Read Chapter 13 - Distributing and Promoting Products

Students,

Please read Chapter 13, Distributing and promoting products.

DISTRIBUTION CHANNELS AND MARKET COVERAGE. A distribution channel, or marketing channel, is a sequence of marketing organizations that directs a product from the producer to the ultimate user. Every marketing channel begins with the producer and ends with either the consumer or the business user. A marketing organization that links producer and user within a marketing channel is called a middleman, or marketing intermediary. A merchant middleman (or a merchant) is a middleman that actually takes title to products by buying them. A functional middleman helps in the transfer of ownership of products but does not take title to the products. Different channels of distribution are generally used to move business and consumer products.

Commonly Used Distribution Channels

Commonly Used Distribution Channels. (See Figure 13-1.) Producer to Consumer. This channel, which is often called the direct channel, includes no marketing intermediaries.  Practically all services, but very few consumer goods, are distributed through the direct channel.

Producers sell directly to consumers for several reasons.

They can better control the quality and price of their products.

They do not have to pay (through discounts) for the services of intermediaries.

They can maintain closer relationships with customers.

Producer to Retailer to Consumer. A retailer is a middleman that buys from producers or other middlemen and sells to consumers.

Producers sell directly to retailers when the retailers can buy in large quantities.

This channel is most often used for products that are bulky, such as furniture and automobiles, for which additional handling would increase selling costs.

 It is also the usual channel for perishable products.

Producer to Wholesaler to Retailer to This channel is known as the traditional channel, because most consumer goods (especially convenience goods) pass through wholesalers to retailers.

A wholesaler is a middleman that sells products to other firms.

A producer uses wholesalers when its products are carried by so many retailers that the producer cannot manage and distribute to all of them.

Producer to Agent to Wholesaler to Retailer to Consumer. Producers can use agents to reach wholesalers. Agents are functional middlemen that do not take title to products and that are compensated by commissions paid by producers. Often, the products with which agents deal are inexpensive, frequently purchased items.

Producer to Organizational Buyer. In this direct channel, the manufacturer’s own sales force sells directly to organizational buyers or business users.

Heavy machinery, airplanes, and major equipment are usually distributed in this way.

The very short channel allows the producer to provide customers with expert and timely services, such as delivery, machinery installation, and repairs.

Producer to Agent Middleman to Organizational Buyer. Manufacturers use this channel to distribute such items as operating supplies, accessory equipment, small tools, and standardized parts.

The agent is an independent intermediary between the producer and the user.

Agents generally represents.

Using Multiple Channels. Often, a manufacturer uses different distribution channels to reach different market segments. Multiple channels are also used to increase sales or to capture a larger share of the market with the goal of selling as much merchandise as possible.

Level of Market Coverage. As with other marketing decisions, producers must analyze all relevant factors when deciding which distribution channels and intermediaries to use.

Marketers should weigh the firm’s production capabilities and marketing resources, the target market and buying patterns of potential customers, and the product itself.

After evaluating these factors, the producer chooses the correct level of intensity of market coverage.

Then the producer selects channels and middlemen to implement that coverage.

Intensive distribution is the use of all available outlets for a product.

It gives a producer the widest possible exposure in the marketplace.

Many convenience goods are distributed intensively.

Selective distribution is the use of only a portion or percentage of the available outlets in each geographic area. Manufacturers of goods such as furniture, major home appliances, and clothing typically prefer selective distribution.

Exclusive distribution is the use of only a single retail outlet for a product in a large geographic area.

Exclusive distribution is usually limited to prestigious products.

It is appropriate for specialty goods such as grand pianos, fine china, and expensive jewelry.

The producer usually places many requirements on exclusive dealers.

PARTNERING THROUGH SUPPLY-CHAIN MANAGEMENT. Supply-chain management is a 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.

Supply-chain management requires cooperation among members of the channel, including manufacturing, research, sales, advertising, and shipping.

Supply-chain management encourages cooperation in reducing the costs of inventory, transportation, administrative, and handling costs. It also speeds order cycle times and increases profits for all channel members.

Suppliers strongly influence what items retail stores carry. This is known as category management.

