The second of the four P's is promotion. This aspect of the marketing mix covers the methods of communication that a marketer uses to provide information about his products. Typically, we think of this information as being persuasive in nature with a goal of getting customers to buy your product instead of its competitors. This information, it can be built verbal and visual. Thus, a promotional strategy can influence consumers by appealing to either their intellect, or their emotions. For example, Coke has built an incredible degree of awareness and interest in its brand via century of effective promotional campaigns. Coke spends about four billion dollars on advertising each and every year, most of this on television ads. Through a 100 years of successful promotions, Coke is one of the world's most recognizable brands, and the world's most popular soft drink. As indication of it's promotional success, the word Coke, there it is. It's the second most recognized word on the planet, just after "OK". Please take a look at the in-video link to get a sense of the history of Coke's advertising. If you take a close look at these ads, you'll see that Coke has historically focused more on the visual than the verbal, in it's attempts to build an emotional bond with it's customers. The promotion part of the marketing mix has a number of key concepts including personal selling, sales promotion, and word of mouth. In this module, we'll focus on two fundamental concepts, advertising and persuasion. Over the past 100 years, the most popular promotional technique has been advertising, with television advertising accounting for the largest portion of most firms' promotional budgets. Today, digital advertising exceeds traditional advertising, but not by much. However, television advertising is still a major element in many firms advertising budgets. For example, many large firms pay over five million dollars for a 30-second advertising spot during the Super Bowl. Now, most advertising is targeted towards existing and potential customers. However, advertising can also be directed to refer distribution channel partners, so does retailers, and also to build morale among its employees. The goal of advertising is to elicit some type of response. Now, there are different types of responses that a firm may seek. For example, a new brand may focus on developing awareness, while an established brand may focus on changing perceptions. Most ads are carefully planned and developed. Usually a firm will hire a professional advertising agency to create an advertising campaign, and then will carefully pretest these ads before they're shown. Once a advertising campaign is launched, a firm will usually have a professional marketing research company track the ad to assess its effectiveness and help decide when it needs to develop a new campaign. As noted earlier, the main goal of most promotional campaigns is to persuade customers to buy a firm's products instead of its competitors. Thus, marketers often think of promotion as a form of persuasion, and employ a number of persuasion tactics such as celebrity endorsements, humor, or scientific claims. The most popular theory about how persuasion works is the Elaboration Likelihood Model, ELM for short. This model suggests that there are two main routes to persuasion. First, the central route, which is marked cognitive in nature, and second, the peripheral route, which is more emotional in nature. According to this theory, the central route is effective when customers have the ability and motivation to process a persuasion message. Persuasion will occur when they find that information to be newsworthy and believable. In contrast, the peripheral route is more effective with customers lack ability and motivation to process a message. Persuasion will occur when they perceive the provider of the message to be credible, or attractive. These two ads are good examples of these two different persuasion routes. Regardless of which route is employed, persuasion tactics focus strongly on trying to convince customers that a product is appealing, and is based on the premise that a firm needs to find the right message, or message provider. Historically, most large firms have devoted most of the promotion budget to advertising. For the bulk of this expenditure, focus on television ads developed by professional advertising agency. Although a small number of customers are typically asked to provide their opinion about these ads through techniques such as copy testing, or concept testing. This process is largely top-down and focus, and most ads are designed to persuade customers to buy a firm's products, by first getting attention for its brand, and then persuading them to make a purchase. This top-down approach is starting to break down due to the democratization of digital tools. For example, most large automobile companies have historically spent billions of dollars a year to advertise their products. In contrast, Tesla, which is a truly digital company, has built a successful automobile company without spending a single dollar on traditional advertising. Instead, approaches brands via social media. For example, Tesla has over four million Twitter followers and Elon Musk, the CEO, has nearly 30 million. In contrast, General Motors, which was once the largest company in the world, has less than 700,000 Twitter followers. In addition to making effective use of social media, the Tesla brand, as well as its products is widely promoted by thousands of fans via Twitter postings, YouTube videos, and other forms of user generated content. Thus, by leveraging the power of the digital and not engaging in traditional advertising, Tesla is able to effectively tell potential customers a story without appearing like is trying to sell them something. So this new digital environment, marketing is moving from selling products to telling stories. In this module, we'll discuss how new digital tools are changing this element of the marketing mix and redefining how we think about promotion.