of the important aspects of marketing strategy. Without
communicating to consumers how can the firm let potential customers know the benefits they can derive
from using the product? How can they know the superior features? Integrated marketing communication
refers to the strategic, coordinated use of all promotional tools and elements to ensure maximum persuasive
impact on the firm’s current and potential consumers. By integrating all forms of communication into the
communication strategy, a firm can reduce costs, improve efficiency and eliminate redundancy and waste
in the overall promotional programme. IMC has gained in importance in recent years because mass media
advertising costs have risen astronomically and the fragmented nature of the market has made mass media
advertising’s responses less predictable than in the past.

The promotional elements used in Integrated Marketing Communication

The following four are the structural elements of the IMC.

 Advertising: Print, broadcast, interactive and outdoor;

 Public Relations: Publicity, press relations, newsletters;
 Sales Promotion: Consumer promotion, Trade promotion;
 Personal Selling: Account management, prospecting, Retail sales

Strategic Issues in IMC

The goal of any promotional campaign is the purchase of goods or services by the target market. This kind
of action must result. Otherwise, communication has not served its purpose. The AIDA MODEL explains
how this ultimate goal is to be achieved. The AIDA model explains the steps required to be followed:

Attention: A firm must first attract the attention of potential customers, even in the midst of densely
competitive advertising and other promotional campaigns. Firms use a number of creative strategies to
attract attention of the target audiences.

Interest: Attracting attention need not necessarily result in selling the product. Hence, the firm must spark
active interest and curiosity in the product by demonstrating its features, uses, and benefits.

Desire: Subsequent to creating interest, the firm must move potential customers beyond mere interest in
the product. Good promotion will stimulate desire by convincing potential customers of the product’s
superiority and its ability to satisfy specific needs.

Action: after convincing potential customers to buy the product, promotion must then push them toward
the actual purchase.

Professionals in the industry organise these elements in diverse ways depending upon the nature of the
product, the target segments’ characteristics, the competitive environment, and the firm’s marketing
strategy (market leader, follower, place on the PLC, etc.).
189
Promotional strategies over the PLC is as follows:

Introduction stage The firm employs heavy advertising and public relations to build brand
awareness and educates customers on the product’s benefits. Personal selling
ensures distribution coverage and supply chain cooperation. Consumer sales
promotion stimulates product trial, while trade sales promotion ensures smooth
distribution activities, especially in obtaining favourable shelf space and product
displays at points of sale.

Growth stage To sustain growth, firms spend heavily on advertising and public relations (PR)
to build and maintain brand loyalty. Personal selling maintains distribution and
supply chain cooperation. Sales promotion activities decline in importance.

Maturity stage a firm’s use of advertising shifts to reminding customers of the firm’s products.
Sales Personal selling remains important. As competition is likely to be intensive
in this stage, firms try to shift or switch consumers from competitive brands to
their own brands, thus expanding their share of their market. The firm needs to
achieve its own growth objective in spite of the flattening of industry or market
growth rate. Thus the communication goal in this stage is to convince potential
customers to switch to the firm’s brand.

Decline stage firms begin to drastically reduce their advertising and PR efforts in order to
reduce their expenses. The overall objective is to maintain product support and
be cost-effective, to squeeze out every sale possible, and maintain confidence of
consumers in the product and the firm’s support.

ADVERTISING
Advertising is one of the key and the most visible elements of promotion. Advertising is paid, nonpersonal
communication transmitted through mass media, such as television, radio, cell phones, magazines,
newspapers, direct mail, outdoor displays, and signs on moving vehicles. Its main attraction is its ability to
reach an extremely large target audience, or small, precisely defined target segments. E.g., Web sites and
magazines often focus on narrow market segments such as organic farming indoors, hobby carpentry,
professional electrical contractors, and so on.

While absolute cost of advertising is generally very high, considering the millions of potential customers
reached, the cost per person reached is quite low. Thus a marketer looks at the quality of this reach, the
number reached in his target segment, and works out the economics and attractiveness of the mass media
advertising option relative to other options before deciding on the media choice.

190
Types of Advertising
Advertising promotes all types of products including goods, services, ideas, issues, people, and anything
else that marketers want to communicate to potential customers. Since expenditures for advertising is
generally very large, mostly larger firms with greater market shares tend to advertise most. Whether used
in consumer or business markets, there are two basic types of advertising: institutional and product
advertising.

Institutional Advertising. Institutional advertising promotes a firm’s image, ideas and culture with
the goal of creating or maintaining an overall corporate image. IBM’s institutional ads create the corporate
brand image by conveying to everyone its superior competence in e-business and its great ability to provide
solutions to problems.

