What are the different channels
of distribution ?
 Department stores
 Franchise
 Hypermarket
 Corner stores or convenience stores. often
family-owned run by minorities .
What are the main assets of the
convenient stores
 - closeness
 - long opening hours
 They are mainly used by people who:live
nearby or can't shop far away (no car, etc.)
 - in case of emergencies to save a trip to a
supermarket.
Main drawbacks
 - little choice or variety (little stock)
 - high prices (their owners can't buy in
bulk).
DISTRIBUTION
1. What are the major differences between
a department store and a hypermarket?
Characteristics
 Department stores are huge shops with many
departments on several floors:
 - on the ground floor, common and relatively
inexpensive items
 - clothes on the first and second floors (shoppers
can take their time to try clothes on in less
crowded spaces)
 - slow-selling goods, or goods which take up a lot
of space, and the restaurant are located at the top
of the store.
 Nowadays, department stores are declining.
Can you name some department
stores ?
 Marks and Spencer
 Dickens and Johns
 C§A
Reasons for their decline?
 - they have uncompetitive prices: shoppers
prefer hypermarkets
 - customers prefer to shop in specialist
stores (expertise and choice)
 - extra charges to park in city centres
 - lack of personality/brand identity for most
department stores
 - old-fashioned image (stores for mature
customers).
Some of them have reacted by
 . creating "worlds", or specialist shops
within the large store. The department store
benefits from fashionable labels, takes a
percentage of profits and rents,
 . focussing on fashion (to try and attract
more young customers)
 . revamping the layout, to make it easier for
customers to find their way around,
 . paying attention to "visual merchandising"
 - free delivery
 - car-parks
 - fashion consultancy (a free service for
timepressed women who simply telephone
the store and ask for some outfits to be
assembled by a "personal shopper"
 - "gold" frequent buyer cards
 - exclusive lounges (where customers can
have tea)
Name some hypermarkets
 Wal mart
 Tesco
 Asda
 Safeway
Reasons for the hypermarket ‘s
success ?
 Consumers are money-conscious
 Supermarkets have chosen to set up on the
outskirts of towns because of:
 price: lower rents for wider spaces
 - car-parks: people do not have to look for a
parking space and can take huge shopping bags
home
 mall/shopping centre offer comfortable indoor
shopping and numerous services (entertainment,
banks, restaurants,etc.).
Reasons for success
 barcodes: stock management is
rationalized - scanning devices at checkouts
 to lay out products so as to make shoppers
buy more.
 impulse buying: head on the shelves.
 strategic places: the products to be
promoted are placed on eye-level shelves,
near the check-out, or at end of aisles.
 Innovations
 British supermarkets are currently
launching financial services for their
customers to ensure their loyalty.
What do you know about the
franchise ?
 A franchise is an agreement between a franchisor
and a franchisee .
 The franchisee pays:
 -franchising fee to buy the right to operate a
business,
 - a percentage of the turnover to the franchisor
(royalties).
 The franchisee gets:
 - the brand and reputation
 - know-how and training - advertising campaigns.
Advantages
of the franchise ?
 on the domestic market: in a recession,
franchising is a way to start up a business
with less risk, with little capital and
experience,
 on foreign markets: franchising is a way to
team up with local partners who know the
target marketplace.
Drawbacks ?
 some franchisors impose standard-format
stores and a range of goods (Benetton),
 - they may also oblige their franchisees to
respect certain rules: dress-code, prices and
opening hours, etc.
Home shopping , mail ordering
 Advantages for the companies?
 low overheads: firms operate from warehouses in
low-rental areas,
 - automated warehousing and logistics.
 - Advantages for consumers:
 - very competitive prices,
 - savings in terms of time/transport: no opening
hours, better service thanks to phone/fax/computer
ordering, delivery times cut to one day.
- Problems ?
 Some consumers hesitate to buy from a
catalogue, many goods are returned.
 Poor quality of the goods
 Not the right size , colour.
 Customers are disappointed
CURRENT TRENDS ?
 E commerce
 Direct-to-home retailing
 - Door-to-door selling for books, insurance, etc. ,
 - home parties (demonstrating products in a
friendly atmosphere) or multilevel distribution
systems.
 Consumers order the goods they have seen on TV
through a computer network or via a toll-free
number.
