Promotion Management MNM304-8

MARKET FACTORS AND PRODUCT FACTORS FOR DISTRIBUTION CHANNEL

Tip : CUSTOMERS can MANUFACTURE PRODUCTS in the ENVIORNMENTAL area for EXISTING
INTERMEDIARIES

In your introduction you should give practical background information by briefly describing Tupperware as
a company. Indicate in your introduction that you will be discussing the five factors that influence the
choice of a distribution channel for Tupperware. Use these five factors as headings in the main body of
your assignment.

Johnny Roux is the owner of a protea farm in the Cederberg area of South Africa. The
proteas on the farm are harvested by a team of workers and carefully packed in cartons,
each carrying a dozen proteas to the target markets in Amsterdam and New York.
What kind of transport would you recommend to get the proteas to the target markets?
What factors came to mind when deciding on the transport mode ?

Cut flowers are a fragile and perishable product, and have a short life span. As the target
markets are far away, a short and very quick mode of transport is required. The best mode
would be air cargo from CapeTown international airport. No inventory will be kept, because
of the perishability of the flowers, and no warehousing is needed, though care must be
taken to control the humidity and temperature levels during the transportation process so as
to ensure the flowers reach the target markets fresh.

Discuss the market/customer factors and all the product factors which influence the choice of a
distribution channel.
Customer characteristics
The choice of a distribution channel will depend on the needs and wants of the consumer. If the target
market of the company is geographically widely dispersed, The Company will need help towards reaching
it. If small quantities of the product are frequently bought by small retailing shops in the rural areas, then a
longer distribution channel will be needed. Let’s make some assumptions: if the target market of The
Company indicated, through marketing research, that they would also like to buy their products in
townships, then retailers in these areas should be evaluated as an alternative distribution channel for their
products. Consumers are the people who buy a business's products and services. Identifying the target
market for your product or service is, therefore, one of the most important activities undertaken by
management. Marketing management has to analyse the consumer to reveal the composition of the
market. Changes in the market composition or changes in consumer needs may create certain
opportunities which, if used, can influence the business's long-term growth and survival. The enterprise
can operate in the following five types of consumer markets which consist of final consumers or
customers, namely
• Consumer markets
• industrial markets
• government markets
• resale markets
• international markets

These variables will affect the business, which makes it imperative for management to react to
opportunities and threats in the market environment. The choice of a distribution channel will depend on
the needs and wants of the consumer. If the target market for a consumer product is geographically
widely dispersed, the manufacturer will need help in reaching it. If small quantities of the product are
frequently bought by small retailers in the rural areas in the Northern Province, for example, then a longer
distribution channel will be needed. Let’s make some assumptions: if we assume that the target market of
Tupperware has indicated, through marketing research, that they would prefer to buy Tupperware
products from retailers such as Pick ‘n Pay and Checkers, then retailers should be evaluated as an
alternative distribution channel for Tupperware products.
Promotion Management MNM304-8

Product characteristics
Five product characteristics will also influence the choice of distribution channel, namely the
1. Perishability – life span
2. Bulkiness – size, space
3. Complexity -
4. Degree of standardisation – what to keep
5. How fashionable the product is. – change over time

The more perishable the product is, the shorter the distribution channel will be. Standardised products, on
the other hand, follow a longer distribution channel than customised products because they are sold to
many retailers who then sell them to thousands of consumers. Owing to the fact that The Company sells
perishable product, it would most likely use a shorter channel, but with more retailers. Five product
characteristics will also influence the choice of distribution channel, namely the perishability, bulkiness,
complexity and degree of standardisation of the product and how fashionable the product is. The more
perishable, bulky and complex the product, the shorter the distribution channel will be. Standardised
products, on the other hand, follow a longer distribution channel than customised products because they
are sold to many retailers and wholesalers, who then sell them to thousands of consumers. Due to the
fact that Tupperware sell standardised products that do not perish easily, it could probably use a longer
channel with more intermediaries

Manufacturer characteristics
The larger the manufacturing enterprise the better the chance of selling directly to retailers such as
cafés and spaza shops.
A small manufacturing business does not have the resources to be able to dictate where and how its
products must be sold. It is therefore evident (if we assume that The Company is a big organisation) that
they could expand their distribution channels to include the small retailers in the townships. A business is
dependent on suppliers. An example of a supplier is the supplier of capital to a business. Traditionally, the
commercial banks are the suppliers of capital to small and medium-sized businesses. Listed companies
such as Pick n Pay have an additional supply of capital provided by their shareholders. The market
environment also contains opportunities that the organization may use to its own benefit, as well as
threats that need to be countered. The larger the manufacturing enterprise, the better the chance will be
of selling directly to a large retailer or to the final consumer. A small manufacturing business does not
have the resources to be able to dictate where and how its products must be sold. It is therefore evident
(if we assume that Tupperware is a big organisation) that Tupperware could expand their amount of
distribution channels to include big retailers such as Pick ‘n Pay.

Existing intermediary characteristics

The availability and quality of existing intermediaries are also determining factors in the selection
process. Some retailers will not carry an unproven or new product, others do not want to carry stock at all.
In some instances the poor quality of existing intermediaries or the unavailability of intermediaries makes
it necessary for the manufacturer to establish its own channel to the target market. The Company is
currently using direct selling. There are, however, other existing intermediares available in the market.
Mention the other intermediaries (Wholesalers, Retailers, merchants, brokers, manufacturers, service
providers)that The Company will have to use and evaluate them in your recommendation of an alternative
channel for the company. Intermediaries, such as wholesalers and retailers, evolved to bridge the gap
between the manufacturer and the consumer. One such example is the development of convenience
shops at filling stations and the resultant threats to the traditional convenience stores, such as cafe's.
The availability and quality of existing intermediaries are also determining factors in the selection process.
Some wholesalers or retailers will not carry an unproven or new product, while others do not want to carry
stock at all. In some instances the poor quality of existing intermediaries or the unavailability of
intermediaries makes it necessary for the manufacturer to establish its own channel of wholesalers and/or
retailers. Tupperware is using direct selling. There are, however, other existing intermediares available in
the market. Explain the other available intermediaries and evaluate them in your recommendation of an
alternative channel for Tupperware.
Promotion Management MNM304-8

