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The Marketing Mix – Promotion & Place Chapter 20

( 20.1 ) Promotion Methods

Promotion is about communicating and attracting customers. Effective promotion not only
increases awareness of products, but can create image and product ‘personalities’.

Promotion ▬

The use of Advertising, Sales Promotion, Personal Selling, Direct Mail, Trade Fairs,
KEY
Sponsorship and Public Relations to inform consumers and persuade them to buy.
DEF
Direct Promotion ▬ A range of promotion activities aimed directly at target
customers. It is also known as direct marketing.

Promotion is designed to encourage new and repeat sales. Loyalty cards, free gifts,
competitions and voucher schemes are the most popular. Companies use sponsorship and public
relations to improve their image, financing sports and public information services.

Promotion Objectives

Promotional campaigns can be designed to achieve several objectives. These are all about
communicating with the target consumers. These aims can either be focused on the short
term ─ such as an increase in sales next month ─ or for the longer term ─ such as to develop
the brand image of the business. Promotional objectives include::

o Increasing sales by raising awareness of a product ─ especially important for newly

launched ones as well as the existing products.

o To recall, remind and reinforce consumers of the existence of a produce.

o To encourage increased purchases by consumers by offering discount offers, and

promotion deals such as “Buy One Get Free”.

o Demonstrating the superior specification and qualities of a product compared to

competitors ─ often used when the product has been updated in some way.

o Correcting misleading reports about the product or to reassure the sales of the
products after a scare or an accident involving the product.

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o Improving the public image of the business ─ rather than the product ─ through
corporate advertising. For example Rolex, Cross Roads, River Stone.

Promotion Mix

KEY Promotion Mix ▬

The combination of all forms of promotion used by a business for any

DEF
product is known as ‘promotion mix’.

It is most unlikely that just one method of promotion will be sufficient to achieve promotional
objectives. They include all of the marketing tools that can be used to communicate with
consumers along with offering promotion deals.

Advertising (Above the Line Promotion)

K Above-the-line Promotion ▬

A form of promotion that is undertaken by a business by paying for

E
communication with consumers.
Y

D Advertising ▬

Paid-for communication with consumers to inform and persuade, for

E
promoting the sale of commercial products., using TV and billboard advertising
F
and is referred to as ‘Above-the-Line Promotion’.

This is the term used in connection with advertising of a product or business through the media,
such as TV, Radio, Billboards, Broachers, Leaflets, Newspapers and Websites. These
advertisements are usually directed towards the appropriate target market by selecting certain
media ─ but it is possible that many people are unlikely to purchase the product may see the
advertisements too. Successful advertisements have led to increases in consumer awareness
and increase sales.

Advertisements are often classified into two types.

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Informative Advertising

Informative Advertising ▬
KEY
These are adverts that give information to potential purchasers of a
DEF
product, rather than just trying to create a brand image.

This information could include price, technical specifications, main features and places where the
product can be purchased. This style of advertising could be particularly effective with
promoting a new product that consumers are unlikely to be aware of it, and also suitable for
technological products such as mobile phones, microwaves, laptops and electronic appliances.

Persuasive Advertising

Persuasive Advertising ▬ This is trying to create a distinct image or

KEY
brand identity for the products and it may not contain any details at all
DEF
about materials or ingredients used, prices or places to buy it.

This form of advertising is very common, especially in those markets where there might be little
actual difference between products and where advertisers are trying to create a perceived
difference in the minds of consumers.

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Advertising Agencies

These are specialists that advise businesses on the most effective way to promote products.
Advertising agencies can offer a complete promotional strategy and this can be invaluable
to a business without its own marketing experts such as small scale firms.

 Research the market, establish consumer tastes, buying habits and preferences and
identify the typical consumer profile.
 Advise on the most cost-effective forms of media to be used to attract the potential
consumers.
 Use their own creative designers to design adverts appropriate to the media to be
used and according to the target audience.
 Film or print the adverts to be used in the campaign.
 Suggest a complete promotional strategy for below-the-line promotion activities.
 Monitor public reaction to the campaign and feed this back to the client to improve
the effectiveness of future advice on promotion.