Advantage for companies ?
 a
new distribution channel without shops,
especially in industries where the choice is so
wide that a web site offers added value,
 - advantage for consumers: they can surf and order
worldwide, from home, at any time,
 - limit: E-commerce is much talked about, but it
does not represent a high volume of sales yet: only
5% of mail ordering transactions and about 1% of
total commerce.
Vending machines : Advantages and
drawbacks
 They
concern many products and services:
elaborate automatic teller machines :food,
newspapers, videos, cigarettes, etc…
 Advantages: quick return on investment,
profitable in travel-related areas (stations, airports,
hotels, cinemas}.
 - Reasons accounting for their development: no
staff, no overheads, round-the-clock sales.
 Main drawbacks: breakdowns and vandalism.
what are their main characteristics ?
 They buy in bulk: a group centralizes the orders, obtains
the best conditions with suppliers and stocks the
merchandise.
 low prices: reduced profit margins, low-price generics or
store-brands instead of famous brand names.
 - the staff (minimum number of employees} does
everything: shelf-filling,
 warehouse-like shops: limited number of brands,
products displayed on pallets or in delivery cases,
 few facilities for customers: rare credit card payments,
long queues.
 - money-cautious consumers that get the best qualityprice ratio.
Development of entertainmentoriented stores
 - Who: famous brands (Nike, Donna Karan,
Warner Bros)
 - what: fun stores, with many entertaining
activities (multimedia games, video clips,
etc.)
 - goal: attract consumers back to stores and
hope they will spend some money there
instead of resorting to home-shopping.
What are the regulations against Sunday
shopping
 Germany, Denmark, Greece and Holland: strict.
 France, ltaly: Sunday trading is allowed in touristrelated areas.
 lreland, Portugal: shops can open whenever they wish
to.
 Spain: a 1996 trading law forbids the opening of stores
on Sundays and public holidays.
 Britain: a December 1993 law allows the opening of
small shops at any time, and the opening of large shops
and supermarkets between 10 and 4 p.m. on Sundays.
 - U.S.A.: shopping is legal 24 hours a day, 7 days a
week.
State your opinion , are you for or
against Sunday opening
 Against Sunday opening –
 unions fear the workers will have to work
on Sundays without extra pay,
 - small shop-owners are afraid they will not
be able to face the cost of Sunday double
pay,
 - church officials claim that Sunday
shopping is a danger to family life and
social relationships.
For Sunday opening
 - some working mothers welcome the
opportunity to do their shopping,
 - store-owners can enjoy flexible working
hours and increase profitability .
 some employees welcome part-time jobs.
Finding the right marketing mix
What is the marketing mix ?
 The marketing mix is made up of 4
elements: - product - place- price –
promotion
 The goal is to get the best possible
combination of the 4 Ps of the mix.
Product
 . Different types of products
 - white/brown/ grey goods
 - staple goods: basic products
 - durables: products that last
 - disposables: products that you throw away after
use
 - fast-moving consumer goods (FMCGs): they are
bought often, so they move quickly.
Brands
 Products are defined by a brand which can be famous or
not:
 - the most famous brands (Coke, Barbie, Michelin, Disney,
McDonald) have become household names, icons of the
20th century.
 - some brands, such as KIeenex, Walkman, Hoover, etc.,
have become generic names. Today they are part of our
daily environment.
 - in the current recession, many stores (discounters,
supermarkets, etc.) have launched their own brands for
foods, apparel, computers, detergents, jewellery, etc. They
are called own-label products or store-brands.
Life cycle






five stages.
introduction: development of product and market
growth: production costs are lower
maturity: competition becomes fiercer
saturation: too many suppliers
decline: demand eventually dies out despite
promotional efforts.
 At each phase of the product's life cycle,
companies try to get the most out of it and adopt
different selling techniques.
new trend
 Nowadays, products must be "politically
correct": consumer watchdogs and
activists are more powerful than before.
They can lobby political groups, organise
boycotts or campaigns to make people
aware of wrongdoings, especially where
child labour or animal cruelty are
concerned .
Packing and packaging
 They are also part of the product mix:
 - packaging must be eye-catching
 - for certain products it must indicate the
contents or ingredients
 - a product must satisfy standards and
regulations (quality, safety warnings)
PLACE
 Different strategies can be chosen: they
determine which channel(s) of distribution
will be used :
 Intensive: goods are available in the highest
possible number of stores.
