Mk Tgm Gt 2007 After Pricing

7/28/2019 Mk Tgm Gt 2007 After Pricing

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CHANNELS

Marketing Channel is a set of intermediaries who are

independent organizations standing between the producer and user

The channel as we normally call consists of a sales channel, a

delivery channel and a service channel.


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Why channels

Reduce transaction cost by reducing the number of transactionsProvide implicit financing for finished goods inventory of the firmOne-to-One marketing is not feasible e.g. gum, coke etc Develop and disseminate persuasive communications Transfer of ownership or pass title to the consumer/customer

Reach agreements on price with customer, which firm may not want to do all by itselfRisk taking in the channel processes and in investment of minimum stocks

prescribed by the firmFirms may find their existing business more profitable than investing in the channelsProvide time, place and possession utilitiesOffloads some of the selling and distribution workload of the firm at efficient

prices to the firmThe entire channel system obtains superior efficiency in making products

accessible, readily available and widely available to target markets - enablesa performance of distribution that the firm could not achieve all by itself. Netresult is a creation of surplus that is passed on the consumers


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A) Consumer marketing channels

M M M M

C C C C

R

WS

R

WS

J

R

0-level 1-level 2-level 3-level

B) Industrial marketing channels

M M M M

IC IC

ID

MR MSB

IC IC

0-level 1-level 2-level 3-level


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Notations

MManufacturer

WSWholesaler

RRetailer

JJobberCConsumer

MRManufacturers Representative

IDIndustrial Distributor

ICIndustrial Customer

MSBManufacturers Sales Branch


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Role of distribution in firms overall objectives

Higher the role of distribution, higher are the management

levels that take distribution decisions e.g. in a tire company like MRF

distribution channel selection is likely to be very important and CEO

may make such decisions.

Role of distribution in the marketing mix

It is possible that competitive parity exists for product, price, promotion.

Then distribution becomes a crucial factor in getting SCA

e.g. HLL in FMCG Category

Synergy in distribution is another reason for increasing the role of

distribution in marketing mix e.g. P&G - WalMart


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Design of Channel Members

-Analyze customers desired service output levels in terms of outputs such as waiting time, lot size,

spatial convenience (Maruti has more dealers across India), service backup (credit,

delivery, installation, repairs), product variety / assortment-Establish objectives in terms of targeted service output levels ( 24 hr response time for repairs,

45 day credit, 8 weeks delivery).

-Identify major channel alternatives to accomplish above objectives

- types of and number of intermediaries, terms and responsibility of intermediaries

- Evaluate major alternativeseconomic criteria + control criteria

- Selection of channel alternativetypes, number and terms and responsibilties


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Number of Intermediaries

Exclusive DistributionNew AutomobilesFranchisees;

severely limiting number of intermediaries with a

hope to get more knowledgable and dedicated

selling

Selective Distributionmore than a few but less than all;

used by new firms seeking distributors e.g.

consumer durables and premium products

Intensive DistributionFMCG


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Terms and responsibilities of channel members

-price policyprice list + discounts and allowances

- conditions of salepayment terms + m/f guarantees

- distributors territorial rights.


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Selection of Channel Members

- To the customers, the channel is the firm. So selection of channel members

in line with firm objectives is important

- Selection is influenced by what is available. Polaroid for instance could

not get its camera into camera stores and was forced to use mass-merchandising

outlets- Evaluate multiple criteria such as number of years in business, other

lines carried, growth and profit record, financial strength, cooperativeness and

service reputation

- decide target market. Accordingly select channel members

- decide channel position. Accordingly fine tune members- broad coverage then selection less important. Selective coverage

then member selection important


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Behavioral dimensions affecting channels

Conflict

Power


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Conflict

Vertical channel conflict

Conflict between different levels in same channel

e.g. Coca-Cola in conflict with its bottlers whoagree to bottle Dr. Pepper

Horizontal Channel ConflictConflict between members at the same level within the

channel e.g. Some Pizza Hut franchisees complain

on other franchisees about providing poor service /

ingredients and hurting Pizza Hut Image

Multi-channel conflict

Occurs when m/f has set up two or more channels to sell

to same market. One channel complains of other

e.g. Levi Strauss sells through department stores and

specialty stores; specialty stores complain about dept

stores.


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Causes of channel conflict

- Goal incompatibility. M/f may want to penetrate. Dealer may like

to take high margins

- Unclear roles and rightsboth m/f and dealer sell to same large

accounts- Differences in perceptionm/f may want dealer to carry high

inventory; dealer may be pessimistic

- Too much dependence on m/f


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Functions of Wholesalers

Selling and promoting: wholesalers sales force help

manufacturers reach many small business customers at arelatively low cost. Wholesalers have more contacts, and oftenbuyers trust wholesalers more than they trust a distantmanufacturer.

Buying and assortment building: Wholesalers are able toselect items and build the assortments their customers need,

saving the customers considerable work.Bulk breaking: Wholesalers achieve savings for theircustomers through buying in large carload lots and breaking thebulk into smaller units.

Warehousing: wholesalers hold inventories, thereby reducing

inventory costs.Transportation: Wholesalers can often provide quicker deliveryto buyers because they are close to the buyers.