Advertisement Methods

The following seven advertising methods are the most frequently used:

Print Advertising

This includes advertising in newspapers, magazines and specialist publications:

o It can be directed at particular towns or regions, or consumers who read particular

special interest magazines.
o It provides hard copy, which can be cut out and kept by the consumer for future
reference.

Print advertising has limitations:

o It is expensive to gain national coverage.

o Evidence suggests that it is now much less effective with younger consumers than
digital.

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Broadcast Advertising

This is advertising on TV and radio, and in cinemas:

o Adverts have visual appeal and can create a brand image through the actors used.
o National or even international coverage is possible.
o It can stay in the memory of consumers for a long time if visually dramatic.

Broadcast advertising has limitations:

o It is expensive to buy media time.

o It is expensive to design and produce the adverts.
o There is no permanent hard copy.

Outdoor Advertising

This includes advertising on billboards and bus shelter posters.

o It is low cost compared to other media.

o It can be located in prime positions with many potential consumers passing by.
o It can be read/seen more than once.

Outdoor advertising has limitations:

o The best locations are the most expensive.

o Many passers-by will not notice this type of advertising.

Product Placement Advertising

Products are featured in TV shows and films:

o The chosen shows or films will be targeted at a particular type of consumer.

o This creates a desirable image if the product is associated with famous actors or shows.
o It is not explicit advertising. Some consumers assume the product is being used because
it is desirable, not because a business has paid for the placement.

Product placement advertising has limitations:

o The show, film or actors may become less popular.

o It is very expensive if the show or film is well known.

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Guerrilla Advertising

Products are advertised at surprising and unconventional events to make the public take notice:

o It is low cost: graffiti paint on walls is low cost, but it is best to gain permission first!
o It can be creative, inventive and can appeal to young consumers.
o It encourages word-of-mouth communication between potential consumers.
o A staged event can receive free publicity from the media.

Guerrilla advertising has limitations:

]

o The message may be misunderstood.

o It may be considered irresponsible and lead to a negative backlash.
o It may be remembered for the wrong reasons.

Sponsorship

This involves payment by a business to become associated with an event, an individual or a

sports team. It could lead to the business logo appearing on a team’s shirts.

Advantages include:
o The good publicity of being associated with big sporting and other events.
o Global press and TV coverage of the largest events.
o The success of the team or individual can lead to greatly increased interest in the
brand.

Sponsorship has limitations:

o Sponsoring the events can be very expensive.

o Failure of the event, team or individual can reflect badly on the brand.

Digital Advertising

Digital advertising is marketing to a target audience through digital platforms, including social
media, email, search engines, mobile apps, affiliate programs, and websites. One of the main
benefits of digital advertising is an advertiser can track in real time the success of the campaign.

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Advertisement Decisions ─ Which Media to Use?

Most expensive forms of communication are not always the most effective. The choice of
media requires consideration of the following factors:

(1) Cost ▬

Marketing managers must compare the cost of each method, including the cost per target
consumer and it will also depend on the time of day that the advertisements are to be placed
and the size of the potential audience.

(2) Size of Audience ▬

This will allow the ‘cost per person’ to be calculated.

(3) The Profile of the Audience in terms of age, income levels, interests and so on. This

should reflect as closely as possible the target consumer profile of the market being aimed for.

(4) The Message to be Communicated using Verbal or Written Methods ▬

Verbal forms are mostly used by household products where quick information is needed to
provide in the form of visual effects such as TV and Radio.
Written forms of communication are likely to be most effective for giving detailed
information about a product that needs to be referred to more than once.

(5) The Other Aspects of the Marketing Mix ▬

The need for integration of the marketing mix is link between the other parts of the mix such
as price and the media chosen for adverts could be crucial to success. It is difficult to
advertise the low price candies, match box and paper clips.

(6) Legal Constraints ▬

A widespread ban on tobacco and other de-merit goods advertising. Restrictions on the use of
TV advertising aimed at children, clamming that it exercises too much influence over young
minds.

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Sales Promotion Methods

K
Below-the-line Promotion ▬

Promotion that is not a directly paid-for means of communication, but based

E
on short-term incentives to purchase.
Y

D Sales Promotion ▬

Incentives such as special offers and special deals directed at consumers or

E
retailers to achieve short-term sales increases and repeat purchases by
F
consumers. This form of promotion is also called ‘below-the-line’ promotion.

