Chapter 21: The marketing mix: promotion

The role of promotion in the marketing mix

Promotion informs consumers about the rest of the marketing mix. Without it, consumers do not
know about the product, the price, or the place. Promotion is more than just advertising, and it
includes several activities. It is crucial when you are selling in a mass market or you have a brand
name. Promotion includes:

Advertisements: They can take different forms, e.g. on TV, in newspapers.

Promotion: e.g. Money off coupons.

Personal selling: Sending out sales representatives to talk directly to the consumers.
Public relations: Involves making the public aware of the company, e.g. creating publicity in
the media.

The aims of promotion

To inform people about particular issues.

To introduce new products to the market.

To compete with competitors products.
To improve the company/brand image.
To increase sales.

Advertising
The advertising process

1. Set objectives: A business needs to determine the purpose of advertising.

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2. Decide
the

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 advertising budget: Set a limit on how much the business can spend on advertising. It can
be decided based on:
1. A percentage of predicted sales revenue.
2. How much competitors are spending.
3. How much the business can afford.
3. Create an advertising campaign: Decide on what advertising campaign to run. Can be
determined based on:
1. Target audience.
2. Objectives.
4. Select the media: Using the suitable media for advertising that is the most cost effective.
E.g. TV, newspaper.
5. Evaluate the effectiveness of the campaign: Has the advertising met objectives?

Different types of advertising

Informative advertising: Involves giving as much information about the product as possible.
(e.g. computer)

Persuasive advertising: Involves persuading consumers that they need the product and
should buy it. (e.g. perfume)

Different media of advertising

Media Advantages Disadvantages Examples

Television Millions of people will see Expensive Food

it. Cars
The product can be Household tools
presented in a very
attractive way.
Easy to reach target
audiences.
Radio Cheaper than TV. Cannot use visual Local services
Uses song or tune which message. Shops
makes ads memorable. Expensive compared to
others. 117
The advert has to be
remembered.
Not as wide audience as

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 TV
Newspaper Can reach many people. Not eye-catching if they Local products
Cheap for local are in black and white. Cars
newspapers. Does not Banks
A lot of info can be put attention.
into the ad.
Adverts are permanent*.
Magazines Can use specialist They are only published Perfume
magazines to reach only once per month/week. Golf equipment
target audience. More expensive then Fashion clothes
Magazine ads are in colour newspapers.
and are more attractive.
Posters/billboards Permanent* Can easily be missed. Events
Cheap No detailed info can be Products bought by a
Potentially seen by anyone included. large section of the
who passes by them. population
Cinemas Visual image shows Only seen by people who
product in a positive way. go to watch films. film.
Fairly cheap.
Effective if target audience
goes to see particular
films.
Leaflets Cheap May not be read. Local events.
Given to a wide range of Retail stores like
people. Seven-Eleven

houses.
May contain vouchers to
encourage readers to keep
the advert.
Permanent*
Internet Can be seen by anybody Internet searches may not Virtual goods.
around the world. highlight the website and Services such as
Can store lots of info. it could be missed. banking or insurance.
Orders can instantly be Internet access is limited Virtually anything
made. in some countries. that is not too small.
Competition from other
websites.
Security issues may 118
discourage people from
buying online.

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Others (delivery Cheap May not be seen by Shops put their
everyone. names on plastic
vehicles or sides of
bags.
bags) Coca cola use neon
signs. *Perma
nent:
adverts can be kept for future references.

Design of adverts
Businesses usually use the AIDA model:

Attention: Informs consumers that the product exists.

Interest: Consumers need to become interested in the product.

Desire: Makes consumers want the product.
Action: Prompts consumers into buying the product.

The AIDA model is most effective on products that are not used regularly. It is less effective on
products that are bought on a daily basis because people will know how good the quality really is.

