Notes Marketing Management Unit III Promotion and Distribution

1. Promotion & Distribution
Unit III

2. Communication Process
Sender -> message content, structure, format, source
Message Encoded ->
Decoded ->
Receiver
Media
Selection
Response
Selective Attention Selective Distortion Selective Recall
Design msg to win attention Prevent distortion by Relate msg with long
keeping msg simple & clear term memory

3. Developing Effective Communication
• Marketing communicator follows 8 steps:
▫ Identifying the target audience
▫ Determine the communication objectives
▫ Design the message
▫ Select the communication channels
▫ Establish the total promotion budget
▫ Decide on the promotion mix
▫ Measure promotion’s results
▫ Coordinate IMC process

4. • Identifying Target Audience:
▫ Assess audience’s current image of the company,
its products and its competitors.
• Determining the Communication Objectives:
▫ E.g. merely purchase, high satisfaction or
favourable word of mouth.
▫ Marketer can be seeking a cognitive (rationality of
audience), affective (emotionality) or behavioural
response.
▫ Moves in hierarchy:
Awareness -> Knowledge -> Liking -> Preference -> Conviction -
> Purchase

5. • Designing the Message:
▫ Message should gain Attention (A), hold Interest
(I), arouse Desire (D) and elicit Action (A).
▫ Designing the message will require solving 4
problems: what to say (message content); how to
say logically (message structure); how to say it
symbolically (message format); and who should
say it (message source).
• Selecting the Communication Channels:
▫ Personal communication: face-to-face, one-to-
many, telephone, through mails
▫ Non-personal communication: media and events

6. • Establishing the Total Promotion Budget
▫ Based on affordability
▫ Based on % of sales
▫ Based on competition
▫ Based on objective and task
• Deciding Promotion-mix
▫ Advertising
▫ Sales promotion
▫ PR
▫ Personal selling
▫ Direct marketing

7. Promotion-mix or promotion tools are:
• Advertising: any paid form of non-personal presentation
and promotion of ideas, goods or services by an identified
sponsor.
• Sales Promotion: a variety of short term incentives to
encourage trail of purchase of a product or service.
• Publicity (PR): a variety of programs designed to promote /
protect company’s image or its products.
• Personal Selling: face to face interaction with one or more
prospective purchasers for the purpose of making
presentations, answering questions, and procuring orders.
• Direct Marketing: use of non-personal contact (mail,
telephone, email etc.) tools to communicate directly (without
middlemen) with customers or prospects.

8. Advertising
• Advertising is any paid form of non-personal
presentation & promotion of ideas, goods or
services by an identified sponsor.
• Advertising is a cost effective way to disseminate
messages, to build brand preference & to
educate people.
• Advertising goals pertain to sales, image,
attitude & awareness.

9. Role of Advertising
• Attention – to bring the existence of company’s
product in the attention of the target segment.
• Interest – to create ‘interest’ in the product by
focusing on attributes, which is of interest to the
consumers.
• Desire – to persuade them to make purchase, to
stimulate demand for their product.
• Action – final purchase or not-to-use stage. The
buyer decides finally, to make the purchase (action)
or not to make the purchase (no action i.e. not
stimulated by the advertisement).

10. 5 Ms of Advertising
• Mission:
▫ Sales goals and Advertising objectives
• Money: factors to consider –
▫ Stage in PLC, Market share and Consumer base,
Competition, Advertising frequency, Product
suitability
• Message:
▫ generation, evaluation and selection, execution and
review of message
• Media:
▫ Reach, Frequency and Impact, type of media, timing,
geographical coverage
• Measurement:
▫ Communication impact and Sales impact

11. Types of Advertising
• Scientific Copy – technical specifications of a
product are explained.
▫ E.g. Suffola – low cholesterol edible oil
• Descriptive Copy – product attributes are described.
▫ E.g. Samsung – galaxy note
• Narrative Copy – a fictional story is narrated.
▫ E.g. NACO’s HIV campaign
• Colloquial Copy – an informal conversational
language is used to convey the message.
▫ E.g. harvest bread

14. Evaluating Advertising Effectiveness
• DAGMAR approach given by Colley
▫ Defining advertising goals for measured advertising
results.
▫ Approach refers to turning of advertising objectives
into specific measurable goals.
▫ An advertising objective is a specific communication
task and achievement level to be accomplished with a
specific audience in a specific period of time.
▫ Advertising objectives can be classified according to
whether their aim is to Inform, Persuade or Remind.

