Question

Discuss different types of promotions used by several companies. Explain group promotion mix components by a company and analyze them for a consistent message. Identify the likely target market for each piece of promotion. Is the promotion component likely to be effective? Why or why not? Does a company appear to favor one component of the promotion mix more than others?

Answer 1

In the absence of any specific company or case study, the question may be answered in generic terms.

The different types of promotions used by companies either individually or in a combination is known as promotion mix. Five major types of promotion generally used by companies are

1. Direct Marketing: This type of promotion involves sending message about the product/service directly to the intended target customer. E-mail and postal mail campaigns are examples of direct marketing. The main purpose of this type of promotion is to generate leads for the salespersons to follow up.
2. Personal Selling: Promotion of product or service is done by directly contacting the leads and persuading them to buy the product or service is known as personal selling. This involves hiring and training personnel, and incidental costs like travel.
3. Advertising: A promotion tool that can be used to send message to a larger audience using mass media. The objective of advertising is to build the brand identity and not necessarily to sell the product or service immediately. Some examples are TV, radio ads and outdoor hoardings.
4. Sales Promotion: This type of promotion involves inducing customers to make that final decision to buy the product or service. Price discounts, quantity discounts, loyalty shopping benefits, giving free samples are all exiamples of sales promotion.
5. Public Relations/ Publicity: This type of promotion is done to enhance or repair the brand image, create awareness or to maintain reputation of the company. Participating in events, exhibitions, conducting press conference are examples of this type of promotion.

Target markets:

1. Direct marketing: The target market could be market segments based on demography. Since the objective is to generate leads, the message must reach maximum number of people in the segment. For example, if the tool is social media, then target would would be Facebook users for the given demographic segment in a selected geography.
2. Personal selling: The target for personal selling would be the decision makers. In a B2B (business-to-business) environment, the target would be purchasing managers. In a retail consumer market, the target would be the customer who walks into the store.
3. Advertising: The target is masses for a selected demographic segment. Consumer product companies would advertise on TV during mass viewership (Super Bowll, prime time shows) to reach maximum audience.
4. Sales promotion: Generally, this type of promotion is used to target the middle class shoppers who are price sensitive. Black Friday sale or Christmas season discounts are targeted at families who are looking at spending out of their precious savings.
5. Publicity/ PR: The target of exhibitions and events is generally new customers or opinion makers (press and interest groups). A designer clothing brand would use a fashion show to showcase the latest collection for the season or phone makers would use a live presentation by CEO to announce the launching of their products.

Effectiveness of the promotion

1. ​Dircet marketing: This type of promotion will be effective if the market segmentation is done scientifically and the messaging is attractive. This type of promotion has become ineffective since most e-mail software and SMS mobile service providers have spam filters that keep the messages away from reaching the target audience. Printed mailers are very expensive. However, social media can be effective if the profiles are chosen based on big data analytics and the content is attractively tailored to match those profiles.
2. Personal selling: This is an effective promotion tool as it involves interactive communication between the seller and potential customer. Products can be demonstrated, doubts can be clarified, prices can be negotiated and a personal rapport can be build. Personal selling is ineffective when budgets are constrained and personnel are not trained or skilled.
3. Advertising: This promotion method is effective when building brand awareness and in reaching masses. This tool suits consumer brands with large number of distribution channels. This promotion type is ineffective for B2B sales or for specialised products that require customisation.
4. Sales promotion: This method is effective for companies that are looking at immediate increase in sales volumes or disposing off excess inventory. This method is financially sustainable only if large sales volume is achieved. Cut throat completion can result in a price war and make this trategy ineffective.
5. Publicity/ PR: This promotion method is effective in generating hype or making a brand statement without incurring expenses advertising costs. Event marketing gets media coverage and reaches a large audience and can be an effective substitute for advertising. On the flip side, negative coverage can hurt the brand.

Favour one component over the other:

Companies must evaluate the pros and cons of using the different types of promotion. It would often be a combination of two or more components of the promotion mix rather than relying on any one single component. The factors that go into devising the ideal promotion mix would be marketing budget, the stage of product lifecycle, brand equity, target market, overall organisation strategy, distribution channel, availability and quality of human resource and business environment. Companies that are in the consumer market tend to favour mass advertising, retailers favour sales promotion, startup companies favour PR,publicity and social media campaigns and companies that sell industrial products tend to favour personal selling in their respective promotion mix.