Business Essentials

Twelfth Edition, Global Edition

Chapter 13
Distributing and
Promoting Products

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Introduction
• In this chapter we
– look at the concept of place, the distribution mix, and
the different channels and methods of distribution
– look at promotion and discuss the considerations in
selecting a promotional mix
– discuss the tasks involved in personal selling and
various types of sales promotions

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Learning Objectives (1 of 2)
1. Explain the meaning of distribution mix and
identify the different channels of distribution.
2. Describe the role of wholesalers and the functions
performed by e-intermediaries.
3. Describe the different types of retailing and
explain how online retailers add value for
consumers on the Internet.
4. Define physical distribution and describe the major
activities in the physical distribution process.

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Learning Objectives (2 of 2)
5. Identify the objectives of promotion and the
considerations in selecting a promotional mix,
and discuss the various kinds of advertising
promotions.
6. Outline the tasks involved in personal selling
and describe the various types of sales
promotions.

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The Distribution Mix
• Distribution Mix
– combination of distribution channels by which a firm
gets its products to end users

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Intermediaries and Distribution Channels
(1 of 2)

• Intermediary
– individual or firm that helps to distribute a product
• Wholesaler
– intermediary who sells products to other businesses for
resale to final consumers
• Retailer
– intermediary who sells products directly to consumers

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Intermediaries and Distribution Channels
(2 of 2)

• Distribution Channel • Direct Channel

– network of – distribution channel in
interdependent which a product travels
companies through from producer to
which a product passes consumer without
from producer to end intermediaries
user

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Retail Distribution
• Requires a large and costly amount of floor space
for storing and displaying merchandise at brick-
and-mortar facilities.
• Wholesalers relieve the space problem by storing
merchandise and restocking store displays
frequently.

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Wholesale Distribution
• Wholesalers
– independent operations that buy products from
manufacturers and sell them to various consumers
or other businesses
– usually provide storage, delivery, and additional
value-adding services, including credit, marketing
advice, and merchandising services, such as
marking prices and setting up displays

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Distribution by Agents or Brokers
• Sales Agent
– independent intermediary who generally deals in the
related product lines of a few producers and forms
long-term relationships to represent those producers
and meet the needs of many customers
• Broker
– independent intermediary who matches numerous
sellers and buyers as needed, often without knowing in
advance who they will be

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Channels of Distribution

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The Value-Adding Intermediary

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Distribution Strategies (1 of 2)
• Intensive Distribution
– strategy by which a product is distributed through as
many channels as possible
• Exclusive Distribution
– strategy by which a manufacturer grants exclusive
rights to distribute or sell a product to a limited number
of wholesalers or retailers in a given geographic area

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Distribution Strategies (2 of 2)
• Selective Distribution
– strategy by which a company uses only wholesalers
and retailers who give special attention in sales effort to
specific products

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Channel Conflict and Channel Leadership
• Channel Conflict
– conflict arising when the members of a distribution
channel disagree over the roles they should play or the
rewards they should receive
• Channel Captain
– channel member who is most powerful in determining
the roles and rewards of other members

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Wholesaling (1 of 2)
• Merchant Wholesalers
– independent wholesaler who takes legal possession of
goods produced by a variety of manufacturers and then
resells them to other organizations
• Full-Service Merchant Wholesalers
– merchant wholesaler that provides credit, marketing,
and merchandising services in addition to traditional
buying and selling services

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Wholesaling (2 of 2)
• Limited-Function Merchant Wholesaler
– merchant wholesaler that provides a limited range of
services
• Drop Shippers
– limited-function merchant wholesaler that receives
customer orders, negotiates with producers, takes title
to goods, and arranges for shipment to customers

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The Advent of the E-Intermediary (1 of 2)
• E-Intermediary
– Internet distribution channel member that assists in
delivering products to customers or that collects
information about various sellers to be presented to
consumers, or they help deliver online products to
buyers
• Syndicated Selling
– e-commerce practice whereby a website offers other
websites commissions for referring customers

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The Advent of the E-Intermediary (2 of 2)
• Shopping Agent (e-agent)
– e-intermediary (middleman) in the Internet distribution
channel that assists users in finding products and
prices but does not take possession of products

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Types of Brick-and-Mortar Retail Outlets
(1 of 3)

