Chapter 2

Promotional marketing

How it fits into a business and its marketing purpose

The business process

How do business and marketing fit together, and how does ­promotional marketing fit into that? Take an example: a business vision may be ‘to grow the business’. Convert that into reality; that is, say, sell more to new customers at the same profit margin, so one of the related business objectives for the year ahead specifies a target sales figure which – based on previous sales per customer and covering an extra number for wastage – sets a ‘new customer acquisition’ target figure. This marketing objective then becomes part of the marketing plan and alternative options to using promotional marketing from the promotional mix are considered to persuade these target potential customers to buy. The selected activities are the promotional marketing objectives. For example, a business might advertise, attend a trade show and use direct mail from the promotional mix to obtain new customers. If the business then meets the target, wonderful. The process has worked. The objectives are met and a part of the vision achieved.

Business plans and marketing plans are covered in other books which assist the development of strategy and the objectives at the different levels that arise from that analysis. This book moves on from the promotional marketing objectives – but to explain a little more …

Business and marketing objectives and activities

Marketing helps provide some of the strategic inputs to decide business objectives. If marketing Insight shows that the market is going to reduce or cease, it is unwise to pursue a start-up. An example is a film-based camera business. In May 2006, film cameras had 5 per cent market share, which was falling – digital cameras had arrived. Marketing Insight provides both an analysis of social media and market research; it assesses the risk of competitors responding adversely to your activities, price sensitivity on your profit and the prevailing market conditions. If the findings are adverse, the strategic decision is don’t do it.

Business and marketing objectives must be SMART: Specific, measurable, agreed, reasonable and timebound. Check each objective as you write it, whether it is a business, marketing or promotional objective, to see that it meets each of the SMART criteria. Obvious, but often not applied.

Inherited past plan’s promotional activities. Some promotional activities may be inherited and should always be questioned. A spring promotion = a sale – may be run simply because there has always been a spring promotion. This may well be a waste of time and money. Market Insight will provide the answer – but data or social media analysis need to be tasked to find out.

A clearly defined marketing objective is the justification for spending time and money on promotional activity, or any marketing activity for that matter. It is often said that advertising brings the horse to water and promotional marketing makes it drink. Consumers may be predisposed to buy a whole range of products and services. Sales promotion at the point of sale focuses their attention on a particular product, in a particular place, and provides the incentive to buy at that moment.

Promotional marketing should be planned for implementation at a specific time, but can also be considered and introduced as contingencies. Problems and opportunities inevitably arise during the year, and to keep a business or marketing objective in place you may need to take additional action. Among the problems may be competitors taking business from you, stocks being slow to move, distribution being lost, sales being sluggish (see Brief 2.2) or an expectation that any of these might happen in the near future. Opportunities also come in a variety of forms: to take market share and volume from a competitor, to build awareness in a particular target market, to back up new distribution, to support other marketing activity or at the point of sale or to build on trial gains.

Every promotion must be related to one or more marketing objectives that will be achieved by its implementation. Time spent thinking through the objectives and relating them to your overall marketing strategy is never wasted. Once the marketing objectives have been determined, how are they to be achieved? Through use on their own or in combinations of the marketing tools available to you in what is known as the ‘promotional mix’.

The marketing interfaces with business

This is best illustrated diagrammatically, showing that, from certain business objectives, through derived marketing objectives and after considering the alternative solutions, one set of options is selected and forms a marketing plan. The marketing plan sets out the marketing activities (a group of marketing activities towards one marketing objective may be called a campaign) that are to be undertaken to promote, communicate and persuade customers to change their behaviour and attitude favourably towards a supplier, accepting the business’s offer.

Sales is face to face with the customer at the point of purchase (this is the part that includes experiential or field marketing) and, once the sale is made, there is an order fulfilment process where customer services people deal with any customer difficulties. Order fulfilment itself may be the service provider for a service product, for example hairdressers or garages, which are principally offering a service.

Marketing also becomes involved with new product (or service) development. Some parts of the business may not interact with the customer directly – Figure 2.1 illustrates this with the office and finance element. Finance may become involved with the customer on credit assessment and poor payments, though this is usually handled through customer services. Note that marketing in a business is the key interface at every point with the customer. Marketing promotion includes advertising, PR and non-face-to-face mobile, internet direct marketing and sales. promotion.

Figure 2.1  Business and marketing

Source: Helmsmen Business Consultants.

Having looked at how marketing operates within a business, now consider what marketing in its various parts can do, describing each as a ‘marketing tool’. The tools described here are shown in Figure 2.2, following a logical sequence – the order in which they are applied.

Figure 2.2  Marketing tools

Source: Helmsmen Business Consultants.

The ‘Market Insight’ tool finds out customer needs, competitor activity and ‘whole market’ or category intelligence. Data and social media analysis is essential to establish your position in the minds of customers (the engram – see Chapter 3) and how they rate your products and services and their preferred channels of communication – a multimedia analysis. There are market research specialists operating; you should use someone unconnected with your business who understands how to do it (see Chapter 5).

