Looking Into Marketing and Distribution
Looking Into Marketing and Distribution
Say that a manufacturer of cellular phones has just developed a new phone that can be used anywhere in the world. The company is eager to showcase its innovative product, and the best way to do that is to develop a plan—a marketing plan.
MARKETING A PRODUCT
A marketing plan is a step-by-step blueprint for introducing, advertising, selling, and delivering a product, a service, or even an idea. To develop such a plan, the cell phone company will need to conduct market research and gather information on what types of people are likely to buy its phones. Once the ideal customer is defined, the manufacturer can develop packaging and an advertising campaign that will appeal directly to that target audience. Next, the company will decide on a price that is competitive with the prices of other cell phones. Finally, the company will have to decide where to sell its new product—in retail stores, through catalogs, or on the Internet at the company's Web site—and how to get it to their customers quickly. All of these steps are part of marketing and distribution work.
A Marketing Revolution
Marketing has changed radically since it was first introduced at the beginning of the twentieth century. The latest innovation, interactive marketing, has sparked an electronic (e) revolution that includes e-products, e-retailing (also called e-tailing), e-advertising, e-research, and even e-delivery in the form of downloadable news, books, and music. Consumers shop from home using the Internet to compare products, prices, and ratings, and then they
purchase those products online. In 2005 e-commerce revenues totaled $86 billion, up from $67.2 billion the previous year, according to the Monthly Retail Trade Survey produced by the U.S. Census Bureau. While e-commerce sales represented only 2.2 percent of all retail sales in 2005, analysts with Jupiter-Research predicted that by the year 2008 this number could jump to 5 percent.
Marketing is a dynamic discipline, one that must adapt quickly to new technologies, new products, and new consumer tastes. This volume explores the history of marketing and distribution, how they have changed over time, and how they are likely to evolve in the future.
Marketing through the Ages
The history of marketing is the history of commerce. People have been exchanging goods and services for thousands of years. As early as 3000 b.c. the Phoenicians developed trade and distribution routes as they sailed the seas in search of spices, precious metals, and rare textiles.
Archaeologists have found evidence of marketplaces in the ruins of ancient civilizations around the world. As trade spread across borders, marketplaces along trade routes became centers of economic and cultural exchange. Along the Silk Road, the legendary 4,000-mile trade route that stretched from eastern China to the Mediterranean Sea, hundreds of these marketplaces facilitated the exchange of goods and ideas.
When European colonists landed in North America, they settled along the Atlantic Coast. Routes of commerce were difficult to establish because roads were undeveloped and many rivers were as yet unexplored. By the early 1800s, however, roads and canals linked many towns together, allowing products to be shipped to distant markets.
Global View: Marketing and Distribution
Almost all companies depend on advertising and marketing to reach potential customers and convince them to buy the firm's products. Twenty-first century companies are expanding their markets to include foreign countries. The need to communicate with people in different cultures and different languages has changed the way advertisers and marketers approach their work.
Perhaps the most basic challenge is using the right words to convey a sales message to a foreign audience. Many English words and phrases do not translate well into foreign languages, so a catchy slogan in the United States may be puzzling to consumers in other countries. Even the use of certain numbers or types of artwork can be problematic. For example, some Japanese people associate the numbers four and nine with death. Advertisers are working more with local writers to make sure that their messages are translated in an appropriate and positive way. Foreign firms are doing the same, hiring American writers to help them with their advertising campaigns in the United States.
As more companies branch out into foreign markets, they are finding a need to adjust their strategies for reaching customers. Direct mail marketing, for example, is a big business in the United States. However, in some countries delivery of direct mail pieces may take several weeks. In addition, foreign postal laws can make it difficult to distribute mass mailings overseas. Another significant change is the growing resistance to U.S. brands in overseas markets. A soft drink manufacturer who once marketed the same product to all of its customers around the world may need to diversify by selling other products specifically developed to appeal to local tastes.
The shape of the industry itself is also changing in response to the global market. The need to establish an international presence is hitting small advertising agencies especially hard. Large advertising firms are now buying out small agencies that once promoted themselves as alternatives to large firms.
