The Hindu Business Line : The promise in promotions

Promotions, whose need is increasingly being felt by the surging services sector, will click if they realise marketing objectives and reinforce brand values.

Virgin's Richard Branson, whose personality promotes the brand

PROMOTIONAL marketing is not about freebies. It is, in fact, a battle for the consumer's mind and heart," says Raj Jain, Managing Director of consumer durables major Whirlpool of India. And with rising competition in almost every customer-centric product category and increasing clutter in the traditional advertising media, this is a fact which Indian companies are fast recognising. More and more companies are now taking to promotions as part of their overall marketing strategy in a bid to create brand differentiation and are spending a larger part of their total advertising budget on promotional marketing.

According to market estimates, the promotional marketing industry in India (not including film marketing) is estimated at Rs 500 crore and has shown a growth of about 50 per cent in the past couple of years. The industry is expected to grow to about Rs 1,500 crore by 2008. And with the advertising industry in a recession globally, promotional marketing has been growing worldwide.

"In the US, for example, for every $14 spent on advertising, $1 is spent on promotions. The promotional marketing industry in the US has grown from about $98 billion in 1998 to $233 billion in the year 2002," points out Pankaj Wadhwa, Managing Director, Kidstuff Promos & Events, a leading Indian promotional marketing firm.

An indication of the industry's growth in India is the increasing number of speciality promotional marketing firms, particularly at the regional level. Furthermore, global advertising firms having a presence in India have opened speciality arms to cater to this segment, an example being Ogilvy Life.

However, market watchers point out that most of the business is still with the independent agencies both at the national and regional level. With promotional marketing being seen as an effective method of brand building, the efforts of Indian promotional marketers are also being recognised at the international level.

The Bano Toonstar with Scooby Doo Max promo

At the recently held Asian promotional marketing awards, Indian marketers won 16 awards. The winners would be eligible to participate in the Globes (promotional marketing awards given at a global level) being held in November this year. Some of the Indian campaigns which have been awarded at this year's Asian level awards include `Milky Bar Eclairs school programme', `Kwality Walls Coolman Promo', `Colgate Fresh Energy Gel MTV VJ Hunt'(which also won a gold), `Bano Toonstar with Scooby Doo Max', `BPCL Speed run' and `Axeffect.com' among others..

Meanwhile, apart from the traditional industries, growth for promotional marketing is also being driven by new, upcoming sectors. "Though FMCGs have remained the largest users for this medium, new emerging industries are driving growth for promotional marketing. These include insurance, financial services, healthcare and telecom. Also, as the cost of acquiring a consumer is higher, loyalty is becoming a very important issue particularly for service-oriented industries such as hotels and airlines," says Kidstuff's Wadhwa.

Agrees R. Suresh, Chief Operating Officer of market research firm NFO-MBL India: "In recent times, I feel promotions for FMCG goods have been on the decline, but the promotions behind service brands have been on the rise. Categories such as airlines, hotels and telecommunications see a much larger dosage of promotions these days. In the services category, promotions are carried out for two different purposes: customer loyalty, which would prevent churn, and excitement, as many of these categories do not offer the regular dosage of experience and excitement as the FMCG categories can," he says.

Leading mobile service provider AirTel, for instance, is heavily dependent on promotional marketing as part of its brand-building strategy. Says Hemant Sachdev, Director (Marketing), Bharti Enterprises: "For promotional advertising, as a manufacturer of minutes, we play around with that. We look at how to enter the consumer's mind." The company has run promo campaigns such as `AirTel Magic Rs 10 crore free offer', `AirTel bundling offer' and `AirTel 012 plan'.

Explaining the logic behind the Rs 10-crore offer, Sachdev says the perceived value for the offer is high. "The promo costs us about Rs 37 per customer. However, if were just to announce Rs 100 as free airtime to customers, the perceived value of this offer would be lesser," he says.

