Above and below the line promotion

Above and below the line promotion 1 Introduction In terms of the general perception of all of the marketing mix elements that a firm may employ, it is perhaps promotion that is the most prominent P in the 4 Ps. In fact to many people promotion is marketing. Promotion is a part of a firms overall effort to communicate with consumers and others about its product or service offering. Both the company and the consumer have needs which they aim to fulfill; the profit making company wishes to improve or maintain profits and market share, and gain a better reputation than its competitors, and the consumer aims to reach his or her personal goals. The total product offering allows each party to move towards these goals, offering a bundle of satisfactions which fulfill needs in an instrumental and a psychological sense. The phrase Marketing Communications is generally preferred to the term promotion, this term being reserved for a branch of communications called below-the-line sales promotion. 2 Promotion or Marketing Communication? In a sense all marketing communication activity is a form of promotion, that is in one way or another is attempting to promote the interest of the brand, product range and/or company. What differentiates above the line activity from below the line activity is a somewhat arbitrary division. There is no universally accepted definition of either. Below the line activity is loosely classed as non-media advertising. Basically if an advertisement is submitted to a publication and a commission is paid to the advertising agency to feature the piece then this is deemed to be above the line communication. If no commission has been paid, for example in the case of a public relations press release, a trade exhibition or a sponsored sports event, this is referred to as below the line activity. This distinction is accepted by most and is the distinction adopted here. 3 Real and implied product attributes The role of marketing communications is to communicate the benefits of the product, service or firm to potential consumers and indeed the same process is undertaken in not for profit situations like political parties. The benefits marketing communicators try to convey can be real although many of attributes are implied through association or suggestion. This has been described as a total bundle of attributes that the consumer perceives in a holistic manner. In other words, consumers see the product or service offering as a unified whole, rather than a bundle of separate component parts such as its price, packaging, shape and so on. In this way, marketing communications conveys the meaning of the companys total product offering, helping consumers attain their goals and moving the company closer to its own goals. Many products, particularly in the fast moving consumer goods (FMCG) category, are very similar to other products in their class. For example margarines are basically similar no matter what brand is selected, and the same goes for many fmcg products. In times of shortage, such as during the war years, goods were treated as homogenous commodities, and basically soap was soap! In less developed countries the same is true today. From the study of buyer behaviour it was noted that Maslow described the different needs of human beings as being hierarchical in nature. At the bottom of the pyramid physiological needs such as hunger and thirst are of primary concern to the individual, almost to the exclusion in fact of anything else. Marketers can make use of this phenomenon and this can be witnessed in advertising soft drinks such as Coca Cola or fast food such as Burger King, McDonalds or KFC. Only when these basic, but important, physiological needs are satisfied will the individual turn his or her attention to the next category of need in the hierarchy. Their next need is safety and that of their family. In modern society these needs are reflected in goods and services such as burglar alarms, car locks and alarms, double glazing, external lighting, insurance, saving schemes etc. Marketers use the motive of fear in order to market such products. Thereafter loftier concerns assume more importance. People need to feel part of a group, appreciated by others and have the opportunity to both give and receive love. Fashion items like perfume, supporting the same pop group or sports team are all examples of how marketing uses social needs to sell products and services. Esteem needs can be translated into products and services through high status marquee cars, designer clothes or expensive holidays. Finally we reach the higher order need of self-actualisation. Only in very wealthy countries is it possible to have large sections in this category. The best example here is probably in California, especially in cities such as San Francisco where people can indulge in a variety of alternative life styles. Books by self help gurus, health supplements exercise videos are examples of products aimed at this motive. 4 The marketing communications mix Promotion describes the communications activities of advertising, personal selling, sales promotion and publicity/public relations. Advertising is a non-personal form of mass communication, paid for by an identified sponsor. Personal selling involves a seller attempting to persuade a potential buyer to make a purchase. Sales promotion encompasses short-term activities such as giving coupons, free samples, etc. that encourage quick action by buyers. The company has control over these three variables, but has little control over the fourth variable, publicity/public relations. This is another non-personal communication method that reaches a large number of people, but it is not paid for by the company and is usually in the form of news or editorial comment regarding a companys product or service. Companies can gain some control over the publicity it receives by the release of news items. Put together, these promotional activities make up the promotional or communications mix with varying emphasis on each element according to the type