2. The Importance ofThe Importance of
PlacePlaceIt is a known fact that without distribution 'place' the bestIt is a known fact that without distribution 'place' the best
product or service will not be delivered and the marketingproduct or service will not be delivered and the marketing
mix will break down and fail it .mix will break down and fail it .
It was once said that ‘place’ is one of the most powerfulIt was once said that ‘place’ is one of the most powerful
elements of the marketing mix, as it is the one way that weelements of the marketing mix, as it is the one way that we
can both reach andcan both reach and actually service the customer.actually service the customer.
Place plays a pivotal role within the marketing mix, and thePlace plays a pivotal role within the marketing mix, and the
key to success will be its successfulkey to success will be its successful
integration within it, ensuring that customers get theirintegration within it, ensuring that customers get their
products at the right place and at the rightproducts at the right place and at the right
time.time.
It also plays an important role, primarily because itIt also plays an important role, primarily because it
ultimately affects the sales turnover and profit margins ofultimately affects the sales turnover and profit margins of
the organization.the organization.
3. 1.1. It organizes the exchange process thoughIt organizes the exchange process though
distributiondistribution
2.2. It organizes communicationsIt organizes communications
Therefore sometimes the channels of distribution can be
called marketing channels or combination
of distribution and communications
Distribution works on 2 main principles
4. Influences on distributionInfluences on distribution
Fuel pricesFuel prices
Environmental legislationEnvironmental legislation
TaxationTaxation
Transportation choicesTransportation choices
National/globalNational/global
transportationtransportation
infrastructureinfrastructure
Nature of product andNature of product and
product characteristics –product characteristics –
perishability and so onperishability and so on
PackagingPackaging
Product life cycleProduct life cycle
Changing life cycleChanging life cycle
The emergence of ICTThe emergence of ICT
Customer expectationsCustomer expectations
Level of complexity inLevel of complexity in
customer buying behaviorcustomer buying behavior
Competitive strategiesCompetitive strategies
Product targetsProduct targets
DemandDemand
Market sizeMarket size
Contribution toward costsContribution toward costs
Marketing mixMarketing mix
componentscomponents
Customer servicesCustomer services
Technical supportTechnical support
5. Distribution is ultimately about providingDistribution is ultimately about providing
a service, a service of delivery to thea service, a service of delivery to the
customer, essentially getting productcustomer, essentially getting product
from A to B.from A to B.
The main marketing issues elates toThe main marketing issues elates to
channels.channels.
The successful management of theThe successful management of the
supply chain will be achieved throughsupply chain will be achieved through
selecting, motivating, and controllingselecting, motivating, and controlling
distributors and distribution outlets.distributors and distribution outlets.
6. Distribution channels:Distribution channels:
definitiondefinition
Distribution channels consists of a groupDistribution channels consists of a group
of individuals or organization that assistof individuals or organization that assist
in getting the product to the right placein getting the product to the right place
at the right time.at the right time.
They enable the manufactured productsThey enable the manufactured products
to flow from a manufacturer to the end-to flow from a manufacturer to the end-
user in many different ways.user in many different ways.
Marketing intermediaries are groupsMarketing intermediaries are groups
which are linking the producers andwhich are linking the producers and
customers.customers.
7. WholesalersWholesalers –– they are buying products fromthey are buying products from
manufacturer, store them within their warehouse andmanufacturer, store them within their warehouse and
sell products to the tradesell products to the trade..
RetailersRetailers –– the final shopping points (real or virtual).the final shopping points (real or virtual).
Their role is to manage the transaction in which theTheir role is to manage the transaction in which the
buyer makes a purchase decisionbuyer makes a purchase decision
Distribution/dealersDistribution/dealers –– groups of intermediaries who aregroups of intermediaries who are
associating with stocking products for manufacturersassociating with stocking products for manufacturers
and selling them on, including after-sales services, andand selling them on, including after-sales services, and
credit facilities. Dealers are slightly different as they quitecredit facilities. Dealers are slightly different as they quite
often specialize in selling one particular brand (caroften specialize in selling one particular brand (car
dealers).dealers).
