chapter 13 distributing and promoting products. copyright © cengage learning. all rights reserved....

Chapter 13

Distributing and Promoting Products

Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 2

Learning Objectives

1. Identify the various distribution channels and explain the concept of market coverage.

2. Understand how supply chain management facilitates partnering among channel members.

3. Discuss the need for wholesalers, describe the services they provide, and identify the major types of wholesalers.

4. Distinguish among the major types of retailers and identify the types of shopping centers.

5. Explain the five most important physical distribution activities.

6. Explain how integrated marketing communications works to have the maximum impact on the customer.


Learning Objectives (cont’d.)

7. Understand the basic elements of the promotion mix.

8. Explain the three types of advertising and describe the major steps of developing an advertising campaign.

9. Recognize the kinds of salespersons, the steps in the personal selling process, and the major sales management tasks.

10. Describe sales promotion objectives and methods.

11.Understand the types and uses of public relations.


Channel of Distribution

…a sequence of marketing organizations that directs a

product from the producer to the ultimate user.


Middleman(Marketing Intermediary)

…a marketing organization that links a producer and user within a

marketing channel.


Figure 13.1: Distribution Channels


Retailer

…a middleman that buys from producers or other middlemen and

sells to consumers.


Wholesaler

…a middleman that sells products to other firms.


Market Coverage


Supply Chain Management

…long-term partnership among channel members working together to create a

distribution system that reduces inefficiencies, costs, and redundancies while

creating a competitive advantage and satisfying customers.

Encourages cooperation in reducing the costs of inventory


Wholesaler Services to Retailers

Buy in large quantities Sell in small quantities Deliver goods to retailers Stock variety of goods in one place Provide assistance in

• Promotion• Market Information• Financial Aid


Wholesaler Services to Manufacturers

Similar to retailers Plus

• Provide sales force• Reduce inventory costs• Assume credit risks• Furnish market information


Types of Wholesalers

Merchant (Jobber)Purchases goods in large quantities and sells to other wholesalers, retailers, institutions, farms, governments, professionals, or industrial users

Full-ServicePerforms entire range of wholesaler functions

General-MerchandiseDeals in wide variety of products


Types of Wholesalers (cont’d.)

Limited-LineStocks only a few product lines but carries numerous items within each line

Specialty-LineCarries a select group of products within a single line

Limited-ServiceAssumes responsibility for a few wholesale services only


Agents and Brokers

Agent: expedites exchanges, represents a buyer or a seller, and often is hired permanently on a commission basis

Broker: specializes in a particular commodity, represents either a buyer or a seller, and is likely to be hired on a temporary basis


In-Store Retailers Based on Store Size and Kind/Number of Products

DepartmentConsists of several sections; wide assortment of products

DiscountSelf-service; sells at lower-than-usual prices

Warehouse ShowroomLarge, low-cost building with large on-premises inventory, minimal service

ConvenienceSmall store that sells limited variety of products; remains open beyond normal business hours


In-Store Retailers Based on Store Size and Kind/Number of Products (cont’d.)

SupermarketLarge self-service; sells food and household products

SuperstoreLarge; carries not only food and nonfood products but also additional product lines

Warehouse ClubsLarge-scale, members-only; features cash-and-carry wholesaling with discount retailing


In-Store Retailers Based on Store Size and Kind/Number of Products

Traditional SpecialtyNarrow product mix with deep product lines

Off-PriceBuys manufacturers’ seconds, overruns, returns, and off-season merchandise for resale at deep discounts

Category KillersLarge specialty store; concentrates on single product line; competes with low prices and product availability


Retail Sales Categorized by Merchandise Type

Source: U.S, Bureau of the Census, Monthly Retail Trade: Sales and Inventories, January 2006, www.census.gov.


Non-Store Retailing

Direct Selling Direct Catalog Direct-Response Telemarketing Television Home Shopping Online Retailing Automatic Vending


Table 13.1: The Ten Largest Retail Firms in the United States

Sources: 2008 Top 100 Retailers, www.stores.org; accessed April 13, 2009.


SpotlightSmall-Business Internet Advertising

Source: Nielsen Online/Web


Types of Planned Shopping Centers

Lifestyle: open-air-environment shopping center with upscale chain specialty stores

Neighborhood: consists of several small convenience/specialty stores

Community: 1 or 2 department stores and some specialty stores with convenience stores

Regional: large department stores, specialty stores, restaurants, theaters, hotels


Physical Distribution

…activities concerned with the efficient movement of products from the producer to the ultimate user.


Functions of Physical Distribution

Inventory Management: minimize holding and potential stock-out costs

Order Processing: receive and fill customers’ purchase orders

Warehousing: receive and store goods and prepare them for reshipment

Materials Handling: handle goods in warehouses and during transportation


Warehousing Activities

Receiving Goods

Identifying Goods

Sorting Goods

Dispatching Goods to Storage

Holding Goods

Recalling, Picking, and Assembling Goods

Dispatching Shipments


Types of Warehouses

PrivateOwned and operated by a particular firm; designed to serve firm’s specific needs

Public Offers services to all individuals and firms


Transportation

…the shipment of products to customers


Carrier

…a firm that offers transportation services


Categories of Carriers

CommonAvailable to all shippers

ContractAvailable for hire by one or several shippers

Private Owned and operated by the shipper

Freight Forwarder Hired by agents to handle transportation

• Ensures goods loaded on carrier• Assumes responsibility for safe delivery


Table 13.2: Characteristics of Transportation Modes

Sources: U.S. Bureau of Transportation Statistics, National Transportation Statistics 2005, www.bts.gov; accessed July 12, 2006.


