DISTRIBUTION DECISIONS

A. INTRODUCTION

Distribution (place) is one of the 4’ps of marketing of the marketing mix. The others are price, product and promotion. Most producers do not sell directly to final consumers. In between them stands a chain of market intermediaries. Many scholars have come up with various definitions of distribution:

Kibera N.K. etal (1998)Defines a channel of distribution as a chain of market intermediaries or middlemen utilized by a producer or a marketer to make products and services available where and when consumers need them.

Kotler P. (1989)Defines marketing channels as sets of independent organizations involved in the process of making a product or service available for use or consumption.

B. MARKETING INTERMEDIAREIS

The need for marketing channel arises because of various reasons. These include: Desire to concentrate on production Direct marketing is not feasible in some areas Lack of enough resources to carry out direct marketing

Intermediaries go by various names, which include: Middlemen Agents or brokers Wholesalers Distributors Dealers

Functions of middlemenDistribution channels exist so that products can be moved from production to consumption. In addition to these, there exist others.

These include:

Contacting—they reduce the number of sales contacts between the producer and consumer

Sorting – Typically, middlemen bring together an assortment of merchandise, usually of related items from several sources in addition to buying in large units and breaking down into smaller units for sale.

Selling – Every middleman must contact potential customers, promote the product and solicit orders.

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Financing – By investing in the inventory and by extending credit to customers, the middle man helps to finance the exchange process.

Storage- Products must be assembled in a convenient location to assure availability and must be protected to prevent deterioration and loss function

Breaking bulk- buy in large quantities and break the bulk purchase into smaller quantities for resale.

Grading – It may be necessary for the middlemen to inspect, test or judge the products he received for quality and to assign distinct quality grades to them.

Transportation – This is the logistics function involving managing the physical flow of the product.

Market information – The middlemen typically has some responsibility for providing market information about availability, product quality, competitive conditions, customer needs, etc.

Risk taking – Risk is inherent in the ownership of an inventory or product that can deteriorate or become obsolete.

C. CHANNEL LEVELS

Consumer Channels

1. Direct channel (Zero-level channel)

Here a producer and ultimate consumer deal with one another directly. It takes this form:

Producer Consumer (A zero-level channel)

This entails selling directly to the final consumer or user of a product. In this case, the producers open up their own retailing outlets where consumers buy the merchandise. Examples include manufacturers of singer sewing machines and the Bata Shoe Company. It is a most feasible for perishable and industrial products.

2. Indirect Channel

Here intermediaries are in between the producer and ultimate consumers. These intermediaries perform numerous channel functions. They can take the following forms.

a. Product Retailer Consumer (one-level channel)

This is a one –level channel consisting of one selling intermediary who gets a profit margin. Examples include:- supermarkets and sellers of agricultural products. This indirect channel is most common where a retailer is large and can buy large quantities from a producer or when the cost of inventory makes it too

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expensive to use a wholesaler. For example a farmer in Eldoret may find it too expensive to take his produce to Nairobi therefore selling to middle (retailer) who owns a shop in Nairobi who in turn sells it to final consumers.

b. Producer Wholesaler Retailer Consumer(A two-level channel)

This channel has two middlemen and is therefore, more complicated. Most consumer products in Kenya including beer, cigarettes, edible fats and toothpaste are distributed in this manner.

c. Producer Agent Retailer Consumer (A two-level channel)

This channel resembles the above only that there is an agent. The difference between a wholesaler and an agent is that while the former owns the merchandise which he sells, the latter does not. An agent only transacts on behalf of the principal. This type of channel tends to be commonest in international trade but even in the case of domestic marketing, agents are also used particularly in the insurance and travel industries.

d. Producer Agent Wholesaler Retailer Consumer (A three-level channel

3. Reverse channel of distribution

This is used when goods to be re-processed move from consumer to intermediary to producers. This process creates an aftermarket – a market for products e.g. products such as cans or newspapers are broken down by the producers and processed for use in the manufacture of new cans or newsprints.

Industrial Channels

Industrial goods manufacturers can use its sales force to sell directly to industrial customers – zero level channel.

Industrial goods manufacturers can sell to industrial distributors who sell to the industrial customers or can sell through, manufacturer’s representatives and/or its own sales branches directly to industrial customers.

One-level channel

Sell directly to industrial customers through distributors

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By bridging the gap between the point of production and the point of consumption, a channel creates time, place and possession utilities. A channel of distribution presents three types of flows. This includes:

a) Goods flow downwards from producers to consumers. This includes information on new products, new uses of existing producers, etc.

b) Cash flows upwards from consumers to producers as payments for goods. It is feedback on the wants, suggestions, complaints etc. of ultimate consumers or user commodities.

c) Marketing information flow in both directions

Therefore a channel of distribution as explained earlier works like a system. One cannot exist independently and operate.

D. CHOICE OF CHANNEL DISTRIBTION

The choice of suitable channel of distribution is one of the most important decisions in the marketing of products because, it affects the cost of distribution as well as the volume of sales. It also influences pricing and promotion efforts in dealer relations. Choice of a channel of distribution involves the selection of the best possible combination of middlemen or intermediaries. (The objective is to secure the largest possible distribution at minimum cost). The channel must be flexible and efficient. It should be consistent with the declared marketing policies and programs of the firm.

