4.3.

2 Place – distribution channels:

What is place?

Place element of the marketing mix is the process of moving products from the producer to the
intended user.

Methods of distribution (Distribution channels)

What is a distribution channel?

Distribution channel refers to the route taken by a producer to the customer.

There are several distribution channels as shown below:

PRODUCER

Wholesaler Agent

Retailer Wholesaler

Agent
Retailer Retailer

CONSUMER

The firm can use intermediaries (middlemen) such as retailers and wholesalers as shown above
or sell the product on its own. The producer may also use more than one channel of
distribution.

Importance of using middlemen in the channel of distribution.

1. They relieve the producer the burden of storage and transportation of the final product.
2. The break the bulk on behalf of the producer.
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 3. They sell in convinient location.
4. They add value to the product through packaging, delivery, and giving guarantees.
5. They provide important feedback to the producer regarding the latest trends in the
market.

Limitations of using middlemen in the channel of distribution (Advantages of eliminating

middlemen from the channel of distribution).

1. Decreased cost of marketing: This is because the middlemen usually make the products
expensive by adding a profit margin to the product. Hence the product can lose a
competitive advantage to rival products in the market.
2. Goods reach faster into the market: By eliminating middlemen the firm can ensure the
products reach faster to the market by opening their own retail outlets. This can ensure
customer satisfaction.

a) Retailers:
Definition of retailers?

Retailers are middlemen who buy from wholesalers, break bulk and sell to the final consumers.

Types of Retailers

1. Independents: A number of shops in several locations having different shop fronts but
one owner.
2. Supermarkets.
3. Department stores – Departmental stores are large stores split into selling departments
such as menswear, nightwear, cosmetics and gifts.
4. Multiple shops or Chain stores – A number of shops in several locations having similar
shop fronts and products.
5. Superstores or Hypermarkets – very large stores outside town offering a wide variety
of goods under one roof.
6. Kiosks and Street vendor.
7. Marker traders.
8. On-line retailers.

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 b) E-retailers (E-commerce)
i) E-Commerce

What is e-commerce?

E-commerce is the buying and selling of goods and services using an electronic network, such as
the internet.

i) E-Retailers (Online retailers)

Definition of e-retailer?

E-commerce is the buying and selling of goods and services using an electronic network, such as
the internet.

Advantages of E Commerce
1. The operating cost is less as the firm does not need a fancy store where the goods are
regularly displayed and transactions take place
2. The cost of developing a website is less than the cost of setting up a store.
3. Consumers can shop 24/7.
Disadvantages of E Commerce
1. Delivery cost is involved, especially for people living far away
2. Difficult to understand credit card forgery.
3. There is lack of human contact which does not suit some customers.

4.3.3 Promotion
What is promotion?
Promotion is an element of the marketing mix that attempts to draw attention to a product or
business so as to gain new customers or retain existing ones.

It gives the consumers information about the rest of the marketing mix. That is, without it,
consumers would not know about the product, the price it sells for or the place where the
product is sold.

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 The aims of promotion
1. To obtain and retain customers.
2. To make consumers aware or increase awareness of the product.
3. To remind consumers about the product. This can encourage existing consumers to repurchase
the product and may attract new consumers.
4. To show that a product is better than that of a competitor. This may encourage consumers to
switch purchases from another product.
5. To improve or develop the image of the business.
6. To reassure consumers after the product has been purchased. This builds up confidence in the
product and may encourage more to be bought at a later date.

Promotional strategies for different market segments:

These are also known as elements of promotion. They include:

Above the line and below the line promotional techniques:

The elements of promotion can be classified into two methods of promotion:
a) Above the line promotion
b) Below the line promotion
a) Above – the - line promotion
What is above –the-line promotion?
Above-the-line promotion. It is a form of promotion that is undertaken by a business by paying
for communication with consumers. It is not done ‘in-house’ since it involves placing adverts
media outside the business such as the press, television, radio and banner adverts on websites.
Businesses pay television companies or newspapers, for example, to have their adverts broadcast
or printed.
An example of above the line promotion is advertising.
Advertising meaning: Advertising is the process of communicating information about the
product to as many potential customers in the target market (the audience at whom an
advertisement is aimed) as possible.
Advertising can be done on television, radio, billboards, posters newspapers and
magazines.
The main aim of advertising is to increase sales.

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 Every advertisement usually aim to do three things:
o Inform consumers: These lead to two types of advertising –
- When a new product is introduced. Informative advertising (aim to inform
- Aimed to create demand of new product. consumers) and persuasive advertising (aim to
o Persuade consumers: persuade consumers).
o To remind:
- To remind people of existing products.
- To draw attraction of customers.

a) Informative advertising
What is informative advertising?
Informative advertising refers to advertising aimed at increasing consumer awareness of a product.
The emphasis of informative advertising is giving full information about the product.
- Informative advertising may give clear information about the features of a product such as size,
quantity and ingredients of the product.
- Informative advertising helps consumers make a rational choice as to whether or not to buy the
product.
Advantages of informative advertising over persuasive advertising

1. Avoids like for like advertising (retaliation): Informative advertising is not likely to attack
the unique selling points -USPs (the special feature of a product that differentiates it from the products
of competitors) of rival firms hence rivals are not likely to retaliate. Retaliation is likely to
damage the reputation of the firm as well as cause a decrease in sales.
2. Suitable for new products: It is likely to create consumer awareness about a new product’s
unique selling points (USPs). Hence the new product can easily gain acceptance causing it to
gain market share.

