Below-the-line promotion (BTL)

By using   BTL promotion techniques the firm can keep control over its promotional efforts and does not have to pay intermediaries and external agencies. As a result, BTL promotion is relatively cheap compared to ATL promotion.

BTL promotions target individuals based on their needs or preferences and can lead directly to sales. The results can be easily measured providing valuable data to estimate return-on-investment.

Advantages of Below-the-Line Advertising

Lower costs are arguably the biggest advantage of below-the-line advertising. While TV and radio ads tend to be pricy, direct mailing and search engine marketing are far more economical. And below-the-line methods can be more cheaply and easily scaled up or down.

Furthermore, below-the-line methods make it easier to track conversions with intended consumers. Case in point: though there are multiple strategies for tracking the effectiveness of TV and radio ads, it's hard to gauge overall impact. Asking customers how they heard about a company, for example, can yield unreliable responses because people sometimes recall their experiences inaccurately. On the other hand, email and search engine marketing precisely track the links consumer’s click, in order to provide businesses with more exacting details.

Below-the-line marketing fosters superior customer engagement, which is critical in today’s modern business landscape. While above-the-line methods are ideal for spreading general brand awareness, below-the-line tactics are preferable for fostering more meaningful relationships with potential customers.

Examples of BTL promotion are:

Sales promotion

1. Direct marketing and direct mail
2. Public relations (PR)
3. Sponsorship
4. Personal selling
5. Branding and merchandising
6. Packaging
7. Telemarketing
8. Trade fairs and exhibitions

Sales promotion

Sales promotions are temporary methods to improve sales by attracting new customers and encouraging existing customers to purchase more. Although offers may be short-term, there is a belief that trial of the firm's product will to create brand loyalty.

Naturally sales promotion is not without cost. Discounts and free samples, for example, reduce a firm's profit margin.

Sales promotion can be divided into two types:

• Into the pipeline: these are promotional activities designed to encourage retailers and wholesalers to stock the product. These include incentives such as discounts, credit terms, prizes, merchandising and display materials and equipment.
• Out of the pipeline: these are promotional activities carried out by manufacturers to encourage customers to buy in greater quantities. These include incentives such as discounts, free gifts and samples, BOGOF offers (buy one, get one free), vouchers, competitions.

Point-of-sales promotions are promotional activities directed at customers in retail outlets, such as special displays, tastings, demonstrations and sales presentations. These are normally combined with vouchers and other special offers on purchases in that shop. This merchandising is to encourage impulse buying.

Direct marketing

Whenever you buy a product, your information may be collected somewhere in the process, especially if the purchase is online. Firms like to collect as much information about you as they can, because this information can be even more valuable than the purchase itself and you may not always notice the small print about sharing your details with 'trusted partners', meaning that you are likely to be targeted by a range of additional organisations in the future.

Firms use loyalty cards to gather data about your purchasing behaviour, which they can use to target you with additional offers or sell that information to other businesses. Even governments sell information gathered about you using information from the census, student cards or passport and driving licence applications.

Direct marketers target customers without using traditional formal channels of advertising, such as TV, newspapers or radio. Firms communicate straight to with consumers with advertising techniques such as fliers, catalogues and promotional literature. If an advertisement asks the customer to respond in some way, such as calling a free phone number or visiting a website, this is called direct response advertising.

Of all the forms of promotion, direct marketing is probably the fastest growing area. There are many research organisations which examine market trends, focus on customer behaviour and sell their findings. They are likely to gather and sell lists of potential customers to businesses - if you want to sell kitchen knives, there will be a list of customers who buy kitchen equipment on a regular basis and the same applies for even the most specialist organisations. If you use online sites, like Amazon, you will know they will target you with products they think will be of interest based on your previous purchase behaviour.

Direct marketing is predominantly used by small to medium-size enterprises with limited advertising budgets that do not have a well-recognized brand message.

