978-0134728391 Chapter 13 Part 1

Chapter 13: Distributing and Promoting Products

Chapter Overview

By now, students have grasped that the marketing mix—or the Four Ps—is built around the

characteristics and needs of the target market. This chapter brings the Four Ps another step

forward by discussing distribution and promotion.

Specifically, the chapter examines the meaning of distribution mix and identifies the different

channels of distribution. Along the way, the chapter examines the role of wholesalers, different

types of retailing, the role of e-intermediaries, and the major activities in the physical distribution

process. Finally, the chapter looks at the objectives of promotion, the considerations in selecting

a promotional mix, the tasks involved in personal selling, sales promotions, and publicity and

public relations.

Learning Objectives

13-1. Explain the meaning of distribution mix and identify the different channels of

distribution.

13-3. Describe the different types of retailing and explain how online retailers add value for

consumers on the Internet.

13-5. Identify the objectives of promotion and the considerations in selecting a promotional

mix, and discuss the various kinds of advertising promotions.

LIST OF IN-CLASS ACTIVITIES: INSTRUCTOR’S CHOICE

Activity

Description

Time Limit

1. Ice-Breaker: Why Do

They Sell Where They

Do?

Students consider distribution and

promotion strategies.

30 min.

2. Up for Debate: Getting

a Stimulus Boost with

Promotion

Students are divided into teams to discuss

the pros and cons of relying on direct

marketing and promotions to help push

products through distribution channels.

30 min.

3. Up for Debate: What’s

the Best Way to Reach

Them?

Students discuss different ways that a

product can be promoted to one specific

target market.

30 min.

Learning Objective 13-1:

Explain the meaning of distribution mix and identify the different channels of distribution.

The Distribution Mix

The distribution mix is the combination of distribution channels that a firm selects to get a

product to end users.

A. Intermediaries and Distribution Channels

Intermediaries help to distribute a producer’s goods, either by moving them or by providing

information that stimulates their movement from sellers to customers. Wholesalers are

intermediaries who sell products to other businesses for resale to final consumers. Retailers

sell products directly to consumers. The nature of the product and the target market greatly

affect whether intermediaries are used.

1. Distribution of Goods and Services. A distribution channel is the path that a product

follows from producer to end user.

a. Channel 1: Direct Distribution. In a direct channel, the product travels from the

producer to the consumer or to the industrial buyer, without intermediaries.

2. The Pros and Cons of Nondirect Distribution. Nondirect distribution becomes higher

priced for end users because each distribution link charges a markup or commission.

However, intermediaries can save consumers time by reducing the number of contacts

made, and save consumers money by providing speed of delivery, storability, and less

cost by buying cheaply in bulk from manufacturers and then passing savings on to final

consumers. Intermediaries exist because they provide necessary services that get products

efficiently from producers to users.

B. Distribution Strategies

1. Intensive Distribution. Intensive distribution means distributing through as many

2. Exclusive Distribution. With exclusive distribution, a manufacturer grants the exclusive

3. Selective Distribution. Using selective distribution, a producer selects only wholesalers

and retailers that will give a product special attention in sales effort, display and

promotion advantage, and so forth. Furniture and appliances are examples of consumer

products that use selective distribution.

C. Channel Conflict and Channel Leadership

1. Channel Conflict. Channel conflict occurs when members of the channel disagree over

roles or rewards. Conflict may arise if one channel member has more power or is

perceived as getting preferential treatment. Conflicts can defeat the purpose of the system

by disrupting the flow of goods.

2. Channel Leadership. Usually one channel member—the channel captain —can determine

the roles and rewards of the others. The channel captain often is a manufacturer or an

KEY TEACHING TIPS

 The distribution channel strategy depends on the nature of the product and the target

market.

 Each of the intermediaries plays a very specific role in distributing the product.

QUICK QUESTIONS

 What are some activities involved between manufacturing and retail? How is value added

in these activities? Remind students of the various benefits that intermediaries provide in

the distribution process.

 No intermediaries are involved in a direct channel. What are some products that flow

through Channel 2?

