Session 27 MG 220 Marketing Management MBA 10

1. MG 220 Marketing Management
MBA 10
Fall 2010
Muhammad Talha Salam, Asst. Professor
talha.salam@nu.edu.pk
Access it online: www.slideshare.net/talhasalam
Part 6:
Delivering Value
> Channel integration and systems: SKIM
> E-Commerce Marketing Practices: SKIM
> Retailing
> Private Labels
Class Presentation | Session 27 | 15 Nov 2010

2. Access it online: www.slideshare.net/talhasalam
Channel Integration and Systems
Vertical Marketing Systems (VMS)
VMS
• Conventional Marketing System: Independent producer, wholesaler, retailer
WHILE
• Vertical Marekting System: Producer, wholesaler, retailer acting as a unified system
• This concept is widely used in different forms: Corporate, Administered, Contractual
• VMS is all based on power of any one of the member of Marketing System (not
necessarily producer, but also retailer or wholesaler)
• Corporate VMS: combines successive stages of production, distribution and retailing
under single ownership. Companies buy from companies they own.
• Administered VMS: coordinates successive stages of production and distribution through
the size and power of one of members
• Contractual VMS: consists of independent firms at different level of production and
distribution integrating their programs on a contractual basis to obtain more economies
or sales impact than they could achieve alone
MG 220 Marketing Management 2

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Channel Integration and Systems
Horizontal and Multichannel Marketing Systems
Horizontal Marketing Systems
• Two or more unrelated companies put together resources or programs to exploit an
emerging marketing opportunity
Multichannel Marketing Systems
• Occurs when a single firm uses two or more marketing channels to reach one or more
customer segments.
MG 220 Marketing Management 3

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E-Commerce Marketing Practices
Key definitions
Internet has impacted channel strategies a lot and these are some relatively new trends
which are now strongly established.
E-business
• Use of electronic means and platforms to conduct a company’s business
E-Commerce
• Company (or its website) offers to transact or facilitate selling of products and services
online.
E-Purchasing
• Companies decide to purchase from online suppliers
E-Marketing
• Describes company efforts to communicate and promote their products online
PURE CLICK COMPANIES
• Companies which started and are operating only on internet i.e. as online or e-business
e.g. Amazon.com
BRICK-AND-CLICK COMPANIES
• Companies which existed otherwise and added online stores later. E.g. Walmart
MG 220 Marketing Management 4

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Retailing
Definition | Types of Retailers | New Models for success
What is Retailing?
• All activities involved in selling goods or services directly to end consumer for personal, non-
business use. EXAMPLES?
Types of Retailers
• Based on Levels of Service:
– Self-service
– Self-selection
– Limited service
– Full service
• Matrix showing positioning strategies for retailers:
• Non-store retailing
– Direct Selling
– Direct Marketing
– Automatic Vending
– Buying Service
New Models for success
– Strong retail brand approach
– The showcase store
MG 220 Marketing Management 5

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Retailing
Marketing Decisions
Key decisions to be taken by retailers
• Target Market
• Product Assortment
• Procurement
– Policies and procedures for procurement based on assortment
• Services:
– Deciding on services mix in terms or pre-purchase, post-purchase and ancillary
• Store Activities & Atmosphere
• Price
– Pricing strategies for retailers
• Communication
– All decisions related to communication i.e. promotion to generate traffic
• Location:
– Three keys to success in retailing are: Location, Location and Location!
MG 220 Marketing Management 6

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Retailing
Trends in Retailing
Upcoming and relatively new trends in retailing
• New Retail forms and combinations
– Supermarkets having bank branches, bookshops having coffee shops
• Growth of intertype competition
– Different type of stores are competing for same consumer. E.g. Electronics retailer competing
with Hyperstar
• Competition between store and non-store retailing
– Non-store based retailing is taking business away from store-based retailing
• Growth of Giant retailers
– Through better information systems, logistical superiority, giant retailers offer better prices
• Decline of Middle Market Retailers
– Hour-glass approach i.e. growth is either at top or at bottom. Middle level retailers are shrinking
• Growing investment in technology
– For better conducting of business use of technology is increasing
• Global Presence of major retailers
– Many retailers from Europe and North America are now presence in almost all continents and are
constantly expanding globally
MG 220 Marketing Management 7

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Private Labels
What is a Private Label?
• A brand developed by the retailers and wholesalers themselves
• This a challenge for manufacturers that retailers can offer private labels in
competition
• But there is a limit to how much private label can be used
• They might not be attractive as national brand and/or they might not be feasible
to produce ‘privately’
House Brands
• Why go for Private Labels
• First: They are more profitable. Intermediaries find low-cost producers and get
it developed and earn better margins themselves
• Second: It can be a differentiating factor for retailers
MG 220 Marketing Management 8

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Private Labels
The Private Label Threat
• Generally retailers have advantage here.
• They can even charge extra fee from manufacturers for their shelf space
• Consumers’ being more price sensitive is also hurting national brands
• Manufacturers react to this threat by focusing more on consumer-driven
promotion to maintain strong brand preference
MG 220 Marketing Management 9

10. MG 220 Marketing Management
MBA 10
Fall 2010
Muhammad Talha Salam, Asst. Professor
talha.salam@nu.edu.pk
Access it online: www.slideshare.net/talhasalam
Part 6:
Delivering Value
> Covering balance from prev session
> Two topics from Part 6 to be covered:
> Wholesaling
> Market Logistics: SKIM
> Overall review of Part 7
Class Presentation | Session 28 | 22 Nov 2010