10. marketing channels, retailing, wholesaling (9-11e)

7/31/2019 10. Marketing Channels, Retailing, Wholesaling (9-11E)

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Marketing Channels,Retailing, Wholesaling &

Market logistics(Place/Distribution)

References: Marketing Management by Philip Kotler (Millennium Edition) Internet

Resource Person: Furqan-ul-haq

Chapter 10

Marketing Mix

Place


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Value Delivery NetworkoThe network made up of the company,

suppliers, distributors, and ultimatelycustomers who partner with each other toimprove the performance of the entire

system. Marketing Intermediaries

oFirms that help organizations in selling,

promoting & distributing of products to finalconsumers are called MI (Wholesalers,retailers, marketing companies,transportation companies, banks & insurance

etc)


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How marketingchannel Reducesnumber of Channel

Transactions

Marketing channels

(Distribution Channels)are set of interdependentorganizations/businessesinvolved in the process of

making a product orservice available for useor consumption.


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FMGC

Clothes

Cosmetics

Toys

Irfan

Iftikhar

Danish

Furqan

Country Fan

Khalid

Haroon

Farooq

Aamir

32Contacts

Salsabila

Depart.Store

12

FMGC

Clothes

Cosmetics

Toys

Irfan

Iftikhar

Danish

Furqan

Country Fan

Khalid

Haroon

Farooq

Aamir


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Level of Marketing ChannelsChannels for Consumer Products

Direct MarketingChannel

Indirect Marketing Channel(one or more intermediaries levels)


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Types of Marketing ChannelsChannels for Industrial Products


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Producers establish marketing channelsfor a variety of reasons:

Many producers lack the financial resources to carryout direct marketing

In some cases direct marketing simply is not feasible

Producers who do establish their own channels canoften earn a greater return by increasing theirinvestment in their main business.

Intermediaries can reach buyers in a more efficient &

targeted way Channel members add value by bridging the majortime, place and possession gaps that separate goodsand services from those who would use them.


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Key Functions Performed byChannel Members

Information Promotion Contact Matching

Negotiation Physical Distribution Financing Risk taking

Channel Members Are ConnectedVia A Variety of Flows

Physical Flow Payment Flow

Information Flow Promotion Flow

Flow of Ownership

M k ti Ch l F ti


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Marketing Channels Functions Forward flow functions: Constitute

activities from company to customeroPromotion, Storage and movement of the

physical products, transfer of ownership Backward flow functions: constitute

activities from customer to companyoPlace orders with manufacturers,

Facilitate payment of bills

Dual Directions:o Information, negotiation & risk taking

Push vs Pull Strategy


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Push vs. Pull Strategy


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Production Scheduling

Push/PullStrategy

Traditional Focus

Push

Start ofProduction

Manufacturing

Inventory-Based

Mass Production

Customer Focus

Pull

Customer-OrderBased

Mass Customization


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Levels of Distribution Intensity

Intensity Level Objective Number ofIntermediaries

Intensive

Selective

Exclusive

Achieve mass marketselling.

Convenience goods.

Work with selectedintermediaries.

Shopping and some

specialty goods.

Work with singleintermediary. Specialtygoods and industrial

equipment.

Many

Several

One


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Channel Dynamics

Conventional marketing System-comprises of independent producers,

wholesalers or retailers who business justto maximize their own profit even if itreduces profit for a system as a whole. Inthis there is no control upon any memberof channel


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Vertical Marketing Channel/system (VMS)by contrast, comprises the producer, wholesaler, or

retailers acting as a unified/coordinated way. The highdegree of control and coordination in VMS is achievedthrough one of the three means: Corporate VMS: common ownership of successive

level of a channel. Contractual VMS: contracts between independentchannel members to increase the efficiency andeffectiveness of distribution (franchises etc)

Administrative VMS: Coordination in distributionthrough market/economic power of one of channelmembers.


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Vertical

MarketingChannel

Manufacturer

Retailer

ConventionalMarketingChannel

Consumer

Manufacturer

Consumer

Retailer

Wholesaler Wholesaler


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Horizontal marketingSystem-

Joining of two or morecorporations (unrelated)for the purposes of

pursuing a new marketingopportunity. Banks,insurance, transportation

companies joint venturewith retailers,manufacturers etc.


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Multi-channel Distribution Systemso Also called hybrid marketing channelso The use of two or more channels to distribute the

same product to the same target marketo Combination of direct

marketing/VMS/HMS/Conventional


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Middlemen

A middlemenis business firm that renders

services related directly to the sale and/or purchaseof a product as it flows from producer to consumer.A middleman either own the product or just onlytakes possession of the product.

Merchant middleman- takes title of the product.The two groups of merchant middleman arewholesalers & retailers.

Agent middleman- they never own the product butonly do arrange the transfer of title. Real statebrokers, travel agents, manufacturers agents etc.


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Retailing: all activities involved in selling goods orservices directly to final consumers for their

personal, non-business use. ...all activities involved in selling, renting, andproviding goods and services to ultimateconsumers for personal, family or household use.

Retailer- businesses engaged in retailing. Wholesaling-All the activities involved in selling

goods and services to those buying for resale orbusiness use.

Wholesaler - those firms engaged primarily inwholesaling activity.


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Specialty Stores

Department Stores

Supermarkets

Convenience Stores

Off-Price Retailer

Superstores

Display Centers

Wide Variety of Product Lines i.e. Clothing, HomeFurnishings, & Household Items (separate department)

Large, low cost, low margin, high volume, wide Variety

of Food, Laundry, & Household ProductsA small store having limited Line of High-Turnover

Convenience Goods

Inexpensive, Overruns, Irregulars, and Leftover Goods

A store larger then supermarket, Large Assortment ofRoutinely Purchased Food & Nonfood Products, Plus

Services

Only display of goods

Narrow Product Line, Deep Assortment with in line

Store Type Length and Breadth of Product Assortment

Discount Stores Merchandises with Low Margin & High Volume

Classification Of Retailer Types


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Criteria for Ranking Modes ofTransportation

RelativeCost

TransitTime

Reliability

Capability

Accessibility

Traceability

Highest Lowest

Air WaterPipeRailTruck

Water Rail Pipe Truck Air

Pipe Truck Rail Air Water

Water

Truck

Rail Truck Air Pipe

Rail Air Water Pipe

Air Truck Rail Water Pipe


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Marketing ChannelsForm a Supply Chain

pply chain Managementthe process of managingstream and downstreamlue-added flows ofterials, final goods, and

lated information amongppliers, the company,sellers, and finalnsumers

Assignment # 2 (15 marks)


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Assignment # 2(15 marks) Continuation of 1stAssignment1.Which Brand Name would you suggest for your product?

Also suggest a marketing slogan for it. (why have youselected this name for your product).2.What would be the pricing objective of the product &

why? (survival, penetration, skimming etc.)3.Which marketing channel would you adopt for your

product and why? (conventional, VMS, HMS, Hybrid etc)4.Which strategy (pull vs. push) would be most feasible for

your product?5.Which sales promotional tools & advertisement medium

would be most appropriate for the product & why?Announcement Date: 08 July, 2010Last date:Before final paper of Marketing(PowerPointpresentation mode)

10. marketing channels, retailing, wholesaling (9-11e)

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