• Department Store
– large product-line retailer characterized by organization
into specialized departments
• Supermarket
– large product-line retailer offering a variety of food and
food-related items in specialized departments
• Specialty Store
– retail store carrying one product line or category of
related products

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Types of Brick-and-Mortar Retail Outlets
(2 of 3)

• Bargain Retailer
– retailer carrying a wide range of products at bargain
prices
• Discount House
– bargain retailer that generates large sales volume by
offering goods at substantial price reductions
• Catalog Showroom
– bargain retailer in which customers place orders for
catalog items to be picked up at on-premises
warehouses

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Types of Brick-and-Mortar Retail Outlets
(3 of 3)

• Factory Outlet
– bargain retailer owned by the manufacturer whose
products it sells
• Wholesale Club
– bargain retailer offering large discounts on brand-name
merchandise to customers who have paid annual
membership fees
• Convenience Store
– retail store offering easy accessibility, extended hours,
and fast service

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Nonstore Retailing (1 of 2)
• Direct-Response Retailing
– form of nonstore retailing in which firms directly interact
with customers to inform them of products and to
receive sales orders
• Mail Order (catalog marketing)
– form of nonstore retailing in which customers place
orders for catalog merchandise received through the
mail

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Nonstore Retailing (2 of 2)
• Telemarketing
– form of nonstore retailing in which the telephone is
used to sell directly to consumers
• Direct Selling
– form of nonstore retailing typified by door-to-door sales

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Online Retailing (1 of 2)
• Online Retailing
– Nonstore retailing in which information about the
seller’s products and services is connected to
consumers’ computers, allowing consumers to receive
the information and purchase the products in the home
• E-catalog
– Nonstore retailing in which the Internet is used to
display products

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Online Retailing (2 of 2)
• Electronic Storefront
– commercial website at which customers gather
information about products and buying opportunities,
place orders, and pay for purchases
• Cybermall
– collection of virtual storefronts (business websites)
representing a variety of products and product lines on
the Internet

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Leading Online Retailers in Selected
Consumer Products Categories
Table 13.1 Leading Online Retailers in Selected Consumer Products
Categories*
Consumer Product Category Online Retailer
Mass Merchandise Amazon.com
Office Supplies Staples Inc.
Computers and Electronics Apple Inc.
Video and Audio Entertainment Netflix Inc.
Home Repair and Improvement Home Depot
Apparel and Accessories L.L. Bean Inc.
Home Furnishings and Housewares Williams-Sonoma Inc.
Toys Toys “R” Us Inc.
Health and Beauty Bath & Body Works
Sporting Goods Cabela’s Inc.

*Adapted from “Top 500 Guide,” Internet Retailer (2016), at www.internetretailer.com/top500/list/.

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Interactive and Video Retailing
• Video Retailing
– nonstore retailing to
consumers via home
television

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Physical Distribution
• Physical Distribution
– activities needed to move a product efficiently from
manufacturer to consumer

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Warehousing Operations
• Warehousing
– physical distribution operation concerned with the
storage of goods
• Private Warehouse
– warehouse owned by and providing storage for a single
company
• Public Warehouse
– independently owned and operated warehouse that
stores goods for many firms

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The Importance of Promotion
• Promotion
– aspect of the marketing mix concerned with the most
effective techniques for communicating information
about and selling a product
• Positioning
– process of establishing an identifiable product image in
the minds of consumers

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Promotional Strategies
• Pull Strategy
– promotional strategy designed to appeal directly to
consumers who will demand a product from retailers
• Push Strategy
– promotional strategy designed to encourage
wholesalers or retailers to market products to
consumers

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The Promotional Mix
• Promotional Mix
– combination of tools used to promote a product

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Five Stages in the Buyer Decision Process
1. Consumers first recognize the need to make a
purchase
2. Consumers search for information about
available products
3. Consumers compare competing products
4. Buyers are ready to purchase products
5. Consumers evaluate products and note (and
remember) their strengths and deficiencies

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The Consumer Buying Process and the
Promotional Mix

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Advertising Promotions (1 of 2)
• Advertising
– promotional tool consisting of paid, nonpersonal
communication used by an identified sponsor to inform
an audience about a product

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Top 10 U.S. National Advertisers

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Advertising Promotions (2 of 2)
• Advertising Media
– variety of communication devices for carrying a seller’s
message to potential customers
• Media Mix
– combination of advertising media chosen to carry a
message about a product

