DEFINITION OF PROMOTION
|IN SUMMARY||PROMOTION IS AN IMPORTANT MARKETING FORCE THE PROVIDES AN EXTRA INCENTIVE (USUALLY SHORT TERM IN NATURE) FOR CONSUMERS, THE TRADE. THE SALES FORCE AND OTHER INFLUENTIAL GROUPS|
|AN IMPORTANT MARKETING FORCE||PROMOTION IS ONE OF THREE MAJOR ACTIVITIES IN THE MARKETING OF PACKAGED GOODS|
Promotion ranks with advertising and field selling effort as one of the major activities that can be utilized in the marketing of packaged goods.
|AN EXTRA INCENTIVE||PROMOTION IS A SPECIAL INCENTIVE|
Promotion is an extra incentive over and above (1) the product’s inherent qualities, (2) its established price, (3) its advertising and (4) its field selling efforts.
|BROAD OR SPECIALIZED IMPACT||PROMOTION IS DIRECTED NOT ONLY TO CONSUMERS OR THE TRADE, BUT ALSO ON OCCASION TO THE SALES FORCE AND OTHER INFLUENTIAL GROUPS|
Promotion, in its broadest sense, provides extra incentives for any group that is an important factor in the marketing of a brand. Although it is most often directed to the consumer or to the trade, it may also be directed to the sales force, or to other influential groups (such as doctors, home economists or appliance manufacturers) … or to all of them at one. Promotion covers a wide field.
|IMMEDIATE OR LONG-RANGE CHARACTER||PROMOTION IS BOTH A SHORT-RANGE AND A LONG-RANGE ACTIVITY|
Usually promotion is short-term in nature. On occasion, however, it can be a long-term activity (as in the case of a continuing in-pack premium operations).
|FET BASIC TYPES||PROMOTION IS LIMITED TO RELATIVELY FET BASIC ENTRES|
Although promotion covers a wide field and seems to offer endless variety, almost all promotional activity is a variation on one or more of a few basic types. An understanding of what promotion is and what it does starts with a knowledge of these basic types. A check list of basic promotion types is provided in Appendix 1.
|PROMOTIONS FUNCTION||THE FUNCTION OF PROMOTION IS TO ACCELERATE ACTION STATED BY OTHER MARKETING ACTIVITIES|
Promotion acts as a catalyst to accelerate action, primarily on the part of the consumer, the trade or the sales force. It supplements, but is not a substitute for, advertising and selling efforts.
Its function is to speed up or trigger the action that: (1) advertising has persuaded the consumer she should take … )2) the salesman has persuaded the retailer he should take … or (3) the sales manager has exhorted the salesman to take. Promotion’s function is to act as a catalyst that triggers action on the part of those who are favourably predisposed – largely because of previous advertising and selling efforts – to act.
|BOTH PROMOTION WORKS||PROMOTION ACCELERATES ACTION BY CHANGING THE PRICE – VALUE RELATIONSHIP OF THE BRAND|
Every product has an established value in the minds of the consumer, the trade or the sales force. This is what the consumer or the retailer or the salesmen is normally willing to expend (in money or effort) for what he gets, or thinks be gets, when he buys (or sells) the product.
Promotion changes this price-value relationship to the point where the individual is stimulated to take a desired action. It does this in most cases either by lowering the price or by increasing the value of the product, or both.
Where the product or its advertising or its selling efforts have failed to establish any worthwhile value, promotion is unlikely to be successful because promotion seldom if ever, provides basic lasting values by itself.
|BOTH PROMOTION COMPARES WITH OTHER MARKETING ACTIVITIES||PROMOTION IS A VERY GOOD METHOD – BUT NOT THE ONLY METHOD – OF CHANGING THE PRICE-VALUE RELATIONSHIP|
A product improvement can increase the real or imagined value of a brand – at least until competition duplicates the improvement.
An attractive, convenient, image-reinforcing package can increase a brand’s value to the consumer or trade.
A price reduction can change the price-value relationship – but in a way that can quickly be matched by competition.
Effective selling efforts (effective distribution, pricing, display, etc.) can improve the price-value relationship – not only to the trade, but to the consumer as well. Yet the number of salesmen is limited end they call infrequently on most stores.
Improved advertising is one of the best ways to increase the value of a brand. A better advertising copy story – or possibly better media coverage and frequency – can give a brand an advantage that competitive brands cannot easily duplicate. For advertising persuades by implanting ideas in the mind – and what is put into the consumer’s mind is the key to her action in the market place. And the consumer’s action in the market place is, in turn, the key to the value the trade puts on the brand. No other marketing endeavor works so effectively o the consumer’s mind
- and thus indirectly on the retailer’s mind
- as advertising.
Promotion – provided it supplements all these other marketing activities – can quickly accelerate action by providing meaningful, readily visible (but temporary) change in the price-value relationship. Without a backleg of other value-building marketing support, however, promotion is not likely to be effective long term.
