Entrepreneurship Chapter 6

Distribution, Promotion, and Selling

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Marketing Mix

Marketing Mix– Helps meet customer needs and enables the

business to earn a profit.

– reaching target market through a blend of:

• Product Chapter 5• Price

• Distribution Chapter 6• Promotion

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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.

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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?

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Channels of Distribution

• 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

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Channels of Distribution

• 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

• 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)

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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Benefits Gained • 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 growers. Grocery store = routine transaction. 16

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Checkpoint Questions• What are the 4 basic options of channels of distribution? #1 MC #3 MWRC

#2 MRC #4 MAWRC

• 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 - PromotionSection 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.

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 one, displaying an advertisement.

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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

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

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Promotional StrategiesPublicity

• 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

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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 StrategiesSelling

• 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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SellingDetermine 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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SellingDetermine 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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SellingDetermine 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 StrategiesSales 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.