Channels of Distribution

A channel of distribution is the combination of middlemen that a company uses to move its products to ultimate purchasers. The two major types of middlemen that can be used are wholesalers and retailers.

Wholesalers purchase goods and resell them to retailers, other wholesalers, industrial users, institutes, commercial firms and government agencies. Wholesalers do not sell directly to ultimate consumers, but retailers do. There are three major types of wholesalers. Merchant wholesalers take title to the products they purchase and often offer a wide range of services. Merchandise agents and brokers bring buyers and sellers together; they do not take title to merchandise. Manufacturers establish sales branches and sales offices in order to perform the wholesaling function themselves.

Middlemen make a number of contributions to the economy. They reduce distribution costs by minimizing the number of transactions required. They perform all the marketing functions. Because they are specialists, they efficiently perform these marketing functions. Their operations result in increased value because time and place utility are created. They bring buyers and sellers together and act as information sources. Middlemen can be especially valuable for companies that are going into new markets, small firms, companies that are

Bringing out new products, and companies that do not have sufficient financial resources.

Firms that market consumer goods tend to use middlemen extensively. In all, approximately 95% of all consumer products flow through wholesalers and retailers. Industrial goods, however, tend to go directly to purchasers and not through middlemen. Around 80% of all industrial goods are marketed directly.

There are four major types of retailing establishment in the United States. By far the most dominant of these are stores. Automatic vending, direct selling, and mail order are much less important than stores. Within the store category, chain operations (operations that have two or more establishments under one ownership) tend to dominate.

Unit 3. Advertising

Text 1 Advertising All Over The World

In the world of advertising, selling products is the most important goal. As the companies are becoming more global, they are looking for new ways to sell their products all over the world. It is true that because of global communication, the world is becoming more smaller today. But it is also true that the problems of global advertising - problems of language and culture - have become larger than ever before. For example, Braniff Airlines wanted to advertise its fine leather seats. But when its advertisement was translated from English into Spanish, it told people that they could fly naked! Another example of wrong translation is when Chevrolet tried to market the Chevy Nova in Latin America. In English, the word “nova” refers to a star. But in Spanish, it means “doesn’t go”. Would you buy a car with this name?

To avoid these problems with translation, most advertising firms are now beginning to write completely new ads. In writing new ads, global advertisers must consider different styles of communication in different countries. In some cultures, the meaning of an advertisement is usually found in the exact words that are used to describe the product and to explain why it is better than the competition. It is true in such countries as the United States, Britain and Germany. But in other countries, such as Japan’s, the message depends more on situations and feelings than it does on words. For this reason, the goal of many TV commercials in Japan will be to create a positive mood or feeling about the product.

Global advertisers must also consider differences in laws and customs. For instance, certain countries will not allow TV commercials on Sunday, and others will not allow TV commercials for children’s products on any day of the week. In some parts of the world, it is forbidden to show dogs on television or certain types of clothing, such as jeans. The global advertiser who does not understand such laws and customs will soon have problems.

Finally, there is a question of what to advertise. People around the world have different customs as well as different likes and dislikes. So the best advertisement in the world means nothing if the product is not right for the market. Even though some markets around the world are quite similar, companies such as McDonald’s have found that it is very important to sell different products in different parts of the world.

All of these products must be sold with the right kind of message. It has never been an easy job for global advertisers to create this message. But no matter how difficult this job may be, it is very important for global advertisers to do it well. In today’s competitive world, most new products quickly fail. Knowing how to advertise in the global market can help companies win the competition for success.

Text 2

Advertising Agencies

Most advertising or promotion can be divided into three parts. One is the agency that plans and prepares the campaign. Another is the advertiser who pays the bills and whose name usually appears in the advertisement. And finally there are the media that carry the message to the public.

The function of the modern advertising agency, to help a company to market and advertise its goods and services efficiently, is fundamentally different from the function of the original advertising agents who were agents for the newspapers and magazines rather than the advertisers. The original agents acted as media brokers selling advertising space to anyone they could persuade to advertise and receiving commissions from the publications for the space they sold. Agencies began to employ copywriters, to think up and write effective advertising copy. Then, as it became more important to make advertisements stand out from the editorial and from an increasing number of other advertisements, graphic artists were employed. Finally, production staff were employed to order the printing services, ensure the best possible reproduction of advertising literature, arrange for TV and radio adverts to be produced.

Nowadays an advertising agency is an independent organization of creative people and businesspeople who specialize in developing and preparing advertising plans, advertisements, and other promotional tools. The agency also arranges or contracts for the purchase of advertising space and time in the various media. It does all this on behalf of different advertisers, or sellers - its clients - in an effort to find customers for their goods and services.

This definition offers some good clues as to why so many advertisers hire advertising agencies. The definition points out that agencies are independent: the are not owned by the advertiser, the media, or the suppliers. This independence allows the agency to bring an outside, objective viewpoint to the advertiser’s business. Good agencies possess the savvy, skill, and competence to serve the needs of a variety of clients because of their daily exposure to a broad spectrum of marketing situations and problems.

Text 3

Criticisms Of Advertising

Advertising is widely criticized not only for the role in selling products but also for its influence on our society. Some critics charge that at its worst advertising is downright untruthful, and, at best, it presents only positive information about products. Others complain that advertising psychologically manipulates people to buy things they can’t afford. There are many discussion questions on the topic.

Does advertising debase our language? The defenders of traditional English usage don’t like advertising. They feel advertising copy is too breezy, too informal, too casual, and therefore improper. Advertising, the believe, has destroyed the dignity of the language. The fact is that advertising must speak to people, must be understandable and readable. Some critics don’t acknowledge that ads are designed for specific audiences and therefore should reflect different language usage. Advertising research shows that people respond better to a conversational tone than to a more formal tone.

Does advertising make us too materialistic? Some critics claim advertising adversely affects our value system by suggesting that the means to a happier life is the acquisition of more material things instead of spiritual or intellectual enlightenment. Advertising, they say, encourages people to buy more things than they need - all with the promise of greater status, greater social acceptance. But These critics fail to realize that they often tend to force their own values on others. Some people prefer a simple life, others enjoy the material pleasures of a modern, technological society. Proponents of advertising also point out that, through its support of the media, advertising has brought literature, opera, drama to millions who otherwise might never have experienced them.

Does advertising manipulate us into buying thing we don’t need? An oft-heard criticism is that advertising forces people to buy thing they don’t need by playing on their emotions. Some critics believe advertising’s persuasive techniques are so powerful that consumers are helpless to defend themselves. Some specialists point out that the persuasive power of advertising has been exaggerated. Advertising powerful ideas doesn’t guarantee a sale if people aren’t interested.

Is advertising excessive? One of the most common complaints about advertising is simply that there is too much of it. Experts say the average American is exposed to over 500 commercial messages a day. We are constantly bombarded at hone with ads on radio and television, in newspapers, and through the mail. Advertisements also reach us in our cars and in elevators, parking lots, hotel lobbies, movie theatres, and subways.

Is advertising offensive or in bad taste? Many people find advertising offensive to their religious convictions, morality, or political perspectives. Others find advertising techniques that emphasize violence or body functions in bad taste. Taste is highly subjective. What is good for some is bad taste to others. And tastes change. What is considered offensive today may not be offensive in the future. Often the products themselves are not offensive, but the way they are advertised may be open to criticism.

Is advertising deceptive? Perhaps the greatest criticism of advertising is that it attempts to deceive the public. Critics define deceptiveness not only as false and misleading but also as any false impression conveyed, whether intentional or unintentional. Consumers must have confidence in advertising if it is to be effective.

Unit4. Banking