Agents/brokersAgents/brokers// facilitatorsfacilitators –– do not take physicaldo not take physical
procession of the goods, and act on behalf of theprocession of the goods, and act on behalf of the
manufacturer to sell their products. Their aim is to bringmanufacturer to sell their products. Their aim is to bring
buyers and sellers togetherbuyers and sellers together..
8. FranchiseeFranchisee –– holds a contact to marketholds a contact to market
and supply a product or service that hasand supply a product or service that has
been very strictly designed and developedbeen very strictly designed and developed
by the franchiser. The franchiser has strictby the franchiser. The franchiser has strict
terms and conditions on store design,terms and conditions on store design,
store layout and contents sold within thestore layout and contents sold within the
retail outlet.retail outlet.
LicenseeLicensee –– similar to franchise. Thesimilar to franchise. The
licensee pays royalties on sales to thelicensee pays royalties on sales to the
licensor.licensor.
MerchandiserMerchandiser –– are responsible for storeare responsible for store
displays relating to different products.displays relating to different products.
9. Distribution is highly expensive, thereDistribution is highly expensive, there
are a lot of add-on costs: marketing,are a lot of add-on costs: marketing,
administrative, packaging, orderadministrative, packaging, order
processing and receiving and makingprocessing and receiving and making
paymentspayments
Network of links for manufacturer canNetwork of links for manufacturer can
contain 10 key buyers, who thencontain 10 key buyers, who then
distribute out to another 10 buyers (10distribute out to another 10 buyers (10
x 10 = 100 links)x 10 = 100 links)
11. Category of marketingCategory of marketing
activitiesactivities
Possible activities requiredPossible activities required
Marketing informationMarketing information
Marketing managementMarketing management
Facilitating exchangeFacilitating exchange
PromotionPromotion
PricePrice
Physical distributionPhysical distribution
Customer servicesCustomer services
RelationshipsRelationships
Analysis of information such as sales data. Carrying outAnalysis of information such as sales data. Carrying out
research studiesresearch studies
Establish objectives, plan activities and manage. Co-Establish objectives, plan activities and manage. Co-
ordinate financing, risk taking, evaluate channels activitiesordinate financing, risk taking, evaluate channels activities
Choose and stock products that match buyers needsChoose and stock products that match buyers needs
Set promotional objectives, co-ordinate advertising, personalSet promotional objectives, co-ordinate advertising, personal
selling, promotionsselling, promotions
Establish pricing policies, terms and salesEstablish pricing policies, terms and sales
Manage transport, warehousing, materials handling, stockManage transport, warehousing, materials handling, stock
control, and communicationscontrol, and communications
Provide channels for advise, technical support, after-salesProvide channels for advise, technical support, after-sales
services, and warrantiesservices, and warranties
Facilitate communication, products, parts, credit control,Facilitate communication, products, parts, credit control,
Maintain relationships between manufacturer and retailMaintain relationships between manufacturer and retail
outlets, and customer/consumeroutlets, and customer/consumer
15. Channel levelsChannel levels
AA zero-level channelzero-level channel (also called a(also called a direct-direct-
marketing channel)marketing channel) consists of a manufacturerconsists of a manufacturer
selling directly to the final customer. The majorselling directly to the final customer. The major
examples are door-to-dour home parties, mailexamples are door-to-dour home parties, mail
order, telemarketing, TV selling, Internet selling.order, telemarketing, TV selling, Internet selling.
Avon sales representatives sell cosmetics door-Avon sales representatives sell cosmetics door-
to-door.to-door.
AA one-level channelone-level channel contains one sellingcontains one selling
intermediary, such as a retailer.intermediary, such as a retailer.
AA two-level channeltwo-level channel contains two intermediaries.contains two intermediaries.
In consumer markets, these are typically aIn consumer markets, these are typically a
wholesaler and a retailer.wholesaler and a retailer.
