Entrepreneurship Chapter 6

1. Entrepreneurship Chapter 6 Distribution, Promotion, and Selling

2. Marketing Mix Marketing Mix • Helps meet customer needs and enables the business to earn a profit. • reaching target market through a blend of: • Product Chapter 5 • Price • DistributionChapter 6 • Promotion

3. The Marketing Mix – Distribution Section 6-1 • Goals: • Describe the four basic options of channels of distribution. • Apply channels of distribution to the specific needs of various types of businesses. • List factors to consider in the physical distribution of products.

4. Focus on Small Business • What do you think happened to Dustin’s order? • What is the problem? • How do you think Dustin should handle this situation?

5. 6.1 Channels of Distribution • Distribution:an important component of the marketing mix that involves the locations and methods used to make products available to customers • Channels of Distribution:routes that products and services take from the time they are produced to the time they are consumed

6. 6.1 Channels of Distribution • Direct Channel:moves the product directly from the manufacturer to consumer • Indirect Channel:distribution channel that uses intermediaries to move products between the manufacturer and the consumer • Intermediaries: agents and wholesalers

7. 6.1 Channel Options • Manufacturer to Consumer • Man.  Retailer Con. • Man.  Wholesaler  Ret.  Con. • Man.  Agent  Whol.  Ret.  Con. Page 149 - Channels of Distribution Chart

8. Distribute Goods and Services • Retail Business • Offer your product or service to consumers in a convenient location during convenient hours • Use catalogs, fliers, and other advertisements to reach customers who live outside the area. • Take phone/fax orders and ship them directly to the customers. • Create a website. Customers can learn about your products and make purchases online.

9. Distribute Goods and Services • Service Business • Most sell their services directly to consumers • Single Direct Channel of Distribution • Production and consumption of a service happens all at once. • Needs to occur WHEN the consumer wants it. • Electricians, Restaurant Owners, Lawyers • Deal directly with consumer wanting the service

10. Distribute Goods and Services • Manufacturing Businesses • Don’t usually sell directly to consumers • Make their products & sell to other businesses • Some will distribute their products very broadly and use many channels • Some will distribute through select outlets only • Cosmetics • High End  Exclusive Department Stores • Inexpensive  Discount Stores & Drugstores

11. Physical Distribution • Physical Distribution includes: • Transportation • Product Storage and Handling • Packaging of products within a channel of distribution. (Next 3 slides…)

12. Physical Distribution • Transportation • Consider what and where you are shipping • Perishables need refrigeration & speed • Airplane, Railroad, Ship, Truck, Combination

13. Physical Distribution • Product Storage and Handling • Efficient storage allows the channels to balance supply and demand of the products. • Adds to cost of product, risk of damage or theft • Stored in warehouses at various channels

14. Physical Distribution • Packaging • Designed to protect the product from the time it is produced until it is consumed. • Protected from being damaged/destroyed which would result in loss of money • Depends on product, shipping & destination • Receiving Goods to Sell • All types of businesses must receive goods from suppliers even if they don’t sell them to consumers (office supplies, raw materials)

15. Where can you find information? • Directories that list suppliers and manufacturers for a wide range of industries • Magazines for specific industries • The Internet • Publications include: • The American Wholesalers and Distributors Directory • The Thomas Register 6.1

16. 6.1 Benefits Gained • Improves economic efficiency • Results in a better assortment of products for consumers • Helps make transactions routine • Makes it easier for consumers to find goods and services. • Example: Georgia Peach Farmer uses an intermediary to sell produce to Midwest customers (where few peaches are grown). Consumers know grocery store has peaches; No searching for local growers. Grocery store = routine transaction.

17. Checkpoint Questions • What are the 4 basic options of channels of distribution? #1 MC #3 MWRC #2 MRC #4 MAWRC • Why are channels of distribution different for different types of businesses? Distribution needs are based on size of market, type of product/service, and customer needs & wants. • What factors are important to consider in the physical distribution of products? #1 Transportation #2 Product Storage Handling #3 Packaging Needs

18. The Marketing Mix - Promotion Section 6-2 • Goals: • List the many forms of advertising and discuss the advantages and disadvantages of each. • Define publicity and describe ways to use publicity as a promotional tool. Nearly every slide has a workbook answer on it this time. 6.2

19. Focus on Small Business • Do you think Chachi’s idea for an opening day promotion ids a good one? Why or Why Not? • Can you suggest some alternative promotions that Chachi might use?

20. Promotional Strategies • You will have to promote your business to make customers aware of the benefits of buying from you. • Promotion can take many forms: • Advertising, Publicity, Personal Selling, Sales Promotion • Promotional Mix – strategy created by adopting a blend of some, if not all the forms

21. Promotional Strategies • Advertising: a paid form of communication sent out by a business about a product. • Keeps your product in the public’s eye by creating a sense of awareness. • Choose your message carefully

22. Online Advertising • Types of Online Advertising: • Banner Ad: graphic image or animation displayed within a rectangular box across top or down the side of a web page. • Floating Ad: An ad which moves across the screen or floats above the page content. • Wallpaper Ad: an ad which changes the background of the page being viewed. • Trick Banner: a banner ad that looks like a dialog box with buttons, often appearing like an error message or alert. • Pop-Up Ad: a new window that opens in front of the current one, displaying an advertisement.

23. Online Advertising • Paying for Online Advertising: • Cost per Mil (CPM): exposure of the message • Cost per Click (CPC): number of user clicks on Ad • Cost per Action (CPA): user completing form, registering for newsletter or some other action. • Disadvantages: • Abuse – spamming: sending mass bulk emails • Excessive use of pop-ups, flashy banners and spam has cause internet users to block these advertisements.

