marketing channels.1ppt
TRANSCRIPT
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Marketing ChannelsMarketing Channels
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Marketing ChannelMarketing Channel
Submitted toSubmitted to -- : Prof. JASMEET: Prof. JASMEET
Submitted bySubmitted by --: Sunil Kumar: Sunil Kumar
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Definition of ChannelsDefinition of Channels
Any organization or individuals who participate in theAny organization or individuals who participate in theflow of goods and services as they move fromflow of goods and services as they move fromproducer to an ultimate user ( consumer or industrialproducer to an ultimate user ( consumer or industrial););
Marketing channels refer to an organized network ofMarketing channels refer to an organized network ofinterconnected organizations and agencies involvedinterconnected organizations and agencies involvedin the process of making a product or servicein the process of making a product or serviceavailable to consumersavailable to consumers..
Cont.Cont.
Producers Intermediaries CustomerProducers Intermediaries Customer
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TIMETIME
PLACEPLACE
POSSESSIONPOSSESSION
Channels of DistributionChannels of Distribution
create time, place, possession andcreate time, place, possession andinformation utilities.information utilities.
InformationInformation
37
24
572
9 1 1
Creating utilities for customers.
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Facilitation : bringing buyer and seller to close the deal ( transfer of title and
ownership )
Information : information about product / services to customers;
Promotion : products / services ( changeover from earlier product and brand
building of new one );
Negotiation : with customer on behalf of producers regarding price, delivery
terms etc.;
Providing pre-sale and post-sale services : as producers can not reach to the
customers;
Warehousing and transportation : stocking, sorting, break bulk, pkg. & dispatch
to members down the channel;
Market feedback and intelligence : product performance, trend, change in habits /
fashion / behavior of customer i.e. Demography.
Functions of Channels
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Channel Functions: PromotionChannel Functions: PromotionProducer CollaboratorsProducer Collaborators CustomerCustomer
Promotion:Promotion:
-- Cooperative advertisingCooperative advertising-- In Store Sales promotionIn Store Sales promotion
SalesPromotion
Advertising
Agencies
(Facilitate exchange)
Personal Selling:Merchant sales reps
sell only, no title transfer
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Channel Functions: PricingChannel Functions: PricingProducer IntermediariesProducer Intermediaries CustomerCustomer
Pricing supportPricing support::
-- terms of sale (credit, cash, etc.)terms of sale (credit, cash, etc.)
-- convenience of paymentconvenience of payment
-- financial riskfinancial risk
Pricing: How much?
Financial Institutions:Transfer of Ownership
Provide Credit Services
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What Levis is DoingWhat Levis is Doing
Levis jeans were the same model and price for many years
although they were bought many different types of people.
Diversifying their target markets by selling jeans in high
end stores such as Central , to middle class stores such as
Westside , to large discount stores such as Mega-Mart.
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Types of Marketing ChannelTypes of Marketing Channel
Wholesaler:Wholesaler: They buy goods fromThey buy goods frommanufacturer and resell the same the retailermanufacturer and resell the same the retailer
Retailer:Retailer: Retailer buys goods from wholesalerRetailer buys goods from wholesalerand sale the same to the customerand sale the same to the customer
Commission Houses:Commission Houses: They have physicalThey have physical
control of the goods they handle . these housescontrol of the goods they handle . these housesare in a position to enjoy broader control on price,are in a position to enjoy broader control on price,method, sales etc than brokermethod, sales etc than broker
ContCont
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Resident
Buyer
This is a type ofagent or individualperson, who isspecialised in
buying specialisedgoods and resalethe same oncommission.
brokers
They do not have
direct and physicalcontrol of goods inwhich they deal.
They representeither buyer orseller
jobbers
They are specialtypes of wholesalerundertaking theiractivities inspecialized trades
and location likestock market
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FactorsFactors to ConsiderWhento ConsiderWhen
Selecting Specific IntermediariesSelecting Specific Intermediaries
The producer will want to useThe producer will want to useintermediaries whointermediaries who::
Reach their target marketReach their target marketHave a good reputationHave a good reputationHandle distribution functions efficientlyHandle distribution functions efficientlyOrder large quantitiesOrder large quantities
Pay invoices quicklyPay invoices quicklyDisplay and promote merchandise wellDisplay and promote merchandise wellHave a good location and professionalHave a good location and professionalsalespeoplesalespeople
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IntensiveIntensive
distributiondistribution
SelectiveSelective
distributiondistribution
ExclusiveExclusive
distributiondistribution
Channel Design:Channel Design:
#1 Target Market Coverage#1 Target Market Coverage
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Reasons for ChoiceReasons for Choice ofof strategystrategy
Every manufacturer / producer may adopt different channels of
distribution according to his convenience and may change
them over a period and in different situations. It is an long-
term decision and various factors need to be considered while
determining the channel
product nature;
customer class / segment;
middleman channel cost, suitability, availability, legalcompliance, cost of maintenance;
market considerations nature, size, spread, size and
frequency of orders;
competitors channel.
