PHK 5e Ch13

13
Distributing and
Promoting
Products
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Learning Objectives
13-1 Identify the various distribution channels and
explain the concept of market coverage.
13-2 Understand how supply-chain management
facilitates partnering among channel members.
13-3 Discuss the need for wholesalers, describe the
services they provide, and identify the major types
of wholesalers.
13-4 Distinguish among the major types of retailers and
shopping centers.
13-5 Explain the five most important physical distribution
activities.
1
Learning Objectives (continued)
13-6 Explain how integrated marketing communications

works to have the maximum impact on the customer.
13-7 Understand the basic elements of the promotion
mix.
13-8 Explain the three types of advertising and describe
the major steps of developing an advertising
campaign.
13-9 Recognize the kinds of salespersons, the steps in
the personal-selling process, and the major sales
management tasks.
13-10 Describe sales promotion objectives and methods.
13-11 Understand the types and uses of public relations.
Distribution Channels
and Market Coverage
§ Marketing organizations that direct a product

from the producer to the ultimate user
§ Middleman: Links a producer and user within
a marketing channel
• Merchant middleman: actually takes title to
products by buying them.
• Functional middleman: Helps in the transfer of
ownership of products but does not take title to the
products.
2
Commonly Used Distribution Channels
§ Producer to consumer
• Direct channel
• Used by all services and by a few consumer goods
§ Producer to retailer to consumer
• Retailer: Buys from producers or other middlemen
and sells to consumers
§ Producer to Wholesaler to Retailer to
Consumer
• Wholesaler: Sells products to other firms
• Traditional channel
More Commonly Used

§ Producer to Agent to Wholesaler to Retailer to

Consumer
§ Producer to Organizational Buyer
§ Producer to Agent Middleman to
Organizational Buyer
Sometimes, companies use multiple

marketing channels rather than just
one. College textbook publishers
often sell their products through
multiple marketing channels.
3
Class Exercise 1
Which channel(s) of distribution would you use for

the following products? Why?
• A new reduced-fat candy bar
• Fine china that costs $550 for a set
• A set of encyclopedias that costs $750
• A line of jeans that sells between $30 and $50 a
pair
4
Level of Market Coverage
§ Intensive distribution: The use

of all available outlets for a product
§ Selective distribution: The use
of only a portion of the available
outlets for a product in each
geographic area
§ Exclusive distribution: The use
of only a single retail outlet for a
product in a large geographic area
Partnering Through Supply-

Chain Management
§ Supply-chain management: Long-term

partnership among channel members working
together to create a distribution system
Dunkin’ Brands, Inc. has a supply-chain deal with NDCP so
they can exclusively provide product to all Dunkin Donut Shops.
Dunkin’
Donuts
Dunkin Brands, National Shops
Inc. DCP
5
Wholesalers Provide Services
to Retailers
§ Wholesalers help retailers by:

• Buying in large quantities, selling to retailers in
smaller quantities, and delivering goods to retailer
• Stocking in one place the variety of goods that
retailers otherwise would have to buy from many
producers
• Providing assistance in: promotion, market
information, and financial aid
Wholesalers Provide Services

to Manufacturers
§ Wholesalers help manufacturers by:

• Providing a sales force
• Reducing inventory costs
• Assuming credit risks
• Furnishing market
information
6
Types of Wholesalers
§ Merchant wholesaler: § Full-service wholesaler:

Middleman that Performs the entire range
of wholesaler functions,
purchases goods in large
including:
quantities and then sells
• Delivering goods
them to: • Supplying
• Other wholesalers or • Warehousing
retailers
• Arranging for credit
• Institutional users
• Supporting promotional
• Farm users activities
• Government users • Providing general
• Professional users customer assistance
• Industrial users
Types of Full-Service Wholesalers
§ General-merchandise wholesaler
• Deals in a wide variety of products, such as drugs,
hardware, nonperishable foods, cosmetics,
detergents, and tobacco
§ Limited-line wholesaler
• Stocks only a few product lines but carries numerous
product items within each line
§ Specialty-line wholesaler
• Carries a select group of products within a single line
7
Agents and Brokers
§ Agents: Middleman that expedites

exchanges, represents a buyer or a seller
§ Brokers: Middleman that specializes in a
particular commodity, represents either a buyer
or a seller
Marketing Intermediaries: Retailers
§ Retailers: Final link between producers and

consumers
§ Retailers may buy from either wholesalers or
producers
§ Retailers can sell goods, services, or both
§ The United States has nearly 1.1 million retail
establishments with total sales of more than $4
trillion
§ Most retailers are small, with annual revenues
well under $1 million
8
Ten Largest U.S. Retailers
Types of Retail Stores
§ Independent retailer: Firm that operates only one retail