Factors affecting the choice of distribution channels

1. Product consideration

The nature and the type of the product have an important bearing on the choice of distribution channels. Some factors include:

a) Unit value:Products of low unit value which are fairly common use are generally sold through middlemen as they cannot bear the cost of direct selling. Expensive consumer goods and industrial products are sold directly by the producers.

b) Perish ability:Perishable goods / products have relatively short channel as they cannot withstand repeated handling.

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c) Bulk and weightHeavy and bulky products are distributed directly to minimize handling costs.

d) StandardizationCustom-made and non-standardized products usually pass through short channels due to the need for direct contact between the producers and the consumers.Standardized and mass – made goods can be distributed through middlemen

e) Technical nature:Products that require demonstration, installation and after sales services are often sold directly.

f) Product lineA firm producing a wide range of products may find it economical to set up its own retail outlets. One the other hand firms with one or two products find it profitable to distribute through wholesalers and the retailers.

g) Age of the Product:A new product needs greater promotional efforts and few middlemen may like to handle it. As the product gains acceptance in the market, more middlemen may be employed for its distribution. Channels used for competitive products may influence the choice of distribution channels.

h) Product life cycle:The stage of the product in the product life cycle influences the type of channel to use.

Considering all these factors therefore means distribution channels need to be reviewed periodically and not just with regard to the cost of the product but with regard to customers as well.

2. Market consideration

Market consideration involves the nature and type of consumers. It is an important consideration in the choice of channel distribution.

a) Consumer or industrial market:The goods purchased for industrial or commercial use and are usually sold directly through agents. Consumer goods are normally sold indirectly.

b) Number of location buyers:When the number of potential customers is small or the market is geographically located in a limited area, direct selling isn’t easy and economical. In case of a large number of customers who are widely scattered, use of wholesalers and retailers becomes necessary.

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c) Size and frequency of order:Direct selling is convenient and economical in case of large and infrequent orders. When articles are purchased very frequently and each purchase order is small, middlemen may have to be used.

d) Customer buying habits:The amount of time and effort which customers are willing to spend in shopping are an important consideration. Customers’ expectation like desire for one-stop shopping, need for personal attention or preference for self- service and desire for credit also influence the choice of channel.

3. Company consideration

The nature, size and objectives of the firm play an important role in channel decision. Factors to consider include:

a) Market standing:Well-established companies with good reputation in the market are in a better position to eliminate middlemen than new and less known firms.

b) Financial resources:Large firms with sufficient funds can establish their own retail shops

c) Management:If a firm has competent and experienced management, it stands a better chance than one with weaker management.

d) Volume of production:It is profitable for a firm with large output to set up its own retail outlets.

e) Desire for control of channel:Firms that want to have close control over distribution of their products will be forced to use a short channel (direct channel)

f) Services provided by manufacturers:A company that sells directly has itself to provide installation credit, home delivery, after sales services and other facilities to customers. This calls for a direct channel

4. Middlemen consideration

The cost and efficiency of distribution depends largely upon the nature and the type of middlemen. This can be reflected by the following factors.

a) Availability:When desired type of middlemen is not available, a manufacturer may have to establish his own distribution network.

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b) Attitude:Middlemen who do not like a firm’s marketing and or payment policies may refuse to handle its products.

c) Services:There are also middlemen who are profitable as they can provide financing services, storage facilities and they can carry out promotion and after sales services. This makes if beneficial to use them.

d) Sales potential:A manufacturer generally prefers a dealer who offers the greatest potential in terms of volume of sales.

e) Cost:Choice of a channel should be made after comparing the costs of distribution through alternatives channels.

f) Custom and competitionThe channels traditionally used for a product are likely to influence the choice. For example, locks are sold through hardware and stores.

g) Legal constraintsGovernment regulation regarding certain products may influence channel decision. For instance liquor and drugs are distributed only through licensed shops.

5. Technology

Technology also imposes a change in channel of distribution as with containerization for example, in the use of free ports based near existing airports for the assembly and manufacture of duty free goods for export only, and in electronic payment transfer, which allows for instantaneous transfer of funds between countries. Technology also affects modes of distribution including vending machines usage to goods/ material handling.

E. EVALUATING THE MAJOR ALTERNATIVES

Each channel member needs to be evaluated against economic, control and adaptive criteria.

1. Economic criteriaEach alternative member will produce different levels of sales and cost, an organization needs to estimate (By use of its own sales force) the volume and associated cost of selling through different channels.

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2. Control criteriaUse of intermediaries cause control problem as they might lack the technicalities of a product desired by the company.

3. Adaptive CriteriaCommitment for some period of time is important in developing a channel. In fast changing markets a producer needs channel structure and policies that provide high adaptability to the changes.

