Marketing (Unit-III)

Meaning:
Promotion means spreading information about an product, service or
issue. Promotion as part of marketing means spreading information about a
product, product line, brand, or company. Promotion includes: Publicity and
public relations. Advertising.
Definition:
Promotions refer to the entire set of activities, which communicate the
product, brand or service to the user. The idea is to make people aware, attract and
induce to buy the product, in preference over others.
Personal selling:
One of the most effective ways of customer relationship. Such selling works
best when a good working relationship has been built up over a period of time.This
can also be expensive and time consuming, but is best for high value or premium
products.
Need and Importance of Sales Promotion:
Sales promotion acts as a bridge between advertising and personal selling.
Due to the adversity of markets, the importance of sales promotion has increased
tremendously. Sales promotion helps remove the consumer’s dissatisfaction about
a particular product, manufacturer, and create brand-image in the minds of the
consumers and the users.

Sales promotional devices are the only promotional devices available at the point-
of-purchase. An advertising medium reaches the prospects at their homes, offices,
etc. and may soon be forgotten. The sales promotional devices at the point-of-
purchase stimulate the customers to make purchase promptly on the spot.

Importance (Need or Objectives):

The basic objective of sales promotion is to maintain, increase, or regulate sales.

There may be some other related objectives to carry out sales promotional efforts.
In nutshell, it can be said that sales promotion is aimed at satisfying customers,
encouraging salesmen and middlemen, and achieving sales targets.

We can enlist objectives as under:

1. To introduce new products.

2. To keep consumers satisfied.

3. To attract new customers.

4. To clear stocks of products. To sell out old stocks rapidly.

5. To induce consumers to try and buy certain products

6. To induce present customers to buy more quantity and/or times.

7. To strengthen competitive position.

8. To offset price competition.

9. To speed up sales of slow moving products.

10. To induce consumers to switch from competitors’ brands.

11. To maintain or increase sales during off-seasons.

12. To inspires middlemen to keep more inventories/stocks.

13. To encourage middlemen to put more efforts in attracting customers.

14. To support personal selling. To motivate salesmen to work more.

15. To increase effectiveness of advertising.

16. To reduce the degree of dissatisfaction of customers.

17. To increase familiarity and popularity of product, brand or company name.

Types of Promotion

Advertising
Advertising means to advertise a product, service or a company with the help of
television, radio or social media. It helps in spreading awareness about the company,
product or service. Advertising is communicated through various mass
media, including traditional media such as newspapers,
magazines, television, radio, outdoor advertising or direct mail; and new media such
as search results, blogs, social media, websites or text messages.

Features of Advertisement:
The features of advertising are as follows:

1. It is a paid form of communication:

Advertisements appear in newspapers, magazines, television or cinema screens
because the advertiser has purchased some space or time to communicate
information to the prospective customers.

2. It is a non-personal presentation of message:

There is no face-to-face contact with the customers. That is why, it is
described as non-personal salesmanship. It is a non- personal form of presenting
products and promoting ideas and it supports personal selling. It simplifies the task
of sales-force by creating awareness in the minds of potential customers.
3. The purpose of advertising is to promote idea about the products and
services of a business:
It is directed towards increasing the sale of the products and services of a
business unit.
4. Advertisement is issued by an identified sponsor:
The identity of the businessman issuing the advertisement must be disclosed.
Non-disclosure of the name of the sponsor in propaganda may lead to distortion,
deception and manipulation. Advertisement should disclose the sources of opinions
and ideas it presents.

Sales Promotion
Sales promotion uses both media and non-media marketing communications for a
pre-determined, limited time to increase consumer demand, stimulate market demand
or improve product availability.

Special characteristics of sales promotion are listed below:

1. It is a part of market promotion. It involves all the promotional efforts other than
advertising, personal selling, and publicity.

2. The primary purpose is to induce customer for immediate buying or dealer

effectiveness or both.

