WTKM 14-1 Pre-Test: How Much Do You Know about Distribution &
Promotion? (TO COME FROM TEST BANK AUTHORS)
(5 minutes. Answers are found in “Answers for Pretests & Posttests” under Tab 14.)
This feature, which appears at the beginning of every chapter, is what is known as a pretest. It allows you,
before you read the chapter, to test yourself on what you think you know about the subject you are going to
read about. At the end of the chapter, we present a posttest (“How Much Did You Learn?”), so you can
determine how much you learned after reading the chapter.
WTKM 14-2 Key Terms & Definitions in Chronological Order to Study
as You Go Along
The following key terms and definitions are presented in chronological order for you to print out, if you
wish, to study as you go through the chapter.
Distribution channel: Also known as a marketing channel, this is a system for conveying goods or
services from producers to customers.
Intermediaries: Also known as marketing intermediaries, the people or firms that move products between
producer and customers.
Agents and brokers: Specialists who bring buyers and sellers together and help negotiate a transaction.
Wholesalers: Also known as middlemen, these are intermediaries who sell products (1) to other
businesses for resale to ultimate customers or (2) to institutions and businesses for use in their operations.
Retailers: Intermediaries who sell products directly to customers.
Distribution mix: The combination of distribution channels a company uses to get its products to
customers.
Distribution strategy: This is the overall plan for moving products from producer to customers.
Direct channel: A distribution channel in which a producer sells directly to consumers.
Utility: The value intermediaries add to products by making them more useful or accessible to consumers.
Market coverage: Product distribution among locations.
Intensive distribution: When a product is distributed among as many locations as possible.
Selective distribution: When a product is distributed in selected locations, where it will get special
attention.
Exclusive distribution: When a product is distributed in only a few locations, as was once the case for
Gucci and Prada and is still for luxury cars.
Manufacturer-owned wholesaler: A wholesale business that is owned and operated by a product‘s
manufacturer.
Manufacturer’s branch office: An office that is owned and managed by a manufacturer that not only has
offices for sales representatives but also carries an inventory from which the staff can fill orders.
A manufacturer’s sales office: An office that is owned and managed by a manufacturer and that has
offices for sales representatives who sell products that are delivered at a later time.
Full-service merchant wholesaler: An independently owned firm that takes title to—that is, becomes
owner of—the manufacturer‘s products and that performs all sales and distribution, as well as provides
credit and other services.
Limited-function merchant wholesaler: An independently owned firm that takes title to—becomes
owner of—the manufacturer‘s products but performs only selected services, such as storage only.
Rack jobber: A limited-function wholesaler who furnishes products and display racks or shelves in retail
stores and shares profits with retailers.
Cash-and-carry wholesaler: A limited-function wholesaler that sells mainly to small retailers, who come
to the wholesaler, pay cash for a product, and carry it out (―cash and carry‖).
Drop shipper: A limited-function wholesaler who owns (has title to) the products, but not physical
custody of them. Rather, the drop shipper takes orders and has the producer ship the product directly to
the customer.
Nonstore retailers: Companies who sell merchandise in ways other than through retail stores.
Direct selling: Consists of face-to-face selling directly to customers in their homes or where they work.
Multilevel marketing (MLM): Independent businesspeople, or distributors, sell products both on their
own and by recruiting, motivating, supplying, and training others to sell those products, with the
distributors‘ compensation being based on both their personal sales and the group‘s sales.
Direct marketing: This is not done face to face but consists of selling directly to customers using mail or
telephone.
Direct mail marketing: This consists of mail promotions—letters, brochures, and pamphlets sent through
the postal service to customers.
Catalog marketing: Also known as mail-order marketing, consists of mailing customers catalogs, from
which they may choose merchandise to be ordered via mail, telephone, or online.
Telemarketing: This consists of using the telephone to sell products directly to customers.
Video marketing: This is marketing to consumers on television, either through special cable TV channels
or through certain programs on regular TV channels.
Online retailing: Also known as electronic retailing, this is non-store retailing of products directly to
consumers using the Internet.
Physical distribution: This consists of all the activities required to move products from the manufacturer
to the final buyer.
Supply chain: The sequence of suppliers that contribute to creating and delivering a product, from raw
materials to production to final buyers.
Supply chain management: The strategy of planning and coordinating the movement of materials and
products along the supply chain, from raw materials to final buyers.
Logistics: This consists of planning and implementing the details of moving raw materials, finished
goods, and related information along the supply chain, from origin to points of consumption to meet
customer requirements.
Intermodal shipping: Shipping which combines use of several different modes of transportation,
Containerization: Products are packed into 20- or 40-foot-long (by about 8-foot square) containers at the
point of origin and retrieved from the containers at the point of destination.
Freight forwarder: An organization that bundles many small shipments together into a single large
shipment for more cost-effective transportation.
Warehousing: The element of physical distribution that is concerned with storage of goods.
Materials handling: The physical handling of goods to and from and within warehouses is called.
Storage warehouses: Warehouses that provide storage of products for long periods of time. Example:
This type of warehouse is used by producers of seasonal products, such as agricultural items, garden
furniture, or Christmas merchandise.
Distribution centers: These provide storage of products for the short periods of time for collection and
distribution elsewhere.
Promotion mix: This is the combination of tools that a company uses to promote a product, selecting
from among four promotional tools: (1) advertising, (2) public relations, (3) personal selling, and (4) sales
promotion.
Integrated marketing communication: Combines all four promotional tools to execute a comprehensive,
unified promotional strategy.
