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Advertising- This component targets large, geographically dispersed audiences, often with high frequency. It has low cost per exposure, although the overall costs are high. Consumers perceive advertised products as more legitimate. It dramatises the corporate image and the brand of the business. Advertising enable businesses to build their brand image. It may stimulate short-term sales. It is impersonal as it follows the one-way communication. Also, advertising is very costly
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Personal Selling- This is the most effective tool for building buyers’ preferences, convictions and actions. The personal interaction enables feedback and adjustments. It is relationship-orientated. Buyers are more attentive. The sales force of personal selling represents a long-term commitment. Personal selling is the most expensive promotional tool
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Sales Promotion- This component reaches both trade and final customers. It makes use of variety of formats: premiums, coupons, competition, etc. It attracts attention, offers strong purchase incentives, dramatises offers and boosts dropping sales. Sales promotion stimulates quick response. However, it is short-lived and not effective at building long-term brand preferences
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Public Relations- This component is highly credible and very believable. There are many forms of public relations: news stories, news features, events and sponsorships, etc. Public relations reach many prospects missed via other forms of promotion. It dramatises the company and its products. It is often the most under used component in the promotional mix. The cost of public relations is relatively low
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Direct Marketing- There is many forms of direct marketing: telephone marketing, online marketing, etc. It has four distinctive characteristics: non-public, immediate, customised and interactive. It is best-suited to highly-targeted marketing efforts
Businesses need to consider the following factors, when setting the promotional mix:
- Type of product/market
- Push and pull strategy
- Buyer readiness stage
- Product life cycle
Type of product/market
The importance of various promotion tools varies between consumer and business markets. Consumer markets companies usually spent money on advertising, then sales promotion, personal selling and public relations. Industrial goods companies usually spend money on personal selling, then sales promotion, advertising and public relations
Push and pull strategy
The promotional mix is affected heavily whether; the business uses a push or pull strategy.
Push strategy is when the sales force and trade promotion “pushes” the product through the channels of distribution. In the channel of distribution, the producer promotes the product to wholesalers, wholesalers to retailers, retailers to the final customer.
Pull strategy involves spending a lot of money on advertising and promotion to build up consumer demand. If the strategy becomes successful, consumers will ask retailers for the product, retailers will ask wholesalers and wholesalers will ask producers- this “pulls” the product through the channel of distribution.
Buyer readiness stage
The effects of promotional tools vary the different buyer readiness stages, i.e. awareness, knowledge, liking, preference, conviction and purchase. The buyer readiness stage is also called the Hierarchy of Effects. Advertising and public relation are used in the awareness and knowledge stages. Personal selling is used in the liking, preference and conviction stages. The purchase stage is mostly done with sales promotion.
Product life cycle
A product life cycle consists of five stages that a product goes through from birth to death. The five stages of the product life-cycle are development stage, introduction stage, growth stage, maturity stage and decline stage.
Here are some general guideline as to how and when to emphasise different parts of the mix according to the stages of a typical product life cycle (see illustration):
The development stage/introduction
The product life cycle starts at the introduction stage. This stage shows the product is being developed and tested. This may take years and losses made due to heavy development costs.
In this stage, many businesses will use light advertising, public relations (PR) for awareness, and sales promotion for trials.
The growth stage
The product is the ready to be placed on sale nationally. If the sales begin to grow rapidly, the product is a success, if not, the business and the product has failed. At this stage competition is beginning to enter the market.
In the growth stage, many businesses will use advertising, public relations, sales promotion, branding and brand marketing, personal selling for distribution.
The maturity stage
At this stage, the product continues to be brought by numerous of customers. In other word, the same product is being carried again and again. The maturity stage is often the longest in practice and many successfully products/services is in this stage, e.g. Bank of England, Nationwide, Lloyds TSB, Barclays, HSBC, etc.
In the maturity stage, businesses will minimise their adverting, and use sales promotions and personnel selling, to remind and persuade consumers to purchase their brand.
The decline stage
This is the final stage of the product life cycle. This is when the sales of the product start to fall down. This takes place when it becomes out of fashion or has been replaced because of the changes in taste or technology
In the decline stage, businesses will reduce advertising and public relations, limit sales promotions, and use personnel selling for distribution.
There are a number of factors that can affect the promotional mix, e.g.:
- Competition and promotional practices
- Promotional budget available
Created by Baljinder Duhra -