This chapter is about Promotion.
Promotion is the way a company communicates what it does and what it can offer customers. It must gain attention, be appealing, tell a consistent message and most importantly give the customer a reason to choose your product over your competitors.
There are four key components to developing successful promotions:
1. Mission
2. Message
3. Method
4. Metrics
Let me go over these four components one by one.
You need to be clear about the Mission, or purpose, of your promotion programme and how it relates to the overall business objectives (that is, high-level goals that you want to achieve to strengthen your value proposition). Your mission can be: increasing profitability, sales and/or market share (that is, of all the products being sold on the market, what percentage are you selling?)
When I first started out, my main business objective was to increase sales and I did so by inviting people to try my product. Today, my business objective is to increase the profitability as I have a large amount of sales and I want to focus on decreasing my costs.
Next, you need to develop a clear Message that would likely influence your customers’ behavior. This message must closely tie to your value proposition and how different your product is from that of your competitors. For example, let’s assume that your business produces peanut butter and that you offer something that your competitors do not, that is, customized peanut butter in different flavors (chocolate, honey, cinnamon etc.), then this fact needs to be included in your message.
I crafted my messages to emphasize what is different about my product, such as how my pumpkin products are all-natural and made of high-quality ingredients.
Method is about the most effective way to deliver the message. There are many different ways that you can use to market your products:
Traditional advertising: This type of advertising uses mass media, such as newspaper, magazines, television advertisement and radio advertisement. If you are selling a product, such as bottled water for all people and you want to generate awareness to compete against existing brands, then this channel allows to you reach a mass audience.
Direct marketing: This channel allows the business to communicate directly with the individual customer. Advertising techniques that can include text messaging, email, flyers, catalog distribution, and promotional letters. This type of marketing is most effective when you want to target a specific type of audience. For example, if you want to share discount deals with loyal customers, you can use text messaging.
Online/social networking: This channel entails reaching out to customers using online media. This could be using online advertisement or building an interactive customer website can sometimes be a cheaper option than advertising in traditional media. Your options are many but the most frequently used social media platforms include Twitter and Facebook’s Business Pages. You may also want to prepare a promotional video and post it on YouTube and then broadcast it on other social media platforms.
Public relations: Public relations is the practice of managing the spread of information between a business and the public. This approach is mostly used by larger businesses since it require staff involvement in a number of activities. For example, this may include writing media advisory, press releases, news articles. It could also involve working directly with the press, arranging interviews for company spokespeople, writing speeches for company leaders and acting as organization's spokesperson by speaking in public and public officials. For example, if you own a food business, you may want to write an article to be featured on the food section of the newspaper.
Sales promotion: This is a tactic to increase sales within a limited time. Examples include contests, coupons, prizes and product samples.
I decided to choose this method to reach the mission of my promotional campaign. I designed a taste-testing event outside of my store. On one side of the table, I placed my pumpkin cake and on the other two pumpkin cakes sold at the market. I welcomed people who passed by to try the cakes and rate them on taste. I am proud to say that 90% of people voted for my pumpkin cake. This promotion activity accomplished my goal of getting people to try my cakes and at the same time showed that my cakes taste better. On this day I also gave a 10% discount on all products, which gave people an incentive to purchase some of my products right away. Not only was my product superior but it also sold at a lower price on this promotion day.
Metrics help assess the success of the promotion programmes. It is very important to know if your activities led to the result that you set out to achieve. And, to do so you need to keep track of all the numbers related to how many people were reached, what did it cost you to reach them and did you stay within your budget for these events?
A good rule of thumb is an advertising to sales ratio of about 8 to 10%. That means that your advertising costs should not exceed 10% of your projected sales. But keep in mind that the advertising to sales ratio vary widely by the age and size of the company, as well as the industry in which it operates.
On the day of the promotion event, I kept track of all types of data. For example, I learned that:
- 100 people tasted my pumpkin cake in the taste event.
- 90 people chose my pumpkin cake as their favorite over the other two
- 30 people bought various products on display.
- 60,000 shillings was generated in revenue that day.
- 20 out of the 30 people came back again to purchase more products. During the event, I had marked down the names of people who participated in order to track whether they returned.
- Sales increased by 100,000 shillings per month after this event.
What is your business goals at the moment? What type of promotion programme could help you achieve these goals? Work through the Mission, Message, Method and Metrics and then discuss with a friend or business partner.