Environmental characteristics
Here factors such as the disposable income of the consumer, the inflation rate, the competitive
nature of the industry, urbanisation, technology, political and legal variables and socio-cultural
changes exert an influence on the choice of a channel. You may, for example, elaborate on the increase
in income of the previously disadvantaged communities and that they are now prepared to pay extra for a
quality product.Competitors are a natural part of a capitalistic society. We are accustomed to the fact that
various competitors compete for the consumer's money in the case of most products and services.
Organisations face two basic types of competition, namely, intra-type competition and inter-type
competition. Intra-type competition refers to the competition between two or more marketers who use the
same type of business format. Shoprite supermarkets, for example, compete with Pick n Pay
supermarkets as they use the same type of store, layout and information system, and carry the same type
of stock. Inter-type competition refers to the situation where two or more marketers compete with different
retail formats. An example is the Edgars fashion retail group, which also competes with Pick n Pay
hypermarkets in selling clothing to customers. The competition that occurs within an industry also has a
significant impact on the competitiveness of the organisation and needs to be carefully analysed. Next
we look at the intermediaries. Here factors such as the consumers’ disposable income, inflation rate,
competitive nature of the industry, urbanisation, technology, political and legal variables and sociocultural
changes exert an influence on the choice of channel. You can elaborate on the use of for example
technology on the distribution of Tupperware products. Tupperware could, for example, consider selling
directly on the Internet

Conclusion

Conclude your answer by summarising the most important aspects mentioned. You should indicate which
alternative intemediaries Tupperware could consider, and suggest an alternative channel for the
distribution of Tupperware products. For example, Tupperware could make use of more intermediaries,
like wholesalers to retailers, in its distribution channel because its products are not perishable or very
complex and the consumer wants to buy Tupperware at Checkers and Hyperama.
Promotion Management MNM304-8

As a manager and owner of Eezee Enterprises a company which sells trendy, imported
women's clothing Mr Samborawants you to explain to him how the variables in the
macro-environment may influence his business. Draw up a list of all the macro-
environmental variables that may influence his business.
The macro-environment
• . technological
• . economic
• . social
• . physical
• . politico-government
• . international

You should have identified six variables which may affect Eezee Enterprises in different ways. These
variables are listed below:

The technological environment. This environment is affected by innovation and change. New
manufacturing processes and new technology may, for example, influence the type and quality of clothing
being sold by Eezee Enterprises. One needs only to think of the new types of materials available, such as
those which combine natural and synthetic fibres to create crease-resistant materials.
The economic environment. This variable is well known to everyone. An increase in the inflation rate,
changes in the exchange rate and a higher rate of personal tax are examples of how the economic
environment may influence Eezee Enterprises' clothing andMr Sambora
in his personal capacity.
The social environment. Social changes are prevalent throughout the world and also in South Africa. A
decline in the population growth rate may eventually have a negative impact on the sale of trendy
imported clothing. The changing role of women in society (eg more women in full-
time positions) may be a positive variable in the case of Eezee Enterprises and may result in a higher
turnover.
The physical environment. This variable is of great concern to people all over the world. Scarce
resources are utilized in the packaging of clothing and the wastage of packaging material must be of
concern to Eezee Enterprises.
The politico-governmental environment, also known as the institutional environment. This variable in
the macro-environment would be of particular concern to Eezee Enterprises.One example of the effect of
this variable would be the surcharges on imported clothing. This would
have a direct influence on the selling price of the clothing sold by Eezee Enterprises in South Africa.
The international environment. South Africa is part of the global village. As such, our economy and its
businesses are directly influenced by the political troubles of the Middle Eastern countries, for example.
Eezee Enterprises may benefit from a better exchange rate, which should enable Mr Sambora to import
his clothing at a cheaper price.
Promotion Management MNM304-8

CLASSIFICATION AND DESCRIPTION OF RETAILERS & AMT OF SERVICE THEY RENDER.

PRODUCT LINES (ASSORTMENT) THEY KEEP

Retailers

Categories
Merchant wholesalers
Rack Jobber – perform most distribution functions, provide and stocking racks in retailers eg pick ‘n pay
Cash & Carry Wholesalers – carries limited selection of products, doesn’t transport to end consumers
eg. Metro Cash and Carry
Drop Shipper – takes title of the product but doesn’t handle physical distribution
Truck Jobber – operates small warehouse , uses trucks to carry goods to retailers

Manufacturer’s Wholesalers
Producers product set up own distribution . May set up their own wholesaling operation eg sales/branch
offices eg. Link, Family circle and Plus Pharmacies
Brokers and Agents – intermediaries that bring together producers and custom forms & sales
arrangement eg. Selling agents, import-export agents & purchasing agents.

Merchant Wholesalers
• Rackjobber = perform most functions
• Cash-&carry = limited quantity – no transport
• Drop-shopper
• Truck jobber = wholesaler small quantities, truck carry G

Manufacturer Wholesalers =
Brokers / Agents = act on behalf of clients

Services Performed by retailers

• Location = located near homes, convenience for P/S
• Variety = wide variety offered and forecast trends
• Re-assortment = buys bulk and breaks down
• Info = about goods
• Finance = credit and leasing
• Ordering = ordered on customers behalf

Types of Retailers

• Department Stores = Woolworths

• Specialty Stores = American Swiss
• Chain Stores = Game, Pick-n-Pay
• Super markets =Spar
• Discount stores = Dion
• Buying centers = Eastgate
• Franchise = Wimp, Steers, McDondalds
Promotion Management MNM304-8

QUESTION : NAME THE SALES PROMOTION METHODS AIMED AT A CONSUMER

THAT A STORE COULD USE TO PERSUADE CUSTOMERS TO BUY THEIR PRODUCTS.

Introduction
In the introduction to your essay you should provide practical background to your business, for
example, that NeatClean is the name of your business. You should also specify the target market, for
example housewives, which you wanted to persuade to buy your products by using sales promotion
techniques.
Sales promotion techniques:
A broad range of customer-oriented sales promotion techniques is used by marketing management in
its battle for consumer loyalty. Neatclean could use the following sales promotion techniques:

Sampling often included with an introductory discount offer & even an on pack premium. It can also be
used in an attempt to revive a slumping product / as a serious entry barrier. Consumer deals are short-
term promotions offering consumers a saving or a bonus on the purchase of a product. Examples of
consumer deals include price-offs and bonus packs. Both these methods could be used by NeatClean.
For example, NeatClean could offer 20% off on the regular price of their detergents. In this way
consumers can be conviced of saving on price. By doing this NeatClean can reward regular brand users,
induce consumers to purchase larger quantities of detergents that they normally would and establish a
repeat purchase pattern after an initial trial purchase. Bonus packs could also be used by NeatClean. This
can be done by offering two washing detergents for the price of one. They could also use a package
which is larger than the standard one, stating that consumers get 50 ml free. Sampling places a free
product in the hands of the consumer for trial, with the idea of letting the product sell itself and of
encouraging consumers to purchase the product on a regular basis. NeatClean could make use of this
method by placing samples of a new washing detergent in the form of small sachets stuck to a page in a
women’s magazine.
• costly
• used to launch new product with other methods of communication
• free sweets, free lipstick
• best for showing key attributes
• may rejuvenate slumping sales
• complex process – outsourced to other companies

Price Incentives are variations of short term price reductions, such as sales , intro offers and specials.
Eg Edgars store sales where certain lines will be put on sale or a price discounted.
• S.T price reductions
• Low introductory offers
• Specials