Infomercials: Extended TV commercials ranging from 2 (short form) to 28.5 (long form) minutes that are
devoted exclusively to promoting a product in considerable detail.
Push promotional strategy: This is aimed at wholesalers and retailers, to try to encourage them to
market the product to consumers.
Pull promotional strategy: This is aimed directly at consumers, to try to get them to demand the product
from retailers.
Product placement: When sellers of a product pay to have that product prominently placed in a TV
show or film so that many people will see it.
Advertising: Defined as paid nonpersonal communication by an identified sponsor (person or
organization) using various media to inform an audience about a product.
Brand advertising: Also called product advertising, consists of presentations that promote specific brands
to ultimate consumers.
Institutional advertising: This consists of presentations that promote a favorable image for an
organization.
Advocacy advertising: A type of institutional advertising which is concerned with supporting a particular
opinion about an issue.
Public service advertising: This consists of presentations, usually sponsored by nonprofit organizations
that are concerned with the welfare of the community in general.
Informational advertising: This provides consumers with straightforward knowledge about the features
of the product offered.
Reminder advertising: Advertising to remind consumers of the existence of a product.
Persuasive advertising: This type of advertising is used to develop a desire among consumers for the
product.
Competitive advertising: Also called comparative advertising, this promotes a product by comparing it
more favorably to rival products.
Direct-action advertising: This type of advertising attempts to stimulate an immediate, or relatively
immediate, purchase of a product through such devices as one-day sales, one-time promotions, or
announcements of a special event.
Fear-appeal advertising: This type of advertising attempts to stimulate the purchase of a product by
motivating consumers through fear of loss or harm.
Advertising media: The variety of communication devices for carrying a seller‘s message to prospective
buyers.
Media planning: This is the process of choosing the exact kinds of media to be used for an advertising
campaign.
Reach: This is the number of people within a given population that your ad will reach at least once.
Frequency: The average number of times each member of the audience is exposed to an ad.
Continuity: This is timing of the ads, how often they appear or how heavily they are concentrated within
a time period.
Cost per thousand (CPM): This is the cost a particular medium charges to reach 1,000 people with an ad.
Publicity: Unpaid coverage by the mass media about a firm or its products.
Press release: Also called a news release or publicity release, is a brief statement written in the form of a
news story or a video program that is released to the mass media to try to get favorable publicity for a
firm or its products.
Public relations (PR): This is concerned with creating and maintaining a favorable image of the firm, its
products, and its action with the mass media, consumers, and public at large.
Press conference: This involves calling media representatives to a press briefing at which they announce
new information.
Personal selling: This is face-to-face communication and promotion to influence customers to buy goods
and services.
Creative selling: This is the selling process in which salespeople determine customer needs, then explain
their product‘s benefits to try to persuade buyers to buy the product.
Order processing: This consists of receiving customer orders and seeing that they are handled correctly
and that the product is delivered.
Sales support: This consists not of selling products but of facilitating the sale by providing supportive
services,
Prospecting: This is the process of identifying potential customers, who are called prospects.
Prospects: Potential customers.
Referral sales prospecting technique: This consists of asking satisfied customers to provide names of
potential customers and to contact them on behalf of the salesperson.
Endless-chain sales prospecting technique: This consists of asking each sales prospect to provide the
salesperson with some names of other prospects who might be interested in the product.
Cold call sales prospecting technique: This consists of calling on prospects with whom you have had no
previous contact and to whom you do not have not any kind of introduction.
Qualifying: Determining if the prospect has the authority to buy and the ability to pay.
Canned presentation: A fixed, memorized selling approach to present the product.
Need-satisfaction presentation: This consists of determining customer needs and then tailoring your
presentation to address those needs. This is by far the more preferred approach these days.
Trial close: A question or statement that tests the prospect‘s willingness to buy.
Actual close: The salesperson concludes the presentation by asking the prospect to purchase the product.
Sales promotion: Defined as short-term marketing incentives to stimulate (1) dealer interest and (2)
consumer buying.
Trade promotion: Also known as business-to-business (B2B) sales promotion, and is intended to
stimulate dealer interest. The devices used include trade shows, conventions, catalogs, and special printed
materials for salespeople.
Trade show: A gathering of manufacturers in the same industry who display their products to their
distributors and dealers.
Guerrilla marketing: Consists of innovative, low-cost marketing schemes that try to get customers‘
attention in unusual ways.
Word-of-mouth marketing: A promotional technique in which people tell others about products they‘ve
purchased or firms they‘ve used.
Buzz marketing: Using high-profile entertainment or news to get people to talk about their product.
Viral marketing: When companies pay people to promote their products to others, as through Internet
chat rooms and blogs.
WTKM 14-3 The Wheel of Retailing
As Walmart quickly approaches the half billion mark in annual sales,) the discount retail environment
(Target, Kmart) has become increasingly competitive in the past decade. As these retailers fight for their
share of the pie, the Wheel of Retailing Concept, developed in 1960 by Malcolm P. McNair continues to
hold true.
Malcolm P. McNair, born in 1894, was a professor at Harvard Business School for forty three years,
where he taught classes in subjects such as retail distribution, retail store management, and marketing.
He played a key role in the development of marketing, retailing, forecasting trends, and case method
courses. McNair developed the Wheel of Retailing hypothesis1 which explains the patterns of change in
retailing.
