Small Business Distribution and Location
Learning Objectives <ul><li>LO1  Recognize the different types of direct marketing and their pros and cons </li></ul><ul><...
Learning Objectives <ul><li>LO5  Recognize the key issues in leasing. </li></ul><ul><li>LO6  Know what to look for in a po...
Distribution <ul><li>Distribution </li></ul><ul><ul><li>process of getting your product to your customers </li></ul></ul><...
Typical Distribution Channels 11- Figure 11.1
Direct Marketing <ul><li>Word-of-mouth  </li></ul><ul><ul><li>A means of spreading information about your business through...
Direct Marketing <ul><li>Direct sales </li></ul><ul><ul><li>Methods of going directly to your customer in order to sell yo...
Direct Marketing <ul><li>Direct mail  </li></ul><ul><ul><li>A method of selling in which catalogs, brochures, letters, vid...
Direct Marketing <ul><li>Mail order </li></ul><ul><ul><li>Sales made from ads in newspapers or magazines, with purchases m...
Direct Mail and Its Variants <ul><li>Microinventory </li></ul><ul><ul><li>A set of goods or service that consists of only ...
Direct Mail and Its Variants <ul><li>Just-in-time inventory </li></ul><ul><ul><li>Having just enough product on your shelv...
Question <ul><li>Which marketing style is a telephone call from a salesperson? </li></ul><ul><li>telemarketing </li></ul><...
Direct Marketing <ul><li>Telemarketing </li></ul><ul><ul><li>Contact via telephone for the express purpose of selling a pr...
Direct Marketing <ul><li>Direct response advertising </li></ul><ul><ul><li>Placing an advertisement in a magazine or newsp...
Cost per 1,000 for Various Forms of Direct Response Advertising 11-
Direct Marketing <ul><li>Guerilla marketing </li></ul><ul><ul><li>The use of creative and relatively inexpensive ways to r...
Direct Marketing <ul><li>Multichannel marketing  </li></ul><ul><ul><li>The use of several different channels to reach your...
Distribution Issues for Direct Marketing <ul><li>Fulfillment center </li></ul><ul><ul><li>A company that will warehouse yo...
Nondirect Distribution <ul><li>Wholesaler </li></ul><ul><ul><li>A middleman business which buys (typically in large quanti...
Nondirect Distribution <ul><li>Agent </li></ul><ul><ul><li>A middleman business which represents a manufacturer’s product ...
Nondirect Distribution <ul><li>e-tailer </li></ul><ul><ul><li>An electronic retailer; a store that exists only on the Inte...
Question <ul><li>Exporting using no middlemen is __________. </li></ul><ul><li>Indirect exporting </li></ul><ul><li>Freigh...
Exporting <ul><li>Direct exporting </li></ul><ul><ul><li>Exporting using no intermediaries </li></ul></ul><ul><li>Indirect...
Exporting <ul><li>Freight forwarders </li></ul><ul><ul><li>Firms specializing in arranging international shipments— packag...
Government Sources of Export Assistance 11- Table 11.2
Exporting <ul><li>Letter of credit </li></ul><ul><ul><li>A document issued by a bank that guarantees a buyer’s payment for...
Importing <ul><li>Importing </li></ul><ul><ul><li>similar to exporting, but buyers and sellers are reversed </li></ul></ul...
Location <ul><li>First choice  for many entrepreneurs is their hometown </li></ul><ul><ul><li>Local banker knows you, more...
Service Firms <ul><li>Three types of locations </li></ul><ul><li>At the client’s location </li></ul><ul><li>At a mutually ...
Service Firms <ul><li>At the  client’s location </li></ul><ul><ul><li>Services include such things as house or office clea...
Service Firms <ul><li>Mutually accessible  location: </li></ul><ul><ul><li>Too much specialized equipment to be readily tr...
Manufacturers <ul><li>Contract manufacturing  </li></ul><ul><ul><li>An existing firm with the correct manufacturing capabi...
Site Selection <ul><li>High customer contact business </li></ul><ul><ul><li>Three critical site selection considerations: ...
Site Selection <ul><li>Low customer contact business </li></ul><ul><ul><li>Manufacturing business </li></ul></ul><ul><ul><...
Leasing: Location Issues 11-
Leasing : Operational Issues 11-
Typical Manufacturing Layout 11- Figure 11.2
Typical Retail Layouts 11- Figure 11.3
Build, Buy, or Lease <ul><li>Building  has the advantage of having the perfect layout in the perfect location and the stre...
Build, Buy, or Lease <ul><li>Leasing  is an option with a considerably lower initial cash outlay </li></ul><ul><ul><li>Oft...
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CHAPTER 11

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  • All marketing centers around the customer. Who are they? Where do they shop? What are they willing to pay for?
  • Answer: a
  • Answer: d
  • If you are importing you are putting the burden of paperwork on the company from which you purchase. Travel abroad, see what products are popular that are not yet in the US but would translate to our culture well.
  • When choosing a location to set up your company most entrepreneurs choose their hometown. It is close, comfortable, and they are known in the area. However, make sure local laws are checked first.
