Marketing
Marketing Management for competitive advantage
Chapter 12
Place Strategy: Marketing
Channels and Supply Chain Management
Marketing Management for competitive advantage
Issues Concerning Distribution
Channels
Downstream partners include the marketing channels or
distribution channels that look toward the customer
Functions of marketing channels
Channel levels
Channel design decisions
Channel management decisions
How to manage channel conflicts
Major types of retailers & wholesalers
How
Howdo
doChannel
Channel
Firms
FirmsInteract
Interactand
and
Organize
Organizeto
todo
dothe
the
Work
Workof
ofthe
the
Channel?
Channel?
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What
WhatRole
RoleDoes
Does
Physical
PhysicalDistribution
Distribution
Play
Playin
inAttracting
Attracting
and
andSatisfying
Satisfying
Customers?
Customers?
What
Whatisisthe
theNature
Nature
Of
OfDistribution
Distribution
Channels?
Channels?
Marketing Management for competitive advantage
What
WhatProblems
Problemsdo
do
Companies
CompaniesFace
Facein
in
Designing
Designingand
and
Managing
ManagingTheir
Their
Channels?
Channels?
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Marketing Management for competitive advantage
What is a Distribution Channel?
Distribution Channel Functions
A set of interdependent organizations
(intermediaries) involved in the process
of making a product or service available
for use or consumption by the consumer
or business user.
Marketing Channel decisions are among
the most important decisions that
management faces and will directly
affect every other marketing decision.
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Marketing Management for competitive advantage
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Marketing Management for competitive advantage
Distribution Channel Functions
These Functions Should be Assigned to the Channel Member Who Can
Perform Them Most Efficiently and Effectively to Provide Satisfactory
Assortments of Goods and Services to Target Customers.
Risk
Risk Taking
Taking
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Information
Information
Number of Channel Levels
Channel level refers to each layer of marketing
intermediaries that performs some work in bringing
the product and its ownership closer to the final buyer
Direct channel (zero-level channel)
Eg. Mail order, tele-marketing, internet selling, …
Financing
Financing
Promotion
Promotion
Indirect channels
one-level, two-level, three-level
Physical
Physical
Distribution
Distribution
Contact
Contact
product characteristics
Negotiation
Negotiation
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Factors that influence the length choice
production
Matching
Matching
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market
...
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Marketing
Marketing Management for competitive advantage
Marketing Management for competitive advantage
Conventional Marketing Channel
vs. a Vertical Marketing System
Channel Level - Each Layer of Marketing Intermediaries that
Perform Some Work in Bringing the Product and its Ownership
Closer to the Final Buyer.
Channel 1
Direct Channel
MM
Channel 2
CC
Indirect Channel
MM
RR
CC
RR
CC
Channel 3
MM
W
W
Conventional
Marketing
Channel
Vertical
Marketing
System
Manufacturer
Manufacturer
Manufacturer
Wholesaler
Wholesaler
Number of Channel Levels
Wholesaler
Retailer
Retailer
Retailer
Channel 4
MM
JJ
W
W
RR
CC
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Channel Design Decisions
Analyzing Consumer Service Needs
Corporate
Setting Channel Objectives & Constraints
Identifying patterns (length)
Identifying number (width) (number of
Common Ownership at Different
Levels of the Channel i.e. Sears
Contractual
channel members to use at each level)
intensive
selective
exclusive
Contractual Agreements Among
Channel Members
Administered
Leadership is Assumed by One or
a Few Dominant Members i.e. Kraft
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Consumer
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Marketing Management for competitive advantage
Types of Vertical Marketing Systems
Degree of
Direct
Control
Consumer
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Responsibilities of channel members
Evaluate
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Marketing Management for competitive advantage
Channel Management Decisions
Select
Train
Comtel Case
Manage and Motivate
Evaluate
Channel Behavior & Conflict
Multi-channel marketing
Horizontal Conflict : among firms at the same
level of the channel, i.e retailer to retailer.
Vertical Conflict: between different levels of the
same channel, i.e. wholesaler to retailer.
Multi-channel conflict: between different channels
Disintermediation:
economic criteria
control criteria
adaptive criteria
a trend
Product and Service Producers are Bypassing
Intermediaries and Going Directly to Final Buyers or
That New Types of Channel Intermediaries are
Emerging to Displace Traditional Ones
Modify
Levi‘s
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Marketing Management for competitive advantage
Marketing Management for competitive advantage
Nature and Importance of Marketing
Logistics
Modification of the Channels
Value Added By the Channels and growth rate
Involves getting the right product to the right
customers in the right place at the right time.
Companies today place greater emphasis on
logistics because:
Value Added By the Channels
High
Low
Market Growth Rate
High
Low
Introduction
•Hobbyist stores
• boutique
Decline
Decline
•mail
•mailorder
order
Maturity
Maturity
Growth
Growth
••specialty
specialtystores
stores
customer service and satisfaction have become the
cornerstone of marketing strategy.
logistics is a major cost element for most companies.
the explosion in product variety has created a need
for improved logistics management.
Improvements in information technology has created
opportunities for major gains in distribution efficiency.
••discount
discountstores
stores
•department
•departmentstores
stores
••mass
massmerchandisers
merchandisers
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Marketing Management for competitive advantage
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Marketing Management for competitive advantage
Retailing & Wholesaling
Classification of Retailing
Retailing includes all the activities involved in
selling goods or services directly to final
consumers for their personal, nonbusiness use.
Wholesaling includes all the activities involved
in selling goods and services to those buying
for resale or business use.
Wholesalers buy mostly from producers and
sell mostly to:
Marketing Management for competitive advantage
Supermarkets
Convenience Stores
Superstores
Discount Stores
Off-Price Retailers
Warehouse Clubs
Product Line
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Marketing Management for competitive advantage
The Future of Retailing
Description
Narrow Product Line, Deep Assortment i.e.
The Limited or Athlete’s Foot
Wide Variety of Product Lines i.e. Clothing,
Home Furnishings, Saks Fifth Avenue
Wide Variety of Food, Laundry, &
Household Products i.e. Kroger
Limited Line of High-Turnover Convenience
Goods i.e. 7-Eleven
Large Assortment of Routinely Purchased
Food & Nonfood Products i.e. Toys R Us
Standard Merchandise at Lower Prices
i.e. Wal-Mart
Changing Collection of Higher-Quality
Goods at a Reduced Price i.e. T.J. Maxx
Limited Selection of Brand-Name Grocery
Items, Appliances, Etc. i.e. Sam’s Club
Category killers are large stores that carry a very deep
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Relative
Relative Prices
Prices
Pricing
Pricing Structure
Structure that
that isis Used
Used
by
by the
the Retailer
Retailer
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Classification of Retailing:
Department Stores
Product
Product Line
Line
Length
Length and
and Breadth
Breadth of
of the
the Product
Product
Assortment
Assortment
Independent, Corporate, or
Contractual
Ownership Organization
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Specialty Stores
Amount
Amount of
of Service
Service
Self-Service,
Self-Service, Limited-Service
Limited-Service and
and
Full-Service
Full-Service Retailer
Retailer
Retail Organizations
Retailers,
Industrial consumers, and
Other wholesalers.
Store
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New
New Retail
Retail Forms
Forms and
and Shortening
Shortening Retail
Retail Lifecycle
Lifecycle
Growth
Growth of
of Nonstore
Nonstore Retailing
Retailing
Increasing
Increasing Intertype
Intertype Competition
Competition
Rise
Rise of
of Megaretailer
Megaretailer
Growing
Growing Importance
Importance of
of Retail
Retail Technology
Technology
Global
Global Expansion
Expansion of
of Major
Major Retailers
Retailers
Retail
Retail Stores
Stores as
as “Communities”
“Communities” or
or “Hangouts”
“Hangouts”
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Marketing
Marketing Management for competitive advantage
Marketing Management for competitive advantage
Promotion: Integrated Marketing
Communications Strategy
Chapter 12
Review
Functions of marketing channels
Different ways of how channel members
interact (channel conflict)
Channel levels
Channel design & management decisions
Roles of retailers and wholesalers in the
distribution channel.