Perhaps the most revolutionary change in marketing and distribution involves the Internet and e-commerce. Companies can quickly and easily reach any consumer who has a computer and an Internet connection—whether that consumer is across town or on the other side of the world. Advertising through Web sites and e-mail saves time and money by reducing the need for such expenses as foreign postage and long-distance phone calls. The Internet virtually eliminates the borders between countries and even continents, allowing for a truly global marketplace. As with other forms of advertising, however, Web advertising must take into account the unique needs and expectations of a global audience.
Advances in technology aided the spread of commerce. The railroads offered a fast, reliable way to transport freight across vast distances. The invention of lithography (printing from a metal plate) in Germany toward the end of the 1700s made the printing of posters easy and inexpensive, and they soon became a popular medium for advertising.
The late 1800s saw the emergence of product "brands," such as Coca-Cola and Procter & Gamble, which were marketed nationwide. Another boost to commerce was the introduction of installment-plan purchasing, which allowed consumers to pay for products over a specified period of time rather than all at once.
In 1900 Milton Hershey had the idea of massproducing small bars of individually wrapped chocolate. Because they were mass produced, Hershey's chocolate bars could be shipped in bulk around the country and sold for just five cents apiece. Soon other manufacturers were following Hershey's lead by producing large quantities of their products, shipping nationwide, and selling inexpensively.
Advertising, which was developed originally to introduce consumers to products, began to take on other functions. It was used to create brand identities, to point out product benefits, and to create a sense of "need" among consumers. The advent of radio and television gave advertisers new arenas for product promotion. By the end of the twentieth century Internet sites were sporting interactive ads, some of which were incredibly sophisticated. A few car manufacturers, for instance, created ads where users could sit in the driver's seat of a virtual, new sports car without ever setting foot in a dealer's showroom. The Internet has provided companies with the capability to take online surveys of their customers to see exactly what interests them most.
Early in the twenty-first century marketing became more customer focused. Merchandisers competing for consumer dollars got to know their customers as thoroughly as possible and tailored their products and services to specific consumer tastes.
Market Research Data
To discover what consumers want and don't want or like and dislike, producers turn to market research.
Market research is just what the name implies-discovering and making sense of marketplace trends and consumer demands. Some producers conduct their own research. Others hire independent firms to carry out the research. These firms gather, organize, and interpret customer information. After analyzing the data, market researchers can create profiles of typical consumers, predict buying patterns, and assist producers in creating products that have been "pre-approved" by consumers. For instance, researchers may determine that a particular type of shampoo is appealing to suburban women between the ages of twenty-five and thirty-four. Armed with this information the shampoo manufacturer can focus on advertising the product during television shows that this group is likely to watch. The manufacturer may also choose to have the product distributed in more suburban locations than urban or rural ones.
New Jobs Projected in Sales, Marketing, and Distribution, 2004–2014*
|OCCUPATION||NEW JOBS||PERCENT INCREASE|
|Retail Sales Workers||937,000||11.1|
|Real Estate Brokers and Sales Agents||60,000||13.0|
Another form of marketing research involves the collection of customer lists, which give the names and addresses of actual consumers who are likely to be interested in a given product. These names and addresses are gathered from a variety of sources, including telephone surveys, supermarket checkout counters, and credit card applications. Virtually any demographic information that customers send to a company—even a filled-out warranty card—can be added to a list and shared with other companies or marketing firms; in fact, it is customary for companies to sell such lists to each other. Customer lists give companies a way to market directly to a target audience. Some stores offer listed customers "loyalty cards," which provide repeat customers with discounts on future purchases. Other companies use the lists to design custom catalogs, which are then sent to specific customers.
Databases of this type have been around for a number of years. However, new computer software makes data compilation and analysis simpler and more cost effective than ever before. One system—called PRIZM (Potential Rating Index by Zip Market) New Evolution—is a database created by Claritas, Inc. It divides U.S. Census Bureau data into zip codes and categorizes purchasing data by income, ethnicity, level of education, and other criteria. The database then compiles lists of groups, attaching catchy titles to each, and sells the lists to companies that are interested in reaching a specific set of consumers. For instance, a company that wants to target upper-middle-class consumers who live in the suburbs might use the PRIZM list titled "Movers and Shakers," whereas a company looking for urban eighteen- to thirty-year-olds might use the list called "Young Didgerati."
Marketing, the process of introducing, advertising, and selling products, services, and ideas to consumers, will continue to be a critical industry in the global marketplace. Web-based marketing is expanding the industry's reach and fundamentally changing the way producers sell and consumers buy. According to employment outlook projections from the U.S. Bureau of Labor Statistics, employment in marketing is expected to grow faster than the average for all occupations from 2004 to 2014, especially in light of more global competition.
