Chapter 17 Marketing #2

Question 1

Define Promotion.

Answer 1

Involves communicating with consumers to let them know about the product and persuade them to buy it.

Question 2

Define advertising.

Answer 2

Is the paid non-personal communication of information about a product through various media.

Question 3

Explain the five different types of advertising.

Answer 3

Reminder advertising: Aim is to let consumers know that a well-known product is still around. E.g. Coca Cola

Information Advertising: Aim is to give factual information to consumers about a product. E.g. Sale starts 10am

Persuasive Advertising: Aim is to convince consumers that they must have product and it is essential to their happiness in life. E.g. Lynx Effect

Generic Advertising: Aim is to advertise the product for the entire industry e.g. “ Buy Irish”

Comparative Advertising: Aim is to show how much better the product is in comparison to competitors. E.g. Lidl and Tesco

Question 4

What are the functions of advertising?

Answer 4

1. To provide information.
2. To remind customers.
3. To persuade customers.
4. To compete with competitors.
5. To increase business profits.

Question 5

Define advertising media.

Answer 5

Is the different places where a business can place an ad.

Question 6

What are the advantages and disadvantages of Internet as an advertising medium?

Answer 6

+: Global audience through social media. Can use picture, sound, movement.
—: Can be copied electronically with ease. Many ignore pop up ads.

Question 7

What are the advantages and disadvantages of TV as an advertising medium?

Answer 7

+: Customers can see product at work, large audience, schedule ads to target certain consumers.
—: Very expensive. Ignored by switching channels.

Question 8

What are the advantages and disadvantages of Radio as an advertising medium?

Answer 8

+: Cost effective, reach local audience and targeted audiences.
—: Relies on sound only to communicate.

Question 9

What are the advantages and disadvantages of Newspaper as an advertising medium?

Answer 9

+: Can be re-read, cheap, certain newspapers certain target market.
—: Poor quality images as opposed to TV. Ad only seen for one day.

Question 10

What are the advantages and disadvantages of Magazines as an advertising medium?

Answer 10

+: Can be re-read, last longer than newspapers, cost effective.
—: Only written, no sound.

Question 11

What are the advantages and disadvantages of Billboards as an advertising medium?

Answer 11

+: Longer life span greater audience.
—: Impossible to predict who will see it.

Question 12

What are the advantages and disadvantages of Direct Mail as an advertising medium?

Answer 12

+: Personalised to consumer. Reach only target market.
—: Expensive. Customers may ignore as “Junk Mail”.

Question 13

Explain the four factors that determine the advertising medium chosen.

Answer 13

1. Media Habits of Target Audience: Use media most used by target market to reach most potential customers. E.g. toys ads between kids programmes.
2. Nature of the Product-If the product needs to be seen at work, visual is best. E.g. Washing Powders
3. The Message: If technical information about the product written is best. E.g. Computer Specs
4. The Cost: Advertising budget determines what medium is chosen. TV is expensive and advertising locally is cheaper.

Question 14

What is ASAI?

Answer 14

Advertising Standards Authority for Ireland regulates the advertising industry to ensure consumers are protected from false and misleading advertising. Draws up codes of advertising standards. Can request that advertisers take down ads if consumers complain in writing.

Question 15

Differentiate between a misleading and an offensive ad with examples.

Answer 15

Offensive Ad: Hunky Dory ran ads with scantily dressed women playing sport. People complained it was demeaning to women.
Misleading Ad: L’Oreal ad ran with “lashes 60% longer” while actor wore false lashes.

Question 16

Define sales promotion.

Answer 16

Incentives or short term offers that a business gives to encourage consumers to buy more of a product sooner than they might have done.

Question 17

Explain six types of sales promotion.

Answer 17

Free Samples: Consumers offered a free trial of the product which encourages them to try it and buy it. E.g. SuperValu

Money-Off Vouchers: Discount off a product to encourage price-conscious consumers to buy it. E.g. Tesco money-off voucher.

Free Gifts: Free gift with every purchase. Must be attractive one that consumers want. E.g. Happy Meal Toy

Competitions: Chance to win prize motivates consumers to buy and creates attention for the product. E.g. Dairy Milk cash prize.

Loyalty Cards: Get points for every purchase. Save up for free product. E.g. Nando’s Card

Merchandising: Display products and store in an attractive and eye-catching way to attract attention and get customers to buy more. E.g. Walk past sweets to get milk.

Question 18

Explain public relations.

Answer 18

Refers to the efforts of a business to create and maintain a positive image of the business in the minds of consumers and build a good relationship with them. Responsibility of Public Relations Officer (PRO).

Question 19

What are the four functions of public relations?

Answer 19

1. Attract publicity for new products-PR stunt to get into newspapers and media. Consumers see the stunt and become aware of the product. E.g. Michael O’Leary dressed up as a cardinal to advertise new Ryanair route to Rome
2. Target certain customers-By sponsoring events that appeal to them. Helps shape attitudes and create positive reaction. E.g. Flora Women’s Mini Marathon.
3. Build Image that reflects well on the company-Charitable actions that gain consumer trust and encourage them to buy from them. E.g. Ronald McDonald Charity Foundation
4. Defend product that has had bad publicity-Business shares their side of things. E.g. Dominos Pizza lack of quality scandal.