Used properly, promotion can be an effective method of temporarily changing the price-value relationship and thus accelerating desired action by consumers, the trade, the sales force, and other influential groups.
|WHEN TO USE PROMOTION||THE NEED FOR PROMOTION VARIES. IT IS GREATEST THEN:|
1. A BRAND’S QUALITY IS INFERIOR TO COMPETITION; OR
2. A BRAND’S ADVERTISING IS NOT AS PRESUASIVE AS COMPETITIVE COPY; OR
3. A NEW BRAND IS BEING INTRODUCED
There is no known formula for determining what percentage of a brand’s marketing expenditures should be devoted to promotion. It depends on the situation. But there are some guide lines.
Generally, promotion is most needed when a significant number of consumers (or retailers) are not convinced that a brand’s value in relation to competition is high enough to warrant its price.
This usually occurs (1) when an established brand is inferior to competitive brands in quality, appearance or results, or 92) when the brand’s advertising copy – completely apart from the media expenditures behind it – is not as effective as competitive copy in persuading the consumer to buy the brand, or (3) when a new brand is in the process of establishing its basic value through its initial advertising and through increasing consumer trial or the product – trial which promotion can accelerate.
Obviously there are many degrees of need for promotion, and in actual practice even a healthy brand needs a certain amount of promotion in its marketing mix. But, long term, the more the product’s quality and its advertising persuasiveness fail to meet competition, the greater is the need for promotion to improve the brand’s price-value relationship.
Therefore, (except short term in new-product introductions) a high ratio of promotion to advertising generally indicates that work needs to be done to improve the brand’s quality and/or its advertising copy.
|PROMOTION’S ROLE IN THE LIFE CYCLE OF A BRAND|
|AT EACH STAGE IN A BRAND’S LIFE CYCLE A DIFFERENT DEGREE OF PROMOTINAL EMPHASIS IS REQUIRED.|
In a competitive market a brand generally follows a well defined life cycle, each stage of which requires different promotional treatment.
A new product can usually profit from substantial promotion support – if the product, the advertising, distribution and price are right … i.e. equal to competition in most respects and superior in some respects.
Here is where promotion can truly perform its function of accelerating trial and purchase of a brand whose value has not yet been fully established in the minds of all consumers. Although good advertising on a new brand will persuade many consumers to try the brand, it is not likely to persuade every logical prospect to take immediate action. Those that advertising does not quickly move to action require an extra incentive, such as a free sample or coupon or some other devide that increases the value of the brand, or lowers its price, to the point where the prospect decides to buy it. If the product is of good quality, promotion thus helps to establish its value ore quickly in the minds of more people.
There are indications, incidentally, that many new brands (but not all) reach their share-of-market peak within six months to a year after the completion of their introduction. This leads to the conclusion that a brand of proven product and advertising copy superiority would be well advised to meet maximum trial during the introductory period by spending heavily in the advertising media and on the promotional devices that are most effective in reaching the brand’s best longterm prospective consumers. Investment at the highest practicable level in offective advertising and promotion during the introductory stage, therefore – by quickly achieving a high franchise level – can establish a business that is less vulnerable to competition and that returns higher level of profit in the following years.
An established, growing brand generally requires minimal promotion support, usually of a selective nature. The product and its advertising are still equal to or better than competition. A high proportion of potential customers have tried the brand and many have become more or less regular users.
In such a healthy situation, the job that promotion has to do usually is much narrower and more specialized. It can be sued for sch specific purposes as improving distribution on large sizes, attracting new users from fringe groups or areas where usage levels are below potential, or increasing the consumption among present users. Total promotion expenditures, however, can be cut back to levels that generate optimum profits – so long as the brand continues to represent superior value for the price.
A mature, stable brand may need increased promotional support as competition begins to match it in product quality and in the persuasiveness of its advertising copy, or as the brand reaches its natural franchise level. When this happens, growth ceases, sales and share level off.
Although the market appears to be in a state of equilibrium, there is seething turmoil under the surface. Consumers are switching to competitive brands – but are balanced by those switching away from competitors. In this dynamic market increased promotional effort can provide the improved price-value relationships needed to hold onto present customer and to attract new users to replace those lost to competition. But here also is the time for efforts to be redoubled to develop an improved product, a better package, a new and more persuasive advertising story, better distribution or a new use or market. Promotion can delay the day of reckoning and give time for such work … but it cannot prevent the inevitable decline that will occur without an improved product and better advertising to re-establish the basic value of the brand.
A declining brand may need much heavier promotion support as it becomes old and out-dated by new or improved competitive brands. Efforts to improve the brand’s quality and its advertising copy to equal competition may have been unsuccessful. Increasing the advertising appropriation may not help – and may, in fact, merely reduce profits.
Yet the old successful brand has a strong base of loyal users – or potential users – because of past product quality and memorable advertising … a substantial reservoir of good will, an established value in the consumer’s mind. True, the value may be lower that it used to be before competitive brands made inroads, but it is there and it still is substantial.