The packaging industry has bounced back from lackluster performance during the 1980s. New packaging designs and manufacturing technologies mean steady revenue growth for this industry. Increased automation, however, will continue to eliminate some packaging industry jobs. Positions for receiving, shipping, and traffic clerks are expected to decline. The U.S. Bureau of Labor Statistics predicts that employment in this field will grow slower than the average for all occupations from 2004 to 2014.
The U.S. Bureau of Labor Statistics reported that retail salespersons filled about 4.1 million positions in 2004. Retailers have watched their business landscape change dramatically with the introduction of e-tailing—buying and selling online— as a marketing strategy. Retail employment is expected to grow about as fast as the average for all occupations from 2004 to 2014, according to employment projections by the Bureau of Labor Statistics.
ADVERTISING AND PUBLIC RELATIONS
Advertising has continued to evolve as a critical component of selling strategies. With the arrival of e-commerce and cable television advertising channels, this industry is developing imaginative approaches to targeting, swaying, and selling new products to consumers. The U.S. Bureau of Labor Statistics projected that advertising and public relations employment would grow faster than the average for all occupations from 2004 to 2014. The competition for these jobs, however, will be intense.
WHOLESALING AND DISTRIBUTION
The performance of the nation's wholesalers and distributors depends on evolving practices in manufacturing and retailing. New approaches, such as just-in-time inventory delivery, will define the future of these two vital industries. Employment in wholesale and distribution is expected to increase about as fast as the average for all occupations between 2004 and 2014, according to U.S. Bureau of Labor Statistics projections.
Database marketing can prove extremely lucrative for modern manufacturers and retailers. Take the case of Milton's, a small discount clothing chain. With the help of a commercial marketing database service, Milton's developed a database from credit card receipts and used the information to design and implement a direct mail campaign targeted at likely consumers. The result was a $100,000 increase in sales.
The Internet has made the collection of consumer information much easier. Many Web sites employ small software applications called "cookies" that track where a user goes when visiting a particular site. These are called Internet leads. Such information can enable webmasters to design more effective sites, eliminating those pages that are rarely visited and expanding and polishing those that generate the most traffic. Other sites, such as news sites or reference sites, may ask users to rate how appealing or useful certain information is. If, for example, users consistently give positive ratings to entertainment news and negative ratings to stories about nature or finance, the site will likely increase its coverage of the entertainment industry while downplaying stories about endangered animals or the bond market. All of this information can be quite helpful to companies trying to market their goods and services effectively via the Internet.
When online e-tailor Amazon.com began selling books and CDs from its Web site in the mid-1990s, its customers soon noticed that the site was paying special attention to them. Say, for example, an individual purchased a Vietnamese cookbook: the next time that individual visited the site he or she would be greeted by name and offered a selection of similar cookbooks that might be of interest. If the customer bought a number of jazz CDs, the site might recommend additional jazz titles, books about jazz and jazz artists, travel guides to cities famous for their jazz clubs, and so on.
This is called "push marketing." Simply put, push marketing uses known information about individuals as a consumer to push specific advertising messages on them. While one person is offered information about jazz, another checking out the same site at the same time might be seeing ads touting motorcycles, soccer, or whatever he or she has shown interest in on earlier trips to the site.
Market research provides manufacturers and retailers with information not only on consumer buying habits but also on how the demographics of our society are changing. This information helps them target emerging consumer groups and tailor their products to meet the needs of those groups.
Marketing researchers have found that today's consumers are different from their predecessors. According to the U.S. Census Bureau's Current Population Survey, the number of households consisting of married couples fell from nearly 61 percent in 1980 to about 52 percent in 2003. In contrast, the number of people living alone continued to rise. The number of American teenagers has leveled off, while the number of men age twenty to forty-four has been decreasing slowly and will continue to do so throughout the first half of this century. Perhaps most notable in terms of marketing is the fact that the eldest of America's baby boomers—those people born from 1946 to 1964—are hitting retirement age.
