Below the Line Promotion

Marketing Spend Shifting to Below-the-line

2007-11-22T10:33:00.000-08:00

A new study conducted by Winterberry Group indicates that marketing efforts are shifting from above-the-line (ATL) to below-the-line (BTL) efforts. In other words, marketing campaigns are moving away from using mass media branding through the use of generic and broad messages and moving towards utilizing more direct response marketing methods.

According to Winterberry Group data and secondary research, ATL marketing makes use of print, broadcast, and outdoor advertising to reach large audiences that strengthen brands and convey general product information or elicit emotional responses from consumers exposed to the advertisements. On the other hand, BTL marketing uses direct mail, insert media, database marketing, interactive marketing, and promotional marketing to create specifically aimed marketing campaigns that offer consumers the ability to easily respond while allowing marketers to track the success of the efforts with little difficulty.

"Simply stated, above-the-line marketing that utilizes generic messages to build awareness is no longer the best way to influence customer behavior," said Bruce Biegel, managing director of Winterberry Group. "Below-the-line initiatives are more successful because they stress targeted and customer-centric communications. Below-the-line also creates measurable results and ROI metrics, which are important to marketers under growing pressure to prove the value of their campaigns. We expect that this demand for quantitative results will continue to intensify for at least the next five years".

According to Biegel, the rate of the shift from ATL to BTL spending was the most surprising aspect of the findings. Winterberry Group’s study found that since 2003, ATL spending grew an average of 5.5% per year, while BTL spending grew 7.8% per year. BTL spending was led by search, e-mail, and online advertising. The study expects these growth rates to continue through 2007, and that the industry as a whole will grow 6.9% from 2003 to 2007.

"The biggest surprise to us was the rate of the shift," Biegel told. "When we started looking at the numbers, we knew that ATL was slowing, even though overall marketing spending was growing. We found ATL was falling a lot faster than expected, even though it was being propped up by cable TV spending”.

The results of the study found two main reasons for this major shift. The first is that consumer attitudes have been changing. Instead of settling for generic, one-sided messages that aim to convey a message to a large, anonymous, and uniform audience, consumers have become more demanding. They insist on responding better to messages that are more engaging and personal, that allow for two-way communication and interaction with the marketer through preferred communication avenues. Advances in technology have allowed marketers to target consumers and track results with more accuracy and efficiency.

This ties into the next factor, which is media fragmentation. As consumers demand more personal and conversational messages, they also demand messages that are made to fit their individual and unique personality and characteristics. The growing diversity of targeted consumers along with the larger options for communication channels makes it difficult for marketers to effectively reach their target audiences. “Every consumer has a different attitude, a different way to reach them. Marketing messages need to be more focused, because the consumer is in control”, Biegel said.

One way marketers are trying to reach consumers is with multi-channel marketing. Many marketers find multi-channel campaigns are more effective, and improve the performance of all channels. This has been borne out in data from the Internet Advertising Bureau that found overall sales can improve by anywhere from 7 to 34 percent, depending on channel, when multiple BTL marketing programs are used in concert.

By coordinating a direct mail drop date with in-statement ads and email, a marketer can expose consumers to the same message in multiple media. More marketers seem to be picking up on this. A recent study by the Direct Marketing Association found 42 percent of marketers sell primarily via two channels; another 40 percent use three.

A recent change in interactive marketing reflecting the maturing of the medium is that it's no longer viewed as a separate component with its own rules, said Paul Chachko, founder and CEO of BTL-focused marketing services firm V12 Group. "A couple of years ago, people used it as its own channel. We're using interactive as a component in our overall strategy."

Another sign interactive is maturing is the change from a single budget line for interactive to separate lines for search, lead-generation, email, and retention activities, Biegel said.

ATL marketing channels as those striving to reach mass audiences with messages that reinforce brands, communicate general product information or inspire emotional response. This includes print and broadcast advertising, as well as outdoor advertising and yellow pages. BTL marketing is made up of targeted, direct marketing efforts with convenient response mechanisms and that are easy to measure. Examples include database marketing, direct mail, interactive marketing, insert media and promotional marketing.