of product or service, characteristics of consumers and company resources. Company size, competitive strengths and weaknesses and style of management all influence the promotional mix. Other communications elements with which promotion must be coordinated are the product itself, price and distribution channels used. Product communication, including brand name, design of packaging and trade-marks are all product cues which convey a message about the total product offering. Price can communicate different things under varying circumstances, for instance conveying prestige appeal for those buyers who perceive that a high price is equal to quality and prestige. The place in which the products are to be found also has notable communications value. Retail stores have personalities that consumers associate with the products they sell. Products receive a halo effect from the outlets in which they can be found and two stores selling similar products can project entirely different product images. For example, a perfume sold through an upmarket store will have a much higher quality image than one sold through supermarkets. 5 The Marketing Communications Process Effective communication means effective marketing. Buyers perceptions of market offerings are influenced by the amount and type of information they receive as well as their reaction to that information. There must be a good flow of information between seller and buyer to assist decision-making that precedes a purchase. An effective marketing communications system also allows feedback from the consumer to the seller. Some people have a psychological predisposition to buy products and services that are new to the market. This predisposition can be modeled with the use of a normal distribution. Certain people derive a great deal of pleasure from acquiring new products and being first in the market. Such people have a low level of perceived risk and in fact they positively like the risk and excitement associated with the purchase of new, innovative products. These people are referred to as innovators and, according to Everett Rogers account for about 2.5 % of the population. The next group of people displaying a tendency to buy new products are known as early adopters and account for approximately 13.5 % of the market. These are still highly adventurous purchasers and the possession of innovative new products gives them a high present value. They still have a low level of perceived risk but are slightly more risk adverse than the innovator category. The next two groups, Early Majority and Late Major ity account for the bulk of the potential market, 64% in all. Most people fall in to one of these categories. Finally the Laggards are people who are not really infested in new product development and tend to purchase products only when their old product is worn out and stops working. This theme is returned to later under product issues. A key question for the marketing communicator is: Are the innovators and early adopters also opinion leaders? The majority of potential customers are too risk adverse or too disinterested to be first in the market for an innovation. They are largely unaffected by the media communication about the innovation. Instead, they are influenced by people that they know who they regard as opinion leaders. Although some individuals my be innovators for many products and services, it is more likely that they will be classified as such for a limited range of products. For example a computer enthusiast may be regarded as a innovator for new computer products. Similarly, someone who is interested in photography may be regarded as opinion leaders in relation to this product but not others. A new brand of toothpaste containing baking soda is not really that new to people; after all, it is still just toothpaste. A vacuum cleaner for your garden is on the other hand quite a radical innovation. These products have recently come on to the market although most people, even keen gardeners seem a little unsure as to whether they should buy one or not. If these products are good, then the message will soon circulate by word of mouth and soon most households will own one, just as most own a lawn mower or a lawn edger and indeed these latter products were considered to be a radical innovation only a few years ago. 6 Marketing related messages. Marketing communications can be defined as the process of: presenting an integrated set of stimuli to a market target with the aim of raising a desired set of responses within that market target; setting up channels to receive, interpret and act on messages from the market to modify present company messages and identify new communications opportunities. As both a sender and a receiver of market-related messages, a company can influence customers to buy its brands in order to make profit. At the same time it can stay in touch with its market so that it can adjust to changing market conditions and take advantage of new communications opportunities. 6.1 The source of the message Receivers of a message are often greatly influenced by the nature of its source. If an audience perceives a communicator as credible, then they will be more likely to accept his or her views. If, on the other hand, the audience believes that the communicator has underlying motives, particularly ones of personal gain, then he or she will be less persuasive than someone the audience perceives as being objective. Some advertisers use candid television interviews with homemakers in order to enhance their credibility and eliminate intent to persuade, sometimes asking consumers to explain why they buy a particular brand or asking them to trade their chosen brand for another. Another method used by companies to increase credibility is to have the product endorsed by an expert with appropriate education and knowledge on a given subject. This source will be more successful in changing audience opinions. Specialized sources of information are often perceived as expert sources, and are successful due to the fact that messages are aimed at selected audiences, for