3.5.2 The Marketing Mix Flashcards

Question

Why do retailers use newspaper advertising? [3]

Answer 1

- Usually, retailers use newspaper advertising because it is relatively inexpensive compared to other media. - Since newspapers provide local coverage, advertising dollars are not wasted in reaching people outside the market area of the business. - It is also timely, and the advertisement can be placed a few days before it is due to appear.

Answer 2

- However, newspaper advertisements have a short life span as they are usually read through once and then discarded. - Also, marketers could not target specific demographic groups as newspapers are read by a broad spectrum of people.

Answer 3

- Magazine advertising is more prestigious than newspaper advertising, and it allows for high quality colour reproduction. - In addition, magazine advertisements have a longer lifespan then those in other media.

Answer 4

A direct-mail campaign may fail if the mailing list is outdated and does not reach the right people.

Answer 5

- Direct-mail advertising is promotional material mailed directly to individuals. - Direct mail is the most selective medium, as mailing lists are available to reach almost any target audience, from car enthusiasts to environmental advocates. - The effectiveness of direct-mail advertising can be measured because the advertiser has a record of who received the advertisements and can track who responded to them. - Increasingly, more businesses are using direct email. - The success of direct-mail advertising depends to some extent on maintaining appropriate and current mailing lists

Answer 6

- Television advertising is the primary medium for larger businesses whose objective is to reach national or regional markets. - A national advertiser may buy network time, which means that its message will be broadcast by all the local channels affiliated with the network.

Answer 7

- The major disadvantages of magazine advertising are high cost and lack of timeliness. - As magazine advertisements must be prepared two to three months in advance, they cannot be adjusted to reflect latest market conditions. - Magazine advertisements, especially the full-colour ones, are also expensive.

Answer 8

- Outdoor advertising consists of short promotional messages on billboards, posters, signs, and transportation vehicles. - Signs and billboard advertising allows the marketer to focus on a particular location, and it is also fairly inexpensive.

Answer 9

However, the opportunity to reach extremely large television audiences has been reduced by the increased availability and popularity of cable channels and online streaming applications.

Answer 10

- This medium is especially suitable for products that lend themselves to pictorial display. - However, because outdoor advertising is targeted towards a mobile audience, the message must be limited to a few words.

Answer 11

The disadvantages of radio advertisements are the absence of visual images and the small audience size.

Answer 12

- Similar to magazine advertising, radio advertising offers selectivity. - Radio stations develop programming for, and are tuned in by, specific groups of listeners. - Radio advertising can be less expensive than other media, and even small businesses can afford to use this medium. - In addition, advertisements can be scheduled and changed on short notice.

Answer 13

Product placement is an advertising technique in which a company promotes its products through appearances on television shows, movies or other media.

Answer 14

- Sales promotion are incentives directed at consumers or retailers to achieve short term sales increases and repeat purchases by consumers. - Sales promotion is an active approach to marketing; it is not just about informing the customers. - In many cases of sales promotion, consumers already know about the product’s existence and any promotion campaign is to stimulate customer purchase. - Sales promotion can be directed at either the end-consumer (to encourage the purchase) or the retailer (to encourage stocking and displaying the product).

Answer 15

- These are temporary reductions in price, also known as price discounting. - They are aimed at encouraging existing customers to buy more and to attract new customers as the product now appears more competitive.

Answer 16

- The limitations are that increased sales gained from price reductions will affect the gross profit on each item sold. - There might also be a negative impact on the brand’s reputation from the discounted price.

Answer 17

- Coupons, or money-off coupons, are a more versatile and better focused way of offering a price discount. - Coupons can appear on the back of receipts, in newspaper adverts or on an existing pack of the product

Answer 18

- Customer loyalty schemes, such as air miles or customer loyalty cards focused on encouraging repeat purchases and discouraging consumers from shopping with competitors. - The information stored through these loyalty cards provides a great deal of information about consumers’ buying preferences.

Answer 19

- However, using coupons may simply encourage consumers to buy what they would have bought anyway. - Retailers may also be surprised by the increase in demand and not hold enough stocks, leading to consumer disappointment. - The proportion of consumers using the coupon might be low if the price reduction it offers is too small.

