Product Promotion

Modern marketing requires more than developing a good product set you an attractive price and make it available to your target customers.

Companies should also communicate with them, and what they say should never be left to chance. To have good communication, companies often hire advertising companies to develop effective advertising, sales promotion specialists who design sales incentive programs, and public relations firms that will create a corporate image. They also train their salespeople to be friendly, helpful and persuasive. But for most companies, the issue is not whether to have a communication, but how much to spend and how.

A modern company manages a complex system of marketing communications have communication with their brokers, their customers and various stakeholders. Their intermediaries, in turn, communicate with consumers and their audiences. Consumers have verbal communication with each other and with other audiences. Throughout this process, each group feedback to everyone else.

The total program of marketing communications for a company – called its “promotional mix consists of the specific mix of advertising, sales promotion, public relations and personal selling the company uses to achieve your advertising and marketing objectives.

The four main promotional tools are described below:

. Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods or services by a sponsor well defined.

. Sales Promotion: short-term incentives to encourage the purchase or sale of a product or service.

. Public relations: The creation of good relationships with various publics a company, creating a good “corporate image” and handling or denial of rumors, stories or negative events.

. Personal Selling: oral presentation in a conversation with one or more potential buyers in order to make a sale.

Within these categories are specific instruments such as sales presentations, displays at points of sale, special announcements, business presentations, fairs, shows, catalogs, literature, press kits, posters , contests, rebates, coupons and stamps for propaganda. At the same time, communication goes beyond these specific promotional tools. Product design, price, shape, color of its packaging and stores that sell … everything communicates something to the buyers. Thus, although the promotional mix is the main activity of a company’s communication, the whole marketing mix – promotion and product, price and location must be coordinated for the best communication impact.

The three main instruments of mass promotion are advertising, sales promotion and public relations. They are marketing tools on a large scale who oppose personal selling, targeted at specific buyers.

ADVERTISING, use of paid media by a seller to inform, persuade and remind consumers a product or organization, is a powerful promotional tool. U.S. marketers spent more than $ 109 billion annually on advertising, which can be very varied and have different uses. Making

decisions on advertising is a process consisting

five steps:

* Setting goals

* Decisions on budget

* Adoption of the message

* Decisions on the means used,

* Evaluation.

Advertisers must have very clear objectives about what is supposed to advertise, inform, persuade or remind.

The budget may be determined by what can be spent, a percentage of sales, as competition spends, or the objectives and tasks. The decision on the post requires you to select the drafters, to assess their work and perform effectively. When deciding on the media, you must define the objectives of scope, frequency and impact, choose the best types, select and program vehicles. Finally, it is necessary to assess the impact on communication and sales before, during and after the campaign.

SALES PROMOTION covers a wide variety of short-term incentives – coupons, prizes, contests, discounts, whose purpose is to encourage consumers to trade and sellers of the company.

expenditure on sales promotion has increased faster than advertising in recent years. The sales promotion required to be set targets, tools are selected, to develop and test programs before implementing it, and evaluate their results.

Types:

Consumer promotion .- promotional sales to stimulate consumer purchases.

Consumer promotional tools:

Samples: Gift of a small quantity of a product for consumers to try it.

Coupons: certificates that translate into savings for buyers of certain products.

cash back (or rebates): Repayment of part of the purchase price of a product to the consumer to send a ‘test purchase’ the manufacturer.

promotional packages (or discount): Discounted rates directly from the manufacturer on the label or package.

Awards: Products are offered free or at low cost as an incentive to purchase a product.

customer rewards: Rewards in cash or otherwise for the regular use of products or services of any company.

promotions at point of sale (ppv): Exhibitions and demonstrations at the point of sale or purchase.

contests, sweepstakes and games, promotional events that give consumers the chance to win something sounds or extra effort.

Trade Promotion .- sales promotion to gain the support of the reseller and improve their efforts to sell.

Promotion .- sales force sales promotion designed to motivate the sales force and ensuring that the group’s sales efforts more effective.

Advocacy to establish a franchise with the consumer sales promotion .- promoting product positioning and include a sales messages in the deal.

PUBLIC RELATIONS: Establish good relationships with various publics, involving favorable publicity and creating a positive image of company, is the least intrusive use of promotional tools, although their potential to raise awareness and make them prefer a product is bigger. Public relations involve the determination of objectives, the choice of the messages and vehicles, the implementation of the plan and evaluating the results.

Determinants of total promotion budget

how a company decides what the total promotion budget and its distribution among the main tools for creating the promotional mix Now we will study these issues.

One of the most difficult marketing decisions facing a company is to define how much to spend on promotion. John Wanamaker, the billionaire owner of department stores, once said: “I know I wasted half my advertising, but do not know which half it is. I spent $ 2 million on ads, but do not know if half or double what it takes. ” It is therefore not surprising that there are large differences between what they spend on promoting the various industries and companies. This can add between 20 and 30 percent of sales in the cosmetics industry, but only 5 to 10 percent for industrial machinery, within each branch of industry, companies are they spend a lot and others that spend little.

How companies decide your budget Study four common methods used to establish the total advertising budget:

the method of the permissible, the percentage of sales, competitive parity and the objective and task.

The method of the permissible

Many companies use the method of the permissible: this means that define the advertising budget as you think you can afford the company. One executive explained this approach as follows:

“It’s very simple. The first thing I do is go to ask the controller how much you can give me this year. Tells me a million and a half. Then the boss comes and asks me how much we spend, and I say” Well, about a million and a half. ”

Unfortunately, this method to define the budget completely ignores the effect of promotion on sales volumes. In addition, this annual promotion budget is uncertain, which makes long term planning of the market. This method can lead to excessive spending on advertising, but most often is that the amount is insufficient.

