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The Promotion component of the Marketing Mix is perhaps the most visible of the four, and therefore subject to the most public criticism. It is also probably the least understood by consumers and critics alike. The Promotion component is essential for all firms, whether they feel like they need it or not. In essence, this component is the communication outreach program of the firm, and silence on behalf of the firm can spell extinction.

This lecture will review the basics of the Promotion component, and then examine several current issues pertinent to the field, such as the influence of advertising on children, infomercials, advertising and promotions to middlemen, and more. The most obvious topic--advertising on the Internet--will be deferred until a future lecture at which time it can be examined more fully. (For an interesting yet cynical view of advertising and promotion in the free world, visit Adbusters.com.)

What Exactly Is Promotion?

"Promotion" is much more than what the word implies. The average consumer already probably thinks that promotion=advertising, which is only partially true. There are several other ways in which the firm can communicate with its various publics, and advertising is just one. A better definition would be promotion=communication, as we will see below.

It is understandable that people would make this equation in their minds, because advertising is the most visible (and audible) type of communication that firms do. Consumers are confronted with thousands upon thousands of advertising messages each day, without realizing they are also exposed to many other forms of communication.

Marketers have at their disposal four different types of communication, which are collectively known as The Marketing Communications Mix. They are as follows:

1. Advertising, which has the following traits: it is paid for, it has an identified sponsor (i.e., the advertiser's name is clearly identified), it is public, it is pervasive, and allows for a high degree of creativity. Advertising is virtually unavoidable in its various forms, no matter how hard a person tries to avoid it.
2. Sales Promotions, which are a short-term inducement to buy. They include such tactics as contests, sweepstakes, sales, and other strategies that serve to motivate the consumer to act now. Sales promotions must be coupled with advertising in order for them to be effective. Why must they be short-term? If they were not, there would be little reason for consumers to act quickly. Thus, a sale should last only a few days or a week; a coupon should have an expiration date; a contest must have an end.
3. Publicity, which is a lot like Advertising, except that it is not paid for. It is the fine art of creating newsworthy events that will attract the attention of the media, who will then provide coverage at no expense to the firm. Publicity is often given much more credibility than advertising because it appears in the context of a news story rather than in an ad. There exists the possibility for great creativity with Publicity; in fact, most large corporations have a Public Relations Department (or some such similar-named entity) for the purpose of serving as a liaison between the firm and the media, and for generating favorable media attention. Examples include: a ground-breaking, a new product introduction, expansion into a new market, etc. Publicity hounds use the press release as their primary tool of the trade.
4. Personal Selling, which is one-on-one selling/buying. Unlike the other three components above, Personal Selling demands a response now. Personal Selling is not needed for most of the products we purchase, like food, CDs, some clothing, and books. Only in those product categories where assistance and expertise are needed (and welcomed) will we find a high degree of Personal Selling.

Iin order for advertising to occur, Marketers must make use of the many different types of media available to them. While the word "media" conjures thoughts of TV and newspapers, etc., that is only partially true. "Media" will be used in the stricted sense here, meaning it is the means by which communication occurs. In other words, TV and newspapers are two different "vehicles" through which Marketing communication can take place.

The list below examines the different types of media that Marketers can utilize in their communications program:

1. Television, which is a very expensive media form, but provides the greatest outlet for creativity and impact. With the advent of cable and satellite TV, television now offers options for both "broadcasting" and "narrowcasting," meaning that there are options available that can reach the masses (e.g., the major network stations), as well as options for reaching highly specific market segments (e.g., The History Channel, The Weather Channel, etc.). Television is far and away the most expensive media outlet, with a 30-second ad during the Super Bowl fetching well over $2 million, and the same ad during  Seinfeld's last episode costing about the same. Still, advertisers willingly pay these fees because they see television as the most influential media form available.
2. Radio has had to redefine their domain of influence in the past 50 years. Once the mainstay of the family living room, the radio has now been relegated to the automobile and the workplace. Before television, radio was prominent in the USA as both a source of news and entertainment. While it still offers both of these, its prominence has been supplanted handily by TV. Geographically, radio is limited (with the exception of powerful AM radio stations that broadcast over large areas at night); however, narrowcasting is possible with radio, allowing advertisers to reach specific segments. Costs tend to be low, and much lower than TV. Radio suffers in that it is not good for products that need a visual presentation. Satellite radio offers the ability now to broadcast coast-to-coast, but it remains to be seen how this medium will be adopted by consumers
3. Newspapers are able to reach large audiences, but unless you are a mass marketer, you will likely be paying for many ad exposures that will be of no benefit to your firm. Costs can be fairly expensive, depending on the market and the number of newspapers in the area. If achieving wide reach is your goal, then newspapers are a good vehicle; if you are looking for direct hits, a different vehicle may be necessary. Newspapers suffer in that their shelf life is very short, and consumers will only read through once, often using perceptual screens to help them locate only the items matching their interests. Finally, ads often lack clarity and resolution because of the printing process and type of paper used.
4. Magazines are a good place to advertise items that need clear illustrations (e.g., autos, clothing, etc.). Furthermore, magazines now offer advertisers the option of adding aromas to the page (like for perfumes). Another advantage of magazines is that consumers tend to keep them for much longer periods than newspapers. Magazines are, however, a fairly expensive medium, because of high printing and mailing costs.
5. Outdoor Advertising includes everything from billboards to busboards, and benches to blimps. Any place an outdoor ad can be placed is considered fair game, including stadiums. In fact, "sponsorship" of stadiums is a fairly new occurrence, as witnessed by the RCA Dome in Indianapolis, Coors Field in Denver, and others.
6. The Internet, which is a newcomer to the field. Internet marketing will be discussed in a later lecture. In just a few short years, having an Internet presence (i.e., a web site) is as important as having a telephone, mailbox, or business card. With 60-percent of American households now owning a computer, the Internet is a growth area for Marketers.
7. Catalogs and Direct Marketing. While being expensive to product and mail, catalogs are seen as having a very distinct advantage over many type of advertising: people tend to keep catalogs much as they would a magazine, and will often refer to them numerous times before finally discarding them. Other direct marketing efforts, which include direct mail as well as telephone solicitation, are not nearly as effective as catalogs. Direct mail items are frequently tossed in the trash before being opened, and phone solicitors are treated like an unwanted guest. One final form of direct marketing is direct sales, once a popular method of contacting customers. But, with people seldom home, door-to-door sales have diminished in importance.
8. Infomercials/Home Shopping Channels. A fairly recent phenomenon of the last 15 years is the program-length commercial, or, as in the case of home-shopping channels, never-ending commercials. Infomercials (which are disussed in more detail below) are usually 30-minute commercials that "look" like a regular television show, when in fact they are simply staged to look like a program. The numerous home-shopping channels are dedicated on-air catalogs of merchandise. In both cases, consumers place their orders by telephone. While no one wants to admit to watching these advertisements, they continue to be a very effective method of reaching consumers.
9. Specialty Advertsing, which can include virtually anything that a logo can be printed on. Specialty advertising is used to promote the business either by giving away these items to clients or general customers, or by giving them to employees. For example, pens, pencils, t-shirts, Frisbees, key rings, plastic cups, coasters, appointment books, pocket calendars...the list is endless. The specialty advertising business is worth $8 billion per year, and virtually every penny of it is given away. It does not include premium items that are sold to consumers, or are included as package add-ons with regular purchases. Specialty advertising is seen as an effective way of keeping the firm's name in front of the consumer. Visit the Promotional Products Association's website for more information on this enormous industry.

Comparative Advertising

Ever since the Big 3 TV networks removed a ban on its use in 1976, comparative advertising has been on the increase. Whereas advertisers could only refer to competing products as "Brand X," with their new freedom advertisers could call their foes by name and point out their weaknesses. By 1986, NBC reported that a full one-half of the commercials it reviewed were comparison ads.