Under these conditions, promotion can temporarily maintain brand sales by building on the established good will. It can increase the value of the brand, or lower its price, to the point where the reservoir of potential consumers is persuaded to buy the brand. Unfortunately, unless improvements are made in the product and the advertising – and unless the advertising is maintained – heavy emphasis on promotion at this stage seems to erode the brand’s basic values, so that ever larger discounts and heavier promotions are required to maintain sales volume. Ultimately, advertising may be discontinued and a decision made to “milk” the brand by relying solely on promotion to brake the decline.
The decision to “milk” a brand through promotion, however, must not be taken prematurely. Brands that were once strong can retain remarkable vitality under the survace. They may have a more firmly established value and longer life than is realized. Abandoning efforts to improve the product and the advertising while switching to heavy promotion may serve only to erode more quickly the established values of the brand. This in turn hastens its eventual demise and the loss of profits which the brand has generated. The decision to switch almost completely to promotion is one that should not be taken lightly.
In Summary, it appears that there is no magic formula to tell the marketing man what promotion of his funds should be spend on promotion. But there is a general life-cycle that most brands in a competitive market follow. And this life-cycle greatly influences promotion activity, as needs change for improving the price-value relationship … needs that are satisfied in many cases most practically by promotion.
|1||IT DOES NOT ATTEMPT TO ACCOMPLISH GOALS THAT ADVERTISING OR SALESMANSHIP CAN ACCOMPLISH BETTER|
The promotion is directed towards specific objectives that promotion properly can achieve. It is not used to perform functions that are best performed by advertising or a good salesman. It is not offered simply because of whim or habit or desire for a change. It is aimed at specifically-defined goals that promotion realistically can be expected to achieve better than any other marketing endeavour.
|2||IT EMPLOYS THE SPECIFIC TYPE OF PROMOTION THAT MOST CLOSELY FITS THE CONDITIONS AND THE GOAL|
Every basic type of promotion has certain fundamental strengths and limitations. Some are better fitted to one task than another; some cost more than others. Some attract new users at the expense of immediate sales to present users, or vice versa. Successful promotions employ the type of promotion that – on the basis of past record and logical analysis – offers the best chance of achieving the desired goals under existing conditions.
|3||IT IS AIMED PRIMARILY AT THE CONSUMER – BUT AT THE SAME TIME IT OFFERS POSITIVE INCENTIVES TO THE TRADE, SALES FORCE OR OTHER INFLUENTIAL GROUPS.|
The consumer is the key to packaged goods marketing success. Strong consumer demand is one of the best incentives that can be offered to the trade to stock, display or feature a brand. Promotion to the trade or to the sales force without ensuring that consumers will take the goods out of the store is likely to be inefficient and ineffective. This does not mean that trade promotions should be used properly. The most successful promotions have consumer appeal built into them.
|4||IT IS CONSISTENT WITH PRESENT – OR POTENTIAL – BEHAVIOR PATTERNS OF THE GROUPS INVOLVED|
It does not require them to do something that is completely foreign to their practice (unless there is strong evidence to suggest that predisposition to change these practices already exists). Unless conditions are right and unless the incentive to action is adequate, consumers will not buy sizes or quantities they don’t usually use or need … nor will the trade buy merchandise they can’t sell or deals that require involved administrative procedures. Successful promotions build on existing – or latent – behavior patterns.
|5||IT USES EMOTIONAL, AS WELL AS RATIONAL, APPEALS TO SELF-INTEREST|
The successful promotion appeals strongly to the self-interest of the consumer (or the trade, or other target group). It frequently does this on the emotional, as well as the rational, level.
While the rational appeal of a reduced price can be very effective, cut prices or conetary rewards are not the only incentives that move people to buy. Equally effective – or even more effective – is the addition of extra value to a brand. Frequently an added-value promotion not only provides longer-lasting benefits than reducing the price, but also is much more difficult for competition to duplicate.
The added value may be extrinsic, or tangible (as in the case of a premium or reusable container) …. Or it may be intrinsic, or intangible – even emotional. Here, especially, is where ideas become so important to the success of a promotion. For ideas evoke actions which can enhance a brand’s prestige and quality, its reputation for service and surety of results – its image and its value.
A great opportunity also exists for adding ideas and emotional qualities even to cut price or other so called rational promotions – ideas such as creatively tying in with news of a product improvement or a new package; dramatizing a new advertising claims; supplying spring house-cleaning hints or Christmas dinner service suggestions. Ideas such as linking an intriguing name or a plausible reason with what would otherwise be a prosaic price-off pack.