Answer 20

- The limitations are that the discount offered by such schemes cut the gross profit on each purchase. - There are administration costs to inform consumers of loyalty points earned and these may outweigh the benefits from increased consumer loyalty. - In addition, most consumers now have many loyalty cards from different retailers, so their loyalty impact is reduced.

Answer 21

- Maximum impact on consumer behaviour is achieved by attractive, informative and well-positioned displays in stores. - The best display points are usually offered to the market leaders; products with high market share. - New products may struggle for best positions in stores unless big discounts are offered to retailers

Answer 22

One problem with rebates is that many people perceive the redemption process to be too complicated.

Answer 23

- A rebate is a return of part of the product’s purchase price. - Usually, the refund is offered by the manufacturer to customers who send in a coupon along with a specific proof of purchase. - Rebating is a relatively low-cost promotional method, and is applied to a wide variety of products. - Some automakers offer rebates on their vehicles because they found that many car customers are more likely to purchase a car with a rebate than the same car with a lower price and no rebates.

Answer 24

- Personal selling is where a member of the sales staff communicates with one consumer with the aim of selling the product and establishing a long-term relationship between company and consumer. - Personal selling offers two unique advantages over other promotional tools.

Answer 25

1. Personal selling results immediate feedback from the customers. 2. Personal selling allows the business to develop a personal relationship with the customer.

Answer 26

- Personal selling results in immediate feedback from the customer. - The salesperson can see the nonverbal communication that might give insight into the customer’s mind-set and the likelihood that he or she will buy. - In addition, the salesperson can listen directly to the feedback, objections, and concerns the customer has. - This allows the salesperson to adjust the sales presentation accordingly and provide detailed and customised solutions that can generate more sales.

Answer 27

- Personal selling allows the business to develop a personal relationship with the customer. - Relationship selling involves building a trusting relationship with the customer over a long period of time. - Relationship selling is increasingly important since very few businesses can survive on profits generated from onetime transactional sales.

Answer 28

- Employing a salesperson to sell to each individual customer is a very expensive form of promotion. - It tends only to be used for quite expensive items with a high profit margin, such as furniture, cars or home improvements. - Sales success rates are often high with skilled direct-sales staff, though customers often complain about being pressured into buying. - This might particularly be the case if the sales staff are well trained and do not make a sale to a reluctant consumer who later regrets the decision and tells friends to avoid this business in future.

Answer 29

The launch of a new product might include a press conference where journalists will be provided with details about the product and its performance, with the hope that this will later appear in an article or television news programme.

Answer 30

- Public relations refer to the deliberate use of free publicity provided by newspapers, television or other media to communicate with and achieve understanding by the public. - Public relations is designed to gain free publicity provided by the media as opposed to advertising that is paid for. - All large businesses have Public Relations departments that try to arrange as much positive press and TV coverage of their business as possible.

Answer 31

Journalists or bloggers might be encouraged to test drive a car for a week or be offered a week’s free holiday in a new hotel. Such enticements are usually likely to lead to positive media coverage.

Answer 32

Sponsorship of major sports and cultural events often leads to free publicity too, when these events are reported in the media, the name of the sponsoring company is nearly always mentioned too.

Answer 33

The Public Relations department will also have the task of putting forward the company’s view on incidents that might be damaging to image or reputation. If there is a quick and detailed response in public to an event, such as an aircraft accident or a faulty batch of products, then the negative impact of the incident may be reduced.

Answer 34

- Other than engaging social influencers, businesses could also run their own promotions directly on their own social media platforms, such as their own Facebook or Instagram page. - An example of such social media promotion includes getting regular social media users to ‘like and share’ a social media post or photograph, with an opportunity to win some prizes. - Other means include the creation of a hashtag and hope that it catches on in social media, and starts to ‘trend’. - The use of social media to promote products is preferred by businesses due to its low costs and high exposure rate.

Answer 35

- The internet has made it easier for businesses to promote directly to consumers. - Traditionally, businesses use the internet for direct marketing, which is advertising that communicates directly with consumers and organisations in an effort to promote a response. - This can be in the form of an email advertisement directed to a consumer containing information about a new product that might interest him or her, or a special offer at a restaurant that is frequently patronised. - With the development of e-commerce, social networking and social media websites and applications are types of online promotion.