F. NUMBER OF INTERMEDIARIES

Companies have to decide on the number of intermediaries to use at each channel level. Channel design must take into account the strengths and weakness of different types of intermediaries. There are three strategies considered in determining distribution coverage:-

a. Intensive mass distribution strategyUnder this strategy, a manufacturer tries to sell products through every possible outlet in order to obtain the maximum exposure. Such a distribution strategy is usually employed for the marketing of consumer products of everyday use e.g. tooth paste, cigarettes, cosmetics, food products, soaps etc. in the purchase of these convenience goods, consumers prefer the nearest location.

b. Selective distribution strategyImplies the use of fewer intermediaries willing to carry a particular product. This policy may be employed at both wholesale and retail levels. This type of distribution is appropriate for shopping goods e.g., refrigerators. This is because prestige is attached to the place of purchase. Generally consumers have brand preferences, so that the use of every outlet is not necessary.

It is more economical and provides the manufacturer with sufficient control over the distribution of his products.

c. Exclusive distribution strategySuch distribution involves the use of one dealer in each sales territory. The dealer is granted the exclusive right to sell the products in the specified territory through an agreement with the manufacturer. The dealer is prohibited from dealing with the competitive products. Exclusive selling is adopted in the case of shopping and specialty goods enjoying brand loyalty. It provides full control cover distribution and reduces distribution costs. It also increases the prestige of the product. However, this strategy is less flexible and does not permit wide distribution of the products.

Factors to be considered in evaluation of a distributor include:- Location of the dealer( business premises) Financial position and credit standing of the dealer

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Knowledge and experience of the dealer Ability of the dealer to secure adequate business to cover the market. Capacity of the dealer to provide after sales services Willingness of the dealer to handle manufacturer’s products. The degree of co-operation and promotion service he is willing to provide. General reputation of the dealer and his sales force Nature of the other products (competitive or complementary) if any

handled by the dealer.

Physical Distribution

Physical distribution is the most powerful element among the marketing mix elements. The main function of this element is to find out suitable channels through which goods ate to be made available to the final consumers.

Physical distribution is concerned with the flow of goods to the ultimate consumers, including transportation, warehousing and inventory management. It is an important marketing function describing the marketing activities relating to the flow of goods from the end of production line to the final consumer.

Physical distribution is responsible for completing the marketing transactions once the function of exchange is completed.

Physical distribution involves the following activities:-1. order processing

Involves : Order checking for any deviation in agreed on negotiated term Technical details; price; delivery period; payment terms; taxes etc Checking the availability of material in stock (material requisition) Production & material scheduling for shortage Acknowledging the order, indicating deviation if any

It is routine operation but require great deal of planning training of people involved and investment to bring about efficiency & accuracyIn a large organization a system capable of handling thousands of voluminous orders with minimum human involvement or without human involvement is a must involving shortened order fulfillment cycle to have edge over rivals

2. Information FlowIt is basically information based activity of inventory movement across the supply chain. Hence role of information system plays a vital role in delivering superior customer serviceThis function is required to facilitate the following information needs

Order Registration Order checking & editing Order processing

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Coordination means to integrate the total supply chain of the company with informational needs as to time ,quantity, value e.g Lead time, rate of consumption , delivery schedule & price of the material , Transportation time & cost etc.

3.WarehousingA storage place wherein finished goods are stored till they are sold. Effectiveness of an organization`s marketing strategy depends on making the right decision regarding warehouse.Nowadays,warehouses are treated as switching facilities rather than storage places.It is a major cost center, many customer problem are the direct result of improper warehousing management.

Major decisions in ware house management are as follows:- Location ,Size & Number of warehousing facilities Warehouse layout Design of building Ownership of the warehouse

4.Inventory managementInvolves decisions on how much to order, when to order, Quantities to stock, slow versus fast moving goods, etc.

5.PackagingIt is also a critical element in physical distribution of the product, which influences the efficiency of the logistics system. This is done with the view of following :-

Handling and damage prevention fast moving goods, etc. communications For inter modal transportation

Storage space economy in order to reduce packaging cost

6.TransportationFocuses on the movement of goods from supplier to buyer. Transportation is the most fundamental and important component of logistics.

E.g. for low unit value products the transportation cost component is 20% of the product cost.Decisions to be made include:

Mode of transportation ( Cost & time factor) Own fleet or Outsourcing Route Planning Vehicle scheduling

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Promotion Decisions

The aim of any communication by an organization is to convey particular messages that should

encourage the target market to prefer the firm’s offer. As a result, many organizations today are

using a variety of marketing communication tools and media to inform, persuade, remind and

induce action from a target audience.

The emphasis today is not on advertising but on the need for an organization to manage its

integrated marketing communications, ((Vaidyanathan &Aggarwal). Businesses in general and

small businesses in particular need to realize that consumers form an impression of an

organization and its capabilities from a number of sources ;i.e. advertising, packaging,

posters/billboards, the friendliness of the sales people, the quality and speed of service the

neatness of the store , etc. It is thus very important to ensure that all these communication

elements project a single, unified consistent message to all consumers.

Marketing communications defined

Any product/service or brand of a company introduced into the market must be supported by marketing communications. Marketing communications is the element of the marketing mix that involves informing the target markets about a product and/or influences the market to buy it. (Churchhill, 1995)Marketing communications is a management process through which an organization enters into

dialogue with its various audiences by developing and presenting messages for its identified

stakeholder groups and evaluating an action upon the response received (Fill,2002)

These stakeholder groups include:-

Consumers(to inform, remind and reinforce)

Government agencies (to influence upcoming legislation)

Financial institutions (funds)

Shareholders (funds, profits, dividends) Distributors /retailers/suppliers( stocking the product )

Media(relationship building)

Employees(internal marketing)

Community(societal marketing)

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These stakeholders have specific needs and hence the nature of the message should reflect the

needs to be met. To successfully do so, requires an organization to develop clear concise

marketing and marketing communications objectives.

