1.0 INTRODUCTION
The word ‘communication’ is based on the Latin word meaning ‘common’.
Thus, the term communication has come to mean sharing something of common use.
In marketing, communication
has a very important place. It is that function of
marketing which is charged with the task of informing the target customer about
the nature and type of the firm’s products and services, their unique benefits,
uses and features as well as the price and place at which those would be
available in the market-place. Marketing communication is more commonly called ‘promotion’
and constitutes one of the Ps of the marketing mix. A study of marketing
communication, therefore, is a study of the promotion function of marketing.
Notwithstanding the continuing debate, whether promotion is the first element
of the marketing mix or the last, the fact remains that sound management of the
marketing function is dependent on effective management of its promotion function.
For example, in the success of the following products and services the
promotion function played a role of greater importance: Hot-shot camera, Maggie
2-minute noodles, KST fans, etc. to mention only a few. Similarly, examples of
the products which misfired due to faulty management of the promotion function
are not far to seek. With growing competition in the market, as well as the
customers becoming better informed and more choosy, it is imperative now that marketing
communications of the right kind only are made to the right group of target
buyers. In order to understand how the promotion function can be managed
effectively, let us begin by first taking a look at how communications work.
2.0 OBJECTIVES
At the end of this note, you will be able to:
·
outline the process of marketing communication
·
identify the various promotional methods
·
define advertising, personal selling, sales promotion and
publicity discuss the factors that influence a firm’s choice of the promotion mix
·
explain how promotion budgets are set.
3.0 MAIN CONTENT
3.1 How Communication Works
We know by now that
communication, simply speaking, is sharing of information between the two
parties. Such an exchange could be oral or written, personal or public, using
words, figures, symbols or a combination. The process of communication begins
when one party (called source, sender or communicator) wishes to communicate
with another party (the receiver). Communication is complete when the receiver
understands in the same sense what the sender wishes to communicate. The
various elements of a typical communication process are given in Figure 1.
Fig. 1: Elements of the Communication Process
As stated above,
communication will be completed only when the receiver understands in the same
sense what the sender wished to convey. The effectiveness of the communication
process, therefore, is dependent upon the level of congruity and compatibility
obtaining among the various elements of the communication process, i.e.,
between the sender and the message, the message and media, the media and the receiver,
and so on. Incongruity and/or incompatibility between the various elements of
the communication process might make the promotion function, and in turn the
marketing function, ineffective as is reported to have happened in the
following two cases for example:
1 It is said that pork, launched more than a decade ago in
northern Nigeria, failed to take off primarily due to the manufacturer’s inability
to get the concept of pork perceived distinctively from that of beef.
2 Not much different was the fate of an advertising campaign of a leading
US detergent marketer who while extending the campaign to the vernacular press
of the Middle East, erred in not reversing the direction of the visuals used,
to make these compatible with the right to left reading characteristic of the media.
Consequently, what the readers saw was that white and bright clothes when
washed in the company’s brand of detergent came out dirty and soiled, thus,
going totally contrary to what the advertiser desired.
3.2 How Communications Influence the Role of Promotion in Marketing
Mutually satisfying exchange being the ultimate goal of marketing,
the role of promotion, therefore, is to encourage such an exchange through linking
communications with the product adoption process of the buyer. Motivating the
adoption of the promoted product as well as effecting the desired change in the
consumer behavior are the goals of the promotion function. The attainment of
these goals presupposes that product purchase process be understood by the
marketers before marketing communications are designed. While there are many
models that help to conceptualise the buying process, two very specific models
that aid in understanding the buying process as well as in framing communication
are: ‘AIDA’ and ‘Hierarchy-of-effects’ models.
The AIDA acronym stands
for: Attention (also called awareness), Interest, Desire and Action.
According to AIDA model, a marketer should begin by winning attention or
gaining awareness, creating interest, inspiring desire and precipitating the
action for purchase, in the prospects in order to enable its product to be
adopted by the target public.
Under the hierarchy-of-effects model, the buyer’s purchase
decision is preceded by steps such as conviction about the product benefits, preference
for the brand, liking for the brand, knowledge relating to the benefits and
features of the product, after an awareness of the product has been gained.
The basic implication of these models is that the function of
persuasive communication or promotion should be handled deftly at every stage
of the buyer’s adoption process. Based on Lavidge and Steiner’s research, Gaedeke
and Tootelian illustrate the various promotional tools that might be relevant
to each stage of the hierarchy-of-effects model that are available to marketers
for making marketing communications.
