Principles of Accountimg Unit 5/8

Promotion Mix

The specific blend of advertising, personal selling, sales promotion, public relations, and direct marketing tools that the company uses to pursue its advertising and marketing objectives.

Advertising

Paid messages disseminated through various media like TV, radio, online, and print to reach a broad audience.

Sales Promotion

Short-term incentives like discounts, coupons, or contests to encourage immediate sales.

Personal Selling

Direct interaction between a salesperson and potential customers to promote and sell products.

Public Relations (PR)

Managing a company’s image and building positive relationships with the public through media and events.

Direct Marketing

Direct communication with consumers through email, catalogues, or phone calls, aiming for a targeted response.

Non-personal communication (Advertising)

A mass non-personal communication, reaching large groups of buyers. It is not delivered by actual person and not addressed to a person

Increases Sales Volume (Advertising)

Advertising boosts product sales by reaching a broad audience and encouraging more customers to buy. It leads to increased demand, resulting in higher production and more profits.

Stabilises Sales Volume (Advertising)

Regular advertising helps maintain consistent sales by keeping products in consumers' minds. Repeated exposure ensures steady demand, even during off-seasons.

Builds Brand Loyalty (Advertising)

Effective advertising strengthens a brand’s relationship with its customers, fostering loyalty over time. It reinforces brand identity and values, making customers more likely to stick with it.

Opens New Markets (Advertising)

Advertising allows businesses to enter and establish themselves in new markets by promoting their products to different customer segments. It helps create awareness in previously untapped areas.

Controls Product Pricing (Advertising)

Advertising can control and maintain product pricing by informing consumers of official retail prices. This prevents price inflation by wholesalers and ensures price consistency.

Educates Consumers (Advertising)

Advertising provides essential information about products, their features, and benefits, helping consumers make informed purchasing decisions. It acts as a guide for choosing the right products.

Sales promotion

Short-term incentives designed to stimulate immediate consumer interest and boost sales of a product or service. It involves tactics such as discounts, coupons, contests, free samples, and loyalty programs to encourage quicker or larger purchases.

Sales promotion activities complement advertising and personal selling

Enhances the impact of advertising and personal selling by offering incentives that encourage immediate purchases.

Sales promotions offer fair margins to retailers

Manufacturers often offer allowances, deductions, or special deals to ensure retailers maintain fair profit margins while promoting products.

Sales promotions increase sales volume for sellers

Designed to drive immediate consumer action, increasing sales volume within a short period.

Sales promotions encourage customer loyalty

Such as loyalty programs or rewards points, encourage repeat purchases by offering ongoing benefits.

Boosts Immediate Sales (Sales Promotion)

Encourage quick consumer purchases by creating urgency through limited-time offers or discounts. This helps businesses clear inventory, drive immediate sales, and increase cash flow.

Attracts New Customers (Sales Promotion)

Effective in drawing new customers who may not have considered the product before. Special deals, samples, or introductory discounts entice potential buyers to try a new brand or product.

Encourages Repeat Purchases (Sales Promotion)

Promotions like loyalty programs or points systems incentivize customers to continue buying, fostering long-term relationships and increasing brand loyalty.

Supports Other Marketing Efforts (Sales Promotion)

Complements advertising and personal selling by driving immediate consumer action after a marketing message is delivered. It bridges the gap between awareness (created by advertising) and action (the purchase).

Clears Inventory (Sales Promotion)

Particularly useful for clearing out old or excess inventory, making room for new products and reducing storage costs.

Personal Selling

Direct, face-to-face interaction between a salesperson and a potential customer with the aim of persuading the customer to purchase a product or service.

Personalised Communication (Personal Selling)

Involves direct, face-to-face interaction between the salesperson and the customer, enabling personalised communication. This allows the salesperson to tailor their message to the specific needs, preferences, and concerns of the customer, enhancing the effectiveness of the sales approach.

Two-Way Interaction (Personal Selling)

Unlike other forms of promotion, personal selling is a two-way communication process. The salesperson can receive immediate feedback, answer questions, and address any objections or concerns the customer may have, fostering a more engaging and responsive sales environment.

Relationship Building (Personal Selling)

Helps in building long-term relationships with customers, as it allows salespeople to establish trust and rapport. Over time, this trust can lead to repeat business and customer loyalty.

Customised Solutions (Personal Selling)

Salespeople often provide customised solutions tailored to the specific needs of the customer. This is particularly useful in industries where the product or service is complex or high-value, and customers require tailored offerings.