  • The three locations are discussed on subsequent slides.
  • CHAPTER 11

    1. 1. Small Business Distribution and Location
    2. 2. Learning Objectives <ul><li>LO1 Recognize the different types of direct marketing and their pros and cons </li></ul><ul><li>LO2 Learn how to do non-direct distribution </li></ul><ul><li>LO3 Differentiate the types of international strategies </li></ul><ul><li>LO4 Identify the factors to consider in selecting your business location </li></ul>11-
    3. 3. Learning Objectives <ul><li>LO5 Recognize the key issues in leasing. </li></ul><ul><li>LO6 Know what to look for in a potential site layout </li></ul><ul><li>LO7 Understand the pros and cons of buying, building, or leasing </li></ul>11-
    4. 4. Distribution <ul><li>Distribution </li></ul><ul><ul><li>process of getting your product to your customers </li></ul></ul><ul><li>“ Where are my customers?” </li></ul><ul><li>“ Where should I be?” </li></ul>11-
    5. 5. Typical Distribution Channels 11- Figure 11.1
    6. 6. Direct Marketing <ul><li>Word-of-mouth </li></ul><ul><ul><li>A means of spreading information about your business through the comments friends and customers make to other potential customers. </li></ul></ul>11-
    7. 7. Direct Marketing <ul><li>Direct sales </li></ul><ul><ul><li>Methods of going directly to your customer in order to sell your product. </li></ul></ul><ul><ul><li>Vending machines, door-to-door salespeople, leasing space at a craft fair, farmers’ markets, party sales, and most industrial sales </li></ul></ul>11-
    8. 8. Direct Marketing <ul><li>Direct mail </li></ul><ul><ul><li>A method of selling in which catalogs, brochures, letters, videos, and other pieces of marketing materials are mailed directly to customers from which they can mail, call, or e-mail an order. </li></ul></ul><ul><ul><li>Direct faxing and direct e-mailing are more modern forms of direct mail. </li></ul></ul>11-
    9. 9. Direct Marketing <ul><li>Mail order </li></ul><ul><ul><li>Sales made from ads in newspapers or magazines, with purchases made online or by phone as well as by mail. </li></ul></ul>11-
    10. 10. Direct Mail and Its Variants <ul><li>Microinventory </li></ul><ul><ul><li>A set of goods or service that consists of only one or a few items. </li></ul></ul>11-
    11. 11. Direct Mail and Its Variants <ul><li>Just-in-time inventory </li></ul><ul><ul><li>Having just enough product on your shelves to meet the immediate purchases. </li></ul></ul><ul><ul><li>Usually requires frequent shipment from your supplier. </li></ul></ul>11-
    12. 12. Question <ul><li>Which marketing style is a telephone call from a salesperson? </li></ul><ul><li>telemarketing </li></ul><ul><li>direct marketing </li></ul><ul><li>guerilla marketing </li></ul><ul><li>direct response advertising </li></ul>11-
    13. 13. Direct Marketing <ul><li>Telemarketing </li></ul><ul><ul><li>Contact via telephone for the express purpose of selling a product or service. </li></ul></ul><ul><ul><li>can either be inbound (customer calls company) or outbound (company calls customer). </li></ul></ul>11-
    14. 14. Direct Marketing <ul><li>Direct response advertising </li></ul><ul><ul><li>Placing an advertisement in a magazine or newspaper, on television or radio, or in any other media. </li></ul></ul><ul><ul><li>ad contains an order blank with a phone number and e-mail or regular mail address with the intent of having the customer place an immediate order. </li></ul></ul>11-
    15. 15. Cost per 1,000 for Various Forms of Direct Response Advertising 11-
    16. 16. Direct Marketing <ul><li>Guerilla marketing </li></ul><ul><ul><li>The use of creative and relatively inexpensive ways to reach your customer. </li></ul></ul><ul><ul><li>Examples include door-knob hangers, flyers under windshield wipers, T-shirts, balloons, and messages written on sidewalks. </li></ul></ul>11-
    17. 17. Direct Marketing <ul><li>Multichannel marketing </li></ul><ul><ul><li>The use of several different channels to reach your customers, for example, a Web site, direct mail, and traditional retailing. </li></ul></ul>11-
    18. 18. Distribution Issues for Direct Marketing <ul><li>Fulfillment center </li></ul><ul><ul><li>A company that will warehouse your products and fill your customers’ orders for you. </li></ul></ul><ul><li>Retailer </li></ul><ul><ul><li>A middleman business which sells to consumers or end-users of a product (typically in single or small quantities). </li></ul></ul>11-
    19. 19. Nondirect Distribution <ul><li>Wholesaler </li></ul><ul><ul><li>A middleman business which buys (typically in large quantities) and sells (typically in smaller quantities) to businesses rather than consumers. </li></ul></ul>11-
    20. 20. Nondirect Distribution <ul><li>Agent </li></ul><ul><ul><li>A middleman business which represents a manufacturer’s product or service to other business-to-business middleman firms. </li></ul></ul>11-
