ONE OF THE FOUR P’S OF MARKETING-PLACE

Presented by:-

ROHIT SHARMA

abt -“place…”

Place involves decisions concerning distribution channels to be used, the location of outlets, methods of transportation.

Objectives

Define distribution. Explain the concept of a channel of distribution. Types of distribution channels. Factors affecting choices of channels. Identifying channel members & their functions

& management. Marketing on web.

Distribution

Products need to be made available in adequate quantities, in convenient locations & at times when customers want to buy them.

It is the process of deciding how to get goods in customer’s hands.

Channel intermediaries

These are those organizations who facilitate the distribution of products from producers to customers

Direct distribution

With no intermediaries 25 transactions.

MFG MFG MFG MFG MFG

Consumer Consumer Consumer Consumer Consumer

Distribution using channel intermediary

With 1 intermediary 10 transactions.

MFG MFG MFG MFG MFG

Consumer Consumer Consumer Consumer Consumer

Intermediary

Benefits :- intermediaries

Small producers can benefit by selling to Intermediaries who then combine a large number of small purchases into bulk for transportation.

Location & time gaps b/w producers and customers need to be bridged.

Channel intermediaries have expertise in areas such as selling, servicing & installations.

Channels of Distribution-

the path a product takes from its producer or manufacturer to the final user.

It is an organized network or a system of agencies &institutions which in combination ,perform all the activities required to link producers with users to accomplish the marketing task

Types of distribution channel

Consumer channel. Industrial channel. Service channel.

Industrial channels tend to be shorter then consumer channels because of small member of ultimate customer , the greater geographical concentration of industrial customers, and greater complexity of the product which require manufacturer – customer liaison. Consumer channels are normally longer because a large no. of geographically dispersed customers have to be reached.

producer consumer

producer

Producer

consumerretailer

retailerwholesaler consumer

O- level

1- level

2- level

3- level

4- level

Producer consumerwholesaler retaileragent

Producer C & F agent Distributor Wholesaler Retailer Consumer

producer consumer

producer consumerretailer

producer retailerwholesaler consumer

producer consumerwholesaler retaileragent

producer

producer

producer

producer

Industrialcustomer

Industrialcustomer

Industrialcustomer

Industrialcustomer

agent

distributoragent

distributor

producerIndustrialcustomer

producerIndustrialcustomer

agent

producerIndustrialcustomer

distributor

producerIndustrialcustomer

distributoragent

Serviceprovider

consumer

agent consumerService

provider

Serviceprovider

consumer

agent consumerServiceprovider

MARKETING FACTORS

Buyers expectations dictate that the product be sold in a certain way.

A willingness of channel intermediaries to market out a product also influences channel decisions.

The profit margin demanded by wholesalers and retailers and the commission rates expected by sales agents also affect their attractiveness as a channel intermediary.

The location and geographic concentration of customers also affects channel selection

MANUFACTURER FACTORS

Manufacturers may lack the financial and managerial resources to take on channel operations.

A wide mix of products may make direct distribution cost effective.

The use of independent channel intermediaries reduces manufacturer control.

PRODUCT FACTORS

Large and complex products are often supplied direct to customers.

Perishable products require short channels to supply the customer with fresh stock.

COMPETITIVE FACTORS

Competition controls the channels of distribution. Channels of distribution includes direct

marketing, exclusive dealership arrangements, manufacturer control or owned distribution network.

Alternate distribution channels may be used as a means of attaining competitive advantage. For e.g., Dell uses direct marketing to gain a substantial competitive advantage

DISTRIBUTION INTENSITY

Deciding the no. of outlets in a region or for a population i.e., the intensity of the outlets is a critical decision .

Cost of serving goes up if outlets are more then reqd. and vice-versa.

Difficulty in accessing the outlets may increase the sales of alternate brand or product .

1-Intensive distribution.

2-Selective distribution.

3-Exclusive distribution.

are the three options available with the company.

INTENSIVE DISTRIBUTION

It provides maximum coverage of market by using all available outlets.

In this case consumers have a range of acceptable brands from which they choose; if brand is not available in the outlet, an alternative is bought.

Such products are also unplanned & impulsive in nature. If the product or brand is not spotted , sales are lost. E.g., cigarettes, food & confectionaries.

SELECTIVE DISTRIBUTION

For products like electric goods, home appliances, manufacturers use limited no. of outlets in geographical area.

This arrangement is used when buyers are willing to spend time in the outlet when selecting the products.

Customer is willing to travel some distance to find his proffered brand/ brand.

EXCLUSIVE DISTRIBUTION

Only one wholesaler, retailer or industrial distributor is used in a geographical area.

This reduce purchaser’s powers to negotiate prices for product., e.g., automobile dealers, super premium brands or high-end brands.

This also reduces competition.

CHANNEL MANAGEMENT

1. SELECTION.

2. MOTIVATION.

3. TRAINING.

4. EVALUATION.

5. MANAGING CONFLICTS.

SELECTION

Small & new manufacturer have to convince key channel intermediaries to stock their products by offering extra incentives & by convincing them.

For estd. Manufacturers do have a choice & members may carry the product at each level.

One have to choose a right intermediary because immature work will give the same image to the product.

Marketing channel can also be taken on the basis of consistent and inconsistent product line.

MOTIVATION

Possible motivation include financial rewards, resource support e.g., advertizing, promotional support etc.

The key to effective motivation is to understand the needs & problems of distributors.

Some distributors may value financial incentives & some may prefer exclusive territorial rights.

TRANING

Provides necessary product knowledge about manufacturers & its product.

Training should be given in areas such as marketing , financial management, inventory control, etc

EVALUATION

On the basis of evaluation one decides which channel member to retain or to drop.

Evaluation criteria includes-

1. sales volume.

2. Profitability.

3. Level of stocks.

4. Selling & marketing capabilities.

5. Feedback provided.

6. Ability & willingness to keep commitments.

MANAGING CONFLICTS

Conflicts occurs when one member of channel is preventing the first member from achieving its goals.

Sources of channel conflicts-

1. Difference in goals(maximum profit)

2. Difference in desired product lines.

3. Multiple distribution channels.

DIFFERENCE IN GOALS.Channel members manufacturer

1.higher margin. 1.Lower margin.

2.Lesser inventory. 2.Greater channel inventory.

3.Lesser promotional expenses. 3.Higher promotional expenses.

4.Greater allowances to channel members

4.Less allowances to channel members.

DIFFERENCE IN DESIRED PRODUCT LINES

In today's scenario retailers decrease product range & increase product line & this displeases original supplier of product lines.

E.g., specialty sports footwear shop

MULTIPLE DISTRIBUTION CHANNEL

In trying to achieve market coverage manufacturer may use multiple distribution channel.

Manufacturer may sell a product lines through a specialty shop, departmental store, a discount store, to increase coverage & again these retail formats compete differently from one another.