Presentation on Place Decisions

By : Group No 7 , MBA 2015- DMS , IIT Delhi • Pawandeep Singh Maniktala -2012SMN6706 • Mayank Lau - 2012SMN6682

Marketing Mix

• McCarthy classified these tools into four broad groups that he called the four Ps

• 4 Ps of marketing:

• Marketers use numerous tools to elicit the desired responses from their Target Markets.

Marketing Mix : Place

• Place : in the marketing sense refers to the Distribution of the Product.

Place considerations involve decisions that affect :

• How you will get the product where it belongs ?• How you will manage inventory ?• How warehouse operations will be carried out and if distribution centres will be

established ?

When you consider place, you also must consider where you perceive the product will sell best.

For some products this means in the store, while for other products this means online!

Marketing Mix : Place

The Objective is to make products available in the Right Place at the Right time in

the Right quantites at least cost !

Marketing Mix : Place

• Place (or Placement ) decisions are those associated with channels of distributions that serve as the means for getting the product to the Target Customers.

• Channel Distribution System Performs :1. Transactional 2. Logistical 3. Facilitating functions

• Distribution Decisions include Location , Market Coverage, Channel member Selection , Logistics and Levels of Service.

Marketing Channels• Most Producers do not sell their goods directly to the Final Users!

• Marketing Channels are sets of interdependent organizations participating in the process of making a product or service available for use or consumption.

• They are set of pathways a product or service follows after production, Culminating in Purchase & Consumption by the final end user.

• The importance of Channels : In the United States, channel members collectively have earned margins that account for 30 per cent to 50 per cent of the ultimate selling price.

Marketing Channels

• Distributor , Wholesaler , Retailers , Agent .

• Each Party in the Distribution channel is called an “intermediary”.

• Retailer is the final step in the chain – Deals directly with Customer.

Marketing Channel Strategy

• Channel Strategy is Long Term• Requires a Channel Structure• Depends on Relationships and People• Requires Effective Inter-Organizational Management

Key Points

1. Need to Reduce Distribution Costs : Significant % of the Final Price of Product

2. Increasing Use of Technology : Technologies help to gain Competitive Adv.

3. Companies use intermediaries when they lack the financial resources to carry out direct marketing, when direct marketing is not feasible

4. Effective channel management calls for selecting intermediaries and training and motivating them.

Channel Marketing Strategy Contd..

• The channels chosen affect all other marketing decisionsThe company’s pricing depends on whether it uses online discounters or high-quality boutiques.

• Push versus Pull marketing

A push strategy uses manufacturer’s sales force, trade promotion money, or other means to induce intermediaries to carry, promote, and sell the product to end users.

In a pull strategy the manufacturer uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries, thus inducing the intermediaries to order it.

• Example : Top marketing companies such as , skilfully employ both push and pull strategies.

A push strategy is more effective when accompanied by a well-designed and well-executed pull strategy that activates consumer demand.

Multichannel Marketing• Today’s successful companies employ Hybrid channels or multichannel marketing i.e. when a single firm uses two or more marketing channels to reach customer segments.

• Example :

Royal Philips Electronics of the Netherlands is one of the world’s biggest electronics companies and Europe’s largest, with sales of over $66 billion in 2009.` i. Products are channelled toward consumer primarily through local & international retailers.ii. Company offers broad range of products, relying on a diverse distribution model that

includes mass merchants, retail chains, independents, and small specialty stores. iii. To work most effectively with these retail channels, Philips has created an organization

designed around its retail customers, with dedicated global key account managers serving leading retailers such as Best Buy, Carrefour, Costco, Dixons, and Tesco.

iv. Like many modern firms, Philips also sells via the Web through its own online store as well as through a number of other online retailers

The Role of Marketing Channels1. Gather Information about potential and

current customers, competitors, and other actors and forces in the Marketing environment.

2. Develop and disseminate persuasive communications to stimulate purchasing

3. Negotiate and reach agreements on price 4. Place orders with manufactures 5. Acquire the funds to finance inventories at

different levels in the marketing channel6. Assume Risks connected with carrying out

channel work7. Provide for the successive storage and

movement of physical products 8. Provide for buyers payment of their bills

through banks and other financial institutions9. Oversee actual transfer of ownership from

one organization or person to another

Five Marketing Flows : Example (Marketing Channel for Forklift Trucks)

So Why Use intermediaries ?

• Geography- Customers may live too far away to be reached directly or spread widely

• Consolidation of small orders into large ones

• Better use of resources elsewhere

• Lack of retailing expertise

• Segmentation – different segments of the markets can be best reached by different distribution channels

Channel LevelsA zero-level channel, also called a Direct Marketing channel, consists of a manufacturer selling directly to the final customer. Examples are door-to-door sales, home parties, mail order, telemarketing, TV selling, Internet selling, and manufacturer-owned stores.

A one-level channel contains one selling intermediary, such as a retailer.

A two-level channel contains two intermediaries. In consumer markets, these are typically a wholesaler and a retailer.

A three-level channel contains three intermediaries.

Channels normally describe a forward movement of products from source to user, but reverse-flow channels are also important(1) Reuse products or containers (such as refillable chemical-carrying drums), (2) Refurbish products for resale (such as circuit boards or computers)(3) Recycle products (such as paper), and (4) Dispose of products and packaging.

Direct Marketing Example• Apple Stores

When Apple stores were launched in 2001, many questioned their prospects and BusinessWeek published an article titled, “Sorry Steve, Here’s Why Apple Stores Won’t Work.”

But Apple stores have been an unqualified success.• Designed to fuel excitement for the brand, they let people see and touch• Apple products—and experience what Apple can do for them—making it more likely they’ll become

Apple customers. • They target tech-savvy customers with in-store product presentations and workshops; • a full line of Apple products, software, and accessories; • and a “Genius Bar” staffed by Apple specialists who provide technical support, often free of charge.

Apple stores offer a unique brand experience to Apple enthusiasts and prospects !

Value-Adds Vs Costs of Diff Channel

Vodafone Stores

Vodafone store are found in various Malls as a Marketing Strategy to reach out the customers !

McDonalds – 24/7 Drive Thru

Factors to Consider• Nature of the Product - Perishable/fragile - Techincal/complex - Type of Product eg, shopping,convenience

• The Market - It is geographically spread - The extent and natue of the competition

• The Business - Its Size - Its Nature - Does it have established distribution network

The Objective is to make products available in the Right Place at the Right time in

the Right quantities at least cost!

Thank You !

References :

• Marketing management millennium edition - Philp Kotler• Product Placement Decisions -

http://productplacement.biz/201009072807/branded-entertainment/philips-tries-online-branded-entertainment.html • MBA Skool -

http://www.mbaskool.com/business-articles/marketing/4823-product-placement-why-do-we-place-them.html• Harvard Article - http://blogs.hbr.org/2013/02/the-decline-and-fall-of-product-placement/• Small Buiness .com - http://smallbusiness.chron.com/product-placement-strategies-1684.html• Academic.edu -

http://www.academia.edu/389600/The_Strategic_Positioning_of_Coca-Cola_in_their_Global_Marketing_Operation• Google Images