BusinessEssentialsTwelfthEditionChapter13DistributingandPromotingProductsCopyright?2019,2016,2013PearsonEducation,Inc.AllRightsReserved.IntroductionInthischapterwelookattheconceptofplace,thedistributionmix,andthedifferentchannelsandmethodsofdistributionlookatpromotionanddiscusstheconsiderationsinselectingapromotionalmixdiscussthetasksinvolvedinpersonalsellingandvarioustypesofsalespromotionsLearningObjectives(1of2)Explainthemeaningofdistributionmixandidentifythedifferentchannelsofdistribution.Describetheroleofwholesalersandthefunctionsperformedbye-intermediaries.DescribethedifferenttypesofretailingandexplainhowonlineretailersaddvalueforconsumersontheInternet.Definephysicaldistributionanddescribethemajoractivitiesinthephysicaldistributionprocess.LearningObjectives(2of2)Identifytheobjectivesofpromotionandtheconsiderationsinselectingapromotionalmix,anddiscussthevariouskindsofadvertisingpromotions.Outlinethetasksinvolvedinpersonalsellinganddescribethevarioustypesofsalespromotions.TheDistributionMixDistributionMixcombinationofdistributionchannelsbywhichafirmgetsitsproductstoendusersIntermediariesandDistributionChannels(1of2)IntermediaryindividualorfirmthathelpstodistributeaproductWholesalerintermediarywhosellsproductstootherbusinessesforresaletofinalconsumersRetailer

intermediarywhosellsproductsdirectlytoconsumersIntermediariesandDistributionChannels(2of2)DistributionChannelnetworkofinterdependentcompaniesthroughwhichaproductpassesfromproducertoenduserDirectChanneldistributionchannelinwhichaproducttravelsfromproducertoconsumerwithoutintermediariesRetailDistributionRequiresalargeandcostlyamountoffloorspaceforstoringanddisplayingmerchandiseatbrick-and-mortarfacilities.Wholesalersrelievethespaceproblembystoringmerchandiseandrestockingstoredisplaysfrequently.WholesaleDistributionWholesalersindependentoperationsthatbuyproductsfrommanufacturersandsellthemtovariousconsumersorotherbusinessesusuallyprovidestorage,delivery,andadditionalvalue-addingservices,includingcredit,marketingadvice,andmerchandisingservices,suchasmarkingpricesandsettingupdisplaysDistributionbyAgentsorBrokersSalesAgentindependentintermediarywhogenerallydealsintherelatedproductlinesofafewproducersandformslong-termrelationshipstorepresentthoseproducersandmeettheneedsofmanycustomersBrokerindependentintermediarywhomatchesnumeroussellersandbuyersasneeded,oftenwithoutknowinginadvancewhotheywillbeChannelsofDistributionTheValue-AddingIntermediaryDistributionStrategies(1of2)IntensiveDistributionstrategybywhichaproductisdistributedthroughasmanychannelsaspossibleExclusiveDistributionstrategybywhichamanufacturergrantsexclusiverightstodistributeorsellaproducttoalimitednumberofwholesalersorretailersinagivengeographicareaDistributionStrategies(2of2)SelectiveDistributionstrategybywhichacompanyusesonlywholesalersandretailerswhogivespecialattentioninsalesefforttospecificproductsChannelConflictandChannelLeadershipChannelConflictconflictarisingwhenthemembersofadistributionchanneldisagreeovertherolestheyshouldplayortherewardstheyshouldreceiveChannelCaptainchannelmemberwhoismostpowerfulindeterminingtherolesandrewardsofothermembersWholesaling(1of2)MerchantWholesalersindependentwholesalerwhotakeslegalpossessionofgoodsproducedbyavarietyofmanufacturersandthenresellsthemtootherorganizationsFull-ServiceMerchantWholesalersmerchantwholesalerthatprovidescredit,marketing,andmerchandisingservicesinadditiontotraditionalbuyingandsellingservicesWholesaling(2of2)Limited-FunctionMerchantWholesalermerchantwholesalerthatprovidesalimitedrangeofservicesDropShipperslimited-functionmerchantwholesalerthatreceivescustomerorders,negotiateswithproducers,takestitletogoods,andarrangesforshipmenttocustomersTheAdventoftheE-Intermediary(1of2)E-IntermediaryInternetdistributionchannelmemberthatassistsindeliveringproductstocustomersorthatcollectsinformationaboutvarioussellerstobepresentedtoconsumers,ortheyhelpdeliveronlineproductstobuyersSyndicatedSellinge-commercepracticewherebyawebsiteoffersotherwebsitescommissionsforreferringcustomersTheAdventoftheE-Intermediary(2of2)ShoppingAgent(e-agent)e-intermediary(middleman)intheInternetdistributionchannelthatassistsusersinfindingproductsandpricesbutdoesnottakepossessionofproductsTypesofBrick-and-MortarRetailOutlets(1of3)DepartmentStorelargeproduct-lineretailercharacterizedbyorganizationintospecializeddepartmentsSupermarket

