Chapter 13
Distributing and
Promoting Products
Learning Objectives
1. Identify the various distribution channels and explain
the concept of market coverage.
2. Understand how supply chain management facilitates
partnering among channel members.
3. Discuss the need for wholesalers, describe the services
they provide, and identify the major types of wholesalers.
4. Distinguish among the major types of retailers and
identify the types of shopping centers.
5. Explain the five most important physical distribution
activities.
6. Explain how integrated marketing communications
works to have the maximum impact on the customer.
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Chapter 13 | Slide 2
Learning Objectives (cont’d.)
7. Understand the basic elements of the promotion mix.
8. Explain the three types of advertising and describe the
major steps of developing an advertising campaign.
9. Recognize the kinds of salespersons, the steps in the
personal selling process, and the major sales
management tasks.
10. Describe sales promotion objectives and methods.
11.Understand the types and uses of public relations.
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Chapter 13 | Slide 3
Channel of Distribution
…a sequence of marketing
organizations that directs a
product from the producer to
the ultimate user.
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Chapter 13 | Slide 4
Middleman
(Marketing Intermediary)
…a marketing organization that
links a producer and user within a
marketing channel.
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Chapter 13 | Slide 5
Figure 13.1: Distribution Channels
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Chapter 13 | Slide 6
Retailer
…a middleman that buys from
producers or other middlemen and
sells to consumers.
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Chapter 13 | Slide 7
Wholesaler
…a middleman that sells
products to other firms.
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Chapter 13 | Slide 8
Market Coverage
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Chapter 13 | Slide 9
Supply Chain Management
…long-term partnership among channel
members working together to create a
distribution system that reduces
inefficiencies, costs, and redundancies while
creating a competitive advantage and
satisfying customers.
Encourages cooperation
in reducing the costs of inventory
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Chapter 13 | Slide 10
Wholesaler Services to Retailers
 Buy in large quantities
 Sell in small quantities
 Deliver goods to retailers
 Stock variety of goods in one place
 Provide assistance in
• Promotion
• Market Information
• Financial Aid
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Chapter 13 | Slide 11
Wholesaler Services to Manufacturers
 Similar to retailers
 Plus
•
•
•
•
Provide sales force
Reduce inventory costs
Assume credit risks
Furnish market information
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Chapter 13 | Slide 12
Types of Wholesalers
 Merchant (Jobber)
Purchases goods in large quantities and sells to other
wholesalers, retailers, institutions, farms, governments,
professionals, or industrial users
 Full-Service
Performs entire range of wholesaler functions
 General-Merchandise
Deals in wide variety of products
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Chapter 13 | Slide 13
Types of Wholesalers (cont’d.)
 Limited-Line
Stocks only a few product lines but carries
numerous items within each line
 Specialty-Line
Carries a select group of products within
a single line
 Limited-Service
Assumes responsibility for a few wholesale
services only
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Chapter 13 | Slide 14
Agents and Brokers
 Agent: expedites exchanges,
represents a buyer or a seller,
and often is hired permanently
on a commission basis
 Broker: specializes in a
particular commodity,
represents either a buyer or a
seller, and is likely to be hired
on a temporary basis
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Chapter 13 | Slide 15
In-Store Retailers Based on Store Size and
Kind/Number of Products
 Department
Consists of several sections; wide assortment of
products
 Discount
Self-service; sells at lower-than-usual prices
 Warehouse Showroom
Large, low-cost building with large on-premises
inventory, minimal service
 Convenience
Small store that sells limited variety of products; remains
open beyond normal business hours
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Chapter 13 | Slide 16
In-Store Retailers Based on Store Size and
Kind/Number of Products (cont’d.)
 Supermarket
Large self-service; sells food and household products
 Superstore
Large; carries not only food and nonfood products but
also additional product lines
 Warehouse Clubs
Large-scale, members-only; features cash-and-carry
wholesaling with discount retailing
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Chapter 13 | Slide 17
In-Store Retailers Based on Store Size and
Kind/Number of Products
 Traditional Specialty
Narrow product mix with deep product lines
 Off-Price
Buys manufacturers’ seconds, overruns, returns, and
off-season merchandise for resale at deep discounts
 Category Killers
Large specialty store; concentrates on single product
line; competes with low prices and product availability
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Chapter 13 | Slide 18
Retail Sales Categorized
by Merchandise Type
2.1%
6.3%
4.7%
5.0%
4.9%
9.4%
8.0%
13.6%
12.6%
12.4%
21.0%
Gene
Healt
Furnit
Car Food/ ral
h and
Buildi
ure,
Clothi Nonand bever merc Resta
Gas
perso
All
ng
electr
ng store
parts age handi urant
statio
nal
other
mater
onics,
store retail
deale store se
s
ns
care
s
ials
applia
s
ers
rs
s store
store
nce
s
s
Series1 21% 12.40 12.60 13.60 8% 9.40%4.90% 5% 4.70%6.30%2.10%
All others
Non-store retailers
Clothing stores
Health and personal care stores
Furniture, electronics, appliance
Gas stations
Building materials
Restaurants
General merchandise stores
Food/beverage stores
Car and parts dealers
Source: U.S, Bureau of the Census, Monthly Retail Trade: Sales and Inventories, January 2006, www.census.gov.
