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 