Trade Sales Promotions

2007-10-31T14:32:00.000-07:00

Certain promotions can help “push” a product through the channel by encouraging channel members to purchase and also promote the product to their customers. For instance, a trade promotion aimed at retailers may encourage retailers to instruct their employees to promote a marketer’s brand over competitors’ offerings. With thousands of products competing for limited shelf space, spending on trade promotion is nearly equal that spent on consumer promotions.

Many sales promotions aimed at building relationships with channel partners follow similar designs as those directed to consumers including promotional pricing, contests and free product. In addition to these, several other promotional approaches are specifically designed to appeal to trade partners. These approaches include:

Point-of-Purchase Displays
Advertising Support Programs
Short Term Allowances
Sales Incentives or Push Money
Promotional Products
Trade Shows

Below is a discussion of each approach.

Point-of-Purchase Displays

Point of purchase (POP) displays are specially designed materials intended for placement in retail stores. These displays allow products to be prominently presented, often in high traffic areas, and thereby increase the probability the product will standout. POP displays come in many styles, though the most popular are ones allowing a product to stand alone, such as in the middle of a store aisle or sit at the end of an aisle (i.e., end-cap) where it will be exposed to heavy customer traffic.

For channel partners, POP displays can result in significant sales increases compared to sales levels in a normal shelf position. Also, many marketers will lower the per-unit cost of products in the POP display as an incentive for retailers to agree to include the display in their stores.

Advertising Support Programs

In addition to offering promotional support in the form of physical displays, marketers can attract channel members’ interest by offering financial assistance in the form of advertising money. These funds are often directed to retailers who then include the company’s products in their advertising. In certain cases the marketer will offer to pay the entire cost of advertising, but more often, the marketer offers partial support known as co-op advertising funds.

Short Term Trade Allowances

This promotion offers channel partners price breaks for agreeing to stock the product. In most cases the allowance is not only given as encouragement to purchase the product but also as an inducement to promote the product in other ways such as by offering attractive shelf space or store location, highlighting the product in company-produced advertising or website display, or by agreeing to have the retailer’s sales personnel “talk-up” the product to customers.

Allowances can be in the form price reductions (a.k.a. off-invoice promotion) and buy-back guarantees if the product does not sell in certain period of time.

Sales Incentives or Push Money

Pharmaceutical and Pesticides companies favorite technique is sales incentive or Push money. Since sales promotions are intended to stimulate activity that leads to meeting promotional objectives, it makes sense that these can also apply to those in the organization who also affect sales. Thus, promotions are commonplace among an organization’s sales force and customer service staff where they are used as incentives to help sell more of the marketer’s product. Sometimes called push money, these promotions typically offer employees cash or prizes, such as trips, for those that meet sales requirements.

Promotional Products

Among the most widely used methods of sales promotions is the promotional product; products labeled with the brand or company name that serve as reminders of the actual product. For instance, companies often hand out free calendars, coffee cups and pens that contain the product logo. Lipton Tea is well known for its widely used Tea Cups and Mugs given away as free gifts for the public. Soya Supreme too has marked its name to gift free Handle Plank with its cooking oil or ghee.

Trade Shows

One final type of trade promotion is the industry trade show (a.k.a. exhibitions, conventions) like, Sanaati Numaish at race course ground, Lahore and at Expo Center, Karachi . Trade shows are organized events that bring both industry buyers and sellers together in one central location. Spending on trade shows is one of the highest of all BTL promotions. In fact, the Promotion Marketer estimates that over 5 billion rupees is spent annually by marketers to participate in trade shows in Pakistan.

Marketers are attracted to trade shows since these offer the opportunity to reach a large number of potential buyers in one convenient setting. At these events most sellers attempt to capture the attention of buyers by setting up a display area to present their product offerings and meet with potential customers. These displays can range from a single table covering a small area to erecting specially built display booths that dominate the trade show floor.

