Lecture 3 Mmm 2010


Published on

1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Lecture 3 Mmm 2010

  1. 1. Managing The Marketing Mix Lecture 3: Place and Channels to Market Dr. Martin J. Liu Lecturer in Marketing
  2. 2. Learning Outcomes Important Announcement Define the 1. Seminar presentation group allocations will be available on Place the U drive on 9/3/10 before 5PM. Please contact your group members and make necessary preparations. Types of 2. Q and A Channels Advantage Target Scope Low Cost Product Uniqueness The IDR Broad Cycle (Industry Wide) Cost Leadership Differentiation Strategy Strategy Narrow Marketing (Market Segment) Focus Focus Strategy Strategy Channel (low cost) (differentiation) Functions Channel Strategy
  3. 3. Learning Outcomes Learning Outcomes Define the • Understand the importance & nature of marketing channels and Place intermediaries to marketers • Explore channel strategies their selection and management Types of Channels • Understand factors influencing channel strategies The IDR • Explore the effect of technology on traditional notion of place in Cycle marketing • Understand the potential for co-operation & conflict within Marketing channels, and the effects of both positive and negative uses of Channel power Functions Channel Strategy
  4. 4. Learning Outcomes The Definition of Place Define the • The place element of the marketing mix involves Place decisions about the location in which goods & services can be purchased Types of Channels • The distribution channels through which they pass from producer to final user, and the physical distribution methods used The IDR Cycle Marketing Channel Functions Channel Strategy
  5. 5. Learning Outcomes Product Characteristics Influence Channel Strategy Define the • High value or technically complex products tend to be distributed Place directly through a short channel (e.g. computers, cars, designer jewellery) Types of Channels • Perishable products need short, fast specialised distribution (e.g. dairy products, fresh fruits, meat products, daily newspapers) The IDR Cycle Marketing • Well packaged, routinely purchased long shelf-life products tend Channel to be intensively distributed through a variety of channels Functions Channel Strategy
  6. 6. Learning Outcomes Channels for Consumer Products Define the Direct Retailer Wholesaler Agent/Broker Place Channel Channel Channel Channel Producer Producer Producer Producer Types of Channels Agents or Brokers The IDR Cycle Wholesalers Wholesalers Marketing Retailers Retailers Retailers Channel Functions Consumers Consumers Consumers Consumers Channel Strategy
  7. 7. Learning Outcomes Channels for Business-to- Business Products Define the Direct Industrial Agent/Broker Agent Industrial Direct Place Channel Distributor Channel Channel Channel Types of Producer Producer Producer Producer Producer Channels The IDR Agents or Agents or Cycle Brokers Brokers Industrial Industrial Marketing Distributor Distributor Channel Functions Industrial Industrial Industrial Industrial Government User User User User Buyer Channel Strategy
  8. 8. Learning Outcomes Distribution of Services Define the Place • Intangibility of services makes their distribution different from the distribution of products Types of • Intangibility also means that there are no titles or rights to Channels services & inventory cannot exist • Therefore, some of the primary functions of distributors The IDR Inventorying, Securing & Taking title of goods - do not exist in Cycle services • Distribution that are appropriate for services Marketing – Franchises Channel – Agents Functions – Brokers – Electronic channels Channel Strategy
  9. 9. Learning Outcomes Marketing Channel Functions Define the Place Specialization and Division of Labor Types of Channels Channels The IDR Fulfill Cycle Three Overcoming Important Discrepancies Functions Marketing Channel Functions Providing Contact Efficiency Channel Strategy
  10. 10. Learning Outcomes Specialization and Division of Labor Define the Place • Provides economies of scale • Aids producers who lack resources to market directly Types of Channels • Builds good relationships with customers The IDR Cycle Marketing Channel Functions Channel Strategy
  11. 11. Learning Outcomes Overcoming Discrepancies Define the Place Temporal A situation that occurs when a product is Discrepancy produced but a customer is not ready to buy it. Types of Channels Spatial The difference between the Discrepancy location of a producer and the location of The IDR widely scattered markets. Cycle Discrepancy The difference between the amount of of product produced and the Marketing Quantity amount an end user wants to buy. Channel Functions Discrepancy The lack of all the items a of customer needs to receive full satisfaction Assortment from a product or products. Channel Strategy
  12. 12. Learning Outcomes Contact Efficiency Define the Place Philips Sony Samsung Toshiba Types of Channels The IDR Cycle Philips Sony Samsung Toshiba Marketing Channel Functions PC World Channel Strategy
  13. 13. Learning Outcomes Value Added Services Provided by Intermediaries Define the Place • Facilitating value - financing, training, information & after sales Types of • Logistic value - assortment, storage, sorting, bulk breaking, Channels transportation The IDR • Transactional value - risk, marketing, administration Cycle Marketing Channel Functions Channel Strategy
  14. 14. Learning Outcomes Discussion Define the Place What should we do about the middlemen (intermediaries)? Are they Types of the necessary evil? Channels The IDR Cycle Marketing Channel Functions Channel Strategy
  15. 15. Learning Outcomes The IDR Cycle Define the Place Intermediation - Disintermediation – Reintermediation (IDR) Cycle Types of • (i) Pure-players enter the market with new offering Channels • (ii) They grab market share and push out traditional firms The IDR • (iii) Traditional intermediaries fight back by making themselves digital-capable Cycle Marketing Channel Functions Channel Strategy
  16. 16. Learning Outcomes The IDR Cycle Define the Place Customer Traditional Intermediary Supplier Intermediation Types of Customer Intermediary Supplier Channels EC-only Intermediary Disintermediation The IDR Customer Intermediary Supplier Cycle EC-only Intermediary Reintermediation Marketing Channel Customer EC-able Intermediary Supplier Functions EC-only Intermediary Channel Weak Link Strong Link Strategy Source: Chircu and Kauffman (1999)
  17. 17. Learning Outcomes Channel Strategies Define the Place Channel strategies cover the selection & management of distribution systems. Types of Channels • Selection involves decision on the direction and intensity of distribution The IDR • Channel management decisions attempt to overcome conflict Cycle and create efficiencies through: – Vertical channel integration: the combination of two or more Marketing stages in the channel under one management Channel (e.g. supermarkets who own food processing plants) Functions – Horizontal channel integration: the combination of institutions at the same level of operation under one management Channel (e.g. DSG International, Owner of Dixons, Currys, PC World ) Strategy
  18. 18. Learning Outcomes Developing A Channel Strategy Define the Place Types of Channels The IDR Cycle Marketing Channel Functions “Channel strategy decisions involve the selection of the most effective distribution Channel channel, the most appropriate level of distribution intensity and the degree of channel integration” Strategy (Jobber 2004: 641)
  19. 19. Learning Outcomes Developing A Channel Strategy: Channel Selection Define the Place Market factors Product factors - Buyer behaviour/expectations - Large/complex products: direct - Geographical concentration & to consumers Types of location of customers - Perishable products: short Channels channels Producer factors - Bulky/difficult products: direct - Resources available distribution The IDR - Desired degree of control - Digitized products: direct Cycle - Decide on either push their distribution product through the channel or market to the end consumer Competitive factors - Follow or differentiate from Marketing what competitors are doing Channel Functions Channel Strategy
  20. 20. Learning Outcomes Push vs. Pull Strategy Define the Place Types of Channels The IDR Cycle Marketing Channel Functions Channel Strategy
  21. 21. Learning Outcomes Push vs. Pull Strategy Define the Place Push Strategy Pull Strategy • Personal selling rather than • Mass media advertising to mass media advertising – communicate the marketing Types of relatively costly message to a large segment Channels • Product type = industrial • Product type = consumer product or complex new goods The IDR products – educate the Cycle customer about features • Channel length = long, more intermediaries need • Channel length = short consumer to pull product through channel Marketing Channel • Media =few print or electronic media available • Sufficient print & electronic Functions (or limited by law) media to carry the marketing message Channel Strategy
  22. 22. Learning Outcomes Developing A Channel Strategy: Channel Intensity Define the Intensive Place - aims to provide saturation coverage of the market - mainly used for mass market products - convenience aspect of purchase is of most importance Types of Selective Channels - enables market coverage - the producer uses a limited number of outlets in a geographical area to sell his/hers products The IDR - main advantage to the producer: Cycle opportunity to select only the best outlets & build close working relationships - main disadvantage: potential dissatisfaction of the distributor if refused the distribution rights of a certain product Marketing Channel Exclusive Functions - extreme form of selective distribution in which only one distributor is used in a particular geographical area - could restrict competition in a way that may be detrimental to consumer interests Channel Strategy
  23. 23. Learning Outcomes Channel Integration: Vertical Integration Define the Place Benefits • A secure source of raw materials or distribution channels Types of • Protection of and control over valuable assets Channels • Access to new business opportunities • Simplified procurement and administrative procedures The IDR Cycle Risks • Costs and expenses associated with increased overhead and capital expenditures Marketing Channel • Loss of flexibility resulting from large investments Functions • Problems associated with unbalanced capacities along the value chain • Additional administrative costs associated with managing a more Channel complex set of activities Strategy
  24. 24. Learning Outcomes Channel Integration: Horizontal Integration Define the Place Benefits • Economies of scale: achieved by selling more of the same product Types of • Economies of scope: achieved by sharing common resource to Channels different products • Increase market power over suppliers and down stream channel members The IDR • Reduction in the cost of international trades by operating factories Cycle in foreign markets Marketing Risks Channel • Anti-trust issue may arise Functions • Whether the anticipated economic gains will materialized • The synergies may not exist Channel Strategy
  25. 25. Learning Outcomes Channel Management Define the Place Types of Channels The IDR Cycle Marketing Channel Functions Channel Strategy
  26. 26. Learning Outcomes Key Retail Marketing Decisions Define the  Retail positioning  Product assortment Place  Involves the choice of target market  Retailers have to decide on the & differential advantage breadth & depth of their product  Innovation in retailing can come assortment from novelty in the process offered  Decide on providing or not own-label Types of to the shopper, or from novelty in brands the product or product assortment Channels offered  Price  Some retailers use price as their  Store location differential advantage, as price is a key  Critical to the success of retailer factor in store choice for some market The IDR  Retailers have to decide on regional segments coverage, the towns & cities to Cycle target within regions and the  Store atmosphere precise location to select within a  Is created by a combination of the given town or city design, colour and layout of a store  Rise of experiential marketing makes Marketing retailers to want to create a shopping experience for consumers Channel Functions Channel Strategy
  27. 27. Learning Outcomes Define the Place Types of Channels Thank You! The IDR Cycle Marketing Channel Functions Channel Strategy