Marketing Mix- Promotion and Place Lecture 8

Marketing Mix: Promotion
Promotion: The communication with customers about products and services to
create demand and encourage purchases.
Characteristics of Promotion

1. Promotion may be done locally, regionally, nationally, or internationally.
2. The goal of promotion is to communicate with the largest target audience
   possible.
3. Promotion helps to attract new customers, increase sales to existing customers,
   and stimulate brand name recognition.
4. Promotional activities affect how customers view a company.
5. Deceptive or misleading promotion practices can harm a business.
   Marketing Mix: Promotion
   Promotion should be designed to…
   Create an awareness and understanding of companies and/or products and to
   introduce new products, inform consumers or changing prices, and explain new
   services.
   Convince consumers about the benefits or using certain products or patronizing
   particular businesses.
   Remind consumers where to purchase certain products, to encourage purchases,
   and to stimulate additional purchases.
   Promotional mix: The combination of all types of communication used by a
   business to inform, persuade, or remind consumers about a company and/or its
   products.
   Six Promotional Mix Elements
6. Advertising:
   Advertising is any paid form of non-personal presentation and promotion of ideas,
   goods and services through mass media such as Newspapers, Magazines, Television or Radio identified sponsor.
   In advertising there is no personal connection between the firm and the public who reads or sees the
   advertisement. It is the most visible form of promotional tools- posters, banners, television ads, radio or
   internet.
7. Personal Selling
   It involves oral presentation of message in the form of conversation with one or more prospective customers
   for the purpose of making sales. It is one of the oldest forms of promotion. It involves the use of a sale force to
   support a push strategy (encouraging intermediaries to buy the product) or a pull strategy ( where the role of
   the sales force may be limited to supporting retailers and providing after-sale service).
   Example: Door to door demonstrations, explanation and display by salesman.
8. Direct Marketing
   It is concerned with establishing an individual relationship between the
   business offering a product or service and the final customer. It is
   defined as “the planned recording, analysis and tracking of customer behaviour
   to develop a relational marketing strategies.”
   Six Promotional Mix Elements
9. Internet Promotion:
   It refers to all methods employed by a company or individual to promote a website and increase its
   position and page rank. Example:
   a. Search engines- Many people, perhaps even a majority of people, will use search engines and the Yahoo! directory to find
   what they’re looking for on the Web.
   b. Linking strategies are a second essential type of site promotion. The more links pointing to your site, the more traffic you’ll
   experience (and the greater perceived “popularity” will rank you higher in the search engines).
   c. E-mail publishing is primarily a way to conserve the people who have shown some interest in your business by coming to
   your website or responding to one of your offers.
10. Sales Promotion:
    It refers to the short term incentives, which are designed to encourage the buyers to make immediate purchase of a product or
    service. It may include an advertising campaign, increased PR activity, a free sample campaign, offering free gifts or trading
    stamps, arranging demonstrations or exhibitions, setting up competitions with attractive prizes, temporary price reductions,
    door-to-door calling, telemarketing, personal letters on other methods.
11. Publicity:
    It is non personal and non paid form of a communication. It includes promoting the product through media. It usually comes in
    the form of news story, editorial, or announcements about an organization and/or its product and services. Techniques used to
    gain publicity include news releases, press conferences, feature articles, photographs, films and videotapes.
    Others: Visual merchandising- attractive and appealing physical display of merchandise combined with effective store layout
    and décor. Entices customers to enter the store
    Special Events: Promotional activities designed to increase customer traffic, sell goods, and improve company image. Ex:
    Fashion shows, celebrity appearances.
    Factors that affect the choice of the
    promotional mix:
    (Jobber Page 462)
    • Resource availability and the cost of promotional tools
    • Market size and concentration
    • Customer information needs
    • Product characteristics
    • Push versus pull strategies
    How to develop advertising
    strategy:
    Advertising decisions should not be
    taken in isolation but should be based
    on a clear understanding of marketing
    strategy, in particular positioning.