AA three-level channelthree-level channel contains threecontains three
intermediaries. In the mi packing industry,intermediaries. In the mi packing industry,
wholesalers sell to jobbers, who sell to small retawholesalers sell to jobbers, who sell to small reta
17. The distribution channel and theThe distribution channel and the
customercustomer
Passing of goods and services direct from manufacturerPassing of goods and services direct from manufacturer
to customersto customers
Passing of goods and services via retailer and then to aPassing of goods and services via retailer and then to a
consumerconsumer
Passing of goods from manufacturer via a wholesalerPassing of goods from manufacturer via a wholesaler
and then directly to a consumerand then directly to a consumer
Passing of goods from manufacturer via wholesaler,Passing of goods from manufacturer via wholesaler,
then on to a retailer, and subsequently on to a consumerthen on to a retailer, and subsequently on to a consumer
Additionally, the manufacturer can distribute theAdditionally, the manufacturer can distribute the
products via agent to a wholesaler, and then follow theproducts via agent to a wholesaler, and then follow the
routesroutes
18. Selecting the channels ofSelecting the channels of
distributiondistributionWhat are the product characteristics andWhat are the product characteristics and
how do they affect methods ofhow do they affect methods of
distribution?distribution?
Who are their customers?Who are their customers?
Where are their customers?Where are their customers?
What are their customer requirements?What are their customer requirements?
How, when and where do they want to buyHow, when and where do they want to buy
products?products?
What are their competitors doing by wayWhat are their competitors doing by way
of distribution?of distribution?
What is the cost of distribution?What is the cost of distribution?
What are the legal and regulatoryWhat are the legal and regulatory
constraints of distribution?constraints of distribution?
19. Intermediary selection criteriaIntermediary selection criteria
Operational criteriaOperational criteria
Knowledge of local marketsKnowledge of local markets
Appropriate premises and equipmentAppropriate premises and equipment
Technological systems and processesTechnological systems and processes
Product knowledge and expertiseProduct knowledge and expertise
Payment facilitiesPayment facilities
Sales force structure, size, and effectivenessSales force structure, size, and effectiveness
Efficient customer service infrastructureEfficient customer service infrastructure
Strategic criteriaStrategic criteria
Quality assurance processesQuality assurance processes
Management abilityManagement ability
InnovativeInnovative
Willing partnershipWilling partnership
Levels of loyalty and cooperationLevels of loyalty and cooperation
20. Channel strategyChannel strategy
There are three types of marketThere are three types of market
coveragecoverage::
Intensive –Intensive – as many available outlets asas many available outlets as
possible (chocolate bars, newspapers)possible (chocolate bars, newspapers)
Selective –Selective – different products are onlydifferent products are only
available in some outlets (electricalavailable in some outlets (electrical
appliances, certain bread)appliances, certain bread)
ExclusiveExclusive -possibly only one outlet in the-possibly only one outlet in the
geographical area (specialty products:geographical area (specialty products:
special cars)special cars)
21. Intensive distributionIntensive distribution
Intensive distributionIntensive distribution means that as manymeans that as many
available outlets as possible hold this product,available outlets as possible hold this product,
for example chocolate, newspapers, bread andfor example chocolate, newspapers, bread and
so on. Intensive distribution will meanso on. Intensive distribution will mean
convenience to the customer and increasedconvenience to the customer and increased
customer satisfaction.customer satisfaction.
The sale of groceries in petrol and serviceThe sale of groceries in petrol and service
stations is an example of how intensivestations is an example of how intensive
distribution has growndistribution has grown
22. Selective distributionSelective distribution
Selective distributionSelective distribution is different in thatis different in that
some products are only available fromsome products are only available from
some outlets, for example electricalsome outlets, for example electrical
appliances, certain brands of clothes andappliances, certain brands of clothes and
fashion products.fashion products.
23. Exclusive distributionExclusive distribution
Exclusive distribution is where possibly only theExclusive distribution is where possibly only the
outlet in a certain geographic area supplies aoutlet in a certain geographic area supplies a
product.product.