Answer 36

- Increasingly, more businesses are listing their products for sale at e-commerce platforms such as Lazada and Qoo10, or directly sell their products via their own websites. - In order to attract and entice consumers to make a purchase on these e-commerce platforms, businesses generate promo codes and advertise them widely to consumers. - The use of promo code is not confined to consumer goods, as it is also used widely in service providers such as insurance, food delivery and transport hailing apps.

Answer 37

1. Price promotions 2. Coupons 3. Customer loyalty schemes 4. Point-of-sale displays 5. Rebates

Answer 38

- Social influencers are social media users who have both a large social reach (followers) and have the power to persuade others by virtue of their popularity or industry credibility. - More and more businesses are engaging social influencers to promote their products, typically on platforms such as YouTube and Instagram, leading to the terms ‘YouTuber and Instagrammer’ being coined. - These social influencers will typically create a short video clip or a photo to promote the product.

Answer 39

1. Product launch 2. Product reviews 3. Sponsorship 4. Crisis management

Answer 40

1. Promo code 2. Social influencers 3. Social media

Answer 41

- Consumers today are bombarded by commercial messages from a wide range of sources. - Conflicting messages from these different sources can result in confused company images, brand positions, and customer relationships.

Answer 42

1. Television advertisements say one thing, a price promotion sends a different signal, while social media posts seem out of sync with everything else. 2. This is likely due to these promotions originated from different parts of the business. 3. The advertisements could be created by an external advertising agency, while personal selling is managed by the Sales Director.

Answer 43

- IMC calls for recognising all contact points where the customer may encounter the business and its brands. - Each brand contact will deliver a message whether good, bad or indifferent. - The business wants to deliver a consistent and positive message with each contact. - IMC leads to a total marketing communication strategy aimed at building a strong customer relationships by showing how the business and its products can help create value for customers.

Answer 44

- IMC is an approach to achieve the objectives of a marketing campaign, through a well-coordinated use of different promotional methods that are intended to reinforce each other. - The business carefully integrates its many communication channels to deliver a clear, consistent and compelling message about the company and its brands.

Answer 45

1. Identify the target audience. 2. Recognise all contact points where the target audience may encounter the business and its brands. 3. Assess the influence each of these contact points will have at different stages of the buying process. 4. Tie together all the messages and images of the business (same message, look and feel) 5. Deliver a clear, consistent and compelling message about the business and its brands.

Answer 46

- IMC ties together all messages and images of the business. - The television and print advertisements have the same message, look and feel as its email and personal selling communication. - Its public relations materials project the same image as its website.

Answer 47

- To help implement IMC, some businesses appoint a marketing communications director who has the overall responsibility for the communications efforts of the business. - This helps to produce better consistency in communications and greater sales impact.

Answer 48

1. Nature of product 2. The stage in product life cycle

Answer 49

Consumer marketers tend to spend comparatively more on sales promotion and advertising.

Answer 50

- Business marketers tend to spend comparatively more on personal selling, as the business markets deal with complex, expensive and risky goods, with fewer and larger sellers. - Trade or industry-focused promotional campaigns meant for the business markets are unlikely to use commercial TV, radio or newspaper advertising. - The intended purchaser of industrial goods is much more likely to refer to specialist magazines or journals, and advertising in these is going to be clearly targeted. - Trade fairs are often used to display and explain the range of products on offer, and this replaces the point-of-sale displays in shops for consumer goods. - Trade promotions will be used instead of consumer sales promotions, and these could take the form of financing deals to aid businesses with the purchase of expensive equipment.

Answer 51

In the introduction stage, advertising and publicity have the highest cost- effectiveness, followed by sales promotion to induce trial.

Answer 52

In the maturity stage, advertising and sales promotion become more important.

Answer 53

In the decline stage, sales promotion remains strong, but advertising is reduced.

Answer 54

Place decisions are concerned with how products should pass from the manufacturer to the end consumer.

Answer 55

- A channel of distribution refers to the chain of intermediaries a product passes through from producer to the final consumer. - It is essentially the route taken by the product as it moves from the producer to consumer.

Answer 56

At the same time, the choice of distribution channels depends on the marketing strategy with regard to segmentation, targeting and positioning.

Answer 57

 Consumers may need easy access to the 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 will sell producers’ goods but will demand a mark-up to cover their costs and make a profit, so, if price is very important, using few or no intermediaries would be an advantage.

Answer 58

Any business whether it produces goods or provides services, needs to establish a distribution strategy that will define how it is going to move products from the point of creation to points of consumption in an efficient and low-cost manner so that it is convenient for the consumers to buy.