    21. 21. Nondirect Distribution <ul><li>e-tailer </li></ul><ul><ul><li>An electronic retailer; a store that exists only on the Internet. </li></ul></ul><ul><li>Born international </li></ul><ul><ul><li>A new firm that opens a Web site immediately, thus being exposed to customers from around the world. </li></ul></ul>11-
    22. 22. Question <ul><li>Exporting using no middlemen is __________. </li></ul><ul><li>Indirect exporting </li></ul><ul><li>Freight forwarding </li></ul><ul><li>Express exporting </li></ul><ul><li>Direct exporting </li></ul>11-
    23. 23. Exporting <ul><li>Direct exporting </li></ul><ul><ul><li>Exporting using no intermediaries </li></ul></ul><ul><li>Indirect exporting </li></ul><ul><ul><li>Exporting using intermediaries such as agents, export management companies, or export trading companies. </li></ul></ul>11-
    24. 24. Exporting <ul><li>Freight forwarders </li></ul><ul><ul><li>Firms specializing in arranging international shipments— packaging, transportation, and paperwork. </li></ul></ul>11-
    25. 25. Government Sources of Export Assistance 11- Table 11.2
    26. 26. Exporting <ul><li>Letter of credit </li></ul><ul><ul><li>A document issued by a bank that guarantees a buyer’s payment for a specified period of time upon compliance with specified terms. </li></ul></ul><ul><li>Documentary draft </li></ul><ul><ul><li>A draft which can be exercised only when presented with specified shipping documents. </li></ul></ul>11-
    27. 27. Importing <ul><li>Importing </li></ul><ul><ul><li>similar to exporting, but buyers and sellers are reversed </li></ul></ul><ul><li>Travel abroad - look for products that are selling well in the country you’re visiting </li></ul><ul><li>Trade mission and domestic and international trade shows are also good sources </li></ul>11-
    28. 28. Location <ul><li>First choice for many entrepreneurs is their hometown </li></ul><ul><ul><li>Local banker knows you, more likely to loan money </li></ul></ul><ul><ul><li>You understand market’s needs and wants </li></ul></ul><ul><ul><li>Friends and family are usually first customers </li></ul></ul>11-
    29. 29. Service Firms <ul><li>Three types of locations </li></ul><ul><li>At the client’s location </li></ul><ul><li>At a mutually accessible location </li></ul><ul><li>At your firm’s location </li></ul>11-
    30. 30. Service Firms <ul><li>At the client’s location </li></ul><ul><ul><li>Services include such things as house or office cleaning, pest control, remodeling, lawn and gardening services, carpet cleaning, and similar services which must be performed at the client’s house </li></ul></ul><ul><ul><li>As the firm grows, it may outgrow its home-based headquarters </li></ul></ul>11-
    31. 31. Service Firms <ul><li>Mutually accessible location: </li></ul><ul><ul><li>Too much specialized equipment to be readily transported </li></ul></ul><ul><ul><li>A need for at least some client involvement </li></ul></ul><ul><ul><li>Barbershops, dentist offices, video rental stores restaurants </li></ul></ul>11-
    32. 32. Manufacturers <ul><li>Contract manufacturing </li></ul><ul><ul><li>An existing firm with the correct manufacturing capabilities makes your product for you. </li></ul></ul><ul><li>Sheltered workshop </li></ul><ul><ul><li>A nonprofit organization or institution that provides business services by using handicapped or rehabilitated workers </li></ul></ul>11-
    33. 33. Site Selection <ul><li>High customer contact business </li></ul><ul><ul><li>Three critical site selection considerations: </li></ul></ul><ul><ul><ul><li>Traffic </li></ul></ul></ul><ul><ul><ul><li>Customer ease </li></ul></ul></ul><ul><ul><ul><li>Competition </li></ul></ul></ul><ul><ul><li>Presence of traffic generators in the area </li></ul></ul><ul><ul><li>Parking is also an issue </li></ul></ul>11-
    34. 34. Site Selection <ul><li>Low customer contact business </li></ul><ul><ul><li>Manufacturing business </li></ul></ul><ul><ul><li>Commercial space might be appropriate </li></ul></ul><ul><ul><li>Support businesses will be in or near the area </li></ul></ul><ul><ul><li>Business incubator : www.nbia.org </li></ul></ul>11-
    35. 35. Leasing: Location Issues 11-
    36. 36. Leasing : Operational Issues 11-
    37. 37. Typical Manufacturing Layout 11- Figure 11.2
    38. 38. Typical Retail Layouts 11- Figure 11.3
    39. 39. Build, Buy, or Lease <ul><li>Building has the advantage of having the perfect layout in the perfect location and the street appeal of a new building, but it is costly and slow </li></ul><ul><li>Buying something already in existence shortens the time and may be somewhat cheaper </li></ul>11-
    40. 40. Build, Buy, or Lease <ul><li>Leasing is an option with a considerably lower initial cash outlay </li></ul><ul><ul><li>Often the only feasible choice </li></ul></ul><ul><ul><li>Lease expenses are deductible business expenses </li></ul></ul>11-
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