This method of distribution usually relates toThis method of distribution usually relates to
specialty products, for example special cars,specialty products, for example special cars,
deluxe clothing and so on.deluxe clothing and so on.
Often exclusive distribution is relevant to nicheOften exclusive distribution is relevant to niche
products.products.
24. IntensiveIntensive SelectiveSelective ExclusiveExclusive
Maximum # of outletsMaximum # of outlets
covered to maximizecovered to maximize
availabilityavailability
Target outlets in as manyTarget outlets in as many
geographical regions asgeographical regions as
possiblepossible
Consumer convenienceConsumer convenience
productsproducts
High # of purchasersHigh # of purchasers
Nigh purchase frequencyNigh purchase frequency
Impulsive purchaseImpulsive purchase
Low priceLow price
Medium level ofMedium level of
customers – but likely tocustomers – but likely to
be significantbe significant
Less intensiveLess intensive
distribution of outletsdistribution of outlets
Retailers may requireRetailers may require
specialist knowledgespecialist knowledge
Shopping-basedShopping-based
productsproducts
Medium # of shoppersMedium # of shoppers
Purchase is occasionalPurchase is occasional
Purchase is more likelyPurchase is more likely
to be plannedto be planned
Medium priceMedium price
Relatively fewRelatively few
customerscustomers
Limited retail outletsLimited retail outlets
Close retailer-customerClose retailer-customer
relationshipsrelationships
Specialty productsSpecialty products
Infrequent purchaseInfrequent purchase
High involvement andHigh involvement and
planned purchaseplanned purchase
High priceHigh price
25. Vertical marketing systemsVertical marketing systems areare
professionally managed and centrallyprofessionally managed and centrally
coordinated marketing channelscoordinated marketing channels
designed to achieve channel economiesdesigned to achieve channel economies
and maximum marketing impact.and maximum marketing impact.
Major types of vertical marketing systemsMajor types of vertical marketing systems::
corporatecorporate
contractualcontractual
administeredadministered
26. A distribution system where two or moreA distribution system where two or more
channel members are connected by ownershipchannel members are connected by ownership
or legal obligation (limited (simple) definition)or legal obligation (limited (simple) definition)
A marketing channel in which a single channelA marketing channel in which a single channel
member will coordinate or manage channelmember will coordinate or manage channel
activities to achieve efficient, low-costactivities to achieve efficient, low-cost
distribution, aimed at satisfying target marketdistribution, aimed at satisfying target market
customer (expand definition)customer (expand definition)
27. Product design and developmentProduct design and development
BrandingBranding
PricingPricing
PromotingPromoting
Stock control and storageStock control and storage
MerchandizingMerchandizing
TransportationTransportation
RetailingRetailing
Customer serviceCustomer service
Finance/creditFinance/credit
Warranties/guarantiesWarranties/guaranties
28. Manufacturer-
sponsored retail
franchise system
(Ford)
Manufacturer-
sponsored retail
franchise system
(Ford)
Manufacturer-
sponsored wholesale
franchise system
(Coca-Cola)
Manufacturer-
sponsored wholesale
franchise system
(Coca-Cola)
Wholesaler-sponsored
voluntary chains
(Western Auto)
Wholesaler-sponsored
voluntary chains
(Western Auto)
Administered vertical
marketing system
Procter & Gamble
Administered vertical
marketing system
Procter & Gamble
Vertical marketing
system
Vertical marketing
system
Corporate vertical
marketing system
(Polo/Ralph Lauren)
Corporate vertical
marketing system
(Polo/Ralph Lauren)
Service-
sponsored retail
franchise system
(Holiday Inn)
Service-
sponsored retail
franchise system
(Holiday Inn)
Contractual vertical
marketing system
Contractual vertical
marketing system
Wholesaler-sponsored
voluntary chains
(Western Auto)
Wholesaler-sponsored
voluntary chains
(Western Auto)
Wholesaler-sponsored
voluntary chains
(Western Auto)
Wholesaler-sponsored
voluntary chains
(Western Auto)
Service
sponsored
franchise system
(H&R Block)
Service
sponsored
franchise system
(H&R Block)
29. The combination of successiveThe combination of successive
stages of production andstages of production and
distribution under a singledistribution under a single
ownership is aownership is a corporate verticalcorporate vertical
marketing systemmarketing system..