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Chapter 13 | Slide 19
Non-Store Retailing








Direct Selling
Direct
Catalog
Direct-Response
Telemarketing
Television Home Shopping
Online Retailing
Automatic Vending
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Chapter 13 | Slide 20
Table 13.1: The Ten Largest Retail Firms
in the United States
Sources: 2008 Top 100 Retailers, www.stores.org; accessed April 13, 2009.
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Chapter 13 | Slide 21
Spotlight
Small-Business Internet Advertising
Source: Nielsen Online/Web
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Chapter 13 | Slide 22
Types of Planned Shopping Centers
 Lifestyle: open-air-environment shopping
center with upscale chain specialty stores
 Neighborhood: consists of several small
convenience/specialty stores
 Community: 1 or 2 department stores and
some specialty stores with convenience stores
 Regional: large department stores, specialty
stores, restaurants, theaters, hotels
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Chapter 13 | Slide 23
Physical Distribution
…activities concerned with the efficient
movement of products from the
producer to the ultimate user.
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Chapter 13 | Slide 24
Functions of Physical Distribution
 Inventory Management: minimize holding and
potential stock-out costs
 Order Processing: receive and fill customers’
purchase orders
 Warehousing: receive and store goods and
prepare them for reshipment
 Materials Handling: handle goods in
warehouses and during transportation
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Chapter 13 | Slide 25
Warehousing Activities
 Receiving Goods
 Identifying Goods
 Sorting Goods
 Dispatching Goods to Storage
 Holding Goods
 Recalling, Picking, and Assembling Goods
 Dispatching Shipments
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Chapter 13 | Slide 26
Types of Warehouses
 Private
Owned and operated by a particular firm;
designed to serve firm’s specific needs
 Public
Offers services to all individuals and firms
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Chapter 13 | Slide 27
Transportation
…the shipment of products to customers
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Chapter 13 | Slide 28
Carrier
…a firm that offers transportation services
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Chapter 13 | Slide 29
Categories of Carriers
 Common
Available to all shippers
 Contract
Available for hire by one or several shippers
 Private
Owned and operated by the shipper
 Freight Forwarder
Hired by agents to handle transportation
• Ensures goods loaded on carrier
• Assumes responsibility for safe delivery
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Chapter 13 | Slide 30
Table 13.2: Characteristics of
Transportation Modes
Sources: U.S. Bureau of Transportation Statistics, National Transportation Statistics 2005,
www.bts.gov; accessed July 12, 2006.
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Chapter 13 | Slide 31
Integrated Marketing Communications
…coordination of promotion efforts to
ensure maximal informational and
persuasive impact on customers.
Goal = Consistent message to customers
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Chapter 13 | Slide 32
Reasons for
Integrated Marketing Appeal
 Drop in mass media popularity
• High costs
• Unpredictable audience size
 Precisely targeted
promotional tool
 Database marketing = precise
targeting individual customers
 Promotion-related companies
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Chapter 13 | Slide 33
Promotion
…communication about an organization and its
products that is intended to inform, persuade,
or remind target-market members.
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Chapter 13 | Slide 34
Promotion Mix
…the particular combination of
promotion methods a firm uses to
reach a target market.
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Chapter 13 | Slide 35
Figure 13.2: Possible
Elements of a Promotion Mix
Depending on the type
of product and target
market involved, one
or more of these
ingredients are used
in a promotion mix.
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Chapter 13 | Slide 36
Advertising Spending by Media
and Total Dollars Spent
Source: Robert Coen, “Insider’s Report,” July 2008, p. 4.
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Chapter 13 | Slide 37
Types of Advertising by Purpose
 Primary Demand – increases demand for
all brands of a product within an industry
 Selective – sells a
particular brand of product
• Immediate-Response
• Reminder
• Comparative
 Institutional – enhances
firm’s image or reputation
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Chapter 13 | Slide 38
Steps in Developing Advertising Campaign
1. Identify/Analyze
8. Evaluate Effectiveness
2. Define Objectives
7. Execute Campaign
3. Create Platform
6. Create Message
4. Determine Appropriation
5. Develop Plan
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Chapter 13 | Slide 39
Advertising Agency
…an independent firm that plans, produces,
and places advertising for its clients.
