Promotion is about communicating to a market intended to sell a product or increase public awareness. Its role is to inform, persuade, and remind consumers about the company’s products. Through it, the company aims to acquire new customers or retain existing customers.

Companies develop a promotion strategy – a systematic action plan to achieve promotion goals. Promotional strategies can vary widely. Some companies rely on advertising, either in conventional media such as television and print media or online channels, by developing digital advertisements. Other methods may involve personal selling, sales promotion, publicity, public relations, direct marketing, and sponsorship. We all know this as the marketing mix.

Promotion objectives

The main objective of promotion is to increase sales by gaining new customers and encouraging repeat purchases. The AIDA model is an important starting point when discussing promotion objectives. It is a cognitive stage in the buying process, including:

• Attention: attract the consumers’ attention
• Interest: creating interest in the product
• Desire: drives the desire to buy
• Action: generate action by purchasing the product

Effective promotion will contribute to the above elements. Promotion seeks to attract attention and create interest in the product, encouraging the desire to buy. Buying the product is the final goal, which may be a new or repeat purchase.

Meanwhile, other aspects related to promotion objectives are:

• Reaching potential customers who may be geographically dispersed where direct selling is impossible.
• Communicating or reminding consumers about existing products and their quality.
• Positioning the product in relation to its main competitors by highlighting its advantages.

Types of promotion

Promotions are divided into two main categories:

• Above-the-line promotions
• Below-the-line promotions

In addition, there are other classifications, namely:

• Into-the-pipeline promotion
• Out-of-the pipeline promotion

Above-the-line promotions vs. Below-the-line promotion

Above-the-line promotion

Above-the-line promotion involves paid independent media. It is often through an advertising agency. Thus, the company has no control. This method usually aims to reach a broad audience to inform products, raise awareness and build brand positioning.

Above-the-line promotion includes advertisements in various media, including:

• Television
• Radio
• Newspaper
• Magazine
• Posters and billboards
• Internet

Above-the-line promotion allows companies to gain wide exposure. Advertising reaches a vast audience in many market segments.

However, above-the-line promotion is expensive. Companies have to pay advertising agencies and mass media. In addition, they have no control over the messages conveyed to the audience.

Below-the-line promotions

Below-the-line promotion is non-mass media promotion focused on the target market. The company has direct control over the target or intended audience because the in-house business designs and produces the promotions. This method usually aims to increase short-term sales and encourage repeat purchases.

Below-the-line promotion can involve:

• Sales promotion
• Direct sales
• Public relations
• Direct mailing
• Sponsorships
• Personal selling
• Fairs and trade shows

Below-the-line promotion offers companies better control than above-the-line promotion. Also, this method is more affordable, making it more suitable for smaller businesses.

However, the drawback is the narrow range. Moreover, the impact lasts for a limited period. Some customers also dislike it because it is annoying, for example, personal selling.

Into-the-pipeline promotion vs. Out-of-the-pipeline promotion

Into-the-pipeline promotion

Into-the-pipeline promotion targets retailers. Companies promote products to encourage them to buy products from companies and maintain and store products in their warehouses.

Into-the-pipeline sales promotion can involve:

Discounts – the company offers discounts when retailers buy in bulk. Thus, they can save on unit costs, allowing them to earn higher profits.

Trade credit – the company offers credit to retailers to pay for goods at a later date. So, they can buy the stock even though cash is limited. However, problems can arise if retailers cannot sell stock and have trouble paying.

Sale or return – the company gives the retailer the right to return unsold stock. This method encourages retailers to try new products without risk. In addition, they are more willing to keep new products because they can return them if they don’t sell. However, the company bears the risk that the product may be returned in bad condition.

Merchandising materials – the company offers free posters and display materials to retailers to show products to customers. This method can improve the retail store’s appearance, attracting customers to promoted products.

Dealer loader – the company gives away extra goods when the retailer buys a certain amount. This is an alternative to giving discounts.

Promotional gifts – the company provides promotional gifts to retailers to hand to customers when purchasing a product. For example, a company offers free bowls with the purchase of detergent.

Staff training – the company offers training to retail staff to increase their product knowledge. For retailers, the training enhances staff skills to serve customers when selling the product, increasing sales opportunities.

Out-of-the-pipeline promotion

Out-of-the-pipeline promotion is carried out by retailers and is aimed at customers. The goal is to encourage customers to buy products from them. Methods can include:

Special offers and discounts – Retailers offer lower prices to encourage customers to try new products. Buy one get one free is also included in this method. After the special offer period ends, the customer purchases at the regular price.