These types of marketing systemsThese types of marketing systems
can develop via eithercan develop via either forwardforward
integrationintegration oror backward integrationbackward integration..
30. Under aUnder a contractual vertical marketingcontractual vertical marketing
systemsystem,, independent production andindependent production and
distribution firms integrate their effortsdistribution firms integrate their efforts
on a contractual basis to obtainon a contractual basis to obtain greatergreater
functional economies and marketingfunctional economies and marketing
impactimpact than they could achieve alone.than they could achieve alone.
Contractual systems are theContractual systems are the mostmost
popularpopular among the three types ofamong the three types of
vertical marketing systems, accountingvertical marketing systems, accounting
for about 40% of all retail sales.for about 40% of all retail sales.
31. Contractual VMSContractual VMS
Wholesaler-sponsored voluntaryWholesaler-sponsored voluntary
chains:chains: Wholesalers organize voluntaryWholesalers organize voluntary
chains of independent retailers to helpchains of independent retailers to help
them compete with large chainthem compete with large chain
organizations.organizations.
The wholesaler develops a program inThe wholesaler develops a program in
which independent retailers standardizewhich independent retailers standardize
their selling practices and achieve buyingtheir selling practices and achieve buying
economies that enable the group toeconomies that enable the group to
compete effectively with chaincompete effectively with chain
organizations.organizations.
32. Contractual VMSContractual VMS
Retailer cooperatives:Retailer cooperatives: Retailers take theRetailers take the
initiative and organize a new businessinitiative and organize a new business
entity to carry on wholesaling and possiblyentity to carry on wholesaling and possibly
some production.some production.
Members concentrate their purchasesMembers concentrate their purchases
through the retailer co-op and plan theirthrough the retailer co-op and plan their
advertising jointly.advertising jointly.
Profits are passed back to members inProfits are passed back to members in
proportion to their purchases, Nonmemberproportion to their purchases, Nonmember
retailers can also buy through the co-opretailers can also buy through the co-op
but do not share in the profits.but do not share in the profits.
33. Contractual VMSContractual VMS
Franchise organizations:Franchise organizations: AA
channel member called achannel member called a franchisorfranchisor
might link several successive stages inmight link several successive stages in
the production-distribution process.the production-distribution process.
Franchising has been the fastest-Franchising has been the fastest-
growing retailing development ingrowing retailing development in
recent years.recent years.
Although the basic idea is an old one,Although the basic idea is an old one,
some forms of franchising are quitesome forms of franchising are quite
new.new.
34. FranchisingFranchising is a contractualis a contractual
arrangement between a parentarrangement between a parent
company (acompany (a franchisorfranchisor) and an) and an
individual or firm (aindividual or firm (a franchiseefranchisee) that) that
allows the franchisee to operate aallows the franchisee to operate a
certain type of business under ancertain type of business under an
established name according toestablished name according to
specific rules.specific rules.
Franchise association in Europe,Franchise association in Europe,
USA, Russia.USA, Russia.
35. Administered vertical marketingAdministered vertical marketing
systemssystems achieve coordination atachieve coordination at
successive stages of productionsuccessive stages of production
and distribution by theand distribution by the sizesize andand
influenceinfluence of one channel memberof one channel member
rather than through ownershiprather than through ownership..
36. The combination of institutions at theThe combination of institutions at the
same level of channel operation undersame level of channel operation under
one managementone management
37. The balance of power within theThe balance of power within the
distribution channeldistribution channel
The balance of power within the distribution channelThe balance of power within the distribution channel
is an interesting concept to consider. As each partyis an interesting concept to consider. As each party
has its own set of objectives to pursue and its ownhas its own set of objectives to pursue and its own
agenda, fitting in with a partner organization canagenda, fitting in with a partner organization can
potentially cause conflict.potentially cause conflict.
