Distribution Channel Management, Target market strategies, Distribution channel management, Sales distribution Channel

1. Distribution Channel Management
Target market strategies
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Prepared by Komal Hambir (A012)

2. I. Target market strategies
o Selection of target market
o Evaluating target segments
o Evaluating Market Segments
o Choosing a Target Marketing Strategy
• Undifferentiated (Mass) Marketing
• Differentiated (Segmented) Marketing
• Concentrated (Niche) Marketing
• Local (Micro or Individual) Marketing
o Socially Responsible Target Marketing
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Contents

3. Contents
II. Distribution Channel
Management
o Definition and phases
o Intermediaries
o Why Intermediaries?
o Functions of Intermediaries
o Activities that a typical
distribution channel performs
• Spatial discrepancy
• Temporal discrepancy
• Need to break the bulk
• Need to provide assortment
o Setting distribution objectives
o Organizing channel activity
o Distribution channel strategy.
o Pharmaceutical distribution in
India
o Sales Distribution Channel
• Supply or service channel
• OTC Distribution
• Web Distribution
• Extent of distribution
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4. Target Market Strategies
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5. Target market
Is a market
segmentation and
market coverage
strategy whereby a
product is developed
and marketed for a
very well-defined,
specific segment of
the consumer
population.
A specific
group of
consumers at
which a
company aims
its products
and services
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6. Targeting is the actual selection of the
segment you want to serve the target
market is the group of people or
organizations whose needs a product
is specifically designed to satisfy
Target market
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7. • The better a company is at
identifying their potential
consumers; the more
successful they will be in
delivering products and
services that are in
demand
• Focusing on a target
market makes it easier to
develop products people
want.
• Your target consumers are
those who are most likely
to buy from you.
Target market
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8. Target marketing is particularly effective for small companies with
limited resources because it enables the company to achieve a strong
market position in the specific market segment it serves without
mass production, mass distribution, or mass advertising. It enables
firms to capitalize on the respective serve market share
• Example: 2 The company vim targets the housewives, who are
using the bar for washing utensils, it has a small market.
Target market
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9. Here are some questions to get you
started:
• Are your target customers male or
female?
Target market- Selection of target market
• How old are they?
• Where do they live?
• What do they do for a living?
• What level of education has
your target consumers
completed: high school,
college, or university?
• How much money do they
make?
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10. Evaluating Target Segments
• how large is this target market? Worth
pursuing?Size
• even if the market is small, it may be profitable
if there are indications that it will grow.
Expected
Growth
• low competition equals attractive marketCompetitive
Position
• Is this market accessible with our tactics?Cost to Reach
• how aligned is this market to our goals?
Compatibility
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11. Evaluating Market Segments ggg
Segment Size
and Growth
Analyze current
segment sales, growth
rates, and expected
profitability.
Segment
Structural
Attractiveness
Consider effects of:
competitors, existence
of substitute products,
and the power of
buyers & suppliers.
Company
Objectives and
Resources
Examine company
skills & resources
needed to succeed in
that segment.
Offer superior value
and gain advantages
over competitors.
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12. Choosing a Target Marketing Strategy
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Targeting
Strategy
Undifferentiated (Mass) Marketing
Differentiated (Segmented) Marketing
Concentrated (Niche) Marketing
Local (Micro or Individual) Marketing
Targeting
Broadly
Targeting
Narrowly

13. Choosing a Target Marketing Strategy
Company Resources
Product Variability
Product’s Life-Cycle Stage
Market Variability
Competitors’ Marketing Strategies
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14. The undifferentiated marketing strategy focuses on an entire target market rather than a segment
of it.
This strategy employs a single marketing mix -- one product, one price, one placement and a
single promotional effort -- to reach the maximum number of consumers in that target market.
Effective when most consumers have similar needs.
1. Undifferentiated (mass) marketing
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Example 2:
Television commercials, Big Print Advertising, Billboards, Radio

15. • Example 3: Ford When Henry Ford introduced the Ford
Automobile, he offered one model to the market with one color
option, black. As you now know, Ford has grown into a great brand
with many types of vehicles and colors and they segment their cars
and trucks to different markets, worldwide.
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1. Undifferentiated (mass) marketing
Henry Ford epitomized
this strategy when he
offered the Model- T
Ford in one color ,
black.

16. A differentiated marketing strategy targets different market segments
with specific marketing mixes designed especially to meet those
segments' needs.
Each mix includes a product, price, placement and promotional
program customized specifically for a particular segment.
2. Differentiated (segmented) marketing
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For example, a company that manufactures vitamin supplements might
identify gender-based market segments.
It could produce one multivitamin formula for women, other for men.
It could further differentiate by segmenting the gender groups by life
stage and creating different marketing mixes around each one.
Differentiated marketing is best suited for markets with readily
identifiable segments, each with distinctive needs.

