Backnotes

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Marketing Mix – Promotion and Place

PROMOTION

  • Promotion is the use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorship, and public relations to inform customers and persuade them to buy a product
  • Promotional objectives aim to-
    • increase sales by raising consumer awareness of a product – especially important for newly launched ones
    • remind consumers of an existing product and its distinctive qualities
    • increase purchases by existing consumers or to attract new consumers to the brand
    • correct misleading reports about the product or the business and to reassure the consuming public after a ‘scare’ or an accident involving the product
    • develop the public image of the business – rather than the product – through corporate advertising
    • encourage retailers to stock and actively promote products to the final consumer

PROMOTION DECISIONS

  • Promotion Mix- the combination of promotional techniques that a firm uses to sell a product
  • Advertising- also referred to as above-the-line promotion
    • Above-the-line promotion is undertaken by a business by paying for communication with consumers
    • Advertising is communicating information about a product or a business through the media such as the radio, TV, and newspapers
    • Advertisements are often classified into two types-
      • Informative advertising
        • Adverts that give information to potential purchasers of a product, rather than trying to create a brand image
        • These adverts could include price, technical specs or main features and places where the product can be purchased 
        • This style of advertising could be effective when promoting a new product that consumers are unlikely to be aware of or when communicating a substantial change in price, design, or specification
      • Persuasive advertising
        • Adverts that try to create a distinct image or brand identity for the product
        • They may not contain any details about all materials or ingredients used, prices, or places to buy the product
        • This form of advertising is effective in those markets where there may be little differentiation between products and where advertisers are trying to create a perceived difference in the minds of consumers
    • Advertising agencies- firms who advise businesses on the most effective way to promote products
      • They research the market, establish consumer tastes and preferences, and identify the typical consumer profile
      • Advise on the most cost-effective forms of media to be used to attract these potential customers
      • Use their own creative designers to advise adverts appropriate to the media to be used
      • Film or print adverts to be used in the campaign
      • Monitor public reaction to the campaign and feed this back to the client to improve the effectiveness of future advice on promotion
    • Choice of which media to use is influenced by-
      • Cost
      • Size of audience
      • The profile of the target audience in terms of age, income levels, interests, etc
      • Message to be communicated
      • Other aspects of the marketing mix
      • Legal and other constraints
  • Sales promotion- also referred to as below-the-line promotion
    • Below-the-line promotion is not a directly paid-for means of communication, but based on short-term incentives to purchase
    • Sales promotion are incentives such as special offers/deals directed at consumers or retailers to achieve short-term sales increases and repat purchases by consumers
    • These include-
      • Price deals
      • Loyalty reward programs
      • Money-off coupons
      • Point-of-sale displays in shops
      • Buy One Get One Free
      • Games and competitions
    • Sales promotion can either be directed at-
      • The final consumer to encourage purchase
      • The distribution channel to encourage stocking and display of the product
  • Branding- the strategy of differentiating products from those of competitors by creating an identifiable image and clear expectation about a product
    • An effective brand identity has the following benefits for businesses-
      • Increase the chances of brand recall by consumers
      • Clearly differentiate the product from others
      • Allow for the establishment of a family of closely associated products with the same brand name
      • Reduce PED as consumers have been shown to have preferences for well-known brands
      • Increase consumer loyalty to brands which is a major marketing benefit
  • Marketing/promotion budget- the financial amount made available by a business for spending on marketing/promotion during a certain time period
  • Packaging performs the following functions-
    • Protects and contains the product
    • Give information, depending on the product to consumers about contents, ingredients, cooking instructions, assembly instructions, etc
    • Support the image of the product created by other aspects of promotion
    • Aid the recognition of the product by the consumer

PLACE

  • Channel of distribution- the chain of intermediaries a product passes through from producer to the final consumer
  • Place is important as-
    • Consumers may need easy access to a firm’s products to allow them to try them and see them before they buy, to make purchasing easy and to allow, if necessary, for the return of goods.
    • Manufacturers need outlets for their products that give as wide market coverage as possible, but with the desired image of the product appropriately promoted
    • Retailers – firms that sell goods to the final consumer – will sell producers’ goods but will demand a mark-up to cover their costs and make a profit so if the price is very important, using few or no intermediaries would be an advantage
table of information
  • Factors influencing choice of distribution channels include-
    • Industrial products tend to be sold more directly with fewer intermediaries than consumer goods
    • Geographical dispersion of the market- use of intermediaries is more likely if the target market is widely dispersed throughout the country
    • Level of service expected by customers
    • Technical complexity of the product
    • Unit value of the product
    • Number of potential customers
  • Recent trends in distribution channels-
    • Increased use of the internet
    • Large supermarket chains perform the function of wholesalers as well as retailers
    • Using a variety of distribution channels
    • Increasing integration of services where a complete package is sold to consumers
  • The Internet and the 4Cs
    • Internet (online) marketing- refers to advertising and marketing activities that use the Internet, email, and mobile communications to encourage direct sales via electronic commerce
    • E-commerce- the buying and selling of goods and services by businesses and consumers through an electronic medium
    • Marketing over the Internet can involve several different marketing functions which impact the 4Cs-
      • Convenience- selling of goods directly to consumers or other businesses as orders are placed online through the company website or an online retailer like Amazon
      • Communication- one and mobile advertising by using the company’s own website
      • Communication- sales contacts are established by visitors to a site leaving their details and then the company emails them to attempt to make a sale
      • Customer solution- collecting market research data by encouraging visitors to the website to answer questions that can provide important consumer data to aid the development of new products
      • Cost to customer- dynamic pricing- using online data about consumers over the Internet, often these prices are much lower than those charged by traditional retailers
  • Viral marketing- the use of social media sites or text messages to increase brand awareness or sell products
table of benefits and limitations
  • Promotion and Place evaluation-
    • Promotion supports and helps to create the image of the product intended by its design and specification- it informs and persuades consumers, and the rapid growth of promotion spending in all market-driven economies in recent years suggests that successful campaigns can make a difference to sales and market share.
    • The increasing use of electronic means of communication and direct marketing is allowing firms to both promote and sell products online- ease of access to products is essential if consumers are to be attracted to buying them – especially items that are bought regularly and in small quantities.
    • The constant search for cost savings has made many manufacturers question the wisdom of using intermediaries in distribution. The fact that traditional shopping will continue in its present form for many years for most products will ensure that these intermediaries continue to perform essential functions – particularly for those consumers who lack mobility or IT facilities.
  • Integrated marketing mix- the key marketing decisions complement each other and work together to give customers a consistent message about the product
    • The most effective marketing mix decisions will be-
      • Based on marketing objectives and affordable within the marketing budget
      • Integrated and consistent with each other and targeted at the appropriate consumers