Coupons Offers price deals . Redeemable at a retail store, used by retailers and wholesalers to gain
reimbursements from the mnfrers.. Coupons are certificates distributed by manufacturers to consumers,
redeemable at retail outlets, giving the consumer a specified price reduction on a particular product. The
coupon usually contains information on the brand and package size, the value of the coupon and the
expiry date. Neatclean could possibly issue coupons with specific price reductions on a specific washing
detergent.
• Gained to use reimbursements
• Limited price reductions
• Have timeframes attached (eg: valid until 30 October)
• Used to develop selective demand
• May inserted in newspaper

Premiums foods can offer on- or in-pack gifts eg Pokeman tazzo’s that become collectable items. It
encourages repeat purchases, increased sales, brand switching & added brand value. A premium is the
Promotion Management MNM304-8

offer of an article of merchandise either free or at a reduced price to induce purchase of another product.
Various types of premiums can be used, namely in, on and near pack premiums, free-in-the mail
premiums and self-liquidating premiums.
• free gift / reward for purchase
• stimulate repeat purchasing
• increases amount purchased
• may switch brand
• added value
• time magazine : free watch
• pokemon cards …

Tie-in promotions 2 types inter and intra co. tie ins. Intra-company tie-ins is a sales promo involves 2
brands belonging to a single market eg. Toothbrush & Toothpaste – should appeal in the same market)
Inter-company tie-ins involve joint promo’s. 2 or more co’s that are not in direct competition but whose
products are complementary eg. Ster Kinekor “ win a trip to the Oscars “ with other prices involving BMW.

promotion between 2 brands in a single competition

Intra Company
� 2 brands from single company (tooth brush and paste)
Inter Company
�Promo between 2/more brands from non-competing companies

Trade shows Staff efficiency, positive relationship bet. Expenditure per attendee, specialist industry trade
show are more effective than multi-industry shows

Frequent shopper programs based on 2 principals – all customers are not equal and behavior follows
reward
based on 2 principles
• customers are not all equal
• behavior follows rules
PARETO PRINCIPLE = 20% customers = 80% sales
Should motivate customers to develop loyalty

Competition / contest / sweepstakes allows mnfrers to collect demographic & even psychographic info
from their target market via entry forms. Prizes can add value to brand by association. Can result in free
publicity to the manufacturer. Sweepstakes eg Readers digest have lost popularity. Promotional activities
that involve consumers in the advertising and merchandising activities of the manufacturer by gaining
their participation in games of skill or chance are known respectively as "contests" and "sweepstakes".
Neatclean could introduce a contest where entrants are required to say in less than 20 words why they
like NeatClean’s detergents. Proof of purchase of one of NeatClean’s products would be required.

• offer probability of winning a reward

• help create / select name
• create awareness of a product
• increase sales

Bonus packs These offer more product either in a larger container or multiple units for the same or a
reduced price, which amounts to a price-off per unit
larger quantities
multiple units of reduced price

Warranties part of the product offering. Can serve as an incentive to buy and this can be deemed a
consumer promotion.
Promotion Management MNM304-8

• incentive
• to buy more
• used to provide compensation is product defective
• money back
• replacement
• free service
• free repairs

Refunds and rebates

A refund or rebate is a cash discount of reimburesement given by the marketer to the consumer on
submission of proof of purchase. NeatClean could possibly give a refund of 20% on proof of purchase
of a specific detergent.

Point-of-purchase promotion
Manufacturers make use of displays to attract the attention of consumers and to stimulate them to
purchase the product. These displays encourage impulsive buying. A point-of-purchase display
involves the use of display materials such as posters, banners, shelves, mobile displays, price cards
and specially designed racks or window displays. NeatClean could make use of specially designed
posters and banners which could be put up everywhere in stores to promote their detergents. A
special rack with bright colours could also be designed for displaying the washing detergents.

Gifts
Gifts, also known as "specialities", are novelties on which the business’s name or the advertising
slogan or logo appears. These articles are handed out free of charge to customers. NeatClean could
hand out pens, t-shirts and pocket diaries on which the name NeatClean appears in order to gain
goodwill and obtain exposure for their washing detergents.

Conclusion
End your essay with a suitable conclusion. Emphasise, for example, that by making use of these
sales promotion methods and the reward they offer, NeatClean could persuade many consumers to
buy their washing detergents.
Promotion Management MNM304-8

PHYSICAL DISTRIBUTION/LOGISTICS
Briefly discuss the main activities of logistics that managers should
perform.
Identify two of these activities that are more relevant to SingNow than the others. For instance, order
processing when street vendors indicate how many CD’s they require. The transportation of the products
is also important – should they be delivered by the sales persons or should other personnel be used for it.

Logistics activities have one overarching goal, namely, to develop and maintain the steady flow of
products from the manufacturer to the final consumer. The four major categories of logistics activities
include order warehousing, inventory management, processing and transportation. Let
us briefly look at each.

Warehousing
This is where inventory is stored before it is sold. Warehousing performs a number of functions, such as
receiving, sorting and storing the goods, and filling and dispatching the orders. Three decisions are
important in terms of warehousing management. These are to decide how many warehouses are needed,
where they should be located, and what type of warehouse to use (private or public warehouses, or
distribution centres). Each type has its own characteristics and uses, and management needs to consider
these carefully to choose the correct type for the organisation's logistical requirements.
 Functions:
o Receiving
o Sorting
o Storage
o Filling orders
o Dispatching
 Decisions:
o how many
o what types (public, private warehouses / distribution centres)
o where to put warehouses

Inventory management
Traditionally done by the purchasing dept but is still part of the logistic function. This involves keeping an
eye on the inventory levels, so that customer needs can be met and so that the minimum levels are
maintained. Companies like to carry sufficient stock to fill all customer orders immediately. This is,
however, not always cost effective. Inventory decision
making involves knowing when to order and how much to order. There are two issues involved in doing
this, namely, the reorder point and the economic order quantity.The reorder point occurs when inventory
is at a certain level, a level which indicates the need to place another order.This is calculated by taking
into account the order lead time, the usage rate and
the safety stock level needed.
The economic order quantity (EOQ) is the quantity to order so that the sum of the inventory carrying costs
and the order processing costs are kept to a minimum. It is calculated using the following formula:
EOQ = 2 D O
IC
where:
D =annual demand in units
O = costs of placing an order
I = inventory carrying costs as a percentage of annual inventory investment
C = cost of one unit of the product Aspects such as just-in-time management and ABC inventory analysis
have also provided advantages to organisations in terms of managing their inventory levels.
 Objective-minimize inventory cost (when to order and how much to order)
Promotion Management MNM304-8

 Factors to consider:
o reorder point (when inventory reaches a certain level = place order)
o usage rate (measured as usage per day – sold/used up)
o safety stock (does not run out of goods)
o economic order quality (EOQ)
o just-in- time (JIT) ( eliminates forms and unnecessary waste. Right products arrive at the
right qty when it is required = achieved thro’ KANBAN)

