Promotion and Place 7 & 8 PDF

Module 7 Promotion What is Promotion? Marketing activities that make potential customers, partners and society aware of and attracted to the business’s offerings. Marketing communications is another term for promotion that refers to communicating a message to the marketplace. Objectives of Promotion...

Module 7 Promotion What is Promotion? Marketing activities that make potential customers, partners and society aware of and attracted to the business’s offerings. Marketing communications is another term for promotion that refers to communicating a message to the marketplace. Objectives of Promotion Support marketing objectives Demonstrate features and benefits of products Distinguish form competitor offerings Encourage product trial and create demand Increase awareness about and goodwill for the organisation Build a relationship between customer and brand Increase general awareness and goodwill towards an organisation - When this is linked to product sales, this is known as cause related marketing Cause related marketing is when goodwill is linked to an increase in product sales Integrated Marketing Campaigns When carefully combined and coordinated to achieve a consistent and effective message, the promotional approach is known as integrated marketing communications. The idea behind IMC is that the planning of each part of the promotion mix should not be done in isolation. IMC is the term given to the coordination of promotional efforts to maximise the communication effect. The IMC goal is to consistently send the most effective possible message to the target market The best return on promotional efforts is achieved when there is a high degree of consistency, and synergy across the four areas of promotion Communication Process Noise is anything that gets in the way of the advertising communication The Promotion Mix Various combinations of promotional methods are used to promote a specific product (good, service, idea) Four main elements of promotion mix are; 1) Advertising 2) Public Relations 3) Sales Promotion 4) Personal Selling Integrating Promotion Mix Elements Most effect promotion mix will vary with; - Goals of marketing - Product characteristics - Target market characteristics - Nature of marketing organisation - Resource and budget available Appropriate marketing mix can evolve as these characteristics may change thus changing the effectiveness of the promotional mix. Push and Pull Policies A pull policy is an approach in which the producer promotes it’s product to consumers - Usually done through advertising and sales promotion, which generates demand upwards through the marketing distribution channel. A Push Policy is an approach where the product is promoted to the next organisation down the distribution channel Advertising In the integrated marketing campaign strategy, the overall advertising plan is known as the advertising campaign Advertising decisions should be made in context of an IMC approach More complex and ambitious the campaign the more likely it is the marketing organisation will engage the services of a specialist advertising company. Creating an Advertising Campaign Keys steps 1) Understand market environment - Emerging issues in marketing environment may effect campaign including technological changes and competitor actions - Need to complete a situational analysis 2) Know target market - Important to know about who you are sending messages to including audience’s demographic and lifestyle factors - Marketing organisations that run campaigns not based on knowledge of the target market will fail 3) Set objectives - Know aim of campaign - Set objectives like sales but they need to be clear and measureable objectives - Once defined, they can facilitate later evaluation of the campaign’s success 4) Create message strategy - A main message approach needs to be created for example emotional vs rational and type of emotional appeal - The message helps links the knowledge of target market to the specific objectives of the campaign. 5) Allocate resources - Determine budget for campaign based on the organisation’s; 1) financial and other resources, 2) the objectives of the campaign 3) expected ROI - Businesses can choose to; - Match competitor spending - Set percentage of sales or revenue aside - Make educated guess - Work backwards from objectives to determine what will be required to produce appropriate effective advertising 6) Select media - Two of most important considerations when choosing media are reach and frequency - Reach measures proportion of target market is exposed to the advertisement at east once - Frequency is how many times each consumer is exposed to the advertisement. - Media Types; 1) Television: Free to Air - Adv: Mass audience, low cost per person - Disadv: very expensive overall, a lot of advertising competition, immunity/annoyance of ad frequency, impossible to customise. 2) Television: Pay TV - Adv: Large niche audience - Disadv: very expensive, viewer immunity/annoyance, impossible to customise. 