marketing mix
TRANSCRIPT
Marketing mix : PlaceManagement of
distribution channelsViraj Mahida QA Roll no:18Smit Bhavsar QA Roll no:16
“A marketing channel is a system of relationships existing among businesses that participate in the process of buying and selling products and services.”
Four Ps• Four Ps
Four Cs• Four Cs
P = Location• Convenience• Distribution• Availability• Accessibility• Usability• Where and when necessary• Size and portability
Place- Convenience• Placement is replaced by the convenience function. • With the rise of internet and hybrid models of purchasing, place is no
longer as relevant as before.• Convenience takes into account the ease to buy a product, find a
product, find information about a product, and several other considerations.
Product Classes - Place• Convenience Products - have to be in convenient places - small
stores, vending machines• Shopping Products - have to be where shoppers go, malls,
superstores etc.• Specialty Products - have to available where people want to buy
them - ie. Movie theatres have to be located where many people go, and where you can park easily
Place and PLC• PLACE must be considered in terms of the Product Life Cycle• In the beginning Growth Stage - it might be good to have your
product sold in a certain location, but in the maturity or decline stage, you may have to change locations to make it better for customers who are no longer so strongly interested in buying
Functions of distribution channel
• Link between production and consumption• Market information• Communicate promotional offers• Transporting & storing• Financing and Risk taking
Types of Channels
• Consumer Product Channels
zero-level channel
One-level channel
Two-level channel
Three-level channel
strategic channel alliance
Marketing Channels for Consumer Products
Manufacturer Manufacturer
Manufacturer
Manufacturer
Agents
Wholesalers
Wholesalers
Retailers
Retailers
Retailers
Consumers Consumers
Consumers
Consumers A
B C
D
Direct channels
•Door to door sales•Mail order•Telemarketing•Tv sellingManufacturer owned stores:Example-Eureka Forbes, Tupperware, Bharat Petroleum
Industrial Product Channels
Manufacturer Manufacturer
Manufacturer
Manufacturer
Agent
Agent
IndustrialDistributors
IndustrialDistributors
Industrial
Buyers
Industrial
Buyers
Industrial
Buyers
Industrial
Buyers
P Q
R S
Intensity of Market Coverage• A company must determine the distribution coverage intensity a product should
get, what number and kinds of channel in which the product will be sold. Three major coverage strategies include intensive, selective, and exclusive distribution.
• Intensive Distribution: A company uses all available distribution outlets for making its product available to consumers.
• Selective Distribution: Companies use selective distribution, which means using more than a few and less than all available outlets in a market area to distribute products.
• Exclusive Distribution: This type of distribution means using one or very limited few outlets.
Vertical, Horizontal, and Multichannel Marketing Systems
• With the passage of time and changes in business environment and strategies, marketing channel systems evolve and new wholesaling and retailing institutions appear.
Vertical Marketing System (VMS)
• Vertical marketing system refers to an arrangement in which the whole channel focuses on the same target market at the end of the channel.
• There are three types of VMS –
corporate – Sherwin Williams makes paint but also owns and operates 2,000 retail outlets.
administered – Kodak, Gillette, Procter & Gamble
contractual- value-adding partnerships
Horizontal Marketing Systems
• Horizontal marketing system occurs when two or more related or unrelated companies working at the same level come together to exploit marketing opportunities.
Multichannel Marketing System• Some companies use several marketing channels
simultaneously to reach diverse target markets. This system is also called hybrid channels or multichannel.
• Disney sells its DVDs through five main channels like,I. Movie rentals store such as blockbuster II. Disney’s retail store - Best buyIII. Online store - Amazon.comIV. Disney’s own online storeV. Disney catalog and other catalog store
Channel length : Direct/Indirect
• Choice of intermediary• Logistics options for channels • Control over the channel
• Who decides price, promotion, packaging
Why use intermediaries?• Geography – Customers may live far away to be reached directly• Segmentation – Different segments can be reached only by different
distribution channels• Lack of retailing experience• Better use of resources elsewhere
Factors to be considered in selection of channels • Type of product?:
• Is it sold to other producers or customers?
• How often the product is purchased?• How expensive is the product?• How perishable is the product?• Location of customers?• Competitors
Marketing Channel Management
Formulating channel strategy
Design channel structure
Select channel members
Motivate channel members
Coordinate with marketing mix
Evaluate member performance
• Realize only the place ‘P’ provides protection from imitation
• Distribution strategies can provide sustainable competitive advantage
Marketing Channel Management
Design channel structure
Select channel members
Motivate channel members
Coordinate with marketing mix
Evaluate member performance
Formulating channel strategy
Set distribution objectives
Specify tasks to be performed by the channel
Consider alternative structures
Choose optimal structure
Marketing Channel Management
Design channel structure
Select channel members
Motivate channel members
Coordinate with marketing mix
Evaluate member performance
Formulating channel strategy
• Optimal structure identified by considering:
• Market variables• Product variables• Company variables• Intermediary variables• Behavioral variables• External environment variables
Marketing Channel Management
Design channel structure
Select channel members
Motivate channel members
Coordinate with marketing mix
Evaluate member performance
Formulating channel strategy
Prospective channel member
Management succession
SalesPerformance
MarketCoverage
Reputation
ProductLines
SalesStrength
Credit andFinancialCondition
Size
Attitude
ManagementAbility
Develop selection criteria
Marketing Channel Management
Design channel structure
Select channel members
Motivate channel members
Coordinate with marketing mix
Evaluate member performance
Formulating channel strategy
• Find prospective channel members• Evaluate prospective channel members• Convert prospective into actual channel members
Marketing Channel Management
Design channel structure
Select channel members
Motivate channel members
Coordinate with marketing mix
Evaluate member performance
Formulating channel strategy
• Learn about the needs and problems of channel members• Advisory committees
• Offer support• Informal support• Strategic alliances, partnerships
• Provide ongoing leadership• Continuing focus
Marketing Channel Management
Design channel structure
Select channel members
Motivate channel members
Coordinate with marketing mix
Evaluate member performance
Formulating channel strategy
• Product and Channel• Retailers (a channel
member) play an important role in product positioning
• Personal selling
• Pricing and Channel• Relevant to channel
members:• Profit margins available
to channel members• Pricing policies• Incentives
• Promotion and Channel• Promotions interface with
channel members• Point-of-purchase displays• Inventory levels• Sales person training
Marketing Channel Management
Design channel structure
Select channel members
Motivate channel members
Coordinate with marketing mix
Evaluate member performance
Formulating channel strategy
• Assessment of success of channel members in implementing strategies
• Requires good information flows between members
• Point-of-sale systems
Channel Conflicts and Cooperation
“Channel conflict is a situation in which one channel member perceives another channel member(s) to be engaged in behaviour that prevents or impedes it from achieving its goals. The amount of conflict is, to a large extent, a function of goal incompatibility, domain descensus, and differing perceptions of reality.”
Types of ConflictIn any distribution channel arrangement there can possibly develop three kinds of conflicts:
Vertical channel conflict
Horizontal channel conflict
Multichannel conflict
Causes of ConflictMajor causes of conflict include: Goal incompatibility, Roles and rights ambiguity, and Differing perceptions.