Comparative advertising is by its very nature one-sided. It showcases the strengths of the advertised products, at the expense of all others. The FTC contends that comparative ads are good for consumers because they provide more information that might otherwise be available. Other supporters of comparative ads contend that users of competing products are more likely to notice the ad and will therefore be more likely to consider the brand being advertised.

There are critics, however, who argue that comparative ads cheapen the advertiser's image, weakens criedibility, and actually increases support and sympathy for the competing brand. Still, some researchers have found instances in which comparative ads generated a positive result for the advertiser, specifically if the ads were done tastefully and credibly, and also in the instance of brands with low market share. in other words, if done properly, these ads may be effective; also, if the advertised brand has a low share, this method may help stimulate sales.

Marketing Communications to the Trade

This is one subject often given short shrift by textbook writers. It is a form of marketing communications that generally goes unseen by the consuming public, yet it occurs on a daily basis, and often just as intensely as consumer-oriented communications. The only things different are the content and, in some cases, the media used.

While most people would be hard-pressed to ever find an ad from a manufacturer aimed at wholesalers or retailers on TV or radio, or even in your city's newspapers, it is perfectly normal for these "business communications" to be found in highly specialized trade publications, The Wall Street Journal, and in direct mail pieces. Businesses dealing with the trade must communicate with their distributors just as much as they would with end consumers. After all, they are selling.

Business-to-business sales communications tend to be focused on the following methods (although cetainly there are other methods used).:

1. Trade publications become the "bible" for industry employees. Publications like Progressive Grocer  magazine are vital reading for those in these industries. Editorial content usually focuses on industry trends, new products, selling techniques, and the like. Advertising content tends to focus on equipment and fixtures, products (stressing margins, of course!), software, etc.
2. Trade shows are a must for all members of the trade, from manufacturers to wholesalers and retailers. This is where the bulk of corporate selling goes on. For example, Interbike  hosts a show every fall in Las Vegas. This trade show has grown to become the largest show in this industry, and attracts hundreds of manufacturers, and thousands of attendees. Trade shows are often the only chances that retailers have to inspect products before stocking them in their stores. Thus, the selling is intense, and price deals are thrown about like candy at a parade. Manufacturers trot out all of their latest products, and pour thousands of dollars into elaborate displays that will hopefully lure buyers in. Booth rental is not cheap: a 10 X 10 booth is $1800 for three days! Furthermore, union labor must be hired at $50 per hour for any construction or assembly that must be done on premise (vendors are allowed to carry in one load per person, period). Still, manufacturers will pay these costs because it is one of only a few chances they will have each year to demonstrate their products to the trade. These shows can often take on the appearance of a carnival, with fast-talking salesmen and attractive models used to entice buyers into the web.
3. Direct Mail is used to simultaneously reinforce trade show efforts, as well as to substitute for trade shows. In the case of the former, direct mail is good; in the case of the latter, it is a cheap but hardly effective use of money. By buying mailing lists of the trade show registrants, manufacturers can do a pre- and post-show mailing, as well as follow-ups throughout the year. Since most trade shows now use ID cards with magnetic strips encoded along the back, vendors can rent data capture systems to build mailing lists of everyone who visited their booth.
4. Direct solicitation occurs mostly after an account has been established, although there are exceptions to this rule. While "cold calls" will always occur, direct solicitation (be it in person, or by phone) usually occurs for the purpose of gathering simple re-orders.
5. The Internet is an emerging means of communicating with clients. These sites are often closed to the general public (i.e., they have a password requirement), because wholesale prices will often be presented. Websites will continue to grow as an alternative method of communication for manufacturers and distributors.

Coupons: Effective or Not?

Over 300 billion coupons are distributed each year to consumers, but are they even noticed? More importantly, do they influence the way consumers purchase?

