Chapter 19

The marketing mix –

promotion and place
Chapter 19 – The marketing mix – promotion
and place
Once a product is produced and a price has been
set for it the business must then communicate
with consumers and persuade them to purchase
the product. This is the role of promotion.
Place refers to the channel of distribution used
to get the product to those consumers. Both
promotion and place, as elements of the
marketing mix, are being significantly affected
by technological change.
Promotion methods
Promotion refers to the tactics that a
business uses to make consumers aware of
their product(s) and to entice them to
purchase the products, creating sales
revenue for the business.
Promotion is also used to create a
personality for a business’s products that
consumers can identify with.
Advertising is only one form of promotion.
Promotion also includes DIRECT
PROMOTIONS and SALES PROMOTIONS.

The combination of advertising, direct

promotion and sales promotion is known
as the PROMOTIONAL MIX.
The amount a business spends on
promotion is referred to as the promotion
budget.
The size of the budget has a significant part
to play in how a business approaches its
promotion but is not the whole of it.
Successful communication also depends on
how the budget is allocated between the
different forms of promotion.
Packaging is an important
component of promotion and
creating an image for the product.

It is sometimes considered as a 5 th

P in the marketing mix.

Promotion refers to the use of
advertising, sales promotion,
personal selling, direct mail, trade
fairs, sponsorship and public
relations to inform consumers and
persuade them to buy a firm’s
products.
Promotion can often be referred to as
either:

• above-the-line promotion

• below-the-line promotion
Above-the-line promotion is
promotional activity that refers to
promotional activity paid for by
the business.
Advertising is often referred to as
‘above-the-line promotion’.
Below-the-line promotion refers to
promotional activities which include more
short-term tactics such as personal selling,
sales promotions, packaging, branding and
direct mail which the firm does not pay for
directly.

In other words below-the-line promotion is

based on short-term incentives to
purchase.
Most businesses will use a
combination of above and below
the line tactics in order to create
the desired impact on consumers.
Promotion objectives
An effective promotional effort contains a
clear message that is targeted to a certain
audience and is done using appropriate
channels.
The target customers are people who will
use, as well as influence or decide the
purchase of the product.
Identifying these people is an important part
of market research.
Promotional objectives include :
• increasing customer awareness
• reaching targeted clients
• reminding customers about the existing
product and its distinctive qualities
• showing the superiority of a product over its
competitors’ products
• increasing sales
• giving information to consumers about the
product and the company
Promotional objectives include :
• correcting misleading reports about a product
or the business
• developing the public image of the business
• encouraging retailers to stock and promote a
product
The promotional mix

The promotional mix is defined as

the combination of promotional
techniques that a firm uses to sell a
product.
Advertising

Advertising is defined as paid for

communications with consumers to
inform and persuade, using media
such as television, newspaper and
magazine advertising.
Advertisements generally fall into two
categories:

• Informative advertising

• Persuasive advertising
Informative Advertising
Informative advertising is used to inform
the public about the existence of a
product. The advert will provide details
about goods such as prices, features,
where to buy and how to buy the product.
Informative advertising is particularly
useful when promoting a new product or
major specification changes to an existing
product.
Persuasive Advertising
Persuasive ads attempt to get consumers to
purchase a product by creating a distinctive
image or brand identity for the product, and
by emphasising certain aspects of the
marketing mix (e.g. the taste, style). This form
of advertising is commonly used where there
is little differentiation between products on
the market and the firm is trying to create a
perceived difference in the minds of
consumers.
Usually advertisements have an element of
both informative and persuasive
advertising.
Not all advertising is aimed at final users.

Trade advertising is used to encourage

retailers to stock and promote a product.

