| Steps in Developing the Promotion Mix |
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Because there are four distinct promotion mix components (advertising, personal selling, promotion, and publicity or public relations), each with its own unique strengths and weaknesses, developing an effective promotion mix is difficult. To facilitate this task, most companies follow a five-step decision process, which is discussed below. 1. SETTING THE PROMOTIONAL OBJECTIVES Changes in sales and market share are often used as promotional objectives, but they are a function of the entire marketing program—not just the promotional mix. An exception is where the promotion requires an immediate response, such as direct-mail advertising, coupons, and catalogues. Acceptable promotional objectives follow from the situation analysis and involve four key components: a statement defining the target audience, a statement of how some aspect(s) of the audience's perceptions, attitudes, or behavior should change, a statement of how fast such a change should occur, and a statement as to the degree of change desired. One possible promotion objective for the BMW 1994 promotion program would involve generating awareness of BMW's new models, their price, and the company's superb engineering among members of the target audiences. You can donwload excellent powerpoint slides on marketing management and business strategy here. 2. DESIGNING THE MESSAGE Preparing a successful message is difficult—if only because of the countless ways in which it can be constructed. Yet the payouts from good messages are substantial. For example, simple changes in the wording of a print ad have been known to generate a substantial increase in sales for retail stores, mail-order houses, and direct-mail sellers. All marketing communications involve some degree of information and persuasion. Each message, for example, involves a sponsor or a brand name, which is basically informative. And each message directly or indirectly advo¬cates some change by the audience, which is basically persuasive. 3. SELECTING THE COMMUNICATION CHANNELS Channel selection is a three-step process. First, marketers decide which promotion components to use: advertising, personal selling, sales promotion, or publicity. Second, they choose the specific activities within each component. In advertising, this involves considering such media as TV, radio, newspapers, magazines, or billboards. A consumer sales promotion could consist of coupons, free samples, or premiums. Third, within each activity they must decide which specific vehicle to employ; for example, in advertising, this requires selecting a TV or radio program, while in sales promotion, they must decide about the coupon specifics—its value, size and color, message format, and how it will be delivered. You can donwload excellent powerpoint slides on marketing management and business strategy here. 4. PREPARING THE PROMOTION BUDGET There are a number of ways to prepare the promotion budget, most of which work from the top down (i.e., managers first deter¬mine the total amount to be budgeted and then allocate various amounts to the different mix components). These budget-setting methods are discussed briefly below. The percentage of sales method is the one most commonly used. The procedure consists of setting this year's budget as a percentage of this year's anticipated sales. Under this approach, sales determine the promotional activity versus planning to achieve some desired sales objective. Even though illogical, this method has some advantages. It is simple to calculate and is risk-adverse because spending is linked to sales. The affordable method of budgeting is based on the premise that all necessary expenditures, such as production costs, personnel costs, and so forth, come first, and promotion receives what is left over. Thus, in good years, the firm would commit large amounts to promotion, while in bad years spend little or nothing. Of all methods considered here, the affordable method holds the least potential for mak¬ing sound promotional decisions. The competitive parity method sets the level of promotional spending equal to the firm's market share or larger if an attempt is being made to increase share. Thus, if the firm's market share is 20 percent, then its budget would be 20 percent of the total amount spent by the industry on promoting a given product-market entry. This method of budgeting tends to create stability in market shares among competitors and has the advantage of considering competition. Share-of-market budgeting is often used in connection with new products where the rule of thumb is to spend one and a half times the share objective at the end of the first or second year. 5. CHOOSING THE PROMOTION MIX Designing the promotional mix is complex because components interact; for example, a consumer sales promotion (a sweep¬stake) often requires advertising to inform the public about the promotion. The following factors largely determine the effectiveness of the mix components: (a) the objectives and resources of the firm, (b) the type of product involved, (c) the stage of the product life cycle, (d) market characteristics, and (e) other elements in the marketing mix.
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