UNIT 3. Chapter 17: Marketing mix - promotion and place

Question 1

Def. Promotion

And types of promotion? (7)

Answer 1

The use of advertising, sales promotion or any other means to inform potential consumers of the product and persuade them to buy it.
• Advertising
• Sales promotion
• Personal selling
• Direct mail
• Trade fairs and exhibitions
• Sponsorship
• Public relations

Question 2

Examples of promotion objectives?

Answer 2

• To increase sales by raising consumer awareness of the product
• To remind consumers of an existing product and its distinctive qualities
• To develop or adapt the public image of the business

Question 3

Def. Promotion mix

Answer 3

The combination of promotional techniques that a firm uses to sell of product.

Question 4

Def. Above the line promotion

Answer 4

A form of promotion that is undertaken by a business by paying for communication with consumers. e.g. Advertising

Question 5

Def. Advertising

Answer 5

Communicating information about a product or business through the media.

Question 6

What are the two types of advertising?

Answer 6

• Information advertising: adverts that give information, like price or main features, of the product rather than creating brand image.
• Persuasive advertising: Creating distinct image for the product and may not contain any technical information about the product.

Question 7

What are the factors to consider when choosing media for advertising? (5)

Answer 7

• Cost
• Size of audience
• Profile of the targeted audience like age, sex, income and interests
• The content of the advertisement
• The law and other constraints

Question 8

Def. Below the line promotion

Answer 8

Promotion that is not directly paid for means of communication, but based on short term incentives to purchase. e.g sales promotion, personal selling, direct mail, trade fairs and exhibitions, sponsorship and public relations.

Question 9

Def. Sales promotion

Answer 9

Incentives such as special offers or special deals directed at consumers or retailers to achieve short term sales increases and repeat purchases by consumers. e.g. temporary reduction in price (10%), coupons, ‘buy one get one free’.

Question 10

Def. Personal selling

Answer 10

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

Question 11

Def. Branding

Answer 11

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

Question 12

What are the benefits of an effective brand identity? (3)

Answer 12

• Clearly differentiate the product from others’
• Reduce price elasticity of demand
• Increase consumer loyalty to brands

Question 13

How can a business determine the spending limits for promotion?

Answer 13

• A percentage of sales: marketing budget would vary with sales. The flaw is that with low sales, the less promotion.
• Objective base budgeting: sees how much sales needed to be made to reach target and assess how much supporting expenditure is needed.
• Competitor based budget
• What business can afford
• Incremental budgeting: Taking last year’s budget and adding a percentage that reflects sales targets.

Question 14

What are the functions of packaging?

Answer 14

• Protect and contain the product
• Give information about the product e.g. ingredients
• Support the image of the product
• Aid the recognition of the product

Question 15

Def. Channel of distribution

Answer 15

This refers to the chain of intermediates a product passes through from producer to final consumer.

Question 16

What are the three most commonly used channel distributions?

Answer 16

• Manufacturer to consumer (no intermediates) e.g. Farmers market
• Manufacturer to retailer to consumer (1 intermediate) e.g. some super markets that hold their own stock
• Manufacturer to wholesaler to retailer to consumer (2intermediates) e.g. Soft drinks manufactures over seas

Question 17

Benefits and limitations for no intermediates? (4 4)

Answer 17

Benefits:
• Producer has complete control over marketing mix
• Quicker than other channels
• Fresher products
• Direct contact with consumer offers good market research.
Limitations:
• Cost of storage for inventory
• No retail outlets so consumer can’t see the product first
• Location may not be convenient for consumer
• Deliveries may be expensive

Question 18

Benefits and limitations for 1 intermediate? (4 3)

Answer 18

Benefits:
• No storage costs
• Retail does product display
• Retailer’s are in locations more convenient for consumers
• Producers can focus on production
Limitations:
• Profit mark up making products more expensive
• Producers lose some control over marketing mix
• Deliveries may be expensive

Question 19

Benefits and limitations for 2 intermediates? (4 3)

Answer 19

Benefits:
• Wholesalers buy in larger bulks
• No storage costs
• No delivery costs
• Allows producers to enter foreign markets
Limitations:
• More profit mark up
• More loss of control over marketing mix
• Slows down the distribution chain.

Question 20

Factors influencing choice of distribution channels

Answer 20

• Industrial products tend to be sold directly with fewer intermediates than consumer goods
• Geographical dispersion
• The level of service expected by consumers
• Unit value of the product e.g. selling a yacht is worth hiring staff to help sell
• Number of potential customers - direct selling for little number of potential staff like aircrafts

Question 21

Def. Internet marketing

Answer 21

The marketing of products over the internet.

Question 22

Benefits and limitations to Internet marketing (5 4)

Answer 22

Benefits:
• Relatively inexpensive
• Easier to reach world wide audience
• Easier to collect market research
• Convenient for consumers
• Dynamic pricing - charging different pricing to different consumers - is easier.
Limitations:
• Consumers do not get to touch, or smell tangible goods before buying.
• Increase in product returns
• Cost and unreliability of postal services in some countries
• Consumers’ worry about internet security.

Question 23

Def. Viral marketing

Answer 23

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