Fig. 2: Promotion and the Hierarchy – of – Effects Model
3.3 The Promotion Mix In our daily life, we all are exposed to various tools of
promotion aiming at communicating one thing or the other to us. To illustrate
this, while at home we come across advertisements when reading a newspaper, watching
TV, listening to radio or even examining the water, electricity or telephone
bills; on our way to the office similar communications face us on bus panels,
roadside hoardings, neon signs, posters and banners, etc.
At a retail shop, these take the shape of traffic builders,
product displays, streamers, hangers, bins, etc., all sharing information
relating to a specific product of a company. Listed above are just few types of
the various promotion tools available to a marketer. Before proceeding, let us
take a look at the definitions of the four major methods of promotion. These
are: advertising, personal selling, sales promotion and publicity. The
committee on Definitions of the American Marketing Association defined these
components as follows:
Advertising Any paid form of non-personal presentation and promotion of ideas,
goods, or services by an identified sponsor. It includes the use of such media
as magazines, newspaper, outdoor posters, direct mail novelties, radio,
television, bus posters, catalogues, directories, programmes and circulars.
Personal Selling Oral presentation is a conversation with one or more prospective purchasers
for the purpose of making sales.
Sales Promotion Those marketing activities, other than personal selling,
advertising, and publicity, that stimulate consumer purchasing and dealer
effectiveness such as non–routine selling efforts. These are usually short–term
activities.
Publicity Non-personal stimulation of demand for a product, service or
business note by generating commercially significant news about it in published
media or obtaining favorable presentation of it on radio, television, or stage.
Unlike advertising, this form of promotion is not paid for by the sponsor.
Table 1: Relatives
Advantages and Disadvantages of Promotion Components
Although definitions vary about the number of components that constitute
promotion, marketing practice shows that almost all marketing activities
influence the promotion function. Notably, packaging performs the promotion
function in addition to providing protection to the product.
By incorporating creativity in its design, a package can add the
‘pick-me-up appeal to the product and also help to communicate its features,
uses and benefits more effectively. The promotion aspect of packaging is
witnessing a bit of revolution in Nigeria nowadays with the introduction of
innovative package in the field of consumer goods, for example, package design
of Pepsi and edible oils, etc.
Public relations, likewise,
performs an important role in promotion insofar as it helps to create a
favorable image of the firm and allows the public to experience better
satisfaction in dealing with the firm. High and consistent product quality,
provision of superior customer services, and price promotions as a way of
increasing short-term sales and compatibility between the character of
distribution outlets and the product are the other ways which contribute to the
promotion function of firm.
3.5 Determining the Promotion Mix Marketers rarely rely
on only one promotion method. They make use of two or more methods to
accomplish promotion and marketing objectives. When a firm makes use of more
than one promotion method for one product, the promotion methods used
constitute the promotion mix for that product. For example, while TV spots,
newspaper and fashion magazine advertisements, and attractive festival displays
at the authorised retail shops constitute the promotion mix of textile fabrics specialized
industry magazines and participation in national and international exhibition
of clothing materials and cosmetics goods may constitute the promotion for
women generally.
The promotion function being linked with the ever changing market environment
is a dynamic function. The promotion mix, therefore, acquires the dimension of
dynamism and varies from product to product over a period of time. Quite
similar to the problems faced by a marketer in the determination of the optimal
marketing mix are the problems faced in the determination of the promotion mix.
The task involved is rather more complex due to cross-substitutability of the
various promotion methods (i.e. each method is capable of achieving what the other
method may achieve) thereby making the measurement of promotional effectiveness
more difficult. Notwithstanding these difficulties, factors as mentioned below
act as the major determinants of the promotion mix:
·
Type of product
·
Nature of market
·
Stage of product in its life–cycle
·
Available budget, and
·
Company policy.
Type of Product In terms of the promotion task involved, the type of product is
the major influence on the promotion–mix. For example, a low priced, frequently
purchased, consumer convenience item, say a toilet soap, a brand of toothpaste
or a cigarette will require that repeat message influencing and reminding the
existing consumers, and persuading the new consumers, be used in a mass manner
and at a high frequency. Newspaper and magazine advertisements, TV spots and
Cinema Slides, offer of incentives to consumers and organization of contests
will, therefore, constitute the ‘promotion mix’ of such consumer goods.
