© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 1 Distributing and Promoting Products Chapter13

4 P’s of the Marketing Mix

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 3 Promotion  The particular combination of promotion methods a firm uses to reach a target market Advertising – A paid non-personal message communicated to a select audience through a mass medium Personal selling – Personal communication aimed at informing customers and persuading them to buy a firm’s products Sales promotion – The use of activities or materials as direct inducements to customers or salespersons Public relations – Communication activities used to create and maintain favorable relations between an organization and various public groups, both internal and external

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 4 Possible Elements of a Promotion Mix

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 5 Advertising (cont.)  Advertising Age is the industry’s preeminent source of marketing, advertising, and media news, information, and analysis.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 6  Slinky 1960’s  Old Spice  VW commercial: Darth Vader (Superbowl 2011)  VW commercial: Dog Gets Fit (Superbowl 2012)  The Making of the VW Commercial Examples of TV ads

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 7 Major Steps in Developing an Advertising Campaign 1. Identify and analyze the target audience. 2. Define the advertising objectives. 3. Create the advertising platform. 4. Determine the advertising appropriation. 5. Develop the media plan. 6. Create the advertising message. 7. Execute the campaign. 8. Evaluate advertising effectiveness.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 8  Independent firms that plan, produce, and place advertising for their clients  Large agencies also help with sales promotion and public relations  Media usually pay a commission to agencies Example: Deep Local Ad Agency Advertising Agencies

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 9  Activities or materials that are direct inducements to customers or salespersons  Sales promotion objectives To attract new customers To encourage trial of a new product To invigorate the sales of a mature brand To boost sales to current customers To reinforce advertising To increase traffic in retail stores To steady irregular sales patterns To build up reseller inventories To neutralize competitive promotional efforts To improve shelf space and displays Sales Promotion

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 10 Sales Promotion Methods (cont.)  Rebate A return of part of the purchase price of a product  Coupon Reduces the retail price of a particular item by a stated amount at the time of purchase  Sample A free product given to customers to encourage trial and purchase  Premium A gift a producer offers to a customer in return for buying its product  Frequent-user incentives A program that rewards customers who engage in repeat (frequent) purchases

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 11 Sales Promotion Methods (cont.)  Point-of-purchase displays Promotional material in the retail store designed to inform customers and encourage purchases  Trade shows Industry-wide exhibits at which many sellers display their products  Buying allowance A temporary price reduction to resellers for purchasing specified quantities of a product  Cooperative advertising A manufacturer agrees to pay a certain amount of the retailer’s media cost for advertising the manufacturer’s product

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 12 Public-Relations (PR)  A broad set of communication activities used to create and maintain favorable relationships between an organization and various public groups, both internal and external Customers, employees, stockholders, suppliers, educators, the media, government officials, society in general  Types of public-relations tools Written and spoken communications – Brochures, newsletters, company magazines, annual reports, news releases, corporate-identity materials, speeches Event sponsorship – Special events such as concerts and charity functions that the firm underwrites wholly or partially

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 13 Publicity  Publicity Communication in news-story form about an organization, its products, or both – News release – Feature article – Captioned photograph – Press conference

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 14  To promote people, places, activities, ideas  To enhance the reputation of the organization by increasing awareness of company products and activities  To create specific positive company images The Uses of Public Relations

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 15  Channel of distribution A sequence of marketing organizations that directs a product from the producer to the ultimate user Distribution

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 16 Channels for Consumer Products  Producer to consumer (direct channel) No intermediaries (“middle men”) Used by all services and by a few consumer goods Producers can control quality and price, do not have to pay for intermediaries, and can be close to their customers Examples: Dell Computer, Mary Kay Cosmetics

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 17 Channels for Consumer Products (cont.)  Producer to retailer to consumer Producers sell directly to retailers when retailers (e.g., Walmart) can buy in large quantities Most often used for bulky products for which additional handling would increase selling costs, and for perishable or high-fashion products that must reach consumers quickly

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 18 Channels for Consumer Products (cont.)  Producer to wholesaler to retailer to consumer The traditional channel Used when a producer’s products are carried by so many retailers that the producer cannot deal with them all

