The Role and Activities of Promotion

Promotion is the aspect of marketing concerned with increasing sales. Marketing must be considered in making production decisions, and promotion must be considered in the overall marketing process. Pro­motion attempts to persuade and influence the customer's attitude in various ways. It is oriented toward producing a customer for the product rather than a product for the customer. Economists believe price should be determined by supply and demand. Promotion attempts to increase demand for a product and thereby increase sales. It wants to make the demand for a product inelastic (unchangeable) when prices increase and elastic when prices decrease. In other words, through promotion, companies try to keep demand and sales constant when prices increase. They do not want an increase in the price of their product to result in lower sales; instead they want it to result in an increase in profits. However, if the price decreases, they want demand for the product to increase, hoping that an increase in sales volume will offset (balance) the decrease in price.

Three main promotional activities are advertising, personal selling, and sales promotion. Advertising is a nonpersonal presentation of goods, services, or ideas aimed at a mass audience. It is particularly suited for products that are widely distributed, such as convenience goods. There are several methods of advertising and several media (means of communication). The method selected depends upon the product, the distribution of the market (the type of people who will buy the product), and the type of information which the company wishes to convey (communicate) about its product. For example, television advertising reaches a large audience. It has the advantage of appealing to the emotions of the audience through the senses of sight and sound. Television advertisements are expensive to produce and must be repeated thousands of times in order to justify the cost of production. Newspaper advertisements, on the other hand, can appear on a particular day in a particular geographic area. A newspaper advertisement can contain a lot of written detail that appeals to the logic of the reader. It explains why he should purchase a particular product or service.

In general, advertising works best when the demand for a product is increasing. It also works well when there are real differences between two or more similar products such as the different types of cars. Using advertising, a company can emphasize the differences between its prod­uct and that of the competition. The purpose of advertising is to communicate information that convinces a customer to buy a specific product.

Personal selling involves a salesperson trying to convince customers directly to buy a product. Personal selling is very effective when there is a concentrated market for a product — in other words, the product is not for general consumption by the public. For example, airplanes are purchased only by airlines, not by the general public. There would be little point in advertising them on television. The same is true for many industrial goods. A sales representative usually gets a commission. If the product has a high unit value, in other words each individual item is very expensive, the cost of the product justifies the commission paid to the sales representative for his or her work. If the product must be individually tailored to (designed for) the purchaser, the salesperson must be able to sell exactly what the customer needs. Sales staff are also needed to demonstrate a product. This is particularly important for new products which may be unfamiliar to the customer. Finally, personal selling is necessary when there is negotiation about the price of the product, for example, when a trade-in is involved.

Sales promotion involves several activities. It is becoming increasingly important in the self-service environment where there is often no sales staff. Sales promotion activities are of two types: information and stimulation. Examples of information promotion are a pamphlet or booklet about the product, a demonstration, market research information telling about the nature of the customers, and dealer training and managerial advice from producers. Stimulation promotion can be accomplished by the distribution of free samples, reduced price promotions, premiums, and coupons. A premium is something that the customer receives as a bonus when he purchases a product. For example, a customer purchasing a razor might receive a free package of razor blades. A coupon is a certificate which entitles the customer to purchase the product at a reduced price. Sales promotions also involve displays of the products. Displays can increase sales as well. A customer might make a decision to buy a particular product like a convenience item simply on the basis of a display that makes the item easy to see and reach.

Basically there are two ways to increase sales of products: find new markets and increase market share. A company seeking (looking for) new markets can expand its geographical sales area or try to sell its product to a different segment of the population. In this case promotion may involve increased advertising to spread information about the product. Personal selling at the wholesale level can encourage additional retailers to carry (have in their stores for sale) the product.