These demographic changes affect the buying patterns and needs of consumers and influence the way in which manufacturers choose to market their goods. For instance, the growing number of people living alone has led many food manufacturers to package their products in single-serving sizes. The number of U.S. teenagers with money to spend has encouraged manufacturers to develop a greater variety of electronic products, including video game platforms, cell phones, and MP3 players. Successful middle-aged baby boomers are likely to have extra income, which will energize the market for goods such as furniture. As more specific market data become available, manufacturers will be able to finely tune their marketing strategies and distribution methods.
Once a manufacturer determines who its customers are likely to be, it sets about making its product both appealing and accessible to them. This process starts with the packaging. Today's packaging incorporates elaborate graphic images, photos, and other illustrations that stand out from the competition.
Technology is constantly changing the way goods are packaged and sometimes solves age-old problems. For example, toothpaste was traditionally packaged in squeezable screw-capped tubes. However, some customers complained that the tubes were difficult to squeeze; others found that they were left with wasted toothpaste at the bottom of the tubes; and still others were frustrated over continually misplacing the tiny screw-on caps. Toothpaste companies responded to these problems by offering consumers a softer tube with a permanently attached flip-top cap and a "pump" package in addition to a conventional tube. Another example is soap products. Pump bottles have replaced bar soaps for the kitchen and countertop. Marketers appeal to children with brightly colored liquid soaps, character-laden labels, and an inviting, foamy consistency.
The U.S. government also plays an important role in the packaging of goods. In response to overflowing landfills and other environmental concerns, the government has enacted a number of regulations aimed at ensuring the use of "eco-friendly" packaging practices. As a result many manufacturers now use packaging materials that are recyclable
or biodegradable. The amount of materials needed to package an item has decreased as well. For example, when compact discs first arrived on the market, they were sold in packaging that was much larger than the CDs themselves; today music CDs are packaged in a small plastic case covered only in cellophane. Manufacturers will continue to develop lighter plastics, fibrous glass, and recyclable composite materials. In addition, technological advances in food packaging will provide manufacturers with new designs that increase the shelf life of their products.
The Flexible Packaging Web site noted that as of 2005 the packaging industry was estimated to be a 420-billion-dollar global industry, with the United States accounting for about $124 billion, or 29 percent of it.
ADVERTISING AND PUBLIC RELATIONS
Advertising is critical to an effective marketing strategy and has become omnipresent throughout the world. Piccadilly Circus in London, the Ginza district of Tokyo, Times Square in Manhattan—each is awash in flashing neon, jumbo video screens, and electronic billboards. Advertising also enters Americans' lives via television, radio, newspapers, magazines, and the Internet. The goal of advertising is convincing consumers to Buy This Product or to Use This Service.
The U.S. advertising industry was the largest in the world in 2006. According to the American Association of Advertising Agencies, the United States is home to more than thirteen thousand ad agencies. Some are big companies with offices in cities throughout the world; others are small shops employing as few as ten or fifteen professionals. Competition for clients is fierce and the financial stakes are high. The success or failure of a product or service may well rest on its ad campaign.
Today's ad agencies perform a variety of marketing tasks. Creating print and electronic advertisements is only one part of the business. Agencies often put together complete marketing strategies for their clients. If a soft drink manufacturer is developing a new flavor, its ad agency may play an important role in all aspects of the process: conducting consumer taste tests, developing a product image, designing logos and packaging, creating advertisements, buying advertising time and space, and deciding where and how the product will be sold. Such an integrated approach not only keeps the product's image and message consistent, it also frees the manufacturer to concentrate on what it does best—developing and manufacturing soft drinks.
Many large corporations hire advertising agencies to promote themselves and their employees. These agencies send out press releases to various local media in an attempt to create a communityminded image for a specific company. For example, a local real estate office may team up with a non-profit organization to raise money through fundraisers, raffles, or dances.
Television and Radio Advertising
Television and radio advertisements offer manufacturers the chance to familiarize millions of consumers with their products. Advertisers use actors, sports figures, and other celebrities to sell everything from sneakers and soft drinks to trucks and brokerage firm services. These commercials are carefully scripted and often use state-of-the-art film and editing techniques.
Manufacturers buy airtime during specific programs, often using available demographic data regarding a show's audience to determine which time spots to buy. Although television commercials have proven extremely effective, they come at a very high price. A thirty-second television commercial can cost hundreds of thousands of dollars. "Event" programming, such as the Super Bowl, can generate many millions of dollars in advertising revenue. Often this is money well spent. For instance, CareerBuilder.com aired Super Bowl ads about a man who worked in an office full of monkeys. The ads caught the nation's attention and remained popular long after their first appearance, leading to a surge of new visitors to the CareerBuilder Web site.