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Decisions in channel ManagementDecisions in channel Management
Mktg. channelMktg. channel --independent businessindependent business orgnorgn.,.,
--middlemanmiddleman
--ensure smooth flowensure smooth flow--act as an interface between mfg.act as an interface between mfg.
& customer& customer
Product/Goods
Flow
Service
Flow
Buyers(institutional/individual)
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NeedNeed Of Channel ManagementOf Channel Management
Every manufacturer needs to reach to customers in theEvery manufacturer needs to reach to customers in the
market by either ways. Options to reach the Customermarket by either ways. Options to reach the Customer
are as under :are as under :--
Mfg. / Producer Wholesaler
Customer
[ Indirect Marketing Concept ]
Retailer
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Types of channelTypes of channel
Direct to customerDirect to customer
Through a Marketing channelThrough a Marketing channel
Two channels
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Direct Vs.Direct Vs. Indirect ChannelsIndirect Channels
Direct channelDirect channel-- a marketing channela marketing channelthat does not use intermediaries tothat does not use intermediaries to
distribute the product.distribute the product.
Why sell directly?Why sell directly?
Indirect channel a marketingchannel where intermediaries are
used to help distribute the product.Why sell indirectly?
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Examples of direct and indirectExamples of direct and indirect
channelschannels
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Distribution Channel DesignsDistribution Channel Designs
Organizations through which a product passes toOrganizations through which a product passes toreach the end user.reach the end user.
Zero-level:
(Direct)
Intermediaries:
(Traditional)
ManufacturerManufacturer
ConsumerConsumer
ManufacturerManufacturer
ConsumerConsumer
WholesalerWholesaler
RetailerRetailerIntermediaries
ProducerProducer
RetailerRetailer
ConsumerConsumer
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Direct to customer
Channel Structure
Zero level ChannelDirect contact with customer: Luxurious
: Exclusive products
Small Producers: Weak Financial Capability: Perishable Goods(Food, Farm)
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Direct Marketing ChannelsDirect Marketing Channels
ProducerProducer BuyerBuyer
Personal SellingPersonal Selling
TelemarketingTelemarketing
Toll free phone #Toll free phone #
Catalog orderCatalog order
Fax orderFax order
Mail orderMail order
E CommerceE Commerce
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Direct Marketing can eliminate theDirect Marketing can eliminate the
middleman but not the functionsmiddleman but not the functions
Infomediaries & Vertical Exchange
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Channel Structure
Two level Channel
M>W>R>C-all FMCG
M>Brokers/Commission Agents>R>C-Farm productFood grain
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Advantages of Marketing ChannelAdvantages of Marketing Channel
It bridge the gap between the producer andIt bridge the gap between the producer andconsumerconsumer
It helps in large scale distribution of products.It helps in large scale distribution of products.
It creates time , possession and place utilities.It creates time , possession and place utilities.
It performs marketing functions like storage ofIt performs marketing functions like storage ofgoods, risk bearing, sales promotion etc.goods, risk bearing, sales promotion etc.
effective coverage of the target market.effective coverage of the target market.
helping the firm to carry on manufacturinghelping the firm to carry on manufacturinguninterrupted, confident that the channels willuninterrupted, confident that the channels willtake care of sales.take care of sales.
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DisadvantageDisadvantage
Sources of Channel ConflictSources of Channel Conflict Disagreements on responsibilitiesDisagreements on responsibilities
Communication difficulties reduce coordinationCommunication difficulties reduce coordination
Increased use of multiple distribution channels byIncreased use of multiple distribution channels bymanufacturers creating conflicts with distributorsmanufacturers creating conflicts with distributorsand retailersand retailers
Intermediaries diversifying into and offeringIntermediaries diversifying into and offeringcompeting productscompeting products
Producers try to circumvent intermediaries andProducers try to circumvent intermediaries anddeal directly with retailersdeal directly with retailers
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