A different market situation requires a different method of promotion. When a market is saturated, it means that there are no new customers to be found. A company then needs to lure (attract) customers from the competition and gain a greater share of the total market. To increase market share, the marketing department of a company must design a total program of promotion for a particular product. Such a program may involve in­creased advertising to remind the customer of the name of the product. In advertising the company will also emphasize the superiority of its product by comparing it with the competition's product. A program to increase market share may also include convincing a retailer to allow more shelf space (display area) in the store for the product. Sales promotions may include contests, coupons, and price discounting. Increasing market share involves more stimulation of the buyer's emotions than does finding new markets where simply furnishing information about the product may increase sales.

Vocabulary Building Introduction

A: Vocabulary in context

Study the following sentences. Pay attention to the words in italics.

1. Promotion attempts to increase demand for a product, which is represented graphically as a shift in the demand curve. The demand curve expresses the relationship between price and the quantity demanded. When the price decreases, more people will purchase the product.

2. When the price decreases, more people will purchase the product. The demand for the product is elastic. More people desire to own the product when the price is lower.

3. We want people to continue to desire and purchase the product even when the price increases. When the price increases, we do not want demand to change. Demand should be inelastic when the price increases. We want demand and sales to be constant even when the price increases. We don't want sales to fall off.

4. If the sales increase when the price is lowered, the increase in sales will offset the decrease in price. High sales volume will make up for the decrease in profit per item. There is a lower profit made on each item, but the increase in the number of items sold compensates for the lower profit per item. Overall profits have remained constant. The total profit is the same.

5. Promotion attempts to persuade and influence the customer's atti­tude. Promotion tries to make the customer think differently about the product. As a result of effective promotion the customer forms a good opinion about the product. The customer has favorable thoughts about the product.

6. Advertising is a nonpersonal presentation of goods, services, or ideas aimed at a mass audience. Advertising is nonpersonal because every person sees the exact same advertisement. The advertisement is not tailored for the individual. The advertiser wants a maximum number of people to see or read his message. He aims at a mass audience.

7. Advertising is suited to products which are widely distributed. Advertising is a good way to sell convenience goods. Television and newspapers are two advertising media. Radio is another medium.

8. We should choose a method based on the distribution of the market. Most people who buy winter clothes live in cold climates. The market is distributed geographically. You can sell winter clothes in areas where there are cold winters.

9. Most movie goers are between the ages of 16 and 25. The market for movies is distributed demographically. People who spend money for movies are mostly a certain age. The advertiser must know how the market is distributed.

10. Television advertising appeals to the senses of sight and sound. Audiences see and hear television advertisements. Newspaper advertisements appear on certain days in certain areas. They have time utility and geographical distribution.

B: Matching

Try to match the words on the left with words and phrases having the

same meaning.
1. shift a. consumer desire to purchase product
2. demand curve b. arrangement
3. supply С. according to population
4. decreases d. according to location
5. demand e. price-demand relationship expressed as a graph
6. elastic f. usefulness at a certain time
7. constant g. maximum number of viewers or readers
8. fall off h. he appropriate
9. inelastic i. compensate for
10. offset j. quantity of items available for sale
11. sales volume k. opinion
12. overall 1. able to change under certain condi­tions
13. persuade m. becomes less

14. attitude n. methods to convey information
15. nonpersonal o. decline
16. mass audience p. total
17. suited q. change
18. media r. convince
19. distribution s. rate of sales
20. demographic t. unresponsive to increasing prices
21. geographic u. unchangeable
22. time utility v. mass

Vocabulary Building and Reading Comprehension_____________

C: Multiple choice

This exercise is designed to increase vocabulary and reading comprehension. Select the answer which best completes the meaning of the sentence.

1. Promotion attempts to increase demand for the product. Effective promotion therefore

a. increases sales b. decreases supply с aims at a mass audience d. decreases prices.

2. Promotion should shift the demand curve so that

a. supplies increase с consumers want to buy the product more than before.

b. prices increase d. demand stays constant.

3. If the demand for the product is inelastic, when prices increase

a. customers continue to buy the product even at higher prices.

b. increased prices result in fewer sales

с increased prices result in more sales.

d. the supply available for sale is increased.

