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Principles of Marketing Unit 9: Promotion and Integrated Marketing Communications

Promotion is how a firm communicates customer value and persuades people to act. This unit covers the promotion tools, how to blend them into one consistent message, how to set budgets, and the math of media planning.

Covers: The promotion mix, Integrated marketing communications, The communication process and buyer-readiness stages, Setting the promotion budget, Push and pull strategies, Advertising objectives and media measures, Personal selling, sales promotion and public relations

Study guide

The promotion mix, or marketing communications mix, is the blend of tools a firm uses to communicate customer value. Advertising is any paid, nonpersonal presentation of ideas, goods or services by an identified sponsor. Sales promotion offers short-term incentives such as coupons, samples and contests to encourage purchase. Personal selling is personal presentation by a firm's sales force to make sales and build relationships. Public relations (PR) builds good relations with the firm's publics through favorable publicity and a good corporate image. Direct and digital marketing engages carefully targeted consumers directly, often for an immediate response. Each tool has strengths: advertising reaches masses cheaply per exposure, while personal selling is the most effective for building preference and closing complex sales.

Integrated marketing communications (IMC) means carefully integrating and coordinating the firm's many communication channels to deliver a clear, consistent and compelling message about the organization and its brands. Without IMC, a brand's TV ads, social posts, packaging and salespeople may send conflicting messages. The communication process has nine elements: sender, encoding, message, media, decoding, receiver, response, feedback and noise. Noise, such as competing ads or distractions, can distort the message. Buyers move through buyer-readiness stages: awareness, knowledge, liking, preference, conviction and purchase. A related model, AIDA, says a message should get attention, hold interest, arouse desire and obtain action.

Firms set promotion budgets in four common ways. The affordable method spends what the firm thinks it can afford, which ignores promotion's effect on sales. The percentage-of-sales method sets the budget as a percentage of current or forecast sales; it is simple but treats sales as the cause of promotion rather than the result. The competitive-parity method matches competitors' spending. The objective-and-task method, the most logical, defines specific objectives, determines the tasks needed to meet them, and estimates their costs. Firms also choose between two basic strategies. A push strategy uses personal selling and trade promotion to push the product through channels. A pull strategy uses advertising and consumer promotion so consumers demand the product from retailers.

Advertising objectives are classified by purpose. Informative advertising is used heavily when introducing a new product category, to build primary demand. Persuasive advertising becomes more important as competition grows, to build selective demand for a brand; comparative advertising directly compares the brand with rivals. Reminder advertising keeps mature brands in mind. Media planners measure reach (the percentage of the target market exposed at least once during a period), frequency (how many times the average person in the target is exposed) and media impact. Gross rating points (GRP) equal reach times frequency. Cost per thousand (CPM) compares media efficiency: CPM = cost of the ad ÷ (audience size ÷ 1,000).

Personal selling follows a process: prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing and follow-up. Follow-up is essential to satisfaction and repeat business. Sales promotion tools aimed at consumers include samples, coupons, cash refunds (rebates), price packs, premiums, loyalty rewards and contests; trade promotions include discounts, allowances and free goods given to resellers. PR tools include news, speeches, special events, sponsorships and social responsibility activities. PR can create strong impact at lower cost than advertising because people see news stories as more credible than ads, but the firm controls the message less. Every tool must serve the same positioning under IMC.

Key ideas

• The five major promotion tools are advertising, sales promotion, personal selling, public relations, and direct and digital marketing.
• IMC coordinates all communication channels so every message supports one clear brand position.
• Buyers move through awareness, knowledge, liking, preference, conviction and purchase.
• The objective-and-task method is the most logical way to set a promotion budget.
• Push strategies target channel members, while pull strategies target final consumers.
• Informative, persuasive and reminder advertising fit different stages of the product life cycle.
• GRP = reach × frequency, and CPM compares the cost efficiency of media.

Formulas and rules

Common mistakes

• Calling publicity advertising; advertising is paid and has an identified sponsor.
• Mixing up push (through the channel) and pull (consumer demand) strategies.
• Computing CPM as cost ÷ audience, forgetting to divide the audience by 1,000.
• Thinking the percentage-of-sales method is the most logical; it reverses cause and effect.
• Confusing reach (how many see the ad) with frequency (how often the average person sees it).

Before the test, make sure you can

• Identify the five promotion mix tools and their strengths.
• Explain IMC and why consistent messages matter.
• Label the elements of the communication process and the buyer-readiness stages.
• Compare the four budgeting methods and calculate a percentage-of-sales budget.
• Distinguish push from pull strategies with examples.
• Calculate GRP and CPM and compare media options.
• List the steps of the personal selling process and classify sales promotion and PR tools.

Words to know

Promotion mix

The specific blend of advertising, public relations, personal selling, sales promotion and direct and digital marketing tools a company uses to communicate customer value.

Advertising

Any paid form of nonpersonal presentation and promotion of ideas, goods or services by an identified sponsor.

Sales promotion

Short-term incentives to encourage the purchase or sale of a product or service.

Personal selling

Personal presentation by the firm's sales force for the purpose of engaging customers, making sales and building relationships.

Public relations

Building good relations with the company's various publics by obtaining favorable publicity, building a good corporate image and handling unfavorable events.

Integrated marketing communications (IMC)

Carefully integrating and coordinating the company's many communication channels to deliver a clear, consistent and compelling message.

Noise

Unplanned static or distortion during the communication process, which results in the receiver getting a different message than the sender sent.

Buyer-readiness stages

The stages consumers normally pass through on their way to a purchase: awareness, knowledge, liking, preference, conviction and purchase.

Objective-and-task method

Setting the promotion budget by defining objectives, determining tasks needed to achieve them, and estimating the costs of those tasks.

Percentage-of-sales method

Setting the promotion budget at a certain percentage of current or forecast sales.

Competitive-parity method

Setting the promotion budget to match competitors' outlays.

Push strategy

A promotion strategy that uses the sales force and trade promotion to push the product through channels.

Pull strategy

A promotion strategy that uses advertising and consumer promotion to get final consumers to demand the product from intermediaries.

Comparative advertising

Advertising that compares one brand directly or indirectly with one or more other brands.

Reach

The percentage of people in the target market who are exposed to an ad campaign during a given period.

Frequency

The number of times the average person in the target market is exposed to the message.

Cost per thousand (CPM)

The cost of reaching 1,000 people with an ad.

Prospecting

The step in the selling process in which the salesperson identifies qualified potential customers.

Sample practice questions

30 more questions like these, from level 1 to 5, are in the practice set.