CHAPTER 13:

SECTION 3.3.3 PLACE – DISTRIBUTION CHANNELS

SECTION 3.3.4 PROMOTION
SECTION 3.3.5 TECHNOLOGY AND THE MARKETING MIX

BUSINESS IG:
 3.3.3 PLACE – DISTRIBUTION:

• THIS ELEMENT OF THE MARKETING MIX INVOLVES A BUSINESS IN

DECIDING:
 HOW TO GET THE GOODS FROM THE PRODUCER TO THE FINAL
CONSUMER – KNOWN AS THE CHANNEL OF DISTRIBUTION
 THE PLACE WHERE THE CONSUMER WILL BE ABLE TO BUY THE
GOOD OR SERVICE
• EVERY BUSINESS MUST DECIDE THE BEST WAY OF GETTING THEIR
PRODUCT TO THE FINAL CONSUMER. BUSINESSES CAN USE ANY
OF THE CHANNEL OF DISTRIBUTION SHOWN IN TABLE 13.1

• “CHANNEL OF DISTRIBUTION”: HOW A PRODUCT GETS FROM THE

PRODUCER TO THE FINAL CONSUMER.
 DIFFERENT DISTRIBUTION CHANNELS:

• IN THE FOUR DISTRIBUTION CHANNELS: THE AGENT, THE WHOLESALES, AND THE RETAILER ARE KNOWN AS THE
MIDDLEMEN
1. THE FIRST CHANNEL OF DISTRIBUTION IS WHERE THE PRODUCER SELLS THE PRODUCT DIRECTLY TO THE
CONSUMER. THIS IS KNOWN AS DIRECT SELLING.
2. IN THE SECOND CHANNEL OF DISTRIBUTION THE PRODUCER SELLS THE PRODUCT TO RETAILERS. THE RETAILERS
THEN SELL THE GOODS IN THEIR SHOPS TO THE FINAL CONSUMER.
3. THE THIRD CHANNEL OF DISTRIBUTION USES TWO MIDDLEMEN – WHOLESALERS AND RETAILERS. THE PRODUCER
SELLS LARGE QUANTITIES OF THE PRODUCT TO THE WHOLESALER. THE WHOLESALER THEN SELLS THE PRODUCT
IN SMALLER QUANTITIES TO RETAILERS, WHO THEN SELL THE PRODUCT TO THE FINAL CONSUMER.
4. THE FINAL CHANNEL OF DISTRIBUTION USES AN AGENT. THIS IS MOST COMMONLY USED WHEN A BUSINESS
ENTERS A FOREIGN MARKET FOR THE FIRST TIME. THE AGENT HAS SPECIALIST KNOWLEDGE ABOUT THE
COUNTRY AND ITS MARKETS AND CAN HELP THE PRODUCER TO PLACE THEIR PRODUCT WITH WHOLESALERS
AND RETAILERS. SAVING THE PRODUCER, A LOT OF TIME AND EXPENSES.
 Advantages
and
Disadvantages
of channels of
distributions:
 CHOOSING A METHOD OF DISTRIBUTION:

• THERE ARE SEVERAL FACTORS THAT WILL • WHOLESALERS: A BUSINESS THAT BUYS
INFLUENCE THE BEST METHOD OF THE PRODUCTS IN BULK FROM PRODUCERS AND
DISTRIBUTION OF A BUSINESS’S GOODS SUCH AS:
THEN SELLS THEM TO RETAILERS
1. COST – THE COST OF TRANSPORTING GOODS TO
• RETAILERS: SHOPS AND OTHER OUTLETS THAT
THE CUSTOMER NEEDS TO BE CONSIDERED.
SELL GOODS AND SERVICES TO THE FINAL
2. NATURE OF THE PRODUCT – SOME OF THE GOODS
CONSUMER
WILL NEED SPECIAL DELIVERY CONDITIONS
3. THE MARKET – MARKETS THAT COVER A WIDE
• MIDDLEMEN: THESE ARE THE INTERMEDIARIES
GEOGRAPHICAL AREA ARE BEST SERVED THROUGH IN THE CHANNELS OF DISTRIBUTION
WHOLESALERS WHO CAN BUY THE PRODUCT IN • DIRECT SELLING: THE PRODUCT IS SOLD BY THE
BULK FROM PRODUCER AND THEN BREAK THIS
PRODUCER DIRECTLY TO THE FINAL CONSUMER
DOWN INTO SMALLER UNITS FOR RETAILERS.
WITHOUT THE NEED FOR ANY MIDDLEMEN
 3.3.4 PROMOTION:

• PROMOTION: “ MARKETING ACTIVITIES USED TO COMMUNICATE WITH

CUSTOMERS AND POTENTIAL CUSTOMERS TO INFORM AND PERSUADE THEM TO
BUY A BUSINESS’S PRODUCTS.”
• ADVERTISING: “PAID-FOR COMMUNICATION WITH CONSUMERS WHICH USES
PRINTED AND VISUAL MEDIA. THE AIM IS TO INFORM AND PERSUADE
CONSUMERS TO BUY A PRODUCT.”
• INFORMATIVE ADVERTISING: “INFORMATION ABOUT THE PRODUCT IS
COMMUNICATED TO CONSUMERS TO CREATE PRODUCT AWARENESS AND
ATTRACT THE INTERESTS OF CUSTOMERS.”
• PERSUASIVE ADVERTISING: “COMMUNICATION WITH CONSUMERS AIMED AT
GETTING THEM TO BUY A FIRM’S PRODUCT RATHER THAN A COMPETITOR’S
PRODUCT.”
 SALES PROMOTION:

• THIS TYPE OF PROMOTION IS SOMETIMES CALLED BELOW-THE-LINE PROMOTION

• THERE ARE SEVERAL DIFFERENT ACTIVITIES THAT ARE FORMS OF SALES PROMOTION (INCLUDING):
1. MONEY-OFF COUPONS OR VOUCHERS
2. POINT OF SALE DISPLAY IN SHOPS
3. LOYALTY REWARD SCHEMES
4. COMPETITIONS AND GAMES WITH CASH OR OTHER PRIZES.
MAIN ADVANTAGES OF SALES PROMOTION IS THAT IT IS USUALLY VERY SPECIFIC TO THE BUSINESS
OR ITS PRODUCTS. THE CONSUMER MUST BUY THE PRODUCT TO USE THE VOUCHERS OR MONEY-OFF
COUPONS. LOYALTY REWARD POINTS ARE GIVEN WHEN CONSUMERS SPEND MONEY IN A
PARTICULAR BUSINESS.
 DIFFERENT TYPES OF SELLING PROMOTIONS:

• BELOW-THE-LINE PROMOTION: PROMOTION THAT IS NOT PAID FOR COMMUNICATION BUT USES
INCENTIVES TO ENCOURAGE CONSUMERS TO BUY.
• SALES PROMOTION: INCENTIVES USED TO ENCOURAGE SHORT-TERM INCREASES IN SALES OR REPEAT
PURCHASES.
• PERSONAL SELLING: SALES STAFF COMMUNICATION DIRECTLY WITH THE CONSUMER TO ACHIEVE A
SALE AND FORM A LONG-TERM RELATIONSHIP BETWEEN THE FIRM AND CONSUMER.
• DIRECT MAIL: ALSO KNOWN AS “MAILSHOTS”, PRINTED MATERIALS WHICH ARE SENT DIRECTLY TO
THE ADDRESSES OF CUSTOMERS.
• SPONSORSHIP: PAYMENT BY A BUSINESS TO HAVE ITS NAME OR PRODUCTS ASSOCIATED WITH A
PARTICULAR EVENT.
• MARKETING BUDGET: THE AMOUNT OF MONEY AVAILABLE BY A BUSINESS FOR ITS MARKETING
ACTIVITIES DURING A PARTICULAR PERIOD.
 3.3.5 TECHNOLOGY AND THE MARKETING
MIX:
• THE DEVELOPMENT OF
TECHNOLOGY HAS
AFFECTED MANY YEARS OF
BUSINESS ACTIVITY. THE
INTERNET AND SOCIAL
NETWORKS HAVE
CHANGED THE WAYS MANY
BUSINESSES MARKET AND
SELL THEIR PRODUCTS.
• E-COMMERCE: THE USE OF
THE INTERNET AND OTHER
TECHNOLOGIES USED BY
BUSINESSES TO MARKET
AND SELL GOODS AND
SERVICES TO CUSTOMERS.
 ACTIVITY:

• ACTIVITY 13.4 PG. 186

• PRACTICE EXAM QUESTIONS: (1 A, B, C ) (2 A, B, C)