Successful promotions employ both emotional and rational approaches in appealing to the self-interest of the groups the brand is trying to move to action.
|6||IT SETS ITSELF APART FROM OTHER PROMOTIONS BY UNIQUENESS, VARIETY AND CREATIVE IMAGINATION|
Promotions may be successful because no other brands in the category are using promotions, or because the promoted brand may be the first or only brand to use a particular type of promotion or an intriguing variety of promotions. But more likely, success is due to creative, imaginative thinking in the conception and execution of the promotion – creativity in the basic idea or the reason for the promotion, in the name given to it, in the prizes or premiums offered, in the little, intriguing differences that excite imagination and arouse enthusiasm at all levels. Creative thinking is just as important in promotion as it is in advertising, field selling and product development.
|7||IT HAS ATTENTION-VALUE, URGENCY AND ACTION BUILT INTO IT|
An effective promotion is arresting and cannot be ignored. It is concentrated within a limited time period and is limited in quantity. It features a sense of urgency, an incentive to action. It is not something that the consumer or the trade or the sales force can put off doing until later. Generally, the more immediate the reward, the greater the effectiveness of the promotion. A successful promotion is an infrequently-offered incentive of limited duration and quantity that demands action now.
|8||IT HAS SUFFICIENT IMPACT TO ACHIEVE ITS STATED OBJECTIVE, BUT DOES NOT WASTE MONEY|
A promotion that is too weak to accomplish what it sets out to do is a waste of money. An effective promotion has sufficient impact at every level to achieve its goals. The incentive is adequate to trigger the desired action. Deal quantities realistically meet the trade’s obvious minimum requirements.
But, on the other hand, an effective promotion does not give away more than is necessary. The amount of money spent on a promotion, or the size of the incentive that is offered, is not necessarily a measure of its effectiveness. A 20-cent coupon usually does not get twice as many new triers as a 10-cent coupon. Doubling the deal quantity may do nothing more than reduce brand profits. A good on-pack premium may attract more potentially loyal consumers than a price-off pack costing 50% more. Adding a trade display allowance to a strong consumer promotion may result in only a few more displays than would have been obtained anyway.
A brand with an established value may need a smaller price-off concession than a brand of lesser value or poorer image. A good promotion is strong enough to do the job, but does not waste money.
|9||IT IS CLEAR, SIMPLE AND EASY TO UNDERSTAND AND EXECUTE|
The consumer refuses to be confused. If the promotion is complicated, she will ignore it. So will the trade. And so will the sales force. The most successful promotions are simple in concept, clear in presentation, easy to operate. There is little opportunity for things to go wrong.
|10||IT IS HONEST, BELIEVABLE AND REPRESENTS GOOD VALUE AND QUALITY|
It is straight forward and honest in presenting the terms of the promotion offer and in describing the incentive. Prizes and premiums are not misrepresented in terms of value or quality. It avoids trickery or subterfuge or gimmickry that the consumer or trade is quick to spot and which diminishes believability and brand loyalty.
|11||IT IS CONSISTENT WITH THE BRAND IMAGE|
A good promotion can enhance brand image. But many promotions actually conflict with the image that the product, its package, its advertising, its positioning have carefully developed. By appealing to the wrong type of consumers, some promotions not only waste money but actually drive the brand’s best prospects away. Good promotions are consistent with the brand image.
|A SIGNIFICANT VALUE MUST HAVE BEEN ESTABLISED FOR THE BRAND BEFORE PROMOTION CAN BE EFFECTIVE|
A reduced price on an unwanted brand does not make the brand more wanted. A significant value for the brand must exist in the minds of consumers (or others) before promotion can be effective. (In the case of a new product this value sometimes is created almost simultaneously with the offer of the promotion – usually through media advertising, the advertising massage accompanying the sample or coupon, or even through broad consumer awareness of the product class.)
The establishment of brand value relies on many things, of which the following two are most important:
The product must be good. The better the product is in relation to competitive brands, the more effective promotion will be in attracting and holding new triers … and at the same time the less will be the need for continuing and heavy use of promotion beyond the introductory period. On the other hand, the more the brand fails to meet competitive product quality, the greater must be the reliance placed on promotion to compensate for diminished value. In order for promotion to be truly effective in accelerating long-term growth and profits, a good product is essential.
The advertising must be persuasive. Even a good product will not be successful unless consumers (and everyone else) believe that the brand offers the advantages (i.e. value) provided by no other brand. Implanting this idea in the consumer’s mind is the function of advertising. If advertising does this job well, promotion can effectively provide added incentives to accelerate purchase and trial. If advertising performs this job poorly, promotion must make much more drastic changes in the brand’s price-value relationship. Good advertising copy and the effective use of media, therefore, are prerequisities for effective promotion.
Some brands seem at first glance to be exceptions to these conditions. Take, for example the older brand with no product superiority which has abandoned advertising completely in favor of promotion … and which is building its share of market in spite of this. Does not this cast doubt on the validity of these conclusions? The answer is “No”. For it is clear that the brand’s past advertising and product quality have effectively created a scund value concept as the base upon which promotion builds … at least until such time as the brand’s value begins to decrease in the minds of a shrinking group of consumers. Promotion cannot be effective unless a significant value has been established for the brand.