Major types of retailers and wholesalers
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Integrated Marketing Communications
Communication Process
Developing Effective Communications
Deciding on the Marketing Communications
Mix (Promotion Mix)
promotional tools
factors
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Marketing Management for competitive advantage
Marketing Management for competitive advantage
Integrated Marketing Communications
With Integrated Marketing Communications
(IMC), the company carefully integrates
and coordinates its many communications
channels to deliver a clear, consistent, and
compelling message about the organization
and its product or service.
recognizing all contact points (brand
contact) where the customer may
encounter the company and its brands
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Marketing Management for competitive advantage
2.
3.
4.
5.
6.
IMC & Promotion Mix
Product’s
Design
Product’s
Price
Stores that Sell
the Product
Product’s
Package
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Marketing Management for competitive advantage
Developing Effective Communications
1.
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Developing Effective Communications
2. Determining the Communication Objective
Marketers seek a purchase response that results from a
consumer decision-making process that includes the
stages of buyer readiness
Identify the target audience
Determine the communication
objectives
Design the message
Choose the media
Select the message source
Collect feedback
Awareness
Knowledge
Liking
Preference
Conviction
Purchase
Purchase
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Marketing
Marketing Management for competitive advantage
Marketing Management for competitive advantage
Developing Effective Communications
Developing Effective Communications
3. Designing the Message
content, structure, format
Message content is an appeal or theme that will
produce the desired response
• Rational appeal
• Emotional appeal
• Moral appeal
4. Selecting Communication Channels
personal communication
⌧Company, Independent experts, Word of mouth
⌧Opinion leaders
⌧Buzz marketing involves cultivating opinion leaders
and getting them to spread information about a
product or service to others in their communities
Nonpersonal communication
⌧media that carry messages without personal contact
or feedback— including major media, atmospheres,
and events—that
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Setting the Total Promotional Budget
competitive parity method
objective-and-task method
Setting the Overall Promotion Mix
Determined by the nature of each promotion tool
and the selected promotion mix strategy
Advertising, Sales promotion, Public relations,
Personal selling, Direct marketing
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The Promotion Mix
The Promotion Mix
Wide Assortment of Tools, Rewards
Quick Response, Efforts Short-Lived
Public
Relations
Very Believable, Dramatize a Company
or Product, Underutilized
Public relations involves building good relations with the
company’s various publics by obtaining favorable publicity,
building up a good corporate image, and handling or heading
off unfavorable rumors, stories, and events
• Press releases
• Sponsorships
• Special events
• Web pages
Sales promotion is the short-term incentives to
encourage the purchase or sale of a product or
service
• Discounts
• Coupons
• Displays
• Demonstrations
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Reach Many Buyers, Repeat Message
Many Times, Impersonal, Expensive
Advertising is any paid form of non-personal
presentation and promotion of ideas, goods, or
services by an identified sponsor
• Broadcast
• Print
• Internet
• Outdoor
percentage of sales method
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The Promotion Mix
Advertising
affordable method
Sales
Promotion
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Marketing Management for competitive advantage
Set the Total Promotion Budget & Mix
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Marketing
Marketing Management for competitive advantage
Marketing Management for competitive advantage
The Promotion Mix
Personal
Selling
The Promotion Mix
Personal Interaction, Relationship
Building, Most Expensive Promo Tool
Personal selling is the personal presentation by the
firm’s sales force for the purpose of making sales
and building customer relationships
• Sales presentations
• Trade shows
• Incentive programs
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Nonpublic, Immediate, Customized,
Interactive
Direct marketing involves making direct connections with
carefully targeted individual consumers to both obtain an
immediate response and cultivate lasting customer
relationships—by using direct mail, telephone, directresponse television, e-mail, and the Internet to communicate
directly with specific consumers
• Catalog
• Telemarketing
• Kiosks
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Factors In Setting the Promotion Mix
Push vs. Pull Strategy
Type of Product Market
Buyer-Readiness Stage
Product-Life-Cyle Stage
Market Position
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Direct
Marketing
Promotion Mix Strategies
Strategy that
Calls for
Spending A Lot
on Advertising
and Consumer
Promotion to
Build Up (Pull)
Consumer
Demand.
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Strategy
Selected
Depends
on:
Type of
ProductMarket &
Product
Life-Cycle
Stage
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Strategy that
Calls for Using
the Salesforce
and Trade
Promotion to
Push the
Product Through
the Channels.
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Cost-Effectiveness
of Different Promotional Tools
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