24. Television Advertising • TV Promotions reach millions every day. • Best way to reach large numbers quickly. • Commercials and Paid Ads (Infomercials) • Disadvantages: • Very expensive • Reach too broad of an audience

25. Radio Advertising • Less expensive that television promotion • More certain you are reaching target market • Radio Stations tend to narrow down the target market for you • Disadvantages: • Purely audio, no visuals of your product • Listeners may not remember what they hear • Listeners may change station at commercials

26. Newspaper • Single largest form of advertising in U.S. • Relatively inexpensive • Targets a limited geographic area • Reaches large number of people • Disadvantages: • More people looking to Internet, less newspaper • May be paying to reach thousands outside of your target • A lot of competition advertised right next to you.

27. Telephone Directory Advertising • List of phone numbers of people & businesses • Directory ads will appear on a page near the listing and phone number. • Similar to Newspaper Ads • Used repeatedly • Disadvantages: • Lack of persuasion in a listing • Listed next to competition • May already know what business they were looking for

28. Direct-Mail Advertising • Direct-Mail advertising includes: • Fliers, catalogs, letters & other correspondence sent to target customers through mail. • Purchase mailing list which fit your target • Companies specialize in maintaining targeted mailing lists and sell them to businesses • Disadvantages: • Only Effective IF people read it! • Sometime considered – “Junk Mail”

29. Magazine Advertising • Magazines are an excellent way to aim products at specific markets • Fitness magazine – equipment & apparel • Teen magazine – cosmetics, clothing, shoes • Disadvantages: • Most magazine are nationally distributed;Not good for limited geographic selling

30. Outdoor Advertising • Includes: • Billboards and Signs • Effective in keeping your name out there where many people can see it. • Disadvantages: • Does not offer very much information • Drive-by readings must be - short and sweet

31. Transit Advertising • Consists of signs on public transportation. • Provides much more info than Outdoor Ads. • Inside and outside of vehicles • Inside Transit Ads offers the riders something to read for the duration of the trip. • Disadvantages: • Effective only if target market commonly uses public transportation

32. Promotional StrategiesPublicity • Publicity: non-paid form of communication that calls attention to your business through media coverage. • Good publicity can be helpful advertising • Publicity is free & largely out of your control • Can be negative if coverage is unfavorable

33. Publicity • Press Release: a written statement meant to inform the media of an event or product. • Example Page 162 • Elements of a Press Release • Date and Time • Food and Beverage Provided? • Celebrity Entertainment? • Company Information • Product Information

34. Publicity • Public Relations: establishing a favorable relationship with customers & general public. • Public awareness and positive public relations can generate business when you show community involvement and commitment. • Sponsor a community sports team • Make donations to local charity/relief efforts • Work-based programs through local high school • Active members of local Big Brother/Sister Program • Organize community program - clean up parks

35. Publicity • Self-Promotion helps keep the company name visible and in the forefront of the people’s mind. • Giving away t-shirts and hats displaying your company name and logo. • Distributing pens, notepads, coffee mugs, and other useful items printed with company info.

36. Checkpoint Questions • Why is promotion important to a business? A business will not succeed if target customers are not aware of it and what it has to offer. • What are advantages/disadvantages of publicity? Good publicity can be helpful as no-cost (free) advertising. But largely out of the business’s control and if it is negative, it could turn customers away.

37. Selling & Promoting Section 6-3 • Goals: • Explain the role of selling in a business • Determine how to meet customer needs & wants • Discuss other types of promotional activities

38. Focus on Small Business • Do you think that JoJo is making a good decision in adding a retail clothing line to her dance studio? Why or Why Not? • What kinds of promotions do you think JoJo should use to try and attract new customers?

39. 6.3 Promotional StrategiesSelling • Personal Selling: direct communication between a prospective buyer & a sales rep. • Sales representative attempts to influence the prospective buyer in a purchase situation. • Thorough Product Knowledge - Salesperson • Features: physical characteristics/capabilities • Benefits: advantages of products

40. SellingDetermine Customer Needs & Wants • Needs Assessment • Salesperson finds out as much info about customers situation. • Identifies the range of options for the customer • Need Satisfying - fulfill consumer needs • Problem Resolution - assess problem, gather info, act as consultant to assist customer

41. SellingDetermine Customer Needs & Wants • Buying Decisions • Rational B.D. based on logical reasoning of customers Safety, simplicity, quality, reliability, economy, convenience, service, durability, knowledge, $ gain, ease of operation • Emotional B.D. based on desire to have specific productFeelings, beliefs and attitude: fear, protection, appearance, recreation, improved health, comfort, recognition, pride, prestige and popularity

42. SellingDetermine Customer Needs & Wants • Customer Decision-Making • Define the problem • Gather information • Identify various solutions • Evaluate alternatives • Select the options • Take action • Evaluate the actions • Salesperson can help in this decision process

43. Promotional StrategiesSales Promotion • Sales Promotion: an incentive offered to customers in order to increase sales. • Contests, Free Samples, Rebates, Coupons, Special Events, Gift Certificates, Frequent Buyers • Rebate: a refund offered to people who purchase a product. • Telemarketing: using the phone to market your product or service

44. Checkpoint Questions • Why is selling important to a business? • Makes money for the business • Why is it important to meet customer needs and wants in the selling process? • Customers purchase goods and services in order to satisfy needs and wants. If these cannot be met by the business, no sales will be made.