Promotion (Cambridge (CIE) IGCSE Business): Revision Note

The aims of promotion

• Promotion plays a crucial role in generating customer awareness, interest and desire for a product

  • It communicates a businesses value proposition to potential customers and helps to differentiate the product or business from competitors

Types of promotion

• Above-the-line promotion refers to advertising  aimed at reaching a wide audience through traditional mass media channels

  • Advertising may use media such as television, radio, newspapers, magazines and outdoor sites such as billboards

• Below-the-line promotion includes marketing communications over which a business has direct control and which do not make use of mass media

  • These channels include direct marketing, sales promotions, personal selling and public relations (PR)

• Businesses have a wide choice of promotional tools and techniques

  • They must select the most appropriate methods for their product, target audience and budget

Explaining the different promotional methods

1. Advertising

• Promotion through paid channels such as television, radio, print media, online advertising and outdoor advertising

2. Direct marketing

• Communicating directly with customers through email, text message, social media or post

3. Sales promotions

• Temporary incentives or discounts such as free samples, buy one get one free (bogof), discount coupons, loyalty cards,] and rebates (customers have to mail in to receive money back)

4. Personal selling

• A salesperson interacts with potential customers one-on-one either in person or through digital channels

5. Sponsorship

• Agreement where a business provides financial or other support to an event, team, or organisation in exchange for marketing exposure

• Can take many forms, such as logo placement or naming rights (For example, Arsenal's Emirates Stadium)

6. Public relations (PR)

• Building relationships with the public and manage business reputation

• Include media relations, product launches, crisis management and community outreach

7. Digital communications

• Promotions or communication delivered electronically, such as social media, search engine optimisation (SEO) or social media apps such as Instagram and Twitter

• Can be used for building brand awareness, generating leads or driving sales

Spending the marketing budget effectively

• A marketing budget is the plan for marketing spending over a specific time period

  • A budget helps the business to determine how much can be spent on advertising, sales promotions and other promotional activity

  • It allows the effectiveness of the marketing department to be assessed

• The size of the marketing budget can be calculated in several ways

  • Using market and competitor averages

    • E.g., using a proportion of sales revenues

  • Using the businesses marketing objectives

    • E.g., How much needs to be spent to increase market share by 5%

  • Using figures from the the previous year and adjusted for known changes in the marketing activities this year

    • E.g. the budget may have increased this year due to the development of a new product 

• A small budget limits the media a business can use for advertising or the techniques it can use

  • Smaller businesses often find it difficult to use promotion to compete with larger businesses

  • Online promotional activity may be the most cost-effective way to reach large or targeted audiences

• A business will need to compare the cost of promotional activity with increases in sales it generates

  • Over time businesses will determine the most effective methods for their specific circumstances