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 19 Distribution Channels

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 20 Level of Market Coverage  Intensity of market coverage Intensive distribution – The use of all available outlets for a product to saturate the market Selective distribution – The use of only a portion of the available outlets for a product in each geographic area Exclusive distribution – The use of only a single retail outlet for a product in a larger geographic area

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 21 The Ten Largest Retail Firms in the United States

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 22 Using the Internet  The National Retail Federation is a gateway for information for the retailing industry.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 23 Physical Distribution  All those activities concerned with the efficient movement of products from the producer to the ultimate user Inventory management Order processing Warehousing Materials handling Transportation

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 24  Inventory management The process of managing inventories in such a way as to minimize inventory costs – Holding costs—the costs of storing products until they are purchased or shipped to customers – Stock-out costs—the costs of sales lost when items are not in inventory when needed  Order processing  Warehousing  Materials Handling- in warehouse and in transport  Transportation Physical Distribution (cont.)

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 25 Physical Distribution (cont.)  Transportation Trucks – Tremendous expansion since creation of national highways – Often favored for offering door-to-door service, less stringent packaging requirements, and flexible schedules Airplanes – Fastest but most expensive – Used to ship high-value or perishable goods Waterways – Slowest but least expensive – Used mainly for bulky, nonperishable goods – Use limited to cities located on navigable waterways Pipelines – used primarily to carry petroleum and natural gas

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 26 Characteristics of Transportation Modes

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 27 Classes of In-Store Retailers  Independent retailer A firm that operates only one retail outlet  Chain retailer A company that operates more than one retail outlet- Walgreens, Starbucks  Department store A retail store that: – employs twenty-five or more persons – sells at least home furnishing, appliances, family apparel, and household linens and dry goods, each in a different part of the store  Discount store A self-service, general-merchandise outlet that sells products at lower-than-usual prices

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 28 Classes of In-Store Retailers (cont.)  Catalog showroom A retail outlet that displays well-known brands and sells them at discount prices through catalogs within the store  Warehouse showroom A retail facility in a large, low-cost building with large on-premises inventories and minimal service  Convenience store A small food store that sells a limited variety of products but remains open well beyond normal business hours

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 29 Classes of In-Store Retailers (cont.)  Supermarket A large self-service store that sells primarily food and household products-Copps  Superstore A large retail store that carries not only food and nonfood products ordinarily found in supermarkets but also additional product lines-Walmart Superstores  Warehouse club A large-scale members-only establishment that combines features of cash-and-carry wholesaling with discount retailing-”Sam’s Club”

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 30 Classes of In-Store Retailers (cont.)  Traditional specialty store A store that carries a narrow product mix with deep product lines- “Baseball Card Store”  Off-price retailer A store that buys manufacturers’ seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts  Category killer A very large specialty store that concentrates on a single product line and competes on the basis of low prices and product availability Examples: Toys “R” Us, Home Depot, Best Buy, Barnes & Noble

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 31 Kinds of Nonstore Retailing  A type of retailing whereby consumers purchase products without visiting a store Direct selling – The marketing of products to consumers through “in person” sales presentations at home or in the workplace-Tupperware, Tastefully Simple Direct marketing – The use of the telephone, Internet, TV and nonpersonal media to introduce products to customers, who can then purchase them via mail, telephone, or the Internet – Home Shopping Network

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 32 Many Examples of Nonstore Retailing  Catalog marketing An organization provides a catalog from which customers make selections and place orders by mail, telephone, or the Internet  Direct-response marketing A seller advertises a product and makes it available, usually for a short time period, through mail, telephone, or online orders  Telemarketing The performance of marketing-related activities by telephone

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 33 More Examples of Nonstore Retailing  Television home shopping Products are presented to television viewers, who can buy them by calling a toll-free number and paying by credit card  Online retailing Makes products available to buyers through computer connections  Automatic vending The use of machines to dispense products

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 34 Chapter Quiz 1. A women’s apparel manufacturer most likely will use A. intensive distribution. B. selective distribution. C. exclusive distribution. D. high-style distribution. E. popular-style distribution.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 13 | Slide 35 Chapter Quiz 2. Which activity combines inventory management, order processing, warehousing, material handling, and transportation? A. Marketing B. Merchandising C. Warehousing D. Physical distribution E. Transporting