According to the Wheel of Retailing hypothesis, new types of retailers (cut prices- whose prices? this
isn‘t clear and makes this paragraph difficult to follow, do my changes make sense? ) 1. enter the market
at ―low-status, low-margin, low-price,‖ stores by lowering or eliminating customer services; 2. once
established, they increase customer services, prices, investments, and operating costs by becoming more
elaborate and larger, 3)they mature as high-cost, high-price outlets, becoming affected (and thus
suffering) by competition; 4) a new retailer enters and, the wheel goes round again. As a result, they
become vulnerable themselves to new, low-price retailers.2 In a 1960 Journal of Marketing article,
Stanley Hollander, a professor of business at Michigan State University, examined the history of
numerous retail institutions to determine if this process really constitutes a ―natural law of retailing.‖ 3
In 1958, McNair wrote, ―Department store merchants who originally appeared as vigorous competitors to
the smaller retailers, and who have now become vulnerable to discount house and supermarket
competition, are often cited as prime examples of the wheel pattern4
.‖ Can you see where Target and Walmart fit on this wheel, who did they replace? What do you think
will happen to them as the wheel continues to turn?
He asked, ―What factors cause wheel-pattern changes in retail institutions?‖ While there wasn‘t much
empirical evidence, McNair had a tentative theory for the wheel, which was explained as ―Retail
Personalities,‖ whereby new types of retail institutions are often established by highly aggressive, cost-
conscious entrepreneurs.... These men may relax their vigilance and control over costs as they acquire age
and wealth. Their successors may be less competent. Either the innovators or their successors may be
unwilling, or unable to adjust to changing conditions. Consequently, according to his view, deterioration
in management causes movement along the wheel.5
Which retailers have been outsmarted by the likes of Target and Wal-Mart?
WTKM 14-4 Greenwashing and StopGreenWatch.org
The term ―Greenwashing‖ (a combination of the words ―green‖ and ―whitewashing‖) was coined by
environmentalist Jay Westerveld when he examined the towel policy touted by hotels worldwide. ―The
hotel industry‘s practice of placing ‗green‘ placards in each room promoting reusing guest towels is a
façade, and not a serious attempt to save the environment,‖ says Jay Westerveld.6 Green washing refers to
false efforts, usually through advertising slogans, promotions, programs and professed accomplishments,
by businesses and corporations to create an image of business practices implemented and used to make
the environment better.
Other deceptive ―greenwashing‖ campaigns include Coca Cola‘s efforts to launch a new ―plant bottle‖ for
Dasani bottled water. The company‘s ―exciting packaging advancement‖ touts Coca-Cola‘s efforts to
bottle its plain old municipal water in a bottle that is ―made with up to 30 percent plants.‖7 According to
the website, www.petitionsite,com, ―the ‗plant‘ portion of Coke‘s new bottle is ethanol from Brazilian
sugarcane.‖ 8 This is referred to as greenwashing because Coca Cola is using their efforts to privatize
public water to secure greater access to resources for their beverage sales.9
Stopgreenwash.org is a website run by Greenpeace, dedicated to helping the average citizen discern
between authentic and inauthentic environmental messaging and corporate campaigns touting green goals,
programs and accomplishments -- or what the website refers to as ―telling the difference between those
companies genuinely dedicated to making a difference and those that are using a green curtain to conceal
dark motives.‖ 10
The website states: ―Corporations are falling all over themselves to demonstrate to current and potential
customers that they are not only ecologically conscious, but also environmentally correct. Some
businesses are genuinely committed to making the world a better, greener place. But for far too many
others, environmentalism is little more than a convenient slogan. Buy our products, they say, and you will
end global warming, improve air quality, and save the oceans.‖ For the average consumer, it‘s difficult to
tell what is true, and if so, how much of that truth is being stretched. Some of the statements stretch the
truth, and others are meant to help conceal harmful environmental behavior by corporations. 11 The
purpose of the organization is to monitor this type of corporate ―malfeasance,‖ confront polluters and stop
environmental crimes.
To learn more about the Stop Green Wash Initiative at Greenpeace.org, go to the Green Peace website at:
www.stopgreenwash.org/introduction
I would probably leave this out and stick to the topic of greenwashing, unless you somehow tie this into
greenwashing. To see a list of the ―Toxic Ten,‖ or America‘s worst polluters, go to Portfolio Magazine‘s
website, which claims, ―for all the environmental-speak coming out of American corporations these days,
many remain polluters.‖
http://www.portfolio.com/news-markets/national-news/portfolio/2008/02/19/10-Worst-Corporate-
Polluters/#ixzz1N0LEXbqY
WTKM 14-5 Bar Codes & Smart Tags
Consider a shipment of 10 cartons; it will take approximately 2 minutes or more to write down product
codes and serial numbers compared to about 10 to 20 seconds to scan the barcodes. In a busy operation
this can be a significant saving. Can you imagine life without bar codes? The all too frequent credit card
swipe contains account information, as does the scan at the grocery store for that jar of fancy mustard. Bar
codes save time, record crucial information (sales and inventory), improves operational efficiency,
reduces errors, and cuts costs (including labor).