outlet
§ Chain retailer: Company that operates more than one
retail outlet
§ Department store:
Retail store that
employs twenty-five
or more persons
§ Discount store:
Self-service, general-
merchandise outlet that
sells products at lower-
than-usual prices
9
Types of Retail Stores (continued)
§ Warehouse showroom: Retail facility in

a large, low-cost building with large on-premises
inventories and minimal service
§ Convenience store: Small food store that sells a
limited variety of products but remains open beyond
business hours
§ Supermarket: Large self-service store that sells
primarily food and household products
§ Superstore: Large retail store that carries not only food
and nonfood products ordinarily found in supermarkets
but also additional product lines
Warehouse Clubs
§ Warehouse club: A large-scale members-only

establishment that combines features of cash-
and-carry wholesaling with discount retailing
Consider:
Are you a member of one of these clubs?
Warehouse clubs charge small businesses and
consumers an annual fee that allows them to buy
products in bulk at discount prices. Sam’s is an
example of a warehouse club. So is Costco.
10
More Types of Retail Stores
§ Traditional specialty store: Carries a narrow

product mix with deep product lines
§ Off-price retailer: Store that buys
manufacturers’ seconds, overruns, returns, and
off-season merchandise for resale to
consumers at deep discounts
Category Killer
§ Category killer: Very large specialty store that

concentrates on a single product line and
competes on the basis of low prices and
product availability
The Home Depot is an
example of a category
killer.
Small retailers with
less product variety
and higher prices have
found it difficult to
compete against
category killers.
11
Class Exercise 2
The following are examples of category killers:

• Toys “R” Us
• Home Depot
• Best Buy
• Office Depot
• PETsMart
• Barnes & Noble
Can you think of others?
Types of Nonstore Retailing
§ Nonstore retailing: Consumers purchase

products without visiting a store
• Direct selling: Marketing of products to consumers
through face-to-face sales presentations
• Direct marketing: Use of non personal media to
introduce products to customers
12
Direct Marketing
§ Catalog marketing: Provides a catalog to customers to

make selections and place orders
§ Direct-response marketing: A retailer advertises a product
and makes it available through mail, telephone, or online
orders
§ Telemarketing: Performance of marketing-related activities
by telephone
§ Television home shopping: Products are presented to
television viewers, who can buy them by calling a toll-free
number and paying by credit card
§ Online retailing: Makes products available to buyers
through computer connections
§ Automatic vending: Use of machines to dispense products
Utilizing Multiple Retail Approaches
Many retailers use multiple marketing strategies to

reach potential customers. IKEA operates more than
350 retail stores in 43 countries. It also engages in
direct marketing through catalog and online retailing.
13
Types of Shopping Centers
§ Lifestyle shopping center: Open-air configuration and

is occupied by upscale national chain specialty stores
§ Neighborhood shopping center: Consists of several
small convenience and specialty stores
§ Community shopping center: Includes one or two
department stores and some specialty stores, along
with convenience stores
§ Regional shopping center: Contains large department
stores, numerous specialty stores, restaurants, movie
theaters, and sometimes even hotels
The “New” Main Street
Upscale stores and the quaint “Main-Street”-like

atmosphere found in small towns a generation ago
have made lifestyle shopping centers like this one
very popular. No longer are shoppers trapped
indoors when they are at malls.
14
Physical Distribution
§ All those activities concerned with the efficient

movement of products from the producer to the
ultimate user
§ The movement of the products through their
channels of distribution
§ Combines several interrelated business
functions, the most important of which are:
• Inventory management
• Order processing
• Warehousing
• Materials handling
• Transportation
Inventory Management
§ Managing inventories to minimize inventory

costs, including both holding costs and potential
stock-out costs
• Holding cost
• Stock-out costs
15
Order Processing and Warehousing
§ Order processing: Activities involved

in receiving and filling customers’ purchase
orders
§ Warehousing: Activities involved in receiving
and storing goods and preparing them for
reshipment
• Private warehouse
• Public warehouse
Warehousing Activities
Activities included in warehousing:

• Receiving goods
• Identifying goods
• Sorting goods
• Dispatching goods to storage
• Holding goods
• Recalling, picking, and assembling goods
• Dispatching shipments
16
Materials Handling and Transportation
§ Materials handling: § Transportation:

Physical handling of Shipment of products
goods, in warehouses to customers
as well as during § Carrier: Firm that
transportation offers transportation
§ Unit loading: Several services
smaller cartons, • Common carriers
barrels, or boxes are • Contract carriers
combined into a
• Private carriers
single standard-size
load • Freight forwarders
Transportation Modes
Different transportation modes:

