Integrated Marketing Communications: Placement, Distribution Intensity, And Promotion Strategies

Placement decision

Over the years, industry giants like V and Red Bull have dominated the Australian market of non-alcoholic beverages. These manufacturers of energy drinks hold a substantial share in the both global and domestic market. However, recent medical researches deem these energy drinks as unsafe for daily consumption. The effects of daily usage of such energy drinks include overdose of caffeine, palpitation of heart, poor oral health and several neurological problems (Peacock, Bruno and Martin 2012)

The revelations from these medical researches has led to not only decline in the soft drink market but also made the consumers more conscious regarding their health with respect to the consumption of such drinks.

Hence, in order to benefit from this change in the consumer behavior, the company seeks to launch a new product that lacks all the harmful effects of the energy drinks and plus acts as a healthier refreshment drink for all its consumers.

Channel intermediaries refer to those parties involved in the distribution of any product or consumer goods from the manufacturer to the end user in the distribution channel (Hollensen 2015). These parties mainly incorporate retailers wholesalers, agents and brokers.

Channels of distribution divide into four levels as stated below:

• zero level channel
• one level channel
• two level channel
• three level channel 

XYZ Company will choose one level and two level channels for this operation. The motive behind choosing these channels elaborates as follows:

One level	Two level
· Requires less investment compared to direct selling ·  Reduces cost on stock-holdings · Provides expertise and consultancy from an external party · Opportunity for extending the geographical expanse	· Products are sold in larger quantities · This channel devises various sales method to reach potential customers · Effective for narrow product line · Provides better insight on customer behaviour and trends

Distribution intensity refers as the approach or strategy of the marketing entity chosen to determine the level of the product’s availability in a particular region (Mallen 2013). The level of intensity depends on various factors such as the pricing, capacity of the production, market size and product’s promotion in the market.

Distribution Intensity categorizes into three types-

• intensive
• exclusive
• selective

In this context, XYZ Company adopts the approach of intensive distribution strategy with reasons explained as follows:

• This method aims to cover every possible outlet that are available within the company’s reach
• This strategy not only creates brand awareness but also substantially boosts the sales of the product
• The method will determine as well as help in analysing the demand of the product from smaller retail stores to supermarket levels.
• the data compiled from the demand trends will facilitate in planning future promotional activities for the product in order to increase the product awareness towards both current and potential customers

Product related factors-

• The product is at the initial stage of the product life cycle.
• the product provides various health benefits to its consumers compared to other energy drinks

Market related factors-

• According to IBISWorld, the annual growth of the industry was recorded approximately 2.4% from 2011 to 2016(Ibisworld.com.au 2017)
• A 12% drop in the soft drink consumption is predicted as a result of 20% tax on sugar-sweetened drinks(greens.org.au 2017)

Market communication strategies are responsible creating such awareness to the whole supply chain including the end user. The aim of communication strategies follows to inform, persuade and remind the consumer about their product supposedly available for purchase and consumption.

Market communication further divides into two categories- interpersonal and mass communication. In this context, the company approaches mass communication for following reasons:

• The range of message is wider than interpersonal communication
• It is capable of reaching out to heterogeneous audience
• Mass communication builds brand and product image
• It helps in determining the supply-demand trend of the product in both domestic and non-domestic market.

Production promotion refers to the process of propagating product awareness in the eyes of the customers whether current or potential .While choosing a strategy for promotion; two terms emerge during the study-

• Push strategy- this strategy aims to create product demand by utilizing the company’s sales force and applying promotional trade activities to create consumer demand for the product. It is more applicable in trade shows and direct selling.
• Pull strategy- this strategy focuses on creating brand awareness for the product directly to the customers. The main emphasis of this strategy is to motivate the end user into buying the product. This strategy involves utilizing techniques like advertising, oral referrals and discounts. Unlike push strategy, the customer creates the demand for the product instead of the manufacturer.

In this context, XYZ Company chooses pull strategies for following reasons:

• Pull strategy is more customer oriented than push strategy
• Provides efficient inventory control
• It improve the flow of cash resources in the company
• This strategy can assess customer demands and initiate production accordingly

Distribution Intensity

Advertising is a part of promotional mix, which is also a paid and non-personal form of communication dealing with informing or influencing the customer or end users regarding the product or the company (Moriarty et al 2014).