From Market Insight, you can then decide the brand values (tool 2) and define the Offer (tool 3) – described in Chapter 3. Market Insight should have found the customer preferences for media, channels and formats too, what is now described as the ‘communication canvas’, helping you to decide which media, channel and format to go for (tool 4). You will also be able to establish a sales process (tool 5) from the Market Insight. You then add appropriate promotions (tool 6), providing zip or fun which your potential customers will appreciate. This is what this book is about. Finally you measure (tool 7) whether you (or your business) obtained value from the (revenue expenditure) spend on the marketing promotion you made.

Marketing strategies and tactics

Strategies

Any business activity benefits from being planned in a strategic manner. Strategy is not another word for ‘important’. It is about identifying the firm’s distinctive capabilities and translating them into competitive advantage in the relationships the firm has with its customers and suppliers. It’s about what you – and only you – do best. Promotion is strategic if it enhances the firm’s distinctive capabilities, increases its competitive advantages and builds its long-term relationships.

There are several reasons for taking a strategic approach to planning promotions. It enables one promotion to build on the previous one and to establish a continuity of communication. This makes it possible to communicate long-term psychological values, making promotions work harder. It can produce considerable savings in time and money, and can speed up response times. Strategic planning also enables promotional offers to be fully integrated into the other activities in the marketing programme. Frequently, the characteristics of a good tactical promotion are the characteristics of a good strategic promotion. A good promotion can be both tactical and strategic (‘Hay Fever Survival’, Case study 74, is an example). A bad one can be both bad tactics and bad strategy (‘Hoover’s free flights promotion’, Case study 50, is an example of this).

There are five things you should do in order to establish a strategic approach to promotion:

1 Understand the strategic framework in terms of the competitive advantage and positioning that should underpin every promotion, as with any other marketing activity.

2 Establish guidelines for each product or service, determining the style of promotion that will be appropriate to it – this is the same for all marketing activities.

3 Ensure that promotions are handled or overseen by a sufficiently senior executive so that they are conceived, integrated and implemented professionally.

4 Insist that promotions are researched and evaluated through marketing accountability measurement in a way that enables you to assess their performance and compare it to other types of marketing expenditure.

5 Plan and budget for your use of promotion over the year ahead so that the promotions become integral to your marketing effort alongside other marketing activities.

A cut-price offer on a prestige brand; a promotion that is badly administered, leaving customers feeling aggrieved; an offer that promises more than it delivers – all these can undermine long-term relationships. A feeble ‘me too’ offer copied from a competitor can destroy distinctive positioning.

Sadly, even the largest companies do not always adopt a strategic approach. This is often because responsibility for promotions is pushed down to junior staff, whose time horizons are shorter, who change jobs more frequently and who have not been briefed properly on strategic issues. This is a pity as it makes promotions less effective and does not reflect the importance of promotions in business today. The remedy lies in the hands of senior management. Those charged with responsibility for promotion need to understand the relationships they are dealing with.

Tactics

Taking a tactical approach to promotion means having a number of promotional concepts up your sleeve that can be put into effect as and when they are called for. Large manufacturing companies approach this by issuing their sales force with a range of promotions in concept form that can be put into effect with particular retailers whenever the sales situation demands. It also means having the imagination, speed and resourcefulness to react quickly to competitive pressure and to seize short-term market opportunities. These are tactics at their best.

Change promotions too often and the brand loses its identity. Change them too little and more flexible competitors can overtake you. Promotion is a tool that cuts across all the components of the brand. That is why the balance of tactics and strategy is so important in using promotion effectively. Business success is always an interplay between short-term and long-term, tactical and strategic. Companies succeed by thinking about tomorrow, but they fail if, in so doing, they forget about today; the reverse is also true. The best strategy is always adaptive.

Promotion shares with direct marketing the benefit that it can achieve short-term effects, that campaigns can be conceived and implemented in a matter of days and that the result can be seen in a matter of weeks. As such, promotion fits well with a ‘just-in-time’ approach to business, which is already familiar in manufacturing stock control and delivery cycles. Brief 2.5 and Case study 1 are examples of such promotions.

Most of this book details how to run promotions one by one. These are the building blocks for strategic and tactical promotional planning. It is well worth taking a look at the promotions your company has run over a longish period – say, five years – and asking how they have contributed to its long-term differential advantage. Were they good tactics and good strategy? That is the goal to search for.

The marketing plan

The promotional mix you select is your marketing plan. You get there by going through a business process of preparing business objectives first. Once objectives are clear, you can draw out marketing objectives and look at all the options in the promotional mix before picking those that you believe suit you and will achieve your objectives. The picking process (selection of the communication tools alongside communication channel planning) is helped by using a customer perspective (both existing customers and prospects) at all times and thinking throughout of the offer, the six Cs, your customers’ buying process and their influencers, and your brandgram – the images you want shopper/buyers to have of your brand (see Chapter 3, where all these are covered).

Overcome the easy-life tendency

The process of drawing up a marketing plan is a useful discipline. As with inherited promotions, if you find activities that do not help in achieving your objectives then discard them. They are often put in because someone found it too easy to repeat last time’s plan – beware the lazy approach. A Willott Kingston Smith (WKS) survey found marketers relied too much on agencies to decide for them which promotional tools and channels to use. The consequence is that the promotional mix and the channels selected change little year on year.

