Characteristics of Different Promotions

Characteristics of Different Promotions

Before we discuss the different types of promotion options available to a marketer, it is useful to gain an understanding of the features that set different options apart. For our discussion we isolate seven characteristics on which each promotional option can be judged. While these characteristics are widely understood as being important in evaluating the effectiveness of each type of promotion, they are by no means the only criteria used for evaluation. In fact, as new promotional methods emerge the criteria for evaluating promotional methods will likely change.

For our discussion we will look at the following characteristics of a promotional method:
1. Intended Audience: Mass vs. Targeted
2. Payment Model: Paid vs. Non-Paid
3. Interaction Type: Personal vs. Non-Personal
4. Message Flow: One-Way vs. Two-Way
5. Demand Creation: Quick vs. Lagging
6. Message Control
7. Message Credibility
8. Effective Cost of Promotion

1. Intended Audience: Mass Promotion vs. Targeted Promotion

Promotions can be categorized based on the intended coverage of a single promotional message. For instance, a single television advertisement for a major sporting event, such as the Super Bowl, World Cup or Olympics, could be seen by millions of viewers at the same time. Such mass promotion, intended to reach as many people as possible, has been a mainstay of marketers’ promotional efforts for a long time.

Unfortunately, while mass promotions are delivered to a large number of people, the actual number that fall within the marketer’s target market may be small. Because of this, many who use mass promotion techniques find it to be an inefficient way to reach desired customers. Instead, today’s marketers are turning to newer techniques designed to focus promotional delivery to only those with a high probability of being in the marketer’s target market. For example, Google, Yahoo and other Internet search engines employ methods for delivering highly targeted ads to customers as they enter search terms. The assumption made by advertisers is that customers who enter search terms are interested in the information they have entered, especially if they are searching by entering detailed search strings (e.g., phrases rather than a single word). Following this logic, advertisers are much more likely to have their ads displayed to customers within their target market and, thus, receive a higher return on their promotional investment. The movement to highly targeted promotions has gained tremendous traction in recent years and, as new and improved targeting methods are introduced, its importance will continue to grow.

2. Payment Model: Paid Promotion vs. Non-Paid Promotion

Most efforts to promote products require marketers to make direct payment to the medium that delivers the message. For instance, a company must pay a magazine publisher to advertise in the magazine. However, there are several forms of promotion that do not involve direct payment in order to distribute a promotional message. While not necessarily “free” since there may be indirect costs involved, the ability to have a product promoted without making direct payment to the medium can be a viable alternative to expensive promotion options.

3. Interaction Type: Personal vs. Non-Personal

Promotions involving real people communicating with other people is considered personal promotion. While salespeople are a common and well understood type of personal promotion, another type of promotion, called controlled word-of-mouth promotion (a.k.a., buzz marketing), is emerging as a form of personal promotion. Unlike salespeople who attempt to obtain an order from customers, controlled word-of-mouth promotion uses real people to help spread information about a product but is not designed to directly elicit orders.

One key advantage personal promotions have is the ability for the message sender to adjust the message as they gain feedback from message receivers (i.e., two-way communication). So if a customer does not understand something in the initial message (e.g., doesn’t fully understand how the product works) the person delivering the message can adjust the promotion to address questions or concerns. Many non-personal forms of promotion, such as a radio advertisement, are inflexible, at least in the short-term, and cannot be easily adjusted to address questions that arise by the audience experiencing the ad.

4. Message Flow: One-Way vs. Two-Way Communication

Promotions can be classified based on whether the message source enables the message receiver to respond with immediate feedback. Such feedback can then be followed with further information exchange between both parties. Most efforts at mass promotion, such as television advertising, offer only a one-way information flow that does not allow for easy response by the message receiver. However, many targeted promotions, such as using a sales force to promote products, allow message recipients to respond immediately to information from the message sender.

5. Demand Creation: Quick vs. Lagging

As we discussed earlier, the success of promotional activity may not always be measured by comparing spending to an increase in product sales since marketers may use promotion to achieve other objectives. However, when a marketer is looking to increase demand, certain promotional activities offer advantages in turning exposure to promotion into a quick increase in demand. In general, these activities are most effective when customers are offered an incentive to make the purchase either in a monetary way (e.g., save money) or in psychological way (e.g., improves customer’s perceived group role or status level).

6. Message Control

Most promotions are controlled by the marketer who encodes the message (or hires specialists such as advertising agencies to create the promotion) and then pays to have the message delivered. However, no marketer can totally control how the news media, customers or others talk about a company or its products. Reporters for magazines, newspaper and websites, as well as posters to Internet forums may discuss a company’s products in ways that can benefit or hinder a company’s marketing efforts. This is particularly true with non-paid promotions where a marketer is looking to obtain a free “mention” by an influential message medium (e.g., newspaper article).

7. Message Credibility

The perceived control of the message can influence the target market’s perception of message credibility. For example, many customers viewing a comparative advertisement in which a product is shown to be superior to a competitor’s product may be skeptical about the claims since the company with the superior product is paying for the advertisement. Yet, if the same comparison is mentioned in a newspaper article it may be more favorably viewed since readers may perceive the author of the story has possessing an unbiased point-of-view.

8. Cost Effectiveness

Promotional cost is measured in several different ways though the most useful are measured in terms of cost-per-impression (CPI), cost-per-targeted impression (CPTI), and cost-per-action (CPA). The CPI metric (also measured in terms of cost-per-thousand impressions or CPM) relates to how many people are exposed to a promotion in relation to the cost of the promotion. A national or international television advertisement, while expensive to create and broadcast, actually produces a very low CPI given how many people are exposed to the ad. Yet, a low CPI can be misleading if a large percentage of the promotion’s audience is not within the marketer’s target market, in which case the CPTI may be a better metric for gauging promotion effectiveness. The CPTI approach looks at what percentage of an audience is within the marketer’s customer group and, thus, legitimate targets for the promotion. Clearly, CPTI is higher than CPI, but it offers a better indication of how much promotion is reaching targeted customers.

An even more effective way to evaluate promotional costs is through the cost-per-action metric. With CPA the marketer evaluates how many people actually respond to a promotion. Response may be measured by examining purchase activity, number of phone inquiries, website traffic, clicks on advertisements, and other means within a short time after the promotional message was delivered. Unfortunately, measuring CPA is not always easy and tying it directly to a specific promotion can also be difficult. For example, a customer who purchases a snack product may have first learned about the snack product several weeks before from a television advertisement. The fact that it took the customer several weeks to make the purchase does not mean the advertisement was not effective in generating sales, though if the CPA was measured within a day or two after the ad was broadcast this person’s action would not have been counted..

With the growing trend to more targeted promotions, especially those delivered through the Internet, combined with the development of sophisticated customer tracking techniques, the ability to compare promotion to actual customer activity is bound to one day be the dominant method for measuring promotional effectiveness.