Now let us think of an industrial product, say a special purpose
machine tool washing machine, which has a high note value, is technical in nature,
is purchased in-frequently and requires demonstration and conviction before it
gets sold. Personal selling, quite obviously, becomes indispensable for such a
product along with organising product demonstrations and exhibitions, holding
seminars, etc. These then constitute the promotion mix in the case of an industrial
good with newspaper advertising playing only the limited role of keeping the
public informed about the company’s activities and accomplishments.
Publicity, however, to the extent that it projects the desired
image of the company, plays a more important role.
Nature of Market The locational characteristics of the customers, intensity of competition
in the marketplace and the requirements of wholesalers and retailers influence
the promotion mix relating to the product in their own way. For example, if the
target audience of a consumer product is both large as well as widely dispersed
in different parts of the country such as soft drink like Coca–Cola, Pepsi–Cola,
and double cola, advertising and sales promotions emerge to be both more
effective and economical promotional methods than the others. This is why
advertising and sales promotions are so dominant among consumer goods
companies. Personal selling also has a role to play among consumer goods companies
but limited mainly to wholesalers and retailers who receive greater focus for
activities such as pushing inventories, conducting displays, etc.
Stage in Product Life
Cycle The promotion mix changes with the movement of the product from one
stage to the other in its life cycle. For example, when the product is in the
introduction and early growth stages, and the tasks involved are that of
building and motivating trials of the product, the promotion mix comprises
publicity, informative advertising, consumer sales promotions and trade deals.
Later, as the product reaches the maturity stage, and goals of maintaining brand
loyalty and creating brand preferences become more important, aggressive brand
advertising and dealer promotions become the key components of the promotion
mix.
The Available Budget Each method of promotion has certain costs associated with it. The
level at which each promotion method is to be used and the selection of the
promotion mix is dependent on the promotion budget of the firm. Firms with
small promotional budgets have to be content with more localised area activity,
using dealer displays, wall writings, personal selling, and other less sophisticated
methods. It needs to be emphasised here that for the promotion function to be
effective the minimum threshold level must always be exceeded.
Company Policy In the final analysis an aggressive consideration of the above
four determinants of the company’s own marketing and promotion policy
determines the mix. Important factors here include the conviction of the top
management in the role of promotion and its various components, the product
marketing company strategy, and the type of corporate image it wants to
project. For example, a company even under the seller’s market might still
believe in keeping a high profile in public and thus may go for extensive publicity
and advertising programmes. Yet another company in the same industry may rely
more on personal selling, and continue to grow by maintaining its promotions at
a low key.
3.6 The Promotion Budget
As we noted above, the promotion budget influences the level of promotional
activity as well as the promotion mix used by the firm. Budgeting for promotion
is yet another area where a lot of subjectivity prevails regarding what is the
right amount to be spent on the promotion function. Pending any clear-cut
relationship between the promotion expenditure and the achievement of promotion
objectives, some decisions are made based on the rules of the thumb. These are:
·
Incremental promotional expenditure yields incremental sales to a certain
extent;
·
A minimum level of promotion activity must be exceeded for promotion
to have a meaningful effect. Often such a minimum level of promotion is set by
the competitor or more appropriately by an average of the industry.
·
Promotion activities when well integrated with other elements of the
marketing mix produce greater than the planned results.
The above discussion should not, however, lead us to understand
that no attempts have been made to shed light on the inherent uncertainty shrouding
the cause–effect relationship in this area of promotion budgeting. In fact,
quite a few notable attempts have been made by economists in terms of
application of marginal cost and marginal revenue principle (additional
promotional expenditure and additional revenue and profits made), and by
marketing researchers through experimentation and model building approaches.
The substance of their findings is that results of the promotion
function should be constantly monitored in order to establish more reliable
parameters of cost–benefit relationship. Further, cost–benefit analysis should
form the basis of the trade-off before the promotion budget is finalized by
using any one of the following methods. These methods include per cent-of-sales
method, fixed-sum per note, affordable funds, competitive parity, and objective
and task method.
Percent-of-Sales This method views promotion budget determination by linking the appropriation
to a fixed percentage of sales of the company products. Such sales may relate
to the previous year, an average of sales of the previous few years, projected
sale of the next year or years, or an average of the previous few years sales,
as well as the projected sales of the next years.
This method though simple to use fails to account for the changing
promotional costs, and relating the appropriations made to the product market needs.
