Unit 3: Marketing mix: place and promotion (Chap 13) Flashcards
1
Q
What are the 4 channels of distribution?
A
- Producer —> Consumer
- Producer —> Retailer —> Consumer
- Producer —> Wholesaler —> Retailer —> Consumer
- Producer —> Agent —> Wholesaler —> Retailer —> Consumer
2
Q
What do we call the agent, wholesaler and retailer?
A
Middlemen
3
Q
What is the first channel of distribution called (Producer —> Consumer)?
A
Direct selling
4
Q
What happens in the third channel of distribution?
A
- Uses two middlemen - wholesalers and retailers
- Producer sells large quantities of the product to the wholesaler
- Wholesaler sells the product in smaller quantities to retailers
- Sold to the final consumer
5
Q
What happens in the fourth channel of distribution?
A
- Uses an agent
- Most commonly used when a business enters a foreign market for the first time
- Agent has specialist knowledge about the country and its markets
- Can help producer to place its product with wholesalers and retailers
- This saves the producer a lot of time and expense
- However another middleman enters the channel of distribution and this could reduce the amount of profit earned by the producer
6
Q
How do you choose a method of distribution? (Application) Page 180
A
- Cost
- Nature of the product
- The market
7
Q
Cost
A
- Cost of transporting goods to the customer needs to be considered
- Some methods are cheaper than others, but it’s important that the goods arrive on time and in perfect condition
- Cheaper alternatives might delay delivery or damage goods in transit
8
Q
Nature of the product
A
- Some goods will need special delivery conditions e.g. frozen foods and fresh fruit/vegetables will need special transport vehicles to maintain the correct temperature
- Fragile items e.g. televisions need to be handled as few times of possible to reduce risk of damage
- Perishable goods e.g. milk need to get to the final consumer rapidly so a long channel of distribution might not be appropriate
9
Q
The market
A
Markets that cover a wide geographical area are best served through wholesales who can buy the product in bulk from he producer.
10
Q
Advantages: Producer —> Consumer
A
- All of the profit is earned by producer
- Producer controls all parts of the marketing mix
- Quickest method of getting product to consumer and this may be important for perishable goods e.g. vegetables
- Producer has direct contact with consumer, providing useful market research opportunities
11
Q
Disadvantages: Producer —> Consumer
A
- Consumers aren’t always able to see or try the product before they buy, e.g. if it’s online
- Delivery costs may be high if there are many customers over a wide area
- Producer pays for all storage costs
- All promotional activities carried out and financed by the producer
12
Q
Advantages: Producer —> Retailer —> Consumer
A
- Consumers can see and the product before they buy
- Cost of holding inventories is partly paid by the retailer
- Retailer will pay for advertising and other promotional activities
- Retailers are usually more conveniently located for consumers
13
Q
Disadvantages: Producer —> Retailer —> Consumer
A
- Retailer takes some profit from producer
- Producers lose control of the marketing mix
- Producer must pay delivery costs to the retailers
- Retailers usually sell competitors’ products as well
14
Q
Advantages: Producer —> Wholesaler —> Retailer —> Consumer
A
- Wholesaler buys in bulk from producer and breaks this down into smaller quantities for retailers
- Wholesalers will advertise and promote the product to retailers
- Transport cost to the retailer is paid for by the wholesaler
- Wholesalers will pay for the storage costs of the products purchased from the producer
- Distribution of goods through wholesalers helps the producer to sell its goods to a larger market
15
Q
Disadvantages: Producer —> Wholesaler —> Retailer —> Consumer
A
- Another middleman (the wholesaler) takes part of the profit from producer
- Producer loses even more control of marketing mix
16
Q
A+D: Producer —> Agent —> Wholesaler —> Retailer —> Consumer
A
- The agent has specialist knowledge of the market, especially a foreign market
- They find wholesalers and retailers who are prepared to buy the product from producer
- Another middleman is added - less profit for producer
17
Q
What are the many aims of promotion?
A
- Attracting attention of consumers by making them aware of the product
- Reminding consumers the product is still on the market
- Persuading consumers to buy
- Explaining how a product is better than competitors’ products
- Creating/developing a brand image
- Encouraging wholesalers and retailers to stock the product
- Reassuring consumers, following a problem with the product
18
Q
What are the 5 methods of promotion?
