Distributingand Promoting

Products andServices C

HA

PT

ER

12

The Future of BusinessThe Essentials 4th EditionGitman & McDaniel

Prepared byDeborah Baker

© B

anan

aSto

ck /

Jupi

terim

ages

Chapter 12Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved

2

Learning Goals

CH

AP

TE

R 1

2

1 What is the nature and function of distribution?

2 What is wholesaling, and what are the types of wholesalers?

3 What are the different kinds of retail operations?

4 How can supply chain management increase efficiency and customer satisfaction?

5 What is promotion, and what are the key elements of a promotional mix?

3

Learning Goals (continued)

CH

AP

TE

R 1

2

6 How are advertising media selected?

7 What is personal selling?

8 What are the goals of sales promotion, and what are several types of sales promotion?

9 How does public relations fit into the promotional mix?

10 What are the trends in promotion and distribution?

4

The Nature and Functions of Distribution

1

What is the nature and function of distribution?1

5

distribution

Efficiently managing the acquisition of raw material to the factory and the movement of products from the producer to industrial users and consumers.

1

The Nature and Functions of Distribution

6

Supply Chain

1

Suppliers ofRaw Materials

Suppliers ofRaw Materials

CD Factory

CD Factory

Wholesaleor

DistributionCenter

Wholesaleor

DistributionCenter

Retailers,Wholesalers,Distribution

Centers

Retailers,Wholesalers,Distribution

Centers

CustomersCustomers

Finished CDs

Exhibit 12.1

7

distribution channel

The series of marketing entities through which goods and services pass on their way from producers to end users.

marketing intermediaries

Organizations that assist in moving goods and services from producers to end users.

1

Distribution

8

Agents andBrokers

Agents andBrokers

Agents are sales representatives of manufacturers and wholesalers, and brokers are entities that bring buyers

and sellers together.

Agents are sales representatives of manufacturers and wholesalers, and brokers are entities that bring buyers

and sellers together.

IndustrialDistributorsIndustrial

Distributors

Independent wholesalers that buy related product lines from

manufacturers and sell them to industrial users.

Independent wholesalers that buy related product lines from

manufacturers and sell them to industrial users.

WholesalersWholesalersFirms that sell finished goods to

retailers, manufacturers, and institutions.

Firms that sell finished goods to retailers, manufacturers, and

institutions.

RetailersRetailersFirms that sell goods to consumers and

to industrial users for their own consumption.

Firms that sell goods to consumers and to industrial users for their

own consumption.

Marketing Intermediaries

1

91

Nontraditional Distribution Channels

Internet

Mail-order

Infomercials

Kiosks

Shopping networks© AP Images / Mark Lennihan

101

Functions of Distribution Channels

Ease the flow of goodsEase the flow of goods

Reduce the number of transactionsReduce the number of transactions

111

Distribution Channels Ease the Flow of Goods

AccumulatingAccumulating

Sorting outSorting out

AllocatingAllocating

Locating BuyersLocating Buyers

Storing merchandiseStoring merchandise

12

CONCEPT check

1

List and define the marketing intermediaries that make up a distribution channel.

Provide an example of a strategic channel alliance.

How do channels reduce the number of transactions?

132

What is wholesaling, and what are the types of wholesalers?

2

Wholesaling

14

Types of Wholesale Intermediaries

Manufacturers’representativesManufacturers’representatives

Salespeople who represent noncompeting manufacturers and wholesalers. Function

as independent agents rather than as salaried employees of the manufacturers.

Salespeople who represent noncompeting manufacturers and wholesalers. Function

as independent agents rather than as salaried employees of the manufacturers.

BrokersBrokers Salespeople who bring buyers and sellers together. Do not take title to merchandise.Salespeople who bring buyers and sellers together. Do not take title to merchandise.

MerchantWholesalersMerchant

Wholesalers

An institution that buys goods from manufacturers (take ownership) and resells them to businesses, government agencies,

other wholesalers, or retailers.

An institution that buys goods from manufacturers (take ownership) and resells them to businesses, government agencies,

other wholesalers, or retailers.

2

15

CONCEPT check

Define wholesaling and describe what wholesalers do.

Describe merchant wholesalers.

Explain the difference between agents and brokers.

2

163

What are the different kinds of retail operations?3

Retailing

17

In-Store RetailingIn-Store Retailing Nonstore RetailingNonstore Retailing

Department store

Specialty store

Convenience store

Supermarket

Discount store

Off-price retailer

Factory outlet

Catalog store

Hypermart

Vending machine

Direct selling

Direct-response marketing

Home shopping networks

Internet retailing

Types of Retail Operations

3 Exhibit 12.4

183

Fixture type and densityFixture type and density

Merchandise type and densityMerchandise type and density

Employee type and densityEmployee type and density

SoundSound

OdorsOdors

Creating a Store’s Atmosphere

© AP Images / David Zalubowski

19

CONCEPT check

Describe at least five types of in-store retailing and four forms of nonstore retailing.