In 1948, Bernard Silver, a graduate student at Drexel Institute of Technology in Philadelphia, helped a
local food chain store owner research a method of automatically reading product information during
checkout. This solution is what we know today as the bar code.12
Logistically, barcode technology has eliminated human errors and increased the speed in which products
are traced and moved through a system, allowing for increased productivity. Here are a few industry
examples of how bar codes are used:13
Manufacturing – picking, packing, assembly, shipping and receiving
Warehousing – making inventory tracking easier, faster, and accurate
Retailing – point of sale, price check, inventory control, anti-counterfeiting
Education – library book tracking, time and attendance, asset control
Healthcare – bedside medication administration, pharmacy, labs, asset control
Transportation and logistics: Barcode technology is used in every application in the transportation
and logistics industry, such as tracking and safety, advanced data capture, load management,
route planning and scheduling activities. To explore more about each of the applications, go to:
http://barcode.amdatablog.com/2011/05/19/barcode-technology-in-transportation-and-logistics-industry/
Radio Frequency ID Tags (RFID) are similar to bar codes for tracking data, but with radio frequency
identification. Radio waves are used to exchange data wirelessly between a reader (a type of scanner that
sends and receives data via antennas14) and an electronic tag attached to an object, a pallet of goods, or
even a farm animal, to identify and track. RFID is a general term that is used to describe a system that
transmits the identity (in the form of a unique serial number) of an object wirelessly, using radio waves.15
Applications of RFID can be divided into two areas, which include short range, where the reader and tag
are in close proximity of one another, and mid to long range, where the tag can be read from a longer
distance, such as across a distribution facility. The technology is used in electronic payment, supply
chain management and livestock tracking. 16
Large retailers are using RFID in supply chain management as a way of managing complex issues.
Marks and Spencer, a global retailer and the largest RFID user (100 million tags a year), began using
RFID tags in 2004. They now use the technology on around 18% of all its general merchandise products.
A spokesperson for the retailer said: ―We‘ve found that RFID is most beneficial in our high-value
departments where there are complex sizing requirements, such as suits and tailoring, as it allows us to
manage our stock levels better and ensure we have the right product mix on display.‖17 However, not all
retailers are as impressed with RFID and are concerned that there are still too many challenges
surrounding the cost, the implementation, and effective use of RFID technology for retailers. This
following quote isn‘t that useful as an explanatory quote because the example of Marks and Spenser isn‘t
a grocery store and the example below isn‘t either. . ―With the exception of grocery store retailers, it is
difficult to see where the real benefit for retailers will be with RFID‖, says writer Rick Boretsky, retail
technology specialist.18
In 2008 Walgreens announced it had integrated RFID with its distribution center operations for shipping,
warehouse management and material handling operations at its Anderson, South Carolina distribution
center. This included 45 doc doors with integrated RFID readers that track more than 170,000 shipping
totes and other reusable assets. Walgreens said, at the time, it expected the new DC to be 20% more
productive than its previous generation of facilities, and some of those gains were attributable to RFID. 19
To read more about the value of RFID and its proliferation in retail, go to:
http://www.tiresias.org/research/guidelines/rfid.htm
To learn more about future applications of Radio Frequency ID Tags, go to:
http://www.tiresias.org/research/guidelines/rfid.htm
WTKM 14-6 What Are Some Push & Pull Strategies?
As stated in the chapter, the push promotional strategy is aimed at wholesalers and retailers, to try to
encourage them to market the product to consumers. The pull promotional strategy is aimed directly at
consumers, to try to get them to demand (in the short term), the product from retailers. One way to think
of it is that ―push‖ marketing is more focused on short-term results, while the goal of ―pull‖ marketing is
to create loyalists by setting a certain standard and image for their brand.20When managing its channel
partners, a firm must decide how much effort to devote to push versus pull marketing.
When using a push strategy, manufacturers may use aggressive personal selling (face-to-face selling)
and trade advertising to convince a wholesaler or retailer to carry and sell their merchandise. The
wholesaler pushes the merchandise forward by persuading the retailer to carry and handle the goods. The
retailer uses advertising and other forms of promotion to convince customers to buy the ―pushed‖
products. An easy way to think about a push strategy is as ―marketing programs that take the product to
the customer.‖ A good example of "push" selling is mobile phones, where the major handset
manufacturers such as Nokia promote their products via retailers such as Carphone Warehouse. Personal
selling and trade promotions are often the most effective promotional tools for companies such as Nokia
to offer subsidies on the handsets, and to encourage retailers to sell higher volumes. This isn‘t clear, what
is meant by subsidies? What if they don‘t know Carphone Warehouse are their other examples? Does the
retailer get bonuses/incentives if they carry the products? Examples of push strategies include:21
1. Trade show promotions to encourage retailer demand
2. Direct selling to customers in showrooms
3. Negotiation with retailers to stock your product
4. Packaging design to encourage purchase
5. Point of sale displays
Pull strategies can be thought about as ―marketing programs that get the customer to come to you." With a
pull strategy, the manufacturer uses advertising, sales promotion, and other forms of communication to
persuade consumers to demand the product from intermediaries such as wholesalers or retailers. This
consumer demand for a product induces the intermediaries to order it. Pull strategy is particularly
appropriate when there is high brand loyalty and high involvement in the category, and when consumers
are able to perceive differences between brands. For example, when loyalists think of a Porsche
automobile, they think of a stylish body, strong engine and a performance car made with precision and
quality.
Examples of pull strategies might include: 22
1. Advertising and mass media promotion
2. Word of mouth referrals
3. Customer relationship management
4. Sales promotions and discounts
WTKM 14-7 How Do Advertising & Propaganda Differ?
Advertising (sometimes called ―commercial propaganda‖), is defined in the textbook as paid nonpersonal
communication by an identified sponsor (person or organization) using various media to inform an
audience about a product.
