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Distribution Plan
Week-8
Lecture Hour
04/21/23 Dr. Yuvaraj 1
Marketing Channels Defined
A marketing channel is the structure linking a group of individuals or organisations through which a product or service is made available to the consumer or industrial user.
04/21/23 Dr. Yuvaraj 2
Types of Intermediary
04/21/23 Dr. Yuvaraj 3
Agents and brokers
Wholesalers
RetailersFranchisees
Distributors and dealers
Where could you go to buy the following: Clothes Chocolate bar (candy) New car Insurance CDs Avon cosmetics Newsweek
04/21/23 Dr. Yuvaraj 4
Where Do You Buy From?
Consumer: Retailers / dealers Catalogues / mail order companies Vending machines Direct marketing sources
eg telesales, direct mail, door to door
Internet QVC / TV shopping channels
Industrial: Own salesforce / agents Industrial distributors Growth in direct (Internet) for industrial supplies
04/21/23 Dr. Yuvaraj 5
Types of Channels
Find and communicate with customers Promote and sell the product to customers Provide information on customer needs and competitors’ activities
Agree price and trading terms Transport and store the product Carry the cost of all the above Assume the risks of all the above
04/21/23 Dr. Yuvaraj 6
What Channels Do?
How wide the distribution (market coverage) should be:
How many channels How many levels
Type of channel Depends on:
Number and nature of market segments Range and nature of tasks to move products to end
customer Effectiveness of channel alternatives
04/21/23 Dr. Yuvaraj 7
Key Channel Decisions
Intensive Mass distribution e.g. confectionery, soft drinks, batteries, camera film
Selective e.g. electrical appliances (electrical retailers and department stores)
may also be specialist e.g. package holidays
Exclusive Restricted or sole rights e.g. franchisees, designer items, luxury cars
04/21/23 Dr. Yuvaraj 8
Market Coverage
04/21/23 Dr. Yuvaraj 9
ConsumerProducer Agent Wholesaler Retailer
Producer
Producer
Producer
Wholesaler Retailer Consumer
Retailer Consumer
Consumereg Insurance
eg A pint of beer (UK)
eg Most supermarket goods
eg Imported goods
Consumer Channels
04/21/23 Dr. Yuvaraj 10
Producer Industrialcustomereg High value, complex products
Producer Industrialdistributoreg Components via Radio Spares
Industrialcustomer
Producer Agent Industrialcustomer
Producer AgentIndustrialdistributor
Industrialcustomer
Industrial Channels
How Many Levels?
Considerations: How many customers & where they are How fragile / bulky / valuable the goods Whether offering is a tangible product or a service How much control you want over the contact with
the customer
04/21/23 Dr. Yuvaraj 11
Supply chain management: Production
How many items to produce, materials lead times Transportation
Mode, e.g. road, rail, air etc. Facility
Location of factory, warehouse etc. Inventory
How much stock, materials, work-in-progress etc. Communication
Systems for orders, billing, stock control, payment etc.
04/21/23 Dr. Yuvaraj 12
Tangible Products
Services Distribution
Services are consumed at point of production:
Both provider and consumer are present People are part of the service
Consider: How to make service easily available to target
market How to maintain service quality if intermediaries
are used
04/21/23 Dr. Yuvaraj 13
Service Location
How to ensure service is available and accessible to target market
Are customers willing / able to travel for your service
Use of technology, e.g. ATMs, telephone and Internet banking Telephone / Internet travel booking
04/21/23 Dr. Yuvaraj 14
Many organisations have multiple distribution systems
Often needed to address needs of different segments, e.g.
Customers can buy BT phones direct from BT via the Internet
BT also sells its phones via third party high street retailers - Dixons, Argos etc. Sales account managers (large industrial customers)
04/21/23 Dr. Yuvaraj 15
Managing Distribution
Selecting Channel Members
Own strengths & weaknesses e.g. company size, brand strength
Channels used by competitors Characteristics of the product / service
Range and nature of tasks needed to move product / service to end customer
Effectiveness of the channel alternatives
04/21/23 Dr. Yuvaraj 16
Selecting Channel Members
Effectiveness of the channel: Sales and marketing
e.g. skills, image, coverage, quality of sales staff
Product and service e.g. product knowledge, storage facilities,
quality of service staff Risk and uncertainty
e.g. their stability, track record
04/21/23 Dr. Yuvaraj 17
Reconfiguring the market
Substitute/configured products example email/post.
Disintermediation- removing a part of the channel e-commerce.
Reintermediation- replacing an existing intermediary, EBay, reverse auctions.
Partial channel substitution- some functions of the intermediary lost, Car websites.
Media switching/addition- using the internet as the main means of communication, Dell.
04/21/23 Dr. Yuvaraj 18
Channel strategy
Single channel provider Channel migrator- moving from one type to another
Online ticketing, ATM
Activity based strategy- Based upon customer life-cycle. Call centers to take insurance orders
Integrated multi-channel strategy- telephone and internet sales/banking.
Needs based-direct selling versus internet selling Graduated customer value strategy- channel based upon customer financial value.
04/21/23 Dr. Yuvaraj 19
Differences between country markets
Stage of economic development
Market structure and competition
Rate of growth in similar markets
Diverse cultures and languages
Politics, regulations and associated risk
Legal and financial systems and bodies
Business rules and customs
Currency and exchange risks
Customer profiles Data expensive and difficult to obtain
Control & coordination difficult
04/21/23 Dr. Yuvaraj 20
Planning Regulations, Tenders/BribesConsideration to Environment,Compliance Issues/H&SLocal Materials, EarthquakesLevel of developmentClimate (Materials required)Level of technological advancementFamily culture (size of house)Amount of available land
Use of Sub ContractorsCommunication/Logistics, Availability and skill/knowledge of labour, Low cost supplier, Cultural differences, Low income, Poor infrastructure/distributionDifferent eating habits (ie more family meals, less packaged food), No fridges/freezers (or electricity)MR difficult
Lesser developed Countries
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Questions?
04/21/23 Dr. Yuvaraj 22