    Then the steps are: (Jobber Page 491 point 7)
    • Identify and understand the target
    audience
    • Define advertising objectives
    • Set the advertising budget
    • Message decisions
    • Media decisions
    • Execution
    • Evaluation of advertising
    Ethical Issues in Advertising (Jobber Page 488)
    The use of ethical advertising is one sure way for companies to show they value the
    needs of their customers. Including a moral stance within their advertising gives
    consumers information about what companies they want to support and which ones
    from whom they’d rather withhold their money. People are eager to make a difference
    in the world, and using products from ethical companies is one simple way to show
    they care. https://bizfluent.com/12087777/code-of-ethics-for-european-advertisements
    • Misleading advertising
    • Advertising influence on society’s values
    • Advertising to children
    • Issues with gender dynamics
    Marketing Mix: Place
12. Place: The process of moving products from the producer to the intended user is called place. In
    other words, it is how your product is bought and where it is bought. This movement could be
    through a combination of intermediaries such as distributors, wholesalers and retailers.
13. A Channel of Distribution: A distribution channel can be defined as the activities and processes
    required to move a product from the producer to the consumer. Also included in the channel are
    the intermediaries that are involved in this movement in any capacity. These intermediaries are
    third party companies that act as wholesalers, transporters, retailers and provide warehouse
    facilities.
14. Ethical Issues in Distribution: (Jobber Page 651, 652)
    Slotting allowances
    Grey markets
    Exclusive dealing
    Restrictions in supply
    Fair trading
    Channels/ Methods of Distribution:
    Channels/ Methods of Distribution:
    There are a wide variety of different methods a firm could use to get their
    goods to the consumer. These include:
15. Direct to the consumer through various methods such as:
    • Websites (e-commerce)
    • Catalogues and mail order
    • Representatives and sales teams
    • Vending machines
    • Telesales – selling over the phone
16. Using retailers
17. Selling to retailers through wholesalers
18. Using agents
    Channels of Distribution:
    • Manufacturer – who supplies the product or service. For example Cadbury produces chocolate and
    Direct line provides insurance. Selling directly to consumers will help to maximise profit margins as
    profit is not lost in intermediary’s mark ups. However this is often difficult to achieve for many types
    of products.
    • Wholesaler – These firms purchase products in large quantities (bulk) and supply them in smaller
    quantities to retailers (break bulk). Producers prefer to sell to bigger wholesalers than to lots of
    smaller retailers as it reduces their distribution costs and the time taken to negotiate. For example,
    Costco and Makro.
    • Intermediaries – organisations that provide a service and help get products from the producer to the
    customer.
    • Retailer – Shops that sell goods/services to the final customers. Supermarkets such as Asda, retail
    chain stores such as Topshop, franchises such as McDonalds and small independent shops are all
    examples of retailers, at the end of the chain of distribution. Retailers help producers get their
    products to their consumers on a wide scale.
    • Agent – A firm that never actually owns the good but will facilitate buyers and sellers coming
    together to make a deal happen. Examples include estate agents (property) and travel agents
    (holidays, e.g. hotels and flights). They help to bring all the different holiday firms together making it
    easier for the consumer and producer.
    Factors influencing the choice of distribution
    method
    • Profit margins – The more intermediaries in the distribution channel the lower the profit margin
    for the producer
    • Distribution costs – Often retailers help firms to ensure their products are available all over the
    country/world without having to pay their own distribution costs
    • Control required over display and brand image – For example Tesco and Levi’s court battle and
    high-end fashion brands wanting to only be available in suitable retailers and their own stores
    • Proximity – How close does the firm need to be to its customers?
    • Convenience for customers and type of product – For example, convenience goods must be easier
    for consumers to access as they often rely on impulse purchases
    • Size of the retailer – larger retailers will want to bypass the wholesaler
    • Type of product – perishable products will generally, not be sold to a wholesaler, but items such as
    newspapers ma be to keep distribution costs down
    • Technology – the internet has had a huge influence on how products are sold
    Importance of Location
    Convenience – This is one of the most crucial factors (especially for
    supermarkets) in why people buy from certain businesses. You wouldn’t travel
    miles to find a cheaper product if its convenient to stay local and buy it
    Accessibility – traffic jams in high streets can have a factor on consumers’
    decisions to buy, and travelling a long distance means you’re less likely to buy a
    product
    Cost-of-access – shopping centres may offer free parking to entice customers –
    at the detriment of high street shops
    Reputation – private doctors in Harley Street or fashion houses in Knightsbridge
    benefit from the prestige attached to the address
    Localisation – some retailers benefit from being near competitors when prices
    need to be compared (electrics/estate agents/solicitors)