Download BUSINESS - chpt 28 - Promotion and Place

Chapter 28
Promotion and Place
Name 12 SAM
Promotion
The use of advertising, sales promotion,
personal selling, direct mail, trade fairs,
sponsorship and public relations to inform
and persuade consumers to buy.
Promotional objectives
- Increasing sales by raising awareness
- Encourage increased purchases from consumers or
attract new ones
- Create or reinforce the brand image of product
- Correct misleading reports about the product to
reassure consumers
- Adapt the public image of the business
- Encourage retails to stock and actively promote the
product
Above-the-line promotion
A form of promotion that is undertaken by
a business by paying for communication
with consumers.
For example: advertising
Advertising
Communicating information about a
product or business through media, such
as radio, TV or newspaper.
The media used is usually selected for the
appropriate target market.
There are two types of advertising, which are
Advertising
1.
Informative advertising – when
adverts which give information to
potential buyers of the product,
rather than creating a brand image.
Often include price, specifications
and places where it would be sold.
This is to introduce the product
where consumers are unlikely to be
aware of them.
Advertising
2.
Persuasive advertising – trying to
create a distinct image or brand
identity for the product. Doesn’t
contain details about material or
ingredients of the product. A very
common form of advert when
there is little difference between
competing products.
Advertising decisions
WHICH MEDIA SHOULD WE USE?
Choosing the right type of media depends on many
factors…
Advertising decisions
1.
Cost: There are many types of media such as TV,
magazines, newspapers, posters etc… The cost varies
his advertisements depends on the size of potential
audiences. For example, TV advertising will be more
expensive than a local newspaper because the size of
audience is different.
Advertising decisions
2.
Target audience profile: this differs from income levels
to personal interest because advertising decisions
need to take in account of the consumer profile as
well. For example, advertising children’s toy at
midnight would be wrong.
Advertising decisions
Advertising decisions
3.
Type of product & message sent: written media
(newspapers..) would be great for giving detailed
information of the product while visual media (TV..) is
great for creating the image of the product as it is
more dynamic and colourful.
Below-the-line promotion
Promotion not directly paid-for means of
communication, but based on short term
incentives to purchase.
For example: sales promotion techniques
Sales promotion
Incentives such as special offers or
special deals directed at consumers or
retailers to achieve short-term sales
increases and repeat purchases by
consumers
A huge range of activities/incentives come
under ‘ sales promotion’, which are
Sales promotion
- Price deals: a temporary reduction in price
- Loyalty reward programmes: consumers collect the
points to redeem their rewards later
- Money-off coupons: redeemed when consumers buy
the product
- Public relations (TV…)
- ‘Buy one get one free’ (BOGOF)
- Point of sale displays in shops
Sales promotion
Methods
Possible limitations
Price deals
Sales from price reductions affect gross profit
May impact the brand’s reputation
Loyalty reward programmes
Most consumers have lots of loyalty cards for many brands, so the ‘loyalty’ impact
is reduced
Money-off coupons
Only encourage customers to buy what they normally bought
If reduction is small, not many people will be using them
Public relations
Not easy to control. For example, the product might receive negative reputatiov
due to bad news paper reviews
Buy one get one free
Reduction in gross profit
Customers may have use the opportunity to stock, so future sales will decrease
Point of sale displays
New products may struggle for the best positions on stores
Best display points usually offered to the market leaders (products with high
market share)
Promotion mix
The combination of promotional techniques
that a firm uses to communicate the benefits
of its products to customers.
The 8 stages of the promotion mix are
Promotion mix
1. Decide on image of product
2. Develop a profile of the target market
3. Decide on the messages to communicate
4. Set an appropriate budget
5. Decide how the messages should be communicated
6. Establish how success of promotion mix is to be assess
7. Undertake promotional plan
8. Measure its success
Promotion mix
Promotion mix options at stages in the
product life cycle:
MATURITY
Advertising to emphasize the differences between
the product and its competitors.
Sales promotion incentives to encourage brand
development and loyalty.
GROWTH
Focus shift to brand building and persuasive
advertising.
Sales promotion to encourage repeat purchases.
Attempt to develop brand loyalty.
DECLINE
Minimal advertising.
Sales promotion for little additional support for
the product if the intention is to withdraw it.
INTRODUCTION
Informative advertising and PR to make consumers
aware of the product.
Sales promotion offering free samples to encourage
consumers to test the product.
Channel of distribution
Refers to the chain of intermediaries a
product passes through from producer to
final consumer.
Why is it important?
1.
Consumers: need easy access to a firm’s products to
allow them to see and try before they buy, make
purchasing easy, if necessary, they can return the
goods.
Why is it important?
2.
Manufacturers: need outlets for their products to cover
a wide range of the market as well as promoting the
product’s desired image.
Why is it important?
3.
Retailers: are firms that sell goods to the final
consumer. However, they will demand a mark-up to
cover their costs and profits. If price is important,
using few to no intermediaries will become an
advantage.
Channel strategy
Deciding an appropriate channel strategy, the business
must answer these questions…
- Should products be sold directly to consumers or not?
- How long should the channel be?
- Where should the product be made available?
- Should electronic methods of distribution be used?
- How much will it cost to keep stock of product on shelves
and warehouses?
- How will the distribution channel be selected?
Channel strategy
Factors influencing choice of distribution channel include
the following…
Channel strategy
1.
Industrial products: tend to be sold more directly, with
fewer intermediaries than consumer goods.
2.
Geographical dispersion of
market: if the target market is
dispersed throughout the country,
it is more likely to have lots of
intermediaries.
Channel strategy
3.
Number of potential buyers: a product with lots of
potential buyers (Nike…) may consider having
intermediaries to distribute the product.
4.
Technical complexity: products like computers tend to
be sold directly as they require technical knowledge
from staff and a supporting service team.
Distribution channels
Question time
1. Name two types of sales promotion.
Price deals, money-off coupons, BOGOF, sponsorship…
2. What is ‘channel of distribution’?
Chain of intermediaries a product passes through from producer to final
consumer.
3. What are the two types of advertising?
Persuasive and informative
Thank you for listening 