chapter 13 distributing and promoting products. copyright © cengage learning. all rights reserved....
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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.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 3
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.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 4
Channel of Distribution
…a sequence of marketing organizations that directs a
product from the producer to the ultimate user.
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Middleman(Marketing Intermediary)
…a marketing organization that links a producer and user within a
marketing channel.
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Figure 13.1: Distribution Channels
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Retailer
…a middleman that buys from producers or other middlemen and
sells to consumers.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 8
Wholesaler
…a middleman that sells products to other firms.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 9
Market Coverage
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 10
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 11
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
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Wholesaler Services to Manufacturers
Similar to retailers Plus
• Provide sales force• Reduce inventory costs• Assume credit risks• Furnish market information
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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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 14
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 15
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 16
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 17
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 18
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 19
Retail Sales Categorized by Merchandise Type
Source: U.S, Bureau of the Census, Monthly Retail Trade: Sales and Inventories, January 2006, www.census.gov.
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Non-Store Retailing
Direct Selling Direct Catalog Direct-Response Telemarketing Television Home Shopping Online Retailing Automatic Vending
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Table 13.1: The Ten Largest Retail Firms in the United States
Sources: 2008 Top 100 Retailers, www.stores.org; accessed April 13, 2009.
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SpotlightSmall-Business Internet Advertising
Source: Nielsen Online/Web
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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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 24
Physical Distribution
…activities concerned with the efficient movement of products from the producer to the ultimate user.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 25
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 26
Warehousing Activities
Receiving Goods
Identifying Goods
Sorting Goods
Dispatching Goods to Storage
Holding Goods
Recalling, Picking, and Assembling Goods
Dispatching Shipments
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 27
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
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Transportation
…the shipment of products to customers
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Carrier
…a firm that offers transportation services
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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
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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.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 32
Integrated Marketing Communications
…coordination of promotion efforts to ensure maximal informational and persuasive impact on customers.
Goal = Consistent message to customers
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 33
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 34
Promotion
…communication about an organization and its products that is intended to inform, persuade,
or remind target-market members.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 35
Promotion Mix
…the particular combination ofpromotion methods a firm uses to
reach a target market.
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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.
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Advertising Spending by Media and Total Dollars Spent
Source: Robert Coen, “Insider’s Report,” July 2008, p. 4.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 38
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 39
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 40
Advertising Agency
…an independent firm that plans, produces, and places advertising for its clients.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 41
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.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 42
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.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 43
Using the Internet
• Advertising Age is the industry’s preeminent source of marketing, advertising, and media news, information, and analysis.
www.adage.com
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 44
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 45
Kinds of Salespersons
Order Getters Order Takers
• Inside• Outside
Support Personnel• Sales support• Missionary• Trade• Technical
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 46
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.
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 47
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 48
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 49
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 50
Sales Promotion Methods
Rebates Coupons Samples Premiums Frequent-User
Incentives
Point-of-Purchase Displays
Trade Shows Buying Allowances Cooperative Advertising
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 51
Types of Public Relations Tools
Publicity
News Release
Feature Article
Captioned Photograph
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 52
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 53
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 54
3. A firm that operates only one retail outlet is called a(n) _________ retailer.
a) chainb) specialtyc) Independentd) merchante) single
Chapter Quiz
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 55
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
Copyright © Cengage Learning. All rights reserved. Chapter 13 | Slide 56
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