Entrepreneurship
Chapter 6
Distribution, Promotion,
and Selling
Marketing Mix
Marketing Mix
– Helps meet customer needs and enables the
business to earn a profit.
– reaching target market through a blend of:
• Product
• Price
Chapter 5
• Distribution
• Promotion
Chapter 6
2
The Marketing Mix – Distribution
Section 6-1
• Goals:
– Describe the four basic options of channels of
distribution.
– Apply channels of distribution to the specific
needs of various types of businesses.
– List factors to consider in the physical distribution
of products.
3
Focus on Small Business
• What do you think happened to
Dustin’s order?
• What is the problem?
• How do you think Dustin should handle
this situation?
4
Channels of Distribution
6.1
• Distribution: an important component of
the marketing mix that involves the locations
and methods used to make products
available to customers
• Channels of Distribution: routes that
products and services take from the time
they are produced to the time they are
consumed
5
Channels of Distribution
6.1
• Direct Channel: moves the product
directly from the manufacturer to consumer
• Indirect Channel: distribution channel that
uses intermediaries to move products
between the manufacturer and the consumer
– Intermediaries: agents and wholesalers
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Channel Options
•
•
•
•
6.1
Manufacturer to Consumer
Man.  Retailer  Con.
Man.  Wholesaler  Ret.  Con.
Man.  Agent  Whol.  Ret.  Con.
Page 149 - Channels of Distribution Chart
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Distribute Goods and Services
• Retail Business
– Offer your product or service to consumers in
a convenient location during convenient hours
– Use catalogs, fliers, and other advertisements
to reach customers who live outside the area.
– Take phone/fax orders and ship
them directly to the customers.
– Create a website. Customers can
learn about your products and
make purchases online.
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Distribute Goods and Services
• Service Business
– Most sell their services directly to consumers
– Single Direct Channel of Distribution
– Production and consumption of a service
happens all at once.
– Needs to occur WHEN
the consumer wants it.
– Electricians, Restaurant Owners, Lawyers
– Deal directly with consumer wanting the service
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Distribute Goods and Services
• Manufacturing Businesses
– Don’t usually sell directly to consumers
– Make their products & sell to other businesses
– Some will distribute their products very broadly
and use many channels
– Some will distribute through
select outlets only
– Cosmetics
• High End  Exclusive Department Stores
• Inexpensive  Discount Stores & Drugstores
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Physical Distribution
• Physical Distribution includes:
– Transportation
– Product Storage and Handling
– Packaging
of products within a channel of distribution.
(Next 3 slides…)
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Physical Distribution
• Transportation
– Consider what and where you are shipping
– Perishables need refrigeration & speed
– Airplane, Railroad, Ship, Truck, Combination
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Physical Distribution
• Product Storage and Handling
– Efficient storage allows
the channels to balance
supply and demand of
the products.
– Adds to cost of product,
risk of damage or theft
– Stored in warehouses
at various channels
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Physical Distribution
• Packaging
– Designed to protect the product from the time
it is produced until it is consumed.
– Protected from being damaged/destroyed
which would result in loss of money
– Depends on product, shipping & destination
• Receiving Goods to Sell
– All types of businesses must receive goods
from suppliers even if they don’t sell them to
consumers (office supplies, raw materials)
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Where can you
find information?
• Directories that list suppliers and
manufacturers for a wide range
of industries
• Magazines for specific industries
• The Internet
• Publications include:
– The American Wholesalers
and Distributors Directory
– The Thomas Register
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6.1
Benefits Gained
6.1
• Improves economic efficiency
• Results in a better assortment of products
for consumers
• Helps make transactions routine
• Makes it easier for consumers to find goods
and services.
• Example: Georgia Peach Farmer uses an
intermediary to sell produce to Midwest customers
(where few peaches are grown). Consumers know
grocery store has peaches; No searching for local
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growers. Grocery store = routine transaction.
Checkpoint Questions
• What are the 4 basic options of channels of distribution?