Coordinated marketing communications mean different things to different people but it should

mainly focus on the marketing mix, the promotional mix, internal communications and all those

who contribute to the overall marketing communications process.

This means that public relations advertising, direct mail, trade promotions , consumer

promotions packaging, point -of-sale , signage, brochures, literature ,merchandise, web sites

and sponsorship all have their own individual role but all achieve the corporate marketing

objectives for the brand.

The role of Marketing Communicationsi. Differentiates a product or brand from competitors’ products

ii. Reminds and reassures the target audience about the product so as to encourage

repurchase

iii. Informs the target audience about a new brand, package, flavor, size, etc.

iv. Persuades an audience to buy a given product or brand

v. Stabilizes sales of a product by creating and maintaining a loyal customer base for the

product

Marketing communications activities contribute to brand equity by:--creating awareness of brand-Linking the right associations to brand image in the consumer’s mind /memory -Eliciting positive brand judgments or feelings -Facilitating a stronger consumer-brand connection

There are five basic tools of integrated marketing communication:

1. Advertising:This tool can get your messages to large audiences efficiently through such avenues as radio, TV, Magazines, Newspapers (ROP), Internet, Billboards and other mobile technological communication devices. This method can efficiently reach a large number of consumers, although the costs may be somewhat expensive.

2. Sales Promotion:This tool is used through coupons, contests, samples, premiums, demonstrations, displays or

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incentives. It is used to accelerate short-term sales, by building brand awareness and encouraging repeat buying.

3. Public Relations:This integrated marketing communications tool is initiated through public appearances, news/press releases or event sponsorships, to build trust and goodwill by presenting the product, company or person in a positive light.

4. Direct Marketing:This tool will utilized email, mail, catalogs, encourage direct responses to radio and TV, in order to reach targeted audiences to increase sales and test new products and alternate marketing tactics.

5. Personal Selling:Setting sales appointments and meetings, home parties, making presentations and any type of one-to-one communication, to reach your customers and strengthen your relationship with your clients, initiate this IMC tool.

Decisions linking the overall objectives and strategies during the marketing planning phases help to evaluate and fine-tune the specific activities of integrated marketing communication.

Before selecting an IMC tool, marketing, product and brand managers must look at social, competitive, legal, regulatory, ethics, cultural and technological considerations. While activating the IMC tools, marketers must avoid reaching inappropriate audiences and causing controversy. That could be damaging when trying to build brand awareness and encourage consumer spending with your company.

When marketing managers examine the beliefs, emotions and behavior of their targeted audience towards their brand, they can influence their beliefs to achieve product awareness, by attracting attention to their promotional campaigns.

THE MARKETING COMMUNICATION PROCESS

There are four main elements of the communication process.

1. The sender (source

2. The message

3. The medium

4. The receiver

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The various tasks/functions performed in the communication process include:

1. Encoding

2. Transmission

3. Decoding

4. Feedback

-Sender-this is the source of the message .It may be a company or an individual. The sender

encodes the message by converting it into a group of symbols that represent images or concepts

-Medium of transmission – this is the mode that carries a message to the receiver.,E.g. television,

radio, print ,live speech , music

-Receiver- this is the person or group for whom the message is intended (audience)

-Decoding-this is the process where the receiver converts symbols / images or concepts

contained in the message. (Assigns meaning to the symbols)

-Noise-It exists when the receiver does not or cannot decode the message to mean what the

source intended. Examples of noise include physical noise from radio/television /traffic/, as well

as other commercials being aired which distract the listener.

-Feed back- this is the receiver’s response to a message .feedback begins t e communication

process all over again. In marketing communications, feedback takes two forms:

i. the potential customer accepts or rejects the product

ii. The potential customer changes attitude towards product/service/idea

The Communication Models

The simple model

Source encoding medium receiver decoding

NOISE

Feedback

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Each of the communication elements identified in the diagram above is important in the

marketer’s effort to communicate. A breakdown in any of them can cause havoc in the

communication between a company and its customers’.

1. The AIDA model

This model explains the complex occurrences in a consumer between the time he receives the

message and when he takes action. Before the sender receives a feedback either in the form of

purchasing of the product being offered or receiving complaints, there are some other things that

must happen to the receiver. The AIDA model suggests that when a message is sent to the

receiver it must first gain his/her attention(A), then arouse interest (I) desire(D) and finally cause

a particular action .(A)

Implications of the AIDA model

i. Attention stage – marketers should aim at gaining the attention of target audiences by

breaking through the clutter from other communications, so that the message sent is

noticed. This goal can be achieved if the message immediately taps into the needs of the

audience .To achieve this, the marketer should develop creative and eye catching adverts.

ii. Interest stage –the message sent should generate enough interest from the target audience.