 Selective: several stores (according to
criteria of size, location, image and knowhow) sell the product without having an
exclusive agreement.
 exclusive: the dealer or franchisee must not
sell competing brands.
Supplying the various
points of sales is of
considerable importance:
repeat orders must be
answered quickly.
Price
 The price paid by the general public always
includes VAT (value-added tax) in Europe or sales
tax (U.S.A.).
 market surveys help fix the minimum and
maximum psychological prices for a product,
generally just below a round figure.
 the money-conscious consumer looks for the best
value for money (quality-price ratio).
what’s the main purpose of the
Promotion
 inform consumers about a new product, the improvement




of a well-known item, or a special offer.
- make people more aware of the brand: the brand, the
logo and the design of the packaging help consumers
differentiate one product from rival brands. Slogans are
repeated.
- create (or strengthen) the brand image
convince consumers to buy: advertising surrounds the
product with connotations of happiness, health, well-being
to persuade consumers that one brand is better than the
others,
- promote the "philosophy" of the company
 What’s
usually
a
 firm ‘s
first
concern
How to choose an advertising medium
give examples.
 according to the target.
 posters (stuck on hoardings/billboards) in
the street, Underground or bus shelters
 press advertisements
 commercials on TV or radio
 endorsements by famous stars
 sponsoring
 - surprise media: buses.
 What’s the
hiden
message
here?
State wether those statements
are false or right.
 1. Durables are products that you throw away after
using them.
 2. Coca-Cola is called an icon brand.
 3. During the maturity phase in the life cycle of a
product, the suppliers are too numerous.
 4. Selling techniques are similar from the
introduction of a product on the market to its
decline.
 5. There is less disposable packaging than before.
 6. The psychological price is generally a round
figure.
 8. The quality-price ratio is considered as
important nowadays.
What is the situation of
counterfeiting worldwide ?
 It is a booming industry : there are lO to 20
times more copies of luxury brand articles
sold than are produced by the companies
themselves ! In computing ,3/4 of the
software used in Europe are copies !
Counterfeiting also represents 5 % of world
trade , which is huge !
What are the most popular
products being counterfeited ?
 CDs,videotapes,Ray-ban
sunglasses
,
software ( Microsoft ) , games ( Nintendo ) ,
toys , clothes (Levi's , Adidas , Nike ,
Lacoste) , luggage ( Vuitton , Chanel) ,
perfume , watches ( Rolex , Cartier) ,
medical drugs , airplane and car spare parts
branded foods and drinks = any kind of
product but quite often luxury goods .
Who makes the rip - offs ?
 The Third World , NICs and a few European
countries but the 12 main counterfeiting
nations are : South Korea , Taiwan, Hong
Kong, China, Thailand , Singapore , India ,
Turkey , Morocco, Mexico , Spain and Italy
.
What are the reasons for making such goods ?
 Some are too expensive to be affordable and
their notoriety and prestige make them
attractive.
 the counterfeiters are often from poor or
developing nations and steal the ideas from
foreign firms which are an ideal to them and
it allows them to find a lucrative job more
easily.
What are the consequences for firms
consumers and countries ?
 Firms
spend a lot on Research and
development - without a real return - and on
the protection of their interests (Vuitton ,
Lacoste and Cartier spend around I % of
their turnover to fight against counterfeiting
 These copies mean financial tosses for
them as weIl as a loss of prestige and
notoriety in a way .
What are the consequences for users ?
 they could benefit from cheaper goods , on one
side (CDs, software etc ... )
 the quality is often poor , on the other side .
 some fake items may be dangerous (fake
medicines which killed some people in Cambodia
or toys which led to domestic accidents because
they did not comply with EU norms) : so look for
the safety labels before buying some goods !
 Now this trend can lead to trade wars between
countries (China and the USA )
What are the solutions ?
 suits
 fines , ( equivalent to one or two times the
value of the genuine merchandise )
 confiscation of the goods at the customs
 Jail, emprisonment
 burning the pirated goods
 closing down the underground factories (in
Thailand… ).
Are they efficient measures?
 Don’t t you think this phenomenon is
amplified thanks to the use of new
technologies and devices such as CD
recorders which make copycats easier ?
Should we therefore ban them to stop the
problem or is it an everlasting issue which
cannot be solved anyway ? Who should
intervene ,each government confronted with
the problem or the WTO ... ) ?