Disadvantages of informative advertising over persuasive advertising

1. It can cause a decrease in sales: This is because it is less likely to convince the consumers’
to switch over to the firm’s products in a competitive market since it only aims to inform.
Hence it may include details that may highlight the weakness of the product causing the
product to lose market share.

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2. Unsuitable for established products: It is likely to be unsuitable for established products since
most of the consumers may have already experienced the product. The firm may need to
convince customers to remain loyal to the brand – hence persuasive advertising may be more
relevant in defending the firm’s product.

b) Persuasive advertising
What is persuasive advertising?
Persuasive advertising refers to advertising aimed at convincing consumers to switch their demand
from a rival product to the firm’s product.
Persuasive promotion is strongly supported by the use of branding, packaging and other forms of
product differentiation (The process of making a product as different as possible from competitors
–by changing its marketing mix- so as to gain a competitive advantage).

NB: For the main advantages and disadvantages of persuasive advertising refer INFORMATIVE
ADVERTISING.

b) Below – the - line promotion

What is above –the-line promotion?
Below -the-line promotion refers to methods of promotion that are designed and produced by the
business ‘in-house’.
This means that below-the-line does not involve advertising or using the media.
Examples of Below-the-line promotion:
1. Public relations: The main purpose of public relations is to increase sells by improving the
image of the business and reinforcing an established brand. Examples of public relations:
 Press releases/ press statements- A press releases is a written or recorded communication
directed at members of the news media for the purpose of announcing something
newsworthy.
 Press conference: A press conference is an interview given to journalists by a prominent
person in order to make an announcement or answer questions.
 Sponsorship;
 Donations (to charities and the local community).

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2. Sales promotions: Sales promotions are incentives to encourage people to buy the product.
Examples of sales promotion include:
 Free gifts – The firm may give a free gift to customers when they buy the product e.g.
computer firms always give a free software with the purchase of a computer.
 Coupons – A firm may give a money-off coupon or discount coupons to attract customers
to buy. The coupons are usually attached to the product when the consumer is buying.
 Loyalty cards – The firm can give customers loyalty cards where they are rewarded with
points. The points can then be exchanged for cash vouchers or free goods. This is common
with supermarkets and credit card companies.
 Competitions – Customers can be allowed to enter into a competition every time they buy
a product and an attractive price can be offered to the winner.
 BOGOF offers (Buy one get one free offers) – very popular with businesses such as
supermarkets, restaurants and transport companies.
 Money off deals – The firm may offer its customers discounts to attract them to buy such
as ‘20% discount” or “20% extra free”.
3. Merchandising and packaging: Merchandising refers to arranging the point of sale such that
it is eye catching and interesting to see so as to encourage sales. Examples of merchandising:
 Product layout: The firm can carefully plan the layout of so as to encourage the
customers to follow particular routes and look for certain products while shopping. For
instance some products can be placed at eye level so as to make them more visible.
 Display material: The firm can display certain products so as to persuade consumers to
buy. These may be through lighting and special effects, window displays and leaflets to
draw in customers.
 Stock: The firm ensures that the shelves are always well stocked since empty shelves
create a bad impression and drives customers away.
4. Direct mailing: In direct mailing the firm sends customers leaflets or letters informing the
about new products or price changes. This can be done via e-mail or postal letters.
5. Personal selling or direct selling: In direct selling a sales person calls or visits the customers
with intention of persuading them to buy the product.
6. Exhibitions and trade fairs

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 The use of technology in promotion
a) Targeted advertising online: By studying consumers’ browsing history firms can now
target their adverts to more specific consumers and save a lot of resources. Marketing
companies such as Double Click create such a database that can be used by firms to tailor
their advertising.

b) Viral advertising: Viral marketing is a method of marketing in which consumers are

encouraged to share information about a company's goods or services via the Internet (e-
mails or social media).

c) Social media: This involves the use of social media platforms such as Face book, Twitter,
Tumblr and Instagram to advertise a firm’s products. Social media gathers a lot of
information about users which can be used to tailor the firm’s advertising.

d) E-newsletters: The firm can send an e-newsletter to customers who have already purchased
its products or have expressed interest in the firm’s products. They may be used to develop a
relationship with customers and create attention to buying opportunities to the customer.

The importance of a brand:

What is brand?

Brand is a unique name, symbol, logo or a combination of these that identifies the product of a
firm and differentiate it from the competitor’s product.

What is branding?

Branding is the marketing practice of creating a unique name, symbol, logo or a combination of
these that identifies the product of a firm and differentiate it from the competitor’s product.

The importance of branding.

1. To differentiate the product: In a market where products are fairly similar, branding helps to
give the product an identity different from that of competition. A brand name helps consumers to
easily recognise the company and its product.

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2. To increase loyalty to the product: Consumers tend to have a high degree of loyalty to well-
known and established brands. Therefore, branding a product provides an opportunity to
strengthen the relationship of the brand with the consumers
3. Gain flexibility in pricing decisions: Brand loyalty reduces price elasticity of demand of a
commodity i.e. makes the demand more inelastic. The more loyal consumers are to a given brand,
the easier it is to change the prices to raise more revenues without affecting sales.
4. Reduce cost of promotion: Companies spend less in promoting well established brands
compared to non-branded or new brands to increase awareness. This explains why companies
such as Coca-Cola, Microsoft, Apple and Samsung etc. seem to achieve global marketing success
so easily.

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