Propaganda originally referred to an arm of the Catholic Church responsible for ‗de propaganda fidei,‘ or
propagation of the faith, which developed a negative connotation when totalitarian regimes used every
means to distort facts and spread total falsehoods.23 Today, propaganda usually refers to a message
designed to ―persuade its intended audience to think and behave in a certain manner‖. ―Propaganda,
according to the late Edmund McGarry, Professor of Marketing at University of Buffalo (is he still? I see
below that he was in 1958), is biased, partial, and one sided. It has an axe to grind; therefore it is always
controversial.‖ 24
There are many similarities between techniques used in advertising and public relations and propaganda.
The propagandist (as does the advertiser), seeks to change the way people understand an issue or
situation, for the purpose of changing their actions and expectations to support the goals of the interest
group. 25
In a 1958 article published in The Journal of Marketing called, ―The Propaganda Function in Marketing,‖
Edmund McGarry, Professor of Marketing at the University of Buffalo, states, ―Advertising as used today
is primarily a type of propaganda.‖ ―The essence of propaganda,‖ he writes, ―is that it conditions people
to act in a way that is favorable or desired by the propagandist. Every advertisement is designed to
predispose its readers to a favorable consideration of its sponsor and his product. It is deliberately planned
to make its readers and listeners take sides—to affiliate and ally themselves under its banner and to ignore
all others. Advertising is the obtrusive display of the conflict of interests in the marketplace. It represents
a parade of the contestants in the battle for market supremacy, each imploring the audience to follow him.
By its very nature advertising must be prejudiced in order to be potent. .‖ 26
You can view examples of propaganda at: http://english.glendale.cc.ca.us/propaganda.examples.html
Additional examples of propaganda including posters for issues like communism, abortion, smoking, and
the military can be viewed at:
http://www.google.com/search?q=examples+of+propaganda&hl=en&sa=N&rlz=1R2ADFA_enUS358&p
rmd=ivns&tbm=isch&tbo=u&source=univ&ei=pnrZTeyXJou-sQOM_-
yFDA&ved=0CCMQsAQ&biw=1345&bih=461
WTKM 14-8 New Media Marketing Examples
―New media‖ include online ads, web sites, e-direct marketing, and ads on cell phones as well as ads on
store-based TV screens, video games, and digital video recorders, as well as TV and movie product
placements. Here are some examples:
Online Ads: Eggo had been the leader in the frozen breakfast category since the mid-1970s, with frozen
waffles being the flagship product. In 2009, they were faced with competitive threats from other
breakfast foods. Eggo placed interactive online banner ads online featuring videos of kids and their
Eggos were used in conjunction with the print ads to launch the new ―Eggo my way‖ campaign. The ads
were placed on sites accessed by mothers who could interact with different kids, get a sense for who they
were and see how their Egos really brought their personality to life. If they were intrigued, they could go
to the microsite and view the print ads to see the full breadth of options Eggos allows.
Websites: In 2008 'Glacial Falls' was the worst-performing scent in the Old Spice portfolio and was in
jeopardy of being pulled off supermarket and drugstore shelves. Marketing‘s job was to rebrand 'Glacial
Falls' and save the scent from extinction. By relaunching the scent as 'Swagger: The Scent that Makes a
Difference, the campaign far-exceeded sales goals. The Old Spice website was instrumental in the
success. To take a peek, go to: http://www.oldspice.com/products/product/81/old-spice-red-zone-body-
wash-swagger/
Mobile advertisements (cell phones): Branded entertainment, when the brand is woven into the
storyline of the movie, television show, or online video, is becoming more and more popular. BMW
most recently launched ―Wherever you want to go‖ a series of films about the future of mobility.
http://mobile.bmwactivatethefuture.com/atf/
Email Marketing: Amazon.com is the master of relevant, timely and pertinent email marketing. For
example, one of the authors purchased an item from Amazon‘s kitchen department and matched it with a
cooking book (recommended by Amazon). Within a week, the author received an email from Amazon
that was:
- Pertinent: it was clearly relevant to my recent order (I have no reason to ask ―why I am receiving this?‖)
- Enticing: the email is positioned as a reward (now whether it actually is a special discount, I don‘t
know… but 50% off is always attractive)
- Simple: the email is three sentences long. I know instantly whether I want to take action.
- Good looking: the focus on the special 50% offer / button is clear and the email‘s layout is attractive
To see the actual email, go to: http://ryanspoon.com/blog/2009/08/17/amazons-email-marketing-
relevant-timely-includes-special-offers/
Blogs: The Home Apron Blog – The Home Depot, Inc. is the second-largest retail in the U.S., after Wal-
Mart. The home-improvement retailer runs 2,200+ stores that offer building materials, home
improvement supplies and lawn and garden products that are sold to do-it-yourself customers, do-it-for-
me customers, home improvement contractors, and building maintenance professionals. Home Depot's
so-called social-media store associates are part of a new, hybrid group that spends two days each week
managing the retailer's How-To Community and creating content for use across the company on The
Home Apron Blog. For more information, go to: http://ext.homedepot.com/community/blog/
Branded Entertainment:
Branded entertainment is becoming more and more popular. The brand is woven into the storyline of the
movie, television show, or online video. Three examples are: BMW most recently launched
―Wherever you want to go‖ a series of films about the future of mobility. To view, go to:
http://mobile.bmwactivatethefuture.com/atf/. Absolut Vodka produced a vintage style short film called
Lemon Drop. The film stars Ali Larter and Martin Kove. On Absolut‘s Facebook page the fans can not
only watch the movie, but also download the movie poster and read the recipe of the homonymous
cocktail. For more information, go to: http://lemondrop-movie.com/. Mercedes was woven seamlessly
into the film of Sex in the City 2. Mercedes paid a hefty price to be one of the three lead brands in this
heavily branded movie, including a whole lengthy sub-plot involving the spectacular Mercedes Maybach.