• Railroads
• Trucks
• Airplanes
• Waterways
• Pipelines
17
Characteristics of Transportation Modes
§ The cost of a transportation mode is an important

consideration
§ Speed is measured by the total time that a carrier possesses
the products, including time required for pickup and delivery,
handling, and movement between point of origin and
destination
§ Dependability is determined by its consistency of service
§ Load flexibility is the degree to which a mode can be
adapted for moving different kinds of products with varying
requirements
§ Accessibility refers to a transportation mode’s ability to move
goods over a specific route or network
§ Frequency refers to how frequently a marketer can ship
products by a specific transportation mode
Comparing Characteristics of
Transportation Modes
18
Integrated Marketing Communications
§ Coordination of promotion efforts to ensure:

• Maximal informational
• Persuasive impact on customers
§ Results in a consistent message to customers
The Promotion Mix: An Overview
§ Promotion: Communication about an organization

and its products
§ Promotion mix: Particular combination of
promotion to reach a target market
19
Possible Elements of a Promotion Mix
Advertising
Advertising: Paid non-personal message

communicated to a select audience through a
mass medium
• Personal selling
• Sales promotion
• Public relations
20
Types of Advertising by Purpose
§ Primary-demand advertising: Increase

demand for all brands of a product in a specific
industry
§ Selective-demand advertising: Advertising
that is used to sell a particular brand of product
• Immediate-response advertising
• Reminder advertising
• Comparative advertising
§ Institutional advertising: Designed to
enhance a firm’s image or reputation
Major Steps in Developing an

Advertising Campaign
1. Identify and analyze the target audience

2. Define the advertising objectives
3. Create the advertising platform
4. Determine the advertising appropriation
5. Develop the media plan
6. Create the advertising message
7. Execute the campaign
8. Evaluate advertising effectiveness
21
Advantages and Disadvantages
of Major Media Classes
Most Effective Advertisers
22
Advertising Agencies
§ Independent firm that plans, produces, and

places advertising for its clients
§ Firms may use
• In-house media personnel
• Independent agency
Social and Legal

Considerations in Advertising
§ Advertising is the most effective and least
expensive means of communicating product
information to a large number of individuals and
organizations
§ Advertising encourages competition and leads to
the development of new and improved products,
wider product choices, and lower prices
§ Advertising revenues support mass-communication
media—newspapers, magazines, radio, and
television, effectively paying for news coverage and
entertainment programming
§ Advertising provides job opportunities in fields
ranging from sales to film production
23
Personal Selling
§ Most adaptable and expensive promotion method

§ Kinds of salespersons
• Order getter: Salesperson
who is responsible for
creative selling
§ Creative selling: Selling products to new customers and
increasing sales to present customers
• Order taker: Salesperson who handles repeat sales

in ways that maintain positive relationships with
customers
Support Personnel
§ Sales support personnel are employees who aid in

selling but are more involved in:
• Locating prospects
• Educating customers
• Building goodwill for the firm
• Providing follow-up service
§ Missionary salespersons: Visits retailers to
persuade them to buy the manufacturer’s products
§ Trade salespersons: Assists customers in
promoting products, especially in retail stores
§ Technical salespersons: Assist current customers
in technical matters
24
Six Steps of the
Personal Selling Process
Personal selling is
not only the most
adaptable of all
promotional
methods but also
the most expensive
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies,

18th ed. (Mason, OH: South-Western/Cengage Learning, 2016). Adapted with
permission.
Major Sales Management Tasks
§ Sales managers must:

• Set sales objectives
§ Concrete, quantifiable terms
§ Specified time period
§ Specified geographic area
• Adjust the size of the sales force to meet changes in
the firm’s
25
Major Sales Management Tasks
(continued)
§ Sales managers must:

• Attract and hire effective salespersons
• Train salespersons
• Formulate a fair compensation plan
• Motivate salespersons to boost productivity
• Define sales territories and determine scheduling
and routing
• Evaluate the operation holistically
Sales Promotion
§ Activities or materials that are direct

inducements to customers or salespersons
§ Sales promotion techniques can significantly
affect sales and are often used to enhance and
supplement other promotional methods
§ Firms have dramatically increased spending on

sales promotions as they increase in
importance as part of the promotion mix
26
Sales Promotion Objectives
1. Attract new customers

2. Encourage trial of a new product
3. Invigorate the sales of a mature brand
4. Boost sales to current customers
5. Reinforce advertising
6. Increase traffic in retail stores
7. Smooth out customer demand
8. Build up reseller inventories
9. Neutralize competitive promotional efforts
10. Improve shelf space and displays
Sales Promotion Methods
§ Consumer sales promotion method:

