Promotion in Marketing

Meaning of Promotion

Promotion could be described as the use of any incentive by a manufacturer to induce the trade ( wholesaler and retailer) or consumer to buy brand and to encourage the sales force to aggressively sell it. It must be noted that sales promotion even though can influence but may not be able to compensate for a poorly trained sales force, give the trade or consumer any compelling long-term reason to continuing purchasing a brand, permanently stop as established brand’s declining sales trend or change the basic non-acceptance of an undesirable brand.

Promotion is an effort by the marketing manager to convince potential customers that the “right” product is available at the “right” price often through publicity, advertisement, sales promotion and other promotion techniques “.

Forms of Promotion

The following among others are the forms of promotion that are employed in marketing management:

i. Pricing – off

This is a strategy that involves temporary price reductions to retailers with the intent that savings will be passed along to consumers. Another consumer-oriented promotion technique is the direct price-off deal, which reduces the price of the brand. Price-off reductions are typically offered right on the package through specially marked price packs. Typically, price-offs range from 10 to 25 per cent off the regular price, with the reduction coming out of the manufacturer’s profit margin, not the retailer’s. Keeping the retailer’s margin during a price-off promotion maintains its support and cooperation.

Marketers use price-off promotions for several reasons. First, since price-offs are controlled by the manufacturer, it can make sure the promotional discount reaches the consumer rather than being kept by the trade. Like bonus packs, price-off deals usually present a readily apparent value to shoppers, especially when they have a reference price point for the brand and thus recognize the value of the discount. So price-offs can be a strong influence at the point of purchase when price comparisons are being made. Price-off promotions can also encourage consumers to purchase larger quantities, preempting competitors’ promotions and leading to greater trade support.

Price-off promotions may not be favourably received by retailers, since they can create pricing and inventory problems. Most retailers will not accept packages with a specific price shown, so the familiar X amount off the regular price must be used.

ii. Coupon

In marketing, a coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product.

Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be used in retail stores as a part of sales promotions. They are often widely distributed through the mail, coupon envelopes, magazines, newspapers, the Internet (social media, email newsletter), directly from the retailer, and mobile devices such as cell phones. Since only price conscious consumers are likely to spend the time to claim the savings, coupons function as a form of price discrimination, enabling retailers to offer a lower price only to those consumers who would otherwise go elsewhere. In addition, coupons can also be targeted selectively to regional markets in which price competition is great.

In government, a coupon is a paper certificate used to administer a benefit or permission.

iii. Salesman competition

This is a contest that brings in reward for salesmen and the company they represent. It is said to occur when companies equipped their sales representatives and aspiring for a large customer base.

iv. Loyalty scheme

A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, such programs cover most types of commerce, each having varying features and rewards schemes, including in banking, entertainment, hospitality, retailing and travel.

The loyalty scheme is just a way to show appreciation by rewarding loyal customers, but how to do it is very important. It goes a long way in determining the relationship with customers moving forward. For a business to retain those customers, it is very imperative to initiate effective customer loyalty scheme.

Reasons for the Loyalty Scheme

Data Generation

The business stands the chance of generating good data that will help in repositioning it in the long run. Generating data pertaining to customers will give room for strategy and planning. It could be used to improve the business bottom line but all depends on how it effectively use those data.

The fact remains that customer loyalty schemes give the business an opportunity to really know it real customers, which can be used to separate the good eggs from the bad ones.

The scheme actually put the spotlight on customer behaviour. They can show the best clients and also underscore the worst customers.

Serves as a comeback avenue

While the best customers may be bringing in the lion’s share of business profit, worst customers are the bargain-hunters that spend little and only buy discounted goods. However, the loyalty schemes there could be used to win back those lapsed customers.

These customers are much easier to win over than cold prospects. They know the business and it knows them, their buying history and where and how to reach them. It could be more profitable to lose bad customers than to gain new ones.

Allow the business to focus on Good Customers

Knowing good and bad customers worth it, hence business need a customer loyalty programme. Customer loyalty scheme serves as an avenue for business to focus on best customers and allows it to focus on improving satisfaction.

The thing is that loyal customers buy more and are often willing to pay more, which boosts business cash flow. Remember, by increasing loyalty, a business can increase profitability and extend the time they place their business with it.

