Entrepreneurship Chapter 9 Small businesses are increasingly affected by what

Chapter 09 – Promoting and Distributing

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CHAPTER

Promoting and Distributing

CHAPTER CONTENTS

Learning Objectives 9.2

Chapter Overview 9.2

Brief Chapter Outline 9.2

9

Chapter 09 – Promoting and Distributing

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LEARNING OBJECTIVES

After studying the material in this chapter, the student will be able to:

1. Describe the use of advertising to promote the sale of a product.

2. Discuss some opportunities and problems involved in selling to ethnic groups.

CHAPTER OVERVIEW

This chapter is very strong on advertising and personal selling. But it also covers choosing a

channel of distribution, selling through intermediaries, and promoting the sale of products.

Advertising, merchandising, sales promotion, and publicity are used in selling the product, based

on the choice of channels and the sales forecasts. Regardless of whether a company uses intermediaries or

BRIEF CHAPTER OUTLINE

I. ADVERTISING

A. Types of Advertising

B. Developing the Advertising Program

C. Setting the Budget

Chapter 09 – Promoting and Distributing

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II. MERCHANDISING, SALES PROMOTION, AND PUBLICITY

A. Merchandising

III. CONSIDERING ETHNIC DIFFERENCES

IV. OPPORTUNITIES FOR SMALL FIRMS IN GLOBAL MARKETING

A. Importing by Small Firms

V. DISTRIBUTION

A. Storing

B. Order Processing

C. Transportation

VI. CHOOSING A DISTRIBUTION CHANNEL

A. Factors to Consider in Choosing a Distribution Channel

VII. SELLING THROUGH INTERMEDIARIES

A. Brokers

B. Agents

C. Wholesalers

D. Retailers

VIII. SETTING WITH YOUR OWN SALES FORCE

A. Need for Personal Selling

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

CHAPTER OPENING PROFILE:

Springdale Travel Inc.

I. ADVERTISING

Learning Objective 1.

Describe the use of advertising to promote the sale of a

product.

A. ADVERTISING informs customers of the

availability, desirability, and uses of a

B. Types of Advertising

1. PRODUCT ADVERTISING calls at-

tention to or explains a specific prod-

C. Developing the Advertising Program

1. Determine whether its’ effectiveness

over various periods of time

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

c. What should the content say?

This is where it can get tricky.

Words are powerful media.

d. Unless you have experienced ad

or service?

D. Setting the Budget

Advertising costs should be controlled by

an advertising budget set by one of

four methods, after company guide-

lines are set.

1. In POS, percentage of sales or profits

method, advertising costs are a con-

E. Selecting Advertising Media

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

1. The best medium for small busi-

2. Media examples used by small firms.

a. Display ads in local newspapers

can be effective for most retail

and service businesses. These

decisions need to include the cut

some businesses, remembering

that even Yellow pages are now

online.

f. Outdoor signs can be used for

announcements.

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CHAPTER OUTLINE AND TEACHING NOTES

REAL WORLD EXAMPLE 9.1

Guthy-Renker gained prominence using high-quality info-

REAL WORLD EXAMPLE 9.2

Small retailers such as Brett Finkelstein can use targeted

Internet ads. Per example, through Google’s local advertising

program.

REAL WORLD EXAMPLE 9.3

Bookseller Karen Weyant found that her Internet sales

REAL WORLD EXAMPLE 9.5

Lane Guest Ranch advertises in the Wall Street Journal to

reach its target market for vacationers.

E. How to select the appropriate Medium.

a. Absolute cost is the actual ex-

penditure for running an ad.

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

F. Developing the Message

1. Translate the ideas or information

G. When and How to Use an Advertising

Agency

2. However, advertising agencies can

help by:

a. Performing preliminary studies

H. Measuring the Results of Advertising

1. IMMEDIATE-RESPONSE ADVER-

TISING tries to get customers to buy

II. MERCHANDISING, SALES PROMOTION,

AND PUBLICITY

A. Merchandising

1. MERCHANDISING is promoting the

sale of a product at the point of pur-

chase.

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

REAL WORLD EXAMPLE 9.6

Richard Ost’s three small drugstores are successful, be-

cause he targets his minority clientele with culturally-appro-

priate merchandising.

3. Some manufacturers and wholesal-

B. Sales Promotion

1. SALES PROMOTION includes mar-

keting activities (other than advertis-

ing and personal selling) that stimu-

late consumer purchasing and dealer

effectiveness.

2. Consumer promotions use coupons,

5. A TRADE SHOW (trade fair) is an ex-

hibition of products or services by

companies in the same industry.

a. A participation fee is paid for the

REAL WORLD EXAMPLE 9.7

As a promotional gimmick, William Wrigley once sent a

stick of gum to every person listed in the U.S. phone book.

