Unit1-Marketing Mix Place

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Marketing Mix Unit1 Place(Distribution) Subhajit Sanyal

P = Location: 

P = Location Convenience Distribution Availability Accessibility Usability Where and when necessary Size and portability

Place and PLC: 

Place and PLC PLACE must be considered in terms of the Product Life Cycle Changing PLACEs, as you move through the PLC, is very hard to do because it is expensive and usually involves Real Estate Place decisions are usually harder to change than other marketing mix decisions

Product Classes - Place: 

Product Classes - Place Convenience Products - have to be in convenient places - small stores, vending machines Shopping Products - have to be where shoppers go, malls, superstores etc. Specialty Products - have to available where people want to buy them - ie. Movie theatres have to be located where many people go, and where you can park easily

Place and PLC: 

Place and PLC PLACE must be considered in terms of the Product Life Cycle In the beginning Growth Stage - it might be good to have your product sold in a certain location, but in the maturity or decline stage, you may have to change locations to make it better for customers who are no longer so strongly interested in buying

Distribution Tasks: 

Distribution Tasks Transport * materials handling Store * handling * order processing Break Bulk * inventory management Sorting - choice & range Contacting Co-ordinating Controlling costs

What is it?: 

What is it? Distribution - the where when how and why products and services are made available to potential customers Physical distribution - the activities concerned with the physical flows through producer to intermediaries to consumers and customers

Objectives of Distribution: 

Objectives of Distribution Appropriate and adequate distribution Access to markets and target customers Relative cost effectiveness in access, transaction value and distribution Reseller motivation Revenue returns from channel members Competitive representation Customer service

Some Contemporary Influences on Distribution: 

Some Contemporary Influences on Distribution Political Economic Social Cultural Technological Educational Environmental

Marketing / Distribution Channels create - Time - Place - Possession/ownership utility: 

Marketing / Distribution Channels create - Time - Place - Possession/ownership utility Delivered at the right time - time utility Delivered to the right place - place utility With appropriate legal requirements - possession / ownership utility

Channels and key players: 

Channels and key players Channel of distribution Intermediary Merchant Functional middleman

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Producer Buyers Producer Buyers Middleman or intermediary Figure 12.1 Efficiency in exchanges provided by an intermediary

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Marketing channel activities that intermediaries perform TABLE 12.1 CATEGORY OF MARKETING ACTIVITIES POSSIBLE ACTIVITIES REQUIRED Table 12.1 Marketing channel activities that intermediaries perform Marketing information Marketing management Facilitating exchange Price Physical distribution Analyse information such as sales data; perform or commission marketing research studies Establish objectives; plan activities; manage and co-ordinate financing, personnel and risk taking; evaluate and control channel activities Choose and stock product assortments that match the needs of buyers Establish pricing policies and terms of sales Manage transport, warehousing, materials handling, inventory control and communication Promotion Set promotional objectives, co-ordinate advertising, personal selling, sales promotion, publicity, direct mail and packaging

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Classifying heterogeneous supplies into homogeneous groups Developing a bank or stock of homogeneous products to provide aggregate inventory Breaking down homogeneous stocks (inventories) into smaller units Combining products into collections or assortments that buyers want Sorting out Accumulation Allocation Assorting Figure 12.2 Sorting activities conducted by channel members.

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The process that helps producers, who produce different amounts, and different types, organize their products into categories/assortments to make it easier for the consumer to buy. Sorting

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“… putting together a variety of products to give a target market what it wants…” Some stores cannot take the full range of a company’s product line - they do not have the shelf space or floor space - so they carefully select the brands of several mfgs to sell. Assorting

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E F G H Producer Producer Producer Producer Agents Agents Business-to-business distributors Business-to-business distributors Business-to-business buyers Business-to-business buyers Business-to-business buyers Business-to-business buyers Figure 12.4 Typical marketing channels for industrial products

Channel design decisions: 

