Consider the problem of a manufacturer of flour. Unless he had tremendous resources he would not consider attempting a national campaign until he had built up distribution and consumer demand by starting out in a single center, and then branching out gradually into adjacent territories. If he were strong enough to begin with a section of the country instead of with a small section of a state, he might plan his campaign so as to make the successive steps in its development coincide with the divisions of the country recognized by the Federal Reserve bank sys tem. There are twelve Federal Reserve banks, each centering a district which is largely tributary to it. If large sections of the country are to be used as units in the campaign, probably no better divisions than those established by the Federal banking system could be found. The accompanying map shows the twelve di visions of the country, the amount paid for flour by consumers, and the percentage of total consumption which is represented by the expenditures for flour in each district.
4. A flour campaign.—A manufacturer usually commences with his home territory as a tryout mar ket. Assume that a flour manufacturer has a factory in Kansas City, the center of Federal Bank District No. 10. He will send salesmen to dealers, and he will choose advertising mediums reaching flour con sumers in Kansas, Nebraska, Wyoming, Colorado, and parts of New Mexico, Oklahoma and Missouri. After he has worked up his business in this district, he will probably expand into Federal District No. 8, establishing a district agency in St. Louis in an effort to obtain his share of the $49,000,000 market in this district.
Other conditions being favorable, he may next con sider the Chicago district, the Dallas district or the Minneapolis district. In each case he will use local ized mediums, such as newspapers, billboards, street cars and farm papers supplemented by sampling and possibly direct-by-mail advertising, repeating the same campaign, changed to fit local conditions, in each territory.
After the manufacturer has covered, say, six or eight of the trade territories, and has obtained what he considers satisfactory distribution in each, he will be in a position to consider national advertising, using national magazines, national farm journals, a sched ule of national posters, or a schedule of the leading newspapers in the large cities, the circulation of which linked together will blanket the country.
In this case, as in many others, national advertis ing follows a long period of local advertising coupled with careful cultivation of dealers. For many prod
ucts any other plan than this would be too wasteful and too expensive.
5. Distribution, for an article of limited consump tion.—In marketing an automobile accessory, a man ufacturer would proceed in a very different way from that in which a flour campaign would have to be con ducted. National advertising could begin almost at once, because he could bring a direct appeal to all the possible distributers within a short time. Instead of a total of 25,000,000 families and 350,000 dealers, as in the case of the flour manufacturer, the total con sumer market would be only about 2,500,000. Ap proximately 20,000 dealers in automobile supplies would have to be reached. He might send salesmen to dealers in the larger cities, and appeal to the others by direct advertising of various sorts—strong sales letters, a catalog and reproductions of the con sumer advertising. Probably he would also use the advertising columns of the trade papers in order to talk directly with dealers.
6. Dangers of overstocking.— Some manufactur ers in their eagerness to make large sales to dealers, induce them to buy more goods than they can sell within a reasonable time. At the beginning of a cam paign the dealer is seldom in a position to determine for himself just how many of the new products he will be likely to sell. The manufacturer should see that he does not stock too heavily. An overstock often means the loss of the dealer's good-will, and it usually results in disastrous price-cutting. The men who are overstocked and who cut prices will scarcely be willing to order again when their stock is gone, and the dealers who do not cut prices will see their trade leaving them and will focus their resentment on the goods. In either case, the manufacturer loses. A manufacturer does not conduct an elaborate campaign to induce first sales only; his profits must come from reorders, and reorders are received only when the dealer has been treated fairly—when prices and profits are right, when the manufacturer has done his part to interest consumers, and when the dealer's first stock has been large enough to satisfy immediate demands but small enough to permit a rapid turnover of the money invested in it.
The Procter & Gamble Company, when it intro duced Crisco, sent free to every grocer in the country six cans of the product. Gratuitous distribution of small sample stocks is certainly an almost ideal way of inducing dealers to handle a new line of goods, but it is too expensive for many manufacturers to use.