Letting the receiver know about the organization’s products and how it can help to meet

his/her needs.

iii. Desire –this is where the product or service being promoted should generate desire which

often involves positioning the product or service as the answer to the problem previously

identified. e.g., the benefit of the product or service should be emphasized at this stage to

arouse desire in the customer.

iv. Action –stimulation of some form of response on the part of the target audience. This

requires the marketer to develop incentives to stimulate purchase e.g., call-ins, coupons,

reduction in price for the 1st 100 people to sign up for a service, etc.

COMMUNICATING WITH THE TARGET MARKET

There are a number of issues marketer should bear in mind when communicating with the target

market in order to make the communication understandable and appealing to the market.

i. know what vocabulary will be clear to members of the target market

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ii. Now how the target market will interpret images and sounds used in the message

iii. Know where members are likely to encounter the communication –television, radio,

newspaper, etc.

iv. Know the factors that are likely to influence most of their purchase behavior e.g., income,

gender, level of education, age, lifestyle, occupation, etc.

MARKETING COMMUNICATION PROGRAMS

THE COMMUNICATION PROCESS

Other than developing a good product, pricing it attractively and making it accessible to target customers companies must also communicate with the present and potential stakeholders and with the general public. The marketing communication mix consists of five major modes of communication:

i) Advertising: Any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor e.g. print and broadcast ads, packaging, inserts, motion pictures , videotapes etc,

ii) Sales promotion: A variety of short-term incentives used to encourage trial or purchase of a product or service e.g. contests, games, exhibits, trade-in allowances etc.

iii) Public relations and publicity: A variety of programs designed to promote or protect company's image or its individual products e.g. Press kits, seminars, speeches, sponsorships etc.

iv) Personal selling: Face-to-face interaction with one or more prospective purchase for the purpose of making a presentation, answering questions and procuring orders e.g. sales presentations and meetings, samples, fairs and trade shows etc.

v) Direct marketing: Use of mail, telephone, fax, e-mail or internet to communicate with or solicit a direct response from specific customers and prospects e.g. catalogs, mailings, e-mail, fax mail, telemarketing etc.

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a. The two major parties in a communication. Sender Receiver

b. The two major communications tools: Message Media

c. The four major communications functions: Encoding Decoding, Response Feedback and Noise: This is a random and competing message that may interfere with the intended

communication.

To get their messages through, marketers must encode their messages in a way that it takes into account how the target audience usually decodes messages. They must also transmit the message through efficient media that reach the target audience and develop feedback channels to monitor response to the message.

The target audience may not receive the intended message for the following reasons:1. Selective attention: People are bombarded with 1600 commercial messages a day of which

80 are consciously noticed and about 12 provoke some reaction. This explains why ads with bold headlines promising something such "Be a millionaire overnight" have a high likelihood of grabbing attention.

2. Selective distortion: Receivers will hear what fits into their belief system. As a result, receivers often add things to the message that are not there (amplification) and do not notice other things that are there (leveling). The communicator’s task is to strive for simplicity, clarity, interest and repetition to get the main points across,

3. Selective retention: People will retain in long-term memory only a small fraction of the messages that reach them. If the receiver's initial attitude toward the object is positive and he/she rehearses support arguments, the message is likely to be accepted and have a high recall. If the initial attitude is negative and the person rehearses counterarguments, the message is likely to be rejected but to stay in long-term memory.

There are some general factors that influence the effectiveness of a communication: The greater the monopoly of the communication source over the recipient, the greater the

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recipient's change or effect in favor of the source. Communication effects are greatest where the message is in line with the receiver’s

existing opinions, beliefs and dispositions. Communication can produce the most effective shifts or unfamiliar, lightly felt, peripheral

issues, which do not lie at the center of the recipient's value system. Communication is more likely to be effective where the source is believed to have expertise,

high status, objectivity, or likeability but particularly where the source has power and can be identified with.

The social context, group or reference group will mediate the communication and influence whether or not the communication is accepted.

DEVELOPING EFFECTIVE COMMUNICATIONSDeveloping effective communications involves eight steps: i. Identify the target audience ii. Determine the communications objectivesiii. Design the messageiv. Select the communication channels v. Establish the communications budgetvi. Decide on the communications mix vii. Measure the communications' results viii. Manage the integrated marketing communication process

Developing Effective Communications

1. IDENTIFYING THE TARGET AUDIENCE

The process of developing effective communication must start with a clear target audience in mind. The target audience might include potential buyers of the company's products, current users, deciders or influencers; individuals, groups, particular publics, or the general public.The target audience is a critical influence on the communicator's decisions on what to say, how lo say it, when to say it, where to say it and to whom to say it.

2. DETERMINING THE COMMUNICATION OBJECTIVES

Once the target market and its perceptions are identified, the marketing communicator must decide on the desired audience responses.The marketer can be seeking a) Cognitive b) Affective c) Behavioral responses. i.e. the marketer might want to put something into the consumers mind, change an attitude, or get the consumer to act.There are different models of consumer response stagesE.g. the AIDA Model Hierarchy of effects model, etc.

