Marketing Mix

Place
Chapter 10

Marketing Channels, Retailing, Wholesaling & Market logistics (Place/Distribution)

References:
Marketing Management by Philip Kotler (Millennium Edition) Internet

Resource Person: Furqan-ul-haq

 Value Delivery Network

o 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. that help organizations in selling, promoting & distributing of products to final consumers are called MI (Wholesalers, retailers, marketing companies, transportation companies, banks & insurance etc)

Marketing Intermediaries
o Firms

 Marketing channels
(Distribution Channels) are set of interdependent organizations/businesses involved in the process of making a product or service available for use or consumption.
How marketing channel Reduces number of Channel Transactions

FMGC Clothes Cosmetics Toys

Irfan Iftikhar Danish Furqan Country Fan Farooq Aamir Khalid

FMGC Clothes Cosmetics Toys

32 Contacts
Salsabila Depart. Store

Haroon
Irfan Iftikhar Danish Furqan Country Fan Farooq Aamir Khalid Haroon

12

Level of Marketing Channels

Channels for Consumer Products
Direct Marketing Channel Indirect Marketing Channel (one or more intermediaries levels)

Types of Marketing Channels

Channels for Industrial Products

Producers establish marketing channels for a variety of reasons:

Many producers lack the financial resources to carry out direct marketing In some cases direct marketing simply is not feasible Producers who do establish their own channels can often earn a greater return by increasing their investment in their main business. Intermediaries can reach buyers in a more efficient & targeted way Channel members add value by bridging the major time, place and possession gaps that separate goods and services from those who would use them.

Key Functions Performed by Channel Members

Information Promotion Contact Matching
Negotiation Physical Distribution Financing Risk taking

Channel Members Are Connected Via A Variety of Flows

Physical Flow Payment Flow Information Flow Promotion Flow

Flow of Ownership

Marketing Channels Functions Forward flow functions: Constitute activities from company to customer o Promotion, Storage and movement of the physical products, transfer of ownership Backward flow functions: constitute activities from customer to company o Place orders with manufacturers, Facilitate payment of bills Dual Directions: o Information, negotiation & risk taking

Push vs. Pull Strategy

Production Scheduling
Traditional Focus Customer Focus
Push/Pull Strategy Start of Production Manufacturing Push Inventory-Based Pull Customer-Order Based

Mass Production Mass Customization

Levels of Distribution Intensity

Intensity Level Objective
Achieve mass market selling. Convenience goods. Work with selected intermediaries. Shopping and some specialty goods. Work with single intermediary. Specialty goods and industrial equipment.

Number of Intermediaries
Many

Intensive

Selective
Exclusive

Several

One

Channel Dynamics
Conventional marketing Systemcomprises of independent producers, wholesalers or retailers who business just to maximize their own profit even if it reduces profit for a system as a whole. In this there is no control upon any member of channel

 Vertical Marketing Channel/system (VMS)

by contrast, comprises the producer, wholesaler, or retailers acting as a unified/coordinated way. The high degree of control and coordination in VMS is achieved through one of the three means: Corporate VMS: common ownership of successive level of a channel. Contractual VMS: contracts between independent channel members to increase the efficiency and effectiveness of distribution (franchises etc) Administrative VMS: Coordination in distribution through market/economic power of one of channel members.

Conventional Marketing Channel

Manufacturer

Vertical Marketing Channel

Manufacture r Wholesale r Retailer

Wholesaler

Retailer

Consumer Consumer

 Horizontal marketing System-

Joining of two or more corporations (unrelated) for the purposes of pursuing a new marketing opportunity. Banks, insurance, transportation companies joint venture with retailers, manufacturers etc.

 Multi-channel Distribution Systems o Also called hybrid marketing channels o The use of two or more channels to distribute the same product to the same target market o Combination of direct marketing/VMS/HMS/Conventional

Middlemen
A middlemen is business firm that renders services related directly to the sale and/or purchase of a product as it flows from producer to consumer. A middleman either own the product or just only takes possession of the product. Merchant middleman- takes title of the product. The two groups of merchant middleman are wholesalers & retailers. Agent middleman- they never own the product but only do arrange the transfer of title. Real state brokers, travel agents, manufacturers agents etc.

 Retailing: all activities involved in selling goods or services directly to final consumers for their personal, non-business use. ...all activities involved in selling, renting, and providing goods and services to ultimate consumers for personal, family or household use. Retailer- businesses engaged in retailing. Wholesaling-All the activities involved in selling goods and services to those buying for resale or business use. Wholesaler - those firms engaged primarily in wholesaling activity.

Classification Of Retailer Types

Store Type Length and Breadth of Product Assortment
Specialty Stores Department Stores Supermarkets Convenience Stores Discount Stores Off-Price Retailer Superstores Display Centers
Narrow Product Line, Deep Assortment with in line
Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items (separate department)

Large, low cost, low margin, high volume, wide Variety of Food, Laundry, & Household Products A small store having limited Line of High-Turnover Convenience Goods
Merchandises with Low Margin & High Volume Inexpensive, Overruns, Irregulars, and Leftover Goods A store larger then supermarket, Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services Only display of goods

Criteria for Ranking Modes of Transportation

Highest
Relative Cost Transit Time Reliability
Air
Water Pipe Water Truck Air Truck Rail Truck Rail Rail Truck Rail Pipe Rail Truck Air Rail Pipe Truck Air Air Water Water

Lowest
Water Air Water Pipe Pipe Pipe

Capability
Accessibility Traceability

Marketing Channels Form a Supply Chain

upply chain Management the process of managing pstream and downstream alue-added flows of aterials, final goods, and lated information among uppliers, the company, sellers, and final onsumers

 Continuation of 1st Assignment 1.Which Brand Name would you suggest for your product? Also suggest a marketing slogan for it. (why have you selected this name for your product). 2.What would be the pricing objective of the product & why? (survival, penetration, skimming etc.) 3.Which marketing channel would you adopt for your product and why? (conventional, VMS, HMS, Hybrid etc) 4.Which strategy (pull vs. push) would be most feasible for your product? 5.Which sales promotional tools & advertisement medium would be most appropriate for the product & why? Announcement Date: 08 July, 2010 Last date: Before final paper of Marketing (PowerPoint presentation mode)

Assignment # 2 (15 marks)