Promotion (Cambridge International IGCSE Business)
Reasons for promotion
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Promotion refers to all the activities a business uses to inform, persuade, and remind customers about its products or services, with the aim of increasing sales and building brand loyalty
- Promotion communicates a business's value proposition to potential customers and helps to differentiate the product or business from competitors
- Promotion plays a crucial role in generating customer awareness, interest and desire for a product
The main aims of promotion
Promotion aims to support sales of new and existing products, inform customers and improve brand and business image
- Enhance brand and business image
- Promotion helps build a strong, positive image of the business. It can show the brand as trustworthy, high-quality, ethical, or innovative
- For example, Apple uses sleek advertising to reinforce its image as a premium, cutting-edge brand
- Compete with rivals
- In competitive markets, promotion helps a business stand out. Special offers, adverts or sponsorships can attract customers away from competitors
- For example, Burger King and McDonald's use adverts and discounts to compete for customers
- Support new products
- When launching a new product, promotion creates awareness and interest. It helps customers learn what the product is and why they should try it
- For example, a soft drinks company might offer free samples in supermarkets when introducing a new flavour
- Increase sales revenue
- Well-planned promotion can boost sales by encouraging more people to buy, or to buy more often
- For example, limited-time discounts or “Buy 1, Get 1 Free” deals increase customer purchases
- Provide information
- Promotion can be used to inform customers about product features, prices, store locations, or changes to the business
- For example, a bank may use advertising to explain new mobile banking features to its customers
Methods of sales promotion
Spec point — "promotion, e.g. vouchers, reward schemes, competitions, special offers /discounts"
Methods of sales promotion
- Sales promotion is a short-term marketing strategy used to encourage customers to buy a product
- It often includes special deals or incentives and is designed to boost sales quickly or support a new product launch
Methods of sales promotion
Vouchers
- Customers are given a coupon or code offering money off a future purchase
| Advantages | Disadvantages |
|---|---|
| - Vouchers encourage customers to return and make another purchase - They attract customers who are looking for lower prices | - Profit margins are reduced when discounts are used - Some customers may wait for vouchers instead of paying full price |
Reward schemes
- Customers earn points or rewards for regular purchases
| Advantages | Disadvantages |
|---|---|
| - Reward schemes build loyalty by encouraging repeat purchases - They help the business keep existing customers over time | - They can be expensive to set up and maintain - They may not attract many new customers |
Competitions
- Customers enter to win a prize, often by buying a product or taking part in an activity
| Advantages | Disadvantages |
|---|---|
| - Competitions increase interest in the brand and can be shared on social media - They can encourage people to buy in order to enter | - Not all participants become regular buyers. - Prizes and promotions add extra costs for the business |
Special offers and discounts
- Temporary price reductions like 20% off or Buy One, Get One Free
| Advantages | Disadvantages |
|---|---|
| - These offers can quickly increase sales and attract attention - They can help clear old or excess stock | - Frequent discounts may damage the brand’s image - Lower prices can reduce profits |
Exam Hint Avoid treating promotion as only advertising – examiners expect you to distinguish between advertising methods and sales promotions, and to justify which is most effective in the case study
Recommending a suitable sales promotion
- A business must carefully choose the right type of sales promotion to suit its product, customers and objectives
Factors affecting the choice of sales promotion
Sales promotions must be suitable for the target market and type of product, as well as being within budget
Target market
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The type of customers the business wants to reach will influence the promotion
- For example, young customers might respond well to competitions or online discounts, while regular shoppers may prefer reward schemes
Type of product
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Some promotions work better for certain products
- For example, Buy One, Get One Free is effective for fast-moving items like snacks, but not for expensive goods like electronics
Stage in the product life cycle
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Sales promotions are often used during product launch or maturity stages
- For example, a new product might use vouchers to attract first-time buyers, while a mature product might offer discounts to boost slowing sales
Promotion objectives
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The business must be clear on what it wants to achieve
- For example, if the objective is to build loyalty, a reward scheme may be best, but if the objective is to quickly increase sales, a discount might be more suitable
Budget available
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The business must consider how much money it has to spend
- For example, competitions with prizes or large discount campaigns can be costly, so may not be suitable for small businesses
