product placement~ss 10~12

7/31/2019 Product Placement~SS 10~12

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MarketingChannels &

Supply ChainManagement

ProductPlacement

Raymondpresents

world-classexperiencethrough its

stores


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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.


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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


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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


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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

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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


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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


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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


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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


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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


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ProductPlacementIndustrial Marketing Channels


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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.


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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

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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


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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


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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


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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


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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


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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


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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


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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


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Channel Design Decisions

Analyzing Consumer Service Needs

Setting Channel Objectives & Constraints

ExclusiveDistribution

SelectiveDistribution

IntensiveDistribution

Identifying Major Alternatives

Evaluating the Major Alternatives

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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?


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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


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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


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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


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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


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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


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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)


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Key Parameter:

Stock Norm

Investment Level

Competitive Tracking

(Key driver: Planning &

Forecasting)

ProductPlacement

Dominant Trade Franchise

=

Brand Franchise.


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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


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Managing upstream and downstream value

added flows of materials, final goods, and

related information among the supplier,

company, resellers and final consumers.

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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.


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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


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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


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


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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


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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


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Choosing Transportation Modes

1. Speed.

2. Dependability.

3. Capability.

4. Availability.

5. Cost.

Checklist for ChoosingTransportation Modes

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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


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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


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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

product placement~ss 10~12

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