If an advertising agency is the sole supplier, beware: A number of agencies are traditionalists that have always made their money from press, poster and TV advertising. Their creative people do not have publicity, sales promotion, direct marketing or websites ‘on their radar’, and unless you insist on all parts of the promotional mix being considered, you may not really get a broad view. The WKS survey found that most agencies only pay lip service to communication channel planning. The way to overcome this is to insist on it or change to a newer agency that does.

The WKS survey found a media buyer view that most marketers are ­incapable of any accountability. Do not be one of them. It is essential to measure the success of achievement of the final list you select for your plan. Allocate responsibility for each activity and objective. With the person responsible for each marketing activity, define success and then set a key performance indicator (KPI) for that marketing activity. Record the KPI and then measure it. The results indicate the success or failure of the marketing activities to allow you to make any necessary changes next time – and/or allow you to select new marketing personnel! (A summary is in Chapter 15; for full coverage, see Value for Money Marketing by Roddy Mullin, published by Kogan Page.)

Planning is essential to achieve focus and to control cost. It is a human weakness to write plans and then leave them in some filing cabinet. A very short document or table is all that is required, and if it is on display it will trigger the conscience. It is all too easy to forget what you originally set out to do. A plan allows you to allocate priorities in case a round of cost cutting means a number of activities fall by the way. It will also provide a record of what you cut and how that affected the outcome when the day of reckoning comes. Equally, if the plan succeeds and the KPI is achieved, you can praise and celebrate. You also have real, quantified experience for next time.

The promotional mix itself

How does promotion fit with the rest of the mix? The promotional mix is generally divided into four different parts:

1 Advertising: paid-for space and time in broadcast (TV, radio and cinema), outdoor (ambient and transport media in addition to posters and balloons) print media or the new media (websites, interactive TV and mobile with SMS and social media) and other paid-for communications.

2 Publicity: information and opinion about your products or services carried by third parties. This is very powerful if you can get it. Celebrity chefs are excellent at raising sales of ingredients or ‘gadgets’. Health and beauty correspondents are recommending anti-ageing creams, etc.

3 Direct marketing: personal presentation to customers or prospects to which they can respond directly through filling in coupons, posting tip-ons, contacting call centres, e-mails etc. The new media – interactive TV, mobile advertising including text messaging, using apps and e-mails – are a part of direct marketing. Personal selling face to face is now a part of direct marketing called brand experiential (old ‘field’) marketing, where a personal presentation of your products or services is made to customers, prospects or intermediaries carried out through a shop, exhibitions, demonstrations, personal selling at customer premises and merchandising.

4 Promotion: incentives and offers that encourage people to behave in a particular way at a particular time and place, usually delivered by one of the other three parts.

This division within the promotional mix helps in a number of ways. It gives a rough-and-ready definition of what each is able to contribute to the mix and helps companies to decide which will be most useful in achieving particular marketing objectives. For example, an industrial company is likely to put most emphasis on direct marketing. A company requiring short-term sales (brand experience marketing) may put a priority on promotion. A company with a startling new product may go for publicity as its best bet. Examination of the division within the promotional mix also helps companies work out the balance between the different parts. Most of the time, there isn’t one part of the promotional mix alone that will do the job, and a balance is needed between all four, and of course this ties in nicely with the need to send six marketing communications to reach the tipping point.

The separate parts are covered in Chapter 6 (for advertising, publicity and media as a generality), Chapter 7 (for the internet and mobile), Chapter 8 (for experiential) and Chapter 9 (for an overview of promotions and what they can achieve).

Summary

A promotion is the culmination of a process. The process starts with the vision of the owners of a business or the leaders of an organisation. Typically, for any year, that vision is converted into SMART business objectives, of which some affect marketing directly and some indirectly; there are a few that have little effect. From the business objectives, SMART marketing objectives can be derived.

After considering the alternative marketing activities available, some bundled as ‘campaigns’, choose a promotional mix to achieve the marketing objectives all set down in a marketing plan. Each marketing activity has a determinant of success, set with a key performance indicator chosen to measure the achievement of the objectives.

Promotions, normally effective over a limited period, are used to add fun and provide real and clearly perceived benefit to customers. Planning for promotions as a strategy and recording their effectiveness over time will reduce the risk of failure and give a business or organisation a lead over competitors. Promotions can be excellent brand enhancers.

Self-study questions

1 Draw from memory a diagram of how marketing fits into a business and then compare it with Figure 2.1. Ensure you have covered all the interfaces with the customer. As an exercise, consider just how well your business interfaces with the customer.

2 What seven ‘marketing tools’ does a marketer have to consider and use? As an exercise, consider each of the tools and the suitability of each for the customers of your business. (Remember, always start with the customer, not the business. You might prefer to advertise in print as it is relatively easy to arrange and visually pleases your CEO – but it is useless if your customers use only mobiles and the internet.)

3 Differentiate between a marketing objective and a marketing strategy.