largeproduct-lineretailerofferingavarietyoffoodandfood-relateditemsinspecializeddepartmentsSpecialtyStoreretailstorecarryingoneproductlineorcategoryofrelatedproductsTypesofBrick-and-MortarRetailOutlets(2of3)BargainRetailerretailercarryingawiderangeofproductsatbargainpricesDiscountHousebargainretailerthatgenerateslargesalesvolumebyofferinggoodsatsubstantialpricereductionsCatalogShowroombargainretailerinwhichcustomersplaceordersforcatalogitemstobepickedupaton-premiseswarehousesTypesofBrick-and-MortarRetailOutlets(3of3)FactoryOutletbargainretailerownedbythemanufacturerwhoseproductsitsellsWholesaleClubbargainretailerofferinglargediscountsonbrand-namemerchandisetocustomerswhohavepaidannualmembershipfeesConvenienceStoreretailstoreofferingeasyaccessibility,extendedhours,andfastserviceNonstoreRetailing(1of2)Direct-ResponseRetailingformofnonstoreretailinginwhichfirmsdirectlyinteractwithcustomerstoinformthemofproductsandtoreceivesalesordersMailOrder(catalogmarketing)formofnonstoreretailinginwhichcustomersplaceordersforcatalogmerchandisereceivedthroughthemailNonstoreRetailing(2of2)TelemarketingformofnonstoreretailinginwhichthetelephoneisusedtoselldirectlytoconsumersDirectSellingformofnonstoreretailingtypifiedbydoor-to-doorsalesOnlineRetailing(1of2)OnlineRetailingNonstoreretailinginwhichinformationabouttheseller’sproductsandservicesisconnectedtoconsumers’computers,allowingconsumerstoreceivetheinformationandpurchasetheproductsinthehomeE-catalogNonstoreretailinginwhichtheInternetisusedtodisplayproductsOnlineRetailing(2of2)ElectronicStorefrontcommercialwebsiteatwhichcustomersgatherinformationaboutproductsandbuyingopportunities,placeorders,andpayforpurchasesCybermall

collectionofvirtualstorefronts(businesswebsites)representingavarietyofproductsandproductlinesontheInternetLeadingOnlineRetailersinSelectedConsumerProductsCategoriesTable13.1LeadingOnlineRetailersinSelectedConsumerProductsCategories*ConsumerProductCategoryOnlineRetailerMassMerchandiseAOfficeSuppliesStaplesInc.ComputersandElectronicsAppleInc.VideoandAudioEntertainmentNetflixInc.HomeRepairandImprovementHomeDepotApparelandAccessoriesL.L.BeanInc.HomeFurnishingsandHousewaresWilliams-SonomaInc.ToysToys“R”UsInc.HealthandBeautyBath&BodyWorksSportingGoodsCabela’sInc.*Adaptedfrom“Top500Guide,”InternetRetailer(2016),at/top500/list/.InteractiveandVideoRetailingVideoRetailingnonstoreretailingtoconsumersviahometelevisionPhysicalDistributionPhysicalDistributionactivitiesneededtomoveaproductefficientlyfrommanufacturertoconsumerWarehousingOperationsWarehousingphysicaldistributionoperationconcernedwiththestorageofgoodsPrivateWarehousewarehouseownedbyandprovidingstorageforasinglecompanyPublicWarehouseindependentlyownedandoperatedwarehousethatstoresgoodsformanyfirmsTheImportanceofPromotionPromotionaspectofthemarketingmixconcernedwiththemosteffectivetechniquesforcommunicatinginformationaboutandsellingaproductPositioning