Answer 59

- The pricing strategy will depend on whether the business uses mass merchandisers or high-quality boutiques. - The selling and advertising decisions depend on how much training and motivation the salespersons require.

Answer 60

Holistic marketers ensure that marketing decisions in all these different areas are made to collectively maximise value.

Answer 61

1. Direct 2. Indirect

Answer 62

A direct channel is where the manufacturer or producer sells directly to consumers.

Answer 63

An indirect channel consists of one or more intermediaries, or middle-men, and these are typically the wholesalers and retailers.

Answer 64

A manufacturer/ producer uses wholesalers when its products are carried by so many retailers that it cannot deal with all of them.

Answer 65

A wholesaler is a middleman that buys goods from a manufacturer/ producer and sells them to other businesses such as retailers, other manufacturers or other wholesalers.

Answer 66

 Breaks down bulk consignments into smaller quantities suitable for individual retailers  Provides storage facilities reducing the need for both manufacturer and retailer to hold large inventories  Provides credit facilities to retailers  Improves cash flow of manufacturers

Answer 67

A retailer is a middleman that buys products either directly from producers/ manufacturers or wholesalers and sells them to end-consumers.

Answer 68

 Offer a variety of goods for customers  Provide convenience service  Provide information and advice to customers  Provide delivery services

Answer 69

Examples of retailers include chain stores (City Chain), department stores (Metro), convenience stores (7-Eleven) and supermarkets (Fairprice).

Answer 70

Direct selling, also known as the direct channel, is when the manufacturer bypasses all middlemen or intermediaries, and sells directly to end consumers, using its own sales force or retail stores.

Answer 71

In the business market, businesses dealing with heavy machinery, airplanes, and major equipment distributers use direct selling.

Answer 72

- Direct selling is commonly used in the business market, where equipment and machinery are sold. - With the rise of the internet and e-commerce platforms, more businesses are also using direct selling to reach out to customers in the consumer market.

Answer 73

Examples of businesses that sell directly to end consumers include Dell Computer, Singapore Airlines (via its website) and Circles.Life.

Answer 74

The very short channel allows the manufacturer/ producer to provide business customers with expert and timely services such as delivery, installation and repairs.

Answer 75

 all storage and stock costs have to be paid for by producer  no retail outlets limits the chances for consumers to see and try before they buy  may not be convenient for consumer  no advertising or promotion paid for by intermediaries and no after-sales service offered by shops  can be expensive to deliver each item sold to consumers

Answer 76

A one-intermediary channel is when a producer/ manufacturer sells to retailers, which then sells to customers.

Answer 77

 no intermediaries, so no mark-up or profit margin is taken by other businesses  producer has complete control over the marketing mix – how the product is sold, promoted and priced to consumers  quicker than other channels  may lead to fresher food products  direct contact with consumers offers useful market research

Answer 78

- These retailers usually have great purchasing power and can buy in large quantities. - They are also able to arrange their own storage and delivery systems to individual outlets.

Answer 79

- One-intermediary channel is usually used for products that are bulky, such as furniture and automobiles, for which additional handling would increase selling costs. - It is also used for perishable products, such as fruits and vegetables, and for fashion items that must reach the customer in the shortest possible time.

Answer 80

Examples of one-intermediary channel includes airlines and hotels selling through travel agents (Dynasty Travel), and agriculture businesses selling fruits and vegetables via supermarkets.

Answer 81

- A two-intermediaries channel is where a producer/ manufacturer sells to a wholesaler, which in turn sells to a retailer which finally sells to the end consumer. - It is known as the traditional channel because many consumer goods, especially convenience goods, pass through wholesalers and retailers.

Answer 82

- Although a one-intermediary channel is usually used in the consumer market, it could also be used in the business market where the middleman is an agent selling industrial products to businesses. - Manufacturers use these agents to distribute items such as operating supplies, accessory equipment, small tools and parts.

Answer 83

 intermediary takes a profit mark-up and this could make the product more expensive to final consumers  producers lose some control over marketing mix  retailers may sell products from competitors too, so there is no exclusive outlet  producer incurs delivery costs to retailer

Answer 84

 retailer holds inventory and pays for storage and inventory-holding costs  retailer has product displays and offers after-sales service  retailers are often in locations that are convenient to consumers  producers can focus on production, not on selling the products to consumers

Answer 85

- A two-intermediaries channel is usually used in a large country where the distance between producer/ manufacturer and retailers is great. - Many consumer goods, such as soft drinks, are distributed using a two-intermediaries channel.

