1. IB Business Management 4.5 PROMOTION

2. Learning Outcomes To understand and be able to apply the following aspects of promotion: (A02) > above the line promotion > below the line promotion > Promotional mix To be able to analyse the impact of changing technology on promotionla strategies e.g. viral marketing, social media and social networking. (A03) To understand guerilla marketing and analyse its effectiveness as a promotional method

3. Essential Question What is the most effective promotional mix?

4. Promotion Promotion refers to methods of communicating messages to the market with the intention of selling a product

5. What is Promotion? Promotion is all of the activities involved in informing and persuading potential customers to buy a product It is not just advertising

6. Promotion Objectives To inform To persuade To remind

7. Types of Promotion Promotion can be: ABOVE THE LINE – Direct Advertising through consumer media (TV, newspapers, radio, billboards) BELOW THE LINE – All other forms of promotion (PR, sales promotion, social networking)

8. Advertising Any form of paid communication used to develop awareness, perception or attitudes about a business or its products. A successful advertising campaign must be distinct from the competition

9. Advertising True or False?

10. TV commercials during Super Bowl XLV in 2011 are estimated to have cost $1 million for a 30-second spot False…… It actually cost $3million

11. More than $500 billion a year is spent on advertising worldwide True

12. The average child in America watches over 40,000 television commercials in a year, or over 100 a day True

13. Starbucks spent $9million on advertising in 2006 False…… They actually spent $95 million

14. The newest form of marketing is called ‘Viral Marketing’ and involves using blogs and emails to advertise a product True

15. Facebook makes $4billion a year from advertising True

16. Microsoft allegedly paid the Rolling Stones $20 million to use their hit “Start Me Up” in its Windows 95 advertisements False…… It actually a mere $9million!

17. Here are some successful adverts What makes them successful?

18. 5 features of a good advert Discuss and agree in pairs what the most important features of a good advert are The features of a good advert are…….

19. Homework – My favourite advert Bring an advert to share with the rest of the class. Who do you think the product is aimed at? Why do you think it’s effective?

20. Advertising Media What methods can a firm use to advertise?

21. Above the Line Promotion Firms must choose advertising media: Television Cinema Newspapers – Local or National Magazines Radio Posters/Billboards Leaflets/flyers Internet Outside Advertising

22. Types of Promotion Media TypeAdvantagesDisadvantages Television + Uses power of moving pictures & sound - Very expensive - Message can be missed due to DVR or channel surfing Radio + Less expensive than TV + Listeners can be exposed to ad during other activities - Audio only - Lower attention levels

23. Types of Promotion Media TypeAdvantagesDisadvantages Newspaper + Very inexpensive + Longer life than TV and radio - Often overlooked - No sound or movement - Thrown away after a day Magazines + High-quality color images + Longer life than newspaper - Must be submitted months in advance - More expensive than newspaper - Clutter Billboards + High rate of local exposure + Inexpensive - Cannot include too much information

24. Choice of Media When choosing an advertising media a firm must take into account several factors: Cost Target audience Marketing budget Size of the market Geographical dispersion of the market What competitors are doing Impact Legal constraints

25. Task What advertising media would you use for these products, and why?

26. Below the Line Promotion The use of non-mass media promotional activities, allowing the business to have direct control. No commission is paid to external media agencies.

27. BTL Promotional Strategies Branding – developing a personality or persona that makes the product or business instantly recogniseable Slogans – catchy memorable phrases to grab attention Logos – linked to branding and a visual symbol to represent the product or business Packaging – should fit with the brand. Bags can promote – ‘bagvertising’ Word of mouth – fast and free but can be + or – Direct marketing – selling direct to customer with no intermediaries through telephone, mail, email

28. Sales promotions – temporary ways to boost sales through price reduction, BOGOF, free samples, competitions. Loyalty rewards for frequent customers e.g. Starbucks, frequent flyer miles Point of sales – promotion at the location where the customer buys the product e.g. large displays, posters to try and get customers to buy products they would not normally buy Publicity – promotion by attracting media coverage but could be + or - Sponsorship – offering financial funds and resources to support an event or another organisation Public Relations – gaining positive media coverage without paying for it – press conference, newspaper article

29. Which type of BTL Promotion?

34. Publicity Information that is provided to the public by the media or other sources at no cost to the business, such as TV or print news stories about a business or product. Cannot be controlled by the business, thus it is not always positive

35. Public Relations (PR) Business activities aimed at establishing and protecting the desired image of an organization. PR is concerned with getting good press coverage without paying for it. Businesses hold press conferences or submit press releases to the news media.