3. It is optional. Many companies do not practice it.

4. It is directed for multiple objectives, like to maintain sales during off season, to
increase sales, to face competition, to clear stocks, to improve image, to promote
new products, etc.

5. It consists of offering, wide variety of tools/incentives.

6. Sales promotion efforts consist of special selling efforts for the specific time
period in forms of short-term incentives and schemes undertaken at consumer
level, dealer level or at salesmen level.
7. It involves the non-recurrent selling efforts. They are not a part of daily
activities. They are not undertaken repeatedly.

8. Sales promotion incentives are imitative. Competitors can easily imitate them.

9. Sales promotion is expensive. It may affect adversity the profitability of

company.

10. Excessive use of sale promotion may affect sales and reputation of company
adversely.

11. It supports personal selling and advertising efforts. It is like a bridge between
advertising and personal selling. It can increase effectiveness of other promotional
efforts.

12. It includes impersonal incentives. They are offered openly to all.

Personal Selling
The sale of a product depends on the selling of a product. Personal Selling is a
method where companies send their agents to the consumer to sell the products
personally. Here, the feedback is immediate and they also build a trust with the
customer which is very important.

Importance of personal selling:

(1) Personal Form:

Under personal selling a personal contact is established between the buyers and the
salesman. In other words, both the parties face each other.
(2) Development of Relationship:

Personal selling results in the development of personal relationship between the

sales person and the possible buyer. Such a relationship has an important place in
sales.

(3) Oral Conversation:

There is oral conversation between the sales person and the buyer regarding the
features of the product, i.e., price, colour, shape, design, method of using, etc.

(4) Quick solution of Queries:

The prospective buyer can make inquiries regarding the product. Salesman answers
these queries quickly and removes any doubts in the mind of the buyer.

(5) Receipt of Additional Information:

Normally, before introducing its product, a company is aware of the preferences of
the probable buyers. Nevertheless, during the course of personal selling, when the
sales person is in direct contact with the buyers he/she gathers additional
information regarding their tastes and likings.

(6) Real Sale:

Under personal selling, the buyers are not only informed about the product but the
goods are actually sold to them.

Public Relation
Public relation or PR is the practice of managing the spread of information between
an individual or an organization (such as a business, government agency, or a
nonprofit organization) and the public. A successful PR campaign can be really
beneficial to the brand of the organization.
Direct Marketing
Direct marketing is a form of advertising where organizations communicate directly
to customers through a variety of media including cell phone text messaging, email,
websites, online adverts, database marketing, fliers, catalog distribution, promotional
letters and targeted television, newspaper and magazine advertisements as well as
outdoor advertising. Among practitioners, it is also known as a direct response.

Top 11 Factors Influencing Promotion Mix

1. Type of Product:
Type of product plays an important role in deciding on promotion mix.
Product can be categorized in terms of branded products, non-branded products,
necessity products, luxury products, new products, etc. All these types of products
need different promotional tools. For example, advertising is suitable for the
branded and popular products. Personal selling may be fit for non-branded
products. Advertising, personal selling, sales promotion and publicity – all four
tools – are used for a newly launched product to get a rapid consumer acceptance.

2. Use of Product:
Product may be industrial product, consumable and necessity product, or
may be luxurious product that affects selection of promotion tools and media. For
example, advertising and sales promotion techniques are widely used for consumer
goods while personal selling is used for industrial goods.

3. Complexity of Product:
Product complexity affects selection of promotional tools. Personal selling is
more effective for complex, technical, risky, and newly developed products as they
need personal explanation and observation. On the other end, advertising is more
suitable for simple and easy-handled products.
4. Purchase Quantity and Frequency:
Company should also consider purchase frequency and purchase quantity
while deciding on promotion mix. Generally, for frequently purchase product,
advertising is used, and for infrequently purchase product, personal selling and
sales promotion are preferred. Personal selling and advertising are used for heavy
users and light users respectively.