Question 20

Explain five PR techniques.

Answer 20

1. Events: An occasion to attract PR such as a Roadshow, exhibition and open days.
2. News Conference: Invites newspapers to announce newsworthy developments in the business such as new jobs or new product launch.
3. Public Service Activities: Helps the local community so consumers feel that they care. e.g.Tesco for Schools Club
4. Sponsorship: Donates money to an event or team in return for showing its brand or name.
   People who enjoy event will have positive view of the brand that ran it. E.g. Aviva Stadium
5. Celebrity Endorsements: Celebrities are paid to endorse or be associated with a brand. Celebrities market the product through TV ads, radio or social media. Consumers buy products used by celebrities they like, increasing sales. E.g. Taylor Swift became a brand ambassador for Pepsi.

Question 21

What is Personal selling?

Answer 21

Personal Selling: Meeting with customers face-to-face to give them personalised advice specific to their needs and build a relationship with them to get them to buy the product. This relies on a salesperson’s knowledge and expertise.
E.g. Phone Shop Assistant who are knowledgeable about the products.

Question 22

Evaluate the sales promotion techniques of public relations, advertising, sales promotion and personal selling using McDonalds as an example.

Answer 22

Public Relations: McDonald’s set up Ronald McDonald Foundation Children’s Charity. Evaluation: Effective as target market is parents who will choose to go there if supports children.
Advertising: McDonalds has the slogan “I’m Lovin It” with Justin Timberlake song.
Evaluation: This is effective as linking with famous celebrities helps attract teenagers.
Sales Promotion: McDonalds gives free gifts with happy meal.
Evaluation: Effective as target market children would like to collect the toys.
Personal Selling: Encourages consumers to buy more.
Evaluation: Staff well trained to ask consumers if they want fries with that which increases profits.

Question 23

Define place with relation to the marketing mix.

Answer 23

Involves deciding where the product will be available for purchase and how the product gets from manufacturer to consumer. Also called Channels of Distribution.

Question 24

Explain traditional channel of distribution. With ‘diagram’.

Answer 24

Producer —> Wholesaler —> Retailer —> Consumer.
Producer: Makes the product and sells in large quantities to wholesaler.
Wholesaler: Buys in huge amounts off producer then sells for a profit to retailer in smaller quantities.
Retailer: The shop sells individual products to the consumer.
Consumer: Buys product for their own personal use.

Question 25

Explain direct channel of distribution. With ‘diagram’.

Answer 25

Producer —> Consumer
Producer: Makes the product and sells directly to the consumer.

Question 26

Why is a direct channel good?

Answer 26

Higher margins as each stage adds a percentage profit. Goods can be sold cheaper to consumers which increases sales.

Question 27

Why is a traditional channel good?

Answer 27

Reduced costs as no storing fees for producer. Make use of existing distribution networks that distribute far better than a single producer working alone.

Question 28

Why is distribution important? (3)

Answer 28

Impact on Sales: If the product is not available for consumers when they are looking for it, it cannot be sold.
Impact Profit Margins: the more stages, the more expensive the product becomes for the consumer as each business adds a profit to the price. E.g. Dell Laptops cheaper as direct to consumer.
Impact Consumer Satisfaction: If the business has distribution problems and does not have on-time delivery customers will not be happy and reputation will be damaged e.g. Next Delivery should be next day.

Question 29

What six factors determine which channel of distribution is chosen?

Answer 29

Cost: Each stage adds a percentage profit to the product and consumers are charged higher prices the more stages. This leads to worse margins and lower profits for the producer.

Nature of the Product: If the product is bulky it is best to sell directly to consumer as delivering to each stage is expensive. If product is perishable it should be sold direct. E.g. Milk

Target Market: Will influence where a product should be sold. If low-priced intense distribution. If luxury only distributed to high-end shops to reflect exclusivity. E.g. Chocolate bars use intensive distribution to be in as many shops as possible. Rolex uses minimal distribution.

Location of Customers: Located in small areas business will use direct channel of distribution as costs low. But global market needs wider network.

E-commerce: Sell directly using a website and order system. Cut costs. E.g. River Island.co.uk

Cash Flow: Consider cash-flow implications of each channel. Selling to large retailers they may pay with credit only. E.g. Dunnes Stores. Smaller retailers pay cash.

Question 30

Evaluate the marketing mix for a product or service of your choice.

Answer 30

Product: Red bull is an energy drink invented in Austria by Entrepreneur Dietrich Mateschitz. Evaluation: Unique selling point is unique taste and providing energy and concentration. Makes it no. 1 selling energy drink in the world.

Price: Premium pricing strategy. Evaluation: High price reinforces idea that Red Bull is a premium product encouraging customers to buy it.

Promotion: Organises own events rather than sponsoring events such as Red Bull Air Race. Evaluation: Events appeal to target market. Attracts media attention.

Place: Red Bull uses intensive distribution strategy and makes the product available in as many shops as possible. Evaluation: Well distributed can be bought easily anywhere in the world.

Question 31

Define margin of safety.

Answer 31

Is how far estimated sales can fall before business loses money.