What factors most influence a retail store’s atmosphere?

3

204

How can supply chain management increase efficiency and customer satisfaction?

4

Using Supply Chain Management

21

Physical flow processPhysical flow process

CommunicatorCommunicator

Role of Supply Chain Management

4

22

CONCEPT check

What is the goal of supply chain management?

What does it mean for a supply chain to be customer driven?

4

235

What is promotion, and what are the key elements of a promotional mix?

5

Promotional Goals

24

Promotional Goals

promotion

The attempt by marketers to inform, persuade, or remind consumers and industrial users to engage in the exchange process.

5

25

2. Getting consumers to try products2. Getting consumers to try products

3. Providing information3. Providing information

4. Keeping loyal customers4. Keeping loyal customers

6. Identifying target customers6. Identifying target customers

1. Creating awareness1. Creating awareness

5. Increasing the amount and frequency of use5. Increasing the amount and frequency of use

Promotional Goals

5

26

The Promotional Mix

Promotional Mix

Promotional Mix

AdvertisingAdvertising

Public RelationsPublic

Relations

PersonalSelling

PersonalSelling

SalesPromotion

SalesPromotion

5

27

integrated marketing communications

The careful coordination of all promotional activities—media advertising, sales promotion, personal selling, and public relations, as well as direct marketing, packaging, and other forms of promotion—to produce a consistent, unified message that is customer focused.

5

Integrated MarketingCommunications

28

CONCEPT check

What is the objective of a promotional campaign?

What is the promotional mix?

What are the features of an integrated marketing communications campaign?

5

296

How are advertising media selected?6

The Huge Impact of Advertising

30

advertising

Any paid form of nonpersonal presentation by an identified sponsor.

The Huge Impact of Advertising

6

31

audience selectivity

An advertising medium’s ability to reach a precisely defined market.

6

Advertising Costs and Market Penetration

32

CONCEPT check

How is technology impacting the way advertisers reach their markets?

What are the two main factors that should be considered when selecting advertising media?

6

337

What is personal selling?7

Personal Selling

34

Provides a detailed explanation or demonstration of the product

Message can be varied according to the motivations and interests of each prospective customer

Can be directed only to qualified prospects

Costs can be controlled by adjusting the size of the sales force in one-person increments

Considerably more effective than other forms of promotion in obtaining a sale and gaining a satisfied customer

Advantages of Personal Selling

7

35

6. Following up sale6. Following up sale

5. Closing sale5. Closing sale

4. Handling objections4. Handling objections

3. Presenting & demonstrating3. Presenting & demonstrating

2. Approaching customers2. Approaching customers

1. Prospecting and qualifying1. Prospecting and qualifying

Satisfied customer

The Selling Process

7

36

Does the prospect have a need for our product?

Can the prospect make the buying decision?

Can the prospect afford our product?

Qualifying Questions

7

37

CONCEPT check

What are the advantages of personal selling?

Explain the selling process.

7

388

What are the goals of sales promotion, and what are several types of sales promotion?

8

Sales Promotion

39

sales promotions

Marketing events or sales efforts—not including advertising, personal selling, and public relations—that stimulate buying.

point-of-purchase display

A strategically placed visual display or product display that informs potential customers about a product or service.

Sales Promotion

8

© AP Images / Mark J. Terrill

40

CONCEPT check

How does sales promotion differ from advertising?

Describe several types of sales promotion.

8

419

How does public relations fit into the promotional mix?

9

Public Relations

42

public relations

Any communication or activity designed to win goodwill or prestige for a company or person.

publicity

Information about a company or product that appears in the news media and is not directly paid for by the company.

Public Relations

9

43

Functions of Public Relations

9

Press relations Product publicity Corporate communications Public affairs Lobbying Employee and

investor relations Crisis management

© Steve Helber-Pool / Getty Images

44

CONCEPT check

What is the role of public relations?

Explain the concept of buzz marketing.

9

4510

What are the trends in promotion and distribution?

10

Trends in Promotion and Distribution

4610

Why Companies Blog

1. Real-time input from customers and prospects

2. Create and maintain relationships

3. Dialogue with clients and prospects

4. Focus on specific marketing goals

47

CONCEPT check

Why would a company such as Apple set up a blog?

What factors contribute to the Internet’s soaring growth in retailing?

10