Marketing, Advertising, Promotion - The centrality of marketing

Marketing, Advertising, Promotion

Vocabulary

Match up the words or expressions on the left with the definitions on the right.

1 distribution channel A all the companies or individuals involved in moving a particular good or service from the producer to the consumer

2 to launch a product B an idea for a new product, which is tested with target consumers before the actual product is developed

3 market opportunities C attributes or characteristics of a product: quality, price, reliability, etc.

4 market research D dividing a market into distinct groups of buyers who have different requirements or buying habits

5 market segmentation E places where goods are sold to the public shops, stores, kiosks, market stalls, etc.

6 packaging F possibilities of filling unsatisfied needs in sectors in which a company can profitably produce goods or services

7 points of sale G someone who contacts existing and potential customers, and tries to persuade them to buy goods or services

8 product concept H collecting, analysing and reporting data relevant to a specific marketing situation (such as a proposed new product)

9 product features I to introduce a new product onto the market

10 sales representative J wrappers and containers in which products are sold

The centrality of marketing

Look quickly through the following text and decide which paragraphs are about these subjects:

company-to-company marketing

identifying market opportunities

the marketing mix

the selling and marketing concepts

the importance of market research

Most management and marketing writers now distinguish between selling and marketing. The selling concept assumes that resisting consumers have to be persuaded by vigorous hard-selling techniques to buy non-essential goods or services. Products are sold rather than bought. The marketing concept, on the contrary, assumes that the producers task is to find wants and fill them. In other words, you dont sell what you make, you make what will be bought. As well as satisfying existing needs, marketers can also anticipate and create new ones. The markets for the Walkman, video games, personal computers, and genetic engineering, to choose some recent examples, were largely created rather than identified.

Marketers are consequently always looking for market opportunities profitable possibilities of filling unsatisfied needs or creating new ones in areas in which the company is likely to enjoy a differential advantage, due to its distinctive competencies (the things it does particularly well). Market opportunities are generally isolated by market segmentation. Once a target market has been identified, a company has to decide what goods or service to offer. This means that much of the work of marketing has been done before the final product or service comes into existence. It also means that the marketing concept has to be understood throughout the company, e.g. in the production department of a manufacturing company as much as in the marketing department itself. The company must also take account of the existence of competitors, who always have to be identified, monitored and defeated in the search for loyal customers.

Rather than risk launching a product or service solely on the basis of intuition or guesswork, most companies undertake market research (GB) or marketing research (US). They collect and analyze information about the size of a potential market, about consumers reactions to particular product or service features, and so on. Sales representatives, who also talk to customers, are another important source of information.

Once the basic offer, e.g. a product concept, has been established, the company has to think about the marketing mix, i.e. all the various elements of a marketing program, their integration, and the amount of effort that a company can expend on them in order to influence the target market. The best-known classification of these elements is the 4Ps: product, place, promotion and price. Aspects to be considered in marketing products include quality, features (standard and optional), style, brand name, size, packaging, services and guarantee. Place in a marketing mix includes such factors as distribution channels, locations of points of sale, transport, inventory size, etc. Promotion groups together advertising, publicity, sales promotion, and personal selling, while price includes the basic list price, discounts, the length of the payment period, possible credit terms, and so on. It is the job of a product manager or a brand manager to look for ways to increase sales by changing the marketing mix.

It must be remembered that quite apart from consumer markets (in which people buy products for direct consumption) there exists an enormous producer or industrial or business market, consisting of all the individuals and organizations that acquire goods and services that are used in the production of other goods, or in the supply of services to others. Few consumers realize that the producer market is actually larger than the consumer market, since it contains all the raw materials, manufactured parts and components that go into consumer goods, plus capital equipment such as building and machines, supplies such as energy and pens and paper, and services ranging from cleaning to management consulting, all of which have to be marked. There is consequently more industrial than consumer marketing, even though ordinary consumers are seldom exposed to it.

Comprehension

Look at the following diagrams from Marketing Management by Philip Kotler.

