Download - Product Placement~SS 10~12
-
7/31/2019 Product Placement~SS 10~12
1/36
8/10/20
Produ
ctPlacement
MarketingChannels &
Supply ChainManagement
ProductPlacement
Raymondpresents
world-classexperiencethrough its
stores
-
7/31/2019 Product Placement~SS 10~12
2/36
8/10/20
Produ
ctPlacement
What is a Marketing Channel?
A marketing channel system is the
particular set of interdependent
organizations involved in the process of
making a product or service available for
use or consumption.
ProductPlacement
Channels andMarketing Decisions
A push strategy uses the manufacturers salesforce, trade promotion money, and other means toinduce intermediaries to carry, promote, and sellthe product to end users.
A pull strategy uses advertising, promotion, andother forms of communication to persuadeconsumers to demand the product from
intermediaries.
-
7/31/2019 Product Placement~SS 10~12
3/36
8/10/20
Produ
ctPlacement
Buyer Expectations forChannel Integration
Ability to order a product
online and pick it up at a
convenient retail location
Ability to return an online-
ordered product to a nearby
store
Right to receive discounts
based on total online and
offline purchases
ProductPlacement Rural DistributionTraditional Channels
for Reaching Out toRural Customers
Haats
Mandis
Melas
Innovative DistributionChannels for RuralMarkets
Hub and Spoke
Model
Mobile shops andoffices
Linkage withcommunity
based organizations
(NGOs, and
cooperatives
-
7/31/2019 Product Placement~SS 10~12
4/36
8/10/20
Produ
ctPlacement
Important Terminology
Marketing (distribution) channel: set of interdependentorganizations involved in making a product available foruse or consumption; from the producer down
Supply chain: includes upstream
supplier partners, as well as
downstream channel partners
Value-delivery network: all those
who partner with each other to
improve the performance of the
supply chain system; including the
company, suppliers, distributors,
and even, customers
ProductPlacement Channel Importance
A companys channel decisions directly
affect all marketing decisions
Pricing gets affected by whether the product
is available through national distribution
chains, exclusive stores or direct to
consumers
-
7/31/2019 Product Placement~SS 10~12
5/36
8/10/20
Produ
ctPlacement
Channel Development
The organization tailors its sales forcecommunication on the extent of thechannels requirement of Training
Persuasion
Motivation
Support
New product introduction would need totie in with the channels capabilities
Channel decisions involve long term
commitments need for careful thought
ProductPlacement
Using Marketing Intermediaries
Intermediaries reduce the number of contacts needed to cover a market
Transform assortments made by producers into assortments desired by
consumers
Help to complete transactions:
Information
Promotion
Contact
Matching
Negotiation
Fulfill completed
transactions:
Physical distribution
Financing
Risk taking
-
7/31/2019 Product Placement~SS 10~12
6/36
8/10/20
Produ
ctPlacement
What is a Distribution Channel?
A set of interdependent organizations(intermediaries) involved in the process of makinga product or service available for use orconsumption by the consumer or business user.
Channel decisions are among the most importantdecisions that management faces and will directlyaffect every other marketing decision.