Despite the success of television commercials, some industry observers believe that this type of advertising will become less and less influential. At a time when viewers are offered more than one hundred channels (with more on the way) and remote controls provide an easy exit, television commercials face a big challenge in retaining consumers' interest.
Print Media Advertising
Retail stores and other local businesses do much of their advertising through print media, which include newspapers, magazines, the Yellow Pages, and supermarket fliers. Advertising is serious business for our country's daily newspapers. In 2003 advertising
accounted for more than 77 percent of their total receipts, according to the U.S. Census Bureau's 2006 Statistical Abstracts of the United States. In recent years, however, other types of media have started to eat away at the newspaper industry's market share. In 2004 daily newspaper circulation was 54.6 million, down from previous years because of digital cable, the Internet, and mass mailers.
Sports, fashion, and computer magazines are some of the most popular advertising vehicles in the nation. The U.S. Census Bureau reported that magazine advertising expenditures rose from $3.1 billion in 1980 to $12.1 billion in 2004. Newspapers and magazines now have Web sites that include classifieds ads. The Internet has provided another outlet for the publishing media to attract advertising.
The newest channel for advertising—the Internet—arrived as the twentieth century came to a close. It did not take long for ad agencies and their clients to realize that at any given moment tens of millions of people around the world were sitting in front of computer screens. Soon this captive audience was bombarded with electronic banner ads running across the tops and down the sides of Internet pages and pop-up ads springing up in front of them. These ads were unique because they were interactive—they could be linked to other information the consumer might want to know about a product or service. Through a series of mouse clicks, a small banner ad or larger pop-up ad could provide a potential customer with pages of information, including product comparisons, selling pitches, and special offers. The information might be presented in print, audio, or video formats or some combination of the three. However, many programs also became available that allowed users to "turn off" banner ads and block pop-up ads.
Three-fourths of today's marketing budget goes not to advertising but to promotions. Manufacturers promote their products by sponsoring major events such as figure skating competitions and jazz concerts. Across the country sports arenas are being renamed for corporate sponsors who pay to have their names attached to the arenas. Most of the new ball-parks—from San Francisco's AT&T Park to Philadelphia's Citizens Bank Park—are named for corporate sponsors.
Some manufacturers sponsor promotions with more charitable goals. For example, Colgate-Palmolive helped to create the Starlight Starbright Children's Foundation to fulfill the wishes of terminally ill children. Newspaper inserts alerted people to the foundation. When consumers used the coupons in the insert, a percentage of the money was donated to Starlight.
Many companies use a marketing method called product sampling to introduce their new items to the public. Taste tests at restaurants and bars are a good example of product sampling. This method gives business owners and managers of food establishments the opportunity to decide firsthand which products to market to their clientele. Point-of-purchase advertising is another promotional technique, and it is the most immediate form of advertising available to a manufacturer or retailer. It includes any advertising that occurs where the product is sold, such as photos of mouthwatering burgers and fries at fast food restaurants.
Product pricing is another function of a manufacturer's marketing department. Pricing is based on a number of factors, the first of which is the cost to manufacture the item. This figure includes labor costs, the price of the materials from which the product is made, and the cost of packaging the product. Money spent on advertising and promoting the product must also be recouped through sales, thus adding to the price of the product. The manufacturer must settle on a price that allows for profit yet stays competitive with other brands of the same or similar products. But the product does not go directly to the customer. It must first make a journey through distributors and then take up valuable space on a store's shelves. These steps add to the item's cost.
SELLING THE PRODUCT
Wholesalers and Distributors
Once a manufacturer has made potential customers aware of its product, the next step is to make that product available. Most consumer products follow a path from producer to consumer—a path maintained by wholesalers and distributors. National, regional, or local wholesalers buy goods in large quantities from manufacturers, then sell the goods to retailers and large institutions.
The actual movement of goods from factory to warehouse to retailer is done by workers in the transportation industry, with help from stock clerks, shipping and receiving clerks, and warehouse workers. In recent years the movement from producer to consumer has been made far more efficient through the use of "just-in-time" inventory systems. By ordering goods so that they arrive just in time to sell or ship to retailers, wholesalers and large retail stores can keep their costly inventories smaller.
