This is “Promoting a Product”, section 9.5 from the book An Introduction to Business (v. 1.0).
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Your promotion mixVarious ways to communicate with customers, including advertising, personal selling, sales promotion, and publicity.—the means by which you communicate with customers—may include advertising, personal selling, sales promotion, and publicity. These are all tools for telling people about your product and persuading potential customers, whether consumers or organizational users, to buy it. Before deciding on an appropriate promotional strategy, you should consider a few questions:
To promote a product, you need to imprint a clear image of it in the minds of your target audience. What do you think of, for instance, when you hear “Ritz-Carlton”? What about “Motel 6”? They’re both hotel chains, but the names certainly conjure up different images. Both have been quite successful in the hospitality industry, but they project very different images to appeal to different clienteles. The differences are evident in their promotions. The Ritz-Carlton Web site describes “luxury hotels” and promises that the chain provides “the finest personal service and facilities throughout the world.” Motel 6, by contrast, characterizes its facilities as “discount hotels” and assures you that you’ll pay “discount hotel rates.”
We’ll now examine each of the elements that can go into the promotion mix—advertising, personal selling, sales promotion, and publicity. Then we’ll see how Wow Wee has incorporated them into a promotion mix to create a demand for Robosapien.
AdvertisingPaid, nonpersonal communication designed to create an awareness of a product or company. is paid, nonpersonal communication designed to create an awareness of a product or company. Ads are everywhere—in print media (such as newspapers, magazines, the Yellow Pages), on billboards, in broadcast media (radio and TV), and on the Internet. It’s hard to escape the constant barrage of advertising messages; indeed, it’s estimated that the average consumer is confronted by about three thousand each day.Seth Godin, Permission Marketing: Turning Strangers into Friends, and Friends into Customers (New York: Simon & Schuster, 1999), 29. For this very reason, ironically, ads aren’t as effective as they used to be. Because we’ve learned to tune them out, companies now have to come up with innovative ways to get through. Campbell Soup, for example, puts ads on parking meters.Seth Godin, Permission Marketing: Turning Strangers into Friends, and Friends into Customers (New York: Simon & Schuster, 1999), 31. Even so, advertising is still the most prevalent form of promotion.
Your choice of advertising media depends on your product, your target audience, and your budget. A travel agency selling spring-break getaways to college students might post flyers on campus bulletin boards or run ads in campus newspapers. A pharmaceutical company trying to develop a market for a new allergy drug might focus on TV ads that reach a broad audience of allergy sufferers. A small sandwich shop will probably spend its limited advertising budget on ads in the Yellow Pages and local newspapers. The cofounders of Nantucket Nectars found radio ads particularly effective. Rather than pay professionals, they produced their own ads themselves. (Actually, they just got on the radio and started rambling about their product or their lives or anything else that seemed interesting at the time.)Nantucket Allserve, Inc., “Nantucket Nectars from the Beginning,” http://www.juiceguys.com (accessed May 21, 2006). As unprofessional as they sounded, the ads worked, and the business grew.
Personal sellingOne-on-one communication with customers or potential customers. refers to one-on-one communication with customers or potential customers. This type of interaction is necessary in selling large-ticket items, such as homes, and it’s also effective in situations in which personal attention helps to close a sale, such as sales of cars and insurance policies.
Many retail stores depend on the expertise and enthusiasm of their salespeople to persuade customers to buy. Home Depot has grown into a home-goods giant in large part because it fosters one-on-one interactions between salespeople and customers. The real difference between Home Depot and everyone else, says one of its cofounders, isn’t the merchandise; it’s the friendly, easy-to-understand advice that salespeople give to novice homeowners. Customers who never thought they could fix anything suddenly feel empowered to install a carpet or hang wallpaper.Kevin J. Clancy, “Sleuthing for New Products, Not Slashing for Growth,” Across the Board, September–October 2001, http://www.copernicusmarketing.com/about/docs/new_products.htm (accessed May 21, 2006).
“Congratulations! You just won a month’s free membership in the health club, and we’ve entered your name in our million-dollar sweepstakes! All you have to do is sign up for one of our [high-interest, high–late-fee] credit cards.” This tactic is a form of sales promotionSales approach in which a company provides an incentive for potential customers to buy something. in which a company provides an incentive for a potential customer to buy something. Most sales promotions are more straightforward than our health-club/credit-card offer. Promotional giveaways might feature free samples or money-off coupons. Promotions can involve in-store demonstrations or trade-show displays. They can be cheaper than advertising and can encourage customers to buy something quickly.