ProductPlacement Adding Value
Marketing Intermediaries transform
assortment of products made by
producers to assortments wanted by
customers
Buy large quantities from many
producers and break them down in
smaller quantities & broader assortmentsrequired by customers match supply &
demand
-
7/31/2019 Product Placement~SS 10~12
7/36
8/10/20
Produ
ctPlacement Adding Value
They bridge time, place & possession gaps
They help in completing transactions
ProductPlacement
Distribution Channel Functions
Contact
Financing
InformationRisk Taking
Promotion
MatchingNegotiation
PhysicalDistribution
All Use Up Scarce Resources
All May Often Be Performed Better Through Specialization
All Can Often Be Shifted Among Channel Members
-
7/31/2019 Product Placement~SS 10~12
8/36
8/10/20
Produ
ctPlacement Adding Value
Information: Collating & sharing
market information and feedback
Promotion: Persuasive communication
about an offer
Contact: Locating & communicating
with prospects
Matching: Shaping & fitting the offer
to buyers needs
ProductPlacement Adding Value
Negotiating: Agreement on terms of
purchase
Physical Distribution: Transporting &
storing goods
Financing: Covering cost of the channel
Risk Taking: Business risks
-
7/31/2019 Product Placement~SS 10~12
9/36
8/10/20
Produ
ctPlacement Channel Levels
Channel level is the layer of intermediaries
that perform some of the work in bringing
the product and its ownership closer to the
final buyer
Direct Marketing Channel: A channel that
has no intermediaries
Indirect Marketing Channels: A channel
containing one or more levels
ProductPlacement Marketing Channel Flows
-
7/31/2019 Product Placement~SS 10~12
10/36
8/10/20
Produ
ctPlacement Consumer Marketing Channels
ProductPlacementIndustrial Marketing Channels
-
7/31/2019 Product Placement~SS 10~12
11/36
8/10/20
Produ
ctPlacement
Channel Behavior
Channel conflict: disagreements betweenmarketing channel members on goals and roles-whoshould do what and for what rewards
Horizontal conflict: between firms on
the same channel level
Vertical conflict: between firms on
different levels of the channel
Some conflict encourages healthy
competition which produces innovation and
better performance
Too much conflict becomes dysfunctional
ProductPlacement
Channel Behavior & Conflict
The channel will be most effective when:
each member is assigned tasks it can do best.
all members cooperate to attain overall channel goals
and satisfy the target market.
When this doesnt happen, conflict occurs:
Horizontal ConflictHorizontal Conflict occurs among firms at the same level
of the channel.
Vertical ConflictVertical Conflict occurs between different levels of the
same channel.
For the channel to perform well, conflict must be managed.
-
7/31/2019 Product Placement~SS 10~12
12/36
8/10/20
Produ
ctPlacement
Types of Marketing Channels Conventional distribution channel:
One or more independent producers, wholesalers,and retailers
Each seeking to maximize its own profits
Vertical marketing system (VMS):
Producers, wholesalers, and retailers
Act as a unified system
One channel member owns, has
contracts with, or has so much power
that they all cooperate
Franchise organization
Horizontal marketing system
ProductPlacement
Types of Vertical Marketing Systems
CorporateCommon Ownership at Different
Levels of the Channel
ContractualContractual Agreement Among
Channel Members
AdministeredLeadership is Assumed by One or
a Few Dominant Members
Greater
Lesser
Degreeof
DirectControl
-
7/31/2019 Product Placement~SS 10~12
13/36
8/10/20
Produ
ctPlacement
The Value-Adds vs. Costs ofDifferent Channels
ProductPlacement
Vertical Marketing Systems
VerticalMarketing
Systems (VMS)
CorporateVMS
Contractual
VMS
AdministeredVMS
RetailerCooperatives
FranchiseOrganizations
Wholesaler
Sponsored
Voluntary Chain
Service-Firm-
SponsoredFranchise System
Manufacturer-Sponsored
Wholesaler
Franchise System
Manufacturer-
SponsoredRetailer
Franchise System
-
7/31/2019 Product Placement~SS 10~12
14/36
8/10/20
Produ
ctPlacement Corporate VMS
A vertical marketing system that combines
successive stages of production and
distribution under one single ownership
channel leadership is established through
common ownership.
ProductPlacement ZARA
-
7/31/2019 Product Placement~SS 10~12
15/36
8/10/20
Produ
ctPlacement
Spanish entrepreneur Amancio OrtegaGaona started a firm manufacturing lingerieand nightwear in 1963
He opened the first Zara store in 1975, tosell stock after a customer cancelled a largeorder.
Since then Zara has made high fashionuniversally accessible with 723 stores in 56countries generating sales of Euro 3.8billion.