Free gifts – retailers tempt customers by offering gifts when they buy products. For example, they get free toy prizes for children’s products.

Vouchers and coupons – retailers offer customers money-off coupons. This can encourage repeat purchases as customers feel they get a better value for money.

Loyalty schemes – retailers offer customers a way to accumulate points, which can be exchanged for free or discounted products. The more often customers shop, the more points accumulate. So, this scheme can encourage customers to keep coming back to buy.

Free samples – retailers offer customers free samples to test a product. Retailers expect to urge them to buy after tasting the product.

Promotional methods

Advertising

Advertising is paid, one-way communication, usually by paying an advertising agency, to inform potential customers about a product or service. Advertising is important to reach a wide audience to develop awareness, perception, knowledge, and attitude.

Advertising media

Ad exposure depends on the medium used. Thus, choosing an advertising medium is crucial because it influences cost, geographic reach, and effectiveness. For example, online advertising reaches a wider audience at a lower cost than television advertising.

Advertising media fall into the following three categories:

• Print media: newspapers, magazines, and pamphlets
• Electronic media: radio, television, and the internet
• Outdoor media: posters and billboards

Types of advertising

Advertising could be:

• Traditional advertising
• Digital advertising

Traditional advertising uses conventional media and formats. Examples are television, radio, newspaper, magazine, and billboard advertisements.

Meanwhile, digital advertising depends on the internet and relies on online channels such as websites, streaming content, and mobile applications. The format can also be more comprehensive, from text, images, and audio, to video.

Meanwhile, based on the purpose, advertising could be:

• Informative advertising is intended to inform the audience about a product. It may provide detailed information about prices, where and how to buy products.
• Persuasive advertising aims to promote products to create interest, desire, and motivation in audiences to convince them to purchase.
• Competitive advertising is intended to influence consumer choice by making good points about the product and differentiating it from competitors’ offerings.

Then, based on the media used, advertisements can be:

Television advertising promotes the product during commercial breaks. Ads reach a wide audience and use attractive, lively formats to attract customers. However, they can be costly. In addition, viewers may jump to other channels to avoid watching ads.

Cinema advertising promotes products while viewers wait for a movie to start. Ads use attractive formats and can be enhanced with surround sound and 3D effects. Also, viewers are bound by not being able to switch channels. However, one-time ads may be less effective. In addition, viewers often remember the film more than the commercials.

Radio advertising is done during commercial breaks or sponsorship programs. Its reach is relatively broad and relatively cheaper than television advertising. However, the format is more limited because it only relies on sound. Thus, the product is impossible to demonstrate.

Magazine advertising may use ad space or a full-page spread. Ads feature visualizations to increase impact. In addition, they also often target audiences with specific interests such as sports, business, and so on. However, advertising may be expensive for well-known magazines. The reach is also more limited than a newspaper. In addition, demonstrations cannot be carried out because they only rely on visual formats.

Newspaper advertisements are similar to magazine ads. However, they can reach a wider audience.

Digital screen advertisements are placed in public places in a moving image format. The format is more attractive because it combines visual effects, motion, and sound. They have the potential to appeal to a broad audience in busy areas. However, advertising can be expensive for downtown locations. And audiences may ignore them because they are too busy.

Billboard advertisements take a visual or poster format and place them in a public area. Ads can be placed in busy areas to reach a broad audience. They are usually put up a little longer for people to see them many times. However, ad formats rely solely on visuals. In addition, the quality can be affected by the weather and may be damaged by unauthorized persons. Audiences may also ignore them due to daily routines.

Digital advertising uses computers, smartphones, and internet connectivity to promote products. They can be online ads on websites and in-app ads (in-app ads). They are relatively inexpensive and reach a wide audience. They also use attractive formats through text, images, sound, and video. However, ads can be very annoying, and pop-up blockers can prevent viewers from seeing ads. In addition to these two formats, digital advertising includes email and SMS/text ads.

Public relations

Public relations is a way to build good relations and image with the public and stakeholders such as the government, shareholders, employees, and customers. It becomes a promotional channel by increasing media coverage through:

• Events
• Sponsorships
• Press release
• Press conference
• Charitable donations

The above activities contribute positively in:

• Generate positive publicity
• Improve corporate and product image
• Increase brand awareness
• Facilitate new product launches or promotional campaigns

Finally, activities in public relations support increased sales. If the public views the company positively, it can encourage consumers to buy its products over competing companies.