Technology has enhanced the implementation of supply-chain management significantly. Through computerized integrated information sharing, channel members reduce costs and improve customer service.

MARKETING INTERMEDIARIES: WHOLESALERS

Wholesalers Provide Services to Retailers and Manufacturers. Wholesalers help retailers by:

1. Buying in large quantities and selling to retailers in smaller quantities and delivering goods to retailers.
2. Stocking in one place the variety of goods that retailers otherwise would have to buy from many producers.
3. Providing assistance in other vital areas, including promotion, market information, and financial aid.

Wholesalers help manufacturers by:

1. Performing functions similar to those provided to retailers.
2. Providing a sales force, reducing inventory costs, assuming credit risks, and furnishing market information.
3. Types of Wholesalers. Wholesalers generally fall into two categories: merchant wholesalers and agents and brokers.
4. 1. Merchant Wholesalers. A merchant wholesaler is a middleman that purchases goods in large quantities and sells them to other wholesalers or retailers and to
   institutional, farm, government, professional, or industrial users.
5. a) They usually operate one or more warehouses where they receive, take title
   to, and store goods. These wholesalers are sometimes called distributors or jobbers.
6. b) Merchant wholesalers may be classified as full-service or limited-service wholesalers, depending on the number of services they provide.

Full-service wholesalers perform the entire range of wholesaler functions. These functions include delivering goods, supplying warehousing, arranging for credit, supporting promotional activities, and providing general customer assistance. A full-service wholesaler can be of three different types:

1. A general-merchandise wholesaler deals in a wide variety of products, such as drugs, hardware, nonperishable foods, cosmetics, detergents, and tobacco.
2. ii. A limited-line wholesaler stocks only a few product lines but carries numerous product items within each line.
3. A specialty-line wholesaler carries a select group of products within a single line.
4. Agents and Brokers. Agents and brokers are functional middlemen who do not take title to products. They perform a small number of marketing activities and are paid a commission that is a percentage of the sales price.
5. a) An agent is a middleman that expedites exchanges, represents a buyer or a seller, and often is hired permanently on a commission basis. When agents represent producers, they are known as sales agents or manufacturer’s agents.

(1)    The agent solicits orders for the manufacturers within a specific territory. As a rule, the manufacturers ship the merchandise and bill the customers directly.

(2)    The manufacturers also set the prices and other conditions of the sales.

A broker is a middleman who specializes in a particular commodity, represents either a buyer or a seller, and is likely to be hired on a temporary basis.

MARKETING INTERMEDIARIES: RETAILERS. Retailers are the final link between producers and consumers. They can sell goods, services, or both. The U.S. Census estimates that the United States has nearly 3.8 million retail establishments. Table 13-1 lists the ten largest retail organizations, their sales revenues, and number of stores.

Types of Retail Stores. One way to classify retailers is by the number of stores owned and operated by the firm. An independent retailer is a firm that operates only one retail outlet. A chain retailer is a firm that operates more than one retail outlet. Another way to classify retail stores is by store size and the number of products carried.

Department Stores. According to the U.S. Census, a department store is a retail store that (1) employs 25 or more employees and (2) sells at least home furnishings, appliances, family apparel, household linens, and dry goods, each in a different part of the store.

Department stores have been traditionally service-oriented.

Along with goods they sell, they provide credit, delivery, personal assistance, liberal return policies, and a pleasant shopping atmosphere.

Discount Stores. A discount store is a self-service, general-merchandise outlet that sells products at lower-than-usual prices. These stores operate on smaller markups and higher merchandise turnover than other retailers and offer minimal customer services.

Warehouse Showrooms. Warehouse showrooms are retail facilities with five basic characteristics:

Large, low-cost buildings

Warehouse materials-handling technology

Vertical merchandise displays

A large, on-premises inventory

Minimal service

Convenience Stores. A convenience store is a small food store that sells a limited variety of products but remains open well beyond normal business hours.

A supermarket is a large self-service store that sells primarily food and household products. Supermarkets are large-scale operations that emphasize low prices and one-stop shopping for household needs.

Superstores. A superstore is a large retail store that carries not only food and nonfood products ordinarily found in traditional supermarkets but also additional product lines such as housewares, hardware, small appliances, clothing, personal-care products, garden products, and automotive merchandise. Superstores also provide services, including automotive repair, snack bars and restaurants, photo printing, and banking.

