Download - Bsbmkg502 b – session ii ib
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BSBMKG502B – Establish and adjust the marketing mix
Presentation Three
Place (Distribution)Fourth of the Four P’s
Product (and service)PricePromotionPlace(ment)
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Physical placement
• The process of planning, implementing and controlling the physical flow of materials from point of origin to points of use for the purpose of conforming to customer requirements at a profit. (Kotler)
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Marketing Logistics Networks
• Logistics• The process of planning, implementing and controlling the
efficient, cost-effective flow & storage of materials in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements ( U.S. Council of Logistics)
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Demand Chain Management
• Value-adding by coordinating flows from suppliers to ultimate users
• Coordinating suppliers, purchasing agents, manufacturers, marketers, channel members, customers & end-users
• Managing information systems such as:• computers, point-of-sale (P.O.S.) terminals, uniform
product codes, satellite tracking, electronic data interchange (EDI) and electronic funds transfer (EFT)
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Demand Chain Management
• Sales Forecasting:• production schedules, inventory levels, and distribution
• Production planning:• materials to be ordered by purchasing
• Inbound materials management:• inbound transportation, goods receiving, storage and raw-materials inventory
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Demand Chain Management(cont)• Production: Raw materials converted to finished goods, recorded in finished-goods inventory, for order by customers
• Customer OrdersFinished goods flow off the assembly line, pass through packaging, in-plant warehousing, shipping-room processing, outbound transportation, field warehouse, customer delivery and servicing
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Marketing Channels
• A marketing channel is a set of interdependent organisations involved in making a product or service available for use or consumption by the consumer or end user.
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Marketing 5th Ed Copyright 2001 Prentice HallKotler Brown Adam Armstrong
Marketing Channel Functions
ContactContact
FinancingFinancing
InformationInformationRisk TakingRisk Taking
PromotionPromotion
MatchingMatchingNegotiationNegotiation
PhysicalDistribution
PhysicalDistribution
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Marketing Channel Functions (cont)• Physical Distribution – transporting & storing goods• Financing – covering the cost of channel work, often
extending credit to retailers• Risk Taking – assumes the risk of channel work.
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Number of Marketing Channel Levels – see slides 11 & 12• Consumer Market Channels terms:
• M = Manufacturer, W = Wholesaler• J = Jobber, R = Retail• C = Customer
• Industrial Marketing Channels terms:• M = Manufacturer, • MR = Manufacturer’s Representative,• ID = Industrial Distributor• IC = Industrial Consumer
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Number of Marketing Channel Levels
13-813-8
Marketing 5th Ed Copyright 2001 Prentice HallKotler Brown Adam Armstrong
Channel Levels and Channel ConflictConsumer Marketing Channels
M W J R C
M W R C
M R C
M C
Channel 1
Channel 2
Channel 3
Channel 4
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Number of Marketing Channel Levels
13-913-9
Marketing 5th Ed Copyright 2001 Prentice HallKotler Brown Adam Armstrong
Channel Levels and Channel Conflict
Industrial Marketing Channels
M MR ID IC
M ID IC
M IC
Channel 1
Channel 2
Channel 3
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Distribution channel Functions• Information – gathering & distributing marketing
research & intelligence• Promotion – developing & spreading promotional
communication• Matching – shaping and fitting the offer to the buyer’s
needs• Negotiation – reaching a price and agreeing terms
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Channel Design Decisions
• Types of middle channel members• Company sales Force• Manufacturer’s Agency• Industrial Distributors
• Number of middle channel members• Intensive Distribution – as many outlets as possible• Exclusive Distribution – high prestige• Selective Distribution – good market coverage
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Responsibility of Channel Members
•Agreement on Price Policies•Conditions of Sale•Territory rights (who is authorised to sell in a particular area)
•Specific services to be performed by each member
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Evaluating Major Alternatives• Economic Criteria - Different levels and cost for each
alternative• Control Criteria – benefits of directing channel against
benefits of using outside businesses• Adaptive Criteria – benefits of each criteria against loss
of flexibility of long-term contracts
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Channel Management Decisions
• Selecting Channel Members – to value-add to process
• Motivating Channel Members – high margins, special deals, premiums, advertising & promotional allowances, sales contests
• Evaluating Channel Members – measurement against criteria for sales, inventory control, customer delivery time, training, customer service
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Channel Management Decisions (cont)• Cycle time reduction decisions – reduce time to develop new products & to manufacture & distribute finished products
• Quick response-systems solution: EDI (electronic data
interchange), EFTPOS, Quick Response Retail Technology (QRRT), Quick Response Service Technology (QRST) to reduce cycle time and increase efficiency and improve customer service
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Channel Management Decisions (cont)• Conversion Operations Location Decisions – location has major impact on costs
• Make or Buy Vertically Integrated or Network Decisions
• Input Suppliers Networks - closer economic relationships between channel members
• Manufacturing & Operations Decisions –to order or to develop an inventory
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Channel Management Decisions (cont)• Order Processing Decisions – mail, telephone, fax,
salespersons, online, EDI, internet• Warehousing Decisions – if inventory carried: storage,
distribution, company or intermediary owned• Inventory Decisions – reduce unnecessary inventory
costs
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Marketing 5 th Ed Copyright 2001 Prentice HallKotler Brown Adam Armstrong
Process
PeoplePrice
Product
Promotion
Placement
(Customer
Service)Inventory
carrying costs
Conversion lot
quantity costs
W arehousing costs -
throughput costs, not
storage costs
Transportation
costs
Order-processing
& information
costs
Physicalevidence
Logistics Trade-offs
Placement
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Marketing 5th Ed Copyright 2001 Prentice HallKotler Brown Adam Armstrong
Transportation
TransportationModes
TransportationModes
RailAir
Pipeline Truck
Water
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Choosing Modes of Transport• Speed – measured in door-to-door time• Dependability – Meeting Schedules on time• Capability – The ability to handle various products• Availability – the number of geographic locations served• Cost – usually in tons-per-mile (US)
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Conclusion
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• Logistics management requires great trade-offs between functional units
• Management must focus on communication and strategic objectives to ensure co-operation
• Distribution can often be that part of the mix which irritates the customer the most e.g. failed deliveries, damaged goods, wrong orders ....