example the use of sports professionals as promoters for brands. The credibility of a source is also a function of its perceived status or prestige. The higher the perceived status of a source, the more persuasive it will be. If a receiver likes a source, it will be more persuasive. It is clear that age, sex, dress, mannerisms, accent and voice inflection all affect source credibility and subtly influence the way an audience judges a communicator and his/her message. A source high in credibility can change the opinion of receivers, but available evidence suggests that this influence disperses in a short time after the message is received. It has also been observed that where an audience initially receives a message from a low-credibility source, their opinion change increases over time in the direction promoted by the source. This is referred to as the sleeper effect. Another aspect of this is that when a high-credibility source is reinstated, for example by a repeat advertisement, it has been found that audience agreement with the source is higher after a period of time than if the source had not been reinstated. For a low-credibility source, reinstatement results in less agreement with the source than with no reinstatement, and it is said that under these circumstances reinstatement negates the sleeper effect. 7 Media Advertising Media advertising communicates information to a large number of recipients, paid for by a sponsor. It has three main aims: To impart information To develop attitudes To induce action beneficial to the advertiser (generally the purchase of a product or service). An advertisement for washing powder is paid for by the manufacturer to achieve greater sales; a party political broadcast aims to increase votes. It must be remembered that advertising is only one element of the communications mix, but it does perform certain parts of the communicating task faster and with greater economy and volume than other means. How large a part advertising plays depends on the nature of the product and its frequency of purchase. It contributes the greatest part when: Buyer awareness of the product is low Industry sales are rising rather than remaining stable or declining The product has features which are not obvious to the buyer The opportunities for product differentiation are strong Discretionary incomes are high A new product or new service idea is being introduced. 8 Advertising models These have been drawn from several sources, particularly psychology, and from advertising practitioners in order to explain how advertising works. 8.1 The stimulus/response formula This was used at first, later models taking into consideration the environment in which the decision to buy is made. Daniel Starch said in 1925 for an advertisement to be successful it must be seen, must be read, must be believed, must be remembered and must be acted upon. This model assumed that the advertisement is the main influence on the state of mind of the consumer in respect of the product and makes no allowance for combined or multiple effects of advertisements. 8.2 The DAGMAR philosophy Colleys DAGMAR model in 1961 (Defining Advertising Goals for Measured Advertising Results) allows for the cumulative impact of advertisements and also maps out the states of mind consumers pass through: From unawareness to awareness; to comprehension; to conviction; to action. This is described as the marketing communications spectrum. Advertising, along with promotion, personal selling, publicity, price, packaging and distribution, move the consumer through the various levels of the spectrum as follows: Unawareness/awareness The advertisement tries to make potential customers aware of the products existence. Comprehension The customer recognizes the brand name and trademark and also knows what the product is and what it does; knowledge gained from the advertisement or from an information search prompted by it. Conviction The customer has a firm attitude, preferring a particular brand over all others. Preferences may have an emotional rather than rational basis. Action Some move is made towards purchase, thus the advertisement has been acted upon. This illustrates the concept that the purpose of advertising is to cause a change of mind leading toward purchase, but it is rare for a single advertisement to have the power to move a prospect from complete unawareness to action. Effectiveness is judged by how far an advertisement moves people along the spectrum. 8.3 The Lavidge and Steiner model This consists of a hierarchical sequence of events on six levels: Awareness Knowledge Liking Preference Conviction Purchase These steps divide behaviour into three dimensions: cognitive (the first two), affective (the second two) and motivational (the third two). Although this differs from the DAGMAR model in the number and nature of stages, there is agreement that purchase is the result of the persuasion elements, making the assumption between changes in knowledge and attitude towards a product and changes in buying behaviour there is a predictable outcome. Dissonance theory, however, illustrates a two-way relationship, with behaviour influencing attitudes as well as attitudes influencing behaviour. After making a decision to purchase, the prospect will be involved in cognitive dissonance and will actively seek information to reinforce the decision, focusing on attractive features and filtering out unfavourable data. The major implication of this is that advertising for existing brands in the repeat purchase market should be aimed at existing users to reassure them in the continuation of the buying habit at the expense of the competition. 