5. Fund Available for Market Promotion:

Financial capacity of company is a vital factor affecting promotion mix.
Advertising through television, radio, newspapers and magazines is too costly to
bear by financially poor companies while personal selling and sales promotion are
comparatively cheaper tools. Even, the company may opt for publicity by
highlighting certain commercially significant events.

6. Type of Market:
Type of market or consumer characteristics determine the form of promotion
mix. Education, location, income, personality characteristics, knowledge,
bargaining capacity, profession, age, sex, etc., are the important factors that affect
company’s promotion strategy.

7. Size of Market:
Naturally, in case of a limited market, personal selling is more effective.
When market is wide with a large number of buyers, advertising is preferable.
Place is also an important issue. Type of message, language of message, type of
sales promotion tools, etc., depend on geographical areas.

8. Stage of Product Life Cycle:

Product passes through four stages of its life cycle. Each stage poses different
threats and opportunities. Each stage needs separate marketing strategies. Each of
the promotional tools has got different degree of suitability with stages of product
life cycle.

9. Level of Competition:

Promotional efforts are designed according to type and intensity of competition.

All promotional tools are aimed at protecting company’s interest against
competition. Level of promotional efforts and selection of promotional tools
depend on level of competition.

10. Promotional Objectives:

It is the prime factor affecting promotional mix. Different objectives can be
achieved by using different tools of promotional mix. If company’s objective is to
inform a large number of buyers, advertising is advisable. If company wants to
convince limited consumers, it may go for personal selling. Even, when company
wants to influence buyers during specific season or occasion, the sales promotion
can be used. Some companies use publicity to create or improve brand image and
goodwill in the market.

11. Other Factors:

Over and above these factors, there are certain minor factors that affect promotion
mix.

The list of factors stated above is not complete. There may be more factors.
Promotional strategy should be formulated only after considering the relevant
factors. Marketing manager must be aware of these variables. Note that these
factors affect different firms in varying degree depending upon its internal and
external marketing environment.
 Channels of distribution

Meaning: A distribution channel is a chain of businesses or intermediaries through

which a good or service passes until it reaches the final buyer or the end consumer.
Distribution channels can include wholesalers, retailers, distributors, and even the
Internet.

Functions of Distribution Channels:

Distribution channels provide time, place, and ownership utility. They make
the product available when, where, and in which quantities the customer wants.
But other than these transactional functions, marketing channels are also
responsible to carry out the following functions:

Logistics and Physical Distribution: Marketing channels are responsible for

assembly, storage, sorting, and transportation of goods from manufacturers to
customers.

Facilitation: Channels of distribution even provide pre-sale and post-purchase

services like financing, maintenance, information dissemination and channel
coordination.

Creating Efficiencies: This is done in two ways: bulk breaking and creating
assortments. Wholesalers and retailers purchase large quantities of goods from
manufacturers but break the bulk by selling few at a time to many other channels
or customers. They also offer different types of products at a single place which is
a huge benefit to customers as they don’t have to visit different retailers for
different products.

Sharing Risks: Since most of the channels buy the products beforehand, they also
share the risk with the manufacturers and do everything possible to sell it.

Marketing: Distribution channels are also called marketing channels because they
are among the core touch points where many marketing strategies are executed.
They are in direct contact with the end customers and help the manufacturers in
propagating the brand message and product benefits and other benefits to the
customers.
Distribution

Distribution means the process by which we make the goods or the service available
to the end consumer. Generally, the place of production is not the same as the place
of consumption. So the goods have to be distributed to overcome the barrier of place.

Now the distribution of the products can be done by the organisation itself which is
direct distribution. Or it can hire intermediaries and form distributions channel i.e.
indirect distributions. The plan will depend on several factors, some of which are

Product: Whether the product is perishable or durable will be a factor in deciding

its distributions model.

