Last Modified: 2011-12-11
- Reduced costs in inventory management, transportation, warehousing and packaging.
- Improved service (time based delivery, make to order)
- Higher product availability, more customized products.
- Intensive - having a product available in every outlet where someone might want to buy
- Selective - screening dealers to eliminate all but a few in a single area
- Exclusive - established one or a few dealers w/in a given area.
- Direct channel - producers sell directly to consumers
- Agent/channel broker - used in markets w/ many small manufacturers and retailers that lack resources to find one another. Agents bring them together for negotiations.
- Retailer channel - common when retailer is large and can buy in lg. quantities directly from manufacturer
- Wholesaler channel - commonly used for low-cost items frequently purchased such as candy, cigarettes and magazines.
- Multiple channels / Dual distribution - use of 2+ channels to dist. the same product to target market
- Nontraditional channels - internet, mail order or informercials
- Strategic channel alliances - cooperative agreement btwn businesses to use other's already est. distribution channel
- Target customer considerations
- Geographic location and size
- lg markets = more intermediaries
- concentrated target = direct selling
- More complex and expensive products need shorter/more direct channels
- Sell better through direct sales. Ex, pharmaceuticals,, airplanes, etc.
Product's life cycle
- Delicacy of product - perishables have short life span
- Large financial/marketing resources better able to use direct channels
- Can hire own sales force, warehouse, etc
- Quantity - diff. btwn the amt of product produced and the amount an end user wants to buy
- Assortment - lack of all the items a customer needs to receive full satisfaction from a product.
- Temporal - when a product is produced but a customer isnt ready to buy it. Ex - christmas decorations
- Special discrepancy - diff. btwn the location of a producer and location of widely scattered markets
- Channel power - Capacity of a particular marketing channel member to control or influence the behavior of others
- Channel control - When one marketing channel member intentionally affects another's behavior.
Vertical conflict - occurs btwn diff. levels in a marketing channel, most typically btwn the manufacturer and wholesaler/retailer.
- Sourcing and procurement of raw mtls/supplies
- Production scheduling
- Order processing
- Inventory control
- Warehousing and mtls handling
For the supplier - means supplying customer w/ products in just a few days rather than weeks
For the consumer - lower costs, shorter lead times, and products that more closely meet consumer's needs
Truck - highly accessible, lower transit times, more expensive
Rail - higher transit time, middle of the road every where else
Pipe - lower cost, most reliable, but very low capacity/accessibility/traceability.
Water - lowest cost, lowest reliability/transit time, but very capable.
- Shippers and distributors must be aware of the permits, licenses and registrations they may need to acquire, and any tariffs/quotas etc that apply in each country.
- Transportation can be a major issue w/ global supply chains
- Uncertainty regarding shipping is the top reason companies avoid international markets.
- Independent retailers
- Chain stores - owned as a group by a single organization
- Franchise - right to operate a business/sell a product
Level of service
- Full service or Self service
- Gross margin - amt of $ a retailer makes as a percentage of sales after COGS is subtracted.
- Department stores - housing several depts under one roof
- Specialty stores - specializes in one type of merch.
- Supermarkets - mainly food/groceries
- Drugstores - mainly pharmacy
- Convenience stores - mini. supermarket, limited line of high turnover goods
- Discount store - competes on low prices and high volume (see other card)
Ex: automatic vending
- Direct mail
- Catalogs and mail order
- Product and trade name franchising - dealer agrees to sell certain products provided by manufacturer
- Business format franchising - ongoing relationship where a franchisor grants the business operating rights to a franchisee.
- based on demographic, geographic or psychographic characteristics
2. Develop marketing mix:
- The product offering
- Promotion strategy
- Proper location
- Retail prices
- Presentation of store/Atmosphere
- Employee type (friendly, knowledgeable) and density
- Merchandise type and density
- Sound - control the pace of traffic, attract a shoppers attention
- Visual factors - colors create a mood or focus attention
- Personnel, customer service
M-commerce - enables consumers w/ wireless devices to connect to the internet and shop
- Direct channels are typical
- Industrial wholesalers - channel members who buy and take title to products
- Private exchange - company creates a network so it can connect its business w/ suppliers
- Full line- very limited service, broad assortment of well known branded goods
- Specialty - Offers nearly complete selection of single line merch., uses self-service, discount prices and high volume
- Warehouse membership clubs - limited service wholesalers that sell a limited selection of brand name household items
- Off price retailer - sells at prices 25% or more below dept. store prices because it pays cash for stock.
- Contacting and Promoting
- Negotiating (type of transportation, method of payment, when to deliver)
- Risk taking (of owning inventory)
- Physically distributing
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