Page 524 - Encyclopedia of Business and Finance

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Marketing Mix

Advertising can be further divided into six subcate- Personal Selling. Personal selling involves an interper-
gories: pioneering, competitive, comparative, advocacy, sonal influence and information-exchange process. There
reminder, and cooperative advertising. Pioneering advertis- are seven general steps in the personal selling process:
ing aims to develop primary demand for the product or prospecting and qualifying, preapproach, approach, pres-
product category. Competitive advertising seeks to develop entation and demonstration, handling objections, closing,
demand for a specific product or service. Comparative and follow-up. Personal selling does provide a measure-
advertising seeks to contrast one product or service with ment of effectiveness because a more immediate response
another. Advocacy advertising is an organizational is received by the salesperson from the customer. Another
approach designed to support socially responsible activi- advantage of personal selling is that salespeople can shape
ties, causes, or messages such as helping feed the homeless. the information presented to fit the needs of the customer.
Reminder advertising seeks to keep a product or company Disadvantages are the high cost per contact and depend-
name in the mind of consumers by its repetitive nature. ence on the ability of the salesperson.
Cooperative advertising occurs when wholesalers and
For a promotion to be effective, organizations should
retailers work with product manufacturers to produce a blend all four promotion tools together in order to achieve
single advertising campaign and share the costs. the promotional mix. The promotional mix can be influ-
Advantages of advertising include the ability to reach enced by a number of factors, including the product itself,
a large group or audience at a relatively low cost per indi- the product life-cycle stage, and the budget. Within the
vidual contacted. Further, advertising allows organizations promotional mix there are two promotional strategies:
to control the message, which means the message can be pull and push. Pull strategy occurs when the manufacturer
adapted to either a mass or a specific target audience. Dis- tries to establish final-consumer demand and thus pull the
advantages of advertising include difficulty in measuring product through the wholesalers and retailers. Advertising
results and the inability to close sales because there is no and sales promotion are most frequently used in a pulling
personal contact between the organization and con- strategy. Pushing strategy, in contrast, occurs when a seller
sumers. tries to develop demand through incentives to wholesalers
and retailers, who in turn place the product in front of
Sales Promotion. Sales promotions are short-term incen- consumers.
tives used to encourage consumers to purchase a product
or service. There are three basic categories of sales promo-
PLACE
tion: consumer, trade, and business. Consumer promo-
tion tools include such items as free samples, coupons, The fourth element of the marketing mix is place. Place
refers to having the right product, in the right location, at
rebates, price packs, premiums, patronage rewards, point-
of-purchase coupons, contests, sweepstakes, and games. the right time to be purchased by consumers. This proper
Trade promotion tools include discounts and allowances placement of products is done through middlemen called
directed at wholesalers and retailers. Business promotion the channel of distribution. The channel of distribution is
tools include conventions and trade shows. Sales promo- comprised of interdependent manufacturers, wholesalers,
tion has several advantages over other promotional tools and retailers. These groups are involved with making a
in that it can produce a more immediate consumer product or service available for use or consumption. Each
response, attract more attention and create product aware- participant in the channel of distribution is concerned
ness, measure the results, and increase short-term sales. with three basic utilities: time, place, and possession. Time
utility refers to having a product available at the time that
will satisfy the needs of consumers. Place utility occurs
Public Relations. An organization builds positive public
relations with various groups by obtaining favorable pub- when a firm provides satisfaction by locating products
licity, establishing a good corporate image, and handling where they can be easily acquired by consumers. The last
or heading off unfavorable rumors, stories, and events. utility is possession utility, which means that wholesalers
Organizations have at their disposal a variety of tools, such and retailers in the channel of distribution provide serv-
as press releases, product publicity, official communica- ices to consumers with as few obstacles as possible.
tions, lobbying, and counseling to develop image. Public Channels of distribution operate by one of two meth-
relations tools are effective in developing a positive atti- ods: conventional distribution or a vertical marketing sys-
tude toward the organization and can enhance the credi- tem. In the conventional distribution system, there can be
bility of a product. Public relations activities have the one or more independent product manufacturers, whole-
drawback that they may not provide an accurate measure salers, and retailers in a channel. The vertical marketing
of their influence on sales as they are not directly involved system requires that producers, wholesalers, and retailers
with specific marketing goals. to work together to avoid channel conflicts.

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 501