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DESIGNING THE MESSAGE

Primarily the message should. Gain attention Hold interest Arouse desire Elicit action

Usually involves 4 stages:

a. Message content (What to say)The message must contain an appeal, theme, idea or unique selling point.

i. Rational appeal engages self-interest. Mainly highlights benefits of the product i.e. quality, value, performance, economy etc.

ii. Emotional appealsStir up positive or negative emotions in order to motivate purchase. Negative appeals like fear, guilt or shame are used to make people do something. e.g. brush their teeth or stop doing some things e.g. overeating, smoking, alcohol abuse. To use fear appeals, source credibility must be high and the product must be able to relieve the fears it arouses.Positive appeals (humor, love, pride, etc.,) usually endear consumers to the sponsor.

iii. Moral appeals focus on the audiences’ sense of right and proper in order for them to support social causes e.g. Dettol Heart Run. Freedom from hunger Walk.

Companies that sell products in different countries must be prepared to vary their messages.

b. Message structure (How do we say it logically)Effectiveness of communication also depends on the structure. Some early studies supported the notion that ‘stating conclusions for the audience rather than letting them make their own conclusions is a better structure. Others indicate that the best ads ask questions and allows the audience to make their own conclusions.

Two sided presentations i.e. which praise a product and also mention shortcomings are as appropriate as one-sided presentations. The former is more successful with more educated audiences and those initially opposed.

The order of presenting the arguments is equally important. Presenting the strong arguments first establishes attention and interest for a one sided presentation. For a two sided presentation, strong arguments can be first or last depending on target audience.

c. Message Format (How to say it symbolically)In a print ad, the communicator decides on headline, copy illustration and color. In a radio ad, decisions are on words, voice qualities and vocalizations.In a TV ad or in a person, presenters must pay attention to facial expressions, gestures, dress, postures and hairstyle.

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If the product is carrying the message, color, texture, scent, size or shape are important decisions to be made e.g. Roiko ad has used colorful recipe to convey the message of how delicious food can be with Roiko.

d. Message source (Who should say it)Celebrities used as spokespeople usually achieve a higher attention and recall. Messages presented by highly credible sources are more persuasive e.g. pharmaceutical companies usually seek endorsements by key doctors for their newly developed molecules.Source credibility is determined by a person’s expertise, trustworthiness and likeability. A state of congruity exists if a person has either a positive or negative attitude towards both the source or the message. Communicators must use their good image to reduce some negative feelings towards a brand but in the process might lose some esteem with the audience.

3. SELECTING COMMUNICATION CHANNELS

Channels are of two types:

Personal communication channelsInvolves two or more persons communicating directly with each other face-to-face, person to audience, over the telephone or email. Further meanings are: - Advocate channels - Sales people contacting buyers Expert channels - Independent experts making statements to target market. Social channels - Neighbors, friends, family members and associates talking to target buyers

Personal influence works best especially with:i. Products that are expensive, risky or infrequently purchased e.g. TV's, vehicles,

photocopiers, vacations etc.ii. Products that suggest something about the users’ status or taste e.g. mobile handsets, car

models, designer clothes, watches etc.

Non personal communication channels

These include:a. Media:

Print - newspapers, magazines, direct mail Broadcast -radio. TV Electronic- CD-ROM, audiotape, videotape, web page Display - Billboards, signs, posters

b. Atmospheres:Atmospheres are ' packaged environments' that create or reinforce a buyer’s leanings towards product purchase e.g.Laico Regency Hotel is graced with exquisite chandeliers and marble columns and other tangible signs of luxury.

c. Events

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These are occurrences designed to communicate particular messages to target audiences e.g. the Nation Derby at the Ngong Racecourse, Total Motor Show etc.

Mass communication affects personal attitudes and behavior through a two-step flow-of-communication process: Ideas flow from the media to opinion leaders Ideas flow from opinion leaders to less media-involved population groups.

5. ESTABLISHING THE TOTAL MARKETING COMMUNICATIONS BUDGET

One of the most difficult marketing decisions is how much to spend on promotion. How do companies decide on the promotion budget? Four common methods: the affordable method, percentage- of- sales method, competitive-parity method, and objective-and- task method.

a. Affordable method

Many companies set the promotion budget at what they think the company can afford. One executive said: "Why, it is simple. First, I go upstairs to the controller and ask how much they can afford to give us this year. He says a million and a half. Later, the boss comes to me and asks how much we should spend and I say, "Oh", about a million and a half.' The affordable method of setting budgets completely ignores the role of promotion on sales volume. It leads to an uncertain annual budget, which makes long-range planning difficult.

b. Percentage-of-Sales Method

Many companies set promotion expenditures at a specified percentage of sales (either current or anticipated) or of the sales price. Automobile companies typically budget a fixed percentage for promotion based on the planned car price. Oil companies set the appropriation at a fraction of a cent for each gallon of gasoline sold under their own label.

Advant ages

1. promotion expenditures will vary with what the company can "afford" This satisfies the official managers, who believe that expenses should be closely related to the movement of corporate sales over the business cycle.

2. it encourages management to think of the relationship among promotion cost, selling price, and profit per unit.

3. it encourages stability when competing firms spend approximately the same percentage of their sales on promotion.

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Disadvantages 1. It views sales as the determiner of promotion

rather than as the result. 2. It leads to a budget set by the availability of

funds rather than by market opportunities.3. It discourages experimenting with

countercyclical promotion or aggressive spending.

