Promotional Strategies (Edexcel IGCSE Business): Revision Note
Exam code: 4BS1
An introduction to promotional strategies
The promotion element of the marketing mix includes a variety of promotional strategies
Types of promotion
Each method has advantages and disadvantages associated with their use
Businesses must select the most appropriate methods for their product/service, target audience and budget
Advertising
Advertising makes use of the media, such as television, newspapers and radio, to promote products or brands
It can reach large audiences and increase brand awareness
Advertising can also be used to create a specific brand image or message
E.g. The advertising campaign run by Compare the Market (Meerkat) uses humour to make shopping for financial products more attractive
Specialist media can target specific market segments
E.g. Upmarket furniture brands place advertisements in magazines such as Homes & Antiques and Country Life
Advertising is an expensive promotional strategy
E.g. In the US high viewership for the Super Bowl means that 30-second tv advertisements have been sold for as much as $6.5 million
In most cases, external specialists or media agencies create attractive and creative advertisements
Sponsorship
Sponsorship is a form of public relations where a business provides financial or other support to an event, team, or organization in exchange for marketing exposure
Sponsorship can take many forms, such as logo placement or naming rights
E.g. Through its sponsorship Emirates gives its name to Arsenal Football Clubs' stadium
Major sporting events often attract numerous sponsors keen to align their brand with success
Their logos will appear on official merchandise, within sports venues and on promotional materials
Sponsors of the 2024 Paris Olympics
However, sponsoring high-profile events can be very expensive and it may be difficult to determine the impact it has on driving sales
Product trials
Prior to a full product launch, product trials involves introducing a product to some customers to assess the market
The product may be released to customers in different geographic areas or to specific demographics, such as customers between the ages of 18 and 35
Product trials can also be offered to encourage customers to try out a product for a lower price for a limited period of time
E.g. Some magazines offer half-price trial subscriptions for a certain number of issues
Product trials help gauge demand and collect feedback on the product prior to launching on a large scale
It can help businesses forecast product sales, plan advertising campaigns and determine effective distribution strategies
For example, a retail clothing store planning to expand its products with a new range of fashion accessories could choose a small group of loyal customers to try the products and offer their opinions.
After receiving feedback from these customers, products could undergo design changes, appropriate promotional strategies could be developed and appropriate quantities of stock could be organised
However, product trials may not be suitable for all types of products
E.g. Products that are durable or purchased infrequently are less likely to see repeat sales following a trial
It takes time and money to run effective product trials
A business may lose its first-mover advantage as rivals may be able to launch products more quickly
Sales promotions
Sales promotions are incentives or discounts that encourage customers to buy products
They are often temporary and are designed to attract new customers to try a product for the first time and become loyal to the brand
Examples of sales promotions include free samples, buy one get one free (bogof), discount coupons, loyalty cards, and competitions
Examples of sales promotions
Sales promotions can quickly boost sales though impulse purchases or customer engagement
They are also an effective tool to clear out excess stock, promote a new product or raise cash quickly
However, for a limited period, revenue per item is reduced
This is likely to increase the break-even point
Customers may be unwilling to pay a higher price once the sales promotion has come to an end
Examiner Tips and Tricks
You could be asked to state an example of a sales promotion used by a business. As 'state' questions require application, you need to select a strategy that the business in the context is actually using. It may be one of the examples above, though it may be a different form of sales promotion.
Branding
Branding is the process of creating a unique and identifiable name, design, symbol, or other feature that differentiates a product/service or company from its competitors
Strong brands are often well-known within their markets, highly trusted and add credibility to the products a business sells
Businesses often align their brands with celebrities that demonstrate the qualities with which they wish their brand to be recognised
E.g. Sports stars including Maria Sharapova, Derek Jeter and Rory McIlroy have multi-million dollar endorsement arrangements with Nike
Customers may be willing to pay more for a product that is associated with a well-established brand as they perceive products with strong branding to be of higher quality and therefore worth the extra cost
However, building a brand can take a long time and will require significant investment in promotional activities to become well-known
Businesses may be subject to negative publicity if those associated with a brand are involved in a scandal or controversy
E.g. In 2022 Kanye West was dropped by sports brand Adidas after his anti-Semitic outbursts
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