Direct mail

Direct mail is a direct marketing technique involving the delivery of promotional material to named individuals at their homes or organisational premises, selected from a list of known customers.

This is sometimes referred to as 'junk mail' because the majority of people simply bin the materials when they receive them as they are not seen as relevant or desired. However, if direct marketers target the correct customers with goods and services they are likely to be interested in, the chance of the mail being thrown away is significantly reduced.

It is more of a personalised way of promoting the business, but it often fails to produce a large enough sales revenue to justify its use. Telephone selling can be used as a slightly cheaper method of direct contact with potential consumers.

Advantages of direct mail

• Can be effectively targeted geographically
• Can be used to convey a significant amount of information
• Relatively cost-effective if targeted specifically at certain market segments
• If databases are up-to-date, then can be quite selectively targeted

Disadvantages of direct mail

• Mailing lists can become obsolete if not maintained
• Relatively low return rates/uptake
• Can be expensive if large blanket/national campaigns are used

Public relations (PR) - Publicity 

Most organisations handle the outflow of information with great care. The main goal of a public relations department is to enhance the firm's reputation. Publicity is far more cost-effective than advertising, because unlike advertising, where the firm pays for the message, public relations messages are not paid for. 

Traditional PR tools include press releases and media kits which are sent out to generate positive press on behalf of the organization which consist of promotional materials that give information about an event, organisation, business, or person. The purpose is to show the company in a positive light no matter what. Good publicity has greater longevity than advertising. A positive article about a firm will be remembered far longer than an advertisement, which is clearly sponsored and so may not be believed. Publicity has greater credibility with the public than does advertising. Readers feel that if a magazine, newspaper or radio reporter is featuring a business it must be doing something worthwhile.

For the media, good PR is often treated as a news story even though it promotes the organisation at the same time. Other tools used to provide positive information including brochures, newsletters and annual reports.

Markets are extremely competitive so firms need something to make them more appealing and interesting to both the public and the media. Firms are becoming more imaginative in their promotional techniques. Increasingly PR departments are using social networking sites, such as Twitter and Facebook, to support their campaigns. These social media sites allow the firm to engage in two-way communication, and receive immediate feedback from their various stakeholders.

Sponsorship/celebrity endorsement

Companies are keen to get their brand name associated with celebrities and major events, believing that the excitement and vitality of the event and the celebrity will become associated with the brand.

Sponsorship is where an organisation pays to be associated with a particular event, cause or image. It is most in evidence in the sports' arena, where no major event is without at least one significant sponsor. The hope is that the celebrity endorsement will encourage fans to equate the image of the athlete with their products and services Therefore, firms look for positive qualities such as an athlete's global popularity and recognition, credibility, fitness, physical attractiveness, trustworthiness, expertise and personal strengths.

The salaries and winnings of the best known athletes will often be dwarfed by the value of their 'image rights'. Firms pay celebrities to adorn themselves with their brand name or products. Top tennis players, for example, receive huge sponsorship fees for clothing and tennis equipment and even for using a particular brand of drink between games. Footballers wear clearly branded boots and appear for their sponsors in advertisements and at company events, where they endorse the firms' products. 

Design, logos and other symbols

Visual representations of a firm are crucial as part of its overall identity. It is very easy for us to think of myriads of businesses where its logo or symbol is more important than its brand name. You are likely to think instantly of the golden arches based on the 'M' of McDonalds, the Nike tick and the three stripes of Adidas. We have discussed the value of such brands earlier in this topic, but it may be more difficult to value a logo separate from the brand. A logo should be shorthand for the trust in the firm and for the value of the product.