Who then holds the balance of power?Who then holds the balance of power?
Is it the manufacturer because they have the productsIs it the manufacturer because they have the products
available for market?available for market?
Or the intermediary, who may decide they do not want toOr the intermediary, who may decide they do not want to
sell on the product to retail outlets?sell on the product to retail outlets?
Or is it the retailers themselves, who will decide on theOr is it the retailers themselves, who will decide on the
most appropriate brand to sell to their customers?most appropriate brand to sell to their customers?
38. The balance of power within theThe balance of power within the
distribution channeldistribution channel
Channel cooperation is critical, and channel members need toChannel cooperation is critical, and channel members need to
be united.be united.
They should share information, agree to be directed to theThey should share information, agree to be directed to the
same target markets, and together maximize efficiency.same target markets, and together maximize efficiency.
Often a channel leader will be identified to enable a co-Often a channel leader will be identified to enable a co-
ordinated effort of all parties in the marketing channel.ordinated effort of all parties in the marketing channel.
To become a leader, the channel member must want to directTo become a leader, the channel member must want to direct
and influence the channel’s overall performance. To do so, theand influence the channel’s overall performance. To do so, the
leader should have significant power and driving force in orderleader should have significant power and driving force in order
to succeed.to succeed.
To gain the power in the relationship, the organization will likelyTo gain the power in the relationship, the organization will likely
to be of significant size, with major resources.to be of significant size, with major resources.
It must have the respect of the other channel members.It must have the respect of the other channel members.
It must be able to punish or reward other channel membersIt must be able to punish or reward other channel members
effectively.effectively.
39. Channel conflictChannel conflict
An additional problem for many suppliers isAn additional problem for many suppliers is
channel conflict,channel conflict, especially for premium andespecially for premium and
high-priced products and services.high-priced products and services.
Conflicts can ariseConflicts can arise verticallyvertically, that is between, that is between
sequential memberssequential members in a distribution networkin a distribution network
such as agents and distributor over such matterssuch as agents and distributor over such matters
as carrying a particular range or price increases.as carrying a particular range or price increases.
Horizontal conflictsHorizontal conflicts may arise between membersmay arise between members
of a channel such as betweenof a channel such as between agents or betweenagents or between
distributorsdistributors where competition may be deemed towhere competition may be deemed to
be unfair.be unfair.
Within any channel there are often collisions ofWithin any channel there are often collisions of
interests given all channel members naturallyinterests given all channel members naturally
seek to maximize their profits and resources.seek to maximize their profits and resources.
However, one particular area has seen aHowever, one particular area has seen a
significant amount of channel conflict in recentsignificant amount of channel conflict in recent
years:years: grey marketing.grey marketing.
40. Grey marketingGrey marketing
Grey marketingGrey marketing occurs when distributors purchase goods inoccurs when distributors purchase goods in
one market, either from an authorized dealer or directly fromone market, either from an authorized dealer or directly from
the manufacturer, and resell the same goods in anotherthe manufacturer, and resell the same goods in another
market at a higher price.market at a higher price.
TheyThey undercut the pricesundercut the prices of the authorized dealers in aof the authorized dealers in a
market and still make a healthy profit. Such activity is notmarket and still make a healthy profit. Such activity is not
necessarily illegal, but can fall foul of licence agreements ornecessarily illegal, but can fall foul of licence agreements or
be counter to trade regulations.be counter to trade regulations.
For example, Tesco lost a dispute with Levi's to sell jeans sourced inFor example, Tesco lost a dispute with Levi's to sell jeans sourced in
the grey marker in its supermarkets.the grey marker in its supermarkets.
Companies that find their goods being distributed by greyCompanies that find their goods being distributed by grey
marketers face a mix of problems aside from lost profits.marketers face a mix of problems aside from lost profits.