4. If customers increase purchases of the product when prices decrease,

a. sales volume increases b. the demand is elastic.

с increased volume may offset lower prices d. all of the above.

5. Advertising is aimed at a mass audience. Advertisers hope

a. that it will be convenient for the customer to purchase the product.

b. that a very great number of people will see or hear their message.

c. that reducing prices will increase sales.

d. to sell similar products.

6. Television and radio are examples of advertising media. A newspaper

a. must be widely distributed in order to be useful for advertisers.

b. is a different type of medium.

с cannot tell you what day the advertisement will appear.

d. usually cannot convey detailed information about the product.

7. Television advertisements are usually very expensive to produce. Because of their cost

a. they should not be used to promote convenience goods.

b. they usually appear only on a certain day in a certain area.

c. they are especially good for expensive products like airplanes.

d. they must be shown thousands of times.

8. Personal selling refers to a sales representative who persuades a customer to buy a product. It is very effective when

a. the product must be custom designed for the customer.

b. the number of customers is small and the sales staff know who they are.

c. the product needs to be demonstrated to the customer.

d. all of the above.

9. A commission refers to a fee which the salesperson receives for making a sale. A commission is usually based on a certain percentage of the sales price. Sales staff probably

a. prefer to sell expensive or big ticket items since their commission will be greater.

b. prefer to sell convenience items since customers purchase them frequently.

с can afford to advertise on television to demonstrate their product

d. are unable to negotiate the price of the product.

10. In a self-service store the customer usually selects merchandise personally and then brings it to a cashier to pay for it. Self-service stores

a. could probably increase sales if they used personal selling.

b. can stimulate sales by the proper use of displays and other sales promotion devices.

c. cannot use advertising effectively.

d. usually sell only convenience items.

11. Sales promotion activities include those which provide information to customers and those which stimulate them to purchase particular products. Customers receive information about products through

a. coupons b. pamphlets с premiums d. discounts.

12. A customer can be stimulated to make a purchase through

a. a free sample b. an attractive and convenient display с a reduced price d. all of the above.

13. Increasing sales means getting more customers for your product. You can get more customers to buy your product by finding new markets. A method of expanding the market might be

a. to sell your product in other cities and states.

b. to sell your product to people who do not now purchase your product or a similar product.

с advertising to tell more people about your product

d. all of the above.

14. You can also get more customers for your product if they switch from a competing brand to your own. To do this requires

a. only getting more products on the shelves at the store b. giving more information about your product.

c. saturating the market d. designing a total program according to the product and the market.

15. The promotional activities of a company can best be carried out

a. if a complete advertising program is designed b. if dealers are properly trained.

с if demand for the product is increasing d. if it is considered as part of the total marketing process.

Listening and Note-Taking Skills

D: Vocabulary in context

While many of the words here may already be familiar in another context, they have a particular meaning in business. For example, the word elastic used in the first paragraph may be familiar in its concrete sense meaning rubber-like. However, in this chapter it and many other words are used in an abstract or more general sense. The abstract meanings can be learned by understanding the main idea of the para­graph and using the context. Examples and explanations are given. Look for phrases such as for example and in other words. Phrases that indicate a comparison or opposite meaning may help in the under­standing of a concept. Phrases such as on the other hand and words like however and but indicate such contrasts.

Listen to the first two paragraphs and try to understand the meaning of the following terms. In your own words or using the words given in the text, try to write an explanation of each term.

1. shift the demand curve 2. keep sales constant 3. elastic demand 4. sales volume

5. offset 6. promotion 7. presentation 8. aimed at

9. media 10. wide audience 11. justify 12. demand

E: Comprehension questions

Listen to Paragraphs 2, 3, and 4 and answer the following questions.