Warehouse Clubs. A warehouse club is a large-scale, members-only operation that combines cash-and-carry wholesaling features with discount retailing. For an annual fee, small retailers or individuals may become members and purchase products at wholesale prices for business use, for resale, or personal use.

Traditional Specialty Stores. A traditional specialty store carries a narrow product mix with deep product lines. Traditional specialty stores are sometimes called limited-line retailers.

 If they have depth in one product category, they may be called single-line

Specialty stores usually offer deeper product mixes than department stores.

Off-Price Retailers. An off-price retailer is a store that buys manufacturers’ seconds, overruns, returns, and off-season merchandise at below-wholesale prices and sells them to consumers at deep discounts. Off-price stores charge up to 50 percent less than department stores for comparable merchandise, but offer few customer services.

Category Killers. A category killer is a very large specialty store that concentrates on a single product line and competes by offering low prices on an enormous number of products. These stores are called category killers because they take business away from smaller, higher-cost retail stores.

Types of Nonstore Selling. Nonstore retailing is selling that does not take place in
conventional store facilities.

Direct Selling. Direct selling is the marketing of products to customers through face-to-face sales presentations at home or in the workplace.

Traditionally called door-to-door selling, direct selling is now a major industry with $36 billion in U.S. sales annually.

 Instead of the door-to-door approach, many companies today use other
They can identify customers by mail, telephone, or the Internet and then set up appointments.

Direct selling sometimes involves the “party plan,” which can occur in the customer’s home or workplace.

Direct Marketing. Direct marketing is the use of telephones, the Internet, and nonpersonal media to communicate product and organizational information to
customers, who can then buy products by mail, by telephone, or online.

In catalog marketing, an organization provides a catalog from which customers make selections and place orders by mail, by telephone, or on the Internet.

Direct-response marketing occurs when a retailer advertises a product and makes it available through mail, telephone, or online orders.

Telemarketing is using the telephone to perform marketing-related activities.

Increasingly restrictive telemarketing laws have made it a less appealing marketing method. In 2003, Congress implemented a national do-not-call registry. The FTC enforces violations and companies are subject to fines of up to $16,000 for each call made to customers on the list.

Television home shopping presents products to television viewers, encouraging them to order through toll-free numbers and pay with credit cards.

Online retailing makes products available through computer connections.

Most bricks-and-mortar retailers have websites to sell products, provide information about their company, or distribute coupons.

Automatic vending is the use of machines to dispense products.

(1)    It accounts for less than 2 percent of retail sales.

(2)    Automatic vending is one of the most impersonal forms of retailing.

(3)    Small, standardized, routinely purchased products can be sold in machines because they do not readily spoil and consumers appreciate the convenience.

Types of Shopping Centers. Planning shopping centers are self-contained retail facilities constructed by independent owners and consisting of various stores. A planned shopping center is one of four types: lifestyle, neighborhood, community, or regional.Lifestyle Shopping Centers. A lifestyle shopping center is an open-air configuration and is occupied with upscale chain specialty stores. Some incorporate activities, sports, and culture into their design in order to attract a wide variety of people.

Neighborhood Shopping Centers. A neighborhood shopping center typically consists of several small convenience and specialty stores.

These retailers serve consumers who live less than 10 minutes from the
shopping center, usually within a two- to three-mile radius.

Unlike a lifestyle shopping center, most purchases in the neighborhood shopping center are based on convenience or personal contact. These retailers generally make only limited efforts to coordinate promotional activities.

Community Shopping Centers. A community shopping center includes one or two department stores and some specialty stores, along with convenience stores.

It attracts consumers from a wider geographic area who will drive longer
distances to find products and specialty items unavailable in neighborhood shopping centers.

Carefully planned and coordinated community shopping centers generate
traffic by holding special events such as art exhibits, automobile shows, and sidewalk sales.

The management of a community shopping center maintains a mix of tenants so that the center offers wide product mixes and deep product lines.

Regional Shopping Centers. A regional shopping center usually has large department stores, numerous specialty stores, restaurants, movie theaters, and sometimes hotels. It carries merchandise offered by a downtown shopping district.

