BUS203: Principles of Marketing

5a. Identify a number of marketing channels

• What are the four primary marketing channels?
• What options do companies have for direct selling?
• What are the intermediaries in an indirect selling process?
• Can you think of real-world examples of dual distribution?
• What is the difference between reverse channels and more traditional ones?

The primary marketing channels available to companies include:

• Direct selling: The process of getting goods and services to the consumer without selling from a fixed location. This can include one-on-one demonstrations, personal selling, and online sales.
• Indirect selling: Wholesalers or retailers make the product available to the consumer. Goods travel from the producer or manufacturer to an agent, to a wholesaler, to the retailer, who then connects the product to the consumer (final user).
• Dual distribution: Goods and services are sold from a variety of locations and channels. Companies may sell directly to their customers from their own locations or use franchises to reach a wider range of consumers.
• Reverse channels: Goods flow from the consumer back to a beneficiary. This might include items sent for recycling or repurposing, or reselling to others.

To review, read Channel Concepts: Distributing the Product.

 

5b. Describe a number of ways to evaluate marketing channels

• What are the pros and cons of a direct selling approach?
• Why might companies use intermediaries for indirect selling?

Consumers can benefit greatly from a direct selling approach. A product can be demonstrated, explained, and described to the customer in a way that offers the full focus and attention of the salesperson. Questions can be answered right away, and any concerns or objections can be addressed in detail. On the other hand, since a direct selling approach is one-on-one, it can take time to generate a large number of sales, and not all interactions may result in a purchase. To increase sales levels overall, this process often uses a multi-level marketing model whereby several salespeople are recruited by a manager or sponsor who is paid from their sales as well as from their own.

Intermediaries enable manufacturers to reach a wider range of potential customers. Agents provide access to various wholesalers. These wholesalers are then able to disperse products to larger numbers of retailers. As a result, consumers in many locations now have the ability to purchase a company's goods and services. The downside to this process is that each intermediary along the way must get paid for their services. The more intermediaries involved in the process, the higher the price for the customer, and the lower level of profits for the manufacturer. When determining the number of intermediaries to use in any marketing channel process, a company must conduct a detailed cost/benefit analysis.

In dual distribution, a company uses many outlets to they sell their goods to the public. A company may choose to have company-owned locations as well as franchises, which offer greater exposure. This enables the company to reach many more consumers. However, the downside to this is that company-owned stores may find themselves in conflict with franchise locations, eroding sales of those locations. Many franchisers address this in the contracts they engage in with their franchisees, requiring all locations to be a specified distance from each other.

Reverse channels include recycling or repurposing products, involving only a user and a beneficiary. There is no producer involved. The benefits of this include financial gain from used items and a way for creative individuals or organizations to earn a profit from products that have already been on the market. However, the original producers do not receive any benefits from this channel, even though the products originated from their organization.

To review, read Channel Concepts: Distributing the Product.

 

5c. Identify and describe distribution outlets

• What are the types of retail distribution channels available to companies?
• What are non-store distribution outlets? What benefits do they offer to companies and consumers?
• What are the functions of a wholesaler?

Retail provides companies with a wide range of options for connecting their goods to their customers. While retail represents a large percentage of overall purchases, the growth of technology has had a significant impact on the retail industry. This has caused many retailers to change their business models, reduce their outlets, or close down their businesses entirely. Traditional retail outlets that are undergoing significant changes include department stores, chain stores, supermarkets, discount and warehouse stores, franchises, and planned shopping centers. Before planning a retail distribution strategy, companies should explore the outlets that they currently use, the outlets used by the competition, and consumer trends in buying behavior.

Non-store retailing provides companies the opportunity to connect with their customers on a more personal level. In-home demonstrations and parties to promote a product are effective ways to reach consumers more casually. Vending machines have seen tremendous growth with products from many product categories including fresh foods, shoes, umbrellas, bicycles, and even cars being sold from a machine. This offers low-cost operations for the company and convenience for the customer.

Catalog sales continue to be a valuable source of revenue for companies. Coupled with online sales, this method has expanded the reach of many organizations, enabling them to integrate one method of distribution with another. This increases company sales while providing speed and ease of ordering for consumers.

Wholesalers are also an important part of the distribution process. Wholesalers receive, store, and package goods, while also keeping track of the merchandise. They are also responsible for ensuring that the flow of goods is a smooth process, by arranging for the transportation of those goods from suppliers to buyers. They may also offer information about those goods, and have personal contact with buyers.

To review, read Channel Concepts: Distributing the Product.

 

5d. Identify and describe a number of promotion strategies

• What is Integrated Marketing Communications (IMC)?
• Why are advertising, sales promotions, direct marketing, and sponsorships each meaningful strategies for marketers?