#1 MC
#3 MWRC
#2 MRC
#4 MAWRC
• Why are channels of distribution different for different
types of businesses?
Distribution needs are based on size of market, type
of product/service, and customer needs & wants.
• What factors are important to consider in the physical
distribution of products?
#1 Transportation
#2 Product Storage Handling
#3 Packaging Needs
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The Marketing Mix - Promotion
Section 6-2
• Goals:
– List the many forms of advertising and discuss
the advantages and disadvantages of each.
– Define publicity and describe ways to use
publicity as a promotional tool.
6.2
Nearly every slide has a
workbook answer on it this time.
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Focus on Small Business
• Do you think Chachi’s idea for an
opening day promotion ids a good
one? Why or Why Not?
• Can you suggest some alternative
promotions that Chachi might use?
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Promotional Strategies
• You will have to promote your business to
make customers aware of the benefits of
buying from you.
• Promotion can take many forms:
– Advertising, Publicity, Personal Selling, Sales Promotion
• Promotional Mix – strategy created by
adopting a blend of some, if not all the forms
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Promotional Strategies
• Advertising: a paid form of communication
sent out by a business about a product.
• Keeps your product in the public’s eye by
creating a sense of awareness.
• Choose your
message carefully
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Online Advertising
• Types of Online Advertising:
– Banner Ad: graphic image or animation displayed within a
rectangular box across top or down the side of a web page.
– Floating Ad: An ad which moves across the screen or floats
above the page content.
– Wallpaper Ad: an ad which changes the background of the
page being viewed.
– Trick Banner: a banner ad that looks like a dialog box with
buttons, often appearing like an error message or alert.
– Pop-Up Ad: a new window that opens in front of the current
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one, displaying an advertisement.
Online Advertising
• Paying for Online Advertising:
– Cost per Mil (CPM): exposure of the message
– Cost per Click (CPC): number of user clicks on Ad
– Cost per Action (CPA): user completing form,
registering for newsletter or some other action.
• Disadvantages:
• Abuse – spamming: sending mass bulk emails
• Excessive use of pop-ups, flashy banners and spam has
cause internet users to block these advertisements.
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Television Advertising
• TV Promotions reach millions every day.
• Best way to reach large numbers quickly.
• Commercials and Paid Ads (Infomercials)
• Disadvantages:
– Very expensive
– Reach too broad of an audience
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Radio Advertising
• Less expensive that television promotion
• More certain you are reaching target market
• Radio Stations tend to narrow down the
target market for you
• Disadvantages:
– Purely audio, no visuals of your product
– Listeners may not remember what they hear
– Listeners may change station at commercials
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Newspaper
• Single largest form of advertising in U.S.
• Relatively inexpensive
• Targets a limited geographic area
• Reaches large number of people
• Disadvantages:
– More people looking to Internet, less newspaper
– May be paying to reach thousands outside of your target
– A lot of competition advertised right next to you.
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Telephone Directory Advertising
• List of phone numbers of people & businesses
• Directory ads will appear on a page
near the listing and phone number.
• Similar to Newspaper Ads
• Used repeatedly
• Disadvantages:
– Lack of persuasion in a listing
– Listed next to competition
– May already know what business they were looking for
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Direct-Mail Advertising
• Direct-Mail advertising includes:
– Fliers, catalogs, letters & other correspondence
sent to target customers through mail.
• Purchase mailing list which fit your target
– Companies specialize in maintaining targeted mailing
lists and sell them to businesses
• Disadvantages:
– Only Effective IF people read it!
– Sometime considered – “Junk Mail”
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Magazine Advertising
• Magazines are an excellent way to aim
products at specific markets
• Fitness magazine – equipment & apparel
• Teen magazine – cosmetics, clothing, shoes
• Disadvantages:
– Most magazine are
nationally distributed;
Not good for limited
geographic selling
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Outdoor
Advertising
• Includes:
– Billboards and Signs
• Effective in keeping your name out there
where many people can see it.
