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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
Figure 12.1 Efficiency in exchanges provided by an intermediary Producer Buyers Producer Buyers Middleman or intermediary
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
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.
“… 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
Figure 12.4 Typical marketing channels for industrial products 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
Evaluating alternatives - economic, control, level of flexibility criteria
A vertical marketing channel Members 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. Manufacturer Wholesaler Retailer
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.
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.
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