How to create cost-effective promotional plans

Duncan MacVicar

The most visible activity of your marketing function is promotion—the aggregate of nonpersonal selling activities of your business, designed to attract potential customers. Many companies do some promotional tasks well, like creating clever advertisements, but very few do a good job of crafting effective overall promotional schemes that mesh with the company`s sales efforts.

If the purpose of promotion is to attract potential customers, then promotional activities must be designed to hand prospects over to the sales organization. Promotion is the first link in the marketing chain of five related activities that need to happen to secure an order from a customer—creating awareness, need, and preference in customers` minds; generating a lead; qualifying the lead; engaging the customer; and closing the sale. Some of these activities are accomplished by both promotion and sales effort. The two functions coexist on a continuum of marketing activity needed to sell your product (see figure).

Consider how electro-optical products are typically purchased by researchers. Awareness, need, and preference are created via direct mailings, technical magazines, exhibits at the major conferences, or word of mouth within the research community. A lead is generated when the researcher inquires about equipment needed for an experiment, through a magazine "bingo" card, a trade-show form, the Internet, or a phone call.

The manufacturer qualifies the inquiry either by sending literature and awaiting reply (not recommended for expensive equipment) or by having a salesperson talk with the researcher. The two will then engage in any necessary discussions of capability, specifications, price, delivery, and so forth on the phone or in person when the salesperson visits the researcher. The close of the sale occurs when the researcher decides to commit to buying the item—usually with a prompt from the salesperson. In this case, promotional vehicles accomplish the necessary steps in the marketing chain up to or through the qualification phase.

Promotion plays a large role in the marketing chain for some products and a small role for others. When Hewlett-Packard (Santa Clara, CA) was developing the market for laser interferometers in the early 1970s, it found it had to depend almost entirely on its sales force to do the job. The interferometer was so unfamiliar to potential customers (mostly machine-shop maintenance supervisors) that they rarely responded to promotional vehicles like advertising and displays at trade shows. HP`s answer to this situation was to spread a handful of qualified salespeople around the United States with instructions to demonstrate the instrument to the largest potential accounts.

About the same time, Newport Corp. (Irvine, CA) grew sales of its electro-optical components and accessories without any sales force at all. The company used a direct mail catalog, supported by high visibility at conference exhibits, to carry out nearly the entire process.

You want to choose promotional techniques that target your prospective customers most closely, rather than those that spread your message with a shotgun approach. But the cost of promotion is generally tied to its ability to target, so you will have to make cost-effectiveness trade-offs. Seven of the most common promotional vehicles, listed in order of how well they target exactly the right customer, are seminars, direct mail, word of mouth, articles in trade magazines, trade shows, advertising and press releases, and retail displays (see "Targeting your customers," below). Clearly, if articles, press releases, or word-of-mouth promotion fit your situation, you should use them because they are so cost-effective. Even if you plan ads or direct-mail campaigns, it`s wise to use the "free" promotional vehicles first. Magazine editors love to write about new products while they`re newsworthy. If you`ve already started advertising, the item isn`t news anymore.

Selecting the best promotional vehicles

With all these choices, how does one go about selecting the optimum mix of promotional vehicles and sales channels? Start by making a self-inventory of the key attributes of your product and its market. Is your product simple or complex? Is it easy to learn to operate or difficult? Does it include both hardware and software? Will it be purchased in single or in multiple copies?

Where are your customers? In which industry? In what department? In what job function? Are they computer literate? Are they educated in electro-optics? What trade shows do they attend? Which magazines do they read? What are the company`s purchasing procedures? Who makes the final purchase decision?

From the answers to the above questions, you can determine facts like where to go to find customers gathering, how to capture customers` attention, and whether presales interaction must be face-to-face. You can also determine whether detailed technical exchange is required and if there exist third parties, like OEMs or retail stores, to consider in setting up your marketing chain.

Positioning your product

Before designing promotional techniques and plans, you have to decide upon the theme that will tie your marketing efforts together. This is your product positioning. Simply stated, positioning is creating an image in customers` minds of how your product uniquely fits their needs. To develop your positioning, I recommend that you talk to customers about the product and listen carefully to their reactions. The best positioning is accomplished by understanding customers` perception of a product and then turning it around and feeding it back to them in promotion.

A good positioning statement, effectively communicated, will bring customers in your targeted niche to you. Equally important, it will steer away others that you cannot satisfy, thus cutting your marketing costs.

Constructing a promotional plan

Your marketing people should prepare a promotional plan at least once per year, changing it if market conditions change. The procedure goes something like this: after reviewing the positioning of both the company and of each significant product, you identify initiatives needed during the year, such as new products, significant products, or company-image campaigns. Then you develop a theme and a set of objectives for each initiative.

In my view, marketing people should focus their energies on planning initiatives and setting objectives for them; implementation should be done by a full-service marketing communications agency. These professionals can help you identify effective promotional vehicles and decide how to get across the points that you need to communicate.

Public relations firms, whose specialty is nonpaid promotion via press releases, magazine articles, and other kinds of editorial coverage, can also be useful, but their services are expensive. So, as a general rule they are used for difficult jobs such as a major campaign to introduce several new products simultaneously.

Next month, we`ll look at applying all these promotion ideas to a specific situation—introducing a new product. 

Targeting your customers

Successful marketing of a high-tech product requires establishing a coordinated chain of promotional and sales activities.

Promotional vehicles vary considerable in cost and their ability to target the right customers for high-tech products. Here are seven approaches to consider in your promotional plans, along with a word about the importance of good sales literature.

Seminars. An educational seminar aimed at prospective customers must be the next best thing to actually visiting individual customers. It is an excellent means of promotion for complex products. Though producing a seminar is expensive, charging for seminars is not common and, in fact, can keep people like laboratory technicians away. If you charge customers to attend, you better have lots of educational content and very little sales pitch to justify the tuition.