Consumer Promotion II

2007-10-28T11:56:00.000-07:00

Trial Generation and free Sampling

Enticing members of a target market to try a product is often easy when the trial comes at little or no cost to the customer. The use of samples and free trials may be the oldest of all sales promotion techniques dating back to when society advanced from a culture of self-subsistence to a culture of trade.

Clear Shampoo started its trial generation campaign for its first launch. Trial generation have also been used extensively by other brands which include Toothpastes, Shampoos, Tea and Packed Milk.

Sampling and free trials give customers the opportunity to experience products, often in small quantities or for a short duration, without purchasing the product. Today, these methods are used in almost all industries and are especially useful for getting customers to try a product for the first time.

Free/Extra Product

Some promotional methods offer free products but with the condition that a purchase be made. The free product may be in the form of additional quantities of the same purchased product (e.g., buy one, get one free) or specialty packages (e.g., value pack) that offer more quantity for the same price as regular packaging.

Premiums

Another form of sales promotion involving free merchandise is premium or “give-away” items. Premiums differ from samples and free product in that these often do not consist of the actual product, though there is often some connection. For example, a cellphone manufacturer may offer access to free downloadable ringtones for those purchasing a cellphone.

Contests and Sweepstakes

Consumers are often attracted to promotions where the potential value obtained is very high. In these promotions only a few lucky consumers receive the value offered in the promotion. Two types of promotions that offer high value are contests and sweepstakes.

Contests are special promotions awarding value to winners based on skills they demonstrate compared to others. For instance, a baking company may offer free vacations to winners of a baking contest. Contest award winners are often determined by a panel of judges.

Sweepstakes or drawings are not skill based but rather based on luck. Winners are determined by random selection. In some cases the chances of winning may be higher for those who make a purchase if entry into the sweepstake occurs automatically when a purchase is made. But in most cases, anyone is free to enter without the requirement to make a purchase.

A sub-set of both contests and sweepstakes are games, which come in a variety of formats such as scratch-off cards and collection of game pieces. Unlike contests and sweepstakes, which may not require purchase, to participate in a game customers may be required to make a purchase. In the United States and other countries, where eligibility is based on purchase, games may be subjected to rigid legal controls and may actually fall under that category of lotteries, which are tightly controlled.

Demonstrations

Many products, like Head & Shoulders with its mobile head washing machines equipment, benefit from customers being shown how products are used through a demonstration. Whether the demonstration is experienced in-person or via video form, such as over the Internet, this promotional technique can produce highly effective results. Unfortunately, demonstrations are very expensive to produce. Costs involved in demonstrations include paying for the expense of the demonstrator, which can be high if the demonstrator is well-known (e.g., nationally known chef), and also paying for the space where the demonstration is given.

Personal Appearances

An in-person appearance by someone of interest to the target market, such as an author, sports figure or celebrity, is another form of sales promotion capable of generating customer traffic to a physical location. However, as with demonstrations, personal appearance promotion can be expensive since the marketer normally must pay a fee for the person to appear. As Pakistan’s famous singer, Jawad Ahmed surprise-visited the little towns and cities as the promotional activity for the Supreme Tea in 2004.

Sponsorships

Sponsorship may be an arrangement to exchange advertising for the responsibility of funding a popular event or entity. For example, a corporate entity may provide equipment for a famous athlete or sports team in exchange for brand recognition. The sponsor earns popularity this way while the sponsored can save a lot of money. This type of sponsorship, known as cause-related, is prominent in the sports, arts, media and charity sectors.

When commercial radio stations began broadcasting in the early 1920s, the programs were aired without advertising. Many radio stations were established by radio equipment manufacturers and retailers and programming was provided to sell radio transmitters and receivers. This led to a system where radio and television programs were financed by selling sponsorship rights to businesses. Eventually, the broadcasters began selling smaller blocks of advertising time to several businesses.

