Distributing and Promoting Products

1. Distributing and Promoting Products Chapter 13

2. 4 P’s of the Marketing Mix

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

4. Possible Elements of a Promotion Mix

5. Advertising (cont.) • Advertising Age is the industry’s preeminent source of marketing, advertising, and media news, information, and analysis. http://www.adage.com

6. Examples of TV ads • Slinky 1960’s • Old Spice • VW commercial: Darth Vader (Superbowl 2011) • VW commercial: Dog Gets Fit (Superbowl 2012) • The Making of the VW Commercial

7. Major Steps in Developing an Advertising Campaign • Identify and analyze the target audience. • Define the advertising objectives. • Create the advertising platform. • Determine the advertising appropriation. • Develop the media plan. • Create the advertising message. • Execute the campaign. • Evaluate advertising effectiveness.

8. Advertising Agencies • 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

9. Sales Promotion • 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

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

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

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

13. Publicity • Publicity • Communication in news-story form about an organization, its products, or both • News release • Feature article • Captioned photograph • Press conference

14. The Uses of Public Relations • 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

15. Distribution • Channel of distribution • A sequence of marketing organizations that directs a product from the producer to the ultimate user

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

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

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

19. Distribution Channels

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

21. The Ten Largest Retail Firms in the United States

22. Using the Internet • The National Retail Federation is a gateway for information for the retailing industry. http://www.nrf.com

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

24. Physical Distribution (cont.) • 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

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

26. Characteristics of Transportation Modes

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

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

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”

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

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

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

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

34. Chapter Quiz • A women’s apparel manufacturer most likely will use • intensive distribution. • selective distribution. • exclusive distribution. • high-style distribution. • popular-style distribution.

35. Chapter Quiz • Which activity combines inventory management, order processing, warehousing, material handling, and transportation? • Marketing • Merchandising • Warehousing • Physical distribution • Transporting