15. • Communication-effect Research:
▫ Seeks to determine whether an ad is communicating
effectively, called as ‘copy testing’.
▫ It is done before and after the ad is put into media.
▫ It uses 3 methods to test advertising:
 Direct rating method: asks consumers to rate alternative
ads.
 Portfolio tests: asks consumers to view or listen to a
portfolio of advertisements, taking as much time as they
need. They are then asked to recall the ads and their
content. Their recall level indicates an ad’s ability to
stand out.
 Laboratory tests: use equipment to measure consumers’
physiological reactions – heartbeat, blood pressure, pupil
dilation, perspiration – to an ad.

16. • Sales-Effect Research
▫ E.g. what sales are generated by an ad that increases
brand awareness by 20% ad brand preference by 10%.
▫ It measures advertising results based on Share of
Market against Advertising Expenditure.
▫ 2 Types to find out over-spending or under-spending:
 Historical Approach: Correlating past sales to past
advertising expenditure
 Experimental Design: instead of spending normal % of
advertising budget in all territories, company spends
more in some and less in other territories. If the high-
spending tests produce substantial sales increase, it
appears that company has been under-spending.

17. Sales Promotion
• A diverse collection of incentive tools (coupons,
samples) designed to stimulate quicker or greater
purchase of company’s products / services by the
consumers.
• Sales Promotion include tools for:
▫ Consumer Promotion – samples, coupons, cash refund
offers, price-off/ discounts, gifts, patronage rewards,
free trails, warranties, PoP displays & demonstration.
▫ Trade Promotion – advertising, discounts, display
allowances, trade shows & conventions.
▫ Sales Force Promotion – trade fairs, roadshows,
contests & specialty advertising.

18. Sales Promotion: Objectives
• To attract product trails.
• To increase repurchase rates of occasional users.
• To yield faster sales.
• To attract the brand switchers.
• Inducement toward sales.
• Sales promotion yield more measurable response than
advertising does. (e.g. how many filled coupons received?)
• Good for small-share competitors because they can’t afford to
match the market leader’s large advertising budgets.

21. Public Relations (PR) and Publicity
• 3 distinct qualities:
▫ High credibility: News, stories and features are more
authentic and credible to readers than ads.
▫ Ability to catch buyers off guard: Public relations can
reach many prospects who prefer to avoid salespeople
and advertisements. The message gets to the buyers as
news rather than as a sales-directed communication.
▫ Dramatization: Like advertising, public relations has
the potential for dramatizing a company or product.

22. Personal Selling
• 3 distinctive features:
▫ Personal confrontation: Personal selling involves an
alive, immediate, and interactive relationship between
two or more persons. Each party is able to observe the
other’s needs and characteristics at close hand and
make immediate adjustments.
▫ Cultivation: Personal selling permits all kinds of
relationships to spring up, ranging from a matter of
fact-selling relationship to a deep personal friendship.
▫ Response: Personal selling makes the buyer feel under
some obligation for having listened to the sales talk.

25. Direct Marketing
• Many forms of direct marketing exists – direct mail,
telemarketing, electronic marketing.
• 4 characteristics:
▫ Non-public: The message is normally addressed to a specific
person.
▫ Customized: The message can be customized to appeal to the
addressed individual.
▫ Up-to-date: A message can be prepared very quickly for
delivery to an individual.
▫ Interactive: The message can be altered depending on the
person’s response.

26. Channels of Distribution

27. Channels of Distribution
• Products must be brought to within reach of
consumers for use or consumption.
• Any series of firms or individuals who participate in
the flow of goods from producer to consumer/ final
user, refers to as Marketing/ Distribution/Trade
Channels.
• Distribution means ‘availability of the product’ (for
e.g. %age of total outlets reached)
• Distribution channels are sets of interdependent
organisation involved in the process of making a
product or service available for use or consumption.

28. • Short/ Single Channel:
▫ Producer  Consumer (zero-level)
▫ Producer  Retailer  Consumer (one level channel)
• Long/ Multiple Channel:
▫ Producer  Agent  Wholesaler  Retailer  Consumer
• Marketing channel involves – transporters, stockiest,
agents & merchants, sales force, advertising agencies etc.
who helps in distribution process, are known as
intermediaries or middlemen.
• Marketing channel are associated with –
▫ Change of ownership & risk
▫ Financing & payment
▫ Communication/ Information
▫ Logistics (physical distribution)

29. • Types of Intermediaries:
▫ Company Sales force: company owned / hired direct
sales force, assigned to different territories to contact all
prospects in the area, or develop sales in those regions.
▫ Manufacturer’s Agency: agents that represents & sells
the goods of several manufacturers.
▫ Broker: Whose job is to bring together buyers and
sellers and who does not carry inventory.
▫ Merchant: Who buys, takes title of goods and re-sells
merchandise.
▫ Agent: works for commission and does not take title to
the goods.
▫ Wholesaler: a business enterprise that sell
goods/services to those who but for re-sale or business
use.

