Promotional Policies

Abstract

A promotional policy is a set of principles and guidelines based on an analysis of an organization's goals, objectives, resources, and plans that is used to help develop marketing decisions, strategies, and plans. In addition to the nature of the product or service being offered and the characteristics of the target market, a promotional policy must also take into account the corporate image that the organization desires to portray to the public as well as any ethical considerations about their product or marketing approach. Promotional policies must by their very nature differ from industry to industry and from organization to organization to reflect the nature of business and the characteristics of a particular organization.

Whether one thinks of it as a challenge, a game, or the ultimate boredom, marketing is a fact of life for every business. Even small business owners who swear that they never market their products or services do so through such methods as word-of- mouth and social or business networking. On the other extreme are large corporations with separate marketing departments and large marketing budgets that enable the creation of a corporate persona, high brand recognition, in-depth research, and a multi-pronged approach to identifying, capturing, and retaining customers.

Overview

Strategic Marketing. Whether large or small, the business marketer is faced with a plethora of ways to market the organization's goods and services. Although one could, in theory, stand on the street corner and hawk one's business products, a more solid marketing strategy is necessary. Strategic marketing is a subfunction of marketing that examines the marketplace to determine the needs of potential customers, the strategy of the competitors in the market, and attempts to develop a strategy that will enable the organization to gain or maintain a competitive advantage in the marketplace. Marketing departments can choose from a number of ways to market their company's products or services including advertising, direct response, sales promotions, and publicity. However, no matter how well an advertisement or marketing campaign is designed, unless one understands the needs of the customer, the market, and the industry as well as the strengths and weaknesses of the competition, these approaches are unlikely to be successful. Strategic marketing is an approach to marketing that helps an organization sharpen its focus and successfully compete in the marketplace.

Strategic marketing is concerned with two primary components: The target market and the best way to communicate the value of one's product or service to that market. To develop a viable marketing strategy, one must take into account several key dimensions. First, as with any other strategy within the organization, a marketing strategy needs to be endorsed by top management. Marketing strategy is also political in nature: Powerful units within the organization may disagree on the best marketing strategy and an agreement or compromise may need to be negotiated. Marketing strategies can also be affected by organizational culture and the assumptions that it engenders. For example, if the organization has always marketed its widgets to business executives, it may fail to see the potential for marketing to lower level personnel within the organization or even for personal use to adults or teenagers, with an important segment of the marketplace not being considered as a result.

Marketing/Promotional Policies. Before one can develop a marketing strategy, determine the appropriate marketing mix, develop and implement a plan that will bring the business a sufficient return on investment for their marketing dollars, or design an advertisement, one must first determine what the parameters within which one must design one's marketing strategy are. Although one could take one's marketing budget and spread it across as many categories of the marketing mix as possible in an attempt to increase coverage of one's product or service, strategic marketing demands a more considered, systematic approach that takes into account not only the product but the internal and external factors that affect how the product or service might best be marketed. Typically, successful marketing campaigns start with a marketing or promotional policy. This is a set of principles and guidelines based on an analysis of the organization's goals, objectives, resources, and plans. Typically, policies are set by the organization's governing body (e.g., board of directors) and are used to develop strategy and guide decision making in support of meeting the organization's goals and objectives.

Factors to Consider. As shown in Figure 1, promotional policies need to consider at least four factors affecting the best way to market or promote a product or service:

• The characteristics of the product or service;
• The characteristics of the target market;
• The corporate image that the organization wishes to portray;
• Any ethical considerations in the marketing of the product or service.

The characteristics of the products or services being marketed by the organization have an obvious impact on the way that marketing is done. Not all products and services are best promoted in the same way. For example, a television spot advertising a high-end business consulting service would probably yield more results if placed on an all news channel rather than an all cartoon channel. In addition, the nature of the target market also influences the way that goods and services are most appropriately marketed. For example, a few years ago, a business bought air time on two local radio stations: One a classical station and the other a rock station. The narrative of the ads was the same, but the background music was different to reflect the musical tastes of the audiences of the respective stations. Unfortunately, somewhere in the process, the ads were switched so that the classical station received the ad with the rock music and the rock station received the ad with the classical music. Soon thereafter, the stations started playing an apology from the business that had sponsored the ads: Numerous regular listeners of both stations had called in to complain about the appropriateness of the ads. Although the business had attempted to segment the target market into categories and tailor its advertising to appeal to the tastes of the segments, the execution fell short, ending in a lower return on investment than expected.