Annual Marketing Plan
|PROMOTION MUST BE PART OF AN OVER-ALL PLAN|
Since promotion has already been found to be an important element of marketing that supplements advertising and filed selling and is interrelated with every from of marketing activity on a brand, it seems clear that consideration of promotion must be included in every overall marketing plan. It cannot be treated as an afterthought, nor can it be ignored. It must be included in every brand’s and every company’s marketing planning, rimarily in the following two ways:
All promotion planning must stem from and be part of the brand’s marketing strategy. The marketing strategy (which must be a written, working document) defines the brand’s long-range marketing objectives, the brand concept and reason for being, and the basic strategy by which it hopes to achieve these objectives throughout the years. It is based upon an intensive, organized study of the consumer, the market, the product and the competition.
The marketing strategy also defines in general terms the role of each marketing element (i.e. advertising, promotion, sales effort, etc.) in achieving the brand’s marketing objectives and provides broad guidelines as to the relative proportion of marketing funds that will be put against each element – particularly the relationship of promotion to advertising effect – under defined conditions or during various stages of marketing development. It is the basic long-range planning document for the brand and (while it must be kept up to date) the basic strategy should be changed infrequently.
Promotion activities must be planned and budgeted on an annual basis. They must be part of the brand’s annual marketing plan. The annual plan is (1) a statement of brand objectives, strategies and tactical plans for all marketing activities during the coming year, and (2) a financial forecast that translates these plans into sales, expenses and profits. Failure to include realistic plans and expenditures for promotions means that when a decision is suddenly made to use promotion, advertising or other marketing activities must be cut to provide promotional funds. This in turn makes it impossible 91) to forecast profits accurately, and (2) to coordinate promotion with other marketing activities.
An annual brand marketing plan, therefore, must include objectives, strategy and plans for promotion as well as for advertising, field sales effort, product development, etc. the annual plan must also (1) be consistant with the brand’s long-range marketing strategy, and (2) provide a reasonable degree of flexibility when periodic reviews show that importantly-changed conditions dictate changes in plans. Promotion, like advertising and field selling efforts, must be planned on an annual basis and coordinated with other marketing activities on the brand.
Objectives Annual Program
Guidelines For Promotion Development
|EVERY BRAND MUST HAVE A WRITTEN STATEMENT OF PROMOTION OBJECTIVES AND STRATEGY|
The promotion strategy statement is one of the major elements of the brand’s annual marketing plan. It fundamental purpose is to establish guidelines and principles that are most likely to ensure promotion success for the brand. It does this by translating the eleven principles of effectives promotions ………. Into basic policy decisions applying more specifically to the brand involved. The promotion strategy statement should cover five major points (each to the extent applicable)
Broad objectives – What the brand’s promotion program is espected to accomplish. (See Promotion Principle No.1)
Kinds of promotion that will be used (or not used) – The relative reliance that will be placed on cutting price vs. adding value to the brand in order to achieve these objectives; the approsimate proportion of annual promotion effort that will be directed against the consumer vs. the trade or other groups. The specific types of promotion, therefore, that will generally be used (or not used) by the brand. (See Promotion Principles Nos. 2, 3, 5, and 11).
Policies relating to the annual program – The frequency, duration and number of promotions to be offered; the times of year or types of areas in which promotions will be concentrated or in which no promotions will be run; the relative emphasis (in broad terms), if any, that will be placed on promoting specific package sizeds; provision of funds, and broad policies to be followed, to meet specified types of competitive conditions that may arise. (See Promotion Principles Nos. 2, 4, 7 and 8)
Guidelines relating to individual promotions – Limitations, ranges or standards to assist in establishing pack quantities, price discounts, types and values of premiums, coupon values, etc.; the degree and nature of advertising coordination or support, if any, that is deemed essential for certain type of promotions or conditions; the nature of tie-in promotions that will be used and the standards established for the selection of products and brands as tie-in partners; etc. (See Promotion Principles Nos. 4 through 11)
Reasons – Why these strategic decisions a and guidelines are believed to be the ost effective and efficient way to achieve the brand’s promotion – and overall marketing – objectives, based on analysis of results of prior efforts and appraisal of current conditions.
The promotion strategy a statement tell what the brand will do in promotion, but not how to do it. It is a long-term statement of principle and policy that provides guidance to all concerned. It is changed only when the product manager and his management agree that new conditions or new knowledge dictate a change in basic strategy. Once the strategy has been agreed upon, all promotional activities on the brand must conform to it.
Details of Plan and Time Table
Plans To Evaluate Results
Outline And Summary Included in Annual Plan
|A WRITTEN TACTICAL PLAN MUST BE PREPARED FOR EACH INDIVIDUAL PROMOTION COMPRISING THE YEAR’S PROMOTIONAL PROGRAM – AND MUST DEFINE THE SPECIFIC NUMERICAL OBJECTIVES OF THAT PROMOTION|
The promotion strategy statement, as just described, establishes general promotion objectives for the brand’s promotion program and tells what the brand will do (in terms or principle and policy) to achieve these objectives. A tactical promotion plan, on the other hand, tells how the brand will execute an individual promotion that is part of the progress, translating the strategy into specific terms for that promotion, and establishing numerical goals against which each promotion’s accomplishment can be measured.