Case Study Selecting a Suitable Sales Promotion for GLOH Skincare
GLOH is a small business that produces luxury skincare products. It is about to launch a new moisturising face cream and wants to attract new customers while encouraging them to buy again in the future
Actions
The marketing team is considering two sales promotions
Vouchers
- Customers receive a 20% off voucher with their first purchase to use on their next order
- The team believes this will encourage customers to return, helping to build long-term loyalty
Launch competition
- Customers who buy the face cream during the first month are entered into a draw to win a year’s supply of GLOH products
- The team thinks this will create buzz around the launch and boost interest on social media
Recommendation
- GLOH should offer vouchers as its main sales promotion
- The business wants to encourage repeat purchases and build a base of loyal customers
- While competitions may attract attention, they are more likely to bring in one-time buyers who may not return
Methods of advertising
Spec point — e.g. social media, direct/targeted emails, leaflets, billboards
- Advertising is a form of paid promotion used by businesses to inform, persuade or remind customers about their products or services
- It aims to increase sales, build brand awareness and attract new customers through different media such as TV, social media, billboards or print
Social media
- Using platforms like Instagram, TikTok or Facebook to promote products and interact with customers
| Advantages | Disadvantages |
|---|---|
| - Social media allows businesses to reach a large audience quickly at low cost - It also helps build relationships through comments and messages | - It can be time-consuming to manage accounts and reply to customers - Negative feedback can spread quickly and harm the brand |
Targeted emails
- Sending promotional emails to specific customers based on their interests or past purchases
| Advantages | Disadvantages |
|---|---|
| - Emails are low-cost and can be personalised to suit the customer - They are useful for reaching existing or interested customers directly | - Customers may ignore emails or delete them without reading - If used too often, it can annoy customers or be seen as spam |
Leaflets
- Printed materials handed out or delivered to promote a product, service or event
| Advantages | Disadvantages |
|---|---|
| - Leaflets are cheap to print and are useful for local promotions - They can be delivered directly to potential customers | - Many people throw away leaflets without reading them - Printing large amounts can be wasteful and harm the environment |
Billboards
- Large outdoor posters placed in high-traffic areas to catch public attention
| Advantages | Disadvantages |
|---|---|
| - Billboards are seen by thousands of people every day - They are effective for raising awareness of a brand or product | - Renting billboard space in busy areas can be expensive - They have limited space, so detailed information can't be included |
Recommending a suitable method of advertising
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Businesses must choose the right type of advertising based on several important factors
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Target market
- The advertising method should match the age, interests and habits of the target customer
- For example, social media is good for reaching young people
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Cost and budget
- Some methods like billboards or TV adverts are expensive, while others like social media or leaflets are more affordable
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Type of product
- Products with visual appeal, like fashion items or food, may benefit from image-based adverts on platforms like Instagram or billboards
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Message content
- If the advert needs to give detailed information, methods like emails or leaflets may be more suitable than a billboard
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Reach
- Businesses may choose national advertising for large markets or local advertising, using posters or flyers, for smaller areas
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Case Study Choosing a Suitable Advertising Approach for Kahawa
Kahawa is a small business in South Africa that sells organic, fair-trade coffee beans. The business is planning to launch a new product: cold brew coffee in eco-friendly bottles
Kahawa wants to raise awareness and attract new customers, especially young adults in cities.
Actions
The marketing team is considering three advertising options
Option Description Why it’s being considered Social media - Promote the cold brew on Instagram and TikTok using short videos showing how it’s made and sourced - Social media is popular with young adults and allows for low-cost, creative marketing Leaflets - Hand out leaflets near gyms, universities and cafés, offering a discount on the first purchase - This is a cheap way to advertise locally and reach health-conscious customers in person Billboards - Place a large billboard in a busy part of Cape Town to grab attention - It would reach a wide audience and increase brand visibility Recommendation
Kahawa should use social media as its main advertising method
- This option fits the target market, is affordable and allows the business to tell its story using visuals and video
Leaflets are useful for local promotion but may be ignored
Billboards are likely to be too expensive for a small business at this stage
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