3) Radio: AM, FM, Digital, Podcasts, Streaming - Adv: Mass audience, low production cost, - Disadv: low attention due to listening whilst multitasking 4) Internet: Brand or product website - Adv: Considerably low cost, easily updated, no message competition, can be customised, - Disadv: need to attract audience to website 5) Internet: Company Website - Adv: Can be cheap, easily updated, no competition, can be tailored - Disadv: Need to attract audience to website, websites perform other purposes/stray attention 6) Internet: Advertising on other Sites - Adv: Can be cheap, large audience potential, can be tailored - Disadv: Effectives difficult to measure, presented alongside competitors, cannot control context 7) Internet: Search Engine Optimisation - Adv: Potential large, specific audience - Disadv: Requires constant refinement, resistant search optimisation tactics, effectiveness difficult to measure 8) Email: Subscription & Spam - Adv: Cheap, Specific opt in audience, large potential audience - Disadv: easy to ignore, effectiveness unsure, spamming illegal 9) Newspaper: Major metro newspaper - Adv: Large audience, geographic concentrated, change daily message, relatively cheap - Disadv: short life, easy to ignore 10) Newspaper: Regional - Adv: Geographically concentrated, daily message, cheap - Disadv: short life, easy to ignore 11) Newspaper: Community weekly - Adv: readers often consult newspapers to find ads for services, geographic concentrated, change weekly message, relatively cheap - Disadv: short life, easy to ignore, low production values 12) Magazine: Consumer - Adv: Large audience: with demographic features, high production values, prestige, long life (days to months) - Disadv: Expensive, ignore, attention competition with multi ads 13) Magazine: Niche - Adv: audience has inherent interest in product magazine, prestige, long life - Disadv: Expensive, competition ads 14) Magazine: Business/Trade/Professional - Adv: specific audience with interest in magazine focus - Disadv: Expensive, ignore, attention competition with multi ads 15) Direct Mail: Letters/Brochures - Adv: High level of control over circulation, personalised, combined with sales promotion, coupons, samples - Disadv: Expensive, discarded, pollution 15) Outdoor Media: Public transport, billboards, shop signage - Adv: cheap, potentially large audience, always on/viewable, can be used to draw in customer to store - Disadv: ignore, not prestigious, visual complaints, pollution, can be visible to only minor audience. 7) Produce advertisement - Marketing org must create content )based on message strategy) and workout how to present it - Small org may undertake creative execution - Large scale org might contract advertising agency - Creative services may include copywriting, graphic design, illustration, scripting, photography - Main aim to grab viewer attention - Attention Economy: Attention is most valuable resource but is an increasing problem - Av. Attention is 8 seconds 8) Place advertisement - Involves buying and placement of media space and time - Monitor effectiveness 9) Evaluate campaign - Campaigns can be evaluated before run, during or after - Effectiveness can be monitored during by measuring changes in sales/enquiry qty, publicity increase etc. - After campaign, effectiveness measured through changes in sales and enquiries, and through market research to assess attention or awareness levels such as brand recognition or brand recall. Legal Issues in Advertising Advertising is largely self regulating but there are restriction on what can be advertised and how. Illegal: Lying which is damaging to consumer relationships Some campaigns stretch truth or add puffery (exaggeration) Public Relations: Approaches and Methods Publicity is exposure received from free media coverage Can be positive or negative or ‘any publicity is good publicity’ Publicity can be generated by promoting anything newsworthy to media Highest profile public relation tools is sponsorship Public Relations: Profession Public relations used to manage publicity e.g. celebrities/public figures Purpose of minimising negative press and ensuring regular positive Marketing organisations should have contingency plans to manage quick and efficient publicity responses. Sales Promotion Sales promotion offers extra value to resellers, salespeople and consumers in a bid to increase sales Main benefits of sales promotion are to smooth out sales in periods of low demand to facilitate retailer support Examples e.g. sampling, premium offers, loyalty programs, contests, coupons, discounts, rebates, point of purchase promotions, event sponsorships Trade Sales Promotions Trade sales promotions are aimed at business purchasers Run by producers/industries to present their products E.g. conventions/trade shows Not aimed at consumers therefore they are push policy methods Trade sales methods include trade allowances, gifts/premium money, cooperative advertising, dealer listings. Personal Selling Use of personal communication with consumers to persuade purchase Most expensive form of promotion as it requires full dedication of salesperson Strong advantage over impersonal