1. Which promotional activity is best suited for convenience goods?

2. Who should receive the advertiser's message?

3. When selecting a medium, what are two things which should be considered?

4. Which medium appeals through sight and sound?

5. Why are television advertisements repeated so often?

6. What medium can provide detail?

7. Who does personal selling?

8. Provide an example of a product sold through personal selling.

9. What is paid to the sales staff?

10. Suggest two services besides personal selling that the sales staff can perform.

F: Outlining

Listen again to Paragraphs 2, 3, 4, and 5 and make an outline of them.

Reading Comprehension

G: Comprehension questions

In trying to remember what we read it is useful to notice the general organization of the material. This particular lesson is organized in seven parts, which correspond to the seven paragraphs:

1. promotion and its goals

2. types of promotional activities

3. the best situations for advertising and the purpose of advertising

4. personal selling

5. sales promotion activities

6. ways of increasing sales

7. ways to increase market share

Keeping in mind the overall organization of the lesson, read Paragraphs 4, 5, 6, and 7 and answer the following questions.

1. Why is personal selling effective in a concentrated market?

2. Why is advertising probably not effective for the sale of industrial goods?

3. Why would personal selling be effective for expensive shopping goods?

4. Why is a salesperson necessary when there is a trade in?

5. What is one difference between sales promotion and personal selling?

6. Which sales promotional activity is similar to personal selling? How is it similar?

7. How would you classify free samples, premiums, and coupons as types of sales promotions?

8. What's the difference between a premium and a coupon?

9. How can displays increase the sales of convenience items?

10. What are two sources of new customers for a product?

11. How might increased advertising help to expand the market?

12. How might advertising help increase market share?

13. What are two personal selling activities of the wholesaler?

14. What kinds of sales promotional activities are aimed at increasing market share?

15. How should a company decide which promotional activities to use?

H: Writing a planned paragraph

Suppose you were in charge of the marketing division of a company that produced soft drinks or another convenience product. You now market your product in a large metropolitan area, but want to increase the sales of this product. What are some promotional activities you could consider and why?

Write a paragraph or paragraphs according to this plan. First, explain your current market situation. Then explain how you intend to attract more customers. Finally, explain how such activities will accomplish your goal.

Vocabulary Review: Rephrasing

I: Rephrasing expressions

Rewrite the following sentences. Replace the words and expressions in italics with expressions from the text which have the same meaning.

1. From economic theory we know that price should be determined by the quantity available for sale and the desire for the product on the part of customers.

2. Promotion attempts to shift the relationship between supply and demand to increase demand and sales.

3. Ideally, demand and sales should stay constant when prices increase.

4. They hope that an increase in the number of units sold will compensate for a decrease in prices.

5. Promotion attempts to urge the customer to buy the product.

6. Advertising is useful for products which are available in many places.

7. The company wants to present certain information about its product.

8. Commercial messages on television are seen by many viewers.

9. Television and radio are two channels of communication for advertising.

10. Newspaper advertisements have time value, and they can be delivered in specific communities.

11. Using advertising, a company can point out the differences between their product and that of another company which produces a similar product.

12. Personal selling is effective when there are just certain purchasers for the product.

13. Airplanes are not purchased by most consumers.

14. The cost is high enough so that the producer can afford to pay the salesperson a fee.

15. Sometimes the product must be specifically designed for the purchaser.

16. The salesperson is necessary when there is discussion about the price.

17. The purchase of a new car sometimes involves the exchange of an older model.

18. The salesperson can show the customer how the product works.

19. Here is some information about the type of customers who purchase this product.

20. If you purchase this brand of toothpaste, you will receive a toothbrush as a free gift.

21. The customer decided to purchase this product because it was easy to see and reach.

22. This certificate, which you can cut out of the magazine, allows you to purchase the product at a reduced price.

23. We want to encourage the store owners to have our product available for sale.

24. If we want our competitor's customers to purchase our product, we have to get the retailer to grant us more area for display.

25. We have to influence the customer to purchase our product.