According to research by Robert Leone, only 2.5-percent are redeemed. The rest are thrown in the trash. Leone concluded that shoppers pick up on messages from all coupons they see, even if they do not use the coupon. In other words, shoppers may purchase products they saw advertised on coupons, but not use the coupon! This means that whatever sales are picked up from the non-coupon users can help offset whatever margins were lost to those who did use the coupon.

Leone's research showed that non-coupon users were more likely to purchase a brand imediately after coupons were distributed, even though they did not use the coupons themselves. This effect trailed off quickly, though. Furthermore, sales of non-couponing brands diminished during this period.

These findings have interesting implications. It means that manufacturers can go ahead and publish coupons, knowing that their sales are likely to increase with little if any negative impact on profits, because many consumers will not use the coupon, but will be influenced to buy the product anyway. In other words, publishing coupons may be a prudent use of advertising dollars because few people will actually collect the savings offered, and the manufacturer stands to gain additional volume without affecting margins. Thus, coupons could very well be a good investment for marketers.

These findings notwithstanding, Procter and Gamble and several others announced early in 1996 that they were considering eliminating coupons entirely, and that they planned to use upstate New York as a test market to study the merits of such a decision.

Attorney General Dennis C. Vacco got involved and demanded that manufacturers not stop couponing. Apparently unaware that only one-fortieth of the US population actually uses coupons, Vacco argued that many citizens (notably seniors, young families, and those on fixed incomes) "rely on coupons to help make ends meet." P&G and Clorox both subsequently announced plans to stop the market test. Vacco's investigation focused on "possible market manipulation by the manufacturers."

Score one point each for consumerism and politicking, but -2 points for common sense and knowledge. If anything, the "manipulation" occurs when non-coupon users purchase the brands they saw on coupons, but didn't bother to redeem themselves. The "manipulation" is self-inflicted.

So where does that leave coupons today? On the Internet, of course! H.O.T. Coupons offers consumers coupons over the Internet (see this press release for more information). Coupons will be issued based on the ZIP Code of the user. Travelers can even receive coupons for other cities by simply entering the ZIP Code for their destination. As the press release says, "No hassle, no clipping, and no waiting for coupons."

With a growing percentage of US homes no owning personal computers, and many of these linked to the Internet and with e-mail access, expect a lot of growth in this area. Marketers will be able to target specific individuals with coupons. Some coupons will be delivered because the person requested them, while others will arrive unsolicited. Consumers will check their e-mail only to find a file full of coupons that can be printed and then redeemed. In fact, if non-coupon-using consumers react to electronic coupons the way they do to traditional printed coupons, the costs savings to manufacturers could be substantial, because they will gain a higher percentage of exposures, and with no printing costs.

Infomercials: 30-minute long Commercials

The Infomercial is a form of Marketing communication that was born in the 1980s, and came of age in the 1990s. It looks and sounds like a regular television show, but is actually a program-length advertisement. Infomercials have provided all-night TV stations with a wealth of material to broadcast, and are now a profit center in and of themselves. Their hard-sell approach quickly sinks its hooks into unwitting viewers, who find themselves reaching for the phone before the 30 minutes are up.

Of course, infomercials have not gone unnoticed by federal officials. While many of the products sold in this arena are legitimate (if unneeded), some infomercials sell "get-rich-quick" schemes and "snake oil" that clearly are a deception. The Federal Trade Commission has issued a brochure about infomercials, and encourages consumers to notify them if they spot any deceptive practices during these shows.

One of the best known of the late-night salesmen is Ron Popeil, owner of RonCo, and maker of such can't-live-without gadgets like the Food Dehydrator, Pasta Maker, and Pocket Fisherman. (For an interesting side trip, see what his daughter Lisa is up to on the web.) For 30 minutes consumers can witness the marvels of these impressive products, hear studio audiences "ooh" and "ahh" ad nauseam, and even see "commercials" during the commercial!

But that's only the tip of the iceberg. Everything from cookware to home gym equipment, miracle cleaning solvents, piano lessons, financial planning programs, and more has been hawked in this format. Celebrities are often hired to lend credence to product claims. Members of the studio audience are paid to ooze with enthusiasm and awe. And staged product demonstrations make the item look like the greatest thing since the Salad Shooter.

