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CHAPTER 12
© BananaStock / Jupiterimages
Distributing
and Promoting
Products and
Services
The Future of Business
The Essentials 4th Edition
Gitman & McDaniel
Chapter 12
Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved
Prepared by
Deborah Baker
1
CHAPTER 12
Learning Goals
What is the nature and function of distribution?
2 What is wholesaling, and what are the types of
wholesalers?
3 What are the different kinds of retail operations?
4
How can supply chain management increase
efficiency and customer satisfaction?
5
What is promotion, and what are the key elements
of a promotional mix?
2
CHAPTER 12
Learning Goals (continued)
6 How are advertising media selected?
7 What is personal selling?
8 What are the goals of sales promotion, and
what are several types of sales promotion?
9 How does public relations fit into the
promotional mix?
10 What are the trends in promotion and
distribution?
3
The Nature and Functions of Distribution
1
1
What is the nature and function of distribution?
4
The Nature and Functions
of Distribution
distribution
Efficiently managing the acquisition of raw
material to the factory and the movement of
products from the producer to industrial users
and consumers.
1
5
Supply Chain
Suppliers of
Raw Materials
CD
Factory
Wholesale
or
Distribution
Center
Finished
CDs
1
Retailers,
Wholesalers,
Distribution
Centers
Customers
6
Exhibit 12.1
Distribution
distribution channel
The series of marketing entities through which
goods and services pass on their way from
producers to end users.
marketing intermediaries
Organizations that assist in moving goods and
services from producers to end users.
1
7
Marketing Intermediaries
1
Agents and
Brokers
Agents are sales representatives of
manufacturers and wholesalers, and
brokers are entities that bring buyers
and sellers together.
Industrial
Distributors
Independent wholesalers that buy
related product lines from
manufacturers and sell them to
industrial users.
Wholesalers
Firms that sell finished goods to
retailers, manufacturers, and
institutions.
Retailers
Firms that sell goods to consumers and
to industrial users for their
own consumption.
8
Nontraditional Distribution Channels
 Internet
 Mail-order
 Infomercials
 Kiosks
 Shopping networks
© AP Images / Mark Lennihan
1
9
Functions of Distribution Channels
Reduce the number of transactions
Ease the flow of goods
1
10
Distribution Channels Ease the Flow of Goods
Sorting out
Accumulating
Allocating
Locating Buyers
Storing merchandise
1
11
CONCEPT check
List and define the marketing intermediaries
that make up a distribution channel.
Provide an example of a strategic channel
alliance.
How do channels reduce the number of
transactions?
1
12
Wholesaling
2
2
What is wholesaling, and what are the
types of wholesalers?
13
Types of Wholesale Intermediaries
2
Merchant
Wholesalers
An institution that buys goods from
manufacturers (take ownership) and resells
them to businesses, government agencies,
other wholesalers, or retailers.
Manufacturers’
representatives
Salespeople who represent noncompeting
manufacturers and wholesalers. Function
as independent agents rather than as
salaried employees of the manufacturers.
Brokers
Salespeople who bring buyers and sellers
together. Do not take title to merchandise.
14
CONCEPT check
Define wholesaling and describe what
wholesalers do.
Describe merchant wholesalers.
Explain the difference between agents and
brokers.
2
15
Retailing
3
3
What are the different kinds of retail operations?
16
Types of Retail Operations
In-Store Retailing
Nonstore Retailing
Department store
Vending machine
Specialty store
Direct selling
Convenience store
Direct-response marketing
Supermarket
Home shopping networks
Discount store
Internet retailing
Off-price retailer
Factory outlet
Catalog store
Hypermart
3
17
Exhibit 12.4
Creating a Store’s Atmosphere
Employee type and density
Merchandise type and density
© AP Images / David Zalubowski
Fixture type and density
Sound
3
Odors
18
CONCEPT check
Describe at least five types of in-store retailing
and four forms of nonstore retailing.
What factors most influence a retail store’s
atmosphere?
