Distribution Strategy

W. Rofianto

The particular set of interdependent organizations

involved in the process of making availablea product or service

for use or consumption.

In US, channel members collectively have earned margins that

account for 30-50% of the ultimate selling price. While

Advertising typically has accounted for less than 5-7%.

(Kotler & Keller, 2012)

Marketing Channel

Channels and Marketing Decisions

Appropriate when there is high brand loyalty and

high involvement in the category

Appropriate when there is low brand loyalty in a category, brand

choice is made in the store, the product is an impulse item,

Channel Levels

• Gather information

• Develop and disseminate persuasive communications

• Reach agreements on price and terms

• Acquire funds to finance inventories

• Assume risks

• Provide for storage

• Provide for buyers’ payment of their bills

• Oversee actual transfer of ownership

Channel Member Functions

Reverse-Flow Channels

Customer Needs and Wants

European Consumers

Value

Coercive

Reward

Legitimate

Expert

Referent

Channel Power

• Vertical marketing systems• Corporate VMS

• Administered VMS

• Contractual VMS

• Horizontal marketing systems

• Multichannel systems

Channel Integration and Systems

Hybrid Channels / Multichannel Marketing

• Ability to order a product online and pick it up at aconvenient retail location

• Ability to return an online-ordered product to anearby store

• Right to receive discounts based on total onlineand offline purchases

Buyer Expectations for Channel Integration

The Hybrid Grid

• Goal incompatibility

• Unclear roles and rights

• Differences in perception

• Intermediaries’ dependence on manufacturer

Causes of Channel Conflict

Retailing

All the activities in selling goods or services directly to

final consumers for personal, nonbusiness use.

• Self service

• Self selection

• Limited service

• Full service

Levels of Retail Service

Non-store Retailing

• Direct selling

• Direct marketing

• Automatic vending

• Buying service

• New retail forms and combinations

• Competition between store-based and non-store-based retailing

• Growth of giant retailers

• Decline of middle market retailers

• Growing investment in technology

• Global profile of major retailers

• Growth of shopper marketing

Changes in the Retail Environment

Store Atmosphere and Experiences

Retailer Services Mix• Prepurchase services

• Postpurchase services

• Ancillary services

• Keep shoppers in the store

• Honor the transition zone

• Don’t make them hunt

• Make merchandise available to the reach and touch

• Note that men do not ask questions

• Remember women need space

• Utilize checkout

Tips for Increasing Sales in Retail Space

• Private labels are ubiquitous

• Consumer accepts private labels

• Private-label buyers come from all socioeconomic strata

• Private labels are not a recessionary phenomenon

• Consumer loyalty shifts from manufacturers to retailers

Private Label Brands

50% is the natural limit for volume of private labels

Market Logistics

Includes planning the infrastructure to meet demand, then

implementing and controlling the physical flows of

materials and final goods from points of origin to points of

use, to meet customer requirements at a profit.

An integrated logistics system (ILS) includes materials management, material flow systems, and physical distribution, aided by information technology.