Apple Inc. promotes the iTunes experience by giving away millions of free music downloads, and it has also joined forces with Pepsi to promote digital music on bottle caps and labels. The joint promotion, which has so far given away a hundred million downloads, benefits both companies: while Apple plugged its iTunes download on three hundred million Pepsi bottles, Pepsi sold a lot of soda and fostered a connection between Pepsi and music.“2004 to Bring Loads of ‘Free’ Net Music,” CNN.com, December 22, 2003, http://www.cnn.com/2003/TECH/biztech/12/22/digital.music.reut/index (accessed May 21, 2006).
Free publicityForm of promotion that focuses on getting a company or product mentioned in a newspaper, on TV, or in some other news media.—say, getting your company or your product mentioned in a newspaper or on TV—can often generate more customer interest than a costly ad. You may remember the buying frenzy surrounding a fuzzy red doll named “Tickle Me Elmo” during the 1996 holiday season. The big break for this product came when the marketing team sent a doll to the one-year-old son of talk-show host Rosie O’Donnell. Two months before Christmas, O’Donnell started tossing dolls into the audience every time a guest said the word wall. The product took off, and the campaign didn’t cost marketers anything except a few hundred dolls.“Tickle Me Elmo: Using the Media to Create a Marketing Sensation,” Media Awareness Network,, http://www.media-awareness.ca/english/resources/educational/handouts/advertising_marketing/tickle_me_elmo.cfm (accessed May 21, 2006).
Consumer perception of a company is often important to a company’s success. Many companies, therefore, manage their public relationsCommunication activities undertaken by companies to garner favorable publicity for themselves and their products. in an effort to garner favorable publicity for themselves and their products. When the company does something noteworthy, such as sponsoring a fund-raising event, the public relations department may issue a press release to promote the event. When the company does something negative, such as selling a prescription drug that has unexpected side effects, the public relations department will work to control the damage to the company. Each year, the accounting firm of PricewaterhouseCoopers and the Financial Times jointly survey more than a thousand CEOs in twenty countries to identify companies that have exhibited exceptional integrity or commitment to corporate governance and social responsibility. Among the companies circulating positive public relations as a result of a recent survey were General Electric, Microsoft, and Toyota.PricewaterhouseCoopers, “2003 World’s Most Respected Companies Survey,” http://www.pwc.com/Extweb/ncsurvres.nsf/docid/D2345E01A80AC14885256CB00033DC8F (accessed May 21, 2006).
Now let’s look more closely at the strategy that Wow Wee pursued in marketing Robosapien in the United States. The company’s goal was ambitious: to promote the robot as a must-have item for kids of all ages. As we know, Wow Wee intended to position Robosapien as a home-entertainment product, not as a toy. In spring 2004, therefore, the company rolled out the product at Best Buy, which sells consumer electronics, computers, entertainment software, and appliances. As marketers had hoped, the robot caught the attention of consumers shopping for TV sets, DVD players, home and car audio equipment, music, movies, and games. Its $99 price tag was also consistent with Best Buy’s storewide pricing. Indeed, the retail price was a little lower than the prices of other merchandise, and that fact was an important asset: shoppers were willing to treat Robosapien as an impulse item—something extra to pick up as a gift or as a special present for children, as long as the price wasn’t too high.
Meanwhile, Robosapien was also getting lots of free publicity. Stories appeared in newspapers and magazines around the world, including the New York Times, the Times of London, Time magazine, and National Parenting magazine. Commentators on The Today Show, The Early Show, CNN, ABC News, and FOX News remarked on it; it was even the talk of the prestigious New York Toys Fair. It garnered numerous awards, and experts predicted that it would be a hot item for the holidays.
At Wow Wee, Marketing Director Amy Weltman (who had already had a big hit with the Rubik’s Cube) developed a gala New York event to showcase the product. From mid to late August, actors dressed in six-foot robot costumes roamed the streets of Manhattan, while the fourteen-inch version of Robosapien performed in venues ranging from Grand Central Station to city bars. Everything was recorded, and film clips were sent to TV stations.
Then the stage was set for expansion into other stores. Macy’s ran special promotions, floating a twenty-four-foot cold-air robot balloon from its rooftop and lining its windows with armies of Robosapiens. Wow Wee trained salespeople to operate the product so that they could help customers during in-store demonstrations. Other retailers, including The Sharper Image, Spencer’s, and Toys “R” Us, carried Robosapien, as did e-retailers such as Amazon.com. The product was also rolled out (with the same marketing flair) in Europe and Asia.
When national advertising hit in September, all the pieces of the marketing campaign came together—publicity, sales promotion, personal selling, and advertising. Wow Wee ramped up production to meet anticipated fourth-quarter demand and waited to see whether Robosapien would live up to commercial expectations.
