1. Distributing and Promoting Products

2. What is the Distribution (Place) element of the marketing mix?
The process that makes products available to consumers when and where consumers want them.

3. Distribution: Getting the Product to the Customer
Wholesaler /
Retailer
Producer
Consumer
Channel of Distribution –
the path that a product takes from
the producer to the consumer
Distribution Strategy: getting the right product to the right person at the right place, at the right time

4. Types of Marketing Intermediaries
Agents and Brokers -- Intermediaries who bring buyers and sellers together and assist in negotiating an exchange but do not take title to the goods.
Wholesaler -- An intermediary that sells products to other organizations such as retailers, manufacturers, and hospitals.
Retailer -- An organization that sells products to ultimate customers.

5. Selected Channels of Distribution

6. Selected Marketing Channels: An Overview
Producer to consumer (direct channel)
No intermediaries
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
Producer to retailer to consumer
Producers sell directly to retailers when retailers (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
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
Producer to agent to wholesaler to retailer to consumer
Agent—functional middlemen that do not take title to products and are compensated by commissions paid to the producers
Often used for inexpensive, frequently purchased items, for seasonal products, and by producers that do not have their own sales forces
A manufacturer may use multiple channels
To reach different market segments
When the same product is sold to consumers and businesses
To increase sales or capture a larger market share

7. Why marketing needs intermediaries
Justifications for marketing intermediaries
Intermediaries perform essential marketing services (promotion of products, help sell product)
Intermediaries provide important market information to producers (what’s selling, who’s buying, customer feedback)
Intermediaries help store products (producers won’t be burdened with storage costs)
Intermediaries provide customers with convenience and choice selection
Intermediaries accept risk for customer non-payment or non-sold products
Intermediaries create EFFICIENCY and UTILITY
Intermediaries help REDUCE COSTS and provide VALUE! How?

8. How intermediaries create exchange efficiency

9. 3 Key Facts About Intermediaries
Marketing intermediaries can be eliminated but their activities cannot.
Intermediaries perform marketing functions faster and cheaper than other organizations can.
Marketing intermediaries add costs to products but they are generally offset by the values they provide.

10. 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

11. Marketing Intermediaries: Retailers
Retailers: Final link between producers and consumers
Retailers may buy from either wholesalers or producers
Retailers can sell goods, services, or both
The United States has nearly 1.1 million retail establishments with total sales of more than $4 trillion
Most retailers are small, with annual revenues well under $1 million

12. Types of Retail Stores
Independent retailer: Firm that operates only one retail outlet
Chain retailer: Company that operates more than one retail outlet
Department store: Retail store that employs twenty-five or more persons
Discount store: Self-service, general-merchandise outlet that sells products at lower-than-usual prices
Warehouse showroom: Retail facility in a large, low-cost building with large on-premises inventories and minimal service
Convenience store: Small food store that sells a limited variety of products but remains open beyond business hours
Supermarket: Large self-service store that sells primarily food and household products
Superstore: Large retail store that carries not only food and nonfood products ordinarily found in supermarkets but also additional product lines
Warehouse club: A large-scale members-only establishment that combines features of cash-and-carry wholesaling with discount retailing

13. More Types of Retail Stores
Traditional specialty store: Carries a narrow product mix with deep product lines
Off-price retailer: Store that buys manufacturers’ seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts
Category killer: Very large specialty store that concentrates on a single product line and competes on the basis of low prices and product availability

14. Types of Nonstore Retailing
A type of retailing whereby consumers purchase products without visiting a store
Direct selling
The marketing of products to consumers through face-to-face sales presentations at home or in the workplace
Direct marketing
The use of the telephone, Internet, and nonpersonal media to introduce products to customers, who can then purchase them via mail, telephone, or the Internet

15. Direct Marketing
Catalog marketing: Provides a catalog to customers to make selections and place orders
Direct-response marketing: A retailer advertises a product and makes it available through mail, telephone, or online orders
Telemarketing: Performance of marketing-related activities by telephone
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: Use of machines to dispense products

16. Types of Shopping Centers
Lifestyle shopping center: Open-air configuration and is occupied by upscale national chain specialty stores
Neighborhood shopping center: Consists of several small convenience and specialty stores
Community shopping center: Includes one or two department stores and some specialty stores, along with convenience stores
Regional shopping center: Contains large department stores, numerous specialty stores, restaurants, movie theaters, and sometimes even hotels

17. Partnering Through Supply- Chain Management
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
Category management: The retailer asks a supplier how to stock the shelves
Technology has enhanced implementation of supply-chain management

18. Physical Distribution
All those activities concerned with the efficient movement of products from the producer to the ultimate user
The movement of the products through their channels of distribution
Combines several interrelated business functions, the most important of which are:
Inventory management
Order processing
Warehousing
Materials handling
Transportation

19. Inventory Management and Order Processing
Inventory management: The process of managing inventories in such a way as to minimize inventory costs, including both holding costs and potential stock-out 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
Technology and software help manage inventory
Efficiency is crucial for firms using just-in-time (JIT) approach
Order processing: Activities involved in receiving and filling customers’ purchase orders

20. Warehousing
The set of activities involved in receiving and storing goods and preparing them for reshipment
Receiving goods
Identifying goods
Sorting goods
Dispatching goods to storage
Holding goods
Recalling, picking, and assembling goods
Dispatching shipments
Types of warehouses
Private warehouses—owned and operated by a firm
Public warehouses—offer their services to all firms

