Promotional Strategies (Edexcel IGCSE Business)

An Introduction to Promotional Strategies

• The promotion element of the marketing mix includes a variety of promotional strategies
   

Diagram: Types of Promotion

The different types of promotional methods available to a business to communicate with their target market

• Each method has advantages and disadvantages associated with their use

• Businesses must select the most appropriate methods for their product/service, target audience and budget  

Advertising

• Advertising makes use of the media, such as television, newspapers and radio, to promote products or brands

  • It can reach large audiences and increase brand awareness

  • Advertising can also be used to create a specific brand image or message

    • E.g. The advertising campaign run by Compare the Market (Meerkat) uses humour to make shopping for financial products more attractive
      

  • Specialist media can target specific market segments

    • E.g. Upmarket furniture brands place advertisements in magazines such as Homes & Antiques and Country Life
      
      

• Advertising is an expensive promotional strategy 

  • E.g. In the US high viewership for the Super Bowl means that 30-second tv advertisements have been sold for as much as $6.5 million

  • In most cases, external specialists or media agencies create attractive and creative advertisements

Sponsorship

• Sponsorship is a form of public relations where a business provides financial or other support to an event, team, or organization in exchange for marketing exposure
  

• Sponsorship can take many forms, such as logo placement or naming rights

  • E.g. Through its sponsorship Emirates gives its name to Arsenal Football Clubs' stadium
    
    

• Major sporting events often attract numerous sponsors keen to align their brand with success

  • Their logos will appear on official merchandise, within sports venues and on promotional materials
    

Diagram: Sponsors of the 2024 Paris Olympics

Sponsors of the 2024 Paris Olympics include some of France's leading brands

• However, sponsoring high-profile events can be very expensive and it may be difficult to determine the impact it has on driving sales

Product Trials

• Prior to a full product launch, product trials involves introducing a product to some customers to assess the market
  

  • The product may be released to customers in different geographic areas or to specific demographics, such as customers between the ages of 18 and 35
    

• Product trials can also be offered to encourage customers to try out a product for a lower price for a limited period of time

  • E.g. Some magazines offer half-price trial subscriptions for a certain number of issues
    

• Product trials help gauge demand and collect feedback on the product prior to launching on a large scale

  • It can help businesses forecast product sales, plan advertising campaigns and determine effective distribution strategies

  • For example, a retail clothing store planning to expand its products with a new range of fashion accessories could choose a small group of loyal customers to try the products and offer their opinions.

  • After receiving feedback from these customers, products could undergo design changes, appropriate promotional strategies could be developed and appropriate quantities of stock could be organised
    

• However, product trials may not be suitable for all types of products

  • E.g. Products that are durable or purchased infrequently are less likely to see repeat sales following a trial
    

• It takes time and money to run effective product trials

  • A business may lose its first-mover advantage as rivals may be able to launch products more quickly

Sales Promotions

• Sales promotions are incentives or discounts that encourage customers to buy products

  • They are often temporary and are designed to attract new customers to try a product for the first time and become loyal to the brand

  • Examples of sales promotions include free samples, buy one get one free (bogof), discount coupons, loyalty cards, and competitions
    

Diagram: Examples of Sales Promotions

Sales promotions can include price reductions and encouragements to purchase a greater volume of products

• Sales promotions can quickly boost sales though impulse purchases or customer engagement
    

• They are also an effective tool to clear out excess stock, promote a new product or raise cash quickly
  

• However, for a limited period, revenue per item is reduced

  • This is likely to increase the break-even point

  • Customers may be unwilling to pay a higher price once the sales promotion has come to an end
     

Branding

• Branding is the process of creating a unique and identifiable name, design, symbol, or other feature that differentiates a product/service or company from its competitors
  

• Strong brands are often well-known within their markets, highly trusted and add credibility to the products a business sells
  

  • Businesses often align their brands with celebrities that demonstrate the qualities with which they wish their brand to be recognised

    • E.g. Sports stars including Maria Sharapova, Derek Jeter and Rory McIlroy have multi-million dollar endorsement arrangements with Nike 
      
      

  • Customers may be willing to pay more for a product that is associated with a well-established brand as they perceive products with strong branding to be of higher quality and therefore worth the extra cost
    

• However, building a brand can take a long time and will require significant investment in promotional activities to become well-known
  

• Businesses may be subject to negative publicity if those associated with a brand are involved in a scandal or controversy

  • E.g. In 2022 Kanye West was dropped by sports brand Adidas after his anti-Semitic outbursts