This the term used in connection with all forms of promotion, other than advertising, over
which the business will have some direct control. Examples include::

‘Money off’ Coupons and Rebates:

Money off coupons, rebates and other consumer incentive offered to consumer on purchase.
These can be immediate incentives, for example free samples and trail packs as an immediate
incentives, or delayed incentives.

For example KFC offers

money off coupons deals
to provide immediate
incentive to customers.

Reward Points Using Loyalty Card:

Promotions that offer customers a reward, such as price discounts and free products, for
frequent purchasing the products are called loyalty programs. These are now widely used by
retailer around the world. By scanning electronically the customer’s loyalty card at the same
time as the items bought, the shopper receives a delayed incentive in the form of a future
discount.

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Competition and Prizes:

Sales promotions devised by businesses that involve the customer participating in a prize draw
or competition. Such schemes can be important strategies in advertising and promoting goods
and increasing sales. Promotion offers such as “Your Chance to Win...” or “Enter our competition
to win...”.This increase brand awareness amongst the target consumers and helps to increase
sales.

Gifts:
Sometimes small gifts are placed in the packaging of a product to encourage the consumer to
buy it. For example ‘Toy with breakfast cereals, or McDonald’s happy meal offer aimed to
encourage children’s’ to buy the products.

Cross Promotions:
Involves using one brand to advertise another non-competing brand. Such as a pack of biscuit
attached with the pack of tea bags, KFC offer Pepsi as a soft drink.

Buy One Get One Free (BOGOF):

Some promotional methods offer free products but with the condition that a purchase must be
made. This could be buy one, get one free. These are called purchase incentives.

After-sales Service:
With expensive products, like Cars, LCD’s and Computers, providing an after-sales service are
very useful way of encouraging the customer to buy and repeat purchase.

Point of Sale Display:

Producers are very keen to obtain the best position for their
products in retail shops and will develop eye-catching
displays to draw consumer’s attention. The advantage of
such preferred position tends to be reserved by retailers for
‘brand leader’ products with the highest market share.
People prefer big retail outlets rather than small retail shops.
Most of the decisions of buying are taken by looking at the
point-of-sale display in these retail outlets.

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Direct Promotion Methods

Direct Mail

Direct Mail ▬ This directly send information to potential customers

KEY
through email, sms messages, by post, identified by market research, who
DEF
have a potential interest in this type of product.

Direct Mail Shots:

These can contain a great deal of detailed information, such as sales next week at retail shops,
costs effective and delivered to well defined areas or regions.

Drawbacks:
Mail shots can suffer from poor image and lead to resentment at ‘junk mail’.

Telemarketing

This includes all marketing activities conducted over telephone often from customer call
centres, including selling, market research and promoting products.
Benefits:: Telemarketing can be outsources by an agency, with some amount of fee paid for
contacting customers for advertisement script. Telemarketing is low cost and enables easy
monitoring of response by the customers.

Personal Selling

Personal Selling ▬
KEY A member of the sales staff communicates with one consumer with the aim
DEF of selling the product and establishing a long-term relationship between
company and consumer.

Employing a sales person to sell to each individual customer directly. Firms must be careful to
ensure that sales staff are well trained and provide full necessary information to consumer
about the products and their features. Example door to door selling, home delivery, selling
directly through company outlet and company official website.

Limitations:
Customers may complain about being pressured into buying, especially if the sales employees
are paid a high bonus for each sale made.

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Developments in Digital Promotion

Digital marketing, also called online marketing, is the promotion of brands to connect with
potential customers using the internet and other forms of digital communication. This includes
not only email, social media, and web-based advertising, but also text and multimedia
messages as a marketing channel.

Methods of Digital Promotion

These methods use the latest technology to get their messages to customers:

Social Media Marketing

The term social media marketing (SMM) refers to the use of social media
DEF
and social networks to market a company's products and services.

Social media is not just a marketing channel but also a way for people to keep in touch with
friends and family, read the latest news or follow topics they are interested in. Business need to
consider Face book, Twitter, Instagram, hash tag campaigns and influencer marketing
are among the most famous methods of social media marketing.