The characteristics of the product or service and of the target market or market segment are important aspects of marketing, particularly when designing a marketing campaign that will maximize one's return on investment. In addition, an organization must consider what place it wishes to occupy within its industry. Corporate image is the perception of an organization that is generally held by the public. To cultivate its corporate image, a business needs to participate in activities that support that image and avoid activities that might tarnish it. Certainly, consulting firms and investment companies that have made the headlines over the years have learned this fact the hard way. However, even such decisions as where the organization advertises and how its ads are designed can reflect back on the organization. This is one reason that from time to time organizations change their corporate logo or branding: To realign public perceptions about them or to change their image to reflect new goals and objectives. In addition to activities directly focused on marketing specific products or services for the organization, businesses also typically engage in public relations activities as part of their marketing strategies. A corporate image may change over time depending on the organization's circumstances, publicity, and other publicly known information. Public relations activities help the organization to create and manage its public image or reputation with outside agencies and groups. This marketing function is responsible for developing positive messages about the organization and reducing the impact of negative events and information on the organization's reputation. In addition to considerations of corporate image, businesses also need to be concerned with ethical considerations in marketing and take these into account in the development of their promotional policy and eventual marketing strategy. For example, given the link between smoking and lung cancer, one can no longer view advertisements for cigarettes on television.

Just as there is no such thing as the "ideal" marketing strategy that is appropriate for all organizations, there is also no such thing as the "ideal" promotional policy for all organizations. Different types of organizations and even different industries will market their products and services in different ways. For example, a fast food chain may want to be associated with the concept of "quick and easy" whereas a high-end restaurant would be more likely to want to be associated with a fine dining experience.

Applications

Marketing to Children. One area of promotional policy that has been a topic of much debate, particularly within the food industry, is the issue of whether or not one should market directly to children. Obviously, some products are designed specifically for children, including clothes, toys, and certain food products. The question, however, is the degree to which it is ethically appropriate to market these items directly to the children. For the most part, children do not have a great deal of discretionary cash, so marketing directly to children would appear to be a wasted effort. However, the wants of children can have a great effect on the buying behavior of their parents and other adults. In some cases, this is nothing more than the type of influence that is attempted by other marketing efforts and there is little to say when marketing efforts encourage drinking milk or buying comfortable shoes. However, both children and their parents know that milk and shoes are necessary, so little marketing effort is needed.

The ethical dilemma arises, however, when the item being marketed to children is something that may go against the parents' a priori philosophy of what is good or not good for a child to own, eat, or wear (e.g., revealing clothes or high-sugar snacks). The questionability of marketing to children in ethically ambiguous situations has caused companies such as Coca-Cola and the International Council of Beverages Associations to institute guidelines regarding marketing to children. Based on concerns over the rising obesity epidemic, particularly in children, these organizations have issued a statement saying that they take "special care" when deploying advertising practices to children under the age of 12 as children under that age "may lack the necessary skills and judgements [sic] to properly understand the purpose behind the persuasive techniques commercial advertising represent" (Coca-Cola, 2008). For this reason, they do not market their products directly to children and only show children drinking their products in the company of adult caregivers.

Not only may children not be able to make reasoned judgments about the appropriateness and value of products, but marketing may also change their beliefs and behavior, particularly regarding the marketed product. Bridges and Briesch (2006) developed a model to test the "nag factor" in marketing children's categories. They define the term "nag factor" as an indirect marketing path that begins with promotional activities aimed at influencing the preferences of children who, in turn, request that their parent(s) purchase the product. The promotional activities that are likely to be successful with children tend to be different from those that are successful with adults. Although adults, for example, tend to develop brand loyalty and repeatedly purchase preferred brands, children tend not to focus on brands but make buying decisions (or at least acquisition decisions) based on the characteristics of the product. This is why many products that are aimed at children reflect the latest popular theme or character. In addition, purchasing decisions among children are made differently based on age. Younger children, for example, tend to look for products featuring the latest character, bonus offers, tie-ins with movies, and so forth. Because younger children do not necessarily understand that the general purpose of promotional activities is to sell products, they can, therefore, infer that unhealthy products are good for them because of the "endorsement" of the character. Young children, however, do not remain loyal to a particular brand once they make a purchasing decision, but change brands when a product with a more current character comes out. Teenagers, on the other hand, tend to be more like adults in their buying behaviors, particularly when it comes to brand loyalty, although they continue to respond to image-focused messages.