 Channel 3 emerged as a way of reducing the need for floor space among retailers. What

products might pass through Channel 3?

Use In-Class Activity 1: Ice-Breaker: Why Do They Sell Where They Do?

Time Limit: 30 minutes

HOMEWORK

Now might be a good time to assign Application Exercise 9 from the end-of-chapter materials as

homework. This assignment encourages students to consider the supply chain and how being a

member affects its marketing decisions.

Learning Objective 13-2:

Describe the role of wholesalers and the functions performed by e-intermediaries.

Wholesaling

Wholesalers perform various functions, which may include storing, providing an assortment of

products, and offering delivery, credit, and product information.

A. Merchant Wholesalers

Most wholesalers are independent operations that sell various consumer or business goods

produced by a variety of manufacturers. The largest group, merchant wholesalers, buys

products from manufacturers and sells them to other businesses. They own the goods that

they resell and usually provide storage and delivery.

shipment.

B. Agents and Brokers

Agents and brokers, including online e-agents, serve as independent sales representatives for

many companies’ products. Unlike wholesalers, agents and brokers do not own their

merchandise. However, they serve as sales and merchandising arms for producers or sellers

who do not have their own sales forces.

C. The E-Intermediary

E-intermediaries are Internet-based channel members (wholesalers) who perform one or

both of two functions: (1) collect information about sellers and present it to consumers; or (2)

help deliver Internet products to buyers.

2. Shopping Agents. Shopping agents (e-agents) gather, sort, and present accurate

3. Business-to-Business Brokers. E-commerce intermediaries provide online value-adding

Learning Objective 13–3:

Describe the different types of retailing and explain how online retailers add value for

consumers on the Internet.

Retailing

Varying greatly in size, retailers represent the end of the distribution channel, making the sale of

goods or services to final consumers. More than one-half of the U.S. retailers account for less

than 10 percent of all retail sales.

A. Types of Brick-and-Mortar Retail Outlets

U.S. retail operations vary by type, size, pricing strategies, location, range of services, or

range of product lines.

1. Product-Line Retailers. Retailers that feature broad product lines include department

stores, which are arranged into specialized departments and handle a wide range of

2. Bargain Retailers. Bargain retailers carry wide ranges of products and come in many

forms: discount houses, which feature a large number of items at low prices; catalog

3. Convenience Stores. Convenience stores offer ease of purchase of a narrow assortment

of products with higher prices.

B. Nonstore Retailing

Some retailers sell some or all of their products without stores. Vending machines are ideal

for products such as snack foods, bottled water and soft drinks, cigarettes, and even videos

(Redbox). Major types of nonstore selling include direct-response retailing, in which firms

C. Online Retailing

Over 85 percent of the world’s online population—over 1 billion customers— have made

purchases on the Internet on such sites as iTunes and Amazon.com.

1. Electronic Catalogs. Electronic catalogs use the Internet to display products for both

2. Electronic Storefronts and Cybermalls. Electronic storefronts allow consumers to

3. Interactive and Video Retailing. Interactive marketing allows both retail and B2C

customers to interact with multimedia sites using voice, graphics, animation, film clips,

and access to live human advice. Video marketing lets viewers shop at home from TV

screens by phoning in or e-mailing orders.

KEY TEACHING TIPS

 Students easily confuse the work of agents and brokers. Agents form long-term

relationships to represent just a few producers, while brokers match numerous sellers and

buyers.

 Students often confuse the various types of bargain retailers. It may help to review the

functions of each type: discount houses, catalog showrooms, factory outlets, and

wholesale clubs.

 Review the functions of nonstore retailing, including direct-response retailing, mail

order, telemarketing, and direct selling.

 Emphasize the variety of e-intermediaries and the impact on marketing.

QUICK QUESTIONS

 How do online retailers benefit from the use of syndicated sellers?

 How do online consumers benefit from shopping agents (e-agents)?

 How do online retailers and consumers benefit from electronic retailing?

 How can consumers benefit from interactive and video marketing?

Learning Objective 13-4:

Define physical distribution and describe the major activities in the physical distribution

process.