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Total U.S. Media Usage, Strengths, and
Weaknesses (1 of 2)
Table 13.2 Total U.S. Media Usage, Strengths, and Weaknesses
Percentage*
Advertising of Advertising
Medium Outlays Strengths Weaknesses
Television 33% Program demographics allow for Most expensive
customized ads
Large audience
Internet 18% Targeted audience Nuisance to consumers
Measurable success Easy to ignore

Direct mail 13% Targeted audience Easily discarded Environmentally

Personal messages irresponsible
Predictable results
Newspapers 13% Broad coverage Quickly discarded
Ads can be changed daily Broad readership limits ability to
target specific audience

Radio 10% Inexpensive Easy to ignore

Large audience Message quickly disappears
Variety of ready market
segmentation

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Total U.S. Media Usage, Strengths, and
Weaknesses (2 of 2)
Table 13.2 Continued

Percentage*
Advertising of Advertising
Medium Outlays Strengths Weaknesses
Magazines 10% Often reread and shared Require advanced planning
Variety of ready market Little control over ad
Segmentation placement
Outdoor 3% Inexpensive Presents limited information
Difficult to ignore Little control over audience
Repeat exposure

A combination of additional unmeasured media, such as yellow pages, catalogs, special

events, sidewalk handouts, ads on transport vehicles, skywriting, movies, and door-to-door
communications, are not included.
*Estimated.

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Personal Selling
• Personal Selling
– promotional tool in which a salesperson communicates
one-on-one with potential customers
• Retail Selling
– selling a consumer product for the buyer’s personal or
household use
• Industrial Selling
– selling products to other businesses, either for the
purpose of manufacturing or for resale

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Personal Selling Tasks (1 of 2)
• Order Processing
– personal-selling task in which salespeople receive
orders and see to their handling and delivery
• Creative Selling
– personal-selling task in which salespeople try to
persuade buyers to purchase products by providing
information about their benefits

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Personal Selling Tasks (2 of 2)
• Missionary Selling
– personal-selling task in which salespeople promote
their firms and products rather than try to close sales

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The Personal Selling Process
• Prospecting
– step in the personal selling process in which
salespeople identify potential customers
• Qualifying
– step in the personal selling process in which
salespeople determine whether prospects have the
authority to buy and ability to pay
• Closing
– step in the personal selling process in which
salespeople ask prospective customers to buy products

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Sales Promotions (1 of 3)
• Sales Promotion
– short-term promotional activity designed to encourage
consumer buying, industrial sales, or cooperation from
distributors
• Coupon
– sales-promotion technique in which a certificate is
issued entitling the buyer to a reduced price

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Sales Promotions (2 of 3)
• Premium
– sales-promotion technique in which offers of free or
reduced-price items are used to stimulate purchases
• Loyalty Programs
– sales-promotion technique in which frequent customers
are rewarded for making repeat purchases

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Sales Promotions (3 of 3)
• Point-of-Sale (POS) Display
– sales-promotion technique in which product displays
are located in certain areas to stimulate purchase or to
provide information on a product
• Trade Show
– sales-promotion technique in which various members
of an industry gather to display, demonstrate, and sell
products

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Direct (or Interactive) Marketing
• Direct (or Interactive) Marketing
– one-on-one nonpersonal selling by nonstore retailers
and B2B sellers using direct contact with prospective
customers, especially via the Internet

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Publicity and Public Relations
• Publicity
– promotional tool in which information about a company,
a product, or an event is transmitted by the general
mass media to attract public attention
• Public Relations
– company-influenced information directed at building
goodwill with the public or dealing with unfavorable
events

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Applying What You’ve Learned (1 of 2)
1. Explain the meaning of distribution mix and
identify the different channels of distribution
2. Describe the role of wholesalers and the functions
performed by e-intermediaries
3. Describe the different types of retailing and
explain how online retailers add value for
consumers on the Internet
4. Define physical distribution and describe the major
activities in the physical distribution process

Copyright © 2019 Pearson Education Ltd. All Rights Reserved.

Applying What You’ve Learned (2 of 2)
5. Identify the objectives of promotion, the
considerations in selecting a promotional mix,
and discuss the various kinds of advertising
promotions
6. Outline the tasks involved in personal selling
and describe the various types of sales
promotions

Copyright © 2019 Pearson Education Ltd. All Rights Reserved.

Copyright

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