What Is a Promotion?

Promotion refers to a variety of actions intended to raise greater awareness or advancement of an item. In terms of a career, promotion refers to advancing an employee's rank or position in a hierarchical structure. In marketing, promotion refers to increasing intention on a product through advertising or a discounted price.

Understanding Promotions

A promotion can occur in a variety of ways in business, marketing, and careers. The dictionary definition of promotion is the act or fact of being raised in rank or position. This may occur in relation to people, products, or financial instruments.

An alternative definition is an act of furthering the growth or development of something. In many different types of promotions, a company often contributes additional resources to promote the growth of an item. For example, a company often promotes an employee to a new role by giving them higher pay; alternatively, a company can promote a product by paying marketing costs.

All types of promotions are discretionary spending. This means that promotions are not required to happen. However, a company will often perform an evaluation prior to a promotion to analyze the benefits of the promotion compared to the costs. For example, the incremental salary cost for an employee may not outweigh the benefits that promoted employee will contribute.

Job Promotions

A job promotion is usually handed to an employee who has displayed exceptional performance or has developed the appropriate skills and knowledge necessary to take on additional job responsibilities. In the latter case, the employee may need to work for a company for a required amount of time or have management tenure to be eligible for a promotion.

According to Indeed, an employee that has been promoted and switches jobs may expect an average pay raise between 10% and 20%. However, employees may receive an assortment of other benefits instead. For example, an employee may receive a better title, better office, and career development. In general, a promotion usually is accompanied by a combination of the above.

How to Ask for a Job Promotion

For some, job promotions may come as a surprise or without having to ask. In this case, a company will award a hard-working employee with career advancement. For others, they may be in a situation where asking for a promotion will alert their job of a desire for career advancement and result in feedback on what it will take. Here are some broad tips for asking for a job promotion:

1. Research your value. Before asking for a job promotion, understand what skills and knowledge you have and what they translate to in the job market. Explore what skills open job postings are asking for and how much those jobs pay. Communicate with other professionals in your field about their opinion on what you should be getting paid. Consult online salary estimators to see if your current pay (or prospective pay in a promoted role) is in line with what you want to ask for.
2. Understand the big picture. There may be circumstances that warrant waiting or timing your ask. For example, some companies have limited windows in which their companies consider promotions. Get a sense of extenuating circumstances such as your company's performance to budget, sales numbers, or outstanding risks. Understand what is happening in the macroeconomic environment to understand what the future of the company may looks like. A discouraging but important facet of job promotions is understanding that sometimes, a promotion won't happen because of elements outside of your control.
3. Consult your manager. When asking for a promotion, emphasize your value and what your bring to the company. Demonstrate the specifics you bring that would be difficult to replace. Do not focus on your pay or position compared to other individuals; keep the discussion focused on you, your achievements, and your aspirations.
4. Be flexible and understanding. You may receive feedback on why you have not been promoted and why you are not slated to be promoted. Attempt to take the advice positively, even if you disagree with it. There may truly be an opportunity for you to learn and become better at your job. Alternatively, companies may say it isn't quite time. It's then up to you to decide whether to risk waiting for no promotion or trust in the company and continue delivering results.
   

Example of Job Promotion

At universities and colleges, one type of promotion is the jump from being a tenured track assistant professor to a tenured full professor. Depending on the college or university, the promotion from assistant to full professor comes with a substantial salary bump. An assistant professor may earn over $90,000, but when promoted to a full professor, could earn well over $160,000.

Product Promotions and Sales

Promotions also apply to the marketing sector. In marketing, a brand, company, product, or service uses promotions to increase or improve the promoted asset's perception and boost sales. Promotional tactics run the gamut—from coupons to "two-for" sales (buy one, get a second one free) to straight dollar markdowns or percentage discounts.

Sales promotions are conducted through online media such as social media platforms, digital communications such as mobile SMS, print media such as newspapers, or in a physical location such as a retail store. Other ways to promote a business or product include word of mouth, business cards, and flyers.

Types of Marketing Promotions

A company may choose to increase the awareness of their products through a variety of promotion techniques. The most common types of marketing promotions include:

• Word of Mouth: The traditional form of promotion, word of mouth promoting entails a customer with a positive experience sharing their feelings with other customers. Essentially a free type of marketing exposure, word-of-mouth promotion may be unreliable as there is no guarantee that happy customers will always share the news with their friends or family.
• Direct Marketing: With the introduction of social media, direct marketing now allows companies to pay for targeted advertising that attracts attention from individuals and informs them of the company's goods. Companies can target individuals based on their search history or who they follow on social media.
• Website: Another means of digital promotion, companies now often have robust, information websites that convey product information, company history, and customer reviews. All of this information is meant to convince a prospective customer to buy a good or service.
• Sales: One of the more recognizable means of promoting a good is to have a sale or price discount. Instead of emphasizing the characteristics of the good, a sales promotion brings attention to a discounted price. As customers consider the price, they are more likely to be engaged and research the discounted good.
• Public Relations: Companies can also promote business activity by being good stewards to the community and having a positive external image. A company's brand promotes a sense of identity that consumers may want to engage or be associated with.

Example of Product Promotion

A few months or weeks before kids go back to school, retailers often use product promotions to draw shoppers into a competitive market. For example, Target has historically offered teachers coupons worth 15% off of school supplies over the summer leading up to school.

The holidays are another time of year when product promotions go into full swing, and sales and deals promote products in many retail sectors from food to fashion. In this example, product promotions may be more to raise awareness of unique or new products that might be fitting as a holiday gift.

Security Promotions

Capital markets also use promotions. Stock or security promotions are carried out when an individual or a group wants to hype a stock. Unfortunately, stock promotions in the capital market are mostly fraudulent schemes carried out by people who already own shares in their portfolios. These shares usually are priced really low and are from little-known companies with no solid financial fundamentals.

If the promoter’s tactics work and more people buy the stock, the value of the stock will go up. When this happens, the stock promoter sells or dumps all of their shares on the market in classic pump-and-dump style. Stock promoters use various vehicles to promote the stock, including advertising online, cold calling, and digital email spam. Investment promotion refers to creating awareness of little-known stocks to increase demand, and thus the price of the stock.

Example of Security Promotion

With the proliferation of cryptocurrency coins and tokens, it has been increasingly easier for promoters to hype a security, wait until market participants have bought in, then dump their holdings to yield massive gains. As such, always be mindful when investing in new, young securities with unproven financial histories.

One such case involved EthereumMax. After releasing its token, EthereumMax enlisted the help of several celebrities to promote the security. After obtaining an all-time high price in May 2021, the token has since dropped over 99% as of September 2022. As a result, some promoters including Kim Kardashian are facing potential litigation for securities fraud.

The Bottom Line

A promotion can occur in marketing, careers, the stock market, and even global health endeavors. The term promotion is most frequently used in the job market to describe a rise in job title, duties, salary, or all three. Promotions of products are used in marketing and business, and in the stock market, a stock promotion is used to boost the sale of little-known stocks.