The tactical promotion plan also gives full details of the plan, the quantities, the cost, the timing, the specific areas covered, the responsibilities of sales, Manufacturing and other groups involved. It must include a time table showing the time required for each preparatory step and establishing realistic target dates. Where possible, the tactical promotion plan should also past experience, research or other facts to support the reasonableness of the stated objectives, anticipated consumer and trade reaction, and costs.
Finally, the tactical promotion plan should describe the basis for evaluating the promotion afterit has run, and should indicate what special measurements must be set up in advance for this purpose.
The tactical promotion plan, in summery, serves (1) as a tool to sharpen planning, (2) as a device to communicate plans, coordinate operations and control the execution and cost of the promotion, and (3) as the basis for measuring how successful and efficient the promotion, as run, actually was in relation to anticipated goals and costs. A separate tactical plan is prepared for each promotion in the brand’s program.
A consolidated outline and summery of the individual promotions planned for the year’s promotion program is included in the brand’s annual marketing plan to show how the strategy will be carried out and to provide a finance breakdown and summery of the total annual promotion budget. This consolidated summary include information on the timing, nature, scope and cost of each promotion planned for the year (or it set up reserves and indicates preliminary plans for these promotions for which final plans have not been established.) the detailed tactical plan sheets for each promotion, however, usually are not included in the annual plan, since the consolidated outline and summary provides the essential information for management purposes.
A written tactical plan for each promotion is an essential element in the effective use of promotions.
|5||EFFECTIVE COMMUNICATION, COORDINATION AND CONTROL MUST BE ESTABLISHED TO ENSURE THE SUCCESSFUL EXCUTION OF PROMOTION PLANS|
In almost no other marketing activity do so many different groups of people become involved as in promotion. It requires the assistance of manufacturing, warehousing, transportation, sales, accounting, purchasing and legal groups – in addition to promotion specialization, sales, accounting, purchasing and legal groups – in addition to promotion specialists, creative people, advertising agencies and brand marketing management. Careful and articulate communication of objectives and plans is essential. So is the effective scheduling and coordination of their activities. And so is the establishment of controls to ensure that the promotion works in practices as it was planned in theory. A good plan can be vitiated, for example, by salesmen who don’t understand its purpose, or who authorize payment of trade allowances for services not actually performed as specified; or by failure of the plant to ship deal packs on specified dates. Delays and mistakes cost money – such of it hidden – that may seriously reduce brand and company profits.
Every promotion must, of course inform to legal and ethical standards. But the interpretation of law often is unclear … some times even personal and capricious.
Lack of understanding and enthusiasm by legal advisors can result in routine legal opinions that deny to a brand a form of promotion that a more aggressive competitor may kind a way to carry out, within legal restrictions, with only minor change. A lawyer who is clearly told the purpose and the concept of a promotion can frequently make constructive legal, conceptual and operational suggestions of great value.
The successful execution of sound promotion plans requires persistent attention to detail effective communication, contagious enthusiasm, disciplined coordination and tight control.
Developing fundamental Knowledge To Replace Unproved Assumptions
Assembling And Circulating All Promotion Knowledge
|FACTUAL KNOWLEDGE ABOUT PROMOTION MUST BE DEVELOPED AND ASSEMBLED THOUGH A PROGRAM OF PROMOTION TESTING, ANALYSIS, EVALUATION, RESEARCH AND MEASUREMENT|
It costs as much to run a bad promotion as a good one, perhaps even more. The best way to eliminate bad promotion is to build each promotion plan on a solid foundation of knowledge.
Unfortunately, too little is known about promotion and the way it works. There are few experts or authorities with a broad knowledge of promotion principles and with objective experience in the things that mean better results for less money. And the information that is known is usually not made available to others facing the same problem … or else it is ignored.
Pre-Testing – Every important unknown element of a given promotion should be pre-tested if the risk of failure is greater than the risk of delay or breach of security. In addition, a general program of testing alternative promotions, or lower-cost variations, or premium items or contest prizes must be established to build a backlog of proven devices that can be utilized when conditions do not permit full-scale pre-testing.
Analysis of past records – Frequently a study of past records on the same or other brands suggests how promotions can be improved or prevents a brand from repeating a bad mistake. But analysis is impossible unless records are kept and unless they are interpreted and conclusions are drawn by a qualified person. Faulty memory, superficial study and minister pretation are dangers that must be eliminated.
Evaluation of results – Every promotion should be evaluated after it has been used to determine whether it did, in fact, achieve its objectives within the budgeted cost. If it did, how could it have been improved? If it did not, conclusions should be drawn – with complete objectivity – as to why it failed to perform as planned. The evaluation should be in writing and should be made available to others within the company as a means of increasing their knowledge.
Such a program of evaluation depends on two essentials:
The objectives of the promotion must be clearly defined and stated in measurable terms (i.e. “to obtain offshelf displays of at least five cases each in 15% of the Class A stores”, or “to build retail inventories from a 3-week supply to a 5-week supply,” or “to raise the usage level from 7% to 10%).