processofestablishinganidentifiableproductimageinthemindsofconsumersPromotionalStrategiesPullStrategypromotionalstrategydesignedtoappealdirectlytoconsumerswhowilldemandaproductfromretailersPushStrategypromotionalstrategydesignedtoencouragewholesalersorretailerstomarketproductstoconsumersThePromotionalMixPromotionalMixcombinationoftoolsusedtopromoteaproductFiveStagesintheBuyerDecisionProcessConsumersfirstrecognizetheneedtomakeapurchaseConsumerssearchforinformationaboutavailableproductsConsumerscomparecompetingproductsBuyersarereadytopurchaseproductsConsumersevaluateproductsandnote(andremember)theirstrengthsanddeficienciesTheConsumerBuyingProcessandthePromotionalMixAdvertisingPromotions(1of2)Advertisingpromotionaltoolconsistingofpaid,nonpersonalcommunicationusedbyanidentifiedsponsortoinformanaudienceaboutaproductTop10U.S.NationalAdvertisersAdvertisingPromotions(2of2)AdvertisingMediavarietyofcommunicationdevicesforcarryingaseller’smessagetopotentialcustomersMediaMixcombinationofadvertisingmediachosentocarryamessageaboutaproductTotalU.S.MediaUsage,Strengths,andWeaknesses(1of2)Table13.2TotalU.S.MediaUsage,Strengths,andWeaknessesAdvertisingMediumPercentage*ofAdvertisingOutlaysStrengthsWeaknessesTelevision33%ProgramdemographicsallowforcustomizedadsLargeaudienceMostexpensiveInternet18%TargetedaudienceMeasurablesuccessNuisancetoconsumersEasytoignoreDirectmail13%TargetedaudiencePersonalmessagesPredictableresultsEasilydiscardedEnvironmentallyirresponsibleNewspapers13%BroadcoverageAdscanbechangeddailyQuicklydiscardedBroadreadershiplimitsabilitytotargetspecificaudienceRadio10%InexpensiveLargeaudienceVarietyofreadymarketsegmentationEasytoignoreMessagequicklydisappearsTotalU.S.MediaUsage,Strengths,andWeaknesses(2of2)Table13.2ContinuedAdvertisingMediumPercentage*ofAdvertisingOutlaysStrengthsWeaknessesMagazines10%OftenrereadandsharedVarietyofreadymarketSegmentationRequireadvancedplanningLittlecontroloveradplacementOutdoor3%InexpensiveDifficulttoignoreRepeatexposurePresentslimitedinformationLittlecontroloveraudienceAcombinationofadditionalunmeasuredmedia,suchasyellowpages,catalogs,specialevents,sidewalkhandouts,adsontransportvehicles,skywriting,movies,anddoor-to-doorcommunications,arenotincluded.*Estimated.PersonalSellingPersonalSellingpromotionaltoolinwhichasalespersoncommunicatesone-on-onewithpotentialcustomersRetailSellingsellingaconsumerproductforthebuyer’spersonalorhouseholduse

IndustrialSellingsellingproductstootherbusinesses,eitherforthepurposeofmanufacturingorforresalePersonalSellingTasks(1of2)OrderProcessingpersonal-sellingtaskinwhichsalespeoplereceiveordersandseetotheirhandlinganddeliveryCreativeSellingpersonal-sellingtaskinwhichsalespeopletrytopersuadebuyerstopurchaseproductsbyprovidinginformationabouttheirbenefitsPersonalSellingTasks(2of2)MissionarySellingpersonal-sellingtaskinwhichsalespeoplepromotetheirfirmsandproductsratherthantrytoclosesalesThePersonalSellingProcessProspectingstepinthepersonalsellingprocessinwhichsalespeopleidentifypotentialcustomersQualifyingstepinthepersonalsellingprocessinwhichsalespeopledeterminewhetherprospectshavetheauthoritytobuyandabilitytopayClosing

stepinthepersonalsellingprocessinwhichsalespeopleaskprospectivecustomerstobuyproductsSalesPromotions(1of3)SalesPromotionshort-termpromotionalactivitydesignedtoencourageconsumerbuying,industrialsales,orcooperationfromdistributorsCoupon

sales-promotiontechniqueinwhichacertificateisissuedentitlingthebuyertoareducedpriceSalesPromotions(2of3)Premium

sales-promotiontechniqueinwhichoffersoffreeorreduced-priceitemsareusedtostimulatepurchasesLoyaltyProgramssales-promotiontechniqueinwhichfrequentcustomersarerewardedformakingrepeatpurchasesSalesPromotions(3of3)Point-of-Sale(POS)Displaysales-promotiontechniqueinwhichproductdisplaysarelocatedincertainareastostim