3.17 The Marketing mix - promotion and place

Question 1

Promotion

Answer 1

The use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorship and PR to inform consumers and persuade them to buy the product

Question 2

Promotional objectives

Answer 2

• Increase sales by raising awareness of a product
• Remind consumers of existing products
• Encourage increased purchases
• Demonstrate the superior specification or qualities
• create or reinforce the brand image
• Correct misleading reports about the product or business and reassure the consumers
• Develop or adapt public image of the business
• Encourage retailers to stock and promote products to final consumers

Question 3

Advertising

Answer 3

Paid-for communication with consumers to inform and persuade

Question 4

Above-the-line promotion

Answer 4

A form of promotion that is undertaken by a business by paying for communication with consumers

Question 5

2 types of advertisement

Answer 5

1. Informative advertising

2. Persuasive advertising

Question 6

Factors affecting advertising decisions

Answer 6

1. Cost
2. Size of audience
3. The profile of the target audience in term of age, income, interests
4. The message to be communicated
5. The other aspects of the marketing mix
6. The law and other constraints

Question 7

Sales promotion

Answer 7

Incentives such as special offers or special deals directed at consumers or retailers to achieve short-term sales increases and repeat purchases by consumers

Question 8

Below-the-line promotion

Answer 8

Promotion that is not a directly paid for means of communication, but based on short-term incentives to purchase

Question 9

Personal selling

Answer 9

A member of the sales staff communicates with one consumer with the aim of selling the product and establishing a long-term relationship between company and consumer

Question 10

Direct mail

Answer 10

Directing information to potential customers, identified by market research, who have a potential interest in this type of product.

Question 11

Trade fairs and exhibitions

Answer 11

Contacts are made and awareness of products is increased in a trade fair

Question 12

Sponsorship

Answer 12

Payment by a company to the organisers of an event so that the company name becomes associated with the event

Question 13

Public relations

Answer 13

The deliberate use of free publicity provided by newspapers, TV and other media to communicate with and achieve understanding by the public

Question 14

Branding

Answer 14

The strategy of differentiating products from those of competitors by creating an identifiable image and clear expectations about a product

Question 15

Brand extension

Answer 15

Using strong brand identity as a means of supporting the introduction of new or modified products

Question 16

Marketing or promotion budget

Answer 16

The financial amount made available by a business for spending on marketing/ promotion during a certain time period

Question 17

Budgeting approaches

Answer 17

1. A percentage of sales
2. Objective-based budgeting
3. Competitor-based budget
4. What the business can afford
5. Incremental budgeting

Question 18

Packaging functions

Answer 18

• Protect and contain the product
• Give information (contents, ingredients, instructions)
• Support the image of the product created by other aspects of promotion
• Aid the recognition of the product by the consumer

Question 19

Channel of distribution

Answer 19

Refers to the chain of intermediaries a product passes through from producer to final consumer

Question 20

Promotion assess?

Answer 20

• Sales performance before and after the promotion campaign
• Consumer awareness data
• Consumer panels
• Response rates to advertisements

Question 21

Consumer markets and industrial markets

Answer 21

• Industrial goods is more likely to refer to specialist magazines or journals

Question 22

Direct selling: no intermediaries

Answer 22

+ no mark-up profit margin taken by other businesses
+ producer has complete control over marketing mix
+ quicker than other channels
+ fresher food product
+ direct contact with consumer offers useful market research
- storage and stock costs have to paid by producer
- no retail outlets limits the chances of more costumers getting to know the products
- not convenient for customers
- no adverts or promotion made by intermediaries, no after sales services
- can be expensive to deliver each item to consumers

Question 23

One- intermediary channel. Usually used for consumer goods but could also be an agent for selling industrial products to businesses

Answer 23

+ retailer holds stocks and pays for cost
+ retailer has product displays and offers after sales services
+ retailers often in locations that are convenient to consumers
+ producers can focus on production - not on selling the products to consumers
- intermediary takes a profit markup and could make the product more expensive to final consumers
- producers lose some control over marketing mix
- retailers may sell products from competitors -> no exclusive outlet
- producer has delivery costs to retailer

Question 24

Two- intermediaries channel. Wholesaler buys goods from producer and sells to retailer

Answer 24

+ Wholesaler holds goods and buys in bulk from producer
+ Reduces stock-holding costs of producer
+ Wholesaler pays for transport costs to retailer
+ “Breaks bulk” by buying in large quantities and sell in small quantities
+ Good way to enter foreign markets where producer has no direct contact w/ retailer
- more profit markup - expensive for consumer
- producer loses further control over marketing mix
- slows down the distribution chain

Question 25

Internet marketing

Answer 25

The marketing of products over the internet

Question 26

Benefits of internet marketing

Answer 26

Relatively inexpensive compared to the ratio of cost of no. of consumers reached
Worldwide audience
+ Consumers make purchases and leave important data about themselves
+ Convenient to use bc computer ownership is increasing
+ Accurate records can be kept e.g: number of clicks
+ Lower fixed costs
+ Dynamic pricing - different price for different countries - can be easier

Question 27

Limitations of internet marketing

Answer 27

• Countries with low-speed or no internet
• Consumers can’t try on tangible goods before buying –> limit their willingness
• Product returns increase costs
• Cost and unreliability of postal services
• Website must be kept up to date and user-friendly –> expensive
• Worries about internet security

Question 28

Viral marketing

Answer 28

The use of social-networking sites or SMS text messages to increase brand awareness or sell products

Question 29

Integrated marketing mix

Answer 29

The key marketing decisions complement each other and work together to give customers a consistent message about the product