Email Marketing

Email marketing connects with customers within their own mailboxes. It is a well-established
method of increasing brand loyalty and selling more products to existing customers.
There are many different ways businesses can reach out to customers through email marketing,
such as newsletter campaigns, purchase confirmation emails, thank you emails, and email
notifications about new products.

Smartphone Marketing

Displaying pop-up banners or advertisements on other websites aiming at the same niche is the
most common form of online advertising. Businesses can use online platforms such as Google
allows adverts to be automatically delivered to other content sites.

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Smartphone Marketing

This is becoming one of the most important methods of digital promotion, especially to
younger consumers. It is claimed that 94% of all emails are opened and – once open – the
sender has the reader’s attention. As well as sending text messages to subscribers, businesses
can further appeal to potential consumers by providing them with free apps for all phone types.

Messaging platforms such as Messenger and Telegram also allow marketing teams to create
marketing bots which are used to gain new customers.

Search Engine Optimisation ( SEO )

Businesses that use e-commerce locate their websites on search engines such as Google, Bing,
Yahoo and msn. They need to use SEO to make sure that their content appears among the first
results of a search. Without SEO, it is very difficult indeed for a business trading online to remain
competitive.

Several SEO methods can be used to ensure a high ranking on a search engine results page,
such as optimising the content for specific keywords. Search engine algorithms are constantly
changing and businesses need to update their SEO methods accordingly.

Viral Marketing

Viral marketing makes use of all types of digital marketing. The essence of viral marketing is to
create a post, video, meme or similar short form of content that spreads across the web like a
virus. To make a successful viral marketing campaign, businesses promote the same content
across multiple channels such as Twitter, YouTube, blog posts and newsletters over a short
period of time.

Marketing managers try to identify individuals with high social networking potential, called
influencers. The managers create viral messages that appeal to the influencers. These have a
high chance of being passed on to many people who may be impressed that the influencer has
contacted them about the product.

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Benefits of Digital Promotions

 Worldwide coverage  a website allows businesses to find new markets and trade
globally, increasing potential market size.
 Relatively low cost  a well-planned and well-targeted digital marketing campaign can
reach the right customers at a much lower cost.
 Easy to track and measure results  web analytics and other techniques of measuring
response rates make it easy to establish how effective a promotion campaign has been.
Detailed information about how customers use a website or respond to advertising is
available, which helps to improve the effectiveness of future campaigns.
 Personalisation  Each customer can be made to feel that only they are being sent a
special offer. Whenever someone visits site, the business can greet them with targeted offers.
 Social media communication builds customer loyalty  involvement with social media
and quick responses to customers’ messages can build customer loyalty and create a
reputation for being easy to converse with.
 Content marketing  Campaigns of content marketing means producing images, videos
and articles, which can help a business gain social currency, especially if it goes viral.
 Website convenience increases sales  It is more convenient too, unlike other forms of
media which require people to get up and make a phone call or go to a shop.

Limitations of Digital Promotions

 Time-consuming  unless a digital promotion agency is used (which can be high cost),
tasks such as optimising online advertising campaigns and creating marketing content can be
time-consuming. The success of promotions needs to be judged against the cost of preparing
them.
 Skills and training  employees must have up-to-date knowledge and expertise to carry
out digital marketing with success. Tools, platforms and trends change rapidly. Employees
may need training to keep their skills at the right level.
 Global competition  reaching a worldwide audience is easy but this means competitors
can do so too! Standing out clearly against a large number of competitors can be difficult and
costly. Search engine optimisation is one way of trying to do this.
 Complaints and feedback  unhappy customers can quickly send out negative messages
about a business or its products. Any negative feedback or criticism of a brand can be visible
to the target audience through social media and review websites. It is essential for a business
to respond quickly and effectively to such criticism.

