3.3: The marketing mix

Question 1

Examples of promotion objectives?

Answer 1

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 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

Def. Promotion mix

Answer 2

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

Question 3

Def. Above the line promotion

Answer 3

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

Question 3

Def. Advertising

Answer 3

Communicating information about a product or business through the media.

Question 4

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

Answer 4

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 4

What are the two types of advertising?

Answer 4

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 5

Def. Below the line promotion

Answer 5

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 6

Def. Sales promotion

Answer 6

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 7

Def. Personal selling

Answer 7

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 8

Def. Branding

Answer 8

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

Question 9

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

Answer 9

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

Question 10

How can a business determine the spending limits for promotion?

Answer 10

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 11

What are the functions of packaging?

Answer 11

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 12

Def. Channel of distribution

Answer 12

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

Question 13

What are the three most commonly used channel distributions?

Answer 13

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 14

Benefits and limitations for no intermediates? (4 4)

Answer 14

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 15

Benefits and limitations for 1 intermediate? (4 3)

Answer 15

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 16

Benefits and limitations for 2 intermediates? (4 3)

Answer 16

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 17

Factors influencing choice of distribution channels

Answer 17

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 18

Def. Internet marketing

Answer 18

The marketing of products over the internet.

Question 19

Benefits and limitations to Internet marketing (5 4)

Answer 19

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 20

Def. Viral marketing

Answer 20

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