9331_mm2 - module3.pdf
TRANSCRIPT
Marketing Channel
• Network of all parties involved in moving
products/services from producers to
consumers or customers
MBA-I 2014-16
Distribution
• Essential part of
marketing: Making the
product/service
available to the
buyer/user
MBA-I 2014-16
July 21, 2007 12 million copies Worldwide launch at the stroke of midnight
Channel Functions
MBA-I 2014-16
• Storing and transporting products
• Financing
• Breaking the bulk
• Place order on manufacturers
• Gather information – customers,
competition, environment
• Develop communications
Value Networks • Channels add value through
o Gathering and processing information to
encourage transactions
o Creating efficient infrastructure to exploit
economies of scope and scale
o Absorbing risks
o Reducing information overload – collaborative
filtering
o Product level
• Delayed differentiation
• Kitting
MBA-I 2014-16
Channel Organisation
• Conventional o Each member is independent
o Self-regulating according to market forces
• Vertical Marketing System (VMS) o The producer takes the role of another member
o By acquisition or by creating its own capabilities
• Horizontal o Two or more members at the same level form alliance
– share resources and services for better
performance
MBA-I 2014-16
Channel Strategies
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• Considerations on: o Number of levels of intermediaries
o Form of organisation – owned by the same firm or
interconnected individual firms
o Intensity of distribution – how many distribution points in any geographical area
• Number of levels No. of levels Control Reach Margins
Low
High
Distribution Intensity • Convenience products – high intensity
• Shopping products – selective distribution
• Luxury or high-ticket items – exclusive
distribution
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Channel Design • All channel decisions must be aimed at
delighting the customer
• Multichannel design
• Balance between ‘bricks and clicks’ -
convergence
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Channel Structures
Producer Consumer
Producer Consumer Intermediaries
Producer Consumer Intermediaries
Direct
Indirect
Hybrid
Intermediaries
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• Agents
• Distributors
• Wholesalers
• Franchises
• Retailers
• Infomediaries
Channel Considerations
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• Channel efficiencies o Automation of back-office sales functions
o Personnel and accuracy enhancements
• Current marketing intermediaries o Disintermediation
o Re-intermediation
o Channel advantages for potential buyers
• Customise contact as per buyer’s needs
• Wide range of referral sources
• Always open
Effect of Internet
MBA-I 2014-16
• Pricing o Buyer’s bargaining power
o Geographical advantages
o Commodification – service-enrichment / branding
• Sales force o Complimentarity
o Customise product presentations
o Incentivise online initiatives
• Promotion o Search-engine marketing
Channel Management • Conflict
o Power
o Trust
• Goal-setting
• Incentives
o Cash
o Non-cash
o Training
• Channel leadership
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Channel Conflicts • Situation in which one member perceives
another member to be engaged in a
behaviour that is impeding from achieving
the goals
• Vertical o Across levels
• Horizontal o Along the same level
• Multichannel o Across channels
MBA-I 2014-16
Power
• Ability to evoke change in another’s
behaviour o One channel member controls the decision variables in the
marketing strategy of another member operating at a different level
• Types o Coercive power
o Reward power
o Expert power
o Legitimate power
o Referent power
MBA-I 2014-16
Logistics
• Coordination of all activities related to
transportation or delivery of products /
services occurring within a single business
organisation
• Supply Chain Management (SCM) –
extension of logistics into inside and
outside the organisation
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Logistical Flows
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Suppliers
Firm Channel
intermediaries
Customers
Inbound
Logistics
Reverse Logistics
Outbound
Logistics
Logistics Management • 3PL (Third Party Logistics) firms
o Focus on core business
o Access to more sophisticated distribution networks and
technologies
o Cost reduction
o Holding inventory - warehousing
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Logistics Decisions
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PRODUCTION
What, how, when to
produce
TRANSPORATTION
How, when to move
LOCATION
Where to do
what
INVENTORY
How much to
make, store
INFORMATION Basics for
decision
making
Retailing Strategy
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Target Market
Atmosphere
Merchandise
Promotion
Location
Customer service
Pricing
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• Merchandise o Categories
o Quality level
o Breadth of selection
o Emphasis on any particular brand
• Promotion o Positioning
o Media to be used – broadcast, print, internet
• Location o Multiple or single?
o Distribution channels
o Online?
Dimensions
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• Atmosphere o Environment
o Colours and materials
o Music
o Aisles – wide or narrow
• Customer service o Full service or self-service?
o Return policy
o Training needs of sales personnel
• Pricing o With respect to competition
o Frequency of price promotions/sales
o Bargaining
o Credit cards
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Sephora
Open-sell; touch and
feel; black & white
scheme
Exclusive
Word-of-mouth
Prime
Beauty coaches; made-to-
order cosmetics
High; at par with
dept stores
Retailer Categories Categories Description Examples
Departmental
stores
Assortment of all types of goods; variety
in categories and breadth
Spencers
Discount stores Wide range of products; compete on
prices; less fashion-oriented brands
Brand
Factory
Kirana stores
(mom-and-pop)
Owned by individuals; personalised
services
Specialty stores Focuses on a particular category Body Line
Hypermarkets Variety and huge volumes of
merchandise at low margins
Spencers
Hyper
Supermarkets Self-service; grocery & limited non-food
products; follow EDLP pricing
Easyday
Category killers Single category; very low prices ??
E-tailers Online order booking; door delivery;
with or without COD ∞
MBA-I 2014-16