Designed to attract consumers to particular
retail stores
§ Trade sales promotion method: Designed to

encourage wholesalers and retailers to stock
and actively promote manufacturer’s product
27
Sales Promotion Methods (continued)
§ Factors influencing the choice of sales

promotion method
• Objectives of the promotional effort
• Product characteristics
• Target market profile
• Distribution channels
• Availability of resellers
• Competitive and regulatory forces in the
environment
Selection of Sales Promotion Methods
§ Rebate: Return of part

of the purchase price
of a product
§ Coupon: Reduces
the retail price of a
particular item by
a stated amount
at the time of purchase
§ Sample: Free product given to
customers to encourage trial and purchase
28
Selection of Sales Promotion Methods
(continued)
§ Premium: Gift a producer offers to a customer in

return for buying its product
§ Frequent-user incentives: Program developed to
reward customers who engage in repeat purchases
§ Point-of-purchase displays: Promotional material
in the retail store designed to:
• Inform customers
• Encourage purchases
§ Trade shows: Industry-wide exhibit at which many
sellers display their products
More Sales Promotion Methods
§ Buying allowance: Temporary price reduction

to resellers for purchasing specified quantities
of a product
§ Cooperative advertising: Manufacturer
agrees to pay a certain amount of a retailer’s
media cost for advertising the manufacturer’s
product
29
Public Relations
§ Broad set of communication activities used to

create and maintain favorable relationships
between an organization and various public
groups
§ Groups may include customers, employees,
stockholders, suppliers, educators, the media,
government officials, and society in general
Types of Public-Relations Tools
§ Written and spoken communications

• Brochures, newsletters, company magazines,
annual reports, news releases, corporate-
identity materials, speeches
§ Event sponsorship
• Special events such
as concerts and
charity functions that
the firm underwrites
30
Publicity
Publicity: Communication in news story form about

an organization, its products, or both
• News release: Typed page of about 300 words provided
by an organization to the media as a form of publicity
• Feature article: Prepared by an organization for inclusion
in a particular publication
• Captioned photograph: Picture accompanied by a brief
explanation
• Press conference: Meeting at which invited media
personnel hear important news announcements and
receive supplementary textual materials and photographs
Uses of Public Relations
§ Public relations can be used to:

• Promote:
§ People
§ Places
§ Activities
§ Ideas
• Enhance the reputation of organization

• Create specific positive company images
31

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13

13-6 Explain how integrated marketing communications

§ Marketing organizations that direct a product

More Commonly Used

§ Producer to Agent to Wholesaler to Retailer to

Sometimes, companies use multiple

Which channel(s) of distribution would you use for

§ Intensive distribution: The use

Partnering Through Supply-

§ Supply-chain management: Long-term

§ Wholesalers help retailers by:

Wholesalers Provide Services

§ Wholesalers help manufacturers by:

§ Merchant wholesaler: § Full-service wholesaler:

Types of Full-Service Wholesalers

§ Agents: Middleman that expedites

Marketing Intermediaries: Retailers

§ Retailers: Final link between producers and

Types of Retail Stores

§ Independent retailer: Firm that operates only one retail

§ Warehouse showroom: Retail facility in

§ Warehouse club: A large-scale members-only

§ Traditional specialty store: Carries a narrow

§ Category killer: Very large specialty store that

The following are examples of category killers:

Can you think of others?

Types of Nonstore Retailing

§ Nonstore retailing: Consumers purchase

§ Catalog marketing: Provides a catalog to customers to

Utilizing Multiple Retail Approaches

Many retailers use multiple marketing strategies to

§ Lifestyle shopping center: Open-air configuration and

The “New” Main Street

Upscale stores and the quaint “Main-Street”-like

§ All those activities concerned with the efficient

§ Managing inventories to minimize inventory

§ Order processing: Activities involved

Activities included in warehousing:

§ Materials handling: § Transportation:

Different transportation modes:

§ The cost of a transportation mode is an important

§ Coordination of promotion efforts to ensure:

The Promotion Mix: An Overview

§ Promotion: Communication about an organization

Advertising: Paid non-personal message

§ Primary-demand advertising: Increase

Major Steps in Developing an

1. Identify and analyze the target audience

Most Effective Advertisers

§ Independent firm that plans, produces, and

Social and Legal

§ Most adaptable and expensive promotion method

• Order taker: Salesperson who handles repeat sales

§ Sales support personnel are employees who aid in

Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies,

Major Sales Management Tasks

§ Sales managers must:

§ Sales managers must:

§ Activities or materials that are direct

§ Firms have dramatically increased spending on

1. Attract new customers

Sales Promotion Methods

§ Consumer sales promotion method: