How To Establish A Promotional Mix
You drive sales by promoting the benefits of your company's goods or services to pools of potential buyers. The ways you promote your organization will largely determine whether you successfully plant the right messages in the minds of your target audience. This module explains how you can establish a promotional mix best suited to your company's needs and resources.
Establishing Your Promotional Mix
· Determine Your Target Market
· Determine Your Objectives
· Design Your Message
· Select Your Promotional Channels
· Determine Your Budget
· Determine Your Promotional Mix
· Measure the Results and Adjust
What To Expect
Even a superior product doesn't sell itself. Your customers need information about your product or service before they buy it. The ways you communicate features and benefits to your potential customers is called a promotional mix. This Business Builder will explain how you can maximize your company's promotional mix for best results.
What You Should Know Before Getting Started [top]
When you promote your business, you're engaging in persuasive communication: You want to convince others to buy from you. You must select the right promotional strategy to:
1. Capture the attention of the right group of potential customers in a credible yet catchy way.
2. Educate them about your products or services.
3. Influence them to buy from you.
A promotional mix is an allocation of resources among five primary elements:
1. Advertising
2. Public relations or publicity
3. Sales promotion
4. Direct marketing
5. Personal selling
How you integrate these elements depends on what you're promoting, the biases and preferences of the potential customers you're courting, general market conditions and your promotional budget.
The communications process will succeed if:
· You Deliver A Clear, Compelling Message. You may have several important or beneficial product features, but if you don't emphasize what's most important to your target market or you overwhelm prospects with too much data, they might reject your message. Example: If the target-market customer cares most about saving money, your message should emphasize how this will happen.
· You Choose The Most Appropriate Promotion Method. To convey your message effectively, you must understand the best way to reach your target market. If your key customers are manufacturers and you supply specialized equipment, communicating through an advertisement in a general interest consumer magazine will waste time and money.
Understanding The Main Communication Channels [top]
· Advertising. Advertising is any paid form of media communication. This includes print ads in magazines, trade journals and newspapers, radio and TV announcements, Web-based visibility-building, and billboards. Advertising is a nonpersonal promotional activity because the seller has no direct contact with the potential customer during the communication process.
· Sales Promotions. In-store demonstrations, displays, contests and price incentives (50% off, buy-one-get-one-free) are sales promotion techniques.
· Public Relations. These activities promote a positive image, generate publicity and foster goodwill with the intent of increasing sales. Generating favorable media coverage, hosting special events and sponsoring charitable campaigns are examples of public relations.
· Direct Marketing. A form of advertising aimed directly at target customers (usually in their homes or offices) that asks the receiver to take action, such as ordering a product, clipping a coupon, phoning a toll-free number or visiting a store. Catalogs, coupon mailers and letters are common forms of direct marketing.
· Personal Selling. Face-to-face communication between buyer and seller.
Why You Need A Promotional Mix [top]
If you deliver your message in many different ways, you increase your odds of reaching your target market. Hundreds of messages a day bombard your target market, but only a select few penetrate their consciousnesses. Of those, an even smaller percentage eventually lead them to act.
You may want to communicate a range of messages to different markets. If you have a product, such as spot remover, that's used by general consumers but that auto mechanics apply in a more specialized way, you should communicate different messages to each market via different media and methods. You might air a TV commercial to reach consumers and place an ad in an auto magazine to reach mechanics.
Without the proper promotional mix, you may squander your limited resources by taking a scattershot approach. Promotion must advance your overall marketing plan and reinforce the dialogue you want to establish with the segments of the marketplace you covet most.
Beware: In their rush to expand, some fast-growth entrepreneurs fail to coordinate their marketing strategies with their specific promotional efforts. A common trap: You invest heavily on advertising or sales promotion, but you overlook quality control for your product or price it improperly.
Establishing Your Promotional Mix [top]
Establishing the promotional mix that's right for your company involves seven steps:
1. Determine Your Target Market
The segment of people that needs, or would benefit from, your product or service is your target market. Understanding these individuals' attitudes and behaviors will help you design the best message and select the right means to reach them.
Example: If you own an upscale jewelry store, you know from your sales history or marketing research that your target market is consumers earning more than $75,000 per year. Any print advertising should thus appear in publications in which readership income exceeds $75,000.
2. Determine Your Objectives
You must determine the response you want to elicit from your target market, such as motivating them to click on your Web ad or sign up for a free trial of your product.
Some entrepreneurs fail to define their objectives precisely. While you obviously want to increase sales, you need to decide the best way to build a relationship with shoppers. If you engage them effectively, then sales should inevitably follow.
Example: To introduce new customers to your product, a direct-marketing technique, such as a direct-mail letter with a money-saving offer to first-time customers, might work. Or you can try a sales promotion, such as two-for-the-price-of-one. If your target market has a misconception about your product (say, that it's more expensive or less effective than rival products), you can correct the perception by providing comparisons or testimonials.
The following exercise can help you define your specific goals.
Check the objectives that apply to your current business situation:
_____ I need to introduce a new product to a new market.
_____ I have a product that's under attack by competitor's products, and I need to retain my current customer base.
_____ I need to correct false impressions or counter false claims made about my product.
_____ I need to create greater brand awareness of my product.
_____ I need to communicate new features to increase consumption by present customers.
_____ I need to generate more "buzz" or word-of-mouth business.
_____ I need to build a new image and reposition my product.
_____ I need to persuade retailers to stock my product or make larger orders.
3. Design Your Message
The design of your communication incorporates two main factors: content and format.
Content. The content is the words and images you use to appeal to your target market. You must give your potential customers reasons they should respond to your message. Think of the most important benefit a user of your product receives. That should lead you to the central theme of your message's content.
