Page 367 - Introduction to Business

CHAPTER 10 Developing the Promotion and Distribution Mixes 341

Getting into the Online Equine Game

ebra Smith decided to start a home-based business to supplement her
husband’s income. She had a long-time interest in horses, having
Downed several and having ridden in various horse shows.
As a rider and a caretaker for her horses, she had to drive 70 miles to
purchase suitable equine equipment and supplies. This inconvenience caused
her to consider opening a similar store in her hometown. However, this plan
was shelved when she discovered she would need at least a $50,000 investment
for inventory and yearly rent for a storefront would cost an additional $20,000.
Consequently, Debra decided to operate an online equine business.
This option would require her to develop an appropriate website. While she
had some idea as to what the website should include, she knew that she would
need the services of a website expert to deal with the technical aspects of site
development. Another requirement would be the availability of an 800-number
so customers could call toll-free to place orders. Debra also realized that she
would have to provide customers the option of ordering with credit cards.
Because of limited resources, Debra could not afford to advertise in such
publications as Horse and Rider,Western Horsemen, and Equine. Even a 1/8-
page, black-and-white ad was beyond her reach. Instead, she decided to take out
small classified ads in these publications. On average, these would cost around $100
for 25–30 words. Another option she was exploring was the use of direct mail,
whereby she would send a small brochure featuring her products to readers of the
various equine magazines. She would pay these publications for their subscription
lists and then incur the cost of the four-page brochure, the envelope, and postage.
Debra also believed that she could promote her business by dropping off the
brochures at various horse barns and horse shows.
Transportation and storage were the two most pressing logistics decisions.
Since space was limited in their one-bedroom apartment, she decided to
minimize inventory by ordering from equine suppliers only when she herself
had received an order and having the supplier ship the merchandise directly to
her customer. She planned on repackaging any bulk products she received into
specific orders for her customers as soon as possible, so inventory would not
accumulate. After considering costs and reliability, she decided to ship via UPS.
This decision would require her to take special precautions with some of her
cleaning and grooming products, as they were considered to be “hazmat”
(hazardous materials) products.
Debra was surprised as to how much time and money she had to devote to
promoting her products and transporting and storing them. After putting
together a game plan for dealing with these responsibilities, she was still not
sure she was on the right track. This chapter covers the promotion and logistics
areas of marketing and provides information that would be helpful to Debra.

Introduction

Companies need to develop a promotion mix to help sell their products and serv-
ices. They will have to determine the emphasis that will be placed on advertising,
sales promotion, personal selling, and publicity. Advertising is nonpersonal com-
munication through media (newspapers, magazines, television, radio, etc.) for
which payment is made. Sales promotion is the nonpersonal form of promotion
(trade shows, sweepstakes, samples, coupons, etc.) that does not involve measured

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