Integrated Marketing Communications

…coordination of promotion efforts to ensure maximal informational and persuasive impact on customers.

Goal = Consistent message to customers


Reasons forIntegrated Marketing Appeal

Drop in mass media popularity• High costs• Unpredictable audience size

Precisely targeted promotional tool

Database marketing = precise targeting individual customers

Promotion-related companies


Promotion

…communication about an organization and its products that is intended to inform, persuade,

or remind target-market members.


Promotion Mix

…the particular combination ofpromotion methods a firm uses to

reach a target market.


Figure 13.2: PossibleElements of a Promotion Mix

Depending on the type of product and target market involved, one or more of these ingredients are used in a promotion mix.


Advertising Spending by Media and Total Dollars Spent

Source: Robert Coen, “Insider’s Report,” July 2008, p. 4.


Types of Advertising by Purpose

Primary Demand – increases demand for all brands of a product within an industry

Selective – sells a particular brand of product

• Immediate-Response• Reminder• Comparative

Institutional – enhances firm’s image or reputation


Steps in Developing Advertising Campaign

1. 1. Identify/AnalyzeIdentify/Analyze

2. 2. Define ObjectivesDefine Objectives

3. 3. Create PlatformCreate Platform

4. 4. Determine AppropriationDetermine Appropriation 5. 5. Develop PlanDevelop Plan

6. 6. Create MessageCreate Message

7. 7. Execute CampaignExecute Campaign

8. 8. Evaluate EffectivenessEvaluate Effectiveness


Advertising Agency

…an independent firm that plans, produces, and places advertising for its clients.


Top Ten National Advertisers

1. Procter & Gamble Co.

2. AT&T

3. Verizon Communications

4. General Motors

5. Time Warner

6. Ford Motor Co.

7. GlaxoSmithKline

8. Johnson & Johnson

9. Walt Disney Co.

10. UnileverSource: Reprinted with permission of June 23, 2008 issue of Advertising Age. Copyright, Crain Communications Inc., 2008.


Top Ten Brands in Product Placement

Source: Nielsen Product Placement, January-–June 2008, http://blog.nielsen.com/nielsenwire/consumer/top-10-product-placement-brands-010108-063008/; accessed February 22, 2009.


Using the Internet

• Advertising Age is the industry’s preeminent source of marketing, advertising, and media news, information, and analysis.

www.adage.com


Social and LegalConsiderations in Advertising

1. Most effective and inexpensive means of communicating product information

2. Encourages competition

3. Revenues support mass-communications media

4. Provides jobs


Kinds of Salespersons

Order Getters Order Takers

• Inside• Outside

Support Personnel• Sales support• Missionary• Trade• Technical


Figure 13.3: The Six Steps of the Personal-Selling Process

Personal selling is the most adaptable of all promotional methods and the most expensive.


Sales Manager’s Responsibilities

Set Sales Objectives Adjust Size of Sales Force Attract/Hire Effective Salespersons Develop Training Program Formulate Compensation Plan Motive Salespersons Define Sales Territories Schedule/Route Sales Force Evaluate Operation


Sales Promotion Objectives

1. Attract new customers2. Encourage trial of new product3. Invigorate sales of mature brand4. Boost sales to current customers5. Reinforce advertising6. Increase traffic in retail stores7. Steady irregular sales patterns8. Build up resell inventory9. Neutralize competition10.Improve shelf space/displays


Classification of Promotional Methods

Consumer SalesAttract consumers to particular retail stores and motivate them to purchase new/established products

Trade SalesEncourage wholesalers and retailers to stock and actively promote manufacturer’s product


Sales Promotion Methods

Rebates Coupons Samples Premiums Frequent-User

Incentives

Point-of-Purchase Displays

Trade Shows Buying Allowances Cooperative Advertising


Types of Public Relations Tools

Publicity

News Release

Feature Article

Captioned Photograph


1. Highly perishable products such as fruits and vegetables are typically channeled from producer to

a) retailer to consumer.b) wholesaler to consumer.c) wholesaler to retailer to consumer.d) consumer.

e) functional middleman to consumer..

Chapter Quiz


2. A mail-order wholesaler is an example of a ____________ wholesaler.

a) limited-service b) full-servicec) general merchandised) limited-linee) specialty-line

Chapter Quiz


3. A firm that operates only one retail outlet is called a(n) _________ retailer.

a) chainb) specialtyc) Independentd) merchante) single

Chapter Quiz


4. “Drink More Milk” and “Got Milk?” are examples of

a) public relations.b) institutional advertising.c) primary-demand advertising.d) publicity.

e) selective-demand advertising.

Chapter Quiz


5. Critics’ two main complaints about advertising are that it

a) is malicious and it causes unnecessary competition.

b) encourages society to lie and to steal.c) is useless and it is mean.d) wastes financial resources and consumers are

hurt in the end due to higher prices.e) is wasteful and can be deceptive.

Chapter Quiz

chapter 13 distributing and promoting products. copyright © cengage learning. all rights reserved....

Documents

copyright cengage learning

market information slide

costs of inventory slide

learning objectives

major types of retailers

major types of wholesalers

marketing channel

channel of distribution