8.4 The Unique Selling Proposition This was developed by Rosser Reeves (1961) who reported the principles his agency had adopted for 30 years. This states that the consumer remembers one key element of an advertisement a strong claim or concept. This proposition must be one that the competition does not offer, which will be recalled by the consumer and will result in purchase at the appropriate time. 8.5 The brand-image school This was led by advertising practitioner David Ogilvy who focused on non-verbal methods of communication to invest a brand with agreeable connotations aside from its actual properties in use, such as prestige and quality. It must be remembered that an advertisement is the channel through which the sponsor communicates their message. The encoded message reaches recipients, through advertising or salespeople, who then decode and absorb it either fully or partly. The quality of the transmission can be distorted by noise occurring because the receiver does not interpret the message in the way the source intended (due perhaps to differences in cultural backgrounds of the two parties). It may however be because of cognitive dissonance which occurs when peoples receipt of the message does not agree with what they previously believed. Dissonance may cause a number of different reactions by the receiver: Rejecting the message Ignoring the message Altering the previous opinion Searching for justifications The first two reactions are of course negative, and from this feedback the source may change the message or stop communicating altogether with a particular receiver who is not receptive to the sources ideas. It can, therefore, be seen that advertising does not always convert people into users of a particular product. It can, however, have a positive effect in preventing loss of users, and increasing their loyalty. 8.6 Advertising by objectives Advertising situations are so varied and unique that it is not possible to generalize about how advertising works. Any potential advertiser should therefore adopt an advertising-by-objectives approach that will make clear what they are trying to achieve, how they will achieve it and how they are going to measure its effects. Few companies give any detailed scientific thought to exactly what they are trying to achieve through advertising. Clear objectives are needed to aid operational decisions, which include: The amount to be spent on a particular campaign The content and presentation of the advertisement The most appropriate media The frequency of display of advertisements or campaigns Any special geographical weighting of effort The best methods of evaluating the effects of the advertising. Corkindale and Kennedy (1976) found that systematically setting and evaluating objectives provided the following benefits. Marketing management has to consider and define in advance what each element in the programme is expected to accomplish. An information system can be set up to monitor ongoing performance, with the nature of information required clearly defined. Marketing management will learn about the system it is operating from accumulated experience of success (and failure) and can use this knowledge to improve future performance. Majaros (1970) major study on objective setting revealed that most managers saw increasing sales or market share as their main advertising objective. In fact, this is a total marketing objective and it is unreasonable to expect to achieve this objective through advertising alone (unless it was the only element of the marketing mix used, as in direct mail and mail order businesses). Majaros study also revealed that methods of evaluation used by most companies were not relevant, and that clear, precise advertising objectives, known to all involved, would rectify this situation. The following advantages of the advertising-by-objectives approach became clear. It helps to integrate the advertising effort with other ingredients of the marketing mix, thus setting a consistent and logical marketing plan. It facilitates the task of the advertising agency in preparing and evaluating creative work and recommending the most suitable media. It assists in determining advertising budgets. It enables marketing executives and top management to appraise the advertising plan realistically. It permits meaningful measurement of advertising results. When setting objectives, all personnel in a company who have an interest in, and influence on, advertising decisions have different ideas of the purpose of advertising. The Chairman may be concerned with corporate image, whilst the Advertising Manager may see it as an investment direct toward building a brand image and increasing market share. Marketing objectives have to be separated from advertising objectives. Overall marketing objectives should be defined, and the next step is to determine the contribution that advertising can efficiently make to each of these. An advertising objective is one that advertising alone is expected to achieve. Advertising objectives should be set with the following points in mind. They should fit in with broader corporate objectives. They should be realistic, taking into account internal resources and external opportunities, threats and constraints. They should be universally known within the company, so that everyone can relate them to his or her own work and to the broader corporate objectives. They need to be flexible, since all business decisions have to be made in conditions of partial ignorance. They should be reviewed and adapted from time to time to take account of changing conditions. Setting advertising objectives should not be undertaken until all relevant information on the product, the market and the consumer is available. Consumer behaviour and motivation must be thoroughly assessed, particularly that of the companys target group of customers. The statement of an advertising objective should then make clear what basic message is intended to be delivered, to what audience, with what intended effects and the specific criteria to be used to measure success. Corkindale and Kennedy used five key words to summarize the elements of setting advertising objectives: WHAT What role is advertising expected to fulfill in the total marketing effort? WHY Why is it believed that advertising can achieve this role? (What evidence is there and what assumptions are necessary?) WHO Who should be involved in setting objectives; who should be responsible for agreeing the objectives, coordinating their implementation and subsequent evaluation? Who is the intended audience? HOW How are the advertising objectives to be put into practice? WHEN When are various parts of the programme to be implemented? When can response be expected to each stage of the programme? 