Customers are the most important asset that any business has. Without enough good customers, no company can survive, and to survive, a firm must not only attract new customers, but, perhaps more importantly, it must also hold on to its current customers. Why? Because repeat customers are more profitable. It’s estimated that it costs as much as six times more to attract and sell to a new customer than to an existing one.Randall B. Bean, “We’re Not There Yet,” Direct Marketing Business Intelligence, September 30, 1999, http://directmag.com/mag/marketing_not_yet/index.html (accessed May 21, 2006). Repeat customers also tend to spend more, and they’re much more likely to recommend you to other people.
Retaining customers is the purpose of customer-relationship managementStrategy for retaining customers by gathering information about them, understanding them, and treating them well.—a marketing strategy that focuses on using information about current customers to nurture and maintain strong relationships with them. The underlying theory is fairly basic: to keep customers happy, you treat them well, give them what they want, listen to them, reward them with discounts and other loyalty incentives, and deal effectively with their complaints.
Take Harrah’s, which operates more than forty casinos in three countries. Each year, it sponsors the World Series of Poker with a top prize of $5 million. Harrah’s gains some brand recognition when the twenty-two-hour event is televised on ESPN, but the real benefit derives from the information cards filled out by the thirteen thousand entrants who put up from $50 to $10,000 for a chance to walk away with $5 million. Data from these cards is fed into Harrah’s database, and almost immediately every entrant starts getting special attention, including party invitations, free entertainment tickets, and room discounts. The program is all part of Harrah’s strategy for targeting serious gamers and recognizing them as its best customers.Stephane Fitch, “Stacking the Deck: Harrah’s Wants Your Money,” Forbes.com, July 5, 2004, http://www.forbes.com/business/forbes/2004/0705/132.html (accessed May 21, 2006).
Customer-relationship management is especially important to businesses that provide services. A concierge ensures that hotel guests are treated well during their stay.
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Sheraton Hotels uses a softer approach to entice return customers. Sensing that its resorts needed both a new look and a new strategy for attracting repeat customers, Sheraton launched its “Year of the Bed” campaign: in addition to replacing all its old beds with luxurious new mattresses and coverings, it issued a “service promise guarantee”—a policy that any guest who’s dissatisfied with his or her Sheraton stay will be compensated. The program also calls for a customer-satisfaction survey and discount offers, both designed to keep the hotel chain in touch with its customers.
Another advantage of keeping in touch with customers is the opportunity to offer them additional products. Amazon.com is a master at this strategy. When you make your first purchase at Amazon.com, you’re also making a lifelong “friend”—one who will suggest (based on what you’ve bought before) other things that you might like to buy. Because Amazon.com continually updates its data on your preferences, the company gets better at making suggestions. Now that the Internet firm has expanded past books, Amazon.com can draw on its huge database to promote a vast range of products, and shopping for a variety of products at Amazon.com appeals to people who value time above all else.
Underlying Amazon.com’s success in communicating with customers is the fact that customers have given the company permission to contact them. Companies that ask for customers’ cooperation engage in permission marketing.Seth Godin, Permission Marketing: Turning Strangers into Friends, and Friends into Customers (New York: Simon & Schuster, 1999), 40–52. The big advantage is focusing on an audience of people who have already shown an interest in what they have to offer. Compare this approach with mass marketing—the practice of sending out messages to a vast audience of anonymous people. If you advertise on TV, you’re hoping that people will listen, even though you’re interrupting them; that’s why some marketers call such standard approaches interruption marketing.Anthony Bianco, “The Vanishing Mass Market,” Business Week, July 12, 2004, 61–68. Remember, however, that permission marketing isn’t free. Because winning and keeping customers means giving them incentives, Amazon.com offers its returning customers free shipping, while Harrah’s lets high rollers sleep and eat free (or at a deep discount). Customer-relations management and permission marketing have actually been around for a long time. But recent advances in technology, especially the Internet, now allow companies to practice these approaches in more cost-effective ways.
Companies encourage customers to buy their products by using a variety of promotion tools, including advertising, personal selling, sales promotion, and publicity. Your task is to develop a promotion strategy for two products—the Volkswagen Jetta and Red Bolt soda. For each product, answer the following questions:
Then describe the elements that go into your promotion mix, and explain why you chose the promotional tools that you did.
If you ran an airline, how would you practice CRM? How would you get permission to market your product to customers? What information would you collect on them? What incentives would you offer them to continue flying with you? What advantages can you gain through effective CRM?