ProductPlacement
Zara sourced its basic collection items - T-shirts, lingerieand woolens, and where there was a clear cost advantage.
The rest that were more fashion-dependent, wasmanufactured in-house, in nearby Zara factories.
It focused its attention on understanding the fashion itemsthat its customers wanted and then delivering them
A team of 200 young, talented yet unknown designerscreated designs, based on the latest fashions from thecatwalk and other fashion hotspots, which were easilyadaptable to the mass market.
For example, after Madonna's first concert date in Spainduring a recent tour, her outfit was quickly copied by Zara.By the time she performed her last concert in Spain, somemembers of the audience were wearing the same outfit.
ZARA Supply Chain
-
7/31/2019 Product Placement~SS 10~12
16/36
8/10/20
Produ
ctPlacement
Hybrid Marketing Channel
Multichannel distribution system: a single firm setsup two or more marketing channels to reach one or more
customer segments
Disintermediation: Displacment of
traditional
resellers by new
types of
intermediaries or
by selling direct
Figure 13.5
ProductPlacement Contractual VMS
A vertical marketing system in which
independent firms at different levels of
production & distribution join together
through contracts to obtain more economies
or sales impact than they could achieve
alone
-
7/31/2019 Product Placement~SS 10~12
17/36
8/10/20
Produ
ctPlacement
Manufacturer sponsored
retailer franchise system
Manufacturer sponsored
wholesale franchise system
Service firm sponsored
retailer franchise system
ProductPlacement Administered VMS
A vertical marketing system that co-
ordinates successive stages of production
and distribution , not through common
ownership or contractual ties, but through
the size or power of one of the parties
-
7/31/2019 Product Placement~SS 10~12
18/36
8/10/20
Produ
ctPlacement
ProductPlacement
Innovations in Marketing
Systems
Horizontal MarketingHorizontal MarketingSystemSystem
Horizontal MarketingHorizontal MarketingSystemSystem
Two or MoreCompanies at OneChannel Level JoinTogether to Follow aNew MarketingOpportunity.
Example:
Banks in GroceryStores
-
7/31/2019 Product Placement~SS 10~12
19/36
8/10/20
Produ
ctPlacement
Innovations in MarketingSystems
Hybrid / MultiHybrid / Multi--channelchannelMarketingMarketing
SystemSystem
Hybrid / MultiHybrid / Multi--channelchannelMarketingMarketing
SystemSystem
A Single Firm SetsUp Two or MoreMarketing Channelsto Reach One orMore Customer
Segments.
Example:
Retailers, Catalogs,and Sales Force
ProductPlacement
Changing ChannelOrganization
Disintermediation: The displacement of
traditional resellers from a marketing
channel by radical new types of
intermediaries
-
7/31/2019 Product Placement~SS 10~12
20/36
8/10/20
Produ
ctPlacement
Channel Design Decisions
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
ExclusiveDistribution
SelectiveDistribution
IntensiveDistribution
Identifying Major Alternatives
Evaluating the Major Alternatives
ProductPlacement
Analyzing ConsumerNeeds
What do target consumers want from the
channel?
Nearby locations?
Willing to travel?
Centralized location?
Buy in
person?
Buy over
the phone?
Mail order?Internet?
Home delivery? Credit?Installation?