Market: The size of the market will be a factor. In a large market, the direct
distribution may not be a perfect choice. Also if the markets are scattered indirect
channel will be more suitable

Company: The size of the company and its product-mix are also deciding factors in
the decision about distributions.

Marketing Environment: In a slow economy or depression a shorter distributions

chain is preferable. In a healthy economy, there is a wider choice for alternatives.

Cost: The cost of the channel like transportation, warehousing and storage, tolls etc
are obviously a factor in this decision.

Types of Intermediaries

These are the middlemen that ensure smooth and effective distribution of goods over
your chosen geographical market. Middlemen are a very important factor in the
distribution process. let us take a look at the types of middlemen we usually find.

1] Agents:

Agents are middlemen who represent the produces to the customer. They are
merely an extension of the company but the company is generally bound by the
actions of its agents. One thing to keep in mind, the ownership of the goods do not
pass to the agent. They only work on fees and commissions.
2] Wholesalers
Wholesalers buy the goods from the producers directly. One important
characteristic of wholesalers is that they buy in bulk at a lower rate than retail price.
They store and warehouse huge quantities of the products and sell them to other
intermediaries in smaller quantities for a profit. Wholesalers generally do not sell to
the end consumer directly. They sell to other middlemen like retailers or distributors.

3] Distributors
Distributors are similar to wholesalers in their function. Except they have a
contract to carry goods from only one producer or company. They do not stock a
variety of products from various brands. They are under contract to deal in particular
products of only one parent company

4] Retailers
Retailers are basically shop owners. Whether it is your local grocery store or
the mall in your area they are all retailers. The only difference is in their sizes.
Retailers will procure the goods from wholesaler or distributors and sell it to the final
consumers. They will sell these products at a profit margin to their customers.

Definition of Physical Distribution:

Physical distribution is concerned with the physical movement of the goods

from the producer to the consumer. It is an important part of marketing activity and
a major component of marketing mix. It includes all those activities which help in
efficient movement of goods from producer to consumer, such as transportation,
warehousing, material handling, inventory control, order processing, market
forecasting, packaging, plant and warehouse location and customer service.
Philip Kotler has defined physical distribution as, “Physical distribution
involves planning, implementing and controlling the physical flow of materials and
final goods from the point of origin of use to meet consumer needs at a profit.”

Objectives as follows:
i. To make available the right goods in right quantity at right time and right place at
least cost.
ii. To achieve minimum inventory level and speedier transportation.
iii. To establish price of products by effective management of physical distribution
activities.
iv. To gain competitive advantage over rivals by performing customer service
more effectively.

Importance of Physical Distribution System:

Physical distribution activities have an important role to play in success of
business.

1. Creating Time and Place Utility:

Physical distribution activities help in creating time and place utility. This is
done through transportation and warehousing. Transportation system creates place
utility as it makes available the goods at the right place where they are required.
Warehousing creates time utility by storing the goods and releasing them when
they are required.

2. Helps in Reducing Distribution Cost:

Physical distribution cost account for a major part of the price of the
product. If these costs are handled systematically, decrease in costs of product can
be there. Proper and systematic planning of transportation schedules and routes,
warehousing location and operation, material handling, order processing, etc. can
easily bring in cost economies.

3. Helps in Stabilisation of Price:

Physical distribution helps in maintaining stable prices. Even customers
expect price stability over a period of time. Proper use of transportation and
warehousing facilities can help in matching demand with supply and thus ensure
stabilisation of price.

4. Improved Consumer Services:

Consumer service in physical distribution means making products in right
quantity available at right time and right place i.e. place where customer needs.
Components of Physical Distribution:
(1) Order Processing:
Order processing is the starting point of any distribution activity. Order
processing includes activities like receiving the order, handling the order, granting
credit, invoicing, dispatching, collecting bills, etc. Each customer expects that the
order placed by him is implemented without delay, and as per the specifications of
the order.