Given the fact that most children do not have the necessary funds to purchase items even if they form purchasing decisions, one might wonder at the effectiveness of promotional activities that are targeted towards children. However, Bridges and Briesch's review of the literature on marketing to children found that the nag factor has a definite influence on the purchasing behavior of adults with such items as clothing, shoes, fast food and other food items, snacks, and beverages. For example, one study found that the nag factor accounted for one-third of the trips to a fast food restaurant in 2011, up from only one-tenth in 1977. In 2006, forty-four food and beverage companies spent $2.1 billion to market food to youth (Federal Trade Commission, 2012). Total advertising expenditures by fast food restaurants totaled $4.6 billion in 2012 (Yale Rudd Center for Food Policy and Obesity, 2013). In 2012, children under the age of eleven viewed half the number of fast food advertisements as adults; McDonald’s was the only fast food chain that directed more advertising to children than adults in 2012 (Yale Rudd Center for Food Policy and Obesity, 2013). Research has shown that children tend to be influenced by marketing in categories that are considered unhealthy due to an increase in calorie intake or a decrease in nutrition.

Based on their research, the authors found that the nag factor is a real phenomenon as evidenced by the fact that households with children tend to have more variety in their purchases for such items as soft drinks and cereal than do households without children. Such variety-seeking behavior tends to increase over time as children become more sensitive to the influence of promotional tie-ins with dynamic characters and other popular themes. These findings have ethical implications for the way that organizations market to children so that marketing efforts support their promotional policies.

Conclusion

Before one can develop a marketing strategy, one must first develop a marketing or promotional policy. These principles and guidelines will help the marketing department develop a marketing strategy, marketing plan, and marketing mix that will best support the organization in meeting its goals and objectives. The organization's promotional policy must consider not only the characteristics of the product or service being marketed or the concomitant target market, but also the corporate image that the business desires to convey to the public. Any ethical considerations regarding the marketing of their products must also be taken into account. By first developing a well thought-out promotional policy, marketers can better design marketing strategies and plans that will support the organization in its goals and objectives and maximize the return on investment that the organization receives for its marketing dollars.

Terms & Concepts

Brand: A trademark or distinctive name that is identified with a particular product, service, or organization that makes it publicly and easily distinguishable from other products, services, or concepts. A brand may include a name, logo, slogan, or design scheme associated with the product, service, or organization.

Brand Loyalty: The reluctance of a buyer to switch to another brand of product or service because s/he is familiar and comfortable with the brand s/he is currently using or has used in the past.

Corporate Image: The perception of an organization that is generally held by the public. A corporate image may change over time depending on the organization's circumstances, publicity, and other publicly-known information.

Ethics: In philosophy, ethics refers to the study of the content of moral judgments (i.e., the difference between right and wrong) and the nature of these judgments (i.e., whether the judgments are subjective or objective).

Market Segmentation: A marketing strategy in which a general population or market is subdivided into categories based on an a priori definition of potential buyers and the likelihood of purchase. Marketing efforts are then concentrated on the segment most likely to purchase with the objective of gaining a major share of the segment as opposed to a smaller share of the general category of potential buyers.

Marketing: According to the American Marketing Association, marketing is "an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders" (AMA, 2009)

Marketing Mix: The combination of product, price, place, and promotion that is used to get a product into the hands of the consumer. One of the primary tasks of marketing is to optimize the mix to best position the product for success in the marketplace.

Marketing Plan: A plan that specifies the actions the organization intends to take to obtain customers for its proffered goods or services. The marketing plan includes the organization's marketing strategy, including such things as pricing, budget, specification of target markets, and intelligence about competitors.