Regional shopping centers carefully coordinate management and marketing activities to reach the 150,000 or more consumers in its target market.

National chain stores can gain leases in regional shopping centers more easily than small independent stores, because they are better able to meet the centers’ financial requirements.

PHYSICAL DISTRIBUTION. Physical distribution is all those activities concerned with the efficient movement of products from the producer to the ultimate user. Physical distribution is the movement of the products themselves—both goods and services—through their channels of distribution. It combines several interrelated business functions, the most important of which are inventory management, order processing, warehousing, materials
handling, and transportation.

Inventory Management. We define inventory management as the process of managing inventories in such a way as to minimize inventory costs, including both holding costs and potential stock-out costs.

Holding costs are the expenses of storing products until they are purchased or shipped to customers.

Stock-out costs are sales lost when items are not in inventory.

Marketers seek to balance these two costs so that the company always has sufficient inventory to satisfy customer demand, but with little surplus because storing unsold products can be very expensive.

Order Processing. Order processing consists of activities involved in receiving and filling customers’ purchase orders.

Fast, efficient order processing can provide a dramatic competitive edge.

Those in charge of purchasing goods for intermediaries are especially concerned with their suppliers’ promptness and reliability in order processing.

Warehousing is the set of activities involved in receiving and storing goods and preparing them for reshipment. Warehousing includes the following:

1.  Receiving goods
2. Identifying goods
3. Sorting goods
4. Dispatching goods to storage
5. Holding goods
6. Recalling, picking, and assembling goods
7. Dispatching shipments
8. A firm may use its own warehouses or rent space in public warehouses.

A private warehouse, owned and operated by a particular firm, can be designed to serve the firm’s specific needs. However, the firm must finance the facility anddetermine the best location for it.

Public warehouses are open to all individuals and firms.They provide storage
facilities, areas for sorting and assembling shipments, and office and display spaces for wholesalers and retailers.

 Public warehouses will also hold—and issue receipts for—goods used as collateral for borrowed funds.

Materials Handling. Materials handling is the actual physical handling of goods, in warehouses as well as during transportation.

Proper materials-handling procedures and techniques can increase the efficiency and capacity of a firm’s warehouse and transportation system, as well as reduce product breakage and spoilage.

Materials handling attempts to reduce the number of times a product is handled.

One method is called unit loading. Several smaller cartons, barrels, or boxes are combined into a single standard-size load that can be moved efficiently by forklift, conveyer, or truck.

As a part of physical distribution, transportation is simply the shipment of products to customers.

A firm that offers transportation services is called a carrier. A common carrier is a transportation firm whose services are available to all shippers. A contract carrier is available for hire by one or several shippers. A private carrier is owned and operated by the shipper.

 A shipper can hire agents called freight forwarders to handle transportation. Freight forwarders pick up shipments, ensure that goods are loaded onto carriers, and assume responsibility for their safe delivery. Freight forwarders have the capacity to group
multiple small shipments into one large load, thereby saving smaller firms money by charging them a lower rate.

The six major criteria used for selecting transportation modes are compared in Table 13-2. These six criteria are cost, speed, dependability, load flexibility, accessibility, and frequency. In Table 13-2, each transportation mode is compared according to these six selection criteria and the percentage of use (ton-miles) for each mode.

Rail is the least expensive mode for many products.

Almost all railroads are common carriers, although a few coal-mining companies operate their own lines.

Many commodities carried by railroads could not be transported easily by any other means.

The trucking industry consists of common, contract, and private carriers.

Trucks are a very popular transportation mode because they have the advantage of being able to move goods to areas not served by railroads.

They can handle freight quickly and economically, and they can carry a wide range of shipments.

Railroad and truck carriers sometimes team up to provide a form of transportation called piggyback.

Air transport is the fastest but most expensive means of transportation.

All certified airlines are common carriers. Supplemental or charter lines are contract carriers.

Because of the high cost, uneven geographic distribution of airports, and
reliance on weather conditions, airlines carry only a tiny fraction of intercity freight.

Cargo ships and barges offer the least expensive but slowest form of transportation.