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Chapter 13 | Slide 40
Top Ten National Advertisers
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Procter & Gamble Co.
AT&T
Verizon Communications
General Motors
Time Warner
Ford Motor Co.
GlaxoSmithKline
Johnson & Johnson
Walt Disney Co.
Unilever
Source: Reprinted with permission of June 23, 2008 issue of Advertising Age. Copyright, Crain Communications Inc., 2008.
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Chapter 13 | Slide 41
Top Ten Brands in Product Placement
Brand
Occurrences on TV
Coca-Cola Soft Drinks
2,990
24 Hour Fitness Centers
1,765
Chef Revival Apparel
1,308
AT&T Wireless Text Messaging
701
Pussycat Dolls Nightclubs
602
Nike Sport Footwear
575
Freemotion Fitness Exercise Equipment
409
Chicago Bears Football Team
383
Nike Apparel
378
Precor Exercise Equipment
374
Source: Nielsen Product Placement, January-–June 2008, http://blog.nielsen.com/nielsenwire/consumer/top-10-productplacement-brands-010108-063008/; accessed February 22, 2009.
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Chapter 13 | Slide 42
Using the Internet
• Advertising Age is the industry’s preeminent
source of marketing, advertising, and media
news, information, and analysis.
www.adage.com
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Chapter 13 | Slide 43
Social and Legal
Considerations in Advertising
1. Most effective and inexpensive means of
communicating product information
2. Encourages competition
3. Revenues support
mass-communications media
4. Provides jobs
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Chapter 13 | Slide 44
Kinds of Salespersons
 Order Getters
 Order Takers
• Inside
• Outside
 Support Personnel
•
•
•
•
Sales support
Missionary
Trade
Technical
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Chapter 13 | Slide 45
Figure 13.3: The Six Steps of
the Personal-Selling Process
Personal selling is the most
adaptable of all promotional
methods and the most
expensive.
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Chapter 13 | Slide 46
Sales Manager’s Responsibilities









Set Sales Objectives
Adjust Size of Sales Force
Attract/Hire Effective Salespersons
Develop Training Program
Formulate Compensation Plan
Motive Salespersons
Define Sales Territories
Schedule/Route Sales Force
Evaluate Operation
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Chapter 13 | Slide 47
Sales Promotion Objectives
1. Attract new customers
2. Encourage trial of new product
3. Invigorate sales of mature brand
4. Boost sales to current customers
5. Reinforce advertising
6. Increase traffic in retail stores
7. Steady irregular sales patterns
8. Build up resell inventory
9. Neutralize competition
10.Improve shelf space/displays
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Chapter 13 | Slide 48
Classification of Promotional Methods
 Consumer Sales
Attract consumers to particular retail stores and
motivate them to purchase new/established products
 Trade Sales
Encourage wholesalers and retailers to stock and
actively promote manufacturer’s product
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Chapter 13 | Slide 49
Sales Promotion Methods
 Rebates
 Coupons
 Samples
 Premiums
 Frequent-User
Incentives
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 Point-of-Purchase
Displays
 Trade Shows
 Buying Allowances
 Cooperative Advertising
Chapter 13 | Slide 50
Types of Public Relations Tools
 Publicity
 News Release
 Feature Article
 Captioned Photograph
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Chapter 13 | Slide 51
Chapter Quiz
1. Highly perishable products such as fruits and
vegetables are typically channeled from producer to
a)
b)
c)
d)
e)
retailer to consumer.
wholesaler to consumer.
wholesaler to retailer to consumer.
consumer.
functional middleman to consumer..
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Chapter 13 | Slide 52
Chapter Quiz
2. A mail-order wholesaler is an example of a
____________ wholesaler.
a)
b)
c)
d)
e)
limited-service
full-service
general merchandise
limited-line
specialty-line
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Chapter 13 | Slide 53
Chapter Quiz
3. A firm that operates only one retail outlet is called
a(n) _________ retailer.
a)
b)
c)
d)
e)
chain
specialty
Independent
merchant
single
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Chapter 13 | Slide 54
Chapter Quiz
4. “Drink More Milk” and “Got Milk?” are examples of
a)
b)
c)
d)
e)
public relations.
institutional advertising.
primary-demand advertising.
publicity.
selective-demand advertising.
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Chapter 13 | Slide 55
Chapter Quiz
5. Critics’ two main complaints about advertising are
that it
a) is malicious and it causes unnecessary
competition.
b) encourages society to lie and to steal.
c) is useless and it is mean.
d) wastes financial resources and consumers are
hurt in the end due to higher prices.
e) is wasteful and can be deceptive.
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Chapter 13 | Slide 56