The long-run effect of that is that loyal customers are also good customers in one way or the other helps you to advertise your products and service.

 v. Bonuses

This relates to financial and non- financial rewards given to customers in appreciation and recognition for purchasing one brand rather than another. i.e. sweepstakes, coupons, premium, display allowance etc.

v. Trade allowances

This relates to financial and non- financial rewards given to consumers for performing one activity or the other in support of the manufacturer’s brand.

Forms of Promotion

1. Premium Offer

Traditionally premium offer is defined as a sales promotion technique where the customers are given two or more products and they pay lower than the price of the combined products. It is an inducement for the customers to buy more products. In premium offers the customers get prizes, gifts, coupons, and vouchers etc. as incentives when purchasing products. At times, Premium is designed for loyal customers and sometimes to attract more customers. Premium offers also help generate a lead for the products as many customers are deal hunters.

Types of Premium Offer

Premium offers are of following types:

i. Free premium: – These are the premium offers for which customers don’t have to pay anything they just have to purchase the product and they get the offer. The objective of these premiums is to reward loyal customers, increase brand awareness, make brands more user friendly.

ii. Self-liquidating premium: – In, self-liquidating promotion premium offers, the token amount needs to be paid to avail the offer as a gift or voucher. The objective is to attract more customers at a lower price. This helps generate more revenue for the company.

iii. On Package premiums: –  These premium offers are small toys or gifts inside the packs. These offers help a brand revitalize itself and explain a different usage for the same product. It also helps improve the visibility of the product.

2. Word of Mouth

This is an unpaid form of promotion in which satisfied customers tell other people how much they like a business, product or service.

Word-of-mouth advertising is important for every business, as each happy customer can steer dozens of new ones your way. And it’s one of the most credible forms of advertising because a person puts their reputation on the line every time they make a recommendation and that person has nothing to gain but the appreciation of those who are listening.

Here are some tips to help you generate word-of-mouth:

Word-of-mouth is triggered when a customer experiences something far beyond what was expected. Slightly exceeding their expectations just won’t do it. You’ve got to go above and beyond the call of duty if you want your customers to talk about you.

Don’t depend on your staff to trigger word-of-mouth by delivering “exceptional customer experience.” Good customer service is sporadic, even in the best establishments. The customer who receives exceptional service today can’t be sure their friends will receive the same tomorrow, so even the most well-served are unlikely to put their necks on the line and make a recommendation. Deep down, customers know service comes from an individual, not from an establishment. And even the best people have bad days.

Physical, nonverbal statements are the most dependable in triggering word-of-mouth. These statements can be architectural, kinetic or generous, but they must go far beyond the boundaries of what’s normal.

3. Trade-in Allowance

It is a reduction in the price of a new item when an old item is given as part of the deal. It is also the sales promotion technique in which the buyers are offered a fixed discount (called trade-in allowance) on the price of a new model or item in exchange for an older model or item.

4. Sampling

Sampling is a process used in statistical analysis in which a predetermined number of observations are taken from a larger population. The methodology used to sample from a larger population depends on the type of analysis being performed, but it may include simple random sampling or systematic sampling.

5. Merchandising

Merchandising is the promotion of goods and/or services that are available for retail sale. Merchandising includes the determination of quantities, setting prices for goods and services, creating display designs, developing marketing strategies, and establishing discounts or coupons. More broadly, merchandising may refer to retail sales itself, that is the provision of goods to end-user consumers.

6. Training Schemes

The Act defines a training scheme as “study and training that leads to qualification not, of itself, lead to a qualification. The training scheme is for the pursuit of recreation, pleasure or leisure (including in the nature of a hobby), and the skills gained are not designed to lead to further or higher study, or entry into employment.

Functions of Promotion

i. It provides employment for thousands of people l.

ii. It affords the society to enjoy and derive benefits which would not have otherwise been possible.

iii. Promotion helps to influence consumer buying behaviour.

iv. It helps to communicate the strength of a product over its rivals.

v. It helps to re-orientate old customers about other benefits of their valued/ choice products.

vi. It helps to reinforce advertisement.

vii. It facilitates the introduction of new products to the trade.

viii. It enhances and stimulates salesforce enthusiasm.

ix. It promotes sales of established products

x. It enhances and increases product usage