The infomercial business is big, and the production costs behind them can be astounding. Multimedia Communications, which produces informercials, quotes statistics from the National Infomercial Marketing Association that the average infomercial costs $450,000 to produce, and that only one in 14 is a success. In spite of this, NIMA reported that 1995 and 1996 infomercial sales were each over $1 billion.

While infomercials may be the stuff of which people like to make fun, they are a viable format for many products, and certainly, as the statistics show, an effective one. Just don't tell your friends that you bought something there.

Advertising to Children

There is probably no aspect of advertising that is more likely to stir up emotions and get blood boiling than the practice of advertising to children. While the practice is heavily regulated in some countries (notably throughout Europe), it is essentially unhindered in the USA, and our little young consumers are left to figure things out for themselves.

Marketers have been advertising to children for decades, from the old G.I.Joe and Barbie ads of the 1960s aimed at little boys and girls, to breakfast cereal commercials that sugar-coated (literally and figuratively) their product to entice the youngsters. Who could forget the Wonder Bread commercials, in which they showed how the product helped kids grow 12 different ways? While the ad admittedly was also aimed at discerning parents, there weren't many children who didn't want to grow up to be big and healthy, so they demanded Wonder Bread from their parents.

At the risk of waxing nostalgic, I recall the halcyon days of my youth, when PF Flyers (a sneaker) were aimed at little kids, and Cap'n Crunch sailed the mighty sea in search of children with a bowl and spoon. And you can't help but wonder if kids weren't the target audience for Shake 'N Bake so that they could assist their mommies in preparing dinner for dear old Dad ("It's Shake 'N Bake, and we hay-ulped!").

But those were the Good Old Days, when life was simple, and advertising messages to kids weren't seen as being manipulative or exploitative. In the 1980s, ads aimed at kids became more and more explicit, and more and more common. Peer pressure at school and on the playground only served to reinforce the messages received from the media. And popular products often had 30-minute-long cartoons created around them so that on any Saturday morning in America, it was a children's advertising fiesta.

By the 1990s, controversy began to mount as tobacco and beer products were featured in campaigns that many felt were attracting children in subtle ways. Furthermore, the Internet became a household word, and children were able to access the world wide web without pesky Mom or Dad around to put a parental "lock" on a particular site like they could to cable TV.

The still-unresolved issue is whether children are unduly influenced by advertising. Critics contend that children are ill-equipped to make informed decisions, and lack the insights that adults have. Supporters respond that children need to be exposed to advertising because it prepares them for adulthood in a highly capitalistic buyer-beware society.

Introductory Allowances and Other Kickbacks

The previous lecture discussed in detail the phenomenon known as slotting fees. As it turns out, slotting fees are just one of many "sales promotions" that manufacturers employ to lure retailers into carrying their products. Of course, retailers see it the other way around: they're just another way to make some extra cash.

To wit: Manufacturers frequently give introductory allowances on sales of new items, like cents or dollars off, or free cases or point-of-sale fixtures with the purchase of a certain minimum amount. Other "deal sweeteners" include co-op advertising (the retailer and manufacturer share the expense of local advertising), return allowances, consignment sales, trade show deals, pre-season deals, and more. Collectively, these activities are nothing less than short-term incentives, much like the sales promos offered to end consumers. Retailers then have the option of passing on the savings to consumers, or pocketing it themselves.

The use of sales promotions is just as prevalent in the trade as it is at the consumer level, and probably more intense. As mentioned in the previous lecture, "Marketing without distribution is dead," and manufacturers will do almost anything to ensure their long-term survival.

Communication is essential for all Marketers, be they manufacturers, wholesalers, or retailers, for each has something to sell, and a public to sell to. Without communication, these publics may very well not learn about the Marketer's offerings. This lecture examined several current issues and practices in the field to illustrate some of the factors that contemporary Marketers must consider during this communication process.

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