Chapter 09 – Promoting and Distributing

CHAPTER OUTLINE AND TEACHING NOTES

C. Publicity

1. PUBLICITY is information about a

business that is published or broad-

cast without charge.

III. CONSIDERING ETHNIC DIFFERENCES

Learning Objective 2.

Discuss some opportunities and problems involved in sell-

ing to ethnic groups.

A. Ethnic groups are growing much faster

than traditional markets.

B. These groups require special attention in

promoting your product.

1. Language differences—More than

20% of U.S. families speak a lan–

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

REAL WORLD EXAMPLE 9.8

Longo Toyota, the number one Toyota dealership in the

U.S., has salespeople who speak over 30 languages.

3. Using ethnic media gets better re-

sponse from consumers.

C. Demographics may vary for Ethnic

groups.

D. Tips for evaluating ethnic media:

1. Focus on media that appeals to a

wide range.

2. Consider the “Pass-along” values of

IV. OPPORTUNITIES FOR SMALL FIRMS IN

GLOBAL OPERATIONS

Learning Objective 3.

Describe the opportunities for small firms in global mar-

keting.

A. Many products are now produced or as-

sembled in other countries.

B. Global Marketing

1. GLOBAL MARKETING involves

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

2. Over half of students will work in

some aspect of international activities

C. Importing by Small Firms

1. There are two types of small busi-

ness importers:

a. Some firms import products and

2. Reasons for importing

a. A company’s basic raw material

or product may need to be im-

ported, for example:

1. Most of American grown cot-

ton is sent overseas for pro-

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

d. Increased imports can improve a

company’s output or competitive

level.

3. Some problems with importing

a. Many U.S. producers are suffer-

ing, because of the flood of for-

D. Exporting by Small Firms

1. Misconceptions concerning foreign

business

a. Only large firms can export suc-

2. Some opportunities and risks

a. The opportunities are:

(1) To expand markets, use ex-

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

(1) The difficulty of getting earn-

ings out of many countries.

(2) The changing political, eco-

nomic, and cultural condi-

2. Deciding whether or not to export

a. You should make sure that you:

(1) Have a product suitable for

export.

(2) Can reliably fill international

b. The U.S. Department of Com-

merce is a good source for find-

ing potential trading partners.

3. Help with exporting is available

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

b. Information is available from the

Small Business Administration

V. DISTRIBUTION

Learning Objective 4.

Explain how physical distribution affects marketing strat-

egy.

A. DISTRIBUTION involves the effective

physical movement of a product from the

production line to the final consumer.

B. Storing

1. Until sold or used, goods must be

stored.

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

D. Transportation

1. Transportation involves the physical

movement of a product from the

seller to the purchaser.

REAL WORLD EXAMPLE 9.9

The UPS Store caters to small businesses by handling all

of the transportation issues that small businesses encounter.

5. Railroads, trucks, pipelines, and wa-

terways are popular means of trans-

porting bulky materials.

a. Railroads are able to carry large

volumes of goods at low cost, but

REAL WORLD EXAMPLE 9.10

A change in city ordinances that restrict truck deliveries

endangered a Nebraska feed-and-seed store’s survival.

c. Oil pipelines carry about 6% of all

tonnage moved, and waterways

carry 6%.

Chapter 09 – Promoting and Distributing

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CHAPTER OUTLINE AND TEACHING NOTES

d. Air transport is increasing, espe-

e. INTERMODAL SHIPPING is the

use of a combination of truck,

rail, or ship to transport goods.

1. Containerization is a system of

VI. CHOOSING A DISTRIBUTION CHANNEL

Learning Objective 5.

Describe different channels of distribution used for mar-

keting products and discuss factors to consider in choosing an

appropriate channel.

A. A DISTRIBUTION CHANNEL consists of

marketing organizations responsible for

the flow of goods or services from the pro-

ducer to the consumer.

1. The choice of a channel is compli-

Chapter 09 – Promoting and Distributing

CHAPTER OUTLINE AND TEACHING NOTES

then to a sawmill, where it is pro-

cessed and sent on to a lumberyard

B. Factors to Consider in Choosing a Dis-

tribution Channel

1. Small producers should design their

channels to reach a balance between

maintaining control and minimizing

cost.

2. The primary factors to consider are:

a. geographical markets and con-

sumer types

3. New products require difficult distribu-

tion channels than those used for

well-established products.

4. Multiple distribution channels can cre-

ate conflicts.

REAL WORLD EXAMPLE 9.11