Chapter 20: Marketing mix - promotion and place

Question 1

Promotion

Answer 1

Informing and persuading customers to buy the product through advertising

Question 2

Advertising

Answer 2

Paid-for communication to inform and persuade consumers, using media such as TV and newspapers

Question 3

Types of advertising

Answer 3

Informative: Inform about a product rather than brand image..

Persuasive: Try to create a distinct image/brand identity for the product.

Question 4

Direct promotion

Answer 4

Promotional activities aimed directly at target customers

Question 5

Sales promotion

Answer 5

Incentives directed at customers or retailers to achieve short-term sales and repeat purchases

Question 6

Promotion mix

Answer 6

Combination of promotional techniques that a firm uses to sell a product.

Question 7

Promotion methods

Answer 7

Promotion
Advertising
Direct promotion
Sales promotion

Question 8

Promotion objectives

Answer 8

Increasing sales by raising consumer awareness
Increasing consumer recall of existing products
Increasing purchases by existing consumers
Demonstrating the superior qualities of a product
Creating/reinforcing brand image
Correcting misleading reports
Improving the public image of the business
Encouraging retailers to hold inventories of the product

Question 9

Advertising agencies

Answer 9

Specialists that advise businesses on the most effective way to promote products.

Question 10

What do advertising agencies do?

Answer 10

They research the market, establish customer tastes and identify typical customer profiles.
They advise on the most cost-effective forms of advertising media to be used.
They use their own designers to design adverts appropriate for each medium.
They film or print adverts
They monitor public reaction to the campaign and feedback to the client

Question 11

Advertising methods

Answer 11

Print: Newspapers, magazines.
Broadcast: TV, radio and cinemas
Outdoor: Billboards, bus stop posters
Product placement: featured in TV shows and films
Guerilla: Advertised at surprising events to gain attention
Sponsorship: Associating with a team, event or individual
Digital advertising

Question 12

How to choose an advertising method

Answer 12

Cost
Target audience
Message
Legal constraints

Question 13

Sales promotion methods

Answer 13

Price offers
Loyalty reward programmes
Money-off coupons
Point-of-sale display
Buy one get one free (BOGOF)
Games/competitions on the packaging

Question 14

Possible limitations of price offers

Answer 14

reduces profit
shows a negative brand image

Question 15

Possible limitations of money-off coupons

Answer 15

Can encourage customers to buy what they already wanted
Demand may be too high
Low price reduction may not attract customers

Question 16

Possible limitations of customer loyalty schemes

Answer 16

Discounts cut gross profits
Administration costs
Many loyalty cards are from different retailers, not very loyal

Question 17

Possible limitations of money refunds

Answer 17

Involves the completion and posting of a form, which may be a disincentive
Delay before a refund can be a disincentive

Question 18

Possible limitations of BOGOF

Answer 18

Substantial loss in gross profit margin
Consumers may conclude that the price is too high
Consumers may feel that the product cannot sell at normal prices and this affects the reputation
Current sales might increase but future sales may fall

Question 19

Possible limitations of point-of-sale displays

Answer 19

Best display points are given to market leaders
New products may struggle for the best position unless high discounts are given

Question 20

Direct promotion methods

Answer 20

Direct mail: by post
Telemarketing: Telephone
Personal selling: Door to door

Question 21

Digital promotion

Answer 21

Promotion through digital technologies mainly on the internet

Question 22

Methods of digital promotion

Answer 22

Social media marketing: Instagram, Twitter
Email marketing: Newsletters
Online advertising: Pop-up banners
Smartphone marketing: Messages, apps
Search engine optimisation: e-commerce
Viral marketing: Posts, videos, memes

Question 23

E-commerce

Answer 23

Buying and selling of products through an electronic medium

Question 24

Benefits of digital promotion

Answer 24

Worldwide coverage
Relatively low cost
Easy to track and measure results: web analytics
Personalisation
Builds customer loyalty: Quick responses
Content marketing: Engaging campaigns

Question 25

limitations of digital promotion

Answer 25

Time-consuming Skills and training Global competition

Question 26

How to measure the success of promotion

Answer 26

Sales before and after the campaign Consumer awareness Consumer panels Response rates to advertisements Social media feedback

Question 27

Role of packaging in promotion

Answer 27

Protects and contains the product Gives information about the product Supports brand image Makes the product attractive

Question 28

Aims of branding

Answer 28

Aids consumer recognition Makes the product distinctive Gives the product an identity

Question 29

Benefits of branding

Answer 29

Increases chances of **brand recall** **Differentiates the product** from others Allows establishment of a family of closely associated products **Reduces demand responsiveness to price changes** **Increases customer loyalty**

Question 30

Place

Answer 30

How products should pass from the manufacturer to the final customer

Question 31

Channel of distribution

Answer 31

The chain of intermediaries a product passes through from producer to final customer

Question 32

The 3 channels of distribution

Answer 32

Direct selling: Manufacturer-customer Single-intermediary: Manufacturer-retailer-consumer Two-intermediaries: Manufacturer-wholesaler-retailer-consumer

Question 33

Advantages of direct selling

Answer 33

Intermediaries take **no markup profit** Producer has **complete control of the marketing mix** **Quicker** than other channels **Direct contact with customers** is useful for market research

Question 34

Disadvantages of direct selling

Answer 34

The **producer pays for all storage**/inventory costs No retail outlets so **customers cannot try the products** **May not be convenient for consumers** No after-sales service is offered by shops **Expensive to deliver to customers**

Question 35

Advantages of two-intermediaries channel

Answer 35

Retailers incur costs of inventory Retailers display products and offer after-sales services Retailers should be in convenient locations Producers focus only on production, not on selling

Question 36

Advantages of e-commerce

Answer 36

Relatively **cheap** **Worldwide** exposure Consumers leave important data on websites High in **convenience** Businesses keep records of the number of clicks **Computers/smartphones are more popular** **Lower fixed costs** compared to retailers **Dynamic pricing is easier**

Question 37

Advantages of single-intermediary channel

Answer 37

**Wholesalers** hold goods and **buy in bulk** **Reduces producer's inventory costs** **Wholesalers pay for transport** costs to retailers **Wholesalers buy in high quantities** and sell in low

Question 38

Disadvantages of two-intermediaries channel

Answer 38

**Expensive for consumers** because of more intermediaries **More loss of marketing mix for the producer** **Slows down the distribution chain**

Question 39

Disadvantages of single-intermediary channel

Answer 39

Intermediary takes a** profit markup making it expensive** Producers lose control over the marketing mix The **outlet sells competitors' products** too

Question 40

disadvantages of e-commerce

Answer 40

Some countries have** low-speed Internet** Consumers **cannot physically see the product** Product returns may increase if consumers don't like it **Cost and unreliability of post may reduce cost advantage** **Websites must be user-friendly and up-to-date** Worry about Internet security may reduce growth potential

Question 41

Factors affecting the choice of distribution channel

Answer 41

Which channel is the** most convenient** **Channel length** **Product manufacturing location** Should e-commerce be the main channel? How much will the **inventory costs** be? **How much control of the market mix does the business want?**