By definition, promotion in business covers all aspects that are undertaken to inform and elicit interest in the products and/or services that a given business offers.
These activities include five allied techniques i.e. personal selling, advertising, sales promotion, publicity and public relations.
The first two need no introduction as these terms are commonly in use. Sales promotion is that method used to supplement what has been achieved by advertising and personal selling including the issuing of sales coupons and setting up in-store displays. Publicity is aimed at creating demand stimulation albeit non-personally. The business that benefits from such does not pay for the same. A public relations exercise takes the form of an organized effort that seeks to influence public opinion or attitude towards the business behind the effort.
Promotion in business is all about informing, persuading and communicating; these three activities being innately interrelated. No business can wish away the need to embark on promotional activities, or at least a couple of these, simply because the modern marketplace is characterized by imperfect competition. This market state implies that there is an abundance of product differentiation and non-rational behavior on the part of the customers. Market information tends to be incompletely provided most if not all the time. These characteristics make promotion in business necessary such that any enterprise can in its own way manage to inform, persuade and communicate what it's offering to customers.
There are several factors that necessitate the need for promotion in business. With time, the distance between producers and consumers is getting larger and the space in between is being filled by wholesalers, retailers, middlemen etc. There is a need for information to trickle down this chain through promotional activities lest the availability of even the most basic of commodities remain a producer's secret.
Promotion in business is also required in the face of today's extremely competitive marketplace where there is an abundance of alternatives. A small enterprise needs to think of how it can attract the attention of today's increasingly selective customers.
It may seem odd but the need for promotion in business remains constant even in times of shortage and economic recession. During shortages the enterprise can use advertising to communicate the importance of using products efficiently and conserving the same. In recession times the main problem that has to be tackled is convincing people to buy. Promotion in business must therefore be done to remind customers to maintain their standards of living. From an overall perspective, promotion is also required in such times to maintain healthy levels of employment in the economy.