MGT301MGT301Principles of MarketingPrinciples of Marketing

Lecture-31Lecture-31

SummarySummaryof of

Lecture-30Lecture-30

Retail ing and WholesalingRetail ing and Wholesaling

Today’s TopicsToday’s Topics

Review 3rd P (Place)Review 3rd P (Place)

Place….Distribution Place….Distribution Channel….Marketing ChannelChannel….Marketing Channel

Simple Marketing SystemSimple Marketing System

Producer/Seller Consumer

Communication

Product/Service

Money

Feedback

Right Product

Right Cost

Right Place

Right Condition

Right Time

20 Contacts

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Customer

Customer

Customer

Customer

9 Contacts

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Customer

Customer

Customer

Customer

Wholesaling Intermediary

How Channel Members Add Value?How Channel Members Add Value?

Channel members add value by bridging the major time, place Channel members add value by bridging the major time, place and possession gaps that separate goods and services from and possession gaps that separate goods and services from

those who would use them.those who would use them.

ContactContact

FinancingFinancing

InformationInformationRisk TakingRisk Taking

PromotionPromotion

MatchingMatchingNegotiationNegotiation

PhysicalDistribution

PhysicalDistribution

Distribution Channel FunctionsDistribution Channel Functions

MM WW JJ RR CC→ → → →

MM WW RR CC→ →

MM RR CC→

MM CC

Channel 1

Channel 2

Channel 3

Channel 4

Direct

In-Direct

ProducerAgent/Broker

Wholesaler Retailer Consumer

Producer Wholesaler Retailer Consumer

Producer Retailer Consumer

Producer Consumer

Marketing Channels for Consumer Marketing Channels for Consumer GoodsGoods

ProducerAgent/Broker

WholesalerBusiness

User

Producer WholesalerBusiness

User

ProducerBusiness

User

ProducerBusiness

User

Agent/Broker

Marketing Channels for Business Marketing Channels for Business GoodsGoods

Evaluation of Channel AlternativesEvaluation of Channel Alternatives

Economic CriteriaEconomic Criteria– -Potential sales, costs and profits of channels-Potential sales, costs and profits of channels

Control CriteriaControl Criteria -Amount of control company has over sales efforts-Amount of control company has over sales efforts

Adaptive CriteriaAdaptive Criteria -flexibility of channel to adapt to changing situations-flexibility of channel to adapt to changing situations

SelectingSelecting

MotivatingMotivating

EvaluatingEvaluating

FE

ED

BA

CK

Channel Management DecisionsChannel Management Decisions

The channel wil l be most effective when..The channel wil l be most effective when.. Each member is assigned tasks it can do best.Each member is assigned tasks it can do best. All members cooperate to attain overall channel goals and All members cooperate to attain overall channel goals and

satisfy the target market.satisfy the target market.

Conventional Distribution Channel Conventional Distribution Channel vs. Vertical Marketing Systemsvs. Vertical Marketing Systems

VerticalVerticalMarketingMarketingChannelChannel

Manufacturer

Retailer

ConventionalConventionalMarketingMarketingChannelChannel

Consumer

Manufacturer

Consumer

Retailer

Wholesaler

Wh

ole

sale

r

Channels of distribution

Two differentperspectivesTwo differentperspectives

Logistic ManagementLogistic Management

Logistics(Physical distribution)

Channels of distribution

Two differentperspectivesTwo differentperspectives

Producer

End users

End users

Interme-diaries

Interme-diaries

Producer

Marketingactivities Demand

Demand Demand

Push Strategy

Pull Strategy

Marketing activities

Demand

Marketing Logistics and Supply Marketing Logistics and Supply Chain ManagementChain Management

Functions of Logistics SystemsFunctions of Logistics Systems

InventoryWhen to order

How much to orderJust-in-time

InventoryWhen to order

How much to orderJust-in-time

CostsMinimize Costs ofAttaining Logistics

Objectives

CostsMinimize Costs ofAttaining Logistics

Objectives

WarehousingStorage

Distribution

WarehousingStorage

Distribution

Order ProcessingSubmittedProcessed

Shipped

Order ProcessingSubmittedProcessed

Shipped

Logistics

FunctionsTransportation Water, Truck, Rail, Pipeline & Air

Customer Service ConceptCustomer Service Concept Customer service is the ability of logistics management to Customer service is the ability of logistics management to

satisfy users in terms of:satisfy users in terms of: - time- time - dependability- dependability - communication- communication - convenience- convenience

Companies today place greater emphasis on logistics Companies today place greater emphasis on logistics

because…..because…..