An Integrated Marketing Communications strategy provides an opportunity to present a unified and consistent marketing message across all marketing activities. This consistency enables a company to create an image of the company and its products, that will resonate with consumers in the long term.

Advertising enables a company to reach a wide range of consumers all at once. Traditional advertising media includes television, radio, newspapers, magazines, and direct mail. The growth of technology has created new advertising outlets on the internet and on various mobile devices, further expanding a company's ability to connect with consumers on a mass-market scale.

Sales promotions continue to be an attractive way for companies to encourage immediate purchases. These can include discounts, coupons, rebates, contests, giveaways, and other incentives for quick action by consumers.

Direct marketing includes the flyers and brochures consumers receive in the mail. Telephone calls, catalogs, emails, and other messages we receive on a more personal level are all part of this strategy. This approach has been called "junk mail", but marketers do see results from this strategy, and will continue to make this a part of their IMC activities.

When a company sponsors an event or experience, they are able to target a specific segment of the population and demonstrate "goodwill" toward that cause or organization. This helps to create a positive image for the company, and demonstrate their contributions to society.

There is a wide array of promotional activities that are available to companies. Determining which strategy is most effective depends on the product category, the competition in the marketplace, budget, target market, and other marketing factors.

To review, read Advertising.

 

5e. Explain the role of public relations in marketing

• What is public relations? What are the pros and cons of using it?
• What kinds of public relations tools are available to an organization?

Public relations enables a company, entity, or individual to create a positive image for their publics and their stakeholders. As an integral part of the promotional mix, public relations helps to demonstrate good corporate citizenship and social responsibility and helps build relationships with the public and the media. However, with the growth of social media, companies now have less control over the messages displayed in public forums. Negative comments can be published by almost anyone, with a detrimental impact on the entity being discussed.

A Press Release enables a company to put a positive spin on a story, designed to promote a product, service, or individual. These documents can be distributed by the organization directly, or by a team of Public Relations professionals. A story may gain greater credibility if it comes from a third party. Press Releases can be used to mitigate a crisis or highlight charitable events, awards, company milestones, or contributions to society.

Companies may choose to pay to have their name associated with a line of clothing, an event, a venue, or a cause. Known as sponsorship, this helps a company to enhance its corporate image and gain greater visibility. Examples of this might include a sports arena, clothing worn by an athlete in the public eye, a golf outing, a charitable organization, or a vehicle participating in a road race.

When you see a well-known product in a movie, video, or television program, it is not there by accident. This is called product placement, and companies seek to have their products be a part of popular shows, movies, etc. to gain greater exposure. This form of public relations continues to grow in popularity, and companies aggressively pursue this strategy.

To review, read Public Relations.

 

5f. Analyze and use social media vehicles to support marketing goals

• What are the benefits of including social media in an IMC strategy?
• What are social media zones? How would you describe them?

A majority of Americans participate in social networks. They use these sites to connect with family and friends, search for employment, and gather information about products and services. Companies that do not have a presence on a variety of platforms will find themselves at a disadvantage relative to the competition. As a result, there is an increase in the allocation of company funds to support social media marketing activities.

To better understand the social media environment, it is helpful to identify various platforms based on the zones they exist in.

Social communities include networking sites such as Facebook, LinkedIn, forums, message boards, and other channels that focus on activities and relationships. People tend to share a great deal of information on these platforms, making it an attractive opportunity for companies to market their products to consumers who have shown the most interest.

Social publishing zones distribute information to different audiences through blogs, media sharing sites, videos, photos, music, and other content. Examples of these sites include YouTube, Flickr, and iTunes. These sites are constantly being updated, and offer marketers insight into the interests, needs, and wants of users. This enables those companies to develop their own content for posting, and appeal to those consumers whose needs match those of the company's offerings.

Social entertainment sites offer users the opportunity to participate in games and puzzles with like-minded individuals. Earlier, we discussed product placement as a marketing channel. The content on social entertainment sites offers a wide range of opportunities for companies to gain greater awareness of their products by having their products and services be part of this content.

Finally, as we have discussed earlier, online shopping and e-commerce have seen tremendous growth over the past several years. The social commerce zone offers interactive shopping experiences for consumers by enabling them to make purchases, sell items, review and rate products and services, and chat with company service representatives. By having a robust e-commerce presence, a company can expand their reach and grow their business.

To review, read Public Relations.

 

Unit 5 Vocabulary

This vocabulary list includes terms that might help you with the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.

Try to think of the reason why each term is included.

• advertising
• catalog sales
• direct marketing
• direct selling
• dual distribution
• indirect selling
• integrated marketing communications
• marketing channels
• non-store retailing
• online sales
• press release
• product placement
• public relations
• retail distribution channels
• reverse channels
• sales promotions
• social commerce
• social communities
• social entertainment
• social media marketing
• social media zones
• social publishing
• sponsorships
• sponsorships
• wholesalers