Organizational Culture: The set of basic shared assumptions, values, and beliefs that affect the way employees act within an organization.

Policy: In a business setting, a policy is a set of principles and guidelines based on an analysis of the organization's goals, objectives, resources, and plans. Policies are set by the organization's governing body (e.g., board of directors) and are used to develop strategy and guide decision making in support of meeting the organization's goals and objectives.

Public Relations: The process of creating and managing a public image or reputation with outside agencies and groups. In business, the public relations function is responsible for developing positive messages about the organization and reducing the impact of negative events and information on the organization's reputation.

Return on Investment (ROI): A measure of the organization's profitability or how effectively it uses its capital to produce profit. In general terms, return on investment is the income that is produced by a financial investment within a given time period (usually a year). There are a number of formulas that can be used in calculating ROI.

Strategic Marketing: The subfunction of marketing that examines the marketplace to determine the needs of potential customers, the strategy of the competitors in the market, and attempts to develop a strategy that will enable the organization to gain or maintain a competitive advantage in the marketplace.

Strategy: In business, a strategy is a plan of action to help the organization reach its goals and objectives. A good business strategy is based on the rigorous analysis of empirical data, including market needs and trends, competitor capabilities and offerings, and the organization's resources and abilities.

Target Market: The people or businesses to whom the entrepreneur wishes to sell goods or services.

Bibliography

American Marketing Association. (2009). Marketing. AMA Resource Library: Dictionary. Retrieved February 20, 2009, from http://www.marketingpower.com/%5flayouts/Dictionary.aspx?dLetter=M

Beard, F. K. (2017). The ancient history of advertising: Insights and implications for practitioners; What today's advertisers and marketers can learn from their predecessors. Journal of Advertising Research, 57(3), 239–244. Retrieved February 13, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=125278531&site=ehost-live&scope=site

Bridges, E. & Briesch, R. A. (2006). The "nag factor" and children's product categories. International Journal of Advertising, 25(2), 157–187. Retrieved February 24, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=21110472&site=ehost-live

Coca-Cola Company, The. (2008). International Council of Beverages Associations guidelines on marketing to children. Retrieved February 24, 2009, from http://www.thecoca-colacompany.com/citizenship/icba.html

Federal Trade Commission. (2012). A review of food marketing to children and adolescents: A follow-up report. Retrieved November 24, 2014, from http://www.ftc.gov/sites/default/files/documents/reports/review-food-marketing-children-and-adolescents-follow-report/121221foodmarketingreport.pdf

Proctor, T. (2000). Strategic marketing: An introduction. New York: Routledge.

Yale Rudd Center for Food Policy and Obesity. (2013). Fast food F.A.C.T.S. 2013: Food advertising to children and teens score. Retrieved November 24, 2014, from http://www.fastfoodmarketing.org/media/FastFoodFACTS%5Freport.pdf

Suggested Reading

Challagall, G., B. R. Murtha, & B. Jaworski. (2014). Marketing doctrine: A principles-based approach to guiding marketing decision making in firms. Journal of Marketing 78, 4–20. Retrieved November 24, 2014, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=97014757

Inman, J. J. & McAlister, L. (1993). A retailer promotion policy model considering promotion signal sensitivity. Marketing Science, 12(4), 339–356. Retrieved February 24, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4471790&site=ehost-live

Paley, N. (2005). Promotional strategies: Plan a total communications mix. In N. Paley, Manager's guide to competitive marketing strategies (3rd ed.) (pp. 333–362). London: Thorogood. Retrieved February 24 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22355290&site=ehost-live

Ruskin-Brown, I. (2005). Promoting a service. In I. Ruskin-Brown, Marketing your service business (pp. 199–221). London: Thorogood. Retrieved July 10, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22377471&site=ehost-live

Schimmelpfennig, C., & Hollensen, S. (2016). Significant decline in celebrity usage in advertising: A review. IUP Journal of Marketing Management, 15(1), 7–19. Retrieved February 13, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=113616010&site=ehost-live&scope=site

Scott, J. T. (2005). Business marketing and promotion: A checklist. In J. T. Scott, Concise handbook of management: A practitioner's approach (pp. 213–218). New York: Routledge. Retrieved February 24, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=21713233&site=ehost-live