Product centric	This form of advertising focuses on promoting the manufactured good or service produced by the company
Institutional advertising	This form of advertising is specially designed to promote the company’s brand image rather than good or services it produces
Advocacy advertising	the main objective of this advertising framework is to express an organization’s view or response towards any controversial affairs

Since the primary motive of the XYZ company centres on creating primary demand for the “calm” drink product soon to be launched in the Australian soft drink market, therefore product centric advertising is chosen. It must be remembered that the

Planning an advertising campaign requires setting objectives of the advertisement and finalizing the medium for the supposed promotion of the product. It is clear that the company desires to launch a new “calm” drink product in the Australian market and the product is in the introductory phase of its life cycle, hence the final determinant that remains is the choice of medium or media channel.

In this context, the company chooses following media with illustrated reasons

Media	Coverage	Cost
Television	According to report by Australian Multi Screen Report Q3 2016, 86.6% of the Australian population were record for viewership of broadcast TV (OzTAM 2017).	High
Online	In the same report by Australian Multi Screen Report Q3 2016, the recorded viewership of PC/laptops was 7.8%, 2.9% on smart phones and 2.7% on tablets (OzTAM 2017).	Moderate
Outdoor media	The outdoor media association offers more than 80,000 outdoor positions across five metropolitan areas of Australia (Samios and Samios 2017).	Moderate
Newspaper	About 41 % of Australians read print newspaper in an average week (Roy Morgan 2017).	Low

The main emphasis of the advertising campaign is to make the customers aware of the product along with its benefits. For this purpose, the demographic coverage should be as high as possible in order to ensure the success of the product in the market. The introductory phase of any new product requires high investment until it reaches the growth and maturity phase.

Conclusion

The report concludes with the promotion and placement decision established for the product. In order to gain customer range and cost effectiveness, one and two level channels of distribution are chosen along with the intensive approach of distribution activity. The main factors behind this approach involve the current market conditions as well as the originality of the product. As far as promotion is concerned, the company aims to communicate in the widest range known in order to cover as much of the market customers possible. The strategy is to make the customers aware of the availability of the product rather than choose to offer them directly. The whole purpose of these decisions is to take the advantage of the customer behavioural pattern in terms of health consciousness and create a brand new market segment to achieve high profitability.

References

Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.

https://greens.org.au (2017). Australian Greens. Taxing sugary drinks. [online] Available at: https://greens.org.au/sugar-tax [Accessed 11 Jun. 2017].

Ibisworld.com.au. (2017). Soft Drink Manufacturing in Australia Market Research | IBISWorld. [online] Available at: https://www.ibisworld.com.au/industry-trends/market-research-reports/manufacturing/beverage-tobacco-product/soft-drink-manufacturing.html [Accessed 11 Jun. 2017].

Mallen, B., 2013. Selecting channels of distribution: a multi?stage process. International Journal of Physical Distribution & Logistics Management.

Moriarty, S., Mitchell, N.D., Wells, W.D., Crawford, R., Brennan, L. and Spence-Stone, R., 2014. Advertising: Principles and practice. Pearson Australia. 

OzTAM. (2017). What’s new. [online] Available at: https://www.oztam.com.au/WhatsNew.aspx [Accessed 9 Jun. 2017]. 

Peacock, A., Bruno, R. and Martin, F.H., (2012). The subjective physiological, psychological, and behavioral risk?taking consequences of alcohol and energy drink co?ingestion. Alcoholism: Clinical and Experimental Research, 36(11), pp.2008-2015.

Roy Morgan. (2017). Digital audience growth continued to drive newspaper readership higher in 2016. [online] Available at: https://www.roymorgan.com/findings/7135-australian-newspaper-print-readership-and-cross-platform-audiences-december-2016-201702091424 [Accessed 9 Jun. 2017]. 

Samios, Z. and Samios, Z. (2017). The outdoor industry reinvented itself in 2016 – will creatives get on board in 2017? – Mumbrella. [online] Mumbrella. Available at: https://mumbrella.com.au/the-outdoor-industry-reinvented-itself-in-2016-will-creatives-get-on-board-in-2017-416092 [Accessed 9 Jun. 2017]