– Effective logistics is becoming a key to winning and keeping Effective logistics is becoming a key to winning and keeping customers.customers.

– Logistics is a major cost element for most companies.Logistics is a major cost element for most companies.

– The explosion in product variety has created a need for The explosion in product variety has created a need for improved logistics management.improved logistics management.

– Information technology has created opportunities for major Information technology has created opportunities for major gains in distribution efficiency.gains in distribution efficiency.

Classif ication of Retail ingClassif ication of Retail ing

Retailing and WholesalingRetailing and Wholesaling

Amount of Service

Self-Service, Limited-Service andFull-Service Retailer

Amount of Service

Self-Service, Limited-Service andFull-Service Retailer

Product LineLength and Breadth of the Product

Assortment

Product LineLength and Breadth of the Product

Assortment

Relative PricesPricing Structure that is Used

by the Retailer

Relative PricesPricing Structure that is Used

by the Retailer

Retail OrganizationsIndependent, Corporate, or Contractual

Ownership Organization

Nonstore Retail ingNonstore Retail ing

Mail Order• Catalogs - from clothing to computers

• Direct Mail - brochure offering a product or service at one point in time.

Mail Order• Catalogs - from clothing to computers

• Direct Mail - brochure offering a product or service at one point in time.

Direct Selling• Door-to-Door Sales - declining in U.S.• Parties & Networks - presentations

• Telemarketing - over the phone

Direct Selling• Door-to-Door Sales - declining in U.S.• Parties & Networks - presentations

• Telemarketing - over the phone

Automatic Vending• Best suited to inexpensive merchandise

and food and beverages.

Automatic Vending• Best suited to inexpensive merchandise

and food and beverages.

Direct Response Television• Home Shopping Networks - TV channels

that sell products

Direct Response Television• Home Shopping Networks - TV channels

that sell products

What is Wholesaling?What is Wholesaling?

All the activities involved in selling goods and services to those All the activities involved in selling goods and services to those buying for resale or business use.buying for resale or business use.

Wholesaler - those firms engaged primarily in wholesaling Wholesaler - those firms engaged primarily in wholesaling activity.activity.

Customer Expectations for Customer Expectations for WholesalingWholesaling

Suppliers’ Logistics SystemsSuppliers’ Logistics Systems

AccuracyEasy

Inquiryand

Order

EasyInquiry

andOrder Reliable

DeliveryOn-timeDelivery

On-timeDelivery

Error-FreeInvoicing

Error-FreeInvoicing

Post-SalesSupport

Post-SalesSupport

Easy ClaimsHandling

Easy ClaimsHandling

Warehouse and Warehouse and Materials-HandlingMaterials-Handling

Functionsof

Materials Handling

Receive goods into warehouse

Dispatch the goods totemporary storage

Recall, select, or pick the goods for shipment

Identify, sort, and label goods

Types of WholesalersTypes of Wholesalers

Merchant Wholesaler

Independently Owned Business that Takes

Title to the Merchandise

it Handles.

Merchant Wholesaler

Independently Owned Business that Takes

Title to the Merchandise

it Handles.

Manufacturers’Sales Branches

and OfficesWholesaling by Sellersor Buyers Themselves Rather Than Through

IndependentWholesalers.

Manufacturers’Sales Branches

and OfficesWholesaling by Sellersor Buyers Themselves Rather Than Through

IndependentWholesalers.

Brokers/ AgentsThey Don’t Take Title to

the Goods, and TheyPerform Only a Few

Functions.

Brokers/ AgentsThey Don’t Take Title to

the Goods, and TheyPerform Only a Few

Functions.

Right Product

Right Cost

Right Place

Right Condition

Right Time

Compete on value (not just price.)Compete on value (not just price.)Save customers time and energy.Save customers time and energy.

Make shopping fun.Make shopping fun.

Enough for Place. . .Enough for Place. . .

SummarySummary

Next….Next….

MGT301MGT301Principles of MarketingPrinciples of Marketing

Lecture-31Lecture-31