Institutional advertising could be aimed at stakeholders, including shareholders, consumer advocacy

groups, government regulators and law makers, or the public at large to create a positive view of the
organisation. For example, a company may want to position itself as a mature, responsible, and socially
sensitive organisation that holds human values above short-term profit. Other firms may like to associate
themselves with specific causes and may work to involve their customers and all stakeholders in such
causes in some creative and interesting ways.

Product Advertising. Product advertising promoted the image, features, uses, benefits, and attributes
of products. Comparative advertising is observed often in product advertising. Pioneers may focus more
on expanding the market for the product category by advertising the product rather than one specific brand.
The goal for them is to increase customer awareness and interest in the product category in order to increase
the size of the entire market. Of course, this benefits all players.

Another type of product advertising is competitive advertising that attempts to stimulate demand for a
specific brand by promoting the brand’s image, features, uses, and benefits. This type of advertising is
employed mostly in mass advertising.

Reminder advertising is used to let customers know that a brand is available. These ads also keeps the
positioning fresh in the minds of consumers, attempting to stay at the top of their minds when they choose
between brands when making a purchase.

Reinforcement advertising assures current customers that they made the right choice in buying and
consuming a certain brand. They will use language such as “Always a Good Decision”.

Determining the Advertising Budget

The advertising budget, or the total amount of money a firm allocates to advertising activities for a specific
time period, are determined in many ways depending upon the nature of the product, the intensity of the
competition, its stage on the PLC, and the firm’s marketing goals and objectives. Usually budgets for
industrial or business products are small compared to consumer products. Some of the commonly employed
ways of arriving at the budget are:

191
  Objectives and Task Approach: Here the firm lays out its specific goals for the advertising
campaign—what it want to achieve (market share, speed of adoption,...) lists the tasks required to
accomplish specific advertising objectives. Then they calculate and add up the costs of each task
and arrive at the total budget.

 Percentage of Sales Approach: This is the most widely adopted approach for determining the ad
budget. It is simple and straight forward—it is calculated by taking a percentage of current sales.
The trouble with this is that it might be inefficient. If the market is suddenly showing an upswing
in the market, you might lose market share to a more aggressive advertiser. And in situations when
the market goes into decline, reducing sales volume will lead to shrinking ad spends, which might
only aggravate the situation further. The declining market might require increased spends of
certain kinds, which might be ignored.

 Competitive Matching Approach: Competing firms keep an eye on their competitors’ advertising
budgets and attempt to match these expenditures in absolute rupees. The risk with this approach
is that it might ignore that all firms are different and have different resources.

 Arbitrary Approach: Intuition and personal experience is used to set the budget. This is not
necessarily scientific, logical, or objective but at the same time advertising is not an exact science.
The decision maker many times uses his authority to decide the budget basing his decision on his
own intuition, feel of the market and experience. This could work well if the leader has a close
and intimate connect with the consumers’ minds.

Determining the appropriate advertising budget is an important part of any marketing strategy. Setting the
advertising budget too low may find it difficult to be noticed by potential customers in an over-crowded
market, and may lose sales to competitors.

The over-riding objective is always to be able to achieve the firm’s desired level of sales, market share, or
profits with the lowest level of spending.

PUBLIC RELATIONS (PR)

Public relations is another element of an IMC programme. It tracks public attitudes, identifies issues of
public concern, and develops programmes to create and maintain positive relationships between a firm and
its stakeholders.

Unlike advertising, PR is not a paid communication. It is generally free. However, there are expenses
incurred in a PR campaign such as cost of organising events, press conferences and so on.

PR is used to communicate to all the firm’s stakeholders and can be used to promote the firm, its people,
its image, its ideas, its role in society and contribution to it. Having a good PR strategy is important because
publicity can have the same effect as advertising. Publicity has more credibility than paid advertising. Many
different methods can be used in public relations.

Public Relations Methods

 News (or Press) Releases: a news release is a typewritten statement released to newspapers,
magazines, TV contacts, suppliers, key customers and other stakeholders presenting the firm’s
news and information that the firm’s management would like the public to know.