Just as it has affected nearly every other aspect of marketing, the Internet is also becoming its own distribution channel. Traditionally, after a book has been written it must be set in type, printed, bound, shipped to a wholesaler's warehouse, inventoried, shipped out to bookstores, and possibly even shipped from the bookstore to a customer. The Internet enables publishers to skip most of these steps and their associated costs. Once the book is set in type, it can be offered in a downloadable format at a publisher's site. Customers select which books they want, pay for them, and then download them to their printers. No more binding, packing, shipping, warehousing, or doing inventory. For publishers and book buyers, this process is nothing short of a distribution revolution.
Retail stores are one of the country's most significant sources of jobs. In the 2006 edition of Statistical Abstracts of the United States, the U.S. Census Bureau reported that retail jobs accounted for one out of every seven non-farm jobs in the private sector in 2004. Retail outlets sell merchandise—everything from cereal to socks—for personal use. Supermarkets, department stores, discount stores, convenience stores, and restaurants are some of the many types of retail stores.
Top-Dollar Jobs in Marketing and Distribution
These are the high-paying jobs described in this volume. The figures represent typical salaries or earnings for experienced workers.
Retail stores also provide manufacturers with a powerful way to get their products into the hands of
consumers. According to the Census Bureau's Monthly Retail Trade Survey, retail sales exceeded $3.7 trillion in 2005.
An increasingly competitive climate has caused many of today's retailers to rethink their sales strategies. Many are streamlining their operations and cutting staff and inventory to decrease overhead expenses. At the same time they are adding new services. Some superstores have expanded their services to include hair salons, portrait studios, vision centers, nail salons, and restaurants. Superstore customers can find groceries, clothes, shoes, housewares, and even auto and garden supplies all under one roof. The convenience offered by superstores has made them increasingly popular among busy Americans.
A variety of retailers offer consumers a comfortable environment in which to browse, relax, and engage in various types of activities. For example, some national bookstore chains have opened coffee areas, couches for reading, and recreational areas for children. To maintain their competitive edge, these stores focus on keeping prices low, limiting expenses, and maintaining a fresh supply of stock. One way that retailers achieve this is through a technique called Quick Response.
Quick Response was developed in 1986 by Roger Milliken, president and CEO of Milliken and Company. Quick Response is a business strategy that minimizes the time required for a product to be manufactured, distributed, and sold. This system has revolutionized the way in which products are moved from manufacturer to customer. Using the Quick Response system a salesperson scans a bar code attached to the packaging of each product brought to the checkout counter. This bar code contains identifying information about the product. The information is sent electronically to a computer system at the store's distributor. The distributor's computer automatically schedules a replacement to be delivered to the store and passes this information on to the manufacturer. The manufacturer then creates a replacement product to be delivered to the distributor. Quick Response has succeeded in helping many retailers operate in a more cost-effective manner.
Not all producers market their goods to retailers through distributors. Many companies are turning instead to the lucrative mail-order catalog business. In 2003 alone U.S. mail-order sales exceeded $90 billion, according to the U.S. Census Bureau's Statistical Abstracts of the United States. Marketers such as L.L. Bean, Neiman Marcus, and a large number of computer hardware and software vendors have revolutionized the way Americans purchase products. The industry uses customer lists provided by marketing researchers to target new customers and solicit business.
Home shopping television networks provide manufacturers with another way to market their products directly to consumers. These twenty-four-hour-a-day cable channels, which include QVC (an acronym for Quality, Value, and Convenience) and HSN (the Home Shopping Network), enable viewers to order products by phone. QVC, one of the biggest home shopping networks, claimed it reached 85 million households in 2006 and sold merchandise to more than 190,000 customers a day. In some cases the prices charged by cable channel retailers are comparable to or even cheaper than those in conventional retail outlets.
Some manufacturers go directly to consumers via the Internet. Internet stores may be electronic branches of traditional retail outlets or stores created specifically for the Web. E-tail stores have several advantages over traditional retailers—no parking problems, no crowds, no annoying store music, and purchases delivered right to the consumer's door. Wedding, baby, and bridal registries are often listed online, allowing guests one-stop shopping. These shoppers may opt to have their gifts wrapped and shipped directly to the recipient, which is especially convenient for guests who are traveling or cannot attend a special occasion.