They are used mainly for bulky, nonperishable goods.

Shipment by water is limited to cities by navigable waterways.

Pipelines are a highly specialized mode of transportation. They are used primarily to carry petroleum and natural gas. Pipelines have become more important as the nation’s need for petroleum products has increased.

WHAT IS INTEGRATED MARKETING COMMUNICATIONS? Integrated marketing communications is the coordination of promotion efforts to ensure the maximum informational persuasive impact on customers. A major goal of integrated marketing communications is to send a consistent message to customers. This approach fosters long-term customer relationships and the efficient use of promotional resources.

Because the overall costs of marketing communication are significant, management demands systematic evaluations of communications efforts to ensure that promotional resources are used efficiently. Although the fundamental role of promotion has not changed, the specific communication vehicles employed and the precision with which they are used are evolving.

THE PROMOTION MIX: AN OVERVIEW. Promotion is communication about an
organization and its products that is intended to inform, persuade, or remind target-market members. Marketers can use several promotional methods to communicate with individuals, groups, and organizations.

 A promotion mix (sometimes called a marketing-communications mix) is the particular combination of promotion methods a firm uses to reach a target market. The four elements of the promotion mix are advertising, personal selling, sales promotion, and public relations, as illustrated in Figure 13-2.

Advertising is a paid nonpersonal message communicated to a select audience through a mass medium. Personal selling is personal communication aimed at informing customers and persuading them to buy a firm’s products. Sales promotion is the use of activities or
materials as direct inducements to customers or salespersons. Public relations is communication activities used to create and maintain favorable relations between an organization and various public groups, both internal and external.

Advertising is a very important element of the promotion mix. U.S. firms currently spend around $142.5 billion annually on advertising.

Types of Advertising by Purpose. Depending on its purpose and message, advertising may be classified into three groups.

Primary-Demand Advertising. Primary-demand advertising is advertising aimed at increasing the demand for all brands of a product within a specific industry. Trade and industry associations are the major users of primary-demand advertising.

Selective-Demand Advertising. Selective-demand (or brand) advertising is advertising that is used to sell a particular brand of product.

It is by far the most common type of advertising.

Selective advertising that aims at persuading consumers to make purchases within a short time is called immediate-response advertising.

Selective advertising aimed at keeping the public aware of a firm’s name or product is called reminder advertising.

Comparative advertising compares the sponsored brand with one or more identified competing brands.

Institutional Advertising. Institutional advertising is advertising designed to
enhance a firm’s image or reputation.

Major Steps in Developing an Advertising Campaign. An advertising campaign is developed in several stages.

Identify and Analyze the Target Audience. The target audience is the group
toward which a firm’s advertisements are directed. To pinpoint the organization’s target audience and develop an effective campaign, marketers analyze various factors, such as the geographic distribution of potential customers; their age, sex, race, income, and education; and their attitudes toward the product, the nature of the competition, and the product’s features.

Define the Advertising Objectives. The goals of an advertising campaign should be stated precisely and in quantifiable terms.

Create the Advertising Platform. An advertising platform includes the important selling points or features that an advertiser will incorporate into the advertising campaign.

Determine the Advertising Appropriation. The advertising appropriation is the total amount of money designated for advertising in a given time period.

Develop the Media Plan. A media plan outlines a timetable for advertisements and which media will be used.

Create the Advertising Message. The content and form of a message are influenced by the product’s features, the characteristics of the target audience, the objectives of the campaign, and the choice of media.

Execute the Campaign. Execution of an advertising campaign requires extensive planning, scheduling, and coordination because the tasks are carried out by many people and groups and must be completed on time.

Evaluate Advertising Effectiveness. A campaign’s success should be compared against original objectives at regular intervals before, during, and after campaign launch. See Table 13-3 The Advantages and Disadvantages of Major Media Classes.

Advertising Agencies. Advertisers can plan and produce their own advertising with help from in-house media personnel, or they can hire advertising agencies. An advertising agency is an independent firm that plans, produces, and places advertising for
See Table 13-4 for the Most Effective Advertisers.

Social and Legal Considerations in Advertising. Critics of U.S. advertising have two main arguments—that it is wasteful and that it can be deceptive.

