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Hogeschool van Amsterdam Interactieve Media
Distribute or die: Offline and online distribution strategy
Hoorcollege marketing blok 2 week 7
Hogeschool van Amsterdam Interactieve Media
Learning goals
By the end of the reading and colleges you should understand: How place fits into the overall marketing mix The types of distribution channels available What is channel conflict and some solutions for this issue How distribution relates to interactive media products Some of the main trends in distribution Some ways of choosing distribution channels
Hogeschool van Amsterdam Interactieve Media
Agenda
Introduction: what is place?
Types of distribution channels
Channel conflict
Trends in distribution
Interactive media and distribution
10 tips for choosing and managing distribution channels
Summary
Hogeschool van Amsterdam Interactieve Media
What is place?
Place in the 4Ps of marketing refers to all aspects of getting the product/service/idea from the producer to the end consumer
It is also called distribution or distribution channels
It is an important, but often neglected element of the marketing mix When done well it can help ensure success When things go wrong it can lead to big problems
Hogeschool van Amsterdam Interactieve Media
What sort of things can go wrong?
Choosing the wrong place A place where the customer isn’t A place that is not consistent with positioning / marketing mix
Fighting between places
Not enough product in the right place Imagine this happening during a promotional activity
Too much product in the right or wrong place
Not developing distribution channels to keep up with customers
Hogeschool van Amsterdam Interactieve Media
Distribution channels
These are the routes that companies use to get their product to the customer
Channels are normally split by: Customer type
Business to consumer channels (B2C) Business to business channels (B2B)
Distribution type Direct channels Indirect channels
Hogeschool van Amsterdam Interactieve Media
Why do organizations do indirect business?
Because distributors do a lot of work including: Distribution Financing Risk taking
Esp. inventories
Providing information Marketing intelligence to producer
Promotion Customer management Acquisition Matching needs to products Negotiation of contracts / prices
Hogeschool van Amsterdam Interactieve Media
What is channel conflict?
Most distribution channels are made up of separate companies Often these companies are competitors
One of the main problems is that they often conflict This uses time And can drive the going price down
Two sorts of channel conflict: Horizontal conflict Vertical conflict
Hogeschool van Amsterdam Interactieve Media
Managing channel conflict
The key is to manage your channels
Options include Avoid large pricing differences between channels Maintain regular contact Develop channel specific line-ups Channel specific support
Logistics Promotions Service Financing
Hogeschool van Amsterdam Interactieve Media
Tangible products
The web has opened up many new distribution channels for tangible products Both direct and indirect
channels
Consumers are moving to these channels
Increased risk of channel conflict
Hogeschool van Amsterdam Interactieve Media
Services
Interactive media has opened new channels for services and is especially popular with financial services
ATMs (pinautomaats) online & mobile banking are revolutionizing banks
Hogeschool van Amsterdam Interactieve Media
Software
Online distribution of software is an obvious step
A number of different models Direct sales Shareware Free software
The “free” model has been very successful for Adobe
Risk of channel conflict very high in some areas Music / film
Hogeschool van Amsterdam Interactieve Media
Interactive media products
Interactive media also provides a channel for interactive media products E.g. Google search (site
search, desktop, mobile), adwords
This is a new trend, but it seems to have potential Part of Google’s success is
its innovative approach to “distribution” of its products
The phenomenon of “widgets” and “embedding” make this a more interesting option in future
Hogeschool van Amsterdam Interactieve Media
Shopping as a lifestyle and experience
Shopping is a leisure activity 84% of UK adults enjoy
shopping
Shopping is social
Shopping is used by some as therapy
Shopping can be an enjoyable experience
Many retailers and shopping centres are trying to tie into this trend
QuickTime™ and aTIFF (Uncompressed) decompressor
are needed to see this picture.
Hogeschool van Amsterdam Interactieve Media
Move online
More people shopping online (672m worldwide)* Europeans purchase more
frequently online than North Americans
Security issues being resolved
Familiarity helps
* Source: AC Nielson
Hogeschool van Amsterdam Interactieve Media
Growth in retailer strength
Large retailers have more power than ever before
This leads to better prices for consumers
But killing smaller specialists
May reduce choice long-term
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QuickTime™ and aTIFF (Uncompressed) decompressor
are needed to see this picture.
QuickTime™ and aTIFF (Uncompressed) decompressorare needed to see this picture.
Hogeschool van Amsterdam Interactieve Media
10 tips for choosing and managing distribution channels
1. Be where the customer is Ready to buy Open to influence
2. Ensure the channel fits positioning
3. Visibility is everything Ensure you have shelf-space
4. Treat your distribution as partners Look after them and they will
look after you
5. Minimize channel conflict through strong management
6. Follow the customer
7. Develop new channels
8. Different channels require / expect different profit marginsThese might not fit your business
model
9. No distribution channel “has to have you”
10. Never underestimate how difficult it is to enter new channels
Hogeschool van Amsterdam Interactieve Media
Summary
Distribution is important though sometimes neglected
The “place” should reflect positioning (and support the rest of the marketing mix)
Distribution needs to be strongly managed to avoid channel conflict
Place includes interactive media, in the case of interactive media products there are many new opportunities to distribute products
Trends in online and offline distribution are leading to many opportunities and threats of channel conflict