17. Example 4 : In the early 2000s, when Google began taking over the
search engine business on the Internet. Before Google, there was a
variety of options to use if you had to search for something online.
While most of those search engines would give you the same,
adequate results, they also all followed the same presentation, which
at the time was pretty much just a list of web pages among some
busy advertisements, news links, and images.
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2. Differentiated (segmented) marketing
Google is an American multinational
technology company specializing in
Internet-related services and products
that include online advertising
technologies, search, cloud computing,
software, and hardware.

18. 18
Google's differentiation strategy was twofold.
1. First, it was simplicity. Google was minimalistic. When you went
to Google.com, you saw two things: the name 'Google' and a box
where you could type your search term. Users loved the simplicity
of it.
2. The second differentiation was the algorithm used to find the
results that would be returned to the user. This would come to be a
very important differentiation, but one that the end user wasn't
always aware existed.
2. Differentiated (segmented) marketing

19. Concentrated marketing (or niche marketing) strategy focuses on going
after a large share of one or a few smaller segments, instead of going after
a small share of a larger market.
The ability to specialize to this degree has the advantage of allowing a
company to focus its resources on meeting the needs of a single, well-
defined and well-understood market, which makes it more competitive
against larger companies.
On the downside, a concentrated marketing strategy can pigeonhole a
company into a single product and market and leave it vulnerable to the
effects of changing conditions within that market.
3. Concentrated (niche) marketing
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20. Niche marketing is a somewhat rare strategy to implement and the term is sometimes
confused with one-to-one marketing and being a small market player.
Most small businesses are generally not niche marketers; they simply have a very small
share of a large segment (whereas niche marketers have a large market share in a
small/tight segment).
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3. Concentrated (niche) marketing
The market niche defines the product features aimed at satisfying specific market
needs, as well as the price range, production quality and the demographics that is
intended to impact.
It is also a small market segment.
Example 5 : sports channels like STAR Sports, ESPN, STAR Cricket, and Fox Sports
target a niche of sports enthusiasts.

21. Example 6 : Toyota has had exceptional success with this stratify
because of its brand name that reminds people of reliability.
Toyota began its hybrid market share about 15years ago with Prius as
its first vehicle (in 2000).
Ever since then, it began expanding its selection of hybrid vehicles by
including the Toyota Camry (America's top selling mid-size sedan),
and the Toyota Highlander.
By introducing a selection of different hybrid vehicles, Toyota was able
to capture more customers, thus making it the World leading Hybrid
System.
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3. Concentrated (niche) marketing

22. By capturing the largest market share for hybrid vehicles, Toyota will not
face as much difficulties when we enter the market of electric vehicles
because its hybrid vehicles have proved to be a leader in innovating new
opportunities for drivers. Toyota is a great example of concentrated
marketing because it has successfully dominated a large share in the small
segment of hybrid vehicles.
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3. Concentrated (niche) marketing
Customers have a lot of discretion in choosing their vehicle preference.
Whether they prefer a small size efficient vehicle (the Prius), or America's
favorite mid-size sedan (the Camry), or even the Hybrid SUV (the
Highlander); it caught many consumers thinking about TOYOTA!

23. Also known as ‘neighborhood marketing,’ local marketing generally refers to
any marketing techniques a business uses to market and promote itself to the
area in which it operates. Micromarketing is a marketing strategy in which
advertising efforts are focused on a small group of highly-targeted consumers.
In most cases, local marketing often becomes the responsibility of the
franchisee with the parent company being responsible for the national and
regional marketing initiatives.
Example 7 : McDonald’s would focus on national advertisements that focus
on brand awareness and new products that will be at all the stores across the
nation, while the individual franchise owner may promote special deals they
have on Monday’s at their own location 23
4. Micromarketing (local or individual)

24. • Marketing programs tailored to the needs & wants of local
customer groups in trading areas, neighborhoods , etc.
• this trend is called grass roots marketing.
• Example 8: Adidas, an athletic footwear company might
have market segments for football players and long-distance
runners. As distinct groups, basketball players and long-
distance runners respond to very different advertisements.
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4. Micromarketing (local or individual)
Adidas
provides shoes
for football and
athletes and
other propose
too.

25. Socially Responsible Target Marketing
 Smart targeting helps both companies and consumers.
 Target marketing sometimes generates controversy and
concern.
• Vulnerable and disadvantaged can be targeted.
• Cereal, cigarette, beer, and fast-food marketers have
received criticism.
• Internet has raised fresh concerns about potential targeting
abuses.
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26. 26
Distribution Channel Management

27. Distribution is one of the four elements of the marketing mix, the other
three being product, pricing and promotion.
Distribution channel are probably the most visible aspect of any
company's marketing efforts.
The retail industry provides livelihood to more than 15 million people
in the country.
A channel of distribution consists of the producer of a good (e.g., drug),
the ultimate user, and any intermediaries (i.e., middlemen) through
which the goods pass.
The main focus of the distribution management is on increasing the
convenience of the end user either by increasing the number of
benefits or delivering the benefits at lower rates.
Distribution
Channel Management
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28. • The most popular definition is given by Stern
and El Ansary-
‘Distribution channels are a set of independent
organizations involved in the process of
making a product or service available for use
or consumption.’
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Distribution
Channel Management

29. Distribution Channel management is
particularly key for those companies
with specialty medicines (ie, high cost,
requiring risk management plans,
complex monitoring, biologics, for rare
or orphan diseases, or used by very
limited customers). Put simply: you can't
use the same channel approach for these
as would be the case for Primary Care, or
generics.
Companies that are able to provide
well-designed solutions in patient
service, diagnostics, medicines
sourcing and data provision, will be
welcomed by customers and payers.
Distribution
Channel Management
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30. It encompasses all the activities
dealing with the distribution
function of a firm.
The distribution strategy provides
guidelines for decision making. It
can be viewed as happening in
two phases
• The ex ante phase
• The ex poste phase
Distribution
Channel Management
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31. The ex ante phase involves all the activities that are
associated with the design and establishment of the
distribution channel.
This activities start normally with the distribution strategy
and will try and design a logistical and commercial
network that can efficiently achieve the objectives.
Involves the charting the distribution process for the
channel, including transportation and storage, ordering and
payment etc.
Distribution
Channel Management
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32. Intermediaries
Intermediaries exists in the process of exchange because they can
improve the efficiency of the process.
Channel intermediaries arise to adjust the discrepancy of assortment
through the performance of the sorting process.
Marketing intermediaries hang together, in channel arrangement to
provide for the reutilization of transaction.
Channels facilitate the searching process.
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33. Why Intermediaries?
Intermediaries essentially exists to
• To minimize the distribution costs through routinizing and
standardizing transactions, which make the exchange more
efficient and effective.
• The intermediaries facilitate the searching process of both the
buyers and sellers by structuring the information network
essential to both the parties, as well as providing a place and
opportunity for both parties to meet each other, and reduce
uncertainty.
• To adjust the discrepancy of assortment through the process of
sorting, accumulation, allocation and assorting.
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34. • The sorting function performed by the intermediaries include:
a. Breaking down a heterogeneous supply into separate stocks that are
relatively, homogenous called sorting out.
b. Bringing similar stocks from a number of sources together into a
larger homogeneous supply called accumulation.
c. Breaking a homogenous supply into smaller and smaller lots called
allocation.
d. Building up of an assortment of products for resale in association
with each other called assorting.
Functions of Intermediaries
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35. Activities that a typical distribution channel
performs
The existence of these discrepancies would vary from one exchange
situation to another, but they do exist in some way or the other. The
discrepancies that exist can be broadly classified into four.
Spatial
discrepancy
Temporal
discrepancy
Need to break
the bulk
Need to
provide
assortment
The more these discrepancies exist in the case of a product or a product or
a service the more the need for performing activities that could eliminates
the discrepancies and enable the consumers to consume a product.
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36. Spatial discrepancy
The most critical
discrepancy that the
distribution channels
are required to bridge.
It is defined as the
discrepancy that exists
because of the
physical distance
between the location
where a product ids
manufactured and the
location where the
product is eventually
consumed.
This requires the
product to be
transported between
the two location.
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37. The example for it is
GlaxoSmithKline Ltd
which sells its well
known brands such as
Horlicks and Boost all
over the country.
These brands are made
at just two locations in
India. From these two
locations, the products
have to be delivered to
ten thousand of small
retail outlets.
Spatial discrepancy
exists because it makes
immense economic
sense to concentrate the
production function at a
few or probably just one
location.
Spatial discrepancy
Example: 9
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38. Temporal discrepancy
It is defined as the discrepancy that exists because of the inevitable difference
in the point in the time at which a product is manufactured and the point in
times when the product in consumed.
It is also caused due to the concentrated nature of the manufacturing activity.
Manufacturing actually takes place either as a continous flow or in batches as
it is very difficult to manufacture in small quantities.
The consumer will not have to wait for the product. To reduce temporal
discrepancy, the products have to be stocked at appropriate places in adequate
quantities so the waiting time can be minimized.
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39. Need for breaking the bulk
Products are generally consumed in smaller quantities. The
discrepancy created due to the difference in the performance of the
two activities leads to the needs for breaking the bulk production
into smaller quantities so that the consumption activity is
facilitated.
The bulk production is always broken down in phases so that large
trucks containing cartons of product are sent to different primary
location, such as state capital, from where they are further broken
down into boxes to be sent to various smaller localities from they
are separately sent to various smaller locations
The breaking down of the product bulk happens simultaneously
with the consolidation of the payments from the consumer’s end to
the manufacturer’s end.
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40. The Need for Assortment
The need for assortment emanates form the
character of the demand at the consumer end.
Most of the time consumers demand an
assortment of products and not just a single
product. And production facilities normally
produce large quantities of a single product.
Take the Example of a veggie market,
consumers generally buy small quantities of a
variety of vegetables, while each farmer
produces large quantities of just one and two
types of vegetables.
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41. Value enhancement through the distribution
function
In the final analysis, the distribution function adds immense value to
the end product.
The distribution function complements the form utility by providing