Although advertising can be performed inefficiently, it is far from wasteful.

Advertising is the most effective and the least expensive means of communicating product information.

Advertising encourages competition. It thus leads to the development of new and improved products, wider product choices, and lower prices.

Advertising revenues support mass communication media, effectively paying for news coverage and entertainment programming.

Advertising provides job opportunities in fields ranging from sales to film production.

A number of government and private agencies scrutinize advertising for false or misleading claims or offers that might harm consumers.

Advertising also may be monitored by state and local agencies, better business
bureaus, and industry associations.

PERSONAL SELLING. Personal selling is the most adaptable of all promotion methods because the person presenting the message can modify it to suit the individual buyer. However, it is also the most expensive method.

Kinds of Salespersons. Marketing managers must select the kinds of sales personnel that will be most effective in selling the firm’s products. Salespersons may be identified as order getters, order takers, and support personnel. A single individual can, and often does, perform all three functions.

Order Getters. An order getter is responsible for what is sometimes called creative selling: selling the firm’s products to new customers and increasing sales to present customers. An order getter must be able to perceive buyers’ needs, supply customers with information about the product, and persuade them to buy it.

Order Takers. An order taker handles repeat sales and customer demands to maintain positive relationships with customers.

Inside order takers receive incoming mail, online, and telephone orders. Salespersons in retail stores are also inside order takers.

Outside (or field) order takers travel to customers.

Support Personnel. Sales support personnel aid in selling but are more involved in locating prospects, educating customers, building goodwill for the firm, and providing follow-up service.

A missionary salesperson usually works for a manufacturer and visits retailers to persuade them to buy the manufacturer’s products.

A trade salesperson generally works for a food producer or processor and
assists its customers in promoting products, especially in retail stores.

A technical salesperson assists the company’s current customers in technical matters.

The Personal-Selling Process. Most salespeople follow the six-step procedure in
Figure 13-3.

The first step in personal selling is to research potential buyers and choose the most likely customers, or prospects.

Approaching the Prospect. First impressions are often lasting. Therefore, the salesperson’s first contact with a prospect is crucial to successful selling.

Making the Presentation. The next step is the actual delivery of the sales presentation. The salesperson points out the product’s features, its benefits, and how it is superior to competitors’ merchandise.

Answering Objections. The prospect may raise objections or ask questions at any time. This is the salesperson’s chance to eliminate objections that could prevent a sale, point out additional features, or mention special services the company offers.

Closing the Sale. To close the sale, the salesperson asks the prospect to buy the product. This is the critical point in the selling process. Many experienced salespeople utilize a trial closing, in which they ask questions before the actual close in a tone that assumes a successful sale.

Following Up. The salesperson’s job does not end with a sale. He or she must follow up to ensure that the product is delivered on time, in the right quantity, in good condition, and in proper operating condition.

Major Sales Management Tasks. A firm’s success often hinges on the competent management of its sales force. Most firms rely on a strong sales force—and the revenue it brings in—for their success.

Sales managers must:

Set sales objectives in concrete, quantifiable terms and specify a specific
period of time and geographic area.

Adjust the size of the sales force as changes in the firm’s marketing plan and marketing environment occur.

Attract and hire effective salespersons.

Develop a training program.

Formulate a fair and adequate compensation plan.

Motivate salespersons to keep their productivity high.

Define sales territories and determine scheduling and routing of the sales force.

Evaluate the operation as a whole holistically, through sales reports, communications with customers, and invoices.

SALES PROMOTION

Sales Promotion Objectives. Sales promotion consists of activities or materials that are direct inducements to customers of salespersons. Sales promotion techniques can significantly impact sales and are often used to enhance and supplement other promotional methods.

Sales promotion activities may be used singly or in combination to achieve one goal or a set of goals.

Marketers use sales promotion activities and materials for a number of purposes. (The specific purposes are listed in the text.)

Sales promotion objectives should be consistent with the organization’s general goals and with its marketing and promotional objectives.

Sales Promotion Methods. Most sales promotion methods can be classified as
promotional techniques either for consumer sales or trade sales.

A consumer sales promotion method attracts consumers to particular retail stores and motivates them to purchase certain new or established products.