Persuasion and Negotiation (Personal Selling)

Relies heavily on the salesperson’s ability to persuade and negotiate. Salespeople use their skills to influence the customer’s decision-making process, helping them understand the benefits of the product or service.

Complex Product Sales (Personal Selling)

Particularly effective for high-involvement, complex products that require explanation or demonstration, such as machinery, electronics, or bespoke services. It allows the salesperson to guide the customer through the intricacies of the product.

Direct marketing

A promotional method where businesses communicate directly with potential customers to promote products or services, bypassing intermediaries. It involves personalised outreach aimed at eliciting an immediate response, such as a purchase, enquiry, or subscription.

Direct Communication (Direct Marketing)

Involves businesses communicating directly with their target audience without intermediaries. The interaction is typically personalised, aiming for a one-to-one connection with potential customers.

Targeted Approach (Direct Marketing)

Highly targeted, focusing on specific customer segments based on demographics, behaviour, or past interactions. This ensures that the marketing message is relevant and tailored to the recipient.

Measurable Results (Direct Marketing)

Businesses can track response rates, conversions, and ROI, allowing them to analyse the effectiveness of the campaign and make adjustments.

Personalisation (Direct Marketing)

Allows for a high level of personalisation, enhancing customer engagement and increasing the chances of conversion.

Immediate Response (Direct Marketing)

Designed to elicit an immediate response from the recipient, whether it's making a purchase, signing up for a service, or enquiring for more details.

Targeted Marketing (Direct Marketing)

Allows businesses to focus their efforts on specific customer segments, ensuring that the message reaches individuals who are most likely to be interested in the product or service. This targeting can be based on demographics, past purchases, or customer behaviour, leading to higher conversion rates.

Cost-Effective (Direct Marketing)

Compared to mass marketing techniques like TV or print advertising, direct marketing can be more cost-effective. Businesses can focus their resources on targeted campaigns rather than reaching a broad audience, reducing waste and maximising return on investment (ROI).

Measurable Results (Direct Marketing Advantages)

Businesses can track key performance indicators (KPIs) such as open rates, click-through rates, and conversion rates, allowing for detailed analysis of the campaign’s effectiveness.

Personalisation (Direct Marketing Advantages)

Provides an opportunity for businesses to personalise their messages based on customer preferences, behaviour, or purchase history, which helps build stronger customer relationships.

Higher Engagement (Direct Marketing)

Often personalised and targeted, it tends to have higher engagement rates. The recipient is more likely to respond because the message is relevant to their needs or interests.

Builds Long-Term Relationships (Direct Marketing)

Especially through methods like email newsletters or loyalty programmes, helps businesses maintain regular contact with customers, fostering long-term relationships. This regular engagement can encourage repeat business and customer loyalty.

Encourages Immediate Action (Direct Marketing)

Campaigns are typically designed to prompt immediate action, whether it’s making a purchase, signing up for a service, or responding to a promotion.

Flexible and Adaptable (Direct Marketing)

Highly flexible and adaptable, allowing businesses to quickly adjust their strategies based on market trends or customer feedback. Businesses can also test different messages, formats, or offers through A/B testing to determine which approach is most effective.

Customised Offers (Direct Marketing)

Allows businesses to offer personalised promotions or discounts to specific customer segments, making the marketing message more appealing and relevant.

Public Relations (PR)

An effort to create a favourable attitude towards the products, services and the firm among employees' shareholders, suppliers, customers, the government and the society at large.

Public Relations advantages

An efficient indirect communication channel for promoting the sales of the firm’s products.

Publicity

A non- personal stimulation of demand for a product, service or business unit by planting commercially significant news about it in a published medium, or obtaining favourable presentation of it on radio, television or stage, the sponsor does not pay for that

Online marketing

Allows the company to include not just product information but also many details about the company’s existence and certain other details on the services that the company has been providing over the years.

Features of Online Marketing

The Internet provides enormous opportunities for advertisers, who can then give the customer more information about a particular product that they are endorsing.

Distribution Channel

A path traced in the direct or indirect transfer of ownership to a product, as it moves from a producer to the ultimate consumers or industrial users.

Place Utility

The utility added to goods by moving them from one place to another through distribution channels.

Time Utility

The utility added to goods by making them available to consumers when they want them through distribution channels.

Ownership Utility

The utility created by the transfer of title to goods through distribution channels, giving possession or ownership to the consumer.

Product Characteristics

Various aspects of a product like its type (consumer or industrial), nature (durable or perishable), bulk, size, uses, price, fashion changes, purchase frequency, and required after-sales services.

Customer Characteristics

Factors related to customers like the number of potential buyers, their geographical spread, purchase frequency and regularity, average purchase size, and buying motives.

Marketing Intermediaries Characteristics

Features of middlemen such as the number available, willingness to distribute, location, size, financial strength, product lines, sales potential, and behavior.

Supply Characteristics

Aspects of supply like the number of producers or suppliers, their concentration or dispersion, and the quantity of their supplies.

Intensive Distribution

Distributing a product through as many channels as possible to achieve maximum market coverage.

Selective Distribution

Distributing a product through a selected number of intermediaries to gain adequate market coverage while maintaining control.

Exclusive Agency Distribution

Distributing a product through a single agency to provide exclusive representation in a particular market.

Direct Channel

A distribution method where the manufacturer sells products directly to the final consumers or industrial users without any intermediaries.

Indirect Channel

A distribution method that involves selling through one or more intermediaries or middlemen.

Wholesaler

A channel member that buys goods in large quantities and sells them in smaller units to retailers.

Retailer

A channel member that buys goods from wholesalers and sells them in small units to the ultimate consumers.

Agents

Intermediaries that help manufacturers distribute goods to wholesalers and retailers, earning a commission for their services.

Channel Management

The strategic process of overseeing and maintaining relationships between the different intermediaries involved in the distribution of products.

Logistics

The physical movement of goods through the channel, including transportation, warehousing, inventory management, and delivery.

Grading

Sorting out goods in a warehouse into different grades based on quality, size, shape, etc., to increase the utility of the goods.

Customer Characteristics

Factors that includes the number of potential buyers, their geographical dispersion, their frequency and regularity of purchases, their average purchases and their buying motives.

Physical Handling

activities like transporting and warehousing of goods.

Price

The amount of money paid or payable to acquire a product and its accompanying services.

Cost of Production

The expenses incurred in manufacturing a product, including raw materials, labor, and overheads.

Market Demand

The level of desire and willingness of consumers to purchase a product.

Competition

The presence of rival companies offering similar products.

Target Audience

The specific group of consumers a company aims to attract.

Government Policies

Regulations and taxes that impact pricing by adding additional costs to products or services.

Economic Conditions

External economic elements that affect both the cost of production and consumer spending power.

Brand Positioning

The image and perception of a brand in the market.

Pricing for Target Return (ROI)

A pricing objective that aims to achieve a specific rate of return on investment.

Market Share

A company’s percentage of total sales in a specific market.

Profit Maximization

A strategy that aims to maximize profits on total sales, typically in monopolistic markets.

Stabilize Price

A strategy that aims to maintain stable prices over time to avoid sharp fluctuations.

Discount and Allowance Pricing

Reducing prices to reward customer behaviors such as bulk purchases or early payments.

Segmented Pricing

Adjusting prices to reflect differences in customer segments or geographic locations.

Psychological Pricing

Setting prices just below whole numbers to make a product seem more affordable.

Promotional Pricing

Temporarily reducing prices to boost short-term sales or clear inventory.

Geographical Pricing

Adjusting prices based on a customer’s location to account for differences in costs and demand.

Dynamic Pricing

Real-time price adjustments based on market conditions or customer profiles.

International Pricing

Adjusting prices across different countries based on local market conditions and regulations.

Product Line Pricing

Setting different price points for various products in a single product line.

Optional-Product Pricing

Pricing optional accessories or features separately from the main product.

Captive-Product Pricing

Offering a main product at a lower price while setting higher prices for necessary additional products.

By-Product Pricing

Selling by-products to offset the costs of the main product.

Product Bundle Pricing

Offering multiple products together at a discounted price.

Market-Skimming Pricing

Setting high prices initially to target consumers willing to pay a premium, then reducing prices.

Market-Penetration Pricing

Setting low prices initially to attract a large customer base.

Sound Price Policy

A pricing strategy designed to maximize profits while ensuring customer satisfaction and fair pricing.

Resource Mobilization

A pricing objective that ensures sufficient funds are generated to support a firm’s expansion.

Brand

A symbol of the product; A comprehensive term conveying the positioning of the product in the marketplace; A unique signature of the product and a symbol of the creative process of product development; The value of the expectations or service perceived by the consumer.