Particular difficulties are faced if the sales curve of a company is not
smooth, hence resulting in lower outlays for the years that follow the bad
sales years. Also, the forecast sales realizations remain uncertain. The way out
attempted has been the adjustment provision of a fixed percentage to the
average expenditure of the past (i.e. last year plus 15%), or use of this
method in combination with the others that are discussed below.
Fixed-Sum per Note Very much like the per cent-of-sales, under this method the
promotion budget is determined by allocation of a fixed amount of money per physical
note of product for either past or future sales or a combination of the two.
The only differentiating point of this method from the per cent-of-sales method
is that the base for budgeting, instead of being naira sales, is the number of
product note sold or targeted to be sold.
This method thus, has almost the same strengths and weaknesses as
the ones associated with per cent-of-sales method, namely, simplicity in the determination
but arbitrariness in arriving at the percentage of per note allocation.
Affordable Funds Continuing to think on the plan that promotion expenditure is one
of those business costs which are desirable or avoidable as per the convenience
of the top management, the funds for promotion are appropriated on a
discretionary basis under this method. No wonder then, that companies adopting
this method find their promotion appropriations fluctuating from year to year
depending on the top management’s thinking for the year.
Competitive Parity Incorporating
a measure of competitiveness in planning, this method guides the budget
determination in terms of relativity to what the competitors are likely to
allocate. Being a slightly more market-oriented method than the ones discussed
so far, since it is based on the representative average of the industry
promotion expenditure; it becomes a good norm to moderate the promotion
expenditure of a company.
Objective and Task Method This is one of the most scientific
methods of budget determination. It approaches the budget exercise by first
setting the specific objectives to be achieved. It then identifies the tasks
involved in achieving the said objectives followed by ascertaining the costs
involved in the performance of each task required. The result of the exercise
is an estimation of the amount required for accomplishing the set promotion goals.
Typical objectives might be to increase awareness say by 15% or increase
message/theme recall say by 25%. Indeed, it is a good method as far as
promotion budgeting for new products is concerned, or when a new thrust to the
image of a company and its products is to be provided.
This method presupposes that objectives set are realistic and
promotion results can be measured precisely. These assumptions continue to be
the subject of unending debate at the one end, and of pursuit of research on the
other. It is as a result of the continuing research that some models for promotion
budgeting have been developed and are now being refined to be of practical
utility to marketers.
The Practice In practice, most companies make use of more than one method for determining
the promotion budget. The research into the practices of companies in Nigeria
in this regard revealed the above finding. Among the individual methods used,
the affordable funds method emerged as the most popular, most especially among
the small firms. There were, however, quite a few companies which had started
using the approach of ‘objective and task’ in setting their promotion budget
either exclusively or in combination with other methods. Most of such companies
especially the multinationals, were dealing in consumer goods. The practices of
the companies using a combination of methods for determining the promotion
budget pointed to the efforts they were putting in together with competitive
promotion outlay and its apportioning to various promotion components.
4.0 CONCLUSION
Communication deals
with sharing of information. This is a key function of marketing. The marketing
techniques used to communicate with existing and potential customers are called
promotion. The four major promotion methods available to a marketer are:
advertisement, personal selling, sales promotion and publicity. Packaging,
public relation and other elements of the marketing mix supplement the promotion
efforts of the marketer in their own way.
Marketers devise a suitable promotion mix (use more than one promotion
method) for promoting their products and services. The determination of the
promotion mix is influenced by factors such as type of product, nature of
market, stage of product in the product life-cycle, the available budget and
company policy. The level of promotional activity of a company is dependent
upon the outlay earmarked for it, i.e. the company’s promotion budget. The
promotion budget is set by using one or more of the following methods: per
cent-of-sales, fixed-sum per note, affordable funds, competitive parity and
objective and task method. The objective and task method is the most logical.
Marketing communications being persuasive in nature and aiming
inter alia at affecting the desired behavior in the consumer should be
skillfully managed. This then requires that not only the buyer’s product
adoption process using AIDA and hierarchy-of-effects models be understood, but
also appropriate promotion methods be used at each stage of the process to
achieve the desired response.
5.0 SUMMARY
In this note, we
defined marketing communication as the study of the promotion function of
marketing. It was noted that with the growing competition in the market place
as well as the customers becoming better informed and more choosy, it is
imperative that these days that marketing communications of the right kind only
are made to the right group of target buyers. Hence, we examined how
communication influenced the role of promotion in marketing, the promotion mix,
promotion budget, etc. However, marketing communications being persuasive in
nature and aiming inter alia at affecting the desired behavior in consumer
should be skillfully managed.
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