Distribution Strategy
W. Rofianto
The particular set of interdependent organizations
involved in the process of making availablea product or service
for use or consumption.
In US, channel members collectively have earned margins that
account for 30-50% of the ultimate selling price. While
Advertising typically has accounted for less than 5-7%.
(Kotler & Keller, 2012)
Marketing Channel
Channels and Marketing Decisions
Appropriate when there is high brand loyalty and
high involvement in the category
Appropriate when there is low brand loyalty in a category, brand
choice is made in the store, the product is an impulse item,
Channel Levels
• Gather information
• Develop and disseminate persuasive communications
• Reach agreements on price and terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their bills
• Oversee actual transfer of ownership
Channel Member Functions
Reverse-Flow Channels
Customer Needs and Wants
European Consumers
Value
Coercive
Reward
Legitimate
Expert
Referent
Channel Power
• Vertical marketing systems• Corporate VMS
• Administered VMS
• Contractual VMS
• Horizontal marketing systems
• Multichannel systems
Channel Integration and Systems
Hybrid Channels / Multichannel Marketing
• Ability to order a product online and pick it up at aconvenient retail location
• Ability to return an online-ordered product to anearby store
• Right to receive discounts based on total onlineand offline purchases
Buyer Expectations for Channel Integration
The Hybrid Grid
• Goal incompatibility
• Unclear roles and rights
• Differences in perception
• Intermediaries’ dependence on manufacturer
Causes of Channel Conflict
Retailing
All the activities in selling goods or services directly to
final consumers for personal, nonbusiness use.
• Self service
• Self selection
• Limited service
• Full service
Levels of Retail Service
Non-store Retailing
• Direct selling
• Direct marketing
• Automatic vending
• Buying service
• New retail forms and combinations
• Competition between store-based and non-store-based retailing
• Growth of giant retailers
• Decline of middle market retailers
• Growing investment in technology
• Global profile of major retailers
• Growth of shopper marketing
Changes in the Retail Environment
Store Atmosphere and Experiences
Retailer Services Mix• Prepurchase services
• Postpurchase services
• Ancillary services
• Keep shoppers in the store
• Honor the transition zone
• Don’t make them hunt
• Make merchandise available to the reach and touch
• Note that men do not ask questions
• Remember women need space
• Utilize checkout
Tips for Increasing Sales in Retail Space
• Private labels are ubiquitous
• Consumer accepts private labels
• Private-label buyers come from all socioeconomic strata
• Private labels are not a recessionary phenomenon
• Consumer loyalty shifts from manufacturers to retailers
Private Label Brands
50% is the natural limit for volume of private labels
Market Logistics
Includes planning the infrastructure to meet demand, then
implementing and controlling the physical flows of
materials and final goods from points of origin to points of
use, to meet customer requirements at a profit.
An integrated logistics system (ILS) includes materials management, material flow systems, and physical distribution, aided by information technology.