ABN-Amro bank successfully sponsored first time in Pakistan 20-20 cricket tournament in Karachi in 2005 when bank took significant media coverage as well as a good recognition in the local consumer market. Recently Warid Telecom also plans to sponsor the Tape-Ball tournament to penetrate the local consumers and young generation (Next potential customer).

Sponsorship is also becoming increasingly important in education. Many companies want their logo on sponsored equipment in return. Formula One teams, for example, have heavily relied on the income from tobacco advertising.

Other types of sponsorships revolve around companies paying for parts of television broadcasts and sporting events which bear their name.

Consumer Promotion

2007-10-25T03:31:00.000-07:00

Consumer Promotion

Consumer promotions encompass a variety of short-term promotional techniques designed to induce customers to respond in some way. The most popular consumer promotions are directly associated with product purchasing. These promotions are intended to enhance the value of a product purchase by either reducing the overall cost of the product (i.e., get same product but for less money) or by adding more benefit to the regular purchase price (i.e., get more for the money).

While tying a promotion to an immediate purchase is a major use of consumer sales promotion, it is not the only one. As we noted above, BTL promotion techniques can be used to achieve other objectives such as building brand loyalty or creating product awareness. Consequently, a marketer’s promotional toolbox contains a large variety of consumer promotions.

Following are the different types of BTL tools being used for consumer promotions:

DDS (Door to Door Selling)
Coupons
Rebates
Promotional Pricing
Trade-In
Loyalty Programs
Trial Generation and free Sampling
Free/Extra Product
Premiums
Contests and Sweepstakes
Demonstrations
Personal Appearances
Sponsorship

Door to Door Selling

Door-to-door is a sales technique in which a salesman walks from one door to another trying to sell a product or service to the general public. A variant of this involves cold calling first, when another sales representative attempts to gain agreement that a salesperson should visit. Door-to-door selling is usually conducted in the afternoon hours, when the majority of people are at home.

DDS Products

Typically, products sold door to door will be of the same variety that can be purchased at large discount stores. The products accounting for the largest share of direct-sales revenue includes cleaning supplies, cleaning equipment, magazines, and home improvement products. The largest of these would be the home improvement products where item could be new or repaired roofs, siding, new replacement windows, and decorative stone.

In Pakistan the first DDS was launched by Wheel Washing Powder back in 1995 with a notable success. Its competitor Aerial Surf was the immediate follower. Since then a lot brands have adopted this tool which include:

ú Lifebuoy

ú Blue Band

ú Energile

ú Lux

ú Macleans

ú Head & Shoulders

Interestingly, in many countries, encyclopedias, including the Encyclopedia Britannica, were frequently sold by door-to-door salesmen, although the practice is now less common.

Coupons

Most consumers are quite familiar with this form of sales promotion, which offers purchasers price savings or other incentives when the coupon is redeemed at the time of purchase. Coupons are short-term in nature since most (but not all) carry an expiration date after which the value may not be received. Also, coupons require consumer involvement in order for value to be realized. In most cases involvement consists of the consumer making an effort to obtain the coupon (e.g., clip from newspaper) and then presenting it at the time of purchase.

Coupons are used widely by marketers across many retail industries and reach consumers in a number of different delivery formats including:

Free-Standing Inserts (FSI) – Here coupon placement occurs loosely (i.e., inserted) within media, such as newspapers and direct mail, and may or may not require the customer to cut away from other material in order to use.
Cross-Product – These consist of coupons placed within or on other products. Often a marketer will use this method to promote one product by placing the coupon inside another major selling product. For example, a pharmaceutical company may imprint a coupon for a cough remedy on the box of a pain medication. Also, this delivery approach is used when two marketers have struck a cross promotion arrangement where each agrees to undertake certain marketing activity for the other.
Printout – A delivery method that is common in many food stores is to present coupons to a customer at the conclusion of the purchasing process. These coupons, which are often printed on the spot, are intended to be used for a future purchase and not for the current purchase which triggered the printing.
Product Display – Some coupons are nearly impossible for customers to miss as they are located in close proximity to the product. In some instances coupons may be contained within a coupon dispenser fastened to the shelf holding the product while in other cases coupons may be attached to a special display (see POP display below) where customers can remove them (e.g., tear off).
Internet – Several specialized websites, such as HotCoupons.com, and even some manufacturer’s sites, allow customers to print out coupons. These coupons are often the same ones appearing in other media, such as newspapers or direct mail. In other cases, coupons may be sent via email, though to be effective the customer’s email program must be able to receive HTML email (and not text only) in order to maintain required design elements (e.g., bar code).
Electronic – The Internet is also seeing the emergence of new non-printable coupons redeemable through website purchases. These electronic coupons are redeemed when the customer enters a designated coupon code during the purchase process.