A trade sales promotion method encourages wholesalers and retailers to stock and actively promote a manufacturer’s

Selection of Sales Promotion Methods. Several factors affect a marketer’s choice of sales promotion method. (The specific factors are listed in the text.)

A rebate is a return of part of the product’s purchase price.

Usually, the rebate is offered by the producer to consumers who submit a
coupon and a specific proof of purchase.

Rebating is a relatively low-cost promotional method, but consumers may
not be attracted by it because they view it to be too complicated or time

A coupon reduces the retail price of a particular product by a stated amount at the time of purchase.

These coupons may be worth anywhere from a few cents to a few dollars.

Customers can find coupons in newspapers, magazines, direct mail, and shelf dispensers in the store.

After declining throughout the 1990s, the popularity of coupons has rebounded, largely because consumers can visit coupon websites, and companies send coupons via e-mail to loyal customers.

Samples. A sample is a free product given to customers to encourage trial.

Marketers utilize samples to increase awareness of a product, which can increase sales volume in the early stages of a product’s life cycle and improve distribution.

It is the most expensive sales promotion technique.

A premium is a gift that a producer offers the customer in return for
using its product.

Frequent-User Incentives. Frequent-user incentives are programs developed to reward customers who engage in repeat (frequent) purchases.

Frequent-user incentives foster customer loyalty because the customer is given an additional reason to continue patronizing the company or group of companies.Point-of-Purchase Displays. A point-of-purchase display is promotional material placed within a retail store.

The display is usually located near the product being promoted.

Most point-of-purchase displays are prepared and set up by manufacturers and wholesalers.

Trade Shows. A trade show is an industry-wide exhibit at which many sellers
display their products.

Some trade shows are organized exclusively for dealers—to permit manufacturers and wholesalers to show their latest lines to retailers.

Others are promotions designed to stimulate consumer awareness and interest.

Buying Allowances. A buying allowance is a temporary price reduction to resellers for purchasing specified quantities of a product.

A buying allowance is an incentive to resellers to handle new products and stimulate purchase of items in large quantities.

A shortcoming of buying allowances is that competitors can counter quickly with their own buying allowances.

Cooperative Advertising. Cooperative advertising is an arrangement whereby a manufacturer agrees to pay a certain amount of the retailer’s media costs for advertising the manufacturer’s products. To be reimbursed, a retailer must show proof that the advertisements did appear.

PUBLIC RELATIONS. Public relations is a broad set of communication efforts used to create and maintain favorable relationships between an organization and various public groups, both internal and external.

Types of Public-Relations Tools. Organizations use a variety of public-relations tools to convey messages and to create images.

Public-relations professionals prepare written materials such as brochures, newsletters, company magazines, annual reports, and news releases. They also create corporate-identity materials such as logos, business cards, signs, and stationery.

Speeches are another public-relations tool.

Another public-relations tool is event sponsorship, in which a company pays for all or part of a special event such as a concert, sports competition, festival, or play.

Sponsoring special events is an effective way for an organization to increase brand recognition and receive media coverage with relatively little investment.

Publicity is an important part of public relations, as it increases public awareness of a firm or brand through mass media communications at no cost to the business. Publicity is communication in news-story form about an organization, its products, or both.

The most widely used type of publicity is the news release—a typed page of about 300 words provided by an organization to the media as a form of publicity.

A feature article, which may run as long as 3,000 words, is usually written for inclusion in a particular publication.

A captioned photograph, a picture with a brief explanation, is an effective way to illustrate a new or improved product.

A press conference allows invited media personnel to hear important news announcements and receive supplementary materials and photographs.

Letters to the editor, special newspaper or magazine editorials, and films
may be prepared and distributed to appropriate media for possible use in news stories.

Uses of Public Relations

Public relations is used to promote people, places, activities, and ideas.

 It focuses on enhancing the reputation of the total organization by increasing public awareness of a company’s products, brands, or activities and by fostering desirable company images, such as that of innovativeness, dependability, or social responsibility.

By getting the media to report on a firm’s accomplishments, public relations helps a company to maintain public visibility.

Effective public-relations management can reduce the amount of unfavorable
coverage surrounding negative events.