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Measuring Success of Promotion

Businesses must calculate the success of promotion campaigns to make better decisions in the
future. The best ways of assessing the success of promotions are:

o Sales performance before and after the promotion campaign:

By comparing the sales of the product before the campaign was launched, with the daily
and weekly sales during and after the campaign.
o Consumer awareness data:
Each week, market research agencies publish results of consumer recall or awareness
tests, based on answers to a series of questions concerning the advertisements they have
seen and responded to raise feedback.
o Consumer panels: These are useful for giving qualitative feedback on the impact of
promotions and the effectiveness of advertisements.
o Response rates to advertisements:
Newspaper and magazine adverts often have tear-off slips for consumers to request more
details. TV adverts can ask for consumers to ring in, websites can record the number of
hits and video-sharing sites can record the number of times advert has been viewed.

The Role of Packaging in Promotion

Packaging is the physical container or wrapping for a product. It is also

DEF
used for promotion and selling appeal.

The quality, design and color of materials used in packaging of products can have a very
supportive role to play in the promotion of a product.

Packaging can perform the following functions:

o Protect and contain the product.

o Give information, depending on the product, to consumers about contents, ingredients,

cooking instructions, assembly instructions and so on.

o Support the image of the product created by other aspects of promotion.

o Packaging is used for promoting the product. It has to appeal to the consumer.

o Aid the recognition of the product by the consumer such as red packing of Kit Kat.

o It has to be suitable for transporting the product from producer to people.

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Cheap and nasty packaging of products, such as clothes or chocolates, will destroy the quality
and status image that the firm is attempting to establish.

The Role of Branding in Promotion

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

A brand is the name given by a firm to a product or a range of products. The aims of branding
products include  aiding consumer recognition, making the product distinctive from
competitors and giving the product an identity and personality.

The benefits of branding the products are:

o It increases the chances of brand recall by consumers.

o It clearly differentiates the product from competitors products.
o It allows for the establishment of a family of closely associated products with the same
brand name.
o It reduces the responsiveness of consumer demand to a price increase. Consumers
often have references for well-known brands and are prepared to pay a high price for
them. This gives the business a high profit margin.
o It increases consumer loyalty to brands, which is a major marketing benefit.

A recent development has been the growth of own-label brands. These are product ranges
launched by retailers under their own store name. It is rare for the retailers to actually
produce the goods. They purchase them from producers who add on the retailers’ labels and
brand names.

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( 20.2 ) Place: An Important Part of the Marketing Mix

‘Place’ decisions are concerned with how products should pass from manufacturer to the final
customer. Several different ‘channels of distribution’ are available for firms to use. Some of
the important factors:

o Consumers need easy access to a firm’s products to try them and see them before they
buy, to make purchasing easy and convenient.

o Manufactures need outlets for their products that give as wide market coverage.

o Retailers ─ firms that sell goods to the final consumer - will sell manufacturers’ goods but
will demand a ‘mark up’ to cover their costs and to provide for a profit.

Channel of Distribution ▬
KEY This refers to the chain of intermediaries a product passes through from
DEF producer to final consumer, by using several interconnected intermediaries
such as wholesaler, distributors, agents and retailers.

Concept of Distribution

Getting the right product to the right consumer at the right time in a way that is most
convenient to the consumer is a good definition of distribution. Any business 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.

Customer Service as Objective of Distribution

The main purpose of distribution is

not necessarily to aim for lowest cost
but would it be most convenient for
consumers. Good customer service is
the key objective of distribution.

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Channel of Distribution 1 (Direct Selling)

Channel of Distribution 1 ▬

Direct selling to consumers with

KEY
no involvement of
DEF
intermediaries with personal
services.

Advantages of Channel of Distribution 1:

o Cuts out the profit margins of ‘middle men’ or intermediaries;
o The manufacturer has full control over the pricing and marketing of products;
o Direct marketing can be selective and targeted at the most likely potential consumers
by using computer data bases.

Disadvantages of Channel of Distribution 1:

o Manufacturer is personally responsible for holding stocks;
o Due to distance from the manufacturer the consumer is unlikely to have any chance to
see or try the product ─ after sales service could be a problem too;
o Direct marketing involving ‘mail shots’ has a poor image and can lead to resentment at
‘junk mail’ which has not been specifically requested.

Channel of Distribution 2
(Single-intermediary Channel)

Channel of Distribution 2 ▬

One-intermediary channel such

as retailer used for consumer
KEY
goods, this is where the
DEF
producer sells directly to the
retail outlets and then they sell
the product to the consumer.

