Chapter 20: Marketing mix - promotion and place Flashcards
Promotion
Informing and persuading customers to buy the product through advertising
Advertising
Paid-for communication to inform and persuade consumers, using media such as TV and newspapers
Types of advertising
Informative: Inform about a product rather than brand image..
Persuasive: Try to create a distinct image/brand identity for the product.
Direct promotion
Promotional activities aimed directly at target customers
Sales promotion
Incentives directed at customers or retailers to achieve short-term sales and repeat purchases
Promotion mix
Combination of promotional techniques that a firm uses to sell a product.
Promotion methods
Promotion
Advertising
Direct promotion
Sales promotion
Promotion objectives
Increasing sales by raising consumer awareness
Increasing consumer recall of existing products
Increasing purchases by existing consumers
Demonstrating the superior qualities of a product
Creating/reinforcing brand image
Correcting misleading reports
Improving the public image of the business
Encouraging retailers to hold inventories of the product
Advertising agencies
Specialists that advise businesses on the most effective way to promote products.
What do advertising agencies do?
They research the market, establish customer tastes and identify typical customer profiles.
They advise on the most cost-effective forms of advertising media to be used.
They use their own designers to design adverts appropriate for each medium.
They film or print adverts
They monitor public reaction to the campaign and feedback to the client
Advertising methods
Print: Newspapers, magazines.
Broadcast: TV, radio and cinemas
Outdoor: Billboards, bus stop posters
Product placement: featured in TV shows and films
Guerilla: Advertised at surprising events to gain attention
Sponsorship: Associating with a team, event or individual
Digital advertising
How to choose an advertising method
Cost
Target audience
Message
Legal constraints
Sales promotion methods
Price offers
Loyalty reward programmes
Money-off coupons
Point-of-sale display
Buy one get one free (BOGOF)
Games/competitions on the packaging
Possible limitations of price offers
reduces profit
shows a negative brand image
Possible limitations of money-off coupons
Can encourage customers to buy what they already wanted
Demand may be too high
Low price reduction may not attract customers
Possible limitations of customer loyalty schemes
Discounts cut gross profits
Administration costs
Many loyalty cards are from different retailers, not very loyal
Possible limitations of money refunds
Involves the completion and posting of a form, which may be a disincentive
Delay before a refund can be a disincentive
Possible limitations of BOGOF
Substantial loss in gross profit margin
Consumers may conclude that the price is too high
Consumers may feel that the product cannot sell at normal prices and this affects the reputation
Current sales might increase but future sales may fall
Possible limitations of point-of-sale displays
Best display points are given to market leaders
New products may struggle for the best position unless high discounts are given
Direct promotion methods
Direct mail: by post
Telemarketing: Telephone
Personal selling: Door to door
Digital promotion
Promotion through digital technologies mainly on the internet
Methods of digital promotion
Social media marketing: Instagram, Twitter
Email marketing: Newsletters
Online advertising: Pop-up banners
Smartphone marketing: Messages, apps
Search engine optimisation: e-commerce
Viral marketing: Posts, videos, memes
E-commerce
Buying and selling of products through an electronic medium
Benefits of digital promotion
Worldwide coverage
Relatively low cost
Easy to track and measure results: web analytics
Personalisation
Builds customer loyalty: Quick responses
Content marketing: Engaging campaigns
limitations of digital promotion
Time-consuming
Skills and training
Global competition
How to measure the success of promotion
Sales before and after the campaign
Consumer awareness
Consumer panels
Response rates to advertisements
Social media feedback
Role of packaging in promotion
Protects and contains the product
Gives information about the product
Supports brand image
Makes the product attractive
Aims of branding
Aids consumer recognition
Makes the product distinctive
Gives the product an identity
Benefits of branding
Increases chances of brand recall
Differentiates the product from others
Allows establishment of a family of closely associated products
Reduces demand responsiveness to price changes
Increases customer loyalty
Place
How products should pass from the manufacturer to the final customer
Channel of distribution
The chain of intermediaries a product passes through from producer to final customer
The 3 channels of distribution
Direct selling: Manufacturer-customer
Single-intermediary:
Manufacturer-retailer-consumer
Two-intermediaries:
Manufacturer-wholesaler-retailer-consumer
Advantages of direct selling
Intermediaries take no markup profit
Producer has complete control of the marketing mix
Quicker than other channels
Direct contact with customers is useful for market research
Disadvantages of direct selling
The producer pays for all storage/inventory costs
No retail outlets so customers cannot try the products
May not be convenient for consumers
No after-sales service is offered by shops
Expensive to deliver to customers
Advantages of two-intermediaries channel
Retailers incur costs of inventory
Retailers display products and offer after-sales services
Retailers should be in convenient locations
Producers focus only on production, not on selling
Advantages of e-commerce
Relatively cheap
Worldwide exposure
Consumers leave important data on websites
High in convenience
Businesses keep records of the number of clicks
Computers/smartphones are more popular
Lower fixed costs compared to retailers
Dynamic pricing is easier
Advantages of single-intermediary channel
Wholesalers hold goods and buy in bulk
Reduces producer’s inventory costs
Wholesalers pay for transport costs to retailers
Wholesalers buy in high quantities and sell in low
Disadvantages of two-intermediaries channel
Expensive for consumers because of more intermediaries
More loss of marketing mix for the producer
Slows down the distribution chain
Disadvantages of single-intermediary channel
Intermediary takes a** profit markup making it expensive**
Producers lose control over the marketing mix
The outlet sells competitors’ products too
disadvantages of e-commerce
Some countries have** low-speed Internet**
Consumers cannot physically see the product
Product returns may increase if consumers don’t like it
Cost and unreliability of post may reduce cost advantage
Websites must be user-friendly and up-to-date
Worry about Internet security may reduce growth potential
Factors affecting the choice of distribution channel
Which channel is the** most convenient**
Channel length
Product manufacturing location
Should e-commerce be the main channel?
How much will the inventory costs be?
How much control of the market mix does the business want?
