AP® Business with Personal Finance review sheet from Aim for Five (aimforfive.com/business-finance/units/2/2-7)
Unit 2 · Topic 2.7
2.7 Promotion and Marketing Communications
Promotion is how a business tells customers about its product. A marketing campaign combines tools from the five-part promotional mix, chosen to fit how customers make the buying decision, and digital tools have made promotion cheaper, more targeted and more measurable.
Key terms
- promotional mix
- media advertising
- personal selling
- sales promotion
- public relations
- digital marketing
Marketing campaigns and the promotional mix
A marketing campaign is a coordinated push to promote a product, using some or all of the five tools in the promotional mix. These tools help set the product apart, build brand loyalty and increase sales.
| Tool | What it is | Use it when you want to |
|---|---|---|
| Media advertising | Ads on TV, radio, newspapers, billboards | Reach a huge audience with the same message at the same time |
| Personal selling | A salesperson talking with a customer, often with a sales pitch | Give detailed information or a demonstration |
| Sales promotion | Discounts, coupons, limited deals | Get customers to decide faster, or clear unsold inventory |
| Direct marketing | Flyers, brochures and other materials sent to chosen people | Reach many potential customers with a targeted message |
| Public relations (PR) | Press releases and interviews that lead to news coverage | Build a good public image rather than push one sale |
Matching the tool to the decision
Recall from 2.2 that people decide differently for big and small purchases. Someone buying a car, a laptop for school or business software wants detailed, personal help, so personal selling fits. A sales pitch is a short talk that gets across the product's value proposition and asks for the sale.
Someone buying toothpaste or a snack needs no salesperson. A TV ad, a coupon or a flyer is enough. Smart campaigns match the tool to the decision.
Digital marketing
Digital marketing uses the internet and digital tools, such as websites, email, social media and apps, to reach and serve customers. Early in the 21st century, businesses moved much of their marketing budget away from newspapers, magazines, radio and TV and toward these tools.
Digital tools change three things. They can reach a global audience or a narrow segment. They allow more personal messages, like an email that recommends products based on what you bought. And they usually cost less per person reached than traditional ads.
Big data
Digital tools collect huge amounts of information, called big data, about how people respond to marketing: which ads they click, how long they look, what they buy afterward. That shows what makes customers more likely to buy. Some traditional tools allowed this on a small scale (a salesperson learns what each customer responds to), but a billboard or a TV ad can't tell you who saw it or whether it worked.
Worked examples
Try each one yourself first, then open the solution.
- Example 1Calculator allowed
Comparing cost per sale for two tools
A bakery spent $30,000 on a local TV ad that led to 600 online orders, and $6,000 on targeted social media ads that led to 240 online orders. Find the cost per order for each, and explain one advantage of each tool.
Show the solutionHide the solution
- Step 1: Cost per order = spending ÷ orders.
- Step 2: TV: $30,000 ÷ 600 = $50 per order.
- Step 3: Social media: $6,000 ÷ 240 = $25 per order.
- Step 4: Social media was half as costly per order and lets the bakery track exactly who responded. TV produced more orders in total and reached a wide audience at once.
Answer: TV: $50 per order. Social media: $25 per order. Social media was more cost-efficient and measurable; TV brought in more total orders.
Common mistakes
- Calling public relations a kind of advertising. PR earns news coverage to build an image; advertising is paid space for a specific message.
- Picking mass advertising for a complex, expensive product where customers need detailed help. Personal selling fits better.
- Mixing up sales promotion (discounts and coupons) with direct marketing (flyers and brochures sent to targeted people).
On the exam
- Expect a scenario asking which promotional tool best fits a goal, such as clearing inventory, building image or explaining a complex product.
- When explaining digital marketing, name a specific advantage (targeting, personalization, lower cost, big data) and connect it to the business's goal.
Connected topics
Videos
Check yourself: 2.7 Promotion and Marketing Communications
4 questions on 2.7 Promotion and Marketing Communications. Pick an answer to see if you got it, and why.
Summit Solar Roofing is planning a marketing campaign for its solar roof tiles. A typical installation costs a homeowner about $40,000.
Plan 1: Send trained staff to measure homeowners' roofs, demonstrate the tiles and explain financing options.
Plan 2: Run a 30-second TV commercial during the local evening news.
Plan 3: Offer $1,000 off for contracts signed before March 31.
Plan 4: Send a press release about the company donating a solar roof to a local animal shelter.
Plan 5: Mail brochures to homeowners in neighborhoods with large, south-facing roofs.
Hypothetical marketing plan
Plan 1 is an example of personal selling. Why is it especially suited to Summit's product?
Plan 3 is an example of which promotional tool?
Plan 4 is best described as public relations because it
Plan 5 is an example of direct marketing. Which feature makes it different from Plan 2?
0 of 4 answered