Order processing
This begins when the order is placed and continues until the customer receives the product. This process
may continue a little longer so that database marketing can take place.
The three basic tasks involved in order processing are
1. order entry
2. order handling
3. order delivery
Advances in electronic data interchange, where suppliers, manufacturers and distributors are connected
via an electronic system , have provided many advantages to organisations, both among the members of
the system and within the manufacturing organisation itself.Electronic Data Interchange (EDI) (e-mails,
increased productivity due to faster response, improved channel relationships, increase market
opportunities, increased accuracy, decreased costs and paperwork

Transportation
This is what is used to move the products from the manufacturer through to the final consumer.There are
five basic modes of transport, each with its own characteristics and uses.
 Modes:
o Rail
o Road
o Air
o Pipeline
o Water
o Inter-model (more than on type)
 Factors influencing selection:
o Cost
o Time
o Accessibility
o Capability
o Frequency
o reliability

Materials handling
 Transfer of goods in and outside firm
 Objectives: lowest cost, maximum capacity utilisation, minimum handling, employee safety,
service quality.

Practical guidelines:
Identify two of these activities that are more relevant to SingNow than the others. For instance, order
processing when street vendors indicate how many CD’s they require. The transportation of the products
is also important – should they be delivered by the sales persons or should other personnel be used for it.

EXPLAIN THE PRIMARY VALUE CHAIN ACTIVITIES

You should be able to explain the following primary value chain activities:
Promotion Management MNM304-8

• Inbound logistics, that is, the receiving and warehousing of raw materials, and the
distribution of these raw materials to manufacturing as they are required.
• Operations, that is, the process of transforming inputs into finished products and
services.
• Outbound logistics, that is, the warehousing and distribution of finished goods.
• Marketing and sales, which includes the identification of customer needs and the
generation of sales.
• Service,which includes the support of customers after the products and services are
sold to them

These primary activities are supported by

. the infrastructure of the firm
. the management of human resources
. technological development
. procurement

THE DEFINITION OF ``DEMAND CHAIN'' AND THE DIFFERENCES BETWEEN THE

SUPPLY CHAIN AND THE DEMAND CHAIN
The supply chain starts with the origins of the raw material used in the production of the
product and ends once the product has been discarded or recycled. The demand chain
refers to a need articulated by the consumer which is then met by a product supplied by the
producer.

DEFINE``CHANNEL MANAGEMENT'',``DISTRIBUTION CHANNEL'' AND

`INTERMEDIARIES''.
Channel management is the way in which a distribution channel is managed.
A distribution channel is structured in such away that it links a group of organisations which
make a product or service available to the consumer.

BASIC CHANNEL FUNCTIONS

• Transactional functions. These involve contacting potential customers, promoting
products and soliciting orders.
• Logistical functions. These involve transporting and sorting goods to overcome
temporal and spatial discrepancies.
• Facilitating functions. These functions focus on gathering information about other
channel members and consumers, and extending credit and other financial services
to facilitate the flow of goods through the channel to the final consumer.

MARKET COVERAGE DECISIONS

• Intensive coverage. This involves the placement of products in as many locations
as possible by using the optimum number of intermediaries.
• Selective coverage. This involves the placement of products in a more
limited number of locations.
• Exclusive coverage. This limits the availability of a product to a very small
number of locations.

THE TERM ``DISTRIBUTION SYSTEM'' refers to a complex system of agents, wholesalers and retailers
through which manufacturers move products to their intended markets.
Promotion Management MNM304-8

EXPLAIN ALL THE DIRECT MARKETING METHODS (MEDIA) AVAILABLE.

Tip : DIRECT MAIL to TELEMARKETERS can get a DIRECT RESPONSE PRINT MEDIA &
BROADCAST MEDIA to INTERACTIVE MEDIA

Direct marketing media is an interactive marketing system used by one or more media of
advertising to gain a measurable response and/or transaction at any place.

Introduction
Remember that for each of the direct-marketing media that you propose THE COMPANY
should use you must briefly discuss the objectives of the campaign. For instance a direct-
mail campaign could be used to tell prospective customers about the wide range of products
available, the different quality categories and the stockists (retailers) that keep the products
of THE COMPANY.

Direct-mail
Direct-mail uses the postal system or private delivery organizations to get the product or
message to the customer. THE COMPANY could use the following components of a direct-
mail package:
• The mailing envelope could be used to arouse interest and thus cause the reader to
open the envelope.
• The letter should be personalised and relate to the self interest of the reader.
• The pamphlet (circular) should give details about the products of THE COMPANY,
namely the specifications, colours available, photographs, guarantees and
endorsements.
• The response device is the order form, and THE COMPANY could include with it a toll-
free phone number to render advice to potential customers.
• The return device is any mechanism that allows the customer to return the
necessary information to THE COMPANY. It may be an information request form, an
order form, or a payment.

Telemarketing
If you have a telephone, you probably do not have to be told about the rapid increase in
the use of telemarketing, or sales by telephone. Telemarketing is a combination of
telecommunication technology, and information systems. There are two types of
telemarketing, namely inbound and outbound telemarketing. Inbound telemarketing is
the type where the call originates from the customer, while outbound telemarketing
originates from the marketer. Inbound calls are usually in response to a marketer's
actions. THE COMPANY, for example, might use a direct-mail campaign inviting people to
phone the company for advice, or for a special deal. Outbound telemarketing is used by
Promotion Management MNM304-8
marketers for activities such as opening accounts, qualifying potential clients, providing
customer service and profiling customers. THE COMPANY could apply telemarketing by:
• taking orders and cross selling
• handling complaints
• informing customers about special deals
• providing sales support by scheduling sales visits and confirming appointments
• managing accounts by maintaining relationships between customers and
telemarketers
THE COMPANY could also use telemarketing to schedule demonstrations of new products
to large
prospective paint buyers.

Direct-response media
In the case of THE COMPANY an agreement will have to be reached with their stockists
(retailers) regarding their attempt to sell to franchised retailers. However, direct-
marketing does not always
attempt to sell the firm’s products, but may merely aim to elicit reaction from
prospective customers to get more information about the products, or to visit the
stockists of the products.
Direct-marketing through mass media such as
 Television
Creativity and impact, coverage and cost effectiveness, captivity and attention,
selectivity and flexibility, and demonstration of the product used)
 Radio
Cost and efficiency, inexpensive to produce and radio time costs are low, potential
for mental imagery, the ability to reach selected audiences
 Magazines and
Audience selectivity, creative felxibilty, long life, prestige and consumer receptivity,
services
 Newspapers
Different types, daily/weekly/national, special audience/supplements TYPES Display
adversting, Classified & Special ads and inserts
Extensive penetration, flexibility, geographic selection, reader involvement and
acceptance, service offered
are used to stimulate a direct response from prospective customers, especially when tied
to a coupon or a toll-free number. You must discuss these direct response media (printed
material, radio and television) separately and propose to THE COMPANY’s management
which one(s) they should use. Remember to spell out what the objective(s) of the
campaign is/are. A very important printed medium that THE COMPANY should use is a
catalogue. For a catalogue to be successful, there are criteria that the company must
meet. The consumer must think the products are special and only available through the
catalogue. Consumers must also think that they are receiving a good deal, because if the
product is available at the same price at the local dealer, a catalogue sale will be
unlikely. Television is often well suited for demonstrating a direct marketer's product,
and can be used to sell the product or service, generate leads, or to support direct-
marketing efforts in other media.

