4.5 Promotion4.6 PlaceChapter 28

Promotion The use of advertising, sales promotion, personal

selling, direct mail, trade fairs, sponsorship and public relations to inform consumers and persuade consumers to buy.

Advertising – TV ads, print ads, billboards Sales promotion – sales, coupons, loyalty programs Direct mail – mass mailings Trade fairs – booths at trade fairs (Southern Home Show) Sponsorship – NASCAR, tennis players, golfers, TV shows paid

to display or promote a particular product Public relations – controlled publicity and advertising

Promotional Mix The promotional mix is the combination of

efforts that are used to promote a product. They must send a consistent message to be

successful.

Why do we PROMOTE? Increase sales by increasing consumer demand Remind consumer of exiting products and why they are

special Attract new buyers Demonstrate the superior quality of product as compared to

its competitors – often occurs after a product has been updated

Create or reinforce the brand image Correct misleading reports about the product or the business

and reassure consumers after a “scare” or “accident” Develop or adapt the public image rather than the product Encourage stocking by retailers

Promotion Types Above-the-line promotion

Purchasing communication with the consumer – AKA – advertising

Below-the-line promotion Short-term incentives to

encourage consumers to purchase the product

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Promotions that are visual & auditory

TV Ads, billboards,radio, print ads

Promotions that are tactile

Samples, coupons, loyalty programs, games, price deals

Above-the-line Promotion Advertising

Communicating information about a product or business through the media such as radio, TV, newspapers, magazines, or billboards.

Informative Provide information to potential customers like, price, features,

technical specifications, or where to purchase

Persuasive Trying to create a distinct image or brand identity

Which media to use? Cost

TV and radio can be expensive to purchase and produce. Print media can be less expensive

Profile of the target audience What is the best media to reach your audience?

Type of product message to deliver Written forms are best for detailed information about a product

Link between the marketing mix and advertising media. Are they consistent and sending a similar message?

The law and other barriers Are there bans on certain types of advertising? (Tobacco, alcohol,

adult imagery or language)

Below-the-line Promotion Sales promotions are used to generate short-term

gains in sales. Sales or price deals – a temporary reduction in price Loyalty programs – airline miles, points earned to redeem

for other products and gifts Coupons Point-of-sale displays – aisle interrupters, dump-bins BOGOF – buy one, get one free offers Games and competitions Public relations Sponsorships

Sales Promotions Sales promotions can be targeted to two

groups Final consumer – encourages consumers to

purchase (PULL Strategy)

Distribution channel or Retailer – encourage stocking and display to encourage more sales (PUSH Strategy)

Promotion Mix The combination of promotional techniques that are

used to communicate the benefits of the product to the consumer Decide on the image of the product Develop a profile of the target market Decide on the messages to communicate Set an appropriate budget Decide how the messages should be communicated Establish how the success of the promotional mix is to be

assessed Execute the promotional plan Measure its success

PLACE How should products pass from the

manufacturer to the final customer?

Channel of distribution: the chain of intermediaries a product passes through from producer to final consumer

Distribution Channel is Important Consumers need easy access to the firm’s

product where they can see it, touch it, buy it, return it.

Manufacturers need distribution that provides a wide market coverage.

Retailers need to mark-up the product to cover the costs of sales.

Developing a Channel strategy Should the product be sold directly to the consumer? Should the product be sold through retailers? How many intermediaries? Where should the product be sold? Should electronic distribution be used? How much will it cost to stock products on store or

warehouse shelves? How well the distribution channel support other

components of the marketing mix?

Factors influencing the channel Industrial products tend to be sold more directly to its

customers than durable goods. Geographic area of target market – where are my customers?

The wider area, the more likely intermediaries will be needed.

Level of service expected from customers. Technical complexity of the product. Unit value of the product (the more expensive the more likely

to be sold as individual units and direct sales)….think airplanes

Number of customers (the more customers the larger the need for wide distribution and intermediaries)… think toilet paper

Direct Selling Manufacturer to Consumer

Manufacturer Consumer

Product/Service

Single-Intermediary Channel Manufacturer to a Retailer to a Customer

Manufacturer Retailer Consumer

Two-Intermediary Channel Manufacturer to Wholesaler to Retailer to a Customer

Manufacturer Warehouse Retailer Consumer

Recent trends in distribution Increased internet and direct selling of goods

and services Large supermarkets that act as wholesalers

and retailers Complete packages are sold….air flights,

rental cars, and hotel accommodations are packaged and distributed together.

Effective Use of Distribution ChannelsFeature Products or Services Benefits Drawbacks

Direct Selling

NO intermediaries

Sometimes called “zero intermediary” channel

• Mail order from manufacturer• Farmers markets

• No intermediaries so no additional profit markup• Quicker than other channels• Producer has complete control

• All storage and stock costs paid for by producer• No retail outlets• Can be expensive to deliver products to customer

One-intermediary

Usually used for consumer goods but can be used for B2B

• Travel agents selling airline, hotel, rental car services• Large supermarkets that old their own stock rather than wholesalers

• Retailer holds stock and pays for this cost• Retailer has product displays• Producers focus on production no selling

• Intermediary takes a profit which makes product more expensive•Producers lose some control over marketing mix•Producer has delivery costs to retailer

Two-intermediaries

Wholesaler buys goods from producer and sells to retailer

• In a large country with many retailers and great distances, many goods are distributed this way, e.g. beverages, books, clothing

• Wholesaler holds goods and buys in bulk• Reduces stock holding costs for producer• Wholesaler breaks large stock quantities into smaller units to sell to retailer

• Another intermediary takes a profit which increases the purchases price• Slows down the distribution chanel

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What is an Agent? A business with the authority to act on behalf

of another firm to market its products.

Examples: Best Buy sells HP computers and is allowed to handle customer complaints, provide sales force to sell products, and creates sales displays.

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Supply Chain Management (SCM) Managing the network of businesses that are

involved in the provision of products to the final consumers

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Supply Chain Management (SCM) Coordinating these activities include:

All supply companies are kept well informed of production schedules

Making transportation arrangements for materials and finished goods

Reducing the number of suppliers Planning production to meet consumer demand Ensuring that adequate supplies are delivered, on

time, to retailers or other intermediaries.

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