Agreement must be reached in advance regarding what will be measured and arrangements must be made before the promotion runs to obtain the necessary measurement and information needed for the evaluation. After the promotion has ended it is too late to set up research or to ask for special reports or to make personal observations.
Developing insights about how promotion works through co-ordinated methods and special research – Every promotion plan is based on a combination of fact and unproved assumption. Some of these assumptions are of basic importance. If they are incorrect the plan will fail. Hence it is vital to confirm or disprove such assumptions as the following:
… “New triers obtained by a price-off valuable to a brand as those obtained by a coupon (or by a sample).”
… “New triers usually buy the small size and “trade up” to larger sizes if they are satisfied.”
… “Misredemption of a magazine coupon follows the same pattern as for a mail coupon”.
… “The real value of a sendaway offer lies in the number who buy the product but forget to send in the box top.”
In order to prove or disprove such broad assumptions as these – assumptions which are important to every brand and company – three steps are necessary:
All promotion tests and evaluations – on all brands must be designed not only to answer the questions of immediate interest ot the specific brand but also to permit deeper analysis and insights into the fundamental behavior of people and the basic ways in which promotion works standard methods of testing and evaluating brand promotions may be needed to permit brand-to-brand comparisons.
Special research may have to be undertaken – probably underwritten by several brands or an entire company – to determine the validity of some of the most important basic assumptions about promotion. It is likely that such validation will not come from normal brand testing and research, but will have to be obtained through planned corporate projects of major importance.
Research techniques must be improved and developed which will provide the basic knowledge that each brand needs to define the right marketing and promotion objectives, rather than objectives that are assumed to be right. Establishing the right objective for a brand requires that basic knowledge abuut consumer needs, usage habits and attitudes and about consumer profiles and brand images be available.
In summary, something more than ad-ccc testing and evaluation of specific promotions is required. A special effort must be made to develop deeper knowledge of the fundamentals of promotion and marketing – knowledge that can be applied to all brands in all countries, knowledge that can replace the many unproved assumptions on which most objectives and most promotion plans are now based.
Assembling, analyzing and interesting this knowledge – What one brand learns can be of great value to another brand. A piece of information about one type of promotion may provide insights on how another type works. Basic research, while it may have little application to a given brand’s immediate problems, has vital implications for every brand’s long-range marketing program.
A way must be provided to assemble all available promotion information and knowledge, t analyze and interpret it, and to develop fundamental insights and uncover basic principles. Then a way must be provided to make this knowledge available to every product manager, to every promotion specialist, to every echelon of management so that it can be applied to current marketing operations.
The mounting cost of promotion and the high risk of failure demand that knowledge be developed as rapidly as possible. It also demands that this knowledge be assembled and made available in valid and actionable from to all involved in promotion.
Product Manager Primary Responsibility
Professional Assistance Required
Advertising Agency Limitations
A Staff Promotion Group Is essential
|SPECIALISED, PROFESSIONAL SKILL AND KNOWLEDGE MUST BE BROUGHT TO EVERY PROMOTION OPERATION|
The planning, execution and evaluation of promotion is a highly skilled task that require specialized knowledge and professional ability. It is not something to be turned over to the newest trainee.
Many groups are involved in promotion planning and operation, including both sales and advertising departments. It seems clear, however, that primary responsibility for all promotion activity on a brand must lie with the individual responsible for formulating the brand marketing mix and for profit contributions. In most companies this is the product manager.
But it is also clear that the product managere requires the same sort of professional help in promotion that the advertising agency (and company staff experts) provide in advertising Just as no product manager is expected to be an expert in copy, media, advertising production and advertising research (although he may well be very capable in some), so no product manager should be expected to be an expert in promotion theory, promotion research and analysis, promotion development, promotion execution and promotion evaluation. The job is too complex, too specialized – it requires too much knowledge beyond the product manager’s have the time or the opportunity or the inclination to develop.
Advertising agencies have at times been suggested as a possible source of this professional assistance in promotion. Undoubtedly they can be of great help in the development of promotion ideas. But their help in preparing and executing detailed plans is likely to be limited. It is doubtful, therefore, that any agency can contribute in the promotional field in the same way that it contributes in advertising.
This means that there is a real need for a central staff promotion group within every company where promotion is employed. The form of organisation will very with each situation. A large company may need a complete department staffed with broadly-experienced managers and with specialists in such activities as couponing, contests, premiums, trade promotions, promotion research, evaluation, etc. in a small company the promotion specialist may well be one person who may also have other responsibilities.
The point is that there must be a central, iniesnient staff group – responsible to top management – to supply specialized knowledge and reccive annual and ato ….. company-wide and basic projects. This staff promotion group can also pending specialized services such as preparing display material; or setting up managements with mailing beauses; or developing, testing and buying premiums; or assisting in pre-tests and evaluations. There must be someone within the company to whom both the product manager and management can turn for professional assistance in promotion as they turn to the advertising agency for help in advertising.