Interactive electronic media

An electronic shopping medium links both the buyer and the company interactively.
Thus, by using a keyboard, a consumer can request information about THE COMPANY’s
products which would then appear on the screen. The viewer can then respond with
further questions or placing an order and paying for the product, if direct selling to
customers is used. The Internet is a worldwide means of exchanging information and
communication through a series of interconnected computers. THE COMPANY could use
Promotion Management MNM304-8
the World Wide Web as a communication tool by providing information about their
company, their products and services, advice on product usage and where the products
could be purchased.

COLLECT ANY THREE DIRECT MAIL PACKAGES THAT YOU (OR A FRIEND)
HAVE RECEIVED OVER THE PAST MONTH. EXAMINE THE THREE PACKAGES
AND SEE IF YOU CAN IDENTIFY ANY UNIQUE CHARACTERISTICS IN THE
PACKAGES.
When you answer a question such as this one, you should always include the theory
and practical examples relevant to the question. Let us have a look at the
characteristics that Roberts and Berger (1999:4^6) and Jones
• Direct marketing is targeted. By using either lists of selected names or the
information in a customer database, direct marketers can aim their direct
communication at specific individuals identified as possible customers. This means
that the marketing venture is focused on the person as an individual, which is not
possible in general marketing. Precise targeting makes it possible to identify new
market segments with profit potential.
• Direct marketing is personal. Modern printing technology and database applications
make a broad range of personalisation techniques and one-on-one customised offers
and messages possible. The information in the database can be used to build up an
ongoing relationship with the customer/prospect, because the customer information
enables the direct marketer to make appropriate and persuasive presentations and
offers to the customer. Those customers, for example, who have already purchased
products in the past, can be encouraged to buy other similar products. SA Eagle, for
example, could send letters to their individual clients (Dear Gerda) stating that
because they are the holder of a retirement annuity they qualify for a special
premium on an education policy. The message is addressed specifically to individual
policyholders.
• Direct marketing is immediate action. Direct marketing always makes an appeal for
specific and immediate action, such as the purchase of a product or a request for
more information. The sales pitch usually includes a deadline date or an early bird
discount offer, for example:``Order now to receive 10% discount'' or ``call now to
qualify for the special offer''.
• Direct marketing is measurable. Direct marketers are accountable for every rand
they spend. Because each direct-marketing message asks for an action, the marketer
is able to measure the effectiveness of mailings, calls and advertisements by tracking
the sales, leads or other responses received.
• Direct marketing is testable. Direct marketers are accountable for every rand they
spend. They can measure the effectiveness of mailings and calls, and track the sales
of specific products. Since direct marketing is personalised, it is possible to identify
those customers who have been invited to buy and those who reacted to the
invitation to buy.
• Direct marketing is flexible. The marketer sets the mailing dates, so there are no
publication deadlines or time frames set by a magazine or other publisher. The direct
marketer has control over the size, colour and format of the mailing, as well as when
the communications are released.

The characteristics of a good marketing objective

• are quantifiable
• are aimed at the target market
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• have a time frame

• are realistic
• are attainable

EXPLAIN THE 5 MAIN FUNCTIONS AND ACTIVITIES THAT ARE PERFORMED BY

INTERMEDIARIES.

• They resolve discrepancies ( geographics, qty’s kept, perishable stock, qty and assortment
of products, help in standardization, assembly of products i.e size, quality and weight)
• They close gaps and provide utility (form, time , place & possession bet mnfrer &
consumer)
• They perform distribution activities (TRANSACTION buying, selling & Risk taking :
PHYSICAL warehousing, order processing, storing, sorting and transporting : FACILITATING
financing, garding & Market research.
• They specialize in the distribution channel (perform all the above)
• Efficiency of exchange
o Intensive = convenience products
o Selective = shopping products
o Exclusive distribution = the product is available to a very small no. of locations

Discuss the forms of publicity that a company should consider to promote

their business and its products.
• Press releases Info distributed to the media for publication or broadcast. When a new product is
developed, the benefits and characteristics can be emphasized to the community (eg the
Company could release a notice to the press about how it intends to help out an orphanage or
school with its product)
• Press conferences Called by orgs to announce an event, accomplishment or other happenings.
(eg the Company could collect representatives from the press and address them about steps
taken to reimburse the cause)
• Exclusives (exclusive rights to information) one media/medium eg SABC TV news is given
exclusive rights to info to ensure possible coverage on a main television news bulletin or a co.
can give their side of a story to YOU or HUISEGENOOT in an exclusive interview.
• Interviews with key employees Chat to the CEO who can give extensive coverage and visions.
Provided that he/she is well trained. This can assist in getting rid of negative publicity.
• Community involvement Companies can show how they are actively involved in the community
with eg Aids awareness and can offer their support to companies/orphanages in the form of
donations or assistance.
• Leaked information Leak important info, so people find out things and talk about it for the
companies benefit.
• Media launches of new products, etc Hold media launches. Eg A motor vehicle co. launches a
new model of car at an upmarket region eg The Lost city or Mauritius and Motor journalist are
invited to attend the launch and they are inclined to write good reviews on the vehicle.

Practical guidelines:
The Company could be advised that they should make use of two methods of publicity to communicate
their new method of marketing to target segments, namely press releases and community involvement be
sponsoring eg. a soccer tournament in Soweto
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To avoid draw backs or negative publicity, the org must practice crisis management, & must use sound
marketing communication practices to ward off threats – Refuse to comment, attempt to discredit the
source or negative approaches such as hiding the truth is less likely to be successful

EXPLAIN THE CAUSES OF CONFLICT THAT A COMPANY MAY EXPERIENCE IN THEIR

DISTRIBUTION CHANNEL AND HOW THE CONFLICT CAN BE SOLVED
Channel Conflict – a situation in which one member of a distribution channel perceives another member as a
rival engaged in behavior designed to injure, thwart, or gain scarce resources at the expense of the original
member.”
Some of themost common causes of conflict include the following (Kotler
& Keller 2006:491):
. Goal incompatibility. Individual channel members may have goals which conflict with the
goals of other channel members.
Promotion Management MNM304-8
. Unclear roles and rights. Individual channel members may clash due to uncertainty
surrounding their roles within the channel. This conflict can be avoided by clearly explaining
the roles of and the relationships between each channelmemberwithin the channel.
. Differences in perception.Manufacturers may have a positive view of the channel
prospects,whilst intermediariesmight hold a view that is not as positive. Open
communication is essential to resolve this conflict.
. Intermediaries'dependence on the manufacturer. In this situation, the manufacturer holds
significant influence in the channel based on its product and other marketing decisions. This
power presents a
significant opportunity for conflict. In industries where the manufacturer does not hold this
power, the chances of conflict are significantly reduced.