The logo should:

• reflect the brand's positioning, image and positive attributes
• differentiate the brand from its competitors
• allow easy recognition
• be based on a strong creative idea
• be flexible in its use, so that it can be used in a variety of sizes and colours

Packaging

Some marketing academics believe that packaging should be a separate P in the marketing mix because of its importance in the promotion of a product and the time and cost entailed. Packaging has many functions; it can be used to:

• highlight both the logo and brand name
• protect and preserve the product during transportation and on the shelf
• help carry the product
• facilitate quick recognition of the product
• provides information on ingredients, nutrition, weight and function
• add-value through attractive packaging which acts as a gift wrapping

Trade Fairs and Exhibitions 

Trade fairs offer the opportunity for firms to meet with both the trade and the individual consumer. It also allows representatives of the firm to see what competitors are doing and to learn about innovations and new product offers. There are also opportunities for collaborations and joint ventures to be established as firms identify other organisations with complementary offers.

Exhibitions allow firms to showcase new products and elicit responses from potential customers. The purpose is to increase awareness and to encourage trial; the main focus is not on immediate sales, even though there may be some generated by special 'show promotions and discounts. They are highly focused in that they attract a specific segment of the market; for example major computer, car and boat exhibitions will attract those who are current or potential purchasers or those with a particular interest.

By having a stand at an exhibition firms will be promoting not only their products, but their brand.

Digital media

When we examined ATL promotion we considered the promotion of firms through search engines and other company websites. Clearly, increasingly significant BTL promotional opportunities exist through a firm's own website.

Website design is crucial in the firm's attempt to capture the interest and attention of potential customers. The site itself is likely to carry a range of articles, images, pages and general information that promote the firm, provides its story and informs customers of their products and services and the benefits they will bring. Some websites have games and videos; others collect information about products and services and have links to other relevant sites of interest to the customer. Full access to a website may be by subscription only which provides an additional income stream for the business.

The role of marketing - notes
 

In this section we will examine the role, definition and nature of marketing.

By the end of this section you should be able to:

• Examine the characteristics of the market in which the firm is immersed
• Calculate market share from given information
• Define marketing and describe the relationship with other business activities
• Describe the difference between market and product orientation
• Explain the difference between the marketing of goods and services
• Analyse the marketing techniques of non-profit organisations
• Describe the elements of a marketing plan
• Analyse the influence of marketing orientation on the success or failure of firms

KEY TERMS

What is a market?

A market is a place or process which allows buyers and sellers to meet and exchange goods, services and information.

Markets exist to facilitate trade between collections of people who share a want or need and are motivated to enter into exchange processes to satisfy that want or need. Markets can be local, national or international, but the marketing concepts covering all marketplaces are relatively similar Customers for a firm can be private individuals, other businesses or local or central governments.

Markets that cater for private individuals are referred to as consumer markets, while those serving organisations are industrial or commercial markets. It is important to recognise that trade between businesses, commonly referred to as B2B (business to business) is much larger in value than sales to private individuals, but does not attract the same coverage in textbooks.

Write a brief description of the companies below and the markets in which they operate and then follow the link below to compare your answer to ours. If you're not sure who they are then follow the link to their website to see what they do:
 

Hint

If you look at these sites you will find they are mainly sales sites, but you want company information. When looking at company sites, always look for links on the page that say something like 'Investor information', 'Corporate information' or 'About us'. You will usually find the interesting business information under those headings.

Market size

Markets vary enormously in size and are governed by the laws of demand and supply. Obviously very few products are capable of appealing to everyone. Some markets, such as the market for recorded music is huge, whereas the market for competition bobsleds is significantly smaller!

We would say that the market for bobsleds is a niche market appealing to a very small number of potential customers. This type of market is likely to attract small specialist producers. Large companies are likely to ignore these markets because there is insufficient return to justify entry and no opportunities for economies of scale in production.

Various terms are used to describe the market based on the level of narrowing, with each narrowing reducing the size of the market:

1. Total population
2. Potential market - those in the total population who have interest in acquiring the good or service.
3. Available market - those in the potential market who have effective demand - the desire to buy a product backed up the ability to pay for it
4. Qualified available market - those in the available market who are legally permitted to buy the product.
5. Target market - the segment of the qualified available market that the firm has decided to serve
6. Penetrated market - those in the target market who have purchased the product 

Let's look at these concepts in the context of an example. It is important for firms to know the size of market because this information is required to assess whether the market is worth entering and whether it is growing or contracting. Once in the market, a firm will wish to be able to calculate what share of the market its products hold.

