The promotion today is just not restricted to just the established firms. The promotion today is a part of the plan in strategic decisions of a penny stock to a blue-chip listed company. This is the very reason the organization are involved in continuously channelising their efforts in communication with the internal and external stakeholders.
Marketing today is just not restricted to sales. It covers advertisements, promotions, maintaining public relations and yes, of course, the sales. It is a step by step process, from the introduction of the product and taking it end to end by promoting the deliverables or value proposition. Not to forget the objective of marketing is to promote the products or services and encourage sales from the target market.
There are different types of approaches used for marketing. This can broadly classify into two channels namely online and offline. Promotion deals with awareness and helps in the product sales. This is possible educating people about the product via promotions by devising marketing plans.
Let us now explore marketing communication mix. First things first, communication as a process of transmitting the information to the receiver receiving the information and processing information. A better question to ask while the promotion is not about communication, but then understanding what you communicate, deciding a timeline of communication and the frequency of communication. The different factors of communication mix are advertising, sales and promotion, direct and indirect marketing, maintaining public relations, putting into use different tools of communication.
Let us now deep dive into promotional strategies. Promotional strategies are undoubtedly an effort put into spreading the awareness about a product or service. It is not only useful in the market development but is also useful in expanding the existing customer base within the same market. All this is possible by running online and offline campaigns, organizing public relation events, exhibitions etc. Promotions are different for small and big fishes at the time.
An organisation trying to make a place in the market has to put in a lot of promotional efforts to market its product, but the methods and the means are simpler and are low budgeted campaigns. The established organisation on the other hand market products or services with much complexity and high budget.
We will not take a look at different types of promotional strategies. These are
Advertising is both online and offline. It is used for providing stimuli or manipulate the audience and encourage them to break the conventional habit. Advertising is a non-personal communication and is usually paid in nature. The basic use of advertising is to influence the consumer behaviour. Advertising includes media such as a paper advertisement, magazines, tv commercials, radio, websites blogs, text messages, email marketing.
Advertising helps different stakeholders such as customers, traders and producers. For a customer, advertising acts as education to know a wide range of products and this would help him to comply with the need. Advertising acts as a tool for the sellers in finding new customers for the product and helps in and helps in market development in the existing and new markets. All in all, advertising helps in launching the product; it can be a source of revenue to earn, it is used in sales promotion, increasing the profit, creating awareness amongst consumer.
Personal selling is a more precise way of reaching to the customer, exchanging the information of value proposition and persuading them. Personal selling involves three tasks these are getting orders taking orders and the support personnel. Listen was finding new customers or selling it to the current base of the customers and increasing sales. Order taking is meeting the sales target.
Support personnel are those who help in facilitating the function of selling. There are namely two types of advertising, Product and institutional advertising.
Product advertising focuses on delivering via communication a product value by stating the value proposition, specifications, utility, applications etc. Institutional advertising includes promotion of an idea, concepts, abstracts.
Heard about the BIg Billion day and the mega and bumper sales. These are lucrative offers in attracting the customers and attracting traffic. These do not last for a longer duration. The purpose of sales promotion includes inculcating stimuli for purchase, generate a temporary peak in the sale, liquidate the inventory, develop a new customer base.
The objectives of the promotional strategy include
The price is determined by two ways namely by using the supply and demand criteria or by the conventional cost-based formulas.
We often wonder about the threshold for no profit no loss. This is a condition when selling above this limit will result in the profit and below this will result in a loss. This value is termed as the break-even point, and the analysis is known as break-even analysis. This is a value at which the total revenue equals the total costs. Break Even point in units is calculated as the ratio of total fixed costs to the contribution to fixed costs per unit.
The contribution margin is the difference between selling price and variable costs. If we were to calculate the breakeven point in dollars or the currency, it would be the ratio of total fixed costs to one minus the variable cost per unit per price.
It is characterised by an initial high and escalated price in general and as compared to the competitors. This is used for a product comparatively new and unique in the market. This can help in distinguishing the product from the other conventional goods in the company. It can help the company to generate revenue before the competitors imitate or come up with an alternative technology or substitute.
This is characterised by low pricing initially as compared to the competitors to make a place in the market. In the later stages of achieving the results of penetration, the company gradually increases the price at par and above the competitors pricing.
This is a popular concept in the pricing of retailers such as Walmart, Big Bazaar wherein they maintain a streak of low price continuously rather than an effective slump.
This is adapted to attract a large set of customers. This is followed by advertisement and promotion to spread the word about EDLP scheme and lure the customers into buying behaviour.
This is a relative concept of pricing when one seller tries to match the price of the other. This is a safe play by the seller to avoid shelling off the customer. Reason being the competitor pricing is more attractive to the customer.
It is a general perception when the quality of a product is related directly to the price of the product. So if we were to perform a test of two categorically new product, there is a high possibility of a customer going for a high priced product taking the assumption of the quality kept in priority.
This is in the disadvantage of the company trying to penetrate the market with the initial offering at a low price compared to the competitors.
Purchase a Levis denim for 999 Rs, $ 1.99 or bought a t-shirt for 501 Rs? This is where odd pricing comes in the picture. This is related to a perception that even pricing is associated and appears more to a customer. This is adopted because customers favour odd pricing in general than even pricing schemes.