This form of advertising uses trade journals

and magazines not generally available to
consumers.
Advertising agencies

An advertising agency, often referred to as

a creative agency or an ad agency, is a
business dedicated to creating, planning,
and handling advertising and sometimes
other forms of promotion and marketing
for its clients.
The five largest agencies, with their
estimated worldwide revenues in 2014 :
• WPP Group, London - $19.0 bn
• Omnicom Group, New York City - $15.3
bn
• Publicis Groupe, Paris - $9.6 bn
• Interpublic Group, New York City - $7.5
bn
• Dentsu, Tokyo - $6.0 bn
Ad agencies tend to be expensive. The service they
offer includes :
• Researching the market, establishing consumer
tastes and preferences and identifying consumer
profiles
• Advising on the most cost-effective forms of media
to be used
• Creating appropriate adverts, bearing in mind the
media to be used
• Filming or printing the adverts to be used in the
campaign
• Monitoring public reaction to the campaign and
refer this information back to the client.
Advertising methods
Advertising methods include :
• Print advertising
• Broadcast advertising
• Outdoor advertising
• Product placement advertising
• Guerrilla advertising
• Sponsorship
• Digital advertising
Print advertising :
Advertising in newspapers, magazines and
specialist publications
• It can be carefully directed
• It provides a hard copy which can be cut out
and kept for future reference
But
• National coverage is expensive
• It is probably less effective than digital
advertising with younger consumers
Broadcast advertising :
Advertising on TV, radio and cinema
• Visually appealing and the actors used can help
to create a brand image
• National and international coverage is possible
• Some ads stay in people’s memories
But
• Media time is expensive
• Design and production of these ads is
expensive
• There is no permanent hard copy
Outdoor advertising
This includes billboards and bus shelters
• Low cost compared to other media
• Can be located where many potential
consumers pass by
• May be seen more than once
But
• The best locations are the most expensive
• The ad can be vandalised or damaged
• Many people simply do not notice these ads
Product placement adverts
Where products are featured on TV shows or films
• The film/show will target a specific type of
consumer
• Can create a desirable image where the product
is associated with a famous actor
• Some people think the product is being used
simply because it IS desirable
But
• The show, film or actor may become less popular
• It is very expensive if the show or film is well
known
Guerrilla advertising
Products are advertised at surprising and unconventional
events or places to make people take notice
• Low cost e.g. graffiti painted on walls
• Creative, inventive and likely to appeal to younger
consumers
• Encourages word-of-mouth communications
• Can get free media publicity
But
• The message may be misunderstood
• It may be seen as irresponsible and lead to a public
backlash
• It may be remembered for the wrong reasons
Sponsorship
Sponsorship is a form of advertising, but it does not
attempt to persuade customers to make purchases by
sharing specific messages about a product or company.
Rather, the company pays to support a specific event
that their customers care about. The business is then
associated with the event by customers, attendees, and
the media.
Sponsorships are the financial or in-kind support of
activities. Businesses often sponsor events, trade
shows, groups, or charity causes to reach specific
business goals and increase their competitive
advantage.
Aviva is a savings, retirement
and insurance business serving
31.6 million customers.
Digital advertising refers to marketing through online
channels, such as websites, streaming content, and
more. Digital ads span various media formats, including
text, image, audio, and video. They can help the
business achieve a variety of business goals ranging
from brand awareness, customer engagement,
launching new products and driving repeat sales.

The field of digital advertising is relatively young, in

comparison to traditional channels such as magazines,
billboards, and direct mail. The primary differences
between digital advertising and traditional advertising
are flexibility and precision.
https://www.google.com/search?
q=evian+roller+babies&oq=evian+roller+babies&aqs=chrome..69i57j0i512j0i22i30l8.6760j0
j4&sourceid=chrome&ie=UTF-8#fpstate=ive&vld=cid:4795c4f1,vid:Lb1IUHXoljE

Going viral!
Advertising methods – which media to use?
The bigger the promotional budget a firm has, the
wider will be its choice of media to use for its
advertising campaign. This choice will require
consideration of various factors including :
• Cost involved
• Size of targeted audience
• The profile of the target audience
• The message to be communicated
• Other aspects
• Legal constraints
Cost involved –
this includes the cost of creating the advert
and the media used to broadcast it.
• Television, radio and cinema advertising
is expensive.
• National newspapers are more
expensive than local newspapers.
• Social media can be virtually cost free.
Key concept link

Consider business context when deciding

which advertising method a business might
use. A small business will probably not be
able to afford a TV campaign but it could
afford relatively low cost guerrilla
advertising if it had some innovative ideas.
Size of targeted audience –
knowing this will allow the cost per person to be
calculated. However, total numbers are less
important than the profile of the audience since
the adverts will be targeted at potential
customers rather than just anyone.
• If national coverage is aimed at (mass market)
then television and national newspapers can
be used.
• More local coverage might use local
newspapers, posters and billboards.
The profile of the target audience in
terms of age, income levels, interests
and so on –
for example advertising children’s toys
might be limited to the times children
are likely to be watching television.
Younger customers are likely to be
targeted via the kind of social media
platforms they use.
The message to be communicated –
where details about a product need to
be included then a written form of
advertising is appropriate.
Where the advert is centred on an
image then colourful TV or magazine
advertising might be used.
Other aspects of the marketing mix –
the media used must coordinate with
the other elements of the marketing
mix.
For example, choosing a glossy
woman’s magazine to advertise dog
food would be a waste of money.
Legal and other constraints –
a business must abide by the laws governing
advertising.
Depending on the country, advertising cannot be
misleading, cannot make false claims or claims
that advertisers cannot back up and cannot be
unfair.
Advertisers have to be especially careful to act
ethically at all times, taking extra care when
advertising to children, advertising potentially
harmful products and using psychological tactics
to stimulate demand.
An advert for a long-sleeve T-shirt
which claimed to "improve strength
and endurance” has been banned for
being misleading.
Sales promotion

Sales promotion refers to incentives

such as special offers or special deals
directed at consumers or retailers to
achieve short-term sales increases and
repeat purchases by consumers.
Sales promotions are known as below-
the-line promotions.
Sales promotions are a short-term method of
boosting sales volume and revenue, using such
tactics as price discounts, free products,
competitions, and discount coupons.
The immediate aim is short-term although sales
promotions can be used to complement national
advertising campaigns.
Advertising, on the other hand, aims at building
long-term customer awareness and confidence
in the product.
Sales promotions are an active
approach to marketing – consumers
often already know about the product
and the promotion is aimed at
encouraging increased purchases.
Sales promotions can be directed at :
• The consumer – this is called a ‘pull
strategy’ and the aim is to encourage
purchases
• The distribution channel – this is
called a ‘push strategy’ and the aim is
to encourage stocking and prominent
displays of a firm’s product
Sales promotions include :
• Promotional pricing or price deals
• Loyalty programs
• Money-off coupons
• Point-of-sale displays in shops
• Sampling and free trials
• Free products
• Games and competitions
Promotional Pricing or price deals
For example, short-term price
reductions, such as ‘10% off for one
week only’.
However, increased sales gained from
price reductions may not cover the lost
profit on each item. In addition, there
may be a negative impact on the
brand’s reputation as a result of the
discounted price.
Loyalty programmes
Points are “collected” with each
purchase and used to redeem rewards,
such as price discounts and free
products.
These schemes involve certain extra
administration costs for the business,
and the rewards offered will reduce
gross profits.
Money-off coupons
these offer customers price savings or
other incentives when the coupon is
redeemed at the time of purchase. People
may simply use these coupons to buy what
they were already planning to buy. It is
possible that, as a result of increased sales
prompted by the coupons, retailers will run
out of stock leading to disappointed
customers.
Point-of-sale displays in shops
these can be an ‘aisle interrupter’ which is
a sign that juts out into the shopping aisle
or a ‘dump-bin’ which is a centrally placed
bin filled with products and used to attract
people’s attention. The best display points
are usually offered to the market leaders
and producers of new products may have
to offer the retailer large discounts in order
to secure a prominent position.
Sampling and Free Trials
Sampling and free trials give
customers the opportunity to
experience products, often in small
quantities or for a short duration,
without purchasing the product.
Free Products
these may be in the form of additional quantities of the
same purchased product (e.g., buy one, get one free) or
specialty packages (e.g. value pack) that offer more
quantity for the same price as regular packaged
products.
Gross profit margins will be reduced by giving away free
products and future sales may fall as consumers now
have a stock of the product. In addition, consumers
may feel that the normal price is too high or that the
scheme is being used to get rid of stock that cannot be
sold otherwise. In either case, the reputation of the
business may suffer.
Games and competitions
for example on cereal packs.
 Direct
promotion
methods
Direct mail
Direct mail (sometimes referred to as
'junk mail') involves posting
promotional literature directly to
consumers' homes, which are selected
from a list of known customers via
market research.
It is a more personalised way of promoting
the business, but it often fails to produce a
large enough sales revenue to justify its
use.
Text messages and messages
communicated via social media are
replacing postal mail as a cheaper method
of direct contact with potential consumers
(e.g. double-glazing, insurance etc.).
Telemarketing
This includes all marketing activities using the
telephone, including market research.
The cost of telemarketing is less than personal selling
and it is easy to check the response rate. However
many people find cold-calling intensely intrusive and
irritating and they may reject the message just on
principal.
Telemarketing can be outsourced to an agency.