Imagine you are thinking of introducing a new shampoo to the market. What would you need to establish to understand the size of the market ,

Some markets are not easily measured. For example 'black markets' such as those for drugs, are large in terms of value and consequently attract many buyers and sellers. However, since these are markets for products that are illegal, stolen, or otherwise need to be hidden from regulatory authorities, customers are unlikely to volunteer information about themselves or reveal their market activities!

There three main measures of a market's size. These are:

• The volume of sales
• The value of sales
• The number of customers

Market size by sales volume measures the amount of goods sold by quantity, e.g. bottles of cola. Market size by value measures the amount spent by customers on the volume of goods sold and will be expressed in a currency such as US dollars or Euros. The number of customers is self explanatory.

Value versus volume

A company might sell a large volume of products. However, it may be that the sale price is such that the total value of sales (total sales revenue) is less than a competitor, which sells a smaller amount of a more valuable product.

The following is a summary of the state of the UK soft drink market in 2009 by value and by volume. This chart compares the value of soft drinks bought in shops and taken home compared to the value of soft drinks consumed in pubs, bars and restaurants. When measured by value the take home market is smaller than when measured by volume. This is because consumers pay more for products consumed outside of the home, but indicates the need to be careful when comparing market size.

Marketing and its relationship with other business activities.

Marketing is not only much broader than selling, it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer's point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise."
 

What Drucker is saying is that marketing should be seen as a business philosophy, in that the existence of any business depends on satisfying customer needs and wants. This cannot be the sole responsibility of the marketing department.

Marketing is a strategic discipline which underpins most activities of the business and is an essential ingredient of corporate strategy as communicated in the corporate plan. Drucker also said that marketing is:

"The whole business seen from the customer's point of view"

What is important, therefore, is that the product meets customers' needs. Although the marketing function is normally carried out by a specialised department, marketing thinking must permeate the entire organisation. Developing an effective marketing plan will require close links with other functional areas of the business.

The nature of departmental/functional organisations, means it is likely that there is the potential for conflict between functional areas when delivering the corporate plan.

Operations management/production

The marketing department will need to work closely with the production department to ensure that:

• Adequate research and development is planned to satisfy current and future customer needs
• The item can be manufactured to the quality and design specifications laid down by the consumer
• The volume of orders generated by marketing can be met within the time schedule required for delivery

It is likely that the marketing department will set deadlines that may stretch the capabilities of the production department. Marketers will wish to get products to market as soon as possible to ensure competitive advantage, whereas production will want to test and develop products fully to ensure that they do not have to repair or replace defective items and that they meet health and safety requirements.

Finance department

The marketing department will need to work closely with the finance department to ensure that:

• There is an adequate budget to meet the needs for research, promotion and distribution

The finance department have a whole organisation brief to ensure that all the business operates within its financial capabilities. They will want all departments to work within their allocated budgets. Like all departments, marketing may wish to overspend if profitable marketing opportunities emerge over the year. The marketing department is likely to concentrate on sales volume and building market share, while the finance department may be more focused on cash flow, covering costs and paying back investment as quickly as possible.

Human Resource Management

The marketing department will need to work closely with the HRM to ensure that appropriate skills and staffing levels are in place to:

• Research and develop new product ideas
• Meet production targets
• Create an ambitious and competent sales team

The HRM department will have many recruitment and training demands from across the organisation. It will have to balance its obligations to marketing with those to other departments.

1. Select four top sports celebrities and investigate the companies who sponsor them. Then suggest what characteristics those celebrities bring to the brand that justifies their sponsorship agreement.
2. Tiger Woods is one of the world's richest sportsmen. Research his sponsors' different reactions to the negative events around his personal life and explain why you think these companies acted the way they did.