Benefits fulfill a human want or need. Examples: The desire to enhance status, save money and time, or increase safety or security.
In choosing your promotional mix, you must communicate how your product produces a positive emotion or satisfies a particular need. In the case of the jewelry store mentioned earlier, the message can appeal to the target market's desire to gain status, a likely motivator that drives jewelry shoppers. Or your message can communicate the desire to be loved: "If you love her, then you will buy her this elegant ring to prove it."
Format. Each element of the promotional mix has its own format requirements. Web advertising relies on graphics, clarity and color, while personal selling may involve structured presentations, handouts and diagnostic tests to engage potential customers.
To determine the best format to deliver your content, consider the technical aspects of presenting your message. If you prefer to demonstrate a product to sell it, you should probably include a broadcast medium in your advertising. That in turn will lead to decisions about sound effects, camera angles, lighting, and so on. Format for print advertising depends on how long or big a headline should look, how to integrate graphics and what types of photos reinforce your message.
4. Select Your Promotional Channels
Entrepreneurs who miss revenue goals often explain the disappointing results by saying, "We were out-marketed." That usually indicates a failure to plan and implement the right promotional mix.
By choosing the best methods to convey your message and extracting the most value from your financial and creative resources you can devise an integrated marketing communications program that reinforces your company's distinct character in your customers' minds.
Weigh the pros and cons of each of the five promotional methods:
Method 1: Advertising
In one sense, advertising is old-fashioned. It has a long, storied history as a device to sell products. But the way we write and deliver ads today barely resembles the classic print, radio and TV pitches of the past.
Advertising is any paid form of nonpersonal communication about a company, product, service or idea by an identified sponsor. That means you must buy space or time for an advertised message, although in rare cases you can use public service announcements for which the media covers the cost.
Advertising involves mass media, from TV and radio to the Internet, magazines, newspapers and billboards. Its impersonal nature usually leaves little room for gathering instant feedback from receivers. That's why you must study how your target audience will respond to your message before you send it.
Advertising can help you:
o Introduce your target market to new products, new product features and new applications.
o Persuade your audience to choose your product over a competitor's or to perceive your product in a new way, perhaps by launching an "image" appeal.
o Remind your target market of your product's features, benefits and availability.
Advantages Of Advertising
o Credibility. By investing in a public presentation of your company and its products, you can enhance customers' perceptions of legitimacy, permanence and quality that they associate with your enterprise.
o Timing. You can repeat a message at strategic intervals. Repeating your message increases the likelihood that your target customer will see the message at a time where he is open to hearing it. The right timing can maximize your awareness-building efforts.
o Drama. The best advertising puts a human face on a company and its products. It can convey a sense of adventure, challenge people to test their assumptions about your business or entertain or enlighten your audience. It can introduce consumers to images and symbols that differentiate your company from others.
o Branding. Effective advertising enables you to create and nurture brand equity, a vital but intangible source of goodwill that flows from a favorable image associated with a brand name. Once your company establishes a distinctive trademark in the public eye, you have a competitive advantage.
Disadvantages Of Advertising
o Cost. Marketers often argue that advertising offers a cost-effective way to reach large groups, and it's true that the cost per contact can prove lower than with other promotional methods. Nevertheless, many entrepreneurs lack the finances to invest heavily in advertising. Producing and placing professional advertisements is prohibitively expensive for many emerging-growth companies.
o Follow Through. While attention-grabbing advertising can attract interest, even the most innovative campaigns can become stale over time. And entrepreneurs may grow to rely too much on advertising at the expense of more personal, direct appeals to niche audiences.
o Lack Of Feedback. Measuring the success of advertising can prove impossible. Some of the best TV commercials from a stylistic standpoint may not increase sales for the advertiser.
o Consumer Indifference. As people get pelted with promotional messages throughout the day, they become better at screening out ads. Information overload and clutter can lead your target audience to turn away from your best efforts to engage them.
Advertising On The Web
Online advertising is soaring as more people log onto the Internet. Over a billion people worldwide are projected to use the Web by 2005, according to Computer Industry Almanac. Online ad revenue after a tough year for dot-coms was still over $4 billion in 2001 ["Where the Online Ad News is Good," by Jane Black, Business Week Online (January 17, 2002)].
Creating a Web site for your business can help you educate consumers, solicit feedback and provide online service. But don't expect your Web presence to build your company's exposure.
To advertise effectively on the Internet, you may need to pay high-traffic sites or Internet publications to list your URL or link to your home page.
The most common forms of Web advertising include:
o Banner Ads usually appear at the top or bottom of a Web page as rectangular "virtual billboards" that link to your home page. At their best, they draw a browser's eye with sharp, lively graphics. You typically buy banner ads on an average CPM basis (cost per one thousand page views or ads shown), with rates ranging from $1 CPM to reach broad audiences to $50 CPM for more targeted sites. You can also pay for ads that flash onto the screen when triggered by a keyword search. You'll need to factor in the "click-through rate," or the number of people who click on your ad divided by the number of page views shown, when weighing the cost-effectiveness of banner ads. The industry average is about 0.5%, but it varies considerably based on the type of business you're promoting.
o Paid Listings. Portal sites, such as America Online, Yahoo and Lycos, tend to attract the widest net of Web users. If you're building a sports-memorabilia business, you may want to pay for a listing under the "Sports" category of a major portal. This may cost a flat fee or a percentage of sales generated from the ad. To stake out a longer-term position on the Web, you can pay to sponsor a page on a Web site or e-mail newsletter that targets your customer base.