Financing : wholesalers finance customers by granting credit,and finance suppliers by ordering early and paying bills on time.

continued


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Functions of Wholesalers

continued

Risk bearing: wholesalers absorb some risk bytaking title and bearing the cost of theft, damage,

spoilage, and obsolescence.

Market Information: wholesalers supply information

to suppliers and customers regarding competitorsactivities, new products, price developments.

Management services and counseling:

Wholesalers often help retailers improve their

operations by training sales clerks, helping with store

layouts and displays, and setting up accounting and

inventory-control systems. They may help industrial

customers by offering training and technical services.


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Retailing

Selling goods or services directly to final consumer for personal, non business

Use. It does not matter how the goods are sold (by person, mail, telephone,

Vending machine, internet) or where they are sold ( in a store, consumers home)


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Retail store types

-Specialty storeKangan stores, Jewellery stores- Department storeSears, Shoppers stop

- SupermarketFoodworldlow cost, low margin, high volume stores

- Convenience Stores7-11, kirana stores

- Discount storeWal Mart, Big-Bazaar

- Off-Price RetailerFactory outlets, warehouse clubs

- Super StoreHome Depot , IKEA, KempFortSpecial category ofsuper stores that carries a deep assortment in a particular category

- category killers e.g. TOYS R US

- Hypermarkets(80,000200,00 sqft) combine super market, discount and

warehouse retailing. E.g Carrefour (France) , Meijers( Netherlands)

- Catalog ShowroomOrder goods from a catalog, then pick these goods at

a merchandise pick up area in store e.g. Service Merchandise


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Retailer Service Level

1. Self ServiceMostly in discount operations e.g. Darshini Restaurants

2. Self SelectionCustomers find their own goods though they can ask for Assistance

e.g. Wal Mart

3. Limited ServiceCarry shopping goods where customers need more info and

assistance. Limited credit and merchandise return privileges available e.g Shoppers Stop

4. Full ServiceJewellery StoreBhimas Jewellery, Bangalore says customers can return

jewellery 75 years old


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Non Store Retailing

1. Direct Selling (also called multilevel selling, network marketing) e.g. Avon, MaryKay

2. Direct Marketing

3. Automatic Vending Machine


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Managing Direct MarketingDirect marketing includes : Catalogs (Mervyns, Macys); Direct Mail [Speciality items, Fitness equipment, Home

gadgets, Speciality magazines(Air and Space,National Geographic, Civilization, Smithsonian)]

Telemarketing(AT&T, MCI) New Mail - Faxmail, e-mail, Voicemail Direct response advertisingon TV (Call a number to

order)

At-home shoppingchannels on TV/Cable Online Marketing/ Electronic Commerce Internet Online Services - Compuserve, America Online, Prodigy


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A Service is any act or performance that one party can offer to another that is

essentially intangible and does not result in ownership of anything. Its

production may be or may not be tied to a physical product


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Services

Government Sector

courts, military and police, loan agencies

Non Business sector

charities, colleges, hospitals

Business Sector

banks, hotels, airlines, insurance

Manufacturing Sectorservice to goods (logistics, after-sales service)


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Some Generalizations in Service

_ Equipment Based (airlines), People Based (accounting services)

_ Need Clients presence (surgery), dont need clients presence ( car repairs)

_ personal need fulfilled (haircut), business need fulfilled (business service inhotels)

_ profit, nonprofit

_ private, public


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Categories ofService mix

Pure tangible - toothpaste

Tangible good with accompanying services e.g. cars,computers

Hybridrestaurantsboth food and service

Major service with accompanying minor goods - airlines

Pure Servicepsychotherapy, baby sitting


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Three types of Marketing in Service Industries

Company

EmployeesCustomers

External Marketing4Ps

Interactive marketing

Technical QualityHigh Tech

Functional QualityHigh Touch

Internal Marketing

Train and motivate

Employees to serve

customers


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Managing Service

Companies

Managing Competitive Differentiation

Managing Service Quality

Managing Productivity


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Managing Productivity

1 Use more skillful workers

2 Industrialize ServiceMcDonalds standardization to fast food retailing

3 Present customers with incentives to use their own labor instead of

company labor e.g. DIY kits

4. Use technology wherever possible


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Managing Product Support Services

1. Look at (a) reliability and failure frequency to customer, (b) downtime durationto customers (c) out of pocket costs of maintenance and repair to customer

2. Offer facilitating servicesinstallation, staff training, maintenance and repair,

financing

3. Offer value augmenting servicestrade-ins, extended warranty plan


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Advertising objectives

inform

persuade

remind


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Message source credibility

trustworthiness

expertise

likeability


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Need Analysis


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Consumer Buying Process


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Consumer Buying Process

Problem Recognition

Information Search

Evaluation of alternatives

Purchase Decision

Post purchase behavior


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Relationship Selling

Situation

Problem

Effect

Need

Decision

SPEND


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Relationship Selling - Need Analysis

Look

Observe

Combine

Ask

Talk

Empathise

LOCATE


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Elmer Wheeler


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Competing salesmen too!


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Contrast theory


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Relationship marketing


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Mk Tgm Gt 2007 After Pricing