Placing in marketing

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Information about Placing in marketing

Published on July 24, 2014

Author: SamithaJayaweera



The network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system


12 - 2 Definitions Value Delivery Network The network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system.

12 - 3 Marketing Channels Sets of interdependent organizations involved in the process of making a product or service available for use or consumption.

12 - 4 • Without Middlemen M1 M2 M3 M4 C1 C2 C3 C4

12 - 5 • With M1 M2 M3 M4 DISTRIBUTOR C1 C2 C3 C4

12 - 6 Nature & Importance of Marketing Channels • Channel choices affect other decisions in the marketing mix  Pricing, Marketing communications • A strong distribution system can be a competitive advantage • Channel decisions involve long- term commitments to other firms

12 - 7 Nature & Importance of Marketing Channels • How Channel Members Add Value  Intermediaries require fewer contacts to move the product to the final purchaser.  Intermediaries help match product assortment demand with supply.  Intermediaries help bridge major time, place, and possession gaps that separate products from those who would use them.

12 - 8 Value FormForm TimeTime PlacePlace PossessionPossession InformationInformation ServiceService OPEN 24 HRSOPEN 24 HRS

12 - 9 Key Functions Performed by Channel Members Nature & Importance of Marketing Channels • Information • Promotion • Contact • Matching • Negotiation • Physical Distribution • Financing • Risk taking

12 - 10 Nature & Importance of Marketing Channels • Number of Channel Levels  The number of intermediary levels indicates the length of a marketing channel. • Direct Channels • Indirect Channels  Producers lose more control and face greater channel complexity as additional channel levels are added.

12 - 11 Non-Store Distribution • E-tailing • Telemarketing • Vending Machines, Kiosks, Carts • Internet • Direct Selling • Multilevel Marketing • Direct Marketing

12 - 12 The Supply ChainThe Supply Chain

12 - 13 Channel Members Are Connected Via A Variety of Flows Nature & Importance of Marketing Channels • Physical Flow • Payment Flow • Information Flow • Promotion Flow • Flow of OwnershipFlow of Ownership

12 - 14 Channel Behavior and Organization • Channel Conflict  Occurs when channel members disagree on roles, activities, or rewards.  Types of Conflict: • Horizontal conflict: occurs among firms at the same channel level • Vertical conflict: occurs among firms at different channel levels

12 - 15 Channel Behavior and Organization • Conventional Distribution Channels  Consists of one or more independent channel members  Lack leadership and power  Often result in poor performance • Vertical Marketing Systems  Consists of members acting as a unified system  Use contracts, ownership or power

12 - 16 Channel Behavior and Organization • Corporate VMS • Contractual VMS • Administered VMS • Corporation owns production and distribution • Coordination and conflict through regular organizational channels Vertical Marketing Systems

12 - 17 Channel Behavior and Organization • Corporate VMS • Contractual VMS • Administered VMS • Individual firms who join through contracts • Franchise organizations  Manufacturer- sponsored retailer franchise system  Manufacturer- sponsored wholesaler franchise system  Service-firm-sponsored retailer franchise system Vertical Marketing Systems

12 - 18 Channel Behavior and Organization • Corporate VMS • Contractual VMS • Administered VMS • Leadership through the size and power of dominant channel members • Leadership could be manufacturer or retailer Vertical Marketing Systems

12 - 19 Channel Behavior and Organization • Horizontal Marketing Systems  Companies at the same level work together with channel members • Multichannel Distribution Systems  Also called hybrid marketing channels  Occurs when a firm uses two or more marketing channels • Changing Channel Organization  Disintermediation

12 - 20 Channel Design Decisions • Step 1: Analyzing Consumer Needs  Cost and feasibility of meeting needs must be considered • Step 2: Setting Channel Objectives  Set channel objectives in terms of targeted level of customer service  Many factors influence channel objectives

12 - 21 Channel Design Decisions • Step 3: Identifying Major Alternatives  Types of intermediaries • Company sales force, manufacturer’s agency, industrial distributors  Number of marketing intermediaries • Intensive, selective, and exclusive distribution  Responsibilities of channel members

12 - 22 Retail Store Distribution • Intensive SelectiveSelective ExclusiveExclusive

12 - 23 Channel Design Decisions • Step 4: Evaluating Major Alternatives  Economic criteria  Control issues  Adaptive criteria

12 - 24 Distribution/Storage Mode • Railroad • Motor Vehicles • Water • Pipeline • Air

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