Cold-calling can be defined as making an unsolicited

phone call in an attempt to sell goods or services.
Personal selling
Personal selling refers to a member of
the sales staff who communicates with
one consumer with the aim of selling a
product and establishing a long-term
relationship between the business and
the consumer.
Personal selling can take the form of door-
to-door selling, trade fairs, and exhibitions.
These allow an opportunity for the
salesman to show how the products
actually work, to see the consumers'
reactions to the product, and to allow the
consumers time to discuss the
performance of the product with an
employee from the business.
It is also known as direct marketing, since
the business deals directly with the
consumers, rather than through an
intermediary such as a retail outlet.
Personal selling is usually used for
expensive, high profit margin items such as
cars or home improvements.
It is also used for expensive industrial
products.
One of the drawbacks of personal
selling is that customers may be
pressured into making a purchase that
they later regret, by sales staff who
stand to make a bonus on each sale.
These customers may then tell friends
to avoid this business.
Trade fairs and exhibitions
These are organized events that bring both
industry buyers and sellers together in one
central location. Businesses use trade fairs
to market their products to other
businesses e.g. wholesalers and retailers or
other businesses in their industry. While
sales may not be made, contacts are and
awareness of the product is increased.
Developments in digital promotion
Digital marketing methods are changing and evolving all the time
and digital promotion is the fastest growing form of promotion.
Digital promotion is the promotion of products using digital
technologies, including the internet and cell phones.
Methods of digital promotion include :
• Social media marketing
• Email marketing
• Online advertising – e.g. pop up ads and ads on websites
• Smartphone marketing
• Search engine optimisation (SEO)
• Viral marketing
Social media marketing – including Facebook, Twitter
and Instagram. The platforms chosen will depend on
which target group marketing managers are aiming to
connect with.
Influencers in social media are people who have built a
reputation for their knowledge and expertise on a
specific topic. They make regular posts about that topic
on their preferred social
media channels and generate
large followings of
enthusiastic, engaged people
who pay close attention to
their views. Brands love social
media influencers because
they can create trends and
encourage their followers to
buy products they promote.
A hashtag campaign
is a social media
marketing campaign
that surrounds a
specific hashtag that
a brand creates and
promotes. This is a
great way to
generate awareness
around a brand,
product, launch,
event and more. The #WantAnR8 campaign
Email marketing includes newsletters, purchase
confirmation emails, thank you emails and
emailed notifications of new products.

Search engine optimisation (SEO) is the art and

science of getting pages to rank higher in search
engines such as Google.

E-commerce refers to the buying and selling of

goods and services by consumers and
businesses through an electronic medium.
Viral marketing

Viral marketing refers to a technique in

marketing a product or a service where users
help in spreading the advertiser's message to
other websites or the users create a scenario
which can lead to multi-fold growth.