Tea companies in Pakistan seems to have been stick to the coupons. Supreme Tea and Tapal Tea have been in close combat in facilitating the consumer of the rural areas. They offer different small items as the gift on the purchase of their tea packs and later perform lucky draws for them, giving away prizes sometimes Motorcycles.

Rebates

Rebates, like coupons, offer value to purchasers typically by lowering the customer’s final cost for acquiring the product. While rebates share some similarities with coupons, they differ in several keys aspects. First, rebates are generally handed or offered (e.g., accessible on the Internet) to customers after a purchase is made and cannot be used to obtain immediate savings in the way coupons are used. (So called “instant rebates”, where customers receive price reductions at the time of purchase, have elements of both coupons and rebates, but for our purposes we will classify these as coupons due to the timing of the reward to the customer.)

Second, rebates often request the purchaser to submit personal data in order to obtain the rebate. For instance, customer identification, including name, address and contact information, is generally required to obtain a rebate. Also, the marketer may ask those seeking a rebate to provide additional data such as indicating the reason for making the purchase.

Third, unlike coupons that always offer value when used in a purchase (assuming it is accepted by the retailer), receiving a rebate only guarantees value if the customer takes actions. Marketers know that not all customers will respond to a rebate. Some will misplace or forget to submit the rebate while others may submit after a required deadline. Marketers factor in the non-redemption rate as they attempt to calculate the cost of the rebate promotion.

Finally, rebates tend to be used as a value enhancement in higher priced products compared to coupons. For instance, rebates are a popular promotion for automobiles and computer software where large amounts of money may be returned to the customer.

Promotional Pricing

One of the most powerful sales promotion techniques is the short-term price reduction or, as known in some areas, “on sale” pricing. Lowering a product’s selling price can have an immediate impact on demand, though marketers must exercise caution since the frequent use of this technique can lead customers to anticipate the reduction and, consequently, withhold purchase until the price reduction occurs again.

As we will see in a later tutorial, promotional pricing is also considered within the framework of the Price marketing mix component. More on of this technique will be provided in that discussion.

Trade-In

Trade-in promotions allow consumers to obtain lower prices by exchanging something the customer possess, such as an older product that the new purchase will replace. While the idea of gaining price breaks for trading in another product is most frequently seen with automobile sales, such promotions are used in other industries, such as computers and golf equipment, where the customer’s exchanged product can be resold by the marketer in order to extract value.

Loyalty Programs

Promotions that offer customers a reward, such as price discounts and free products, for frequent purchasing or other activity are called loyalty programs. These promotions have been around for many years but grew rapidly in popularity when introduced in the airline industry as part of frequent-filer programs. Loyalty programs are also found in numerous other industries, including grocery, pizza purchasing and online book purchases, where they may also be known as club card programs since members often must use a verification card as evidence of enrollment in the program.

Many loyalty programs have become ingrained as part of the value offered by a marketer. That is, a retailer or marketing organization may offer loyalty programs as general business practice. Under this condition loyalty program does not qualify as a sales promotion since it does not fit the requirement of offering a short-term value (i.e., it is always offered). However, within a general business practice loyalty program a sales promotion can be offered, such as special short-term offer that lowers the number of points needed to acquire a free product.

