What is a Promotion?

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Definition:

The term promotion usually refers to either advancement in an employee’s career or an advertising campaign designed to increase sales.

🤔 Understanding a Promotion

The term promotion is used in a few different ways in the world of finance. First, a job promotion refers to a situation where an employee moves to a higher position as a result of their hard work and success. A sales promotion is one that a company engages in to promote a brand, product, or service. Companies often engage in a promotion when they’re releasing a new product and want to draw attention to it. Most of us encounter sales promotions daily via television or social media, often without even realizing it. Finally, a stock promotion occurs when someone wants to increase awareness and excitement about a particular stock.

Example

Suppose that a fictional electronics company TechCenter is planning to introduce a new smartphone. To create hype and excitement around its product launch, the company would start its sales promotion before the product is even available. It would run advertising campaigns online and via television commercials. The company would likely place advertisements around their stores as well and hope that shoppers would spread the word to their friends and family through word of mouth marketing. TechCenter wants to ensure that when the phone finally comes out, people can’t wait to buy it.

Takeaway

A sales promotion is like applying for a job…

When you apply for a job, you put a lot of time into your resume and cover letter. You want to market yourself in the best way possible. When it comes time to hire someone, you want to be the first person that comes to the hiring manager’s mind. Sales promotions work the same way, except you’re marketing a product instead of yourself. You want to raise awareness and public opinion about your product so that when someone goes shopping, they remember to buy your product.

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What is a job promotion?

This use for the term promotion is when an employee advances within a company. When an employee receives a promotion, they’re usually offered a new position with a better title, higher salary, and more prestige.

Typically, companies offer job promotions to those employees that distinguish themselves from their colleagues through hard work, success in their current role, and excelling at the skills necessary for the new job.

Suppose you get a job in marketing for a small corporation. When the company first hires you, they offer you a position as a marketing assistant. After a few years, your employer sees that you’ve outgrown the assistant role.

They notice that not only have you excelled in your current position, but you’re also great with people and a natural leader. For that reason, they offer you a promotion to the job of marketing manager, where you’ll be overseeing the other employees in the marketing department.

There are three primary types of job promotions. 1. Seniority-based promotions are a result of the number of years an employee has spent at the company. 2. Merit-based promotions are those where an employee’s job performance is the determining factor for the promotion. 3. Seniority- and merit-based promotions are those that result from a combination of an employee’s seniority with the company and their job performance.

If two colleagues were up for the same promotion as a result of their equally outstanding job performance, the employer might choose the employee with more seniority within the company. That would be a seniority- and merit-based promotion.

Promoting from within a company rather than hiring from outside has several benefits. First, implementing job promotions allow a company to utilize its human capital in the best way. The firm can take advantage of the talent they already have in the company.

Next, promotions are a way to reward employees for their hard work and success. This system incentivizes employees to do their best work. It also fosters a work environment that people want to stay in, which helps increase job retention. When people know they have room to grow, they might be less likely to seek a job elsewhere.

What is a stock promotion?

The term stock promotion could reference a firm’s initial public offering (IPO), which is when they offer shares of stock for sale for the first time.

A stock promotion is also a way of drawing attention to a particular stock in the hopes of increasing stock sales. In many ways, stock promotions resemble other types of marketing promotions. Promoters often use the following sources for their promotions:

Social media Investment newsletters Online advertisements Email Internet chat rooms Direct mail

Unfortunately these promotions are rarely legitimate, and it is often fraudsters that carry out these promotions. An individual profits from these scams by hyping up a stock they already own. The hype causes an increase in sales of the stock, which causes the stock’s value to increase. Then, when the stock price rises, the fraudster sells his or her shares of the stock at a profit.

According to the Securities and Exchange Commission (SEC), these stock promotions occur most often with microcap and penny stocks, which are low-priced stocks. Because the companies selling these stocks are relatively unknown, it’s easy for the fraudster to spread false information about them and convince people to buy the stock.

The SEC cautions investors to look out for a few red flags that might indicate fraudulent stock promotions: First, be wary of promotions that appear to be more aggressive than usual. Next, avoid stocks if a promoter guarantees you’ll see high investment returns. No one can promise you a particular return on your investment. Additionally, be cautious if a promoter pressures you to buy immediately and tells you a stock offer exists for a limited time. Finally, avoid following unsolicited stock recommendations.

Anyone who proactively reaches out to you via email, social media, or other forms of communication with recommendations you didn’t request probably has an ulterior motive.

What is a product promotion?

A product promotion is a marketing tool that companies use to raise awareness and excitement about a particular product.

It might be that a company is launching a new product and wants to get it in front of people before the release. It could also be that a company wants to increase sales on a particular product and so they offer a discount on the item.

Some of the promotional activities a company might use include advertising, direct marketing, sales promotion, personal selling, and public relations.

Advertising is when companies pay to market their product or their company through media channels such as television, radio, social media, email, and websites. If you were to see a promotion of a particular product on a paid post in your social media feed, this would be a form of advertising.

A sales promotion occurs when a company uses media and non-media communications to run a limited-time sale to increase demand for a product. Suppose your favorite clothing store is running a buy-one-get-one-free deal on their most popular jeans. The odds are that more people are going to go out and buy those jeans.

Personal selling refers to face-to-face promotion. Think about the last time you visited a car dealership. An employee probably came out to greet you and stayed with you as you looked at cars. That person’s job is to get you to buy a car through personal selling.

Finally, companies use public relations to control the message that consumers get about their brand. Public relations professionals make sure the company's preferred information is getting in front of potential customers. They work to increase public awareness and improve public opinion about the brand.

What is the role of promotions in marketing?

Promotion is one of the four basic principles of marketing.

The first principle of marketing is the product, which is what a company offers to its customers. This principle could refer to a physical product or a service. To run a successful marketing campaign, a company has to have a good product that people want to buy.

The next principle of marketing is the price at which a company sells its product. The cost of a product is critical because it determines whether there will be demand for the product. The price is also an essential factor when it comes to promoting the product because it determines how the brand will position it.

Consider how differently luxury brands promote their products versus a discount retail brand. A discount brand is likely to put its low price front-and-center in their marketing. A high-end brand is likely to focus on the luxuriousness of the product. Their target audience will purchase at a higher price point.

The next principle of marketing is the place, meaning the distribution channels of the product. This principle refers to where and how companies choose to sell their products. For a company to successfully sell a product, they have to get it in front of the right people at the right time.

Promotion represents the final principle of marketing. When a company promotes its product, it uses the first three principles to reach the right audience for their product. The purpose of promotion in marketing is to educate consumers about the product, increase demand for the product, and differentiate the company and the product from its competitors.

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