Chapter 12 - Distributing and Promoting Products and Services

Distribution

• Definition: Efficient management and acquisition of raw materials by the factory and the movement of products from the manufacturer to B2B users and consumers.(Efficient management of raw materials)

• Supply Chain: Nature and functions of distribution are key.

Intermediaries

• Definition: Entities operating between the manufacturer and the final consumer.

• Types:

  • Agents/Brokers

  • Industrial Distributors

  • Wholesalers

  • Retailers

Examples of Distribution Channels

• Direct Channel: Producer to Consumers

• Retail Channel: Producer to Retailer to Consumers

• Wholesale Channel: Producer to Wholesaler/Distributor to Retailer to Consumers

• Agent Channel: Producer to Agent/Broker to Wholesaler/Distributor to Retailer to Consumers

Coca-Cola Distribution Channel

• Over 900 bottling plants worldwide.

• 250+ bottling partners.

• 23 Million+ retail outlets.

Traditional vs. Non-Traditional Channels

• Traditional: Wholesalers, retailers.

• Non-Traditional: Internet, mail-order, infomercials.

• The 'best' channel depends on the context and goals.

Functions of Distribution Channels

• Ease the flow of goods (sorting out, accumulating, allocation).

• Intermediaries can be eliminated, but their functions cannot.

Wholesaling

• A wholesaler is an entity that operates between the manufacturer and the retailers, facilitating the distribution of goods.

• Reference to wholesaling in South Africa.

• Types of wholesalers are not prescribed.

Retailing

• The competitive world of retailing.

• Difference between in-store and non-store retailing.

• Not all types of retailing operate in SA.

In-Store Retailing

• Department Store:Woolworths (South Africa) – Offers clothing, home goods, beauty products, and food all under one roof.

• Specialty Store: Cape Union Mart – Focuses specifically on outdoor and adventure gear.

• Convenience Store:Engen Quickshop – Small store at a petrol station offering snacks, drinks, and everyday essentials.

• Supermarket:Pick n Pay – Large self-service store selling groceries and household items.

• Discount Store:PEP Stores – Sells clothing, homeware, and basic goods at lower prices for budget-conscious customers.

• Off-Price Retailer:

Non In-Store retailing

• Vending machines

• Direct selling

• Direct response marketing

• Internet

Atmospherics

• Distribution includes atmospherics – the image of the actual retail store.

• Factors influencing a store’s atmosphere:

  1. Employee Type and Density
     This refers to the number and kind of staff in a store.
     Example: A luxury store might have more staff who give personal service, while a self-service store like a supermarket has fewer employees.

  2. Merchandise Type and Density
     This is about the kind and amount of products on display.
     Example: A boutique might have fewer, carefully selected items (low density), while a discount store may have shelves packed with goods (high density).

  3. Fixture Type and Density
     Fixtures are the shelves, racks, and furniture used to display products. Density refers to how many are used.
     Example: A high-end store uses stylish, spaced-out fixtures; a warehouse store uses many simple shelves close together.

  4. Sound
     This includes the background music or noise in a store.
     Example: Soft music in a spa creates a relaxing mood, while upbeat music in a clothing store makes shopping feel fun.

  5. Odors
     The smells in a store, which can affect how customers feel.
     Example: A bakery smells like fresh bread to attract customers; a clothing store might use a signature scent to create a pleasant experience.

  Let me know if you’d like visuals or real-world store examples!

• Atmosphere and retail image are critical.

Supply Chain Management

• Using supply chain management (p 473)

• Not prescribed

Promotion

• An attempt by marketers to inform, persuade, or remind consumers to influence their opinion or elicit a response, which is not the same as advertising.

Goals of Promotion

• Create awareness

• Getting customers to try products

• Providing information

• Keeping loyal customers

• Increasing the amount and frequency of use

• Identifying target customers

• Teaching/Educating the customer

The Promotional Mix

• Not the same as the marketing mix (4 Ps).

• Traditional Elements:

  • Advertising

  • Personal Selling

  • Sales Promotion

  • Public Relations

• Newer Elements:

  • Social Media

  • E-commerce

• These six elements must be integrated: leading to Integrated Marketing Communication (IMC).

Advertising

• Definition: Traditionally, any paid form of nonpersonal presentation by an identified sponsor.

• Newer advertising media have emerged.

• Newer media became popular due to:

  • Development of technology

  • Benefits associated with newer media

• Advertising cost in SA.

Advertising Costs in South Africa

• Facebook: As little as R15.38 per day (Excluding VAT).

• 30-second TV commercial:

  • TV1 ranges from R2 500 excl VAT (early morning) to R85 000 excl VAT (evening prime time).

  • TV2: R8 000 excl VAT (early morning) to R142 000 excl VAT (evening prime time).

• Online advertising: Absolute minimum of around R 10 500 to hire a professional digital marketing agency.

• YouTube advertising: Expect to pay anywhere from R10,000 upwards for a YouTube video ad. Display ads can be more inexpensive.

Selecting Advertising Media

• Cost-per-thousand (CPM):

• Reach:

• Frequency:

• Audience selectivity

Personal Selling

• What is it?

• More applicable to B2B than B2C?

• However, personal selling can also be applicable to B2C products, such as luxury products.

• Benefits of personal selling:

  • Provides detailed explanation/demonstration

  • Sales messages can be adapted

  • Can be directed only to qualified prospects

  • Can be designed around smaller audiences, therefore less expensive

  • More effective in terms of closing the deal.

Sales Promotion

• What is it?

• The aim is almost exclusively to influence short term behaviour (therefore immediate purchase).

• Proctor & Gamble refers to the ‘first moment of truth’: The three to seven seconds when someone notices an item on a store shelf.

Types of Consumers and Sales Promotion Goals

Public Relations

• What is it?
  PR is the practice of managing how the public views a business or person. It involves non-paid promotion like media coverage, press releases, and events.

  Why do you use it?
  To build a positive image, gain trust, and create awareness without paying for ads.

• Could include techniques such as lobbying, event planning, acting as a press agent, managing internal communication, and coordinating crisis management for communications.

Social Media & E-commerce

• Trends in social media & Trends in E- commerce (p 489-492)

• To be discussed as part of Chapter 13 (Technology).