Channel design decisions Analyse customer service needs - marketing channels deliver appropriate value to the customer Defining channel objectives and constraints - which segments to serve and which channel to use for each Identifying key channel alternatives - direct marketing, broker, agent, intermediary, wholesaler, retailer, e-commerce Evaluating alternatives - economic, control, level of flexibility criteria

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A vertical marketing channel Members Manufacturer Wholesaler Retailer Consumer Functions Design Make Brand Price Promote Buy Stock Display Sell Deliver Finance Manufacturer Wholesaler Retailer Consumer A conventional marketing channel Members Functions Design Make Brand Price Promote Sell Buy Stock Promote Display Sell Deliver Finance Buy Stock Promote Display Sell Deliver Finance Figure 12.5 Comparison of a conventional marketing channel and a vertical marketing system SOURCE: Adapted from Strategic Marketing, by David J. Kollat et al., copyright  1972. Reprinted by permission.

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The whole channel focusses on the same target market at the end of the channel sometimes a large firm will buy up the smaller companies in the channel to have more control over the distribution Vertical Marketing Systems

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CHANNEL CAPTAIN “A person, or company, that helps direct the activities of a whole channel, and tries to avoid, or solve conflicts…” However, some older products don’t have such a position.

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CHANNEL CAPTAIN Can be,,, A strong wholesaler a market oriented producer a large retailer

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CHANNEL CAPTAIN Sometimes Middlemen have a clear picture of what the customer wants, and who the producers are, so they arrange for producers to be in contact with the retailers, so more product can flow in the channel. The Middlemen makes more money by making nore commission on stuff sold.

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Control of resources Size of company Reward power Expert power Referent power Legitimate power Coercive power Economic sources of power Non-economic sources of power Level of power Dependency of other channel members Willingness to lead Channel leadership Figure 12.8 Determinants of channel leadership SOURCE: R.D. Michman and S. D. Sibley, Marketing Channels and Strategies, 2nd edn (Worthington, Ohio: Publishing Horizons, Inc., 1980), p.413. Reproduced by permission.

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ACTIVITY DESCRIPTION Table 13.1 Major wholesaling activities Wholesale Management Negotiating with suppliers Promotion Transport Inventory control and data- processing Planning, organising, staffing and controlling wholesaling operations Serving as the purchasing agent for customers by negotiating supplies Providing a sales force, advertising, sales promotion and publicity Arranging and making local and long distance shipments Controlling physical inventory, book keeping, recording transactions, keeping records for financial analysis Warehousing and product handling Receiving, storing and stock keeping, order processing, packaging, shipping outgoing orders and materials handling Security Safeguarding merchandise Pricing Developing prices and providing price quotations Financing and budgeting Extending credit, borrowing, making capital investments and forecasting cash flow Management and marketing assistance to clients Supplying information about markets and products and providing advisory services to assist customers to sell

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STRATEGIC ISSUES IN RETAILING Location Property Ownership Product Assortment Retail Positioning Atmospherics Store Image Scrambled Merchandising The Wheel of Retailing

Recent Trends in Retailing: 

Recent Trends in Retailing Customisation Larger outlets Own label brands Customer expectations Category stores Relocation of businesses e.shopping Home delivery

e-commerce: 

e-commerce Basics of doing business Market opportunities & the future Media Branding Business to business Regulations Internet and Society

Strategic Distribution Decisions: 

Strategic Distribution Decisions Customer and consumer needs and wants Organisational goals Intensive strategy Selective Exclusive

International Marketing Mix: Promotion: 

International Marketing Mix: Promotion Determinants of push/pull strategies Product type and consumer sophistication Channel length Media availability Push vs pull strategies Push strategy: personal selling emphasis Industrial products; complex new products Short distribution channels Few print or electronic media Pull strategy: mass media advertising Consumer goods Long distribution channels Marketing message can be carried via print/electronic media