Sales percentage method

Many companies use the percentage of sales method, that is, define its advertising budget as a percentage of current or expected sales. Or you can calculate the budget a percentage of the selling price. Automotive companies, for example, tend to budget for promoting a fixed percentage based on the price fixed for the car. Oil companies, meanwhile, set the budget as a fraction of a cent per gallon of gasoline sold with the brand.

It is argued several advantages for the method of percentage of sales. The first is that promotional spending will vary depending on what you can “afford” to spend the company. It also makes the administration think about the relationship between promotional spending, the sales price and profit per unit. Finally, it is supposed to create a competitive stability, and that companies are competing on promotion tend to spend more or less the same percentage of their sales.

However, despite these alleged benefits, the percentage of sales method has little justification. Indeed, the error is considered as the cause sales promotion, rather than its outcome. The budget

is based on the availability of funds rather than on opportunities. There may even prevent the increase of expenditure required to reverse a slump in sales. Furthermore, as the budget varies with sales

each year, it is difficult long-term planning. Finally, this method provides no basis for choosing a specific percentage, out of what has been done in the past, or what they do at the time the competitors.

Competitive parity method

Other companies use competitive parity method, which is to define your promotional budget so it is at the height of its competitors. They look at their advertising or obtain cost estimates in promotion within your industry in publications or associations, and then set your budget based on the average related industries.

There are two arguments that support this method. The first is that the budget of the competitors represents the collective view of the industry.

The second is that by spending as well as competitors, promotional wars are avoided. Unfortunately, none of them valid. For starters, there is no reason to believe that competition has a better idea of what to spend than the company itself. Indeed, companies are very different from each other, and each has its own promotional needs. In addition, there is no evidence that budgets based on a competitive parity avoid promotional wars.

Objective and task method

The most logical way to define a budget is the objective and task method. In it, marketers calculate their promotional budgets (1) defining specific objectives, (2) defining the tasks to be carried out to achieve, and (3) calculating the costs of performing these tasks. The sum of these three costs is the promotional budget is proposed.

The objective and task method requires that the administration specify their assumptions about the relationship between dollars spent and the results of the promotion. But it is also the most difficult to use. Indeed, it is often difficult to define what specific tasks will be used to achieve specific goals. Suppose, for example, that Sony wants a 95 percent awareness for its new personal VCR the size of a Walkman during the introductory period of six months. What are the specific messages and transmission times required to attain this goal Much would these messages and schedules Sony management has to consider these questions, whilst difficult to answer. With the objective and task method, the company sets a budget based on what you want to achieve promotion.

Factors involved in the definition of the promotional mix:

Companies take into account many factors when developing their promotional mix. We will examine below.

Type of product / market: The importance of different promotional tools varies according to whether a consumer or industrial market.

The consumer goods companies tend to invest their funds first, in advertising, followed by sales promotion, personal selling, and, finally, public relations. In contrast, industrial goods placed most of its budget on personal sales, followed by sales promotion, advertising and public relations. Generally, sales are used much more personal when it comes to expensive and risky assets in markets with few major vendors.

While advertising is less decisive than a personal visit from a salesman in the case of industrial markets, even they have an important role. In effect, this tool can create awareness and co-

Product recognition, develop sales trends and give confidence to buyers.

Similarly, personal selling can contribute greatly to the efforts to sell consumer goods. That is simply not true that “the vendors stack products on the shelves and then removes them

advertising. “For consumer goods, a well-trained sales staff can obtain contracts with other dealers to sell a brand in particular convince them to give him more space and shelf

encourage them to use the displays and special promotions.

VS push strategy. attraction strategy. The promotional mix changes substantially as a strategy to select push or a pull. A push strategy requires the use of a sales force and sales promotion for “push” the product through the channels. Producers promote the product to wholesalers, they promote it to retailers, and these, in turn, to consumers. ” In contrast, a pull strategy requires spending a lot of money on advertising and consumer promotion to create consumer demand. This, then, “draws” the product through the channel. If this strategy is effective, consumers will ask the product to retailers, who would in turn ask the wholesalers, and these producers.

Certain small industrial companies use only push strategies, and some direct marketing companies use only the attraction, but most large companies use both. For example, Procter & Gamble uses the publicity in the mass media to bring their products, and a large sales force, along with promotions to push through the channels. In recent years, consumer goods companies have decreased the percentage of attraction of their promotional mix for a major push.

Psychic state of readiness of the buyer. The effects of the tools vary among states available to purchase and analyzed. Advertising, along with public relations play an important role within the states of awareness and knowledge, more than they can have the “cold calling” from vendors. In exchange, taste, preference and conviction of the consumer are more influenced by personal sales, followed closely by advertising. Finally, the sale is closed primarily with sellers and promotes visits

sales. There is no doubt that, considering its high cost, personal selling should focus on the latter stages of the buying process.

Stage of product life cycle. The effects of different promotional tools also vary according to the stage where the product is within its life cycle. In the introduction stage, advertising and public relations serve to raise awareness and sales promotion is useful in promoting the product is tested immediately.

Personal selling must use me for distribution branch of the trade. In the growth stage, advertising and public relations still hold, while the promotion can be reduced see-TAS, as it requires fewer incentives. In the maturity stage, sales promotion is again important in relation to advertising. In effect, buyers are already familiar with brands and advertising is only required for re-

colder product. At the stage of decline, the advertising is kept to a level only reminder left public relations and sellers pay little attention to the product. However, sales promotion remains strong.

PROMOTION

– Promotional mix: it is formed by the specific mix of advertising, sales promotion, public relations and personal selling the company uses to achieve their advertising and marketing objectives.