-
7/31/2019 Product Placement~SS 10~12
21/36
8/10/20
Produ
ctPlacement Channel Objectives
Targeted level of customer service
Segments to serve
Best channels to use in each case
Influenced by:
Nature of company
Products
Marketing intermediaries
Competitors Environment
ProductPlacement Identifying Major Alternatives
Type, number &
responsibilities of
intermediaries
Company Sales Force
Manufacturers Agency
Industrial Distributors
-
7/31/2019 Product Placement~SS 10~12
22/36
8/10/20
Produ
ctPlacement
Number of Intermediaries
Also known as intensity of distribution
Intensive
distribution
As many outlets
as possible
Convenience
goods
Selective
distribution
More than one, but
not all outlets
Shopping
goods
Exclusivedistribution One outlet permarket area Specialtygoods
ProductPlacement Intensive Distribution
Stocking the product in as many outlets as
possible
-
7/31/2019 Product Placement~SS 10~12
23/36
8/10/20
Produ
ctPlacement Exclusive Distribution
Giving limited
number of
dealers the
exclusive right to
distribute the
products in their
territories
ProductPlacement Selective Distribution
The use of more than
one but fewer than all
of the intermediaries
that are willing to
carry the companys
products
-
7/31/2019 Product Placement~SS 10~12
24/36
8/10/20
Produ
ctPlacement
Responsibilities of
Channel MembersBoth should agree on:
Price policies
Conditions of sale
Territorial rights
Purchasing & shelving
Slotting fees
Specific services by
each party
Producer should establish:
A list price
A fair set of discounts
Conditions of sale
Channel members
territory
ProductPlacement
Evaluating MajorAlternatives
Economic Criteria: likely sales, cost,
profitability, investments
Control Issues: Allowing control to the
channel about the marketing of the product
Adaptive Criteria: Channel should be
flexible to adapting to changing
environment. Long term commitments
should be superior to economic & control
issues
-
7/31/2019 Product Placement~SS 10~12
25/36
8/10/20
Produ
ctPlacement
Channel Management Decisions
Selecting
Motivating
Evaluating
FEEDBACK
ProductPlacement
Channel Management Decisions
Selecting channel members: companies will vary in their abilityto attract qualified intermediaries
Channel member history, reputation, financial position, location
Other product lines carried, facility
Cooperativeness, future growth potential
Managing & motivating:
Partner relationship
management
Programs, contests, sales
incentives
Cooperative advertising
Product/sales training
Evaluating channel
members:
Performance standards
for sales, market share,
customer service levels,
inventory carried, and
participation in company
programs
-
7/31/2019 Product Placement~SS 10~12
26/36
8/10/20
Produ
ctPlacement Dominating Counters
Key parameters:
Share of floor (floor
space management)
Quality of Display
Merchandising
Product placement
Product Mix
'In product' Display
(Key Driver: Attitude)
ProductPlacement
Counter Share
Key Parameters:
Share by Segment/mix
Share by floor
Quality of selling
Targets
In Shop Demo
Prod. Literature
Comparative charts
(Key driver: ROI & Retention)
-
7/31/2019 Product Placement~SS 10~12
27/36
8/10/20
Produ
ctPlacement Storage Space
Key Parameter:
Stock Norm
Investment Level
Competitive Tracking
(Key driver: Planning &
Forecasting)
ProductPlacement
Dominant Trade Franchise
=
Brand Franchise.
-
7/31/2019 Product Placement~SS 10~12
28/36
8/10/20
Produ
ctPlacement
Marketing Logistics
Supply Chain Management
ProductPlacement Marketing Logistics
The tasks involved in planning,
implementing, and controlling the physical
flow of materials, final goods, and related
information from points of origin to points
of consumption to meet customer
requirements at a profit
-
7/31/2019 Product Placement~SS 10~12
29/36
8/10/20
Produ
ctPlacement
Supply Chain Management
Managing upstream and downstream value
added flows of materials, final goods, and
related information among the supplier,
company, resellers and final consumers.
ProductPlacement
Nature and Importance of MarketingLogistics
Involves getting the right product to the right customers in
the right place at the right time.
Companies today place greater emphasis on logistics
because:
effective logistics is becoming a key to winning and
keeping customers provides competitive advantage
logistics is a major cost element for most companies.
the explosion in product variety has created a need forimproved logistics management.
information technology has created opportunities for
major gains in distribution efficiency.