Promotion
Different types of promotion
Promotion is usually used to support advertising and to encourage new or existing customers to
buy the product. Its main function is to boost sales in the short-term, but not in the long term. It is
used to attract new customers so that they can try out items with the hope that they will like it and
continue to buy it after the promotion has ended. Here are some ways in which promotion is used:

Price reductions: Involves sales or price reduction coupons.

Gifts: Gifts are placed in the packaging of the product to encourage consumers to buy it.
(e.g. toys in McDonald's happy meal).
Competitions: A card may be put in the packaging allowing the consumer to enter contests
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such as the lottery.

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 Point-of sale displays and demonstrations: Can be put near the window and displayed
attractively. It could also encourage people to buy it if they can see how it works
(demonstrated by sales staff)
After sales service: e.g. warranty services. It reassures the customers that if the product has
a problem then they can go and fix it for free. This make the product more attractive than
others without warranty.
Free samples: Encourages people to try the product. It can be included in other products as
well. E.g. washing machine comes with free washing powder.

The advantages of promotion

Can boost sales during the year when sales are traditionally low (encourage off-season
purchases)

Encourages people to try a product.

Encourages people to buy a product or the product in greater quantities.
Encourages people to buy a product instead of competitors' products.

Which type of promotion should be used?

When deciding on what type of promotion should be used, these points should be considered:

The stage of the product life cycle: e.g. use informative advertisement in the introduction
stage of the life cycle.

The nature of the product itself: e.g. consumer goods use coupons but producer goods use
discounts on bulk buying.
The advertising budget: obviously the type of promotion depends on how much you can
spend.
The cultural issues involved in international marketing: businesses need to consider
whether their type of advertising might offend the local people. They should also take into
account things such as how many people own TV, literacy lev
The nature of the target market: Different markets require different media for advertising.

Personal selling
120

Used when the nature of the product varies. e.g. housing

o Price varies.
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 o Quality varies.
o Customer requirements vary.
When customers need advice on what type of product is the most appropriate for their
situation.
When selling expensive products such as cars.
When negotiation about price or products is needed. This is common for businesses that
sell to other businesses. (e.g. discounts on bulk buying)
When a business has a stand at a trade fair.

Public relations
Good for improving the brand/company's image.

These activities raise public awareness of the company.

Includes:
o Sponsoring events such as football matches.
o Giving products to charity.
o Employees take part in an activity for a good cause.

Customer service
It is far more expensive to attract customers than to keep old customers, so one key objective for
any business is to retain their old ones. In the international business environment, there are many
competitors, so businesses need to raise the value of their products with customer service.

Good customer service is not only producing a good product but also means:

Giving advice about the product: It is always good to give as much information about a
product as possible so that the customers can be sure that they have purchased the product
that meets their requirements.

Delivering goods for customers: It becomes convenient for the customer which encourages
the customer to buy products from the business since they do not have to go anywhere.
Providing credit facilities: This means letting customers pay later or in monthly installments.
This make products look cheaper and more affordable encouraging customers to buy them. 121
Credit facilities are usually offered when people buy expensive products. You usually get
interest as a result, but you could charge no interest for promotional purposes.

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 Providing product information: This means giving information on how to use the product
and offering help on customer service helplines.
After-sales service: The aim is to show that you care about customers' satisfaction.
Examples of after-sales service include:
o Warranties.
o Regular product checks.
o Giving refunds for faulty products.
o Exchanging unsatisfactory goods.

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 Chapter 22: The marketing mix: place
The role of place in the marketing mix
After the product, price, and promotion has been decided, the product/service has to be available
to the consumer where and when they want to buy. Consumers should be able to get to the
product easily, and the product has to be in the right place (e.g. expensive chocolate shouldn't be
in a small grocery store) to sell well.