4. Dependence on year-to-year sales fluctuations interferes with long-range planning.

5. There is no logical basis for choosing the specific percentage, except what has been done in the past or what competitors are doing.

6. it does not encourage building up the promotion budget by determining what each product and territory deserves.

c. Competitive- Parity Method

Some companies set their promotion budget to achieve share-of-voice parity with competitors.

Advantages

Two arguments are made in support of the competitive- parity method.

1. competitors' expenditures represent the collective wisdom of the industry. 2. maintaining competitive parity prevents promotion wars.

Disadvantages

1. There are no grounds for believing that competitors know better what should be spent on promotion,

2. Company reputations, resources, opportunities, and objectives differ so much that promotion budgets are hardly a guide.

3. there is no evidence that budgets based on competitive parity discourage promotional wars.

d. Objective- and- Task Method

The objective- and- Task Method calls upon marketers to develop promotion budgets by defining specific objectives, determining the tasks that must be performed to achieve These objectives, and

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estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.

The objective- and- task method has the advantage of requiring management to spell out its assumptions about the relationship among dollars spent, exposure levels, trial; rates and regular usage.

A major question is how much weight promotion should receive in relation to alternatives such as product improvement, lower price or better service. The answer depends on where the company's products are in their life cycles, whether they are commodities or highly differentiable products, whether they are routinely needed or have to be "sold" and other considerations. In theory, the total promotional budget should be established so that the marginal profit from the last dollar in the best promotional dollar just equals the marginal profit form the last dollar in the best non-promotional use. Implementing this principle however is not easy.

6. DECIDING ON THE MARKETING AND COMMUNICATIONS MIX

a. Advertisingb. Sales promotionc. Personal sellingd. Public relationse. Direct marketing

Companies must allocate the promotion budget over five promotional tools - advertising, sales promotion, public relations and publicity, sales force and direct marketing. Within the same industry, companies can differ considerably in their allocations. Avon concentrates its promotional funds on personal selling whereas Revlon spends heavily on advertising.

Companies are always searching for ways to gain efficiency by substituting one promotional tool for another. Many companies have replaced some field sale activities with ads, direct mail and telemarketing. Companies have also increased their sales-promo lion expenditures in relation to advertising.

Factors in Setting The Market Communications Mix

a. Type of product MarketPromotional allocations very between consumer and business markets. Consumer markets spend on sales promotion, advertising, personal selling and public relations in that order. Business marketers spend on personal selling sales promotion, advertising and public relations in that order. In general personal selling is more heavily used with complex, expensive and risky goods and in markets with fewer and larger sellers (hence business markets).

b. Push versus Pull Strategy

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The promotional mix is heavily influenced by whether the company chooses a push or pull strategy to create sales. A push strategy involves the manufacturer using sales force and trade promotion to induce intermediaries to carry, promote and sell the product to the end users. Push strategy is especially appropriate where there is low brand loyalty in a category, brand choice is made in the store, the product is an impulse item, and the beneficiaries are well understood. A pull strategy involves the manufacturer using advertising and consumer promotion to induce consumers to ask intermediaries for the product, thus inducing the intermediaries to order it. Pull strategy is especially appropriate when there is high brand loyalty and high involvement in the category, people perceive differences between brands and people choose the brand before they go to the store.

c. Buyer Readiness StagePromotional tools vary in cost effectiveness at different stages of buyer readiness. Advertising and publicity play the most important roles in 'the awareness-building stage. Customer comprehension is primarily affected by advertising and personal selling. Mostly personal selling influences customer conviction. Closing the sale is influenced mostly by personal selling and sales promotion. Recording is also affected mostly by personal selling and sales promotion, and somewhat by reminder advertising.

d. Product - Life - Cycle StagePromotional tools also vary in cost effectiveness at different stages of the product life cycle.i. In the introduction stage, advertising and publicity have the highest cost effectiveness

followed by personal selling to gain distribution coverage and sales promotion to induce trial.ii. In the growth stage, all the tools can be toned down because demand has its own

momentum through word of mouth.iii. In the maturity stage, sales promotion, advertising and personal selling all grow important

in that order.iv. In the decline stage, sales promotion continues to be strong, advertising and publicity

are reduced and salespeople give the product only minimal attention.

e. Company Market RankMarket leaders derive more benefit from advertising than sales promotion. Conversely, smaller competitors gain more by using sales promotion in their marketing communications mix.

7. MEASURING RESULTS This takes place after the implementation of the promotional plan. Areas to address from the target audience are whether they: Recognize or recall the message How many times they saw it. What point they recall How they felt about the message Their previous and current attitudes towards the product and company.

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The communicator then collects behavioral measures of audience response such as how many people bought the product, liked it and talked to others about it. This is done using a feedback measurement.

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CHARACTERISTICS OF SERVICES AND THEIR MARKETING IMPLICATIONS

Intangibility

Services are intangible and cannot be seen, touched, felt or smelt before they are bought. To

reduce uncertainty, the buyer will look for signs or evidence of the service quality by drawing

inferences about service quality from the place, people, symbols and the price they sell.

Inseparability

Services are usually produced and consumed simultaneously. Thus, the client is also present

when the service is produced.