Types of BTL Promotion

2007-10-22T11:38:00.000-07:00

Types of BTL Promotion

BTL promotion can be classified based on the primary target audience to whom the promotion is directed. These include:

Consumer Market Directed - Possibly the most well-known methods of BTL promotion are those intended to appeal to the final consumer. Consumers are exposed to promotions nearly everyday, and as discussed later, many buyers are conditioned to look for sales promotions prior to making purchase decisions.
Trade Market Directed – Marketers use sales promotions to target all customers including partners within their channel of distribution. Trade promotions are initially used to entice channel members to carry a marketer’s products and, once products are stocked, marketers utilize promotions to strengthen the channel relationship. Merchandising technique have proven very useful specially in the rural areas of Pakistan for improvement in the trade targets.

Objectives of BTL Promotion

2007-10-10T04:16:00.000-07:00

Objectives of BTL Promotion

BTL promotion is a tool used to achieve most of the five major promotional objectives:

Building Product Awareness – Several BTL techniques are highly effective in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction. Additionally, as part of the effort to build product awareness, several sales promotion techniques possess the added advantage of capturing customer information at the time of exposure to the promotion. In this way BTL can act as an effective customer information gathering tool (i.e., sales lead generation), which can then be used as part of follow-up marketing efforts.
Creating Interest – Marketers find that BTL promotions are very effective in creating interest in a product. In fact, creating interest is often considered the most important use of BTL. In the retail industry an appealing promotions can significantly increase customer traffic to retail outlets. Internet marketers can use similar approaches to bolster the number of website visitors. Another important way to create interest is to move customers to experience a product. Several BTL techniques offer the opportunity for customers to try products for free or at low cost.
Providing Information – Generally BTL promotion techniques are designed to move customers to some action and are rarely simply informational in nature. However, some sales promotions do offer customers access to product information. For instance, a promotion may allow customers to try a fee-based online service for free for several days. This free access may include receiving product information via email.
Stimulating Demand – Next to building initial product awareness, the most important use of BTL is to build demand by convincing customers to make a purchase. Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to stimulate sales.
Reinforcing the Brand – Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty. Many companies, including airlines (PIA) and retail stores (Sahulat Card), reward good or “preferred” customers with special promotions, such as email or mail “special deals” and surprise price reductions at the cash register.

Introduction II

2007-10-07T10:42:00.000-07:00

BTL (Below the line ) promotion describes promotional methods using special short-term techniques to persuade members of a target market to respond or undertake certain activity. As a reward, marketers offer something of value to those responding generally in the form of lower cost of ownership for a purchased product (e.g., lower purchase price, money back) or the inclusion of additional value-added material (e.g., something more for the same price).

BTL and Sales promotions are often confused with advertising. For instance, a television advertisement mentioning a contest awarding winners with a free trip to a Caribbean island may give the contest the appearance of advertising. While the delivery of the marketer’s message through television media is certainly labeled as advertising, what is contained in the message, namely the contest, is considered a sales promotion. The factors that distinguish between the two promotional approaches are:

whether the promotion involves a short-term value proposition (e.g., the contest is only offered for a limited period of time), and
the customer must perform some activity in order to be eligible to receive the value proposition (e.g., customer must enter contest).
The inclusion of a timing constraint and an activity requirement are hallmarks of BTL promotion.

Introduction

2007-10-06T11:35:00.000-07:00

Promotion or Marketing Promotion is generally sub-divided into two parts:

Above the line promotion or Advertisement: Promotion in the media (e.g. TV, radio, newspapers, Internet) in which the advertiser pays an advertising agency to place the ad.
(BTL) Below the line promotion: All other promotion. Much of this is intended to be subtle enough that the consumer is unaware that promotion is taking place. E.g. sponsorship, product placement, endorsements, sales promotion, merchandising, direct mail, personal selling, public relations, trade shows.

Above the line and below the line marketing services represent two different sides of a marketer's brand awareness and customer targeting strategy. ATL is synonymous to mass marketing, big splash advertising, whereas BTL is data driven, highly measurable and focused on customer acquisition and retention programs.