9 Below-the-line promotion. The terms below-the-line promotion or communications, refers to forms of non-media communication, even non-media advertising. Examples of non-media promotions are exhibitions, sponsorship activities, public relations and sales promotions such as competitions, banded packs and price promotions. Below-the-line promotions are becoming increasingly important within the communications mix of many companies, not only those involved in fmcg products, but also for industrial goods. For example dealer incentives, exhibitions and sponsorship activities are all growing in popularity. All forms of non-media communications are a form of promotion if we use the word in the broadest sense. Specific forms of below-the-line sales promotion are discussed below. 9.1 Below the line sales promotion Below the line sales promotions are short term incentives, largely aimed at consumers, but also aimed at the trade e.g. wholesalers, retailers, distributors, etc., along with company employees, usually the sales force. Over the past 20 years or so there has been greater pressure on marketing budgets and a greater demand on marketing management to achieve marketing communications objectives more efficiently. Hence marketers have been searching for a more cost-effective way to communicate with their target markets than conventional media advertising. A move to below the line promotion is one result of this. A definition of below-the-line sales promotion is given by Hugh Davidson: An immediate or delayed incentive to purchase, expressed in cash or in kind, and having only a short term or temporary duration. This definition highlights one important characteristic of below-the-line sales promotion that is its short term nature. Most conventional above the line advertising campaigns are medium to long term in nature. Below the line sales promotions tend to be short term in nature. Rarely does a sales promotion last for more than six months, and the majority last for much shorter periods. All promotions are variations of one basic type or another, but since the sales promotion is dynamic by nature new types will be developed in the future. The sphere of sales promotions generally include the following: Display materials (stands, header boards, shelf strips, wobblers) Packaging (coupons, premium offers, pack flashes) Merchandising (demonstrations, auxiliary sales forces, display arrangements) Direct mail (coupons, competitions, premiums) Exhibitions Industrial promotions also include the above elements, but with modifications to make them closer in type to those used by manufacturers of consumer goods for their retailers; designed to gain orders over long periods. 9.2 Sales promotion planning A full plan is needed to ensure that each stage of a promotion is reached: Analyse the problem task Define objectives Consider and/or set the budget Examine the types of promotion likely to be of use Define the support activities (e.g. advertising, incentives, auxiliaries) Testing (e.g. a limited store or panel test) Decide measurements required Plan timetable Present details to sales force, retailers, etc. Implement the promotion Evaluate the result 9.3 Advantages and disadvantages of sales promotions Advantages Easily measured response Quick achievement of objectives Flexible application Can be extremely cheap Direct support of sales force Disadvantages Price-discounting can cheapen brand image Short-term advantages only Can cause stress with retailers Difficulty in communicating brand message 9.4 The importance of sales promotion It is often difficult to know which marketing expenditures can be attributed to sales promotion. For example price reduction can cause confusion 10% off a packet of biscuits is a sales promotion, but what about price discounting by manufacturers? 10 Telephone marketing Telemarketing can be defined as any measurable activity that creates and exploits a direct relationship between supplier and customer by the interactive use of the telephone. The American Telephone and Telegraph Company define it as the marketing of telecommunications technology and direct marketing techniques. Telephone marketing can take the forms of in-coming call and out-going call. In-coming call telephone marketing usually makes use of special numbers, which enables the caller to call free-phone or at local call rates. Such campaigns are usually used in conjunction with other marketing communications tools. 11 Direct mail and direct marketing Direct mailing is the use of the postal service to distribute promotional material directly to a particular person, household or firm. It is often confused with the following related activities, which all fall under the general heading of direct marketing. Direct advertising One of the oldest methods of reaching the consumer, with printed matter being sent directly to the prospect by the advertiser, often by mail, but sometimes by through the letter box personal delivery, handing out to passers-by or left under the screen wiper of a car. Mail order Mail order advertising aims to persuade recipients to purchase a product or service by post, with deliveries being made through the mail or other carrier or through a local agent. Thus it is a special form of direct mail, seeking to complete the sale entirely by mail and being a complete plan in itself. Mail order is a type of direct mail, but not all direct mail is mail order. Direct response advertising This is a strategy of using specially designed advertisements, usually in magazines or newspapers, to invoke a direct response, such as the coupon-response press ad, which the reader uses to order the advertised product or request further information. Other variants offer money-off coupons and incentives to visit the retail outlet. The usage and acceptance of direct mail