Thus, order processing becomes very important. Marketer should make

effort to maintain the order cycle time i.e. the time period between the time of
placement of an order by the customer to the time of arrival of goods at his
destination. Standard procedure should be laid down for processing of order.
(2) Storage and Warehousing:
Storage means making proper arrangements for retaining the goods in proper
condition till they are demanded by customers. There are many products which are
seasonally produced but are used throughout the year, they can be stored and later
released.
Two types of warehouses are there- Storage Warehouses and Distribution
Warehouses. Storage warehouse helps in storing the good for long and medium
period of time to ensure matching of supply and demand. Distribution warehouses
facilitate assembling the product and redistributing it within a short period of time.
They can also be centralised (when located near factory) or decentralised (when
located near market).
(3) Inventory Control:
Inventory control refers to efficient control of goods stored in warehouses.
Maintaining adequate level of inventory is very essential for smooth flow of
business. Inventory acts as a bridge between the orders of customers and
production. They are the reservoir of the goods held in anticipation of sales.
Therefore, it needs to be properly managed and controlled. Neither to small nor too
large inventory should be maintained.
(4) Material Handling:
Material handling includes all those activities which are associated in
moving products when it leaves the manufacturing plant but before it is loaded on
the transport. This activity has been in existence since very long period of time,
and now it has developed as a system.
 It involves moving the goods from plant to warehouses and from warehouses
to place of loading in transport modes. Proper management of material handling
helps in avoiding unnecessary movement of goods, avoiding damage to the goods,
facilitate order processing and efficient movement of goods.
Material handling is the sub part of the total physical distribution system and
helps in reduction in cost and better service to consumers. Effective management
of material handling system leads to effectiveness of total physical distribution
system and thereby makes it economical.
(5) Transportation:
Transportation as a component of physical distribution is concerned with the
movement of goods from the warehouse to customer destination. It includes
loading and unloading of goods and their movement from one place to another. In
doing so it provides time and place utility. Transport accounts for a major portion
of the distribution cost and of the total price of the product.

Different modes of transportation are there like Road transport, railways,

Airways, Water transport and pipeline from which a choice has to be made. Each
has its own share of merits and demerits. Normally a combination of different
mode is chosen and integrated in a sequential order to move the product
economically and faster.
Choice of a particular mode of transportation depends upon various factors like
cost of the transport, availability of the mode of transport, speed, reliability,
frequency, safety and suitability of the mode to move the product.
i. Road Transport:
This is an ancient form of transport and plays an important role in
marketing. Road transport may be through different means like transport by
animals (like bullock, camel), transport by human beings (like coolies or porters),
transport by automobiles (like scooters, auto rickshaws, cars, truck buses etc.).
Road transport is flexible and economical. However, it is unsuitable for long
distances.
ii. Railways:
It is suitable for transporting bulk goods over long distances. It is an
economical mode because large volume of traffic is handled over large network of
railways. However, it is inflexible as it is unfit to transport goods to rural areas.
Further, it involves huge maintenance expenditure.
iii. Water Transport:
 Water way is an important mode of transport for heavy and bulky goods in
large quantities. It consists of inland water transport and ocean transport. Inland
water transport is used for transporting goods within county and ocean transport is
used to transport goods to other countries. Water transport is a cheapest form of
transport, having great carrying capacity and is highly suitable for heavy and bulky
goods, but it has low speed and higher degree of risk due to seasonal difficulties.
iv. Air Transport:
Of late air transport has assumed significant importance as a mode of
transport. Although it accounts for a small percentage of transportation, it is useful
for perishable items, overnight packages, emergency supplies etc. The main
disadvantage of air transport is that it has high freight charges, low carrying
capacity and too much dependence on climatic conditions.
v. Pipelines:
These are specialized carriers design to transport the crude and refined
petroleum and natural gas from wells to refineries and further to distribution
centre. It is an economical mode as it involves less handling and labour cost, but it
is the slowest mode of transportation and very limited in number.