Chapter 13: Marketing mix: Place and promotion

Question 1

What is Place?

Answer 1

Channels of distribution.

Question 2

What are Channels of distribution?

Answer 2

How a product gets from the producer to the final consumer.

Question 3

What are Middlemen?

Answer 3

Intermediaries in the channel of distribution: Agent, Wholesaler, Retailer.

Question 4

What is an Agent?

Answer 4

A person who acts on the business’ behalf for a specified purpose.

Question 5

What is a Wholesaler?

Answer 5

A business that buys products in bulk from Producers then sells them to Retailers.

Question 6

What is a Retailer?

Answer 6

Shops and other outlets that sell goods and services to the final consumer.

Question 7

Advantages of the channel of distribution: Producer -> Consumer (direct selling). 4

Answer 7

1. All the profit is earned by the producer.
2. The producer controls all parts of the marketing mix.
3. Quickest channel.
4. Direct contact with the customer.

Question 8

Disadvantages of the channel of distribution: Producer -> Consumer (direct selling). 3

Answer 8

1. Delivery costs may be high.
2. Storage costs will be high and will need to be paid by the producer.
3. All promotional activities will be carried out and paid for by the producer.

Question 9

Advantages of the channel of distribution: Producer -> Retailer -> Consumer

Answer 9

1. Consumers see and try the product before buying.
2. Inventory cost in paid in part by the Retailer.
3. Retailer pays for promotional activities and advertisement.
4. Retailers are usually more conveniently located for customers.

Question 10

Disadvantages of the channel of distribution: Producer -> Retailer -> Consumer

Answer 10

1. Retailer takes some of the profit.
2. Producer loses some control of the market mix.
3. Producer pays delivery costs to the Retailer.
4. Retailers usually sell competitor products as well.

Question 11

Advantages of the channel of distribution: Producer -> Wholesaler -> Retailer -> Consumer

Answer 11

1. Wholesaler breaks down bulk from the producer for Retailers.
2. Wholesaler will promote the product to Retailers.
3. Transport cost of to the Retailer is paid by the Wholesaler.
4. Storage costs covered by Wholesaler.
5. Helps Producer sell their goods to a larger market.

Question 12

Disadvantages of the channel of distribution: Producer -> Wholesaler -> Retailer -> Consumer

Answer 12

1. Producer loses even more profit.
2. Producer loses even more control of marketing mix.

Question 13

Advantages of the channel of distribution: Producer -> Agent -> Wholesaler -> Retailer -> Consumer

Answer 13

1. Agents have specialist knowledge of the market, especially foreign -> they find Wholesalers and Retailers for the Producer.

Question 14

Disadvantages of the channel of distribution: Producer -> Agent -> Wholesaler -> Retailer -> Consumer

Answer 14

1. Producer loses even more profit.
2. Producer loses even more control of marketing mix.

Question 15

How do you choose a method of distribution?

Answer 15

Based on:
1. Costs -> the cost of transporting goods.
2. Nature of the product -> special delivery conditions.
3. The market -> markets that cover a large geographical area.

Question 16

What is Promotion?

Answer 16

Marketing activities used to communicate with customers/potential customers to inform and persuade them to buy from a business.

Question 17

What is the aim of Promotion?

Answer 17

To increase sales.

Question 18

How does Promotion increase sales?

Answer 18

1. Attracting the attention of consumers -> making them aware of the product, or make them aware that the product is still available.
2. Persuading consumers to buy.
3. Explaining how a product is better than competitors’.
4. Encouraging Wholesalers and Retailers to stock the product.
5. Reassuring customers and following up on problems with the product.

Question 19

What are the main methods of Promotion?

Answer 19

Advertising, Sales promotion, Personal selling, Direct mail, Sponsorship.

Question 20

What is Advertising?

Answer 20

Paid-for communication with consumers which uses printed and visual media. Aim is to inform and persuade consumers to buy product.

Question 21

What are the two kinds of Advertising?

Answer 21

Informative and Persuasive.

Question 22

What is Informative Advertising?

Answer 22

Information about the product communicated to consumers to create awareness and attract their interest.

Question 23

What is Persuasive Advertising?

Answer 23

Communication with consumers aimed at getting them to buy a firm’s product rather than a competitors’.

Question 24

What is Below-the-line Promotion?

Answer 24

Promotion that is not paid-for communication but uses incentives to encourage consumers to buy.

Question 25

What is Sales promotion?

Answer 25

The incentives used to encourage short-term increases in sales or repeat purchases.

Question 26

Examples of Sales promotion?

Answer 26

1. Money-off coupons/vouchers. 2. Point of sale displays in shops. 3. Loyalty reward schemes. 4. Competitions and games with rewards.

Question 27

What is Personal selling?

Answer 27

Sales staff communicate directly with the consumer to achieve a sale and form a long-term relationship between firm and consumer.

Question 28

What is Direct mail?

Answer 28

Printed materials which are sent directly to the addresses of customers.

Question 29

What is Sponsorship?

Answer 29

Payment by a business to have its name associated with a specific event.

Question 30

What is Marketing budget?

Answer 30

The amount of money made available by a business for its marketing activities during a particular period of time.

Question 31

What is e-commerce?

Answer 31

Use of the internet and other technologies by businesses to market and sell goods and services to customers.

Question 32

Examples of e-commerce?

Answer 32

1. Online shopping. 2. Online ticketing. 3. Hotel reservations. 4. Online auctions. 5. Internet banking. 6. Electronic payment.

Question 33

Opportunities for e-commerce for businesses?

Answer 33

1. Increased market -> the business is able to sell its goods around the world. 2. Reduced costs. 3. Better information provided to customers via website.

Question 34

Threats of e-commerce for businesses?

Answer 34

1. Increased competition. 2. Unfamiliarity -> consumers are less likely to buy from an unknown source.

Question 35

Opportunities of e-commerce to consumers?

Answer 35

1. Convenience. 2. Wider choice. 3. Lower prices. 4. Better information about product.

Question 36

Threats of e-commerce to consumers?

Answer 36

1. Fraud -> website might take the money but not provide good. 2. Hacking 3. No personal service 4. Returning items