Marketing Channel

OXXO

Designing a Distribution Channel

Stage 1

Firm and Clients in

the Channel Analysis

Stage 2

Firm’s Objectives

in the Channel

Stage 3

Restrictions

of the Channel

Firm’s Mission & Vision

Products to Market

Target Market

Level of Service to Offer

Market Coverage

Sales Forecast

Margin Forecast

Client’s Satisfaction Level

Firm’s Image & Positioning

Client’s Experience Design

Products’ Characteristics

Intermediates’ Needs

Competitors by Product, Channel

Environment Analysis

Market Knowledge© J

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Segmentation

Positioning

Targeting

Promotion to/with Intermediaries

Evaluation of Intermediaries

Need of Adjustments

New Channels

Designing a Distribution Channel

Stage 4

Identify

Channel Alternatives

Stage 5

Evaluation of the

Channel Alternatives

Stage 6

Selection of the Channel

Stage 7

Follow-Up of the Channel

Define Intermediates Function

Type, Level and Quality of

Intermediates

Amount of Intermediates

Economic Evaluation

Compensatory Evaluation

Control Criteria

Channel Adaptability

Non-Compensatory Evaluations

Selection of Intermediaries

Selection of Distribution

Alternatives

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Establish New

Channel

Refine Existing

Channels

Channel

Implementation

Building Value using Marketing Channels

Delivering Product Benefits

Product quality

Product assortment

Product form

Delivering Service Benefits

After-sale services

Availability/delivery

Transaction services

Improving Cost Efficiency i.e., making a product readily available

(Best 2009)

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Total Oxxo Stores

% annual growth

OXXO

Largest Convenience Store Chain

Holds 77% of the convenience store market in

Mexico (next 7-Eleven: 10%)

5% of “Estanquillos” (Pop & Mom store) in Mexico

Own label offerings:

Beverages, Snacks, Coffee,

Groceries, Cleaning, Pets, Parties,

O‘Sabor: tacos and burritos

16 distribution centers in Mexico

Retailer in Mexico

Largest convenience store

Largest quantity of ATMs

OXXO

Largest Convenience Store Chain

Concentration in Mexico:

North: 52%

Center & Southeast: 33%

Store Size: 105 mt2

+ 2,000 products & services

+ 9 million daily customers

Services: Telephony, Deposits for Credit

Cards, Buses, Banks, Utilities,

Money Transfers, Couriers, etc.Sources: FEMSA Annual Report 2013 and others.

OXXO

Largest Convenience Store Chain

Sales:

35% Drinks (beer, water & soda)

15% cigarettes

15% Cell-phone air time

35% other products

Characteristics:

Open 24/7

State-of-the-art Technological Platform

Similar prices as competitors

Mexico’s most valuable retail brand, 4th overall

Sources: FEMSA Annual Report 2013 and others.

El Economista 24 Sep 2011, Interbrand 2014: Best Mexican Brands

OXXO

Largest Convenience Store Chain

Numbers (2013):

13% Beer from Cervecería Cuahtémoc

Moctezuma

Owner: 100% FEMSA Comercio

Sales: $10,910.75 pesos/mt2

Employees: +100,000

Clients: + 9 million transactions per day

Sources: FEMSA Annual Report 2013 and others.

El Economista 6 Abr 2014, Walmart: $17,964, Soriana: $11,931

OXXO

Largest Convenience Store Chain

Market Segmentation

Accordingly to customer needs per location

In-depth analysis for locations.

Market intelligence to serve segments

Looks for local suppliers

Accept payments for services (power & light,

water, phone, TV, Taxes)

Accept Major Credit Cards (Visa, MC,

Discovery) without signature for up to $150.00

OXXO

Largest Convenience Store Chain

Market Segmentation

Payment for Airline tickets: Volaris,

Vivaaerobus

Courier services:

Own brands: Coffee (Andatti) & Hot Dog

(Vikingo)

Bitz: Snacks, Pastries & Candies

Social Responsibility Program: PRO

OXXO

Largest Convenience Store Chain

Main Competitors:

Chain retailers: Wal-Mart, Soriana,

Comercial Mexicana, Chedraui

Convenience stores: 7-Eleven, Extra

Discussion Question

Describe what segment OXXO is serving?