Rethinking Promotion Strategy

Firmanzah

At the heart of business nowadays is the competition to attract consumers' attention toward products and services. Consequently, each producer needs to build a more attractive strategy and action plan than its competitors. But the strategy should not be just attractive but also appropriate.

Designing an appropriate strategy to communicate and to introduce products into the market can increase market acceptance. Thus, success in attracting the attention and awareness of customers will determine customers' purchasing behavior and a firm's performance. One customer strategy approach that can be used by companies is the promotion strategy.

A promotion strategy is important during a new product's launch period in order to encourage initial acceptance. Early in the launch of a new product, there is a desire to affect a trial period to obtain more rapid market penetration. In principle, launching a new product needs a trial strategy to introduce consumers to the product by test, feel, taste, touch and smell. Therefore, a promotion
strategy facilitates consumers' firsthand experience with a new product.

While in order to boost sales, there are various promotional options and incentives that can be used to entice consumers to try a new product. A promotion strategy is used as an incentive to make customers aware of certain products.

Such incentives are called a consumer promotion when directed at the consumer (e.g., vouchers, samples, discounts and premiums attached to a given product) and a trade promotion when it is directed at channeling intermediaries like retailers to stock or push the companies' product or brand (e.g., trade allowances).

Promotion is also utilized to increase shelf space and create displays in stores, eloquently communicating that this new product is essential and that it is worthy of consumers' attention and trial. If the trial message is reinforced with a sample or voucher delivered in-store or at home, the degree of consumer receptivity will be heightened.

Promotion activities prompt consumers to buy more and consume faster. By using promotions, a company can temporarily build up usage rates. Since there is seasonal purchasing behavior in the market, a company can manage buying behavior during each season. It makes consumer buying behavior more predictable and manageable.

Consequently, a company can also manage its production and inventory facility. This situation can maintain the fluctuation of company sales and market share. When a company knows that there is a low demand for several periods, it can use promotional programs to induce buying behavior. Several programs can be used such as price discrimination (e.g., imposing a lower price over a certain period and a high price at another period) and also product-bundling in which one product is combined with another to provide more advantage in the consumer's perspective.

However, the utilization of promotional activities should consider several aspects. First, if it is not well managed, promotion activities can have a negative effect on customers' brand evaluation. A manager must fully understand the nature of his company's products.

Blind promotion activities can destroy brand image construction. This could happen when consumers associate price promotions, for example, with inferior brand quality. Luxurious products, for example, will have a more sensitive effect rather than consumer goods on brand evaluation.

With luxurious products, consumers perceive and associate luxury brands with high quality and high social status. Regularly reducing the price of this kind of product will endanger luxury brand image construction. In this case, promotion activities might not achieve the extent of sales but decrease it.
Second, promotions should be supported by a company's experts who have some basic industry knowledge and are able to translate information gathered from promotions into valuable information in order to improve a product's quality. By using promotion activities, a company can interact directly with customers. They can see, feel and note consumers' reactions during a product's promotion.

Promotion saleswomen, for example, do not merely introduce and persuade consumers to try a new product but can gather and accumulate valuable information about consumers' responses. This information is hard to amass when a company merely uses advertising as a means to promote a new product.

Third, developing a promotion program must also take into consideration the industrial environment (e.g., suppliers, distributors, consumers, competitors) as well as the general environment (e.g., inflation rate, economic growth, political situation, national disasters) that affect demand. A company's manager should be sensitive to the need for extra service, greater range, style, packaging and labeling and the numerous intangible factors to enhance the viability of the product in the market.

In other words, a promotion program must be adapted and suited to existing market conditions. In order to determine the effectiveness of a sales promotion technique, a manager should assess several things such as consumer motivation, behavior pattern, decision-making characteristics and value orientation. The evaluation should be realized by also considering economic developments, media characteristics and market facilities.

Therefore, a company should monitor sales and profit during and up to two months after the promotion in order to evaluate the efficacy of promotion programs. As long as the intermediate and indirect effects are profitable, playing the promotional game appears to be better than staying out of it.

Promotion programs should be combined with advertising strategy. There is a complementary function between advertising and promotion programs. The role of advertising is more to build brand equity in the long term and to ensure the product/brand positioning in consumers' perceptions. The main objective of an advertising program is to gain consumer loyalty and brand equity building over the long term.

However, promotion activities try to influence consumer behavior in the short term and to encourage buying behavior via price reductions, product samples and testing and interesting displays in retail stores. Hence, advertising and promotion are two important issues to develop and to construct "consumer-communication-package" planning. These two concepts are more situated in the complementary logic rather than in the competing concept.

The writer is a lecturer at the graduate program of Management School of University of Indonesia (PSIM-UI) and consultant at the Management Institute of UI.

www.thejakartapost.com