• Disadvantages:
– Does not offer very much information
– Drive-by readings must be - short and sweet
Transit
Advertising
• Consists of signs on
public transportation.
• Provides much more info
than Outdoor Ads.
• Inside and outside of vehicles
• Inside Transit Ads offers the riders
something to read for the duration of the trip.
• Disadvantages:
– Effective only if target market commonly uses public transportation
Promotional Strategies
Publicity
• Publicity: non-paid form of communication
that calls attention to your business through
media coverage.
• Good publicity can be
helpful advertising
• Publicity is free & largely
out of your control
• Can be negative if
coverage is unfavorable
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Publicity
• Press Release: a written statement meant to
inform the media of an event or product.
– Example Page 162
• Elements of a Press Release
• Date and Time
• Food and Beverage Provided?
• Celebrity Entertainment?
• Company Information
• Product Information
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Publicity
• Public Relations: establishing a favorable
relationship with customers & general public.
– Public awareness and positive public relations
can generate business when you show
community involvement and commitment.
•
•
•
•
•
Sponsor a community sports team
Make donations to local charity/relief efforts
Work-based programs through local high school
Active members of local Big Brother/Sister Program
Organize community program - clean up parks
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Publicity
• Self-Promotion helps keep the company
name visible and in the forefront of the
people’s mind.
– Giving away t-shirts and hats displaying your
company name and logo.
– Distributing pens, notepads, coffee mugs, and
other useful items printed with company info.
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Checkpoint Questions
• Why is promotion important to a business?
A business will not succeed if target customers
are not aware of it and what it has to offer.
• What are advantages/disadvantages of publicity?
Good publicity can be helpful as no-cost (free)
advertising. But largely out of the business’s
control and if it is negative, it could turn
customers away.
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Selling & Promoting
Section 6-3
• Goals:
– Explain the role of selling in a business
– Determine how to meet customer needs & wants
– Discuss other types of promotional activities
37
Focus on Small Business
• Do you think that JoJo is making a good
decision in adding a retail clothing line to her
dance studio? Why or Why Not?
• What kinds of promotions do you think JoJo
should use to try and attract new customers?
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Promotional Strategies
Selling
6.3
• Personal Selling: direct communication
between a prospective buyer & a sales rep.
– Sales representative attempts to influence the
prospective buyer in a purchase situation.
• Thorough Product Knowledge - Salesperson
– Features: physical characteristics/capabilities
– Benefits: advantages of products
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Selling
Determine Customer Needs & Wants
• Needs Assessment
– Salesperson finds out as much info about
customers situation.
– Identifies the range of options for the customer
– Need Satisfying - fulfill consumer needs
– Problem Resolution - assess problem, gather info,
act as consultant to assist customer
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Selling
Determine Customer Needs & Wants
• Buying Decisions
– Rational B.D. based on logical reasoning of customers
Safety, simplicity, quality, reliability, economy,
convenience, service, durability, knowledge, $ gain, ease
of operation
– Emotional B.D. based on desire to have specific product
Feelings, beliefs and attitude: fear, protection,
appearance, recreation, improved health, comfort,
recognition, pride, prestige and popularity
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Selling
Determine Customer Needs & Wants
• Customer Decision-Making
•
•
•
•
•
•
•
Define the problem
Gather information
Identify various solutions
Evaluate alternatives
Select the options
Take action
Evaluate the actions
– Salesperson can help in this decision process
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Promotional Strategies
Sales Promotion
• Sales Promotion: an incentive offered to
customers in order to increase sales.
– Contests, Free Samples, Rebates, Coupons,
Special Events, Gift Certificates, Frequent Buyers
– Rebate: a refund offered to people who
purchase a product.
• Telemarketing: using the phone
to market your product or service
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Checkpoint Questions
•
Why is selling important to a business?
– Makes money for the business
•
Why is it important to meet customer
needs and wants in the selling process?
–
Customers purchase goods and services in order
to satisfy needs and wants. If these cannot be
met by the business, no sales will be made.
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