Marketers aim to spread the word about their

brand to a wide audience, and they often do this
by trying to make their content go viral.
Just like a biological virus, a viral
marketing campaign spreads from one
person to another, resulting in a large
number of views, a substantial amount
of social shares and remarkable brand
awareness.
Watch this advert :
https://www.youtube.com/watch?v=owGykVbfgUE
The ad video got amazing reviews and has more
than 59,000,000 (2022?) views, to date, on
YouTube.
A few months after the ad was launched, the ad
agency made a series of more than 200 short
ads featuring Isaiah Mustafa responding to
comments and questions posted on social media
platforms like Twitter and Facebook. The
campaign resulted in an increase in Twitter
followers of more than 1,000%, and over
600,000 people on Facebook ‘liked’ the ads!
Benefits of digital promotion
• Worldwide coverage
• Relatively low cost
• Easy to track and measure results – using web analytics to
measure response rates
• Personalisation – where the business’s customer database is
linked to the website then each visitor can be greeted
personally and with targeted offers
• Social media communication builds customer loyalty –
especially when the business is quick to respond to comments
or messages
• Content marketing – this is a type of marketing that involves
the creation and sharing of online material (such as videos,
blogs, and social media posts) that does not explicitly
promote a brand but is intended to stimulate interest in a
firm’s products or services.
• Website convenience increases sales
Limitations of digital promotions
• Time-consuming unless a digital promotion agency is used
(likely to be costly)
• Skills and training – employees need up-to-the-minute
knowledge and expertise
• Global competition – standing out against the competition can
be difficult and expensive
• Complaints and
feedback – any
negative feedback is
going to be visible to
everyone in the target
audience – responses
need to be quick and
effective.
Extension : measuring the success of promotions
In order to make better decisions in the future marketing
managers must collect information about current
campaigns. They can do this by :
• Examining sales performance before and after the
promotion campaign
• Collecting market research agency reports regarding
consumer recall and awareness
• Holding consumer panels to gathering qualitative
feedback on the impact/effectiveness of promotions
• Response rates to adverts can be monitored in various
ways
• Social media feedback is usually rapid and is becoming
the most widely used measure of marketing success
or failure
Packaging
Packaging has an important supporting
role to play next to promotion. Many
consumers will judge a product by its
packaging before buying it, so creating
appropriate, or compelling and alluring,
packaging will build first time buyers’
interest.

Packaging may literally be the product

identity.
In addition to this packaging is used to :
• protect and contain the product during
transportation or storage.
• promote the product, by distinguishing
it among other products through
vibrant colours, fonts or packaging
material and helping consumers to
recognise it.
For example, on a retail store shelf
attractive packing will play a vital role in
attracting the attention of the
customers.
But … it looks like EVERYONE got the memo!
• inform the customers about the
contents, ingredients, weight, and
size of the product.

Many governments make it

mandatory to print this information
on the packing of the products.
The packaging used for a product needs to
fit in with the overall image that the
marketing mix has cultivated for that
product.
Expensive chocolates, for example, need to
be presented in expensive looking
packaging.
 Distinctive packaging
can be used as a
basis for a
promotional theme –
think of the red of
Coca-Cola cans and
the iconic Coke
bottle.

Supporting the brand image of the product created by

However, expensive and wasteful
packaging will increase the cost of the
product, possibly reducing its
competitiveness, as well as increasing
external costs (environmental costs).
As a result, the use of recyclable material
in packaging is increasing. New packaging
methods such as tetra packs and wine in
boxes has revolutionised the promotion
and sale of some products.
HP's Boxless Laptop
Back in late 2008, Hewlett-Packard released a
laptop that boasted having 97% less packaging
than typical laptops. HP did it by packing the
laptop and accessories in a messenger bag, and
shipping multiple bags in large boxes to stores.
The laptop-in-a-bag was sold only through
Walmart and Sam's Club, and while it was a one-
off design, it was truly out of the box thinking.
Assignment – Short answers
1. Explain two reasons why a small specialist clothing
manufacturer might decide not to market online. [4]
2. Explain the term ‘direct marketing’. [2]
3. For which products might point-of-sale displays be a useful
form of promotion? [2]
4. Why is packaging an important aspect of promotion for many
consumer products? [3]
5. Explain the differences between advertising and sales
promotion. [2]
6. State three reasons why a business might advertise an
existing product. [3]
The role of
branding in
promotion
Branding

Branding refers to a strategy of

differentiating products from those of
competitors by creating an identifiable
image and clear expectations about a
product.
A business will try to build up brand loyalty
(where consumers are happy with their
purchase of a particular product, and will return
to purchase it again in the future).
A strong brand can enable the product to be
sold at a high price, resulting in a high profit-
margin for the product.
It can also provide a strong basis for the business
to launch new products, using the reputation of
its existing products to break into the market.
The aims of branding include :

• To aid consumer recognition

• To make the product distinctive
from competitors (differentiating it)
• To give the product an identity or
personality that consumers can
relate to
An effective brand identity will lead to :
• Greater brand recall by consumers
• Clearly differentiating the product from others
• The opportunity to establish a ‘family’ of
product under the same brand name
• Reduced price elasticity of demand due to
customer brand preference i.e. customers are
less likely to react negatively to an increase in
price.
• Increased consumer loyalty to the brand, which
is a major marketing benefit.
Some retailers, such as Pick n Pay, have
established their own brand. They do
not make their own products but buy
them labelled and branded from other
producers.
While this does increase the competition
faced by these producers it is also a way
for them to benefit from using any spare
capacity them may have.
Place
Why are place decisions an important part
of the marketing mix?
Place refers to:
• the stores and the retail outlets where
consumers can purchase the products
of the business
• the channels of distribution that the
business uses to get its products from
the factory to these outlets
The channels of distribution refer to
the chain of intermediaries that a
business chooses to use to transport
its product and make it available to
consumers (e.g. wholesalers,
distribution companies and retail
outlets).
Often, a manufacturer will sell its output
in a large quantity to a wholesaler, who
pays a low price per unit (this is known
as 'bulk purchasing').
The wholesaler then breaks this large
quantity into smaller batches, and sells
each batch to a retailer after adding on a
profit margin (this is known as 'breaking
bulk').
The retailer then sells each batch of
products to the consumer, after adding on
a profit margin.

The more intermediaries that exist in the

distribution of a product from a factory to
the consumer, then the higher the final
price of the product, since each
intermediary will add on a profit margin in
return for offering their services.
Channels of distribution
Direct selling (or direct marketing)
The product is passed directly from the
manufacturer to the final consumer e.g. dentist,
the online sale of airline tickets and farmers’
markets. This route is also likely to be used
where the goods are purchased infrequently but
in bulk, where they are large and expensive to
transport, or when they have been customised
for the buyer. The growth of Internet selling has
increased the usage of this channel.
Advantages of direct selling
• Quicker than other channels
• Producer has complete control over the
marketing mix i.e. how the product is
sold
• Direct contact with customers (useful
for market research)
• Products will be cheaper to consumers
as there are no intermediaries adding
mark-ups
Disadvantages of direct selling
• All storage costs are paid for by the producer
• It may not be convenient for consumers
• No advertising or promotion paid for by
intermediaries
• No after sales service offered by
intermediaries
• It can be expensive to deliver each item to
the consumer
• Consumers may not be able to see and try the
product before they buy (buying online)
Single intermediary channel
Retailers buy the product from the manufacturer
and sell it to the final consumers.
Modern retailers have increased in size and now
have much greater purchasing power than
previously.
This channel is usually used for consumer goods.

Examples include holiday firms selling via travel

agents, large supermarkets that hold their own
stock rather than using wholesalers and agents
selling industrial products to businesses.
Advantages of one-intermediary channels

• Producers can focus on production, and

selling is done by retailers
• Retailers are often in locations that are
convenient for customers
• When goods are bought by retailers, the risk
is reduced on the part of the manufacturer
• Storage costs for producers are reduced
• Retailers have product displays and other
after-sales services
Disadvantages of one-intermediary channel

• Profit mark-up imposed by retailers could

make the product more expensive
• Producers lose some control over the
marketing mix
• Retailers may sell products from other
competitors too i.e. there is no exclusive
outlet
• The producer will pass on delivery costs to
the retailer
Two-intermediary channel
This was the traditional channel in the consumer
goods markets. Small retailers depend on
wholesalers for supplies and manufacturers are
also keen to avail themselves the services of
wholesalers.
The wholesaler buys in bulk from the producer
and distributes to small retailers. However this
channel is becoming less popular as a result of
recent developments in retailing and the
Internet.
Advantages of the two-intermediary channel
• Wholesalers hold goods in bulk for the
producer, which reduces the producer’s stock
holding costs
• The wholesalers pays for the transport costs to
the retailer
• The wholesaler ‘breaks bulk’ by buying in large
quantities and selling in small quantities to
retailers
• It may be the best way to enter foreign markets
where the producer has no direct contact with
retailers
Disadvantages of the two-intermediary channel

• There is an additional intermediary in

the channel who will take a profit mark-
up thus further increasing the final price
to consumers
• The producer loses even more control
over the marketing of his product
• The distribution chain is slower
Has grown rapidly in recent years.
Benefits include :
• Relatively inexpensive
• Worldwide reach
• Consumers often interact with the website when
making purchases and leave important data about
themselves
• Convenient for many consumers
• Easy to keep accurate records on clicks/visitors and
can measure the success of various web promotions
• Computer and smartphone ownership is rapidly
increasing
• Selling products on the internet involves lower fixed
costs than traditional retail stores.
• Dynamic pricing – charging different prices to
different consumers – is possible
Limitations include :
• Poor internet connectivity and limited computer
ownership in some countries
• Consumers cannot touch, smell, feel or try on
tangible goods before buying, which may be a
problem for some products
• Product returns need to be dealt with
• The unreliability of postal services in some countries
may limit the number of people who buy online in
these countries
• Websites must be kept up-to-date and user friendly,
and good websites can be expensive to develop
• Concerns about internet security may hinder growth
of e-commerce
Selecting the channel of distribution will depend
on :
• The nature of the product
• The life of the product
• The level of service expected by consumers
• The technicality of the product
• The price of the product
• The geographical distribution of customers
• The number of consumers
• How much control does the firm want?
The nature of the product - industrial
products are usually sold through a direct
channel as compared to consumer products
that are often distributed through a wider
distribution channel.
The life of the product - a product with a
longer shelf life may use a longer channel of
distribution whereas products that are
perishable, such as fresh cream, fruits and
bakery products, will use a short channel of
distribution.
The level of service expected by
consumers, such as after-sales servicing of
a car, may mean that Internet selling is not
appropriate for many manufacturers.
The technicality of the product - products
that need a high level of technical
assistance may be sold directly by the
producers. For example, aeroplanes are
sold directly by the company without
having a network of retailers.
The price of the product - expensive
products are sold through a limited
number of outlets to emphasise their
exclusiveness and high quality.

The geographical spread of customers -

products sold to geographically scattered
customers use a network of wholesalers
and retailers. They might also use agents if
the product is sold in different countries.
The number of consumers - products that
are purchased often will probably be sold
through a network of wholesalers and
retailers to make them widely available.
Examples would include soaps and
shampoos.
The degree of control over the marketing
mix – direct selling gives a firm more
control e.g. over pricing.
The choice of distribution channel is important
because :
• Easy and convenient access for consumers is
important
• Outlets need to cover as much of the market
as possible, while still promoting the right
image of the product
• The more intermediaries that are used, the
higher their combined mark-ups will be,
raising the price of the product
Recent trends in distribution channels
• Increased use of the Internet for direct
selling of goods and services e.g.
Internet banking
• Large supermarket chains are now
duplicating the function of wholesalers
(a case of backwards vertical
integration). Some manufacturers now
own their own shops e.g. Sony (forward
vertical integration)
Digital and physical distribution

Any product that can be converted to digital

format can be widely distributed by digital
means. This bypasses traditional physical
distribution.

Digital distribution includes :

• Streaming
• Downloading of content
Music writers and performers can now :

• Distribute their music globally and expand to

a global fan base
• Avoid the costs of physical distribution
• Keep 100% of the revenue earned (??)
• Achieve a low carbon footprint
An integrated
marketing mix
An integrated marketing mix
Consumers are influenced by the range of
messages that the marketing mix sends them
when they are considering buying a product.
Where the marketing mix is confusing or
inconsistent they are unlikely to buy a product –
for example, if the product looks cheap but is
highly priced, consumers will wonder if they are
being overcharged or if the product’s quality is
higher than the appearance suggests. Either way
they are unlikely to buy it.
An integrated marketing mix
In order to achieve high, long-term sales the
marketing mix message needs to be clear and
unmistakeable.
The most effective marketing mix decisions must
be :
• Based on marketing objectives
• Affordable (within the marketing budget)
• Integrated and consistent across the four P’s
• Targeted at the appropriate consumers