• Oversaturation – too many distributors (Common in the distribution channel &

occurs when the mnfrer for eg. Allows too many distributors in a sales area)
• Conflict over stock levels (Holding stock keeps capital tied up which does not
provide an immediate return on capital. Capital tied up in stock is borrowed =
interest costs are involved)
• Direct versus indirect channels (Some mnfrers have their own sales force to call
on certain customers, while certain distributors call on the same customers)
• National versus regional distributors (Similar to the above example)
• Large account coverage (
• Sales quota’s (Forcing intermediaries to adhere to sales quotas or setting quotas
that are unattainable)
• Market life cycle channel transition (Markets change over time & follow a life
cycle)
• New Market development (Mnfrers want to spread their wings and sell to new
markets in which existing markets aren’t selling.)
• New Product launches (Some stores don’t want to sell/ take a risk at selling new
products)
• Channel tasks to be performed (Where mnfrers want/ need to send mail to
customers on behalf of the mnfrer. If the distributor sees no benefit from this it would
causes channel conflict)
• Technology required (Buying straight from the net may be tempting to the
manufacturer)
• Training (Some intermediaries care less about training and performance of sales
force)
• The Phantom channel (When unauthorised vendor gets hold of a product and sell
it)
• Refusal to be locked into a singular supplier (when manufactures wants the
intermediary to stock only his product)
• Over selling (When a product is launched and does well, the mnfrer cannot supply
the demand for the product)
• Bureaucratic vs entrepreneurial philosophies (Management styles differ
between the manufacture and the intermediaries)
• Pricing issues (Price/ competition has always been a problem)
• Profit margins and compensations (The value of the profit that the intermediaries
receive is always a conflict if not handled properly.)
• Competition over resources (This occurs when 1 or more distributors compete for
resources, eg new training programmes that increase dramatically)
• Train shipping (When a mnfr ships products out of its allocated area to sell the
product to another distributor)
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• Assigned markets (When new markets develop, mnfers don’t invite existing
distributors to have 1st refusal of the new market)
• Conflict resolution in the distribution channel. (The use of power by channel
members and attempts by channel members to gain more power)
METHODS TO SOLVE CHANNEL CONFLICT
(the conflicting members need to share mutual objectives and common goals need to be
shared)
1. Persuasion (this implies that the objective by both parties differ but these parties
are open to modify their objectives and attain the common objective)
2. Negotiations (Set aside their way of thinking and create a new agreement between
channel members without referring to super-ordinate goals)
3. Politics (Using outside parties to resolve the conflict)

Edgars is planning a summer sale for all their swimwear and beachwear. Would
magazines be an appropriate medium to use to advertise the sale? What
advertising media would you suggest they use to inform the consumers of the
upcoming sale?

Magazines are not generally appropriate for advertising a sale. Whilst magazines offer an
ideal opportunity to use high-quality printing and colour to highlight the merchandise, the
nature of a sale is short term and ``newsworthy'' and thus needs a more immediate and
direct medium.
Given a large company like Edgars and their access to a substantial advertising budget, the
use of bursts on television would be more effective.
Radio holds the same advantage. BothTVand radio can be aired at a time when the target
audience is viewing or listening. Newspapers which are published on a daily basis can also
be used to create short-term awareness.
Outdoor advertising offers the opportunity for reminder advertising and are seen by many
people on a daily basis (sometimes for a long time by those stuck in traffic).

DISCUSS THE ADVANTAGES AND SHORTCOMINGS OF MAGAZINES AS

ADVERTISING MEDIUM

Strengths of Magazines
• Audience selectivity (Most selective of all media except for direct mail)
• Reproduction Quality (Printed on high quality paper stock & uses printing
processes to provide excellent reproduction in black and white or in colour)
• Creative Flexibility (Offer a variety of special options that can enhance the creative
appeal of an ad & increase attention & readership)
• Permanence (long life) (They can be kept for reference and can be read over
several days)
• Prestige (Co.’s buy space in prestigious publications for public image)
• Services (Some magz have merchandising staff that call on trade intermediaries,
like retailers to let them know of a product being advertised)
• Consumer receptivity and involvement (magz are purchased ‘cos info it contains
interests the reader)

Limitations/ Shortcomings
• Costs - (Some magazines can appear to be very expensive in absolute terms)
• Limited reach and frequency ( The %age of adult reading any mag tends to be
much smaller, so magazines have a thin penetration in households)
Promotion Management MNM304-8

• Long lead time (Have 30 to 90 day lead time so ads need to be placed within this
time and needs to be prepared well in advance of the actual publication date)
• Clutter and competition for readers attention (The more successful a mag is
the more pages of advertising it attracts, which leads to greater clutter)

In the South African retailing environment, there are a number of large and small
retailers. Each one has a different level of ``power'' within their marketing
channel. In the case of the following products, identify where you think the
channel powers lie. Give a brief motivation for your choice.
• Floormops sold in Pick n Pay
In the case of floormops sold in Pick n Pay, the channel power lies with the retailer. Floor
mops are an unbranded and simple product; the manufacturers rely on the retailer to stock
and sell their products.
Pick n Pay, due to its market position, can offer significant rewards in the form of increased
sales to the manufacturer of the floor mops. The strong financial position of Pick n Pay, in
contrast to the company
manufacturing floormops, adds to thepower theyhavein the channel.

• Designer label dresses sold in an up-market boutique

The demand for designer label dresses is in accordance with the designer's name. In this
case, the manufacturer or designer will hold a considerable amount of power in the
marketing channel. Referent
power in this case is prominent.

• A new Mercedes Benz E-class

In the case of a Mercedes Benz E-class, where the car is sold through a number of exclusive
Mercedes Benz car dealerships, the dealerships adhere to the rules and guidelines set by
Mercedes Benz tomarket and sell these cars. In this case, the manufacturer has legitimate
power over the dealerships, aswell as referent power due to the image and status of the
Mercedes brand name.

• MicrosoftWindowsVista
Microsoft Windows enjoys an extremely strong position within the world market. It is to the
benefit of any retailer that sells computer products to stock Microsoft Windows as one of its
products. Microsoft, therefore, has significant channel power; in this case, it is based mainly
on information power and referent power. Should they so wish, they could also exercise a
significant amount of coercive serve
and reward power based on their strong position in the market.

