marketing mix

Marketing mix : PlaceManagement of

distribution channelsViraj Mahida QA Roll no:18Smit Bhavsar QA Roll no:16

“A marketing channel is a system of relationships existing among businesses that participate in the process of buying and selling products and services.”

Four Ps• Four Ps

Four Cs• Four Cs

P = Location• Convenience• Distribution• Availability• Accessibility• Usability• Where and when necessary• Size and portability

Place- Convenience• Placement is replaced by the convenience function. • With the rise of internet and hybrid models of purchasing, place is no

longer as relevant as before.• Convenience takes into account the ease to buy a product, find a

product, find information about a product, and several other considerations.

Product Classes - Place• Convenience Products - have to be in convenient places - small

stores, vending machines• Shopping Products - have to be where shoppers go, malls,

superstores etc.• Specialty Products - have to available where people want to buy

them - ie. Movie theatres have to be located where many people go, and where you can park easily

Place and PLC• PLACE must be considered in terms of the Product Life Cycle• In the beginning Growth Stage - it might be good to have your

product sold in a certain location, but in the maturity or decline stage, you may have to change locations to make it better for customers who are no longer so strongly interested in buying

Functions of distribution channel

• Link between production and consumption• Market information• Communicate promotional offers• Transporting & storing• Financing and Risk taking

Types of Channels

• Consumer Product Channels

zero-level channel

One-level channel

Two-level channel

Three-level channel

strategic channel alliance

Marketing Channels for Consumer Products

Manufacturer Manufacturer

Manufacturer

Manufacturer

Agents

Wholesalers

Wholesalers

Retailers

Retailers

Retailers

Consumers Consumers

Consumers

Consumers A

B C

D

Direct channels

•Door to door sales•Mail order•Telemarketing•Tv sellingManufacturer owned stores:Example-Eureka Forbes, Tupperware, Bharat Petroleum

Industrial Product Channels

Manufacturer Manufacturer

Manufacturer

Manufacturer

Agent

Agent

IndustrialDistributors

IndustrialDistributors

Industrial

Buyers

Industrial

Buyers

Industrial

Buyers

Industrial

Buyers

P Q

R S

Intensity of Market Coverage• A company must determine the distribution coverage intensity a product should

get, what number and kinds of channel in which the product will be sold. Three major coverage strategies include intensive, selective, and exclusive distribution.

• Intensive Distribution: A company uses all available distribution outlets for making its product available to consumers.

• Selective Distribution: Companies use selective distribution, which means using more than a few and less than all available outlets in a market area to distribute products.

• Exclusive Distribution: This type of distribution means using one or very limited few outlets.

Vertical, Horizontal, and Multichannel Marketing Systems

• With the passage of time and changes in business environment and strategies, marketing channel systems evolve and new wholesaling and retailing institutions appear.

Vertical Marketing System (VMS)

• Vertical marketing system refers to an arrangement in which the whole channel focuses on the same target market at the end of the channel.

• There are three types of VMS –

corporate – Sherwin Williams makes paint but also owns and operates 2,000 retail outlets.

administered – Kodak, Gillette, Procter & Gamble

contractual- value-adding partnerships

Horizontal Marketing Systems

• Horizontal marketing system occurs when two or more related or unrelated companies working at the same level come together to exploit marketing opportunities.

Multichannel Marketing System• Some companies use several marketing channels

simultaneously to reach diverse target markets. This system is also called hybrid channels or multichannel.

• Disney sells its DVDs through five main channels like,I. Movie rentals store such as blockbuster II. Disney’s retail store - Best buyIII. Online store - Amazon.comIV. Disney’s own online storeV. Disney catalog and other catalog store

Channel length : Direct/Indirect

• Choice of intermediary• Logistics options for channels • Control over the channel

• Who decides price, promotion, packaging

Why use intermediaries?• Geography – Customers may live far away to be reached directly• Segmentation – Different segments can be reached only by different

distribution channels• Lack of retailing experience• Better use of resources elsewhere

Factors to be considered in selection of channels • Type of product?:

• Is it sold to other producers or customers?

• How often the product is purchased?• How expensive is the product?• How perishable is the product?• Location of customers?• Competitors

Marketing Channel Management

Formulating channel strategy

Design channel structure

Select channel members

Motivate channel members

Coordinate with marketing mix

Evaluate member performance

• Realize only the place ‘P’ provides protection from imitation

• Distribution strategies can provide sustainable competitive advantage








Set distribution objectives

Specify tasks to be performed by the channel

Consider alternative structures

Choose optimal structure








• Optimal structure identified by considering:

• Market variables• Product variables• Company variables• Intermediary variables• Behavioral variables• External environment variables








Prospective channel member

Management succession

SalesPerformance

MarketCoverage

Reputation

ProductLines

SalesStrength

Credit andFinancialCondition

Size

Attitude

ManagementAbility

Develop selection criteria








• Find prospective channel members• Evaluate prospective channel members• Convert prospective into actual channel members








• Learn about the needs and problems of channel members• Advisory committees

• Offer support• Informal support• Strategic alliances, partnerships

• Provide ongoing leadership• Continuing focus








• Product and Channel• Retailers (a channel

member) play an important role in product positioning

• Personal selling

• Pricing and Channel• Relevant to channel

members:• Profit margins available

to channel members• Pricing policies• Incentives

• Promotion and Channel• Promotions interface with

channel members• Point-of-purchase displays• Inventory levels• Sales person training








• Assessment of success of channel members in implementing strategies

• Requires good information flows between members

• Point-of-sale systems

Channel Conflicts and Cooperation

“Channel conflict is a situation in which one channel member perceives another channel member(s) to be engaged in behaviour that prevents or impedes it from achieving its goals. The amount of conflict is, to a large extent, a function of goal incompatibility, domain descensus, and differing perceptions of reality.”

Types of ConflictIn any distribution channel arrangement there can possibly develop three kinds of conflicts:

Vertical channel conflict

Horizontal channel conflict

Multichannel conflict

Causes of ConflictMajor causes of conflict include: Goal incompatibility, Roles and rights ambiguity, and Differing perceptions.