Provider- client interaction is a special feature of services marketing

Variability

Since services depend on who provides them, when and where they are provided, services are

highly variable. Firms therefore should try to have well trained service providers to maintain

high quality of their services and also to standardize their service provision processes.

Perishability

Services cannot be stored and if not utilized at the time they are available, they simply disappear.

For example if a manager fails to turn up for a conference presentation, he misses the

proceedings. Companies can prepare to take care of high demand periods by providing more

personnel to provide services during the peak hours.

MARKETING OF SEVICES

A service is any act or performance that one party offers to another that is essentially intangible

and does not result in the ownership of anything. Its production may not may not be tied to a

physical product.

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Companies often offer a combination of tangible and intangible products. Several categories can

be identified;

Pure tangible goods - Often consist primarily of a tangible goods such as soaps,

toothpaste etc, without any accompanying services.

Tangible goods with accompanying services. This usually applies for industrial goods

whose supply is often accompanied by some services such as transportation,

demonstrations, training and servicing.

Hybrid - The offer consists of equal parts of goods and services. For example people in a

restaurant get both foods as well as services.

Major service with accompanying minor goods and services - The offer comprises

major service with minimum goods, for example s\air travel is essentially a service, but

passengers may get some drinks or meals while on board.

Pure services - Offer consists primarily of a service for example babysitting,

psychotherapy and massage

Marketing strategies for service firms

The application of marketing strategies for service firms is increasingly- becoming important,

unlike in the past when services firms did not think it was necessary to practice marketing.

However its market is difficult to apply the traditional 4 P's marketing approaches for services.

Booms and Bitner have suggested three additional 3P's, namely people, physical audience, and

processes.

People - since most services are provided by people, the selection, training and

innovation of employees can make a difference I customer satisfaction.

Physical audience - Companies try to demonstrate evidence of quality through a physical

presentation, such as office layouts, dress, equipment and furniture. For example in a

banking hall, banks maintain very neat floors, play some soft music and so on.

Processes - Companies choose difficult processes to deliver their services. This may

involve both external marketing ( how the company prepares, prices, promotes and

distributes services to customers) as well as internal marketing ( how the company trains

and motivates its employees)

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Service companies face three tasks, namely increasing their competitive differentiation, their

service quality and, their productivity.

Managing differentiation

Service marketers often find it difficult to differentiate their services from those of

competitors. They often try to deal with price competitors by developing a differentiated offer,

delivery and or image.

1. Offer - this can include innovation features to distinguish it from competitors. For example

an airline can include hotel accommodation for its clients at some points or banking having

credit cards for customers. ATM services are also additional offers by banks, The only

problem with service offers is that they are easy to copy.

2. Delivery - A service company can try to differentiate its delivery which is of higher quality

than that of competitors. For example a fast food dealer can deliver meals to offices.

Similarly a mechanic can provide his clients with a car to use during the time that the client's

car is at the garage.

3. Image - Image can also be differentiated, through symbols and branding. For example KCB

uses the lion as its symbol, which convey the impression of strength, Nakumatt supermarkets

use the elephant to imply large size, where customers can get everything under one roof.

Managing service quality and productivity

Service firms try to provide service quality -thar can meet or exceed the target customer's service

quality expectations.

The firms need to have clearly stated quality control indicators that can be used to guide service

quality.

Excellently managed service companies share the following common practices.

Strategic concept - they have a clear sense of their target customers and the customer's

needs they are trying to satisfy.

History of top management commitment to quality - Management of such companied

tend to be very concerned about quality of services and closely monitor financial as well

as service performance.

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Services for monitoring service performance - Such companies audit service

performance both for themselves and those of their competitors on a regular basis. They

use various criteria, including ghost shopping to find out employees deliver good service.

High standards - They set high service - quality standards. For example, Swiss air aims at

having 96% more of its passengers rate its services as good or superior.

Systems for satisfying customers complaints - Company employees who receive

complaints must be trained and empowered to resolve customer problems speedily and

satisfactorily. The company should go beyond satisfying particular customers to

discovering the root cause of frequent problems.

Satisfying both employees and customers - They aim at satisfying employees in order

to cope with the demands on their lives outside the office. They believe that employee

relations will reflect on customer relations.

MANAGING PRODUCT SUPPORT SERVICES

Just like for other products, service products need to provide buyers with product support

services. The company must define a customer needs carefully in designing both the product and

the product support system. They must take into account the worries that buyer have.

The failure frequency of a product The dependability of the product The cost of maintenance and

reo air.

The importance of reliability, service dependability and maintenance vary among different

products and product users. Thus to provide the best support, a manufactures must identify the

services that customers value most and their relative importance. Manufacturers need to plan

their product designs and services and mix decisions in close coordination so that any product

designed will reduce the amount of subsequent servicing needed.

Companies must describe how they want to offer after - sales services ( eg maintenance and

repair as well as training) to customers. Some companies have customers service departments,

while others' handle the problem as they come, passing them over to the relevant officers [Q deal

with. There are still other firms that train personnel of their clients [Q services the equipment,

while some first insist on providing the technical services instead of training other people.

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Over time manufacturers switch more of the maintenance and repair services to authorized

distributors and dealers. These dealers and distributors are closer to the customers

operate in more locations and can offer quicker (sometimes better) services.

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