Physical Distribution refers to the activities needed to move products efficiently from

manufacturer to consumer. Two primary activities include warehousing and transportation. Its

purpose is to make goods available when and where customers want them, keep costs low, and

provide services to satisfy customers.

A. Warehousing Operations

Storing or warehousing, is a major part of distribution management. Private warehouses

B. Transportation Operations

Factors involved in choosing a transportation method include the nature of the product, the

distance it must travel, the speed with which it must be received, and the customers’ wants

and needs.

Transportation Modes. The most common modes are trucks, railroads, planes, water

carriers, and pipelines. Differences in cost most often are related to delivery speed.

Trucks. The advantages of trucks include flexibility for any-distance distribution, fast

service, and dependability.

Planes. Air is the fastest mode of transportation for physical goods. However, it is also

the most expensive form of transportation.

High Speed Digital Transmission. Online transmission is a newer, faster, and less

expensive means of distribution than all other modes. It is restricted to products such as

music, images, movies, and software.

Pipelines. Pipelines are slow and lack flexibility and adaptability. But for specialized

products they provide economical and reliable delivery of products such as liquids and

gases.

C. Distribution through Supply Chains as a Marketing Strategy

Instead of just offering advantages in product features, quality, price, and promotion, many

firms have turned to supply chains that depend on distribution as a cornerstone of business

strategy. This approach means assessing, improving, and integrating the entire stream of

activities—upstream suppliers, wholesaling, warehousing, transportation, delivery, and

follow-up services—involved in getting products to customers.

QUICK QUESTIONS

 How can intermediaries provide added value to customers?

 What is the difference between a private warehouse and a public warehouse?

Learning Objective 13-5:

Identify the important objectives of promotion and the considerations in selecting a

promotional mix, and discuss the various kinds of advertising promotions.

Promotion is any technique designed to sell a product; it is a message that a marketer

sends to consumers about its product(s).

A. Promotional Objectives

Marketers may use promotion to accomplish a number of tasks, such as communicating

information, positioning products, adding value, or controlling sales volume. Positioning is

the process of establishing an easily identifiable product image in the minds of consumers by

fixing, adapting, and communicating the nature of the product itself.

B. Promotional Strategies

1. Pull Strategy. A pull strategy appeals directly to consumers who will demand the

product from retailers.

2. Push Strategy. Using a push strategy, a firm markets its product to wholesalers and

C. The Promotional Mix

Marketers use five types of promotional tools: advertising, personal selling, sales promotions,

direct or interactive marketing, and publicity and public relations. The best combination of

these tools—the best promotional mix—depends on many factors. A marketer’s product, its

target audience, and its budget are all important considerations in building the promotional

mix.

1. When buyers first recognize the need to make a purchase, marketers use advertising and

publicity to make sure buyers are aware of their products.

3. Personal selling can become vital as buyers compare competing products. Sales

4. When buyers are ready to purchase products, sales promotion can give consumers an

5. After making purchases, buyers evaluate products and make a note of their strengths and

deficiencies. Advertising and personal selling can remind consumers that they made wise

1. Advertising Media. Advertising media are specific communication devices for carrying

a seller’s message to potential customers; advertising media include newspapers,

television, direct mail, radio, magazines, and outdoor advertising. The combination of

media through which a company advertises is called its media mix.

a. Television. Although TV is the most widely used medium, it is also the most

expensive.

b. Direct Mail. Direct-mail advertisements allow a seller to select its audience and

personalize its message. However, many people discard it as junk mail.

c. Newspapers. Newspapers provide excellent local coverage. However, they are

generally thrown out and don’t allow advertisers to target audiences well.

f. Internet. Although Internet advertising has great target marketing potential,

consumers don’t want to wade through Web pages cluttered with distracting graphics

and pop-ups.

g. Outdoor. Outdoor advertising—billboards and so on—are inexpensive, face little

competition for consumers’ attention, and provide high repeat exposure. However,

they can present only limited information, and advertisers have little control over

audiences.

h. Other. A combination of other media, including catalogs, sidewalk handouts,

skywriting, phone calls, and door-to-door communication, are also available.