A
- Advertising
- Sales promotion
- Personal selling
- Direct mail
- Sponsorship
19
Q
Notes on advertising
A
- Involves communicating with the customer through media such as newspapers, magazines, radio, television and the internet
- Advertising media used often depends on the available budget
- A hairdresser and taxi company are unlikely to advertise in national newspapers as their market is usually local
- A business that sells its products throughout a country is more likely to use national newspapers e.g. a car manufacturer
- This is sometimes called above-the-line promotion
- Most advertising is aimed at the final consumer, although some tries to persuade wholesalers/retailers to stock the product
20
Q
What are the two main forms of promotional advertising?
A
- Informative advertising
- Persuasive advertising
21
Q
What is informative advertising?
A
- Provides information to potential consumers about the product
- Can include information about the price of the product, what it can be used for and the place the consumer can buy it
- Often used when a new product is being launched on to the market or into a new market
22
Q
What is persuasive advertising?
A
- Most common
- Tries to convince consumers that they need the product and that its product is better than competitors’ products
23
Q
Notes on sales promotion
A
- Below-the-line promotion
- Main advantage is that it’s usually very specific to the business or its products
- Consumer must buy the product to use the vouchers or money-off coupons
24
Q
What are some activities in sales promotion?
A
- Money-off coupons and vouchers
- Point of sale displays in shops
- Loyalty reward schemes
- Competitions and games with cash or other prizes
25
Notes on personal selling (Card 1)
- Most often used when selling expensive items that have a high profit per unit e.g. cars
- Salesperson has direct contact with the potential customer when they visit the showroom/other business premises of the seller
- Sometimes seller will visit potential buyer in their own home e.g. while selling home improvements
26
Notes on personal selling (Card 2)
- Enables seller to build a relationship with the customer that can last after completion of the sale and result in further sales in the future
- Can be expensive since more staff are needed to provide level of personal service customers require
- Also, to provide incentives to sales staff, the business will often pay bonuses or a commission on any sales made
- Reduces profit to the business per item sold
27
Notes on direct mail
- Involves posting leaflets or other printed material directly to the business offices or homes of potential customers
- These potential customers have usually been identified through market research
- Very good way of communicating with a large market over a wide geographical area
- So widely used in danger of being considered 'junk mail' and thrown away
28
Notes on sponsorship
- Business will pay to have its name linked to an event
- Or an individual or group of individuals who are in the public eye
29
What are 6 examples of e-commerce?
- Online shopping
- Electronic payment
- Online ticketing
- Internet banking
- Hotel reservations
- Online auctions
30
What are the opportunities of e-commerce for businesses?
- Increased market (business is able to sell its goods and services to consumers throughout the world)
- Reduced costs (staffing/other costs of shops are saved)
- Better information ( the website can provide potential consumers with all the information they need about the goods and services available)
31
What are the threats of e-commerce for businesses?
- Increased competition (competitors can now be from any part of the world, not just the local market)
- Unfamiliarity (consumers are less likely to buy products from new businesses they don't know)
32
What are the opportunities of e-commerce for consumers?
- Convenience (consumers can order their products from the comfort of their own homes at any time of day)
- Wider choice (consumers can buy goods they wouldn't have had access to if they were only able to use their local shops)
- Lower prices (competition is worldwide, reducing prices)
- Better information (consumers are able to read about the goods/services from the websites of the different businesses and also read reviews)
33
What are the threats of e-commerce for consumers?
- Fraud (a website might take a consumer's money and not deliver goods)
- Hacking (a consumer's personal details/bank account details might be "stolen")
- No personal service
- Returning items (can be inconvenient and expensive to return goods which don't meet the consumer's needs e.g. clothing that doesn't fit)
34
What's the differences between a customer and a consumer?
While a consumer is anyone that consumes a product or service, a customer is a person who makes the purchase.
35
What are other uses of business websites other than e-commerce?
- A business may pay to place banner adverts or "pop-ups"
- Social media marketing e.g. using Facebook, Instagram or Twitter