YOU HAVE BEEN APPOINTED AS THE MARKETING COMMUNICATION MANAGER AT

ADCHEK RESEARCH. THE EXECUTIVE MANAGER OF THE COMPANY HAS ASKED YOU
TO WRITE A REPORT ON PROMOTING INTEGRATED MARKETING COMMUNICATION
IN THE COMPANY. PROVIDE AN OUTLINE OF YOUR REPORT.

The report will have the following outline:

Introduction

Integrated marketing communication

Promotion Management MNM304-8
Definition
``a planning process designed to ensure that all brand contacts received by a customer or
prospect for a product, service, or organization are relevant to that person and consistent
over time''. Integrated marketing communication can be defined as a holistic approach to
promote buying and selling in the digital economy. This concept includes many online and
offline marketing channels. In South Africa, online marketing channels include e-marketing
campaigns such as search engine optimisation (SEO), pay-per-click, affiliate, e-mail, banner
and the latest web-related channels for webinar, blog, RSS, podcast and Internet TV.The
retailer Pick n Pay, for example, has a website where the consumer can order groceries and
arrange for them to be delivered. Offline marketing channels include traditional print
(newspapers, magazines), mail order, public relations, billboards, radio and television. Pick n
Pay also makes use of traditional media, such as newspapers and brochures, to advertise
their products.

Phases of the marketing communication planning process

Importance of integrated marketing communication
Conclusion

advertising strategy are the following:

. Target market identification and positioning. Before advertising, the retailer
should have a target market in mind.This will help the retailer to decide the medium
(ormedia) to use, who to reach and, if necessary, how often to communicate.
Analyse the market in which you intend to advertise i.e size of the market, whether
it’s growing or not. Competitors need to be analysed to know their market share &
how large their ad budgets are and how they reach their target markets. Orgs must
also analyse its own products in context with the market being competed in.

. Competitive situation. A retailer should use the different visual forms when
advertising his or her products, so that the target market can see the benefits of
owning the product.
. Customer behaviour.The retailer should know his or her target market (who they
are, where they stay, their usage behaviour, etc) so as to be able to influence them
to buy the product.
. Budgets.The adverts are paid for. The retailer should put money aside to pay the
SABC (TVand radio), the magazine or newspaper or any media where the advert will
be placed.
. Execution. The message should be appealing to the target market. Retailers can
make use of different media for this purpose. (See table
12.2 in the prescribed book.)

Steps taken in developing an advertising strategy for their business.

 Analysing your existing situation

 Setting your advertising objectives

These objectives should clarify the basic message to be delivered to the
target market, to what audience it should be delivered and the specific
criteria to be used by the org to measure the success of the advertising
campaign. These normally include,
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• intro of a new product to customers

• initiate shopping
• stimulate the actual purchase of the product
• remind customers to buy
• encourage enquiries
• reinforce a favourable image
• create brand awareness
• rectify incorrect perceptions and
• To persuade uncertain customers to buy a particular product.
 Preparing an advertising budget
This budget determines how much the org has to spend. Has 2 sides…
• the source side (how much money will be required) &
• the application side (how the money will be spent).
The company should accommodate for back-up funds which can be used
under special circumstances such as the intro to the product or
unexpected competition situations.
 Sending out a core advertising message
Once the audience has been decided, and what the audience is looking
for, the org needs to decide on what advertising message will be sent out.
It must be clear, and convincing to its audience. It’s not about the
advertising message but about deciding on the core message that must
be understood.
 Choose the right advertising medium
The medium must be chosen before the ad is actually created because
the copy and layout are directly affected by the medium selected. This
is selected by the media plan, which is a blue print that maps out the best
course of action to determine the ad time needed to reach its audience to
achieve final ad objectives.
 Selecting the ad agency
Due to this being a specialized area, orgs turn to agencies to help them
develop their ad campaigns. The company gives them a brief of the idea
and the ad company creates ideas and brings the whole add together
(layout, visuals and copy)

Steps to apply
Strategy execution
• Creating the advertising message, which includes the creative concept,
writing the copy, adapting the concept where necessary and producing the
ad
• Testing the message
• Launching (or running) the campaign
• Evaluating and adjusting the strategy
• Evaluating its effect
• Making necessary adjustments
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THE ROLES AND FUNCTIONS OF SALESPEOPLE

(Study page 459 in the prescribed book.)
When studying this section, pay attention to the roles and functions of sales people. These
roles and functions are listed below create new customers
• . sell more to present customers
• . build long-term relationships with customers
• . provide solutions to customers' problems
• . provide services to customers
• . help customers re-sell products to their customers

ASSUME YOU ARE A SALESPERSON AT ABC COMPANY. YOU KNOW THAT MR

PETERSON, WHO IS A BUYER FOR XYZ COMPANY, IS NOT PLEASED WITH THE
CURRENT SUPPLIER AND YOU BELIEVE THAT YOUR PRODUCT COULD SAVE XYZ
COMPANY THOUSANDS EACH YEAR. YOU SET UP AN APPOINTMENT WITH MR
PETERSON, BUT ARE SURPRISED WHEN HE TERMINATES THE APPOINTMENT
QUICKLY WITH NO SALE AND NO MENTION OF A FUTURE APPOINTMENT. YOU TELL
YOUR SALES MANAGER ABOUT THE INTERVIEW.``MR PETERSON KEPT ASKING ME
WHERE I WENT TO SCHOOL, WHETHER I WANTED COFFEE AND HOW I LIKED
SELLING, WHILE I WAS TRYING TO EXPLAIN TO HIM THE FEATURES, ADVANTAGES
AND BENEFITS OF OUR PRODUCT.'' IDENTIFY THE BARRIERS TO COMMUNICATION
AND EXPLAIN HOW YOU WOULD
OVERCOME THEM.
Mr Peterson was sending you signals that he likes doing business with people he knows. He
is a feeler and he does not want to get down to business immediately. He wanted to
establish a relationship. There was never any true communication established between you
and Mr Peterson, which caused you to misread the customer and handle the situation
incorrectly.

Figure12.3 DIFFERENT STAGES IN THE SALES PROCESS.

THey are as follows:
Prospecting for customers
In the sales process, the salesperson begins by prospecting for customers; in other words,
the main purpose of a salesperson is not to make a sale, but rather to identify and/or source
customers.