36. Sales Promotion Short-term incentives designed to temporarily stimulate sales, such as coupons, contests, sweepstakes, giveaways and free samples. Attracts new customers.

37. Point-of-Sale/Merchandising Promotion occurs at the place where the purchase is made (check-out line, in-store displays)

38. Sponsorship Business pays to be associated with an event or organization in return for publicity and/or prime advertising space

39. Suggest a promotional strategy for the following situations... (include above the line and below the line strategies) Cadbury want to increase sales of dark chocolate by 20% in the next 3 years A car dealership are below their sales target and need to increase sales this month M&S want to get rid of the old fashioned image of their clothing range A gardener wants to attract more clients in his local town

40. Push vs. Pull Pull promotion promotional technique used to stimulate demand for a product (to pull or attract customers into buying). Includes above-the-line promotional activities. Push promotion promotional methods that rely on intermediaries, such as retail stores, to push products to the customers. Includes below-the- line promotions such as price reductions.

42. Promotional Mix The set of tools that a business can use to communicate effectively the benefits of its products or services to its customers

43. The right blend of ATL and BTL to achieve: A wareness I nterest D esire A ction

44. Deciding on the best promotional mix depends upon: COST – is the method cost effective? PRODUCT – some products suited to certain promotion types e.g. films – TV, radio and internet PRODUCT LIFE CYCLE – the stage in the cycle will influence the promotional mix e.g. decline stage may necessitate sales promotion to shift remaining stock LEGISLATION – laws may prevent use of some methods for certain products e.g ban on all cigarette promotion in Europe

45. Task Analyse one of our case study companies and evaluate the ATL and BTL methods of promotion they use. Refer to the following four elements of the promotional mix 1.Advertising 2.Personal Selling 3.Public Relations 4.Sales Promotion Why do you think they use this mix? Do you think it is effective? Would you recommend adapting the mix to increase effectiveness – if so how?

46. Technology and Promotion What do you think this refers to?

47. Promotion and the Internet New technologies have created new opportunities and new approaches for businesses to promote their products Web banners and online search engines are now often used to promote brands. Key technological trends imapcting promotion are: 1. Viral marketing 2. Social media marketing 3. Social networking

48. Viral Marketing (P2P marketing) Similar to word of mouth marketing but using technology – ‘word of mouse’ Rapid spread of information about a product or service through use of internet tools e.g. email, messaging, social networking

49. Social Media Marketing The practice of gaining internet traffic through social media websites such as facebook, twitter, youtube… The strategy aims to create engaging content that encourages people to share with others (usually friends) through blogs, websites, instant messaging. Trusted third party source Can spread very quickly Very cost effective BUT no control over what is written or shared about the product/brand  false info could spread (PR disaster)

50. Social Networking Any platform used by individuals to build social relationships between people – Google+, Instagram, Facebook, LinkedIn, Twitter Usually free for the user Funded by selling online advertising space Cost per click basis More effective tool for monitoring effectiveness of promotional campaign as ‘traffic’ can be monitored as well as sales per click for example.

51. Guerrilla Marketing (stealth marketing) Achieving conventional goals such as profit and joy through the use of unconventional methods. OR Grabbing the attention of customers through unusual or shocking techniques

61. Advantages Cost effective – useful strategy for business with small marketing budget. (80:20 rule) Larger businesses could adopt this cheaper strategy and reduce costs  higher profit margins Can lead to viral marketing and rapidly grab the attention of many people at no extra cost Can promote creativity and act as a way of differentiating from competition

62. Disadvantages Does not always reach the right target market due to scattershot approach  little or no impact on sales Can be invasive and add to clutter leaving potential customers annoyed rather than excited Can be deceptive, confusing or distasteful resulting in negative publicity Opportunity cost can be large – the time taken to develop original campaign vs the sales generated Can go wrong – payment of fines and negative reputation

63. Promotion – CUEGIS? CONCEPTRELEVANCE TO PROMOTION THEORY CHANGE CULTURE ETHICS GLOBALISATION INNOVATION STRAETEGY

64. Quiz Time