2. Real-Time Ad Tracking. Advertisers always want better information about who looks at

KEY TEACHING TIPS

 Remind students of the elements of the promotional mix and reinforce that many factors

determine how a marketer designs its promotional mix, with target audience being the

most important.

 Ensure that students realize that to most effectively promote a product, marketers must

find out who their customers are, to which media they pay attention, what messages

appeal to them, and how to get their attention.

QUICK QUESTIONS

 What elements make up the media mix?

 What are some advantages and disadvantages of using newspapers, magazines, radio,

Internet, and outdoor advertising?

Use In-Class Activity 3: Up for Debate: What’s the Best Way to Reach Them?

Time Limit: 30 minutes

HOMEWORK

Advertising Media

Now is a good time to assign Application Exercise 10 from the end-of-chapter materials as

homework. The assignment encourages students to think about the various media options used

by marketers with well-known products by selecting a product and identifying as many media

used in its promotion as they can.

At-Home Completion Time: 1 hour

Learning Objective 13-6:

Outline the tasks involved in personal selling and describe the various types of sales

promotions.

Personal Selling

In personal selling, a salesperson communicates one-to-one with potential customers to identify

their needs and to line them up with the seller’s products. Personal selling requires a certain level

of trust between buyer and seller, which must be established over time.

A. Personal Selling Situations

Salespeople must consider the ways in which personal sales activities are affected by the

differences between consumer and industrial products. Retail selling is selling a consumer

product for the buyer’s personal or household use. Industrial selling is selling products to

other businesses, either for the purpose of manufacturing or for resale.

B. Personal Selling Tasks

In order processing, a salesperson receives an order and sees to its handling and delivery.

Creative selling can help to persuade buyers when the benefits of a product are not entirely

clear. A company may use missionary selling when its purpose is to promote itself and its

products rather than simply to close a sale.

C. The Personal Selling Process

Perhaps the most complex and challenging of these three sales tasks is creative selling. The

creative salesperson is responsible for starting and following through on most of the steps in

the personal selling process:

1. Prospecting and qualifying. Prospecting is the process of identifying potential

customers. In qualifying, prospects must be assessed to determine whether they have the

authority to buy and the ability to pay.

2. Approaching. The approach refers to the first few minutes of a salesperson’s contact

with a qualified prospect, the first impression.

3. Presenting and demonstrating. Next, the salesperson makes a presentation, a full

4. Handling objections. No matter what product is for sale, prospects will have some

5. Closing. The most critical part of the selling process is the closing, in which the

6. Following up. Follow-up is a key activity, especially in relationship marketing. For

lasting relationships with buyers, good salespeople don’t end the sales process with the

closing; they want sales to be so successful that customers will buy from them again.

D. Sales Promotions

Sales promotions are short-term promotional activities designed to stimulate consumer

buying, industrial sales, or cooperation from distributors, sales agents, or other members of

the trade. Sales promotions are important because they increase the likelihood that buyers

will try products.

E. Direct (or Interactive) Marketing

Direct (or interactive) marketing is one-on-one nonpersonal selling that tries to get

consumers to make purchases away from retail stores and, instead, to purchase from home, at

work, or by using a mobile device while traveling. When used by B2B businesses, direct

marketing is primarily lead generation so a salesperson can close the sale where interest has

been shown. In B2C businesses, it has primarily a selling goal. The advantage of direct

marketing is that you can target the message to the individual and you can measure the

results.

F. Publicity and Public Relations

Publicity is information about a company, a product, or an event transmitted by the general

mass media to attract public attention. Public relations is company-influenced publicity that

seeks to build good relations with the public and to deal with the effects of unfavorable

events.

KEY TEACHING TIPS

 Personal selling is used to communicate one-on-one with potential customers to identify

their needs and align them with the seller’s products.

 Review the tasks involved in personal selling: order processing, creative selling, and

missionary selling.

 Reinforce that sales promotions include a number of short-term promotional activities

designed to encourage consumer buying, industrial sales, or cooperation from

distributors.