3
19
Using Supply Chain Management
4
4
How can supply chain management increase
efficiency and customer satisfaction?
20
Role of Supply Chain Management
Communicator
Physical flow process
4
21
CONCEPT check
What is the goal of supply chain management?
What does it mean for a supply chain to be
customer driven?
4
22
Promotional Goals
5
5
What is promotion, and what are the key
elements of a promotional mix?
23
Promotional Goals
promotion
The attempt by marketers to inform, persuade, or
remind consumers and industrial users to engage
in the exchange process.
5
24
Promotional Goals
1. Creating awareness
2. Getting consumers to try products
3. Providing information
4. Keeping loyal customers
5. Increasing the amount and frequency of use
6. Identifying target customers
5
25
The Promotional Mix
Personal
Selling
Advertising
Promotional
Mix
Public
Relations
5
Sales
Promotion
26
Integrated Marketing
Communications
integrated marketing communications
The careful coordination of all promotional
activities—media advertising, sales promotion,
personal selling, and public relations, as well as
direct marketing, packaging, and other forms of
promotion—to produce a consistent, unified
message that is customer focused.
5
27
CONCEPT check
What is the objective of a promotional campaign?
What is the promotional mix?
What are the features of an integrated marketing
communications campaign?
5
28
The Huge Impact of Advertising
6
6
How are advertising media selected?
29
The Huge Impact of Advertising
advertising
Any paid form of nonpersonal presentation by an
identified sponsor.
6
30
Advertising Costs and
Market Penetration
audience selectivity
An advertising medium’s ability to reach a
precisely defined market.
6
31
CONCEPT check
How is technology impacting the way advertisers
reach their markets?
What are the two main factors that should be
considered when selecting advertising media?
6
32
Personal Selling
7
7
What is personal selling?
33
Advantages of Personal Selling
 Provides a detailed explanation or demonstration
of the product
 Message can be varied according to the motivations
and interests of each prospective customer
 Can be directed only to qualified prospects
 Costs can be controlled by adjusting the size of the
sales force in one-person increments
 Considerably more effective than other forms of
promotion in obtaining a sale and gaining a satisfied
customer
7
34
The Selling Process
Satisfied
customer
6. Following up sale
5. Closing sale
4. Handling objections
3. Presenting & demonstrating
2. Approaching customers
1. Prospecting and qualifying
7
35
Qualifying Questions
 Does the prospect have a need for our product?
 Can the prospect make the buying decision?
 Can the prospect afford our product?
7
36
CONCEPT check
What are the advantages of personal selling?
Explain the selling process.
7
37
Sales Promotion
8
8
What are the goals of sales promotion, and
what are several types of sales promotion?
38
Sales Promotion
sales promotions
Marketing events or sales efforts—not including
advertising, personal selling, and public
relations—that stimulate buying.
point-of-purchase display
© AP Images / Mark J. Terrill
A strategically placed visual display or product
display that informs potential customers about a
product or service.
8
39
CONCEPT check
How does sales promotion differ from advertising?
Describe several types of sales promotion.
8
40
Public Relations
9
9
How does public relations fit into the
promotional mix?
41
Public Relations
public relations
Any communication or activity designed to win
goodwill or prestige for a company or person.
publicity
Information about a company or product that
appears in the news media and is not directly paid
for by the company.
9
42
Functions of Public Relations






Press relations
Product publicity
Corporate communications
Public affairs
Lobbying
Employee and
investor relations
 Crisis management
© Steve Helber-Pool / Getty Images
9
43
CONCEPT check
What is the role of public relations?
Explain the concept of buzz marketing.
9
44
Trends in Promotion and Distribution
10
10
What are the trends in promotion and
distribution?
45
Why Companies Blog
1.
2.
3.
4.
10
Real-time input from customers and prospects
Create and maintain relationships
Dialogue with clients and prospects
Focus on specific marketing goals
46
CONCEPT check
Why would a company such as Apple set up
a blog?
What factors contribute to the Internet’s
soaring growth in retailing?
10
47