For a start, price discounting can affect their image andFor a start, price discounting can affect their image and
relationships with authorized dealers can become strainedrelationships with authorized dealers can become strained
as they watch their markets being eroded.as they watch their markets being eroded.
41. Term is used to describe the management ofTerm is used to describe the management of
every part of the distribution process isevery part of the distribution process is
extremely important to ensuring that productsextremely important to ensuring that products
are moved from manufacturer to the point ofare moved from manufacturer to the point of
sale efficiently and effectively.sale efficiently and effectively.
Elements of consideration:Elements of consideration:
Cost involvedCost involved
Methods of transport – road, rail, plane, shipping,Methods of transport – road, rail, plane, shipping,
internetinternet
Routes usedRoutes used
Stock, storage and stock controlStock, storage and stock control
Protection and delivery of stockProtection and delivery of stock
TimingTiming – the key element (JIT (Just in time)– the key element (JIT (Just in time)
managementmanagement
Evaluating the effectiveness of methods of distributionEvaluating the effectiveness of methods of distribution
and being aware of other alternativesand being aware of other alternatives
Physical distribution management (PDM)
43. The key success factors of PDMThe key success factors of PDM
include all elements of marketing mix:include all elements of marketing mix:
Product characteristicsProduct characteristics
PackagingPackaging
PricingPricing
Promotional campaignsPromotional campaigns
44. ““Just in time” (JIT) conceptJust in time” (JIT) concept
Timing is a critical element of PDM, as many companies work on theTiming is a critical element of PDM, as many companies work on the
delivery of materials and components on adelivery of materials and components on a Just in TimeJust in Time basis (JIT).basis (JIT).
It means that the manufacturer of products, or the supplier of rawIt means that the manufacturer of products, or the supplier of raw
materials, must deliver the necessary materials or components as andmaterials, must deliver the necessary materials or components as and
when required.when required.
For example, a window manufacturer, who makes windows for officeFor example, a window manufacturer, who makes windows for office
buildings, will be making windows to order and will be required tobuildings, will be making windows to order and will be required to
deliver them at certain periodic times in the construction of thedeliver them at certain periodic times in the construction of the
building.building.
The concept of JIT was developed to encourage maximized efficiency ofThe concept of JIT was developed to encourage maximized efficiency of
manufacturing.manufacturing.
Both save significant amounts of money, which means that the costBoth save significant amounts of money, which means that the cost
savings can be passed on to the customer, making products cheapersavings can be passed on to the customer, making products cheaper
to purchase.to purchase.
45. Channel choice considerations
1. Target market coverage 2. Buyer requirements 3. Profitability
a. Intensive distribution a. Information a. Total revenue
b. Selective distribution b. Convenience b. Total costs
c. Exclusive distribution c. Variety
d. Attendant services
Channel choice considerations
1. Target market coverage 2. Buyer requirements 3. Profitability
a. Intensive distribution a. Information a. Total revenue
b. Selective distribution b. Convenience b. Total costs
c. Exclusive distribution c. Variety
d. Attendant services
Environment
al
factors
Environment
al
factors
Consumer
factors
Consumer
factors
Product
factors
Product
factors
Company
factors
Company
factors
46. Push and pull strategiesPush and pull strategies
Push strategyPush strategy
The way in whichThe way in which
products make their wayproducts make their way
to customers is a criticalto customers is a critical
consideration toconsideration to
marketersmarketers
TheThe push element relatespush element relates
to distribution and howto distribution and how
personal selling links thepersonal selling links the
supplier to the customer,supplier to the customer,
pushing the product out topushing the product out to
the market.the market.
Pull strategyPull strategy
On the other hand, the pullOn the other hand, the pull
strategy is very heavilystrategy is very heavily
reliant on advertising,reliant on advertising,
packaging and salespackaging and sales
promotions directly aimedpromotions directly aimed
at the consumer,at the consumer,
effectively pulling them oreffectively pulling them or
attracting them to theattracting them to the
product, encouraging themproduct, encouraging them
to purchase and forge ato purchase and forge a
lasting relationship.lasting relationship.