For more information, go to: http://www.placevine.com/blog/2010/06/03/an-analysis-of-product-
placement-in-sex-and-the-city-2/
Videogame advertising: Online video games offers marketers the opportunity for product placement in a
video game. Products can be part of a game purchased at a retail store, or can be placed in an Internet
Video game. The movie characters from the hit movie Rio were recently placed in the Angry Birds
online video game. For more information, go to: http://crave.cnet.co.uk/gamesgear/angry-birds-wrecks-
200-million-download-milestone-50003847/
Cinema Advertising: Moviegoers can now watch more than just upcoming attractions while waiting for
their movie to begin. Many theaters run several commercials mixed in with coming feature segments and
attractions. The products offered often times have some direct relationship with the movie being
watched. For more information, go to: http://www.movieadvertising.com/
Kiosks: Kiosks are set up in many shopping malls as well as various outdoor street locations.
Advertisers can display individual products and services, strategically targeted to consumers in the mall,
or on the street. The popularity of using kiosks as a method of delivering content is continuing to
increase. For more information, go to: http://www.kioskmarketplace.com
WTKM 14-9 Coupon & Groupon Marketing
At one time or another, you may have found yourself clipping a paper coupon or two in order to save a
few cents (and sometimes even more), for an item you usually purchase – or with a coupon in-hand, were
now given an incentive to purchase. Have you ever wondered how coupons began? And how something
as simple as a coupon has created the internet phenomenon Groupon? The word coupon originates from
the French word ―couper,‖ which means ―to cut.‖ The word Groupon comes from the words ―group‖ and
―coupon.‖ Prior to the internet, coupons were distributed in magazines, newspapers or mailed in paper
form (rather than to mobile phones or online with codes, as today).
In 1887, pharmacist and Coca-Cola inventor, John Pemberton began handing out tickets for free samples
of their new drink -- which yielded just so-so results. A year later, when the company was sold, its new
owner, Asa Candler, decided to take the ―free sample ticket‖ strategy to a whole new level and distributed
thousands of coupons for a free glass of Coca-Cola. The coupons were mailed to homes across the
country, placed inside magazines, and handed out on the street by Coca-Cola salespeople. The giveaway
was a great success, and between 1894-1913, more than 8.5 million coupons were redeemed at soda
fountains nationwide and Coca-Cola–and the ―coupon‖– become household names.27
The coupon has come a long way since then. Groupon has created a new channel of promotion.28 ―It's
not a coupon at all,‖ Use name Diamond, an industry analyst, tells Advertising Age, an advertising
industry publication, Diamond explains ―Consumers must buy in advance, so redemption rates are more
like 85% to 90% rather than the 1% or so typical for cents-off cereal coupons distributed in newspapers.‖
29
According to the Groupon Website, ―Groupon negotiates huge discounts—usually 50-90% off—with
popular businesses. We send the deals to thousands of subscribers in our free daily email, and we send the
businesses a ton of new customers. That's the Groupon magic.‖30
Here‘s how it works: Each day in each of its major markets areas served (in 2011 almost 400 American
cities and almost 40 countries)31, the company offers one ―Groupon‖ (―group coupon‖). If a certain
number of people sign up, and the minimum is met, the company‘s offer is made available to all who
signed up (in Groupon language, this is called kicks in, or "tips").32 If the minimum number of people do
not sign up, the deal is not offered.33 A minimum number of ―purchases‖ is set because this lessens the
risk for the retailer who can treat the coupons as quantity discounts and as a sales promotion. Essentially,
the power of ―collective buying‖ is at work here, and the discounts are offered when the companies
determine there are enough ―collective buyers.‖
According to the Groupon website, examples of top performing deals include:
$11 for architectural boat tour (normally $22) (6,000 Groupons sold)
$185 for teeth whitening service (normally $600) (719 Groupons sold)
$5 for $10 in pizza (9,258 Groupons sold)
$74 for Cubs rooftop tickets (1,120 Groupons sold)
$20 for a whale watching boat tour (2,556 Groupons sold)
$39 for a round of golf (803 Groupons sold)
$5 for $15 at popular city bakery (3,984 Groupons sold)
$50 for $125 at a denim boutique (1,269 Groupons sold)
Groupon has been a boon for local businesses open to utilizing the service. . In the past, such businesses
shelled out advertising dollars for newspaper, radio and online ads, often with questionable returns and
uncertainty around who saw the ad. Groupon‘s network of sales representatives seek out local businesses
which match Groupon‘s primary audience,* their goal is to make sure their offer is seen by the right
group of consumers. If the local business is lucky enough to get on Groupon, they pay nothing upfront.34
Groupon has done to local business what Amazon has done to book buying. It has created a vehicle for
customers to learn about and try businesses they otherwise might not have known about. And this all
started with the idea of a ―groupon.‖
*Groupon‘s average subscriber is a single female between the ages of 18-34, and there's a good chance
she makes more than $70,000 a year.35 Reflecting this, the majority of Groupons are for health, fitness
and beauty products or services.
