AP Business 2.7: Promotion and Marketing Communications

Predict first

A company is launching a new electric toothbrush. It runs a TV commercial, has staff demonstrate the brush to dentists at a dental conference, and sends out a press release that leads to a story on a morning news show. How many of these count as promotion?

Campaigns and the promotional mix

A marketing campaign is a coordinated effort to promote a product to potential customers using all or some of the tools in the promotional mix. The promotional mix consists of five tools used to communicate with customers: media advertising, personal selling, sales promotion, direct marketing and public relations. Businesses use them to send messages that differentiate their products, build brand loyalty, and increase sales and revenue.

The toothbrush launch was one campaign that used three of the five tools, each for a different job. Planning a campaign means knowing those jobs well enough to pick the right tools for the product and its customers.

The five tools of the promotional mix
Tool	Examples	A business selects it when it wants to
Media advertising	TV, radio, newspapers, billboards	Reach a large number of customers with the same message at the same time
Personal selling	A demonstration, a sales pitch	Give a potential customer detailed product information or a demonstration, and complete the sale
Sales promotion	Discounts, coupons	Encourage customers to decide more quickly, or reduce unsold inventory
Direct marketing	Flyers, brochures	Reach many potential customers with a targeted message
Public relations	Press releases, media interviews that lead to news coverage	Create a favorable public image rather than advance a specific sale

Matching tools to buying decisions

Businesses choose tools based on how customers make buying decisions for a specific product (see 2.2 Consumer Behavior). A customer making a consequential purchase may need detailed, personalized interaction before deciding. A customer making a more routine purchase may be satisfied by messages and information from mass media or direct-marketing materials.

Think about a family buying a minivan. They want to compare models and take a test drive, and they have questions about safety and financing. A salesperson who can demonstrate the van and answer questions is worth a lot here, and a sales pitch, a short presentation that conveys the product's value proposition, can complete the sale. Now think about a bag of pretzels. Nobody wants a sales pitch in the snack aisle. A TV ad or a billboard that keeps the brand familiar does the job.

Sort it

Tap each promotion, then tap the tool from the promotional mix that it uses.

Media advertising

Sales promotion

Direct marketing

Public relations

Worked exampleEvaluating a campaign for a new e-bike

Brightline Bikes, a shop in a city of 400,000 people, is adding a commuter e-bike that sells for $2,400. Its target customers are commuters who live within 5 miles of downtown. The owner proposes four promotions. Evaluate each one.

A 30-second commercial on a statewide TV station. Media advertising reaches a large number of people with the same message, but most viewers live nowhere near the shop, and an ad cannot answer the questions a purchase this size raises. A weak fit.
Free test rides with a salesperson every Saturday. An e-bike is a consequential purchase. Riders want to feel the motor and ask about battery range before spending that much, so personal selling with a demonstration is the strongest tool here.
Brochures delivered to apartment buildings near downtown. Direct marketing sends a targeted message to many potential customers, and these buildings are where the target commuters live. A good fit.
A coupon for $200 off, good for two weeks. A sales promotion speeds up decisions, so it can tip riders who have already tried the bike. It also cuts what the shop earns on each sale, so it belongs late in the campaign and for a limited time.

Answer.

Lead with Saturday test rides and the brochures, use the coupon to push riders who are close to deciding, and drop the statewide TV commercial. Each tool that stays matches how commuters decide to buy a bike that costs this much.

Digital marketing

Digital marketing is the use of the internet and digital technology tools, such as websites, email, social media and mobile apps, to connect with and serve customers. In the early 21st century, businesses shifted marketing resources away from traditional advertising, such as newspaper, magazine, radio and TV ads, toward digital tools and platforms.

Digital tools let a business reach potential customers, whether a global audience or a targeted customer segment, with greater personalization and at lower cost than traditional tools. Brightline could show its e-bike ad only to people who live within 5 miles of downtown and follow cycling accounts, and greet a returning visitor to its website with the model she looked at last week.

They also let businesses collect a large volume of information, known as big data, about how customers respond to marketing communication and which factors make them more likely to buy. An email campaign shows which customers opened it and which of them went on to buy. Some traditional tools allowed this on a small scale: a salesperson learns something from every conversation. Others, such as TV ads and billboards, did not. A billboard cannot tell a business who read it.

On the exam

When a question gives you a business's goal and asks which promotional tool fits, match the goal to the tool's job: one message to a large audience at once is media advertising, detailed information or a demonstration is personal selling, quicker decisions or less unsold inventory is a sales promotion, a targeted message is direct marketing, and a favorable public image is public relations.

The Business Canvas Project has you build a marketing campaign that includes at least one digital marketing tool and test a hypothesis about it. College Board's course description says the first free-response question asks you to explain how you used hypothesis testing to inform a decision in your project, so keep a record of your hypothesis, your method, the evidence and the decision it led to.

Check your understanding

1

It is March, and a sporting goods store still has 300 winter coats it did not sell. Which promotional tool is the store most likely to select to reduce this unsold inventory?

2

Why is a company that installs home solar panels more likely to rely on personal selling than a company that sells sunscreen?

3

A landscaping company wants to tell the homeowners in three brand-new subdivisions about its plan for planting new lawns. Which tool fits this goal best?

4

A shoe store moves most of its promotion budget from newspaper ads to email and social media. Which change is it most likely to see?

5

Select the two tools that let a business collect information about how customers respond to its marketing.

Select 2 answers, then check.