Promotion (Cambridge (CIE) IGCSE Business)

Revision Note

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Written by: Danielle Maguire

Reviewed by: Steve Vorster

The Aims of Promotion

Promotion plays a crucial role in generating customer awareness, interest and desire for a product
- It communicates a businesses value proposition to potential customers and helps to differentiate the product or business from competitors

Diagram: main aims of promotion

Promotion aims to support sales of new and existing products, inform customers and improve brand and business image

Above-the-line promotion refers to advertising aimed at reaching a wide audience through traditional mass media channels
- Advertising may use media such as television, radio, newspapers, magazines and outdoor sites such as billboards
Below-the-line promotion includes marketing communications over which a business has direct control and which do not make use of mass media
- These channels include direct marketing, sales promotions, personal selling and public relations (PR)

Types of Promotion

Businesses have a wide choice of promotional tools and techniques
- They must select the most appropriate methods for their product, target audience and budget

Diagram: types of promotion

**Businesses may choose to use several of these methods to promote their products**

Evaluating the Different Promotional Methods

Method	Explanation	Advantage	Disadvantage
Advertising	Promotion through paid channels such as television, radio, print media, online advertising and outdoor advertising	Can reach large audiences and increase brand awareness Can create a specific brand image or message, e.g. the advertising campaign run by Compare the Market (Meerkat)	Memorable advertising campaigns can be very expensive The effectiveness of advertising is often difficult to measure Many customers tune out or ignore advertising
Direct Marketing	Communicating directly with customers through email, text message, social media or post	Targets specific audiences and allows personalisation of the message to individual customers Businesses can track results (for example, online advert clicks) and adjust their strategy accordingly	Can be intrusive as customers may perceive it as spam Can also be costly, especially if businesses need to purchase customer databases
Sales Promotions	Temporary incentives or discounts such as free samples, buy one get one free (bogof), discount coupons, loyalty cards,] and rebates (customers have to mail in to receive money back)	Can quickly boost sales or customer engagement through impulse purchases Can help to clear out stock or promote a new product Can be targeted at specific groups of customers	Heavy discounting reduces revenue significantly Attract deal-seeking customers who may not be loyal to the brand May reduce sales of full-priced products
Personal Selling	A salesperson interacts with potential customers one-on-one either in person or through digital channels	Builds relationships with customers and helps to understand their specific needs Can provide personalised advice and guidance to customers	Hiring and training sales staff increases costs Difficult to scale the approach to larger audiences
Sponsorship	Agreement where a business provides financial or other support to an event, team, or organisation in exchange for marketing exposure Can take many forms, such as logo placement or naming rights (For example, Arsenal's Emirates Stadium)	Builds brand awareness and credibility Creates emotional connections with the target audience May support specific business objectives such as entering new markets or reaching new customers	Sponsoring high-profile events or properties can be expensive May not directly drive sales Negative publicity is a risk E.g. In 2022 Kanye West was dropped by sponsor Adidas when he made a series of offensive statements
Public Relations (PR)	Building relationships with the public and manage business reputation Include media relations, product launches, crisis management and community outreach	Can enhance a business's reputation and credibility For example, a brilliant PR strategy helped KFC to communicate with customers in 2018 when supply chain issues causes UK and Ireland KFC outlets to run out of chicken Cost-effective when compared with advertising or personal selling	Can be time-consuming Difficult to measure the direct impact of PR activities on profits
Digital Communications	Promotions or communication delivered electronically, such as social media, search engine optimisation (SEO) or social media apps such as Instagram and Twitter Can be used for building brand awareness, generating leads or driving sales	Can be highly targeted to specific customer segments Can provide real-time engagement and feedback from customers	Easily ignored or filtered out by customers May require significant investment in technology or data infrastructure May not be effective for reaching older or less tech-savvy customer segments

Spending the Marketing Budget Effectively

A marketing budget is the plan for marketing spending over a specific time period
- A budget helps the business to determine how much can be spent on advertising, sales promotions and other promotional activity
- It allows the effectiveness of the marketing department to be assessed
The size of the marketing budget can be calculated in several ways
- Using market and competitor averages
  - E.g. using a proportion of sales revenues
- Using the businesses marketing objectives
  - E.g. How much needs to be spent to increase market share by 5%
- Using figures from the the previous year and adjusted for known changes in the marketing activities this year
  - E.g. the budget may have increased this year due to the development of a new product
A small budget limits the media a business can use for advertising or the techniques it can use
- Smaller businesses often find it difficult to use promotion to compete with larger businesses
- Online promotional activity may be the most cost-effective way to reach large or targeted audiences
A business will need to compare the cost of promotional activity with increases in sales it generates
- Over time businesses will determine the most effective methods for their specific circumstances

Examiner Tips and Tricks

Make sure you can select suitable promotional strategies for particular products and explain why they are suitable

Remember that advertising does not necessarily increase sales and profits. More subtle promotional efforts can achieve outstanding results too

Advertising may increase sales but if prices have been reduced and advertising expenditure increased then profits may not increase

Last updated: 23 October 2024

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