47. Pull strategy: examplesPull strategy: examples
The huge growth in Internet marketingThe huge growth in Internet marketing
and direct marketing has really speededand direct marketing has really speeded
this process up with promotionalthis process up with promotional
incentives.incentives.
For example, Marks and Spencer (M&S)For example, Marks and Spencer (M&S)
are now giving discount vouchers toare now giving discount vouchers to
M&S store card holders to encourageM&S store card holders to encourage
them to make additional purchases.them to make additional purchases.
Next Directory has introduced a varietyNext Directory has introduced a variety
of offers including free delivery or 20 perof offers including free delivery or 20 per
cent off on orders over £100.cent off on orders over £100.
48. Key factors influencingKey factors influencing
push strategiespush strategies
Key factors influencingKey factors influencing
pull strategiespull strategies
Level of economic andLevel of economic and
financial stabilityfinancial stability
Need for economies ofNeed for economies of
scalescale
Mature or saturatedMature or saturated
marketsmarkets
Consumer credit restrictionsConsumer credit restrictions
Political instabilityPolitical instability
Intense competitionIntense competition
High operation costsHigh operation costs
Indication of lowIndication of low marketmarket
growgrow
Level of economic andLevel of economic and
financial stabilityfinancial stability
Innovative cultureInnovative culture
Underdeveloped retailUnderdeveloped retail
infrastructure for theinfrastructure for the
productsproducts
High investment potentialHigh investment potential
High levels of marketHigh levels of market
growthgrowth
Social stabilitySocial stability
Political stabilityPolitical stability
50. Expansion of # of computersExpansion of # of computers
On-line customer purchasesOn-line customer purchases
51. Strategic levelStrategic level Operational levelOperational level
Improved corporate imageImproved corporate image
Improved customer serviceImproved customer service
Increased visibilityIncreased visibility
New market growthNew market growth
opportunitiesopportunities
Lower overall business costsLower overall business costs
Speed of transactions increasedSpeed of transactions increased
Management of informationManagement of information
improvedimproved
Increased service levels ofIncreased service levels of
customerscustomers
Removal of time constraintsRemoval of time constraints
Removal of distance constraintsRemoval of distance constraints
Ability to complete transactionsAbility to complete transactions
electronicallyelectronically
Access to full competitive arenaAccess to full competitive arena
Opportunities for new revenuesOpportunities for new revenues
Cost-effectivenessCost-effectiveness
More effective/closerMore effective/closer
relationships with businessrelationships with business
partnerspartners
Improved understanding ofImproved understanding of
customer requirementscustomer requirements
52. Key performance and evaluation measures include:Key performance and evaluation measures include:
Regular reviewRegular review
a forum for problem review and solutiona forum for problem review and solution
Monthly, quarterly and year sales data analysisMonthly, quarterly and year sales data analysis
Average stock levelsAverage stock levels
Lead and delivery timesLead and delivery times
Zero defectsZero defects
Customer service complaintsCustomer service complaints
Marketing support – achieving marketing objectives, level ofMarketing support – achieving marketing objectives, level of
marketing activity, sales promotions, distributor incentivesmarketing activity, sales promotions, distributor incentives
Spot-check of distributions further down the supply chainSpot-check of distributions further down the supply chain
Annual performance auditAnnual performance audit
53. # of leads# of leads
Increased salesIncreased sales
Customer retentionCustomer retention
Increased market shareIncreased market share
Brand enhancement and loyaltyBrand enhancement and loyalty
Customer serviceCustomer service
54. Basic marketing channel functionsBasic marketing channel functions must bemust be
performed around the world, butperformed around the world, but within thewithin the
context ofcontext of the traditions, customs, geography,the traditions, customs, geography,
and the economic history of the individualand the economic history of the individual
countries and societies.countries and societies.
Understanding the marketing channels inUnderstanding the marketing channels in
global markets is often aglobal markets is often a prerequisite toprerequisite to
successful marketingsuccessful marketing..
