#marketing
#promotions
#advertising
Promotions, Part 2
Let us analyze that promotion example some more. What were the elements that went into its execution? Who did what?
Conceptualizing the promotion was the work of the marketing team. In most cases, they might have involved their advertising and/or promotions agencies. Someone took charge of the toys – getting the Coke logo printed onto the toy, finding a supplier, getting budgets approved, and scheduling deliveries and packaging it with the product. Someone else took charge of briefing the sales force about it and working out the logistics of implementing the promotion, to include communications materials for the retailers so they know how it is supposed to work and what they are expected to do. Typically, this will also involve a separate promotion for the retailers – to encourage them to carry out the consumer promotion properly, they would have to be incentivized. Translation: if they sell more Coke products during the promo period they will get higher commissions. This part of the sales promotion is known as the Trade Promotion – it is a separate activity targeted solely at the retailers, and its purpose is to entice them to support the sales promotion. To distinguish this part of the promotion from the rest of the many elements that are part of the promotion, some marketers use the term Consumer Promotion. It helps them keep things in perspective. To continue with the rest of the elements of the sales promotion, another person took charge of advertising the promo (in other words, the promo itself needs to be promoted): producing a television commercial, radio commercials, flyers, print ads, posters, preparing a media plan, and getting budgets approved for all of it. This would have involved working with a few outside entities including a creative services advertising agency and/or a design studio, broadcast production houses and studios to produce the TV and radio commercials, talent agencies if the productions involve using talents, and a media specialist agency for the media planning and buying functions.
Just from this one example it is clear that a “simple” promo such as giving away fidget toys is really not as simple as it seems. So much work and so many people and entities get involved in the simplest promotions. To recap, a sales promotion (an activity intended to boost sales) is also a consumer promotion (an activity targeted at the consumer), and often includes a trade promotion (an activity restricted to the retailers). It also happens many times that a company might decide to run an independent trade promotion, meaning a sales promotion that does not involve the consumer. This usually happens when the manufacturer wants to alter in some way how it is doing business with the retailers. For example, the company might have decided to change their bulk packaging, and that instead of the usual palette pack that contains 12 regular cases of Coke, they are switching to a bigger pack that has 24 cases of Coke per pack. This decision was made because savings will be generated from the cost of packaging perspective. Anticipating that there could be some resistance to this from retailers, the company will want to sweeten their deal with their retailers to smooth over the transition to the bigger packs. None of this affects the consumer. When the product reaches the shelf, it will still be in the regular 12 cans per case. So while the switch will mean more money for the manufacturer, it means more work for the retailer, and no impact on the consumer.
Apart from sales and giving away toys, are there other ways of doing promotions? Yes. Plenty of other ways. In fact we have to subdivide the category and still not be able to cover all the various ways that marketers can promote their product. Let us list those that we can easily identify.
- Price off. This is a simple discount concept. Similar to a sale, a product is offered at a reduced price to entice a prospective buyer who may have been hesitating on the basis of price. You see this all the time among produce at the grocery. Fruits, for example, have a very limited shelf life. So after a few days, whatever is left of the stock of avocados is offered at 50% off to get them off the shelf before they expire.
- More product. You will see this most often on household items and toiletries. Detergents and deodorant brands, for instance, will add 20 – 25 percent more product for the same price. This is done by using a slightly bigger pack. And with the bigger pack comes more space to announce the offer.
- Sampling. Any opportunity to offer a free sample to prospective consumers should be availed of by a marketer. While this works best for food products, it also works for certain household products. For example, personal care products are known to offer a free sample pack of let’s say conditioner or body wash that is bundled together with their best-selling shampoo product. The proof of the pudding is always in the eating. So for many products, it will take an actual experience using the product before the consumer decides they want to make a purchase. This is similar to trying on apparel items such as clothes and shoes. Most people will not buy until after they have tried it on.
- Premium on pack. This was illustrated by the Coca-Cola promo discussed above. A free gift item is included in the package as an incentive to buy. A popular example would be McDonald’s Happy Meal. It is so successful that it is virtually institutionalized and the promo has become synonymous with the brand. Fragrances have been known to offer a premium item much larger than the product. Some years ago, at the Duty Free shops in Singapore, you could get a name brand designer travel bag if you buy a bottle of cologne.
- Bundling. As the term suggests, this simply bundles together one product with another. They need not be from the same manufacturer, although that is obviously easier to do. Hence, you will likely see a shampoo brand bundled with its conditioner sister product, whether or not they share the same brand name. One example of bundling products from different manufacturers that had been successful was when a cheese brand was bundled with a pasta brand. Although adding a tomato sauce into the bundle would probably have worked even better. These days the brands that most come to mind when you say “bundling” would be the many insurance companies such as Geico and Progressive, as they peddle their home and auto insurance bundles on TV commercials nonstop.
- Raffles and sweepstakes type promotions. You get a raffle ticket when you buy the product, and a winner is drawn at the end of the promo period. An attractive prize is offered to get attention. Prizes can range from cash to toys and gadgets, to trips and holidays.
- Charity angles. You help the needy every time you buy the product. The manufacturer makes a donation to charity with every product purchased. There is a brand of socks called Bombas that has made a big deal of this approach as they boasted having donated more than a million pairs of socks to charity – which is also a clever way of saying they have sold over a million pairs because their advertising says that they donate a pair with every pair that they sell.
- Themed packaging. This is usually a seasonal promotion. Cereal boxes can have Halloween themed packaging, and maybe even give away some toys or other free stuff to boost sales during the season. Confectionary products are the most visible promotions users during the holiday season.
- Couponing. Coupons are given out at the time of a purchase offering discounts on your next purchase. Or discounts on related products.
- Special events tie-ups with other companies. One short term promotion that was very popular in Manila involved sponsoring a movie premiere. The manufacturer offers free tickets to an upcoming blockbuster film with a certain number of products purchased. The use of the term “premiere” can be misleading. It is not the standard gala type movie premiere, with celebrities on the red carpet. Instead, it is a simple, low-key early screening at a regular theater. But who cares? People get to see a free movie ahead of most other people, and that’s all that matters. Most of the time, this activity is done through a radio station. Now the promo becomes bigger and better, and gets even more attractive.
Here is how it works: the film company negotiates with a top-rating radio station for free ads on the station in exchange for an entire screening schedule on the first day of a film’s regular theater run. The radio station sells this event for sponsorship to say, M&M chocolate candies. The company agrees and pays for the entire package of media values: naming rights for PR publicity, product sampling at the venue, and radio ads. The station runs the ads and announces to its listeners that free tickets are available if they call the station and answer a simple question about the brand (M&Ms) that is sponsoring the entire event. Invariably, the caller will simply be asked to repeat the brand’s slogan or tagline, such as “Melts in your mouth, not in your hands.” This is a “win-win-win-win” scenario for everyone – the consumer gets a free movie (and free M&M samples), the film company gets its movie promoted for free, the radio station gets to promote itself to its listeners for free (and even make money on the sponsorship), and M&Ms get a fantastic promotion that consumers would really enjoy, at the cost of just regular advertising spots on radio. Even the movie house gets free publicity as the venue host.
Understanding Marketing 