192
  Feature Articles: This is an article of about 3,000 words prepared for a specific purpose or target
audience. They are also useful when responding to negative events or publicity.
 White Papers: White papers are similar to articles except that they are more technical and focus
on very specific topics of interest to the firm’s stakeholders. White papers promote the firm’s stance
and are used, for example, to establish standards and present technological innovations for
specialised target audiences.
 Press Conferences: A press conference is a meeting with news media called to announce or
respond to major events. Multimedia material may be distributed at such conferences in hopes that
the press (particularly TV stations) will air the material. Firms typically announce new products,
inventions, news worthy events or information at such press conferences.
 Lobbying: This describes the firm’s attempts to influence legislators or government officials
(and/or people in authority, opinion makers and opinion influencers) with the goal of gaining
acceptance of the firm’s views and position.
 Employee Relations, Investor Relations: These are special efforts made by the firm to promote
and maintain healthy and positive relationships with such stakeholders and addressing their specific
interests and perspectives.
 Event Sponsorships: Corporate sponsorships of major events have become one of the most
powerful and most popular means of promoting awareness of the firm’s brand. Firms’ sponsorships
depend upon the money they have to spend. Sponsorships can range from arranging tickets, T-
Shirts, meals, entire teams, entire games, entire events (e.g., The Olympics), and so on.
 Product Placement: Firms and programme producers (TV, movies, theatre, etc) work together to
place a firm’s product into the script of the programme. Many creative ways have been used to
place products in such programmes. The benefit is that the association strengthens the positioning
as well as awareness of the product and makes it more desirable. Beverages, clothing, cosmetics,
cars, watches, computers and many other products have been very effectively placed in movies,
TV soaps, and other programmes.

PERSONAL SELLING AND SALES MANAGEMENT

Personal selling is paid personal communication that attempts to inform customers about products and
persuade them to purchase those products. Compared to other types of communication, personal selling is
the most precise form of communication because it provides direct contact with consumers. Though one-
to-one communication is highly advantageous, the cost per contact is the highest among all communication
forms. Since personal selling involves direct contact with customers, the firm can get first-hand
understanding of consumer sentiments and competitors’ activities. Frontline knowledge and skills held by
sales people is very critical for the success of company.

Sales management is an important part of marketing strategy. Deciding on whom to target the sales force,
the sales objectives to be achieved, determining the size of the sales force required to achieve desired level
of sales, deciding the skill and experience levels required of the sales force, planning for their training, and
then organising the control systems required to control and manage the sales force—all these are important
activities for the marketing manager.

193
SALES PROMOTION
Sales promotion is an activity that adds value for the buyer and acts as an incentive or inducement to
purchase. Sales promotion can be targeted toward consumers, channel intermediaries, sales force, and
alliance partners.

Sales Promotion in Consumer Markets

There are limitless variety of sales promotion methods that can be successfully used in consumer markets.
The list below is just a sample of the promotion ideas used:

 Coupons: Coupons reduce the price of a product and encourage customers to try new or
established brands. This can be used to increase penetration of markets.
 Rebates: Rebates are very similar to coupons except that they require much more effort on the
consumer’s part to obtain the price reduction. Generally, a consumer has to mail in a rebate coupon
with proof of purchase to receive a payment in cash or kind. This helps the company to develop a
good database and profile of its customers. Many consumers never bother to redeem their rebate
coupons. Thus the company does not lose as much margin as through other methods like direct
discounts.
 Samples: Free samples is a commonly used consumer sales promotion method. It stimulates trial
and switching from another brand to your brand. It increases sales volumes particularly in the
introduction stage of a product launch.
 Loyalty Programmes: These are also called frequent buyer programmes. These programmes are
developed in many creative ways. Some companies issue points against each purchase on a smart-
card. These points are accumulated over a period of time. For large purchase aggregates, the firm
might offer free vacation plans to foreign countries. For smaller aggregate purchases, they may
offer attractive and unusual gifts.

Sales Promotion in Industrial or Business Markets

These are also known as trade promotions. These promotions include the following

 Trade Allowances: These include price reductions for purchasing specific quantities of a product
at a single time (like a bulk discount). A firm also makes payments to channel partners in return
for carrying out promotion activities that spur sales of the firm’s products.
 Free Merchandise: sometimes free merchandise is offered instead of discounts, payments or
incentives.
 Training and Service Support: Firms provide technical and soft-skills training to their channel
partners specially when the product is complex.
 Cooperative Advertising: This is an arrangement whereby a manufacturer agrees to participate
financially with a channel partner in certain segments, to promote the firm’s products. This is a
popular form of sales promotion.
 Selling Incentives: This could take the form of sales contest, or incentive cash or kind rewards for
exceeding sales targets. Special appreciation awards and other awards like team awards and so on
are also used to incentives the sales force to excel in their performance.

------------------------------------------------------------------------------------------------------------------

194