Promotion Versus Advertising

Sunday Dec. 1st, 2013

Analyzing promotion vs. advertising is a topic that is commonly brought up in my small business workshops. What’s the real difference between the two and how should each be used? In this article I’ll explore the pros and cons of both.

In my opinion, promotions are more art than science. In order to have a successful promotion some money must be spent. For example, the cost of letting people know about the promotion, extra staffing, increased inventory to name just a few.
Promotions usually have three objectives:
• Introduce new customers to your business,
• Introduce new products or services,
• Establish your brand name.

An additional objective may be to give business a monetary shot in the arm. Promotions are often used to bring in a lot of customers who spend more — due to discounts or sales — in a sort of “feeding frenzy” environment. The downside of promotions is that you run the risk of only attracting “sales” conscious customers who will not become regular lifetime customers.

You might think that due to the statements above that I am “anti-promotion.” Absolutely not. In fact I firmly believe that every retail business should have an “Annual Grand Opening.” When I moved to Bozeman 10 years ago I had to find a shoe store, barber, optometrist, clothing store, hardware store, mechanic, and plumber.

Most of these I found by word-of-mouth. But I might have also attended their promotional events as well. When it comes to promotions, remember the 80-20 rule. Eighty percent of your business will normally come from 20% of your customers. Your objective in any promotion is to convert as many of the 80 to the 20 as you possibly can.

If I walked into your place of business and told you I would give you a nice crisp $20.00 bill for every dollar bill you gave me… how often would you want to see me? My guess is you would want to see me a LOT. Well, that’s exactly what advertising is supposed to do for you. Provided you do it correctly. That means advertising the right product to qualified buyers in a place where they will see it and act on it.

The biggest mistake most businesses make is advertising the wrong thing to the wrong people in the wrong medium. Advertising must always be an investment. It cannot ever be an expense.

Advertising does most of the same things the promotion does. It will build your brand name, it will attract new customers, and it will also help you develop lifelong customers. Unlike promotions, advertising works to attract the 20% rather than the 80% because you have a target market. Those are the people who are most likely to want your products and services at a specific time.

If you read the paper yesterday did you see tire ads? If you needed tires you probably did. Someone needs tires every single day so there is a tire ad somewhere every single day. If you make their tire buying experience a positive one they may not look for tire ads next time. They may just become a lifelong customer and recommend you to their friends.

Last but not least it is better to advertise consistently rather than sporadically. Have you heard of McDonalds? Wal-Mart? Why do they continue to advertise day in and day out? The reason is something called T.O.M.A. – Top of Mind Awareness. They must make sure that when we think of fast food the first place we think of is McDonalds. Without advertising the top spot can be taken over by Wendy’s or Burger King. Keeping your name out there over the long haul is not just important it’s a necessity to your business health and the key to your prosperity.

Most businesses don’t have the advertising budget of a Wal-Mart or McDonalds but the real key is being wherever you can consistently. It can be daily, weekly or monthly but you must be there… especially if your competitors are also there.
There is a time and objective for promotion as well as advertising. Learn when and how to use them both wisely and you’ll have a strong viable business.

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