Channels of Distribution PPT at Bec Doms Bagalkot Mba Marketing
Channels of Distribution PPT at Bec Doms Bagalkot Mba Marketing
Channels of Distribution PPT at Bec Doms Bagalkot Mba Marketing
Marketing Framework
Distribution
Sellers prefer to produce large quantities of a limited number of goods Buyers prefer smaller quantities of a wider variety of goods Distribution deals with realigning the discrepancies between quantities and selections
Breaking bulk: making goods available in smaller batches
Discussion Question
View the next two slides. Assuming all else is equal, which is the most efficient channel? Why?
Manufacturer to Consumer
Discussion Questions
Given the 3 channels below, which is best? What are the tradeoffs between implementing the left channel compared to the right channel?
Discussion Questions
Who are Dells suppliers? Who are Amazons suppliers? Who are DreamWorks channel members?
Intensive Distribution
Intensive: widely distributed
Drugstores, supermarkets, discount stores, convenience stores, etc.
Selective Distribution
Selective: less widely distributed Usually for complex and/or expensive products that require assistance
Cars, computers, appliances, etc.
Push strategy: promote to distribution partners to push goods to consumer Manufacturer has more control due to fewer relationships to manage
Exclusive Distribution
Exclusive: extreme case of selectivity Manufacturers have the most control May become monopolistic
Intensity Strategies
Intensive distribution usually goes with heavy promotion, lower prices and average or lower quality products
Exclusive distribution usually goes with exclusive promotional efforts, higher prices and higher quality products
Discussion Question
Assume you are a marketer for Coach handbags. How intensively would you distribute this product? Why?
Pull Strategy
Incentives offered to consumers to pull products through the channel
Advertise to consumers Distribute widely Offer price and/or quantity discounts Offer inexpensive trials or free samples Offer coupons and/or rebates Offer financing Offer loyalty programs/points
Push Strategy
Incentives offered to distribution partners to push products through the channel
Advertise to partners (and consumers) Distribute more selectively Employ a sales force Offer incentives to sales force Offer price and/or quantity discounts Offer financing Offer allowances for marketing activities
Channel Conflict
Conflict can arise when channel partners differ in their opinions on how to please customers and maximize profit
Conflict may motivate parties to find alternative solutions
Types of Power
Coercive power: Ability to take away benefits or inflict punishment on other party Information power: Having information other party seeks Legitimate power: Using size or expertise to encourage other party
Types of Power
Referent power: One party seeks an affiliation with other Reward power: Ability to provide good outcomes for other party
Arbitration
The third party makes a binding decision for the two
Discussion Questions
Which type of power do you think would be more likely to create cooperative channel partnerships?
Which type of power do you think would be least likely to create cooperative channel partnerships?
Governance Costs
Costs involved with relational issues incurred coordinating the enterprise and controlling ones partners
Revenue Sharing
Channel conflict often comes down to revenue sharing Double Marginalization
The manufacturer wants a mark-up when it sells to a retailer The retailer wants a second markup when it sells to the consumer
Channel Integration
If a company is currently using a partner to do something, it might wish to bring that function back in-house
Forward Integration
e.g., manufacturer controls its retail stores
Backward integration
e.g., manufacturer controls raw material
Private Labels
Many retailers are integrating backward into private label products Advantages
May give retailers negotiating power with the manufacturer May offer significant margin opportunities May allow retailer to distinguish itself as the only place that offers that brand
Discussion Questions
How could Barnes & Noble engage in backward integration? How could Maytag engage in forward integration?
Retailing
Retailers have been gaining power and momentum over the past 10-20 years Powerful retailers can make or break a new product
Types of Retailing
Categorize retailers according to extent of managers ownership
Independent retailers
Local florist
Franchises
Jiffy Lube
Types of Retailing
Categorize retailers according to their level of service which tends to be positively related to their price points
Full service
Nordstroms
Limited service
K-mart
Types of Retailers
Categorize retailers according to product assortment
Specialty: carry depth not much breadth
Toy stores
Discussion Questions
Can you categorize Wal-mart in terms of ownership, level of service and product assortment?
Why do you think Wal-mart has been successful?
Importance of Operations
Flowcharting operations
Front-stage: elements customers see Back-stage: elements customers do not see
Must be run efficiently to support front-stage
What parts of the process flow smoothly? What parts do not? What parts of the process might be streamlined or eliminated altogether?
Importance of Location
Consider factors needed to be successful
Environmental data
population densities income and social class distributions median ages household composition, etc.
Franchising
Company can retain some control without complete ownership or capital expenditure
Franchisor: the company Franchisee: local owner
Pays fee and royalties
Product franchising
Ford dealer, Coca-Cola bottlers
E-commerce
Retail sales online are about $30 billion
Only about 3% of total retail sales Much potential for growth
Internet Penetration
Catalog Sales
E-commerce and catalogs are complementary
Many companies use both successfully 83 of the top 100 catalogers saw growth
Catalogs are preferred for browsing Catalogs trigger web visits Customer databases are utilized for customized catalogs, promotions, etc.
Top Catalogers
Sales Force
Utilized extensively by companies utilizing a push strategy For more undifferentiated products, a companys sales force is its most important driver of its performance
Sales Performance
Evaluation factors
Sales
by segment, product, improvement, etc.
Time spent with clients Expertise Knowledge Attitudes Days worked Selling expenses, etc.
Discussion Questions
How could a company reduce some of these customer complaints? Why would a company use bonuses for its sales force?
Discussion Questions
Why would it be important to understand your customer in designing your distribution channel?
What might you want to know about your customer prior to designing the channel?