Advantages of Channel of Distribution 2:

o Retailer undertakes stock holding for the manufacturer and distributes the product
to consumers over a wide geographical area;
o Manufacturer can concentrate on ‘making’ and not spend time or resources on
selling to consumers directly.

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Disadvantages of Channel of Distribution 2:

o Retailer will expect a profit margin which either raised from the manufacturers profit
margin or leads to higher prices then using the direct selling route;
o Final decisions on marketing policy are under the control of retailers such as price and
promotion.

Channel of Distribution 3
(Two-intermediary Channel)

CHANNEL OF DISTRUBUTION 3
involves using a wholesaler that buy
KEY in bulk from the producers, hold
DEF goods in warehouse and deliver
small quantities to retailers who
sell to final consumer.

Advantages of Channel of Distribution 3:

o Wholesaler performs important stock holding and ‘breaking bulk’ functions ─ they
order in large quantities but sell to retailers in smaller quantities;
o Can provide a wider coverage, to national or international markets.

Disadvantages of Channel of Distribution 3:

o Slows down the overall distribution chain; and increase the price for consumers.
o Wholesaler will expect to make a profit which will reduce profit margin for
manufacturer.

Integrated Marketing Mix

The key marketing decisions complement each other and work together to
DEF
give customers a consistent message about the product.

The best-laid marketing plans can be destroyed by just one part of marketing mix not being
consistent or working with the rest. The most effective marketing-mix decisions will be::

o Based on marketing objectives and affordable to marketing budget.

o Integrated and consistent with each other and targeted at the appropriate consumers.

If the most exclusive shop in your town sold expensive gifts and wrapped them in newspaper,
would you be surprised?

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Online Marketing (e-Commerce)

Online Marketing is the part of marketing techniques that uses the internet
KEY
and online based digital technologies such as computers, mobile phones and
DEF
other digital media platforms to promote products and services.

Benefits of Online Marketing:

o It is relatively inexpensive if the cost is compared to the number of consumers reached.

o Companies can reach a worldwide audience for a small proportion of traditional
promotion budgets.
o Consumers interact with the websites and raise awareness.
o The internet is convenient for consumers to use if they have access to a computer.
o Businesses can keep accurate records on the number of clicks or visitors, and quickly
measure the success rate of different web promotions.
o Computer and smart phone ownership is increasing in all countries of the world.
o Selling products on the internet involves lower costs than retail stores.
o Dynamic pricing  charging different prices to different consumers is easier.

Limitations of Online Marketing:

o Some countries have low speed internet connection.

o Consumers cannot touch, smell, feel or try on tangible goods before buying.
o Product returns may increase if consumers are dissatisfied with their purchases.
o The cost and unreliability of postal services in some countries may reduce the cost
advantage of internet selling.
o Websites must be kept up-to-date and user friendly.

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Factors Influencing the Choice of Distribution Channel

In deciding on an appropriate channel, a business must answer questions such as:

o Should the product be sold directly to customers or through retailers? Many

industrial products are sold directly due to complexity.
o If the market is very widely dispersed geographically, having more than one
intermediary can be an advantage.
o Depend on the cost to keep the product inventory in warehouses. If inventory costs are
high, then direct selling might be the preferred option.
o The level of control does the business want to have over the marketing mix; direct
selling gives much more control over pricing, for example.
o The channel of distribution must be integrated with other marketing-mix components.

Digital & Physical Distribution

Products that can be converted into digital format are now being widely distributed to consumers
by digital means over the internet rather than in a physical form.

Digital distribution bypasses the traditional physical distribution formats, such as paper,
optical discs and film cassettes. The processes involved in digital distribution include streaming
and downloading of content. The key difference is that a streaming file is simply played as it
becomes available, while a download is stored onto a computer’s memory. Both processes
involve the act of downloading, but only a download leaves the consumer with a copy that can be
accessed at any time from the device without having to download the data again.

The promoters of this form of distribution claim that music writers or music performers of the
content can distributed globally on platforms such as iTunes Google Play, avoid the costs of
physical distribution.

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