Sales promotion

Sales promotion uses temporary campaigns or offers to increase interest or demand for a product. It combines techniques such as:

• Promotional gifts
• Coupon
• Free sample
• Buy one get one free
• Coupon
• Loyalty program
• Contest
• Rebates
• Special offer

Sales promotion is a way to increase sales by encouraging consumers to buy more products. Additionally, it’s important to:

• Help the company when launching new products by increasing acceptance
• Become an extension strategy to extend the product lifespan
• Keep customers away from competitors and attract competitors’ customers
• Value existing customers and encourage them to remain loyal

Personal selling

Personal selling is promotion through salespeople to contact consumers directly and convince them to buy products. The salesperson gave a detailed explanation. And they could demonstrate it.

This method can be expensive. Companies need to hire professional salespeople to carry out promotions. They must have persuasive skills, as well as product knowledge. And companies may need to train them to become proficient.

However, personal selling can be an effective technique for making more money when done right. It’s become a way for companies to build closer customer relationships through direct contact. In addition, this method is essential when a company sells a complex or new product.

Technology and promotion

Technological changes have an impact on promotion strategies. It may present both opportunities and challenges. For example, technological advances allow companies to gain wider exposure at a lower cost through online advertising. On the other hand, it increases the information available to consumers to make purchasing decisions, increasing their bargaining power and lowering switching costs.

In general, technological changes contribute positively to promotions by:

• Accelerating message transmission (within seconds)
• Providing full access 24 hours every day (the internet never sleeps)
• Extending the company’s reach globally at a low cost
• Providing flexibility in customizing message formats

However, technological change also raises challenges, including:

• Lowering control over message transmission, including intended content
• Increased concern over privacy and, therefore, regulatory scrutiny
• Challenge to build credibility because messages and information abound on the internet
• Lower switching costs by increasing bargaining power and choice for consumers

Viral marketing

Word of mouth is a conventional marketing method. Consumers talk about and share experiences with others. And it becomes an effective way and has a strong impact on influencing purchasing decisions.

In the past, people had to have direct contact. However, nowadays, technology facilitates them to communicate more easily, such as through instant messaging applications and social media. As a result, information flows quickly, and its transmission is less controllable and predictable.

Word-of-mouth marketing has evolved into viral marketing thanks to technological developments. Consumers use the internet to promote products and increase brand awareness. In addition, they convey marketing messages to other users, increasing message visibility exponentially.

The message format has also been more comprehensive. Where previously, word-of-mouth marketing relied on words, now, messages can be customized into text messages, images, and video clips, which can be easily disseminated.

If the message is positive, it generates favorable exposure for the company, and the effect can be more significant than conventional promotions. However, if the message is negative, the impact can be dire. In addition, messages can be manipulated, not reflecting the original intent.

Social media marketing

Companies invest in social media to build marketing. As a result, social media marketing has become increasingly important. For example, spending on social media promotion in the US nearly doubled during 2018-2022, with $56.8 billion spent in 2022, citing Statista data.

Facebook, LinkedIn, Twitter, TikTok, Youtube, and Instagram are effective tools to:

• Promote products and brands
• Interact directly with consumers
• Increase traffic to the company website
• Obtain feedback from consumers

In addition, companies can easily track their campaign progress. They can also measure success and engagement because social media have built-in data analytics tools.

Promotional elasticity

Promotional elasticity shows how responsive the quantity demanded is to changes in spending on promotion. We calculate it by dividing the change in quantity demanded by the change in promotion spending. Mathematically, the formula is as follows:

• Promotion elasticity = % change in quantity demanded / % change in promotion spending

If the elasticity is positive, spending on promotions contributes to increasing demand. And if more than one, then demand increases more than the increase in spending on promotions. For example, if spending on promotions increases by 5%, demand increases by more than 5%.

The opposite effect holds if the promotion elasticity is negative.

Guerrilla marketing

Guerrilla marketing is a tactic with unusual but effective interactions to promote a product. This method is low cost to get maximum results. It was inspired by guerrilla tactics in a war involving ambushes, sabotage, and surprise.

However, guerrilla marketing requires high creativity and imagination. It also requires a willingness to dare risks.

Guerrilla marketing can produce a viral effect by leveraging:

• Social media to start a campaign
• Discounts or special offers to entice and encourage sharing
• Content with attractive formats, such as videos
• Interactive activities to stimulate interest and engagement