Business-to-business marketing is the process by which businesses sell goods or services to other businesses. This type of marketing is an increasingly important factor in the modern economy. Many large manufacturers purchase raw materials (such as metals or chemicals), finished components (such as computer chips, electronic circuitry, or auto parts), or service operations (such as payroll, customer service, or accounting) from other businesses. Investment firms, insurance companies, and health care providers often seek out businesses with better returns on investments and lower group rates. Business-to-business marketing can be very competitive and lucrative. It is the responsibility of the business providing those goods or services to build and maintain a long-term relationship with its various business clients.
The first step in business-to-business marketing is making prospective customers aware of a business's goods or services. Because those goods or services
are generally expensive purchases involving long-term contracts, the decision-making process can take a long time. Salespeople must be ready to answer any questions potential customers may have and be able to describe clearly the differences between their company's goods or services and those offered by the competition. In addition, business-to-business marketers must maintain good relationships with their customers after the purchase is made. Many economists feel that positive interactions with existing customers is a key to the success of a business selling to other businesses.
Business-to-business marketing on the Internet, known as B2B, took off in the late 1990s. Producers and customers found the Internet a great environment in which to establish long-term contacts between businesses. For sellers and buyers alike, the Internet is a fast, reliable international marketplace of a type that was never before possible.
A major shift in the U.S. economy has taken place over the past few decades. Once dominated by the production of goods, the economy is now dominated by the production of services. As a result the marketing and distribution of services have developed into a major new industry.
The "service industry" centers on large-scale operations in which major corporations sell consumers credit cards, telecommunications devices, cable television access, utilities, and the like. The industry also includes the services of trained professionals such as health care providers, insurance brokers, real estate salespeople, lawyers, accountants, and stockbrokers. Other "services" marketed to families and individuals include the arts (music, theater, dance), education (colleges and continuing education programs), and physical fitness (health clubs and personal training). Just about every facet of American culture has adopted marketing strategies to serve its own purposes.
The process of marketing services begins with the hiring of professionals to design effective marketing strategies; however, these strategies focus on the quality of the services provided rather than on the quality of the goods produced. Services are marketed through a combination of traditional print and broadcast advertising, direct mail advertising, telemarketing, and e-tailing.
Diverse service marketers often bundle their offerings. For instance, credit card companies, long distance telephone companies, and airlines may pool their offerings to allow consumers to earn "frequent flier miles" for signing on with a certain credit card or telephone service. Such partnerships allow consumers to gain additional benefits as they use a company's services. Bundling is expected to remain an important strategy for acquiring and maintaining service customers. As the services sector continues to grow in size and the various campaigns to market those services grow ever more complex, the demand for skilled services-marketing personnel will also grow.
Some marketing techniques have been scrutinized and even banned by federal regulations. In October 2003 the U.S. government created the Do-Not-Call list. Americans could add their names and telephone numbers to the list by visiting a Web site (www.donotcall.gov). Once people posted their numbers on the list, telemarketers were forbidden to solicit them for five years. Exemptions included charitable and political organizations. In addition, the CAN-Spam Act, which was passed by Congress in 2003, required spammers (senders of unwanted junk e-mails) to provide recipients an easy way to opt out of future spam.
THE FUTURE OF MARKETING AND DISTRIBUTION
Occupations in the fields of marketing and distribution are being radically transformed by the information revolution propelling the early twenty-first century. Although industry experts can predict trends with a good degree of accuracy, technological innovations will continue to transform our world in ways that are difficult to forecast. In the 1980s few people could have predicted how rapidly computers would make it into the home. Only 15 million American households had personal computers in 1990. By 2004, however, 69 million American homes had at least one personal computer, according to the U.S. Census Bureau's Statistical Abstracts of the United States. Of these more than half had access to the Internet.
No matter how our world changes, technology will continue to play a role in our lives. Because of this, manufacturers, marketing firms, and distributors will most likely seek employees who have attained a relatively high level of education and who possess technical knowledge and skills.
"Looking Into Marketing and Distribution." Career Information Center, 9th ed.. . Encyclopedia.com. (September 22, 2018). http://www.encyclopedia.com/economics/news-and-education-magazines/looking-marketing-and-distribution
"Looking Into Marketing and Distribution." Career Information Center, 9th ed.. . Retrieved September 22, 2018 from Encyclopedia.com: http://www.encyclopedia.com/economics/news-and-education-magazines/looking-marketing-and-distribution
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