Marketers agree that promotions can be cost-effective, especially in times of a slump, but in some cases they can even be done for free! A case in point being Virgin Atlantic. Points out Alison Copus, Marketing Director, Virgin Atlantic Airways: "We do not like to spend huge amounts on sales promotions. Instead, we just put our Chairman, not our money, where our mouth is." Even if that includes putting your Chairman (in Virgin's case, the colourful Richard Branson) on an elephant or posing with women dressed in samba attire or even getting him to throw a party at his mansion for 60,000 loyal customers and employees. "People like to identify with people. This strategy is also very useful in places where we are relatively new and unknown, such as India, where such promos help create news and excitement. It is the best way to announce that we are here," says Copus. "We have used the conventional promotions too, which were especially helpful in the post 9/11 and SARS scenario, which had thrown the airline industry into a recession. At that time, we ran promotions such as `I love NY' in which we gave away free tickets to New York as a confidence-building measure to assure that it is safe to fly to the city. Otherwise, we try to create awareness through products innovations — such as in-flight massages, or four free limousine transfers with every business class ticket."

The Virgin Atlantic example does show that promotions can be a cost-effective medium for new brands to test the market without really going in for an advertising blitzkrieg.

Further, points out a market analyst, promotions are also used for products where the target segment is niche, in other words, for premium products. Take the case of LG Electronics. The company recently organised corporate golf tournaments to create awareness for its range of premium designer air-conditioners among the target segment. The same generally holds true for premium products in categories such as consumer durables and automobiles, where the niche target segment is addressed either through events or promoted through the direct marketing route.

Another emerging trend in the promotional marketing industry is that of marketers increasingly using promotions to enter the mindset of the young. "The kids' space in promotional advertising has become very large," says Wadhwa.

So while on one hand you have got Hindustan Lever going to school to explain the benefits of Surf, on the other, even Standard Chartered Bank recently held career-counselling sessions for children. The bank recently held different week-long activities for children across the country. For instance, a career event held at the bank's Mumbai branch was attended by over 100 children, after which the kids were given a guided tour on the detail of banking. The bank even organised a Harry Potter party at some of its branches, which included games such as `Berty Botts Bottle', `Muggles Muddles', `Quidditch Quizzich' and `Snatch the Snitch' revolving around actual incidents in J. K. Rowling's bestseller.

What's the reasoning behind holding promotions for young children, even for serious products such as financial services or something as unrelated to a child as washing powder? Points out a marketing analyst: "Apart from catching the customer young, marketers are aware of the immense `pester power' which children enjoy these days. Children today can influence buying decisions in the household for the smallest or even the most expensive of products. Which is why one sees even consumer durable companies going to schools to create awareness for their products. A case in point being Electrolux."

The MTV-Hero Honda promo

So what exactly makes for an effective promotional campaign? "First," says Jain, "one has to realise that sales promotions are a range of marketing objectives, not sales objectives for a definite period of time. Also, the promotion has to be a clear brand-fit; in other words, it has to reinforce the brand values. The promotion should be utilised to fulfil clear strategic objectives, needs to be innovative to create excitement and also requires to have marketing support to create awareness among the target group." Which means if, for example, a brand of tea is giving a face cream as a freebie, it does little to create value for the tea brand. Says Sachdev: "Freebies can build brands if they are a logical extension of the product/service offering. Also, one must keep in mind that the market segment being targeted must desire the offering." An example of a good brand fit would be Whirlpool's association with Ariel for its washing machines.

Over the past few years, some of the highly successful promotional campaigns have been Pepsi's Tazo campaign, Britannia's Britannia Khao, World Cup Jao, among others. The campaigns not only resulted in higher sales during the period of the promotion, but also created lasting values for the brands. However, the truth is that very few promotional marketing campaigns manage to strike the jackpot.

Says Suresh, "If well executed, promotions can even make a permanent impact on the brands' fortunes, though in my experience, very few brands have managed to do that."

Agrees Sachdev: "For instance, in the case of freebies if there is no brand-fit, then the problem of de-bundling arises, where the freebies are sold separately from the product. In fact, seven out of 10 promos suffer from this problem."

Other precautions too need to be taken in the case of promotions. For instance, too many promotions can be detrimental to the health of a brand. A brand which is perpetually on price-offs would not only lose key brand attributes but also consumer interest. The consumer's reasoning being `if a product is cheaper now, does it mean I was being overcharged earlier'?

Similarly, if a brand is always doling out freebies, sales would be affected when there are no freebies on offer. The rule need not apply to every market segment, though. For instance, promotions at McDonald's serve as a constant reminder to kids that it is a great place to come and eat.

However, marketers agree that no matter the market segment, for any promotion to be successful it has to be a part of an overall marketing strategy and not a one-off sales-driving initiative.

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