1 The first diagram contrasts the selling and the marketing concepts. Fill in the four spaces with the following words or expressions:

□ Coordinated marketing □ Market

□ Customer needs □ Profits through customer satisfaction

Factory Products Selling & promoting Profits

through sales volume

a.       The selling concept

(2) (3) .. (4)

b.      The marketing concept

How companies advertise

Advertising informs consumers about the existence and benefits of products and services, and attempts to persuade them to buy them. The best form of advertising is probably word-of-word advertising, which occurs when people tell their friends about the benefits of products or services that they have purchased. Yet, virtually no providers of goods or services rely on this alone, but use paid advertising instead. Indeed, many organizations also use institutional or prestige advertising, which is designed to build up their reputation rather than to sell particular products.

Although large companies could easily set up their own advertising departments, write their own advertisements, and buy media space themselves, they tend to use the services of large advertising agencies. These are likely to have more resources, and more knowledge about all aspects of advertising and advertising media than a single company. The most talented advertising people generally prefer to work for agencies rather then individual companies as this gives them the chance to work on a variety of advertising accounts (contracts to advertise products or services). It is also easier for a dissatisfied company to give its account to another agency than it would be to fire its own advertising staff.

The client company generally gives the advertising agency an agreed budget; a statement of the objectives of the advertising campaign, known as a brief; and an overall advertising strategy concerning the message to be communicated to the target customers. The agency creates advertisements (the word is often abbreviated to adverts or ads), and develops a media plan specifying which media newspapers, magazines, radio, television, cinema, posters, mail, etc. will be used and in which proportions. (On television and radio, ads are often known as commercials.) Agencies often produce alternative ads or commercials that are pre-tested in newspapers, television stations, etc. in different parts of a country before a final choice is made prior to a national campaign.

The agencys media planners have to decide what percentage of the target market they want to reach (how many people will be exposed to the ads) and the number of times they are likely to see them. Advertising people talk about frequency or OTS (opportunities to see) and the threshold effect (efectul de pronire) the point at which advertising becomes effective. The choice of advertising media is generally strongly influenced by the comparative cost of reaching 1,000 members of the target audience, the cost per thousand (often abbreviated to CPM, using the Roman numeral for 1,000). The timing of advertising campaigns depends on factors such as purchasing frequently and buyer turnover (new buyers entering the market).

How much to spend on advertising is always problematic. Some companies use the comparative-parity method (metoda comparativ-analogica) they simply match their competitors spending, thereby avoiding advertising wars. Others set their ad budget at a certain percentage of current sales revenue. But both these methods disregard (a nu tine seama, a neglija) the fact that increased ad spending or counter-cyclical advertising (reclama anticiclica) can increase current sales. On the other hand, excessive advertising is counter-productive (antiproductiva) because after too many exposures people tend to stop noticing ads, or begin to find them irritating. And once the most promising prospective customers have been reached, there are diminishing returns, i.e. an ever-smaller increase in sales in relation to increased advertising spending.

Vocabulary

Find the terms in the text which mean the following.

1 free advertising, when satisfied customers recommend products to their friends.

2 advertising that mentions a companys name but not specific products

3 companies that handle advertising for clients

4 a contract with a company to produce its advertising

5 the amount of money a company plans to spend in developing its advertising and buying media time or space

6 the statement of objectives of an advertising campaign that a client works out with an advertising agency

7 the advertising of a particular product or service during a particular period of time

8 a defined set of customers whose needs a company plans to satisfy

9 the people who choose where to advertise, in order to reach the right customers

10 the fact that a certain amount of advertising is necessary to attract a prospective customers attention

11 choosing to spend the same amount on advertising as ones competitors

12 advertising during periods or seasons when sales are normally relatively poor

Discussion

Which of the following claims do you agree with?

Advertising is essential for business, especially for launching new consumer products.

A large reduction of advertising would decrease sales.

Advertising often persuades people to buy things they dont need.

Advertising often persuades people to buy things they dont want.

Advertising lowers the publics taste.

Advertising raises prices.

Advertising does not present a true picture of products.

Advertising has a bad influence on children.