Answer 86

Examples of two-intermediaries channel in Singapore include wholesalers and distributors in Pasir Panjang Wholesale Centre, which supplies fuits, vegetables and dried goods to wet market stalls and provision shops.

Answer 87

 wholesaler holds goods and buys in bulk from producer  reduces stock-holding costs of producer  wholesaler pays for transport costs to retailer  wholesaler ‘breaks bulk’ by buying in large quantities and selling to retailers in small quantities  may be the best way to enter foreign markets where producer has no direct contact with retailers

Answer 88

1. Product 2. Costs involved 3. Nature of markets and locations 4. Competition

Answer 89

 another intermediary takes a profit mark-up whichmay make final selling price more expensive to consumer  producer loses further control over marketing mix  slows down the distribution chain

Answer 90

- Product is a key factor in the choice of distribution channel. - This includes the nature of the product, unit cost as well as the complexity or technicality of the product.

Answer 91

- In general, industrial products tend to be sold more directly, with fewer intermediaries than consumer goods. - Perishable products must be sold and consumed immediately after production. - Hence, for perishable products direct selling is advisable. For durable products, indirect channel is preferable.

Answer 92

- A high unit cost or high value item usually has a higher margin for the seller. - It may be worth employing sales staff to sell directly to individual customers if the unit cost of, for example, a luxury yacht is $5 million, but not worthwhile if items are being sold for $5. - The use of direct selling can also minimise risk of theft or robbery.

Answer 93

1. Highly complex or technical products (e.g. industrial products) may be better managed directly by the manufacturers themselves since they have the necessary experience and expertise. 2. They require sufficient information and direct supervision. Heavy, bulky products need channels that have efficient materials handling equipment. 3. It is advisable to adopt indirect and multilevel channels to assist consumers to use the technical product properly and safely.

Answer 94

The intermediaries are given a share of the profit for their services.

Answer 95

1. Businesses strive to make the channel network as efficient and effective as possible to reduce the costs. 2. Businesses will select a channel network that generates high sales with minimum costs.

Answer 96

The point to be considered is how much financial resources is required on the part of the business moving its products through a particular channel.

Answer 97

This includes the number and habits of customers, as well as the geographical concentration.

Answer 98

If the number of potential customers is few, as with commercial aircraft , direct selling might be used, but for sports apparel such as Nike or Reebok, with their millions of customers for sports shoes worldwide, intermediate channels would be used to distribute their products.

Answer 99

- Distribution channels must fit with habits of consumers. - Manager should find out why, how, when, where and from whom the consumers like to buy. - For example, if consumers are habituated to buy a little quantity frequently from nearby retailer on credit, a company must involve retailers (along with wholesalers) to avail products at all the places where consumers reside. - The greater use of the internet is leading many consumer services, such as insurance and banking to be sold directly often leading to the closure of intermediaries, such as insurance agents. - And also if women have generally purchased beauty products from pharmacies, then pharmacies probably should be used instead of supermarkets.

Answer 100

- When customers are scattered in several regions, it is not convenient to use direct channels. - For instance, if the markets for an American seller are located in Shanghai, Shenzhen, Beijing and Guangdong, the channels of distribution selected in China must cover these four cities.

Answer 101

When customers are highly concentrated (living in nearby area) in particular region, a business can directly deal with them by using direct selling.

Answer 102

- When there exists a severe competition in the market, a business must consider competitors’ distribution strategies and practices while selecting distribution channels. - In case of less competition, the choice of the business will be independent of competition.

Answer 103

- Reactions and responses of the close competitors must be taken into account while deciding on distribution channel. - A business must select such channels that can help result in competitive advantages.

Answer 104

Relevant competition-related aspects such as intensity, response and reactions of competitors and the competitve position of the business must be analysed when selecting the distribution channel.

Answer 105

- A business which is the market leader can design its own distribution network. - It can select a specific channel of distribution as per its requirements. - However, businesses which are market followers have to follow market leader. - Their choice depends on the market leader’s practice.

3.5.2 The Marketing Mix Flashcards

(131 cards)