21. Materials Handling and Transportation
Materials handling: The physical handling of goods, in warehouses as well as during transportation
Transportation: The shipment of products to customers
Carrier—a firm that offers transportation services
Common carriers—services available for hire to all shippers
Contract carriers—available for hire by one or several shippers; not available to the general public
Private carriers—owned and operated by the shipper
Freight forwarders—agents who facilitate the transportation process for shippers by handling the details of the process
Railroads—in terms of total freight carried, these are America’s most important mode of transportation

22. Types of Transportation
Railroads
Least expensive mode for many products
Used for commodities that could not be transported by any other way
Trucks
Tremendous expansion since creation of national highways
Often favored by offering door-to-door service, less stringent packaging requirements than other services, 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

23. What is Promotion? Promotion The Promotion Mix
Communication about an organization and its products that is intended to inform, persuade, or remind target market members
There are several ways in companies can communicate to target market members
Promotion is NOT just advertising!!!
The Promotion Mix
The particular combination of promotion methods a firm uses to reach a target market
1) Advertising
2) Public Relations
3) Personal Selling
4) Sales Promotion
Integrated Marketing Communications (IMC)
Coordination of all promotion efforts for maximum informational and persuasive impact on customers, and to communicate a unified impression about a product
Goal = Consistent Messages to Customers

24. Integrated Marketing Communications
Coordination of promotion efforts to ensure maximal informational and persuasive impact on customers
Results in a consistent message to customers, long-term customer relationships, and the efficient use of promotional resources
Mass media advertising has given way to targeted promotional tools (e.g., cable TV, direct mail, and the Internet)
The overall cost of marketing communications has risen significantly, pressuring managers to make the most efficient use of marketing resources

25. The Promotion Mix: An Overview
Promotion mix: 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

26. Types of Advertising by Purpose
Primary-demand advertising: Increase demand for all brands of a product in a specific industry
Selective-demand advertising: Advertising that is used to sell a particular brand of product
Immediate-response advertising
Reminder advertising
Comparative advertising
Institutional advertising: Designed to enhance a firm’s image or reputation

27. Types of Advertising Appeals
The 5 Appeals of Product Advertisements
Humor
Informational
Sex
Emotional (ex. Fear/Heartfelt)
Celebrity

28. Popular Advertising Media
TV advertising is still the dominant media.
Digital Video Recorders (DVRs) challenge TV advertising because viewers can skip ads.
Product Placement -- Advertisers pay to put their products into TV shows and movies where the audience will see them.

29. Match Game: Match the Company with the Slogan
“Everybody doesn’t like something, but nobody doesn’t like ___________.”
“We bring good things to life.”
“It takes a licking and keeps on ticking.”
“With a name like _________, it has to be good.”
“Good to the last drop.”
“Betcha can’t eat just one!”
“Because you’re worth it.”

30. Social and Legal Considerations in Advertising
Evidence shows that advertising is not wasteful:
Most effective and least expensive way to communicate to a large audience
Encourages competition
Revenues support mass-communication media
Provides job opportunities in a wide range of fields
FTC, FDA, and FCC oversee advertising practices

31. Personal Selling
Personal selling is paid, personal communication between buyer and seller.
Direct communication between a firm’s sales force and potential buyers to make a sale and to build good customer relationships.
Most expensive part of the promotional mix as a salesperson deals with one buyer at a time
Preferred with high-value, custom-made, or technically complex products

32. Sales Promotion
Sales Promotion -- The promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities.
Consumer Sales Promotion
Trade (B2B) Sales Promotion
Stimulate immediate sales
Premiums
Contests/Games/Promo Items
Samples
Coupons
Rebates
Point of Purchase Displays
Stimulate wholesalers and retailers to push specific products
Special Deals
Allowances
Trade Shows
Contests
Sweepstakes
Special Events

33. Sales Promotion
Activities or materials that are direct inducements to customers or salespersons
Sales promotion objectives
Attract new customers
Encourage trial of a new product
Invigorate the sales of a mature brand
Boost sales to current customers
Reinforce advertising
Increase traffic in retail stores
Steady irregular sales patterns
Build up reseller inventories
Neutralize competitive promotional efforts
Improve shelf space and displays

34. Sales Promotion Methods
Consumer sales promotion method: Designed to attract consumers to particular retail stores and to motivate them to purchase certain new or established products
Trade sales promotion method: Designed to encourage wholesalers and retailers to stock and actively promote a manufacturer’s product
Factors influencing the choice of sales promotion method
Objectives of the sales promotional effort
Product characteristics
Target market profile
Distribution channels
Availability of resellers
Competitive and regulatory forces in the environment

35. Selection of Sales Promotion Methods
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

36. Selection of Sales Promotion Methods (continued)
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

37. Public Relations
A broad set of communication activities used to create and maintain favorable relationships between an organization and various public groups, both internal and external
Groups include: customers, employees, stockholders, suppliers, educators, the media, government officials, society in general

38. Types of Public Relations Tools
Written and spoken communications
Examples: Brochures, newsletters, company magazines, annual reports, news releases, corporate-identity materials, speeches
Event sponsorship
Examples: Special events such as concerts and charity functions that the firm underwrites wholly or partially

39. Publicity
Publicity: Communication in news story form about an organization, its products, or both
News release: Typed page of about 300 words provided by an organization to the media as a form of publicity
Feature article: Prepared by an organization for inclusion in a particular publication
Captioned photograph: Picture accompanied by a brief explanation
Press conference: Meeting at which invited media personnel hear important news announcements and receive supplementary textual materials and photographs

40. Uses of Public Relations
Public relations can be used to:
Promote:
People
Places
Activities
Ideas
Enhance the reputation of organization
Create specific positive company images