Dollinger index

226 ENTREPRENEURSHIP

evision programs paid for by the entrepreneur/marketer and aimed at demonstrating the

product and marketing it to prospective customers. These shows are designed to pro-

voke a direct and quantifiable response and are often edited and altered to increase

response rates.

Entrepreneurs who cannot afford to produce their own infomercials and buy the tel-

evision time may turn to alternatives like the Home Shopping Network and QVC.

Using television to introduce and promote a product offers instant widespread exposure,

costs very little, and can result in significant sales. Feedback can be negative if the prod-

uct does not sell, but at least the feedback is received quickly. Street Story 6.1 deals with

some QVC hopefuls and their products.

The Internet also enables the entrepreneur to go directly to consumers. Most entre-

preneurs have an affinity for the direct sales approach, and they often try to build large

networks of representatives for their products. Street Story 6.2 demonstrates how effec-

tive networks work.

Business distribution channelsare employed when the producer is selling to anoth-

er organization, especially one that uses purchasing agents and has a specialized purchas-

ing organization. The possibilities are diagramed in Figure 6.3. As with consumer chan-

nels, circumstances determine whether a certain node can be skipped or eliminated.

Institutional and government marketshave their own special characteristics, chan-

nels, and buyer behavior. The institutional market is composed of schools and universi-

ties, hospitals, nursing homes, prisons, and other institutions. These entities have differ-

ent objectives and sponsors and are characterized by low budgets and captive popula-

tions. Segmentation strategies work well for these buyers.

Government markets exist at many levels. In the United States, municipal, county,

state, and federal bureaucracies purchase billions of dollars in goods and services. Other

countries have their own hierarchies. Selling to a government frequently involves a bid-

ding process, though this can be bypassed in special situations (such as urgent need or

hard-to-find products). Government sales frequently require extra paperwork and over-

sight, but the government pays on time, usually does repeat business, and may offer set-

aside business opportunities for small businesses and minority-owned organizations.

Producer Producer Producer Producer

Agent or

broker

Wholesaler Wholesaler

Retailer Retailer Retailer

Consumer Consumer Consumer Consumer

FIGURE 6.2 Distribution Channels for Consumer Goods