Channels of distribution
Businesses need to know how to get the product to the consumer. They may use a variety of
channels of distribution:

Channel 1: The manufacturer sells directly to the customer. e.g. agricultural goods are sold

Channel 2: Involves selling to retailers. Common when the retailer is large or the product is
expensive.
Channel 3: Involves the product going through wholesalers as well. Wholesalers break bulk
so that retailers can buy them in smaller quantities. This is common for perishable items
such as foods.
Channel 4: Involve selling the product overseas through an agent, who sells them to
wholesalers on behalf of the company. This may be because he/she has better knowledge of
the local conditions.

Methods of distribution 124

Methods of distribution for different channels of distribution can include:

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 Department stores: Usually in the centre of town that sells a wide range of goods from
many producers.

Chain stores: Two or more which has the same name/characteristics.

Discount stores: Offers a wide range of products, including branded products, at discount
prices. Often all the products are similar.
Superstores: Very large out-of-town stores.
Supermarkets: Very large retail stores with all kinds of goods. (usually daily needs, foods)
Direct sales: Goods are sold directly to the consumer.
Mail order: Customers order via the post by looking at the catalogue
Internet/e-commerce: Customers order via the internet by looking at the website.

E-commerce
The use of the internet to carry out business transactions. Businesses could communicate via email
as well. Producers as well as retailers can use the internet to sell to customers.

Advantages and disadvantages of a wholesaler

Advantages

Breaks bulk.

Reduces storage costs for retailers and producers.

Fewer transactions are needed for the producers. (only a few wholesalers) they no longer
need to do as many deliveries.
Gives credit to small retailers.
May deliver to small retailers reducing their transport costs.
Promotion carried out by wholesaler instead of producer.
They give advice to retailers/producers on what is selling well.

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Disadvantages

More expensive for small retailers.

May not have the full range of products to sell.

Takes longer for perishable products to reach the retailer.
Wholesaler may be far from small shops.

Selecting the channel of distribution to use

When selecting the channel of distribution to use producers need to consider a few things:

Type of product?: Is it sold to other producers or customers?

Is the product very technical?: Will you need to explain how to use the product? If yes,
Channel 1 should be selected (e.g. airplanes)
How often is the product purchased?: If it is bought every day, it should be available in
many retail outlets, otherwise people might not bother to buy it at all.
How expensive is the product?: If it is expensive and has an image of being expensive, then
it will be sold in a limited number of retail outlets.
How perishable is it?: If it is very perishable, it should reach the customers quickly or be
available in many outlets so it can be sold quickly.
Location of customers?: Channel 4 might be used for customers overseas. E-commerce
would be viable anywhere apart from the countryside.
Where do competitors sell their products?:
Usually producers will sell their product in retail stores where their competitors sell too so
that they can compete directly for consumers.

Methods for transporting goods

This is what kind of vehicles are used to transport the products. They should be fast enough for the
product to reach its destination in time. However, they must also be cost efficient and safe. These
factors a taken into account when deciding which method of transportation is used.

Road haulage:

o Cheap and fast. 126

o Require no rail links.

o Can advertise on side of lorries.
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 o Not cost effective if lorries are not used often, may need to hire a specialist transport
business instead.
Railways:
o Even cheaper and faster than road haulage.
o Useful for long distances.
o Goods need to be transported to retail stores by road haulage at the end of the
destination.
Canal and river:
o Slow but cheap.
o Good for products far too big/heavy to be transported by road/train.
o Need canals and rivers.
Sea freight:
o Used mainly for international trade.
o Can carry a lot of products.
o Products are stored in containers, which can be easily loaded onto lorries. Makes it
cheap to load and unload the ships.
Air freight:
o Extremely fast but expensive.
o Used for small, expensive, or perishable products.
Pipelines:
o Used to transport liquids or gases over long distances.
o Cheaper than using road haulage for liquids. Roads are not always available.

Drawing up a marketing plan

Finally, after all the four P's of the marketing mix have been decided, the Marketing department
will put them together into one marketing plan. It will also consider how the 4 P's will be modified
or adapted to fit the overall image of the product. If this is successful, sales and profits will be likely
to increase.

Note: a detailed drawing of the product must be included in the marketing plan.

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