To experience Groupon firsthand, go to: www.groupon.com
To read their press kit (statistics given to prospective businesses), go to:
http://www.groupon.com/pages/press-kit
WTKM 14-10 Guerrilla & Word-of-Mouth Marketing
Guerrilla marketing consists of innovative, low-cost marketing schemes that try to get customers‘
attention in unusual ways. Word of mouth marketing is a promotional technique in which people tell
others about products they‘re purchased or firms they‘ve used. For example, if one person‘s experience
with a particular brand or product for cleaning windows is exceptional, they may recommended the
product to a friend whose windows need to be cleaned.
Guerrilla marketing ―works because it‘s simple to understand, easy to implement and outrageously
inexpensive,‖ says Jay Conrad Levinson, the man who coined the phrase. He explains that consumers
have grown immune to big budget advertising, but marketers that expend a bit of time and effort — rather
than piles of money — can generate effective results with inexpensive, small-scale stunts.36 Take a look
through the gallery of guerrilla and street marketing examples at
http://mashable.com/2010/10/06/guerrilla-marketing-videos/#LO2D42Ol0Nk, where promotions costing
no more than a few dollars can have a big impact on the consumers. They include: Absolut, Nike, Ikea,
Libresse (Bodyform or Tampons), Loctite (Super Glue), Sixt (German Car Rental Company), Lee Jean
Paris, Unicef, and Volkswagen.
WTKM 14-11 Telemarketing Foe: The National Do Not Call Registry
(page 15)
Have you ever received a call from a robot? Robocalling, used extensively by telemarketing firms, is an
automated phone call that uses both a computerized autodialer and a computer-delivered pre-recorded
message. How do you feel about a ―selling pitch‖ robocall during the dinner hour? If you are like most,
and the word ―annoying‖ comes to mind, here is something you can do to avoid these calls.
The National Do Not Call Registry was implemented in 2003 to protect those annoyed consumers who
wish not be called or solicited over the phone. Companies that break the rules face a maximum fine of
$15,000 each time (they must cross-reference the Do Not Call database). Individuals can be fined up to
$1,500 for each offending call.37
While these calls can be a nuisance to you, they have become quite costly for those telemarketers who
continue to make such calls, some of which are fraudulent and hard sell. Below you will find some tips on
how to deal with these types of calls, and what to do if you wish not to be a recipient of them.
The Federal Trade Commission Website states:
―It's like clockwork. You sit down to dinner and the phone rings. You answer it. The caller is trying to sell
you something or tell you that you've won a fabulous prize. If you're tempted by the offer, get the facts. If
you don't, you may be in for a fraud. Although most phone sales pitches are made on behalf of legitimate
organizations offering genuine products and services, many sales calls are frauds. Consumers lose billions
of dollars a year to telemarketing fraud. That's why the Federal Trade Commission (FTC) encourages you
to be skeptical when you hear a phone solicitation and to be aware of a law — the Telemarketing Sales
Rule — that can help you protect yourself from abusive or deceptive telemarketers.‖38
The Federal Trade Commission (FTC) launched the National Do Not Call Registry to give Americans a
choice about getting telemarketing calls at home. According to a recent Harris Interactive poll, 92 percent
of people who reported placing a number on the registry said they are receiving fewer calls; a total of 78
percent said they‘re getting ―far fewer calls‖ or none at all.39
The hooks mentioned in the FTC statement above include: prize offers (but you have to do something to
claim that free prize), con artists representing charities, free or low cost vacations, ―get rich quick‖
investments, and so on. The FTC offers the following examples of phrases that are frequently used in
telephone ―rip-offs‖:
―You‘ve been specially selected to hear this offer.‖
―You‘ll get a wonderful free bonus if you buy our product.‖
―You‘ve won one of five valuable prizes.‖
―You‘ve won big money in a foreign lottery.‖
―You must send money right away.‖
―This investment is low risk and provides a higher return than you can get anywhere
else.‖
―You have to make up your mind right away.‖
―We‘ll just put the shipping and handling charges on your credit card.‖ 40
In addition to knowing about the Telemarketing Sales Rule discussed above, the FTC offers these tips to
keep in mind whenever you hear a phone solicitation:
1. Don‘t be pressured to make an immediate decision.
2. Don‘t give your credit card, checking account, or Social Security number to unknown callers.
3. Don‘t buy something merely because you‘ll get a ―free gift.‖
4. Be cautious of statements that you‘ve won a prize — particularly if the caller says you must send
money to claim it.
5. Don‘t agree to any offer where you have to pay a registration or shipping fee to receive a ―prize.‖
6. Get all information in writing before you agree to buy.
7. Check out a charity before you give. Ask how much of your donation actually goes to the charity.
Ask that written information be sent to you so you can make an informed giving decision.
8. Don‘t invest your money with an unknown caller who insists you make up your mind
immediately.
9. If the offer is an investment, check with your state securities regulator to see if it‘s properly
registered.
10. Don‘t send cash by messenger or overnight mail. If you use cash rather than a credit card in the
transaction, you may lose your right to dispute fraudulent charges.
11. Make sure you know the per minute charge for any 900 number call you make.
12. Check out unsolicited offers with the Better Business Bureau, local consumer protection agency,
or state Attorney General‘s office before you agree to send money.
13. Beware of offers to ―help‖ you recover money you may have lost previously. Be wary of callers
saying they are law enforcement officers who will help you get your money back ―for a fee.‖
To explore the Do Not Call registry go to: https://www.donotcall.gov/
To learn more about the law, go to: http://www.ftc.gov/opa/2008/04/dncfyi.shtm
To register a number, go to: https://www.donotcall.gov/register/reg.aspx
WTKM 14-12 Small Business Blogging: Powerful Conversations (page 20)
Blogging can be an invaluable social and networking tool. ―A small business owner or entrepreneur must
blog,‖ says Mark Suster, a partner at GRP Partners, a Venture Capital firm in Los Angeles. 41 Blogging
is vital to developing an online persona or personality in order to make your company more accessible.