In a well-known survey, the Harvard Business Review asked 2,700 senior business managers whether they agree with these statements. The survey produced some unexpected results. Which of the following percentages do you think go with which of the statements above?

49% 51% 57% 60% 72% 85% 90%

23The four major promotional tools

Insert the following words in the text below.

Advertising  aimed awareness channel loyalty

Maturity medium tactics target trial

The basic idea behind the marketing concept that you make what you can sell rather than sell what you make does not mean that your product will sell all by itself. Even a good, attractively-priced product that clearly satisfies a need has to be made known to its (1). Customers. During the introduction and growth stages of the standard product life cycle, the producer (or importer, and so on) has to develop product or brand (2). , i.e. inform potential customers (and distributors, dealers and retailers) about the products existence, its features, its advantages, and so on.

According to the well-known Four Ps formulation of the marketing mix (product, place, promotion and price), this is clearly a matter of promotion. Since budgets are always limited, marketers usually have to decide which tools advertising, public relations, sales promotion, or personal selling to use, and in what proportion.

Public relations (often abbreviated to PR) is concerned with maintaining, improving or protecting the image of a company or product. The most important element of PR is publicity which (as opposed to advertising) is any mention of companys products that is not paid for, in any (3). : read, viewed or heard by a companys customers or potential customers, aimed at assisting sales. Many companies attempt to place stories or information in news media to attract attention to a product or service. Publicity can have a huge impact on public awareness that could not be achieved by advertising, or at least, not without an enormous cost. A lot of research has shown that people are more likely to read and believe publicity than advertising.

Sales promotions such as free samples, coupons, price reductions, competitions, and so on, are temporary (4). Designed to stimulate either earlier or stronger sales of a product. Free samples, for example, (combined with extensive advertising), may generate the initial (5). Of a new product. But the majority of products available at any given time are of course in the (6).. stage of the life cycle. This may last many years, until the product begins to be replaced by new ones and enters the decline stage. During this time, marketers can try out a number of promotional strategies and tactics. Reduced-price packs in supermarkets, for example, can be used to attract price-conscious brand-switchers, and, also, to counter (a contracara) a promotion by a competitor. Stores also often reduce prices of specific item as loss leader, which bring customers into the shop where they will also buy other goods.

Sales promotions can also be (7).. at distributors, dealer and retailers, to encourage them to stock new items or larger quantities, or to encourage off-season buying, or the stocking of items related to an existing product. They might equally be designed to strengthen brand (8). Among retailers, or to gain entry to new markets. Sales promotions can also be aimed at the sales force, encouraging them to increase their activities in selling a particular product.

Personal selling is the most expensive promotional tool, and is generally only used sparingly, e.g. as a complement to (9).. . As well as prospecting for customers, spreading information about a companys products and services, selling these products and services, and assisting customers with possible technical problems, salespeople have another important function. Since they are often the only person from a company that customers see, they are an extremely important (10) of information. It has been calculated that the majority of new product ideas come from customers via sales representatives.

Summarizing

Complete the following sentences to summarize the text above.

1 When a new product is launched, the producer has to ..

2 Promotion is one of the four . ; sales promotions are one of the four different .

3 The advantages of publicity include ..

4 The four stages of the standard product life cycle (excluding the pre-launched development stage) are .

5 Reasons to offer temporary price reductions include .

6 Sales promotions need not only be aimed at customers; .

7 Apart from selling a companys products, sales representatives .

Discussion

What kind of sales promotions are you receptive to?

coupons giving a price reduction?

free samples?

discounts for buying a large quantity?

price reductions in shops?

packets offering 20% Extra?

competitions

Vocabulary

There is a logical connection among three of the four words in each of the following groups. Which is the odd one out, and why?

1 advertising competitors publicity sales promotion

2 advertising agency advertising campaign media plan word-of-mouth advertising

3 advertising manager brand-switcher marketing manager sales rep

4 after-sales service guarantee optional features points of sale

5 brand awareness brand loyalty brand name brand preference

6 competitions coupons free samples line-stretching

7 credit terms discount list price packaging

8 decline growth introduction product improvement

9 focus group interviews internal research media plan questionnaire

10 packaging place product promotion