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  3. Getting the Promotion Mix Right in MikesBikes Introduction
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  3. Getting the Promotion Mix Right in MikesBikes Introduction

Getting the Promotion Mix Right in MikesBikes Introduction

What is Promotion Mix?

In MikesBikes Introduction, you will be in charge of promoting your company and products with the goal of attracting customers.

The three types of promotional activities available to you are:

  • Product Advertising
  • Product Public Relations (PR)
  • Corporate Brand Advertising (available in Year 2)

The effectiveness of these activities is determined by your current decisions, as well as a percentage carryover effect from the previous period.

Developing a Promotion Mix

The Market Information report is a substantial source of information you can use to determine your optimal promotional mix for a given marketing budget. This report outlines the Product Dimension Sensitivities, Media Viewing Habits and lastly the Advertising and PR Reach by Media curve for each market segment.

By analyzing this report, you will be able to determine how best to spend your marketing budget.

As an example, let’s say we are developing a Promotion Mix for the Mountain segment with a budget of $3 million.

Step 1: Identify the segment’s sensitivities

If we look at the Market Information Report, we will see in the Product Dimension Sensitivities that the Mountain segment has High sensitivity to Advertising and a Low sensitivity to PR.

So we will allocate the majority ($2m) of our marketing budget for this product to Advertising, and the remaining budget ($1m) to PR.

mountain-advertising-product-relations-sensitivities
Market Information Report

What these sensitivities mean is that a change in any of these factors will result in a proportionate change in the consumers’ demand for the product.

Step 2: Identify the segment’s media viewing habits

You will need to consider your consumers’ viewing habits by referring to the Media Viewing Habits chart (below) to help you allocate your budget on each channel.

media viewing habits mbi

The table shows us that 40% of the consumers in the Mountain segment watch TV, 30% engage with the Internet regularly, and 50% read magazines and is the most prevalent media channel.

Step 3: Allocate your marketing budget

We know that we have $2 million to spend on Advertising for our Mountain product, the remainder of our budget on PR.

We also know that 50% of this segment view magazines and 40% watch TV, but 30% are on the internet regularly. Also, while consumers in the Mountain segment mostly read magazines; the internet has a higher reach so we will look into investing in internet and Magazines.

mbi-media-reach-curve

If we spend $1 million on Internet, we will reach around 32.4% of the Internet Viewers. 30% of the Mountain segment can be reached via Internet advertising, meaning we could reach approximately 30% x 32.4% = 9.72% of the Mountain segment.

If we spend $1 million on Magazines, we will reach around 25% of the Magazine readers. 50% of the Mountain segment can be reached via Magazine advertising, meaning we could reach approximately 50% x 25% = 12.5% of the Mountain segment.

Together, our $2 million budget (half spent on Internet and half on Magazine) for Advertising alone would reach approximately 22.22% of the Mountain segment.

For this example, we have demonstrated how to allocate part of our budget to Advertising. The process for Product Relations will be the same.

This is only an example. This is far from the best mix you can make. We suggest playing around on different Marketing Mixes and see what works best for your strategy and budget.

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