Qualifying prospects
One of the most important keys to success in personal selling is the ability to qualify
prospects. Qualifying is the process of identifying prospects (customers) who should be
contacted.
Developing relationships
It is important for salespeople to develop long-term relationships with their customers. A
requirement for this is interpersonal skills.
Presenting the sales message
The presentation combines elements of the relationship, product and customer. Presentation
is a well-conceived pla nwhich includes
• establishing objectives for the sales presentation
• developing the pre-sales presentation plan needed to meet the objectives
• renewing one's commitment to providing outstanding customer service

Handing queries and complaints

Promotion Management MNM304-8
Most customers at some time in the sales relationship will have reason not to agree with a
salesperson's proposal. Being able to respond effectively to a customer's queries and/or
complaints is an essential sales skill. It requires knowledge, skill and a positive attitude of
wanting to solve the customer's problem.
Closing the sale
Closing the sale is the most important part of the sales process. In many selling situations,
the sales person needs to obtain a commitment from the customer. Some closing methods
can move customers from indecision to commitment.
Providing service and support
Customer service encompasses all the activities which enhance or facilitate the sale and the
use of one's product or service. The skills required to bring about a sale are different from
those required prior to the sale. A high-performance salesperson does not abdicate
responsibility for delivery, installation, warranty interpretation or other customer service
responsibilities. The salesperson continues to strengthen the partnership with suggestions,
follow-through on promises and follow-up on activities.
Maintaining trust and commitment
When customers buy goods and services, they focus on the satisfaction they will gain after
they make the purchase. In selling, showing a commitment to the customer must be seen as
part of the process of
satisfying the customer's needs, for example, making delivery on time, providing installation
when necessary and training customers how to use the product. The salesperson must be
honest and reliable when dealing with the customers.

SALE PROMOTION TYPES OF PROMOTION ACTIVITIES WHICH CAN BE

UNDERTAKEN BY MARKETERS IN DEVELOPING THEIR SALES PROMOTION
STRATEGIES.

• Consumer promotion can entail product-based incentives such as samples,

• free trials and tie-in promotions.
• Money-based promotions can include the use of coupons, price cuts and
premiums.
• Prize-related promotions relate to a situation where a customer enters a
competition and using text messaging, for example, sends the bar code of the
product to the manufacturer.
• Trade promotions can include the use of buying allowances, buy-back offers, price-
off offers, display allowances and free goods.
• Business and sales force promotions may include trade shows and contests for
salespeople.
• Incentive-type promotions are usually used to attract brand switchers, appeal to
new customers, increase the usage of the product, reward loyal customers, increase
store traffic and enlarge the order of occasional users.

YOU ARE THE MARKETING MANAGER OF A LEADING SOFT DRINK COMPANY CALLED
COCA-COLA BEVERAGES. DISCUSS THE VARIOUS SALES PROMOTION TOOLS YOU
WOULD CONSIDER USING TO TARGET INTERMEDIARIES.

Trade promotions and allowances.

This sales promotion tool will be used if the resellers of the Coca-Cola products are prepared
to perform a number of important marketing activities in support of your brands. If, for
example, a reseller provides you with a shop or shelf space to put up your point-of-purchase
(POP) displays and materials, you could offer them free fridges to keep the soft drinks cold.
If, for example, they buy large quantities of the Coca-Cola brand, you could offer them a
Promotion Management MNM304-8
price reduction or provide them with one free case of soft drinks for every fifteen bought at
the regular price.

Trade shows and exhibitions.

This sales promotion technique will be used to get your existing resellers to display your
brands (Coca-Cola and related lines) in their stalls when they exhibit at various trade shows.
In return, you could provide them with all the supporting material they want and even pay
some of the exhibition cost they have incurred. You could also participate actively in the
trade shows and exhibitions to help source new dealers and distributors.

CONSIDER YOUR OWN EXPOSURE TO E-MAIL MARKETING AND ALSO TALK

TO FRIENDS AND FAMILY MEMBERS ABOUT THEIR EXPERIENCES WITH E-
MAIL MARKETING MESSAGES.WHAT DO YOU SEE AS THE FIVE MOST
IMPORTANT ADVANTAGES OF E- MAIL MARKETING?
• Ease of use. Most users in business are already familiar with e-mail, which involves
little more than typing a short message to someone and perhaps adding an
attachment to the e-mail.
• Lowcost. E-mail is considered to be the cheapest form of communication available
today. It can be sent overseas at local call rates, be sent after hours or sent in batch
format.
• Permission marketing. This means getting the target recipient's permission before
sending him or her an e-mail; such individuals then represent highly desirable
prospects.
• E-mails generated on an event basis. This means that some event (eg an
overdue account) triggers the sending of an e-mail.
• Large amounts of information may be sent as an attachment to the e-mail.
• Valuable information. E-mails can provide customers with information that has
value for them, such as account statements or a newsletter.
• Auto responses to queries. Standardised information can be provided to
customers by means of auto response, which will save the organization valuable time
and money.

QUESTION : CYBER MARKETING AND ITS ADVANTAGES

• Internet
• World Wide Web
Promotion Management MNM304-8

• Cyber-marketing
• Virtual environment
• Online
• Disintermediation and re-intermediation
• Permission marketing
• One-to-one marketing
• Mass customisation

ADVANTAGES
• Target marketing - (targets very specific groups)
• Message tailoring - (a message is designed to appeal to the specific wants of the
target audience)
• interactive capabilities - (increasing customer involvement)
• information access (an information source)
• sales potential (an increase in sales)
• creativity (creatively designed sites can enhance an organisation's image)
• exposure (an organisation can gain national and international exposure)
• speed (information on an organisation's products is obtained most quickly via the
Internet)

Disadvantages

• measurement problems - (unreliable research numbers)

• audience characteristics - (audience characteristics change quickly)
• websnarl - (downloading information from the Internet may take a long time)
• clutter - (a number of ads may irritate customers)
• potential for deception - (hackers and credit card theft)
• costs - (the costs of doing business on the Internet are increasing)
• poor reach - (the reach of the Internet is still far behind that of television)

THERE ARE FIVE DIFFERENT TYPES OF ONLINE USERS:

Promotion Management MNM304-8

• Directed information seekers. They know exactly what they are looking for.
• Undirected information seekers. These buyers are just browsing through the site.
• Directed buyers.They knowexactly what to buy and what they want to pay for it.
• Bargain hunters.These are the users who are looking for a ``good deal''.
• Entertainment seekers.They want to enjoy their time online.

Another perspective focuses on the online consumer's psychographic make-up, which is also
referred to as ``psycho-segmentation''. This perspective identifies a number of online users:
• Techno-lusters.These users focus on culture and technology.
• Academic buffs.These users originally formed the largest groups of users; they are
now less significant users.
• Techno-boffins.This group is similar to the techno-lusters, but they make more direct
use of the technology for business purposes.
• Get-aheads. They use the Internet as a lifestyle accessory, that is, they use e-mail
and the Internet for product selection.
• Hobbyists. These are people with specialist interests, such as golfers, fishermen and
car enthusiasts, who use the Internet for purchase selection.
• Knowledge traders. These are business-oriented users who use the Internet for news
services and information on best business practice.
• Business bods.These users are general business users in management or
procurement roles.
• Home users. These are generally members of families looking for education,
entertainment or purchases.

The online marketer must understand how the online customer differs from the traditional
``real-world'' customer and adapt the marketing mix accordingly.