30. Functions of Distribution Channels
• Buy in large quantities from manufacturers & sell in
smaller quantities to the buyer who demands less
quantity & wide variety of goods (adjust discrepancy of
quantity).
• Offer a complimentary mix of goods to the buyer,
making purchase easier for buyer.
• Serve a local market territory & deliver goods to local
customers, making goods widely available & accessible to
target markets.
• Provides local warehousing, inventory for quicker
delivery.
• Some take title of goods (ownership) thus, improving
cash flow to producer.
• Some grant credit to customers, making it easy to buy.
• Provide market information to manufacturer. Saves cost
to the producer.

31. CoD as cost saving function
• M1  C • M1 C
• M2  C • M2  D  C
• M3  C • M3 C
• MxC=3x3=9 • M+C=3+3=6

32. • Middlemen are used because they oftentimes
can perform certain functions more effectively
than producers.
• For e.g. Maruti sells its cars through dealer
outlest.
• Chewing Gum manufacturer would not find it
practical to establish small retail gum shops. It
would have to sell gum along with many other
small products in the grocery store or drug store
for extensive distribution.

33. Channel Design Decisions
• What is ideal, feasible & available?
• Designing a channel system calls for –
▫ Analyzing customer needs i.e. types and levels of
services that people want & expect say, product
variety, service backup (add on services like credit,
delivery, installation, repairs)
▫ Establishing Channel Objectives:
 Which market segments to cater
 Vary with product characteristics (perishable, bulky
products, high value products)
 Strengths & weaknesses of the intermediaries
 Market environment -> economic depression means
shorter channel.

34. ▫ Identifying Channel Alternatives:
 Types of available intermediaries – like company sales
force, manufacturer’s agent/agency etc.
 Number of intermediaries: 3 strategies are available:
1) Exclusive Distribution
 limited no. of middlemen,
 great control over the product
 sellers do not carry competing brands
 increases products' image and allow high margins.
2) Selective Distribution
 usually more than a few amount of middlemen but not all of
the middlemen who are willing to carry the manufacturer’s
product.
 adequate market coverage with more control and less cost
than intensive distribution.
 Selected intermediaries

35. 3) Intensive Distribution
 The manufacturer places the goods in as many as outlets as
possible.
 Great intensity of distribution.
 Generally used for convenience items.
▫ Evaluating The Channel Alternatives
 Economic criteria: each channel alternatives will produce a
different level of sales and costs. Say, company’s sales force
who are better trained to sell but limited or very few within
number whereas, a sales agency who have more
representatives to make product sell; though not effectively
trained.
 Control criteria: direct control is effective. However, sales
agency is required for intensive distribution, the control
problem is severe in such a case. Agents also may not have
technical details of company’s products.
The producer needs to seek channel structures and policies that
maximize control and ability to change marketing strategy
swiftly.

36. Channel Management Decisions
▫ After a company has chosen a channel alternative,
individual intermediaries must be selected, motivated
and evaluated. Also channel arrangements must be
modified overtime.
• Selecting Channel Members:
▫ Evaluate intermediaries no. of years in business
▫ Product lines carried out by him
▫ Growth & profit records
▫ Reputation
▫ Size & quality of sales force
▫ Store’s location, future growth potential and type of
clientele.

37. • Motivating Channel Members:
▫ Intermediaries can aim for a relationship based
on:
 Co-operation: through +ve motivators, such as high
margins, special deals , premiums, joint advertising,
sales contests. Through –ve motivators like threat to
reduce margins, slow down delivery or termination
of relationship.
 Partnership: for market coverage inventory levels,
mktg information, technical advice & services.
 Distribution Programming: jointly plan the
merchandising programs, sales training
requirements & advertising-promotional plans.

38. • Evaluating Channel Members:
▫ Against standards such as sales quota attained,
average inventory level maintained, customer
delivery time, treatment of damaged & lost goods
and cooperation in promotional & training
programs.

39. End of Unit III