Successful promotion under today’s conditions requires that specialized, professional skill and knowledge be brought to bear on every phase of promotion planning, execution and evaluation.
A Sampling Devices
B. Pack Promotions
C. Other Consumer Promotions:
A. Trade Allowances
B. Trade Reduced Revenue Promotion
C. Other Trade Promotions.
SALES FORCE INCENTIVE PROMOTIONS
INCENTIVES FOR OTHER SPECIALIZED GROUPS
A. Professional Promotions
B. Appliance Manuracturer Promotions
|PROMOTIONS IN WHICH THE MAJOR EFFORT IS AIMED INITIALLY AT CONSUMER|
1. Sampling (distribution of free special or regular size package to consumers)
House to house
In or on packages of same brand or other brands
2.Couponing (distribution of certificates with a stated monetary or merchandize value which the consumer redeems through a retailer towards the purchase of the specified item
House to house
In or on packages (same brand or different brand)
In media advertisements
3. Demonstrations ( An illustration or demonstration of how a product is prepared and/or used, frequently involving consumer tasting of food products and usually involving the presence of a home economist or other trained representative.
Fairs, exhibits, etc.
1. Reduced-revenue packs (usually at factory, but also may be banded in stores)
½ price sale
“Two for…..” sale
Bonus packs (larger quantity at same price)
2. Premium packs
In or on-pack premium free or self-liquidating, or partially liquidating ( Premium may be a sample of another brand)
May also include separate premiums distributed in stores, but not actually attached to package).
1. Refund offers
(Cash, check or coupon given consumer for proof of purchase…usually by mail)
2. contests or competitions (puzzles, games, estimates, or competitions involving skill for prizes or rewards of various types)
3. Sweepstakes-type drawings (No skill or proof of purchase required)
4. Sendaway (or mail-in) premiums Free or liquidating (usually with proof of purchase) Label saving plans
5. Display promotions, Receipe or service or “idea” display promotions (alone or tied in with other items)
6. Other miscellaneous consumer promotions, such as trading stamps, out-of-pack premiums, etc.
PROMOTIONS IN WHICH THE MAJOR EFFORT IS AIMED INITIALLY AT THE TRADE (DISTRIBUTORS, WHOLESAILERS, RETAILERS OR THEIR SALESMEN)
Payments to the trade usually for a specific purpose and for a specified time. Payment may be in the form of cash or credit. There are several types, including:
Count and recount allowance
Customer stocks counted at beginning and end of period (plus purchases) to give net movement out of stock; allowance paid on net movement.
Advertising and/or display or merchandising
Allowance paid for performance of specified activity, such as featuring in dealer’s advertising, display, reduced price, or offer of extra trading stamps, etc.
Payment during introductory period to obtain distribution
Payment made without stipulation as to service required in return.
Reduced Revenue offers
A reduction in the regular price to the trade without requiring that such reductions be passed along to the consumer or that my specified action be performed. The distinction between this promotion and a buying allowance is small. Generally, however, the reduced revenue promotion takes the following forms.
One package free with purchase of 11 (assuming cases are packed 12’ s)
Baker’s dozen deal (13 for the price of 12) One case of one size free with purchase of specified number cases of another size.
1. Trade Premiums (A gift to the organization or to individuals, frequently upon the purchse of specified quantities or selections. May include permanent display racks, or dual-use display pieces, such as a plastic boat).
2. Redemption of retailer certificates packed in each case of merchandise.
3. Trade contests, competitions or Prizes
4. Trade Sampling
Distribution of free product samples to dealers and distributors (usually for personal use).
5. Other miscellaneous trade incentives
(Pushmoney for retailer’s salesmen; billing; etc.) Some forms – such as delayed billing dates or opportunities to buy in advance of an announced price increase – are frequently classified as other than promotions, but actually might be considered as promotional devices.
PROMOTIONS IN … THE MAJOR EFFORT IS AIMED INITALLY AT THE SALES FORCE
1. Sales contests
Prizes for best or target performances by salesmen
2. Salesmen’s premiums
Merchandize awards for achievement of established sales or pint-value goals, frequently from premium catalogues.
3. Salesmen’s cash bonus plans
These are usually classified as selling expense or compensation, but ma be considered a special form or promotion.
PROMOTIONS IN WHICH THE MAJOR EFFORTS IS AIMED INITALLY AT GETTING THE COOPERATION OF OTHER SPECIALIZED GROUPS
Offering of samples, premiums, service material, special literature, and other incentives to professional people in order to inform that of product advantages in their fields and so encourage them to use and/or recommend the brand in their contacts with consumers and/or other influential groups. Such professional include:
Incentive programs designed to encourage equipment and appliance manufacturers or dealers to recommend the brand in their instruction books and service literature and/or enclose samples, coupons or brand service materials with their equipment and appliances. (Examples: washing machine manufacturers, dishwasher manufacturers, electric mixer or frying pan manufacturers, retail appliances stores, etc.) Promotions may include:
Free service material
Advertising cooperation and support