-
7/31/2019 Product Placement~SS 10~12
30/36
8/10/20
Produ
ctPlacement
Goals of the Logistics System Provide a Targeted Level of Customer Service at
the Least Cost. Maximize Profits, Not Sales.
Higher Distribution Costs/ HigherCustomer Service Levels
Lower Distribution Costs/ LowerCustomer Service Levels
TARGET LEVEL OF SERVICE
ProductPlacement
-
7/31/2019 Product Placement~SS 10~12
31/36
8/10/20
Produ
ctPlacement
Logistics Systems
InventoryWhen to order
How much to orderJust-in-time
CostsMinimize Costs ofAttaining Logistics
Objectives
WarehousingStorage
Distribution
Order ProcessingSubmittedProcessed
Shipped
Logistics
FunctionsTransportationWater, Truck, Rail,Pipeline & Air
ProductPlacement
Supply Chain Management
Major logistics functions:
Warehousing: storage and distribution centers
Inventory management: balance customer
needs with cost
Transportation: speed costs money, how fast
do you need it?
Rail, trucks, water, pipeline, air, and the
Internet
-
7/31/2019 Product Placement~SS 10~12
32/36
8/10/20
Produ
ctPlacement Warehousing
How many and what type of warehouses
Storage warehouses vs. Distribution centers
Distribution Center
A large, very highly automated warehouse
designed to receive goods from various
plants and suppliers, take orders, fill them
efficiently, & deliver goods to customers as
quickly as possible
ProductPlacement Inventory Management
Too little stocks and the company risks nothaving the product when the customers needit
Too high inventory leads to higher costs &obsolescence
Companies benefit by using just-in-time
(JIT) inventories Use of technologies like RFID helps in
managing the supply chain
-
7/31/2019 Product Placement~SS 10~12
33/36
8/10/20
Produ
ctPlacement
ProductPlacement
Transportation Modes
RailNations largest carrier, cost-effectivefor shipping bulk products, piggyback
RailNations largest carrier, cost-effectivefor shipping bulk products, piggyback
TruckFlexible in routing & time schedules, efficient
for short-hauls of high value goods
TruckFlexible in routing & time schedules, efficient
for short-hauls of high value goods
WaterLow cost for shipping bulky, low-value
goods, slowest form
WaterLow cost for shipping bulky, low-value
goods, slowest form
PipelineShip petroleum, natural gas, and chemicals
from sources to markets
PipelineShip petroleum, natural gas, and chemicals
from sources to markets
AirHigh cost, ideal when speed is needed or to
ship high-value, low-bulk items
AirHigh cost, ideal when speed is needed or to
ship high-value, low-bulk items
-
7/31/2019 Product Placement~SS 10~12
34/36
8/10/20
Produ
ctPlacement
Choosing Transportation Modes
1. Speed.
2. Dependability.
3. Capability.
4. Availability.
5. Cost.
Checklist for ChoosingTransportation Modes
ProductPlacement
Integrated Logistics Management
Concept Recognizes that Providing BetterCustomer Service and Trimming DistributionCosts Requires TeamworkTeamwork, Both Inside theCompany and Among All the Marketing ChannelOrganizations.
Third-Party Logistics
Building Channel Partnerships
Cross-Functional Teamwork inside the Company
-
7/31/2019 Product Placement~SS 10~12
35/36
8/10/20
Produ
ctPlacement
Cross-Functional Teamworkinside the Company
Goal is to harmonize company wide
logistical decisions
Logistical committees comprising of
managers responsible for each distribution
function
Logistical activities based on functional
areas
Use of technology
ProductPlacement
-
7/31/2019 Product Placement~SS 10~12
36/36
8/10/20
Produ
ctPlacement
Building Channel
PartnershipsCoordinating and working closely with all
channel partners in the supply chain to
implement and manage logistics strategies
ProductPlacement Third-Party Logistics
Independent logistics provider that performs
any or all the functions required to get its
clients product to market