promotion, can be tailored to consumer needs, adjusting from direct feedback Managing Salesforce Salespeople are public fae of the business. Crucial to customers experience of business interaction, determine consumers purchase, repurchase and initiative of positive or negative word of mouth. Retailers/sales managers need to choose and manage salespeople carefully Additional Forms of Promotion Ambush marketing: Presence of marketing messages at an event sponsored by unrelated business or a competitor - Legal & extremely successful - Sensitivity to ambush marketing is increasing and more steps are being taken to reduce impact and protect sponsors Guerilla Marketing: Used to describe any aggressive or unconventional marketing approach - Aim to grab consumer attention when theyre unaware - Common for small business that couldn’t afford large scale marketing but this is changing as it can cause large amounts of publicity - Effectiveness relies on ability to target unawares as they don’t filter the messages out due to them not being anticipated Product Placement: Paid inclusion of products in film/tv/games etc - Featured or incidental - Product placement involves exclusion of other brands/sole right Viral Marketing: Use of electronic social networks to spread message - Spread by friends/ colleagues meaning it has greater credibility and is more likely to be considered than messages sent via mass media. - Flipside is it can go very wrong Permission Marketing: Broad term given to activities that are centred around obtaining customer consent to receive information and marketing material from a company. - Marketers ask and gain permission to contact consumer - Reduces waste, encourages genuine customers Sponsorship Paid association of a brand with an event or person With the market segmenting into more niche audience, the benefit of sponsorship is diminishing Social and environmental awareness are prompting customers to look beyond a single promotional message through a sponsorship and rather assess the overall activities of the marketed organisation first. Module 8 Place Distribution Channels Requires chain of individuals and organisations Chain exists between producers and consumers Flow of chain is called distribution channel Direct Distribution: - Manufacturer sells directly to consumer - In business markets, the manufacturer sells directly to the organisational buyer - Referred to as one-level distribution - E.g. Apple, Dell - Can bring benefit to consumers being personalisation and more value for money. Indirect Distribution - Manufacturers use marketing intermediaries to sell indirectly to consumer - Intermediaries take on various responsibilities on behalf of manufacturer including; - More cost effective - Make use of greater knowledge/skills - Provide better service outputs to final consumer - Intermediaries can include wholesalers, agents, brokers, retailers direct - E.g. Apple uses three types; (itself) Harvey Norman (JB Hifi) ISM Distributor) Indirect Organisational Distribution - Involves the manufacturer, agents, industrial distributors and organisational buyers. Indirect Supply Chain Management Distribution Channel Partnerships - Each party has expectations and obligations - Diferent amounts of power in he supply chain - Need relationship management to maximise success of distribution channels and their partnerships - Not all distribution channels are successful - Horizontal Integration - When orgs at same level are combined under one management structure - A channel member on same level buys out competitor - E.g. Facebook and Instagram - Vertical Integration - When different stages of the distribution channel are combined - Vertical marketing system - E.g. company like Apple, produce on software, develop devices, have store to market to consumers. Franchising: Business where an organisation, individual or group, grants an individual or group the right to use the main elements of their business model model through a license. The franchisor gives the rights and franchisee pays the franchisor a fee for the use of their product. They do this at it gives the franchisee to develop greater chance of developing profits through using a brand with greater equity or financial resources/ market base - Franchisor - Rights to their business - Provides advertising, business knowledge how and supplier network services - Stipulates standards and rules by which the franchisee must abide - Promises exclusive rights to a certain area of their product or business - Franchisee - Pays franchisor a fee or percentage of sales - Supplies labour and capital - Operates business in accordance with the standards set by the franchisor Wholesalers: Wholesaling comprises exchanges in which products are bought for resale, for use as inputs in other products or for some other business use. - Wholesaler is an organisation primarily engaged in wholesaling - Major Wholesaling Functions - Wholesalers act as connection between producers and retailers - Offer benefits such as wholesalers as specialist is, providing services more efficiently than the producer can themselves - Means for producers, wholesaling benefits outweigh the costs of dealing with wholesalers in the marketing. - Merchant Wholesaler: Independently owned - not owned by the producer - Manufacturer’s Wholesalers: Manufacturer’s sales branches and officers, similar to merchant wholesalers but owned by producer itself, thus represent a form of vertical integration. Retailers: Describes any exchange in which the buyer if the ultimate consumer of the product. - Excludes transaction in which buyer tends to resell or reuse product - Other businesses may undertake retailing but their primary focus is on something else - Marketing organisation must decide what retailing approach/es are suitable for it’s products - Retailing Considerations: - Location: Natural geographic area from which consumers will be drawn - Proximity to competitors - Proximity to complementary retailers - Consumer access to public transport/public parking - Positioning: Retail positioning refers to the practice of identifying a gap in the market and targeting it by creating some distinguishing feature in the mind of customers. - Types of Retailers: - Specialty Retailers - General merchandise retail stores - Online retailing - Other forms (Direct marketing, telemarketing, catalogue marketing, door-to-door selling) Agents: Engaged by buyers or sellers on an ongoing basis to represent them in negotiations with other marketing channel participants. - Main types: - Manufacturer’s agents - Selling agents - Buyers agents - Commission merchants Brokers: Engaged on short term or one off basis to negotiate on behalf of buyers or sellers - More limited role than agents - Their value is in their specialist knowledge and well-established industry contacts - Insurance and mortgage broking industries have been criticised due to brokers guiding customers towards products that maximise broker income through incentives rather than providing most suitable product. How Many and Which Intermediaries to Use? Forms and Functions - Physical distribution - Physical products need to be moved form producers to consumers is activities collectively known as physical distribution - Involves order processing, inventory management, warehousing, transportation - Order Processing: All activities involved in managing information required to receiving, handling and filling orders, goal to minimise cost, maximise satisfaction - Inventory Management: Involves managing stocks of products to ensure availability - Aim is to hold enough stock to fit demand and minimise holding - Inventory is based on order lead time, usage rate, safety stock - Just in Time Approach - Warehousing: Use of facilities to store and move goods - Business generally buy/lease space - Alt. Option = Distribution centre: Warehouse focused on moving rather than storing goods. - Transport: Moving products from place of manufacture to place of consumption. - Key modes = road, rail, sea, air, pipelines - There are specialist transportation/freight companies. - Physical distribution activities can be performed by any member of distribution channel. - Distribution of services - Physical Inputs: Creation and delivery of most service products requires physical inputs - Service business must ensure the physical inputs it needs to deliver the service are available. - Scheduling: Designed to smooth demand in service businesses - Some businesses cannot easily control demand for services e.g. hospitals - Delivery Infrastructure: Some services distributed via physical infrastructure - Some service providers bring service to you e.g. electricity delivered via above and below ground cables - Web has expanded range of services available in this format e.g. online banking Market Coverage - Intensive distribution - Distribution via every suitable intermediary - Covers a wide range of the market - Preferred when high sales target/low margins - Convenience products. - E.g.. tomato sauce being offered at more than one convenience store - Exclusive distribution - Distributes products though single intermediary in any geo region - Helps keep focus simple for a firm - Give impression of exclusivity - Often done by luxury brands - E.g. gently beauty being exclusive to Sephora - Selective distribution - Distributes products through intermediaries chosen for some specific reason - Good with no need to be on every market shelf - Impression of prestige - Allows producers to select based on service outputs/method of output to consumers. - E.g. Apple choosing HN or JBhifi Service Outputs - Bulk breaking - Allows consumers to buy in required sizes and quantities - Spatial convenience - Reduces distance between consumer and seller - Product variety and assortment - Variety - Breadth of classes of goods - Breadth - Breadth of goods within the same category - Waiting and delivery time - Reduces time period between consumption, ordering, receiving - Information provision - Facilitates education about: - Product attributes - Usage capabilities - Pre Purchase services - Post purchase services - Customer service - All service making it easier for consumer to access the good.