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P = Location
• Convenience
• Distribution
• Availability• Accessibility
• Usability
• Where and when necessary
• Size and portability
Place and PLC• PLACE must be considered in terms
of the Product Life Cycle
• Changing PLACEs, as you move through the PLC, is very hard to do because it is expensive and usually involves Real Estate
• Place decisions are usually harder to change than other marketing mix decisions
Product Classes - Place
• Convenience Products - have to be in convenient places - small stores, vending machines
• Shopping Products - have to be where shoppers go, malls, superstores etc.
• Specialty Products - have to available where people want to buy them - ie. Movie theatres have to be located where many people go, and where you can park easily
Place and PLC• PLACE must be considered in terms
of the Product Life Cycle
• In the beginning Growth Stage - it might be good to have your product sold in a certain location, but in the maturity or decline stage, you may have to change locations to make it better for customers who are no longer so strongly interested in buying
Distribution Tasks
• Transport * materials handling
• Store * handling * order processing
• Break Bulk * inventory management • Sorting - choice & range
• Contacting
• Co-ordinating
• Controlling costs
What is it?
• Distribution - the where when how and why products and services are made available to potential customers
• Physical distribution - the activities concerned with the physical flows through producer to intermediaries to consumers and customers
Objectives of Distribution
• Appropriate and adequate distribution
• Access to markets and target customers
• Relative cost effectiveness in access, transaction value and distribution
• Reseller motivation
• Revenue returns from channel members
• Competitive representation• Customer service
Some Contemporary Influences on Distribution
• Political
• Economic
• Social• Cultural
• Technological
• Educational
• Environmental
Marketing / Distribution Channels create- Time- Place- Possession/ownership utility
• Delivered at the right time - time utility• Delivered to the right place - place utility• With appropriate legal requirements -
possession / ownership utility
Producer Buyers
Producer Buyers
Middleman or
intermediary
Figure 12.1 Efficiency in exchanges provided by an intermediary
Marketing channel activities that intermediaries performTABLE 12.1
CATEGORY OF MARKETING ACTIVITIES POSSIBLE ACTIVITIES REQUIRED
Table 12.1 Marketing channel activities that intermediaries perform
Marketing information
Marketing management
Facilitating exchange
Price
Physical distribution
Analyse information such as sales data; perform or commission marketing research studies
Establish objectives; plan activities; manage and co-ordinate financing, personnel and risk taking; evaluate and control channel activities
Choose and stock product assortments that match the needs of buyers
Establish pricing policies and terms of sales
Manage transport, warehousing, materials handling, inventory control and communication
PromotionSet promotional objectives, co-ordinate advertising, personal selling, sales promotion, publicity, direct mail and packaging
Classifying heterogeneous supplies into homogeneous groups
Developing a bank or stock of homogeneous products to provide aggregate inventory
Breaking down homogeneous stocks (inventories) into smaller units
Combining products into collections or assortments that buyers want
Sorting out Accumulation Allocation Assorting
Figure 12.2 Sorting activities conducted by channel members.
The process that helps producers,
• who produce different amounts,
• and different types,
• organize their products
• into categories/assortments
• to make it easier for the consumer to buy.
Sorting
“… putting together a variety of products to give a target market what it wants…”
Some stores cannot take the full range of a company’s product line - they do not have the shelf space or floor space - so they carefully select the brands of several mfgs to sell.
Assorting
E F G H
Producer Producer Producer Producer
AgentsAgents
Business-to-business distributors
Business-to-business distributors
Business-to-business buyers
Business-to-business buyers
Business-to-business buyers
Business-to-business buyers
Figure 12.4 Typical marketing channels for industrial products
Channel design decisions
• Analyse customer service needs - marketing channels deliver appropriate value to the customer
• Defining channel objectives and constraints - which segments to serve and which channel to use for each
• Identifying key channel alternatives - direct marketing, broker, agent, intermediary, wholesaler, retailer, e-commerce
• Evaluating alternatives - economic, control, level of flexibility criteria
A vertical marketing channel
Members
Manufacturer
Wholesaler
Retailer
Consumer
Functions
DesignMakeBrandPricePromoteBuyStockDisplaySellDeliverFinance
Manufacturer
Wholesaler
Retailer
Consumer
A conventional marketing channel
Members FunctionsDesignMakeBrandPricePromoteSell
BuyStockPromoteDisplaySellDeliverFinance
BuyStockPromoteDisplaySellDeliverFinance
Figure 12.5 Comparison of a conventional marketing channel and a vertical marketing system
SOURCE: Adapted from Strategic Marketing, by David J. Kollat et al., copyright 1972. Reprinted by permission.
• The whole channel focusses on the same target market at the end of the channel
• sometimes a large firm will buy up the smaller companies in the channel to have more control over the distribution
“A person, or company, that helps direct the activities of a whole channel, and tries to avoid, or solve conflicts…”
However, some older products don’t have such a position.
Sometimes Middlemen have a clear picture of what the customer wants, and who the producers are, so they arrange for producers to be in contact with the retailers, so more product can flow in the channel. The Middlemen makes more money by making nore commission on stuff sold.
Control of resources
Size of company
Reward power
Expert power
Referent power
Legitimate power
Coercive power
Economic sources of power
Non-economic sources of power
Level of power
Dependency of other channel members
Willingness to lead
Channel leadership
Figure 12.8 Determinants of channel leadership
SOURCE: R.D. Michman and S. D. Sibley, Marketing Channels and Strategies, 2nd edn (Worthington, Ohio: Publishing Horizons, Inc., 1980), p.413. Reproduced by permission.
ACTIVITY DESCRIPTION
Table 13.1 Major wholesaling activities
Wholesale Management
Negotiating with suppliers
Promotion
Transport
Inventory control and data-processing
Planning, organising, staffing and controlling wholesaling operations
Serving as the purchasing agent for customers by negotiating supplies
Providing a sales force, advertising, sales promotion and publicity
Arranging and making local and long distance shipments
Controlling physical inventory, book keeping, recording transactions, keeping records for financial analysis
Warehousing and producthandling
Receiving, storing and stock keeping, order processing, packaging, shipping outgoing orders and materials handling
Security Safeguarding merchandise
Pricing Developing prices and providing price quotations
Financing and budgeting Extending credit, borrowing, making capital investments and forecasting cash flow
Management and marketingassistance to clients
Supplying information about markets and products and providing advisory services to assist customers to sell
STRATEGIC ISSUES IN RETAILING
•Location•Property Ownership•Product Assortment•Retail Positioning•Atmospherics•Store Image•Scrambled Merchandising•The Wheel of Retailing
Recent Trends in Retailing
• Customisation
• Larger outlets
• Own label brands• Customer expectations
• Category stores
• Relocation of businesses
• e.shopping• Home delivery
e-commerce
• Basics of doing business
• Market opportunities & the future
• Media• Branding
• Business to business
• Regulations
• Internet and Society
Strategic Distribution Decisions
• Customer and consumer needs and wants
• Organisational goals
• Intensive strategy• Selective
• Exclusive
International Marketing Mix: Promotion
• Determinants of push/pull strategies– Product type and consumer sophistication– Channel length– Media availability
• Push vs pull strategies– Push strategy: personal selling emphasis
• Industrial products; complex new products• Short distribution channels• Few print or electronic media
– Pull strategy: mass media advertising• Consumer goods• Long distribution channels• Marketing message can be carried via print/electronic
media