Blogging (a combination of the words ―web‖ and ―log‖ allows a company to share their views online with
complete transparency. ―in less than a year,‖ says Mr. Suster, ―I‘ve attracted a large monthly following of
readers who come to my blog to discuss how to build startups, how to raise money, and to get my
thoughts on technology markets. By publicly sharing my thoughts, I‘ve been able to engage in online
discussions with people all over the world, and though it was an unintended consequence, my deal flow
has gone up dramatically.‖42
To blog or not to blog, that is the question. Turns out isn‘t a very hard question. Research has found that
―In a world where small businesses with corporate blogs receive 55 percent more traffic than small
businesses that don‘t blog, companies should be taking note on how to improve their blogs, attract more
readers and get more results. She gives ten tips for corporate bloggers to have an impact in their
communities (and to try to not get bogged down in company policy, and think outside the box): 43
Establish a content Theme and Editorial Guidelines: what value will your blog bring to
customers?
Choose a Blogging Team and Process: Choosing individuals to begin your blog who are
knowledgeable and have experience writing in the areas you wish to cover.
Humanize Your Company: A blog should be seen as a conversation between people rather than a
brand and one person, so encourage those participating to be themselves.
Avoid PR and Marketing: If you get blogging right, it can serve as a real repository of useful
information and analysis by your company‘s employees and those who are interested. Useful and
meaningful information is far more effective than any PR or marketing pitch.
Welcome criticism: Out of fear of criticism, some small businesses have shied away from blogs.
Make it a policy to welcome criticism and consider it an opportunity for improvement.
Outline a Comment policy: Maintain a comment policy. You do want interactivity, and you do
want comments, so a comment policy to follow can be helpful. What types of comments should
be responded to, deleted or passed along for follow-up?
Get Social: Share tools allow others to share your blog (Facebook, Twitter and Digg), so be sure
to use share tools. Maintain a timely response system, and find someone knowledgeable to
respond to posts. Talk like a human being, and be willing to be your authentic self when
blogging. Others will hear that voice loud and clear.
Promote Your Blog: In order to ―invite‖ an audience to participate in your blog, you must
promote it to create awareness. Put the word out through your website, social networks, business
cards, email and advertisements.
Monitor Mentions and Feedback: Set up Google alerts to monitor mentions and feedback.
Track Everything: Track the same type of data you would on a website. To explore more detail on
each of the ten tips for corporate blogging, and the ten best corporate blogs in the world, go to:
http://mashable.com/2010/07/20/corporate-blogging-tips/
http://socialmediatoday.com/markwschaefer/258359/10-best-corporate-blogs-world
www.blogger.com
www.blogspot.com
To see a neat example of a blog for Whole Foods, explore: http://blog.wholefoodsmarket.com/
WTKM 14-14 Ten Most Popular Infomercials
An infomercial is: ―A feature-program length (usually 15 to 30 minutes duration) commercial presented
more as a talk show than a promotion. Aired normally at fringe times (late night to early morning),
infomercials aim at building awareness of a product or service by demonstrating its use and benefits.
Typically, they include an attractive directresponse offer (with toll-free numbers) designed to elicit on-
the-spot orders. Its print equivalent is advertorial.‖44
It‘s easy to make fun of infomercials (a portmanteau of ―information‖ and ―commercial‖), with their
usual low quality production and ―over the top‖ presentation, but information shows that one out of three
people have been convinced enough to pull their credit card out during the pitch45 --the infomercial‘s
longer format television commercial industry is alive and well, with billions of dollars of products sold
each year to willing buyers.‖46
Infomercials, also called ―paid programming‖ generally air during late night or early morning hours,
which is much less expensive than peak times. The cost for 30 minutes of airtime depends on the number
of advertisers bidding for the airtime; as of 2010, a 30-minute slot can range from $150 to $12,000. 47
There are a number of product categories for which the infomercial format is particularly effective. Diet,
health, fitness and beauty/personal care items, automotive, home and garden and kitchen products.
Infomercials about business opportunities like investment programs, real estate, retirement programs,
network marketing and franchising and self-improvement products like teaching aids, parenting helpers,
piano courses, Hooked on Phonics, memory improvers are also proven money makers. And then of course
there are the infamous 900 phone numbers that will connect you to the psychic friends network and pay-
per-call services. 48
Here are some popular infomercial ―hits‖ – have you ever purchased any of them?49
Foodsaver Food Vacuum Packaging Machine
PedEgg
Snuggie
Slap-Chop
Ionic Breeze Air Purifier
Carleton Sheets Real Estate Tutorial
Showtime Pro Electric Rotisserie Oven
ShamWow
Bowflex Home Gym
Proactive
One of the best known media agencies for purchasing infomercials is A. Eicoff and Company, whose
website is: http://www.eicoff.com/
(5 minutes. Answers are found in ―Answers for Pretests & Posttests‖ under Tab 14.)
This posttest features the same questions that you answered in the pretest at the start of this chapter
(―Want to Know More? 14.1 -- Pretest: What‘s Your Distribution and Promotions Strategy IQ?‖). This
posttest will help you determine how much you learned after reading the chapter.
ENDNOTES (Online Content) Footnotes 1-49 only
(WTKM begins with footn
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31
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