IB Business and Management Marketing 4.5 PRODUCT

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IB Business and Management Marketing 4.5 PRODUCT

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IBBusinessandManagement.com IB Business and Management The IB Diploma Business and Management course delivered IN STYLE, ONLINE. ©

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z promotion 4.5

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z promotion Communicating messages to the market with the intention of selling a firm’s products advertising Sales promotion Personal selling Direct mail Trade fairs sponsorship Public relations Social media

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z Promotional objectives Increase sales by raising consumer awareness of a new product Remind consumers of an existing product & its distinctive qualities Encourage increased purchases by existing customers or attract new customers Demonstrate the superior specifications or qualities of the product Create or reinforce the brand image or ‘personality’ of the product Correct misleading reports about the product or business after negative events Develop or adapt the public image of the business – rather than the product Encourage retailers to stock & actively promote products to the final consumer When writing about the promotion of a product, try to consider the marketing objectives of the business. Is the promotion being used likely to help achieve these objectives?

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z Above-the-line promotion A form of promotion that is undertaken by a business by paying for communication with consumers, e.g. advertising television internet magazines newspapers sponsorship billboards Can be informative or persuasive

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z Atl – which media to use? The bigger the firm & the greater the advertising budget is the more ‘media’ choice there is. Factors to consider: question: 4.5.1, p. 562

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z Below-the-line promotion Promotion that is not a directly paid-for means of communication but based on short-term incentives to purchase; e.g. sales promotion techniques Sales promotion: incentives such as special offers or special deals directed at consumers or retailers to achieve short-term sales increases & repeat purchases by consumers e.g. objective = increase sales by 30% Strategy = decrease price for product by 20% in month of june

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z Promotional methods Price promotions Temporary reductions in price (discounting). Aimed at encouraging existing customers to buy more & new customers to buy the product Limitations Gross profit on each item negatively affected Negative impact on brand image from lower price coupons More versatile & better-focussed way of offering a price discount Limitations Encourage consumers to buy what they would have bought anyway Careful coordination with retailers to cater for increases in demand Customer loyalty schemes Focussed on encouraging repeat purchases & discouraging consumers from shopping with competitors. Generate a large amount of useful customer data. Limitations Cost of incentives Reduces gross profit on each purchase Administration costs Many consumers have many loyalty cards so impact can be reduced bogof Buy one get one free encourages multiple purchases & reduces demand for competitors’ products Limitations Substantial reduction in gross profit margin Current sales may increase but future sales decrease as customers have stocked up on the item Point-of-sale displays Maximum impact on consumer behaviour is achieved by attractive, informative & well-positioned displays in stores Limitations Best display points are usually offered to market leaders New products may struggle for the best position in stores – unless big discounts are offered to retailers Public relations The use of free publicity by newspapers, tv & other media to communicate with & achieve understanding of the public Limitations Not easily controllable as some ‘free publicity’ might not be positive towards the company or its products; e.g. newspaper reviews sponsorship Payment by a company to team owners or event organisers so that the company’s name becomes associated with the event Limitations The success of the sponsorship is largely out of the company’s control. If a team loses every match or the event is a failure, this might reflect badly on a sponsor

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z The combination of promotional techniques that a firm uses to communicate the benefits of its products to its customers The promotional mix intro growth maturity decline Informative advertising & pr to make consumers aware of the product Sales promotion offering free samples or trial periods to encourage consumers to test the product Focus shifts to brand building & persuasive advertising Sales promotion to encourage repeat purchases Attempt to build brand loyalty Advertising to emphasise the differences between this product and competitors Sales promotion incentives to encourage brand development & loyalty Minimal advertising, unless extension is an objective Sales promotion – there may be little additional support for the product if the intention is to withdraw it

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z Promotional mix – the aims: AIDA can be used as a set of criteria for judging the success of a promotional campaign attention interest desire action The promotional mix should raise existing & potential customers’ awareness of the product by engaging their attention It should stimulate & keep customers interested, perhaps by using memorable & interesting advertisements It should generate a feeling of ‘need’ for the product, perhaps through the use of free samples to lure customers It is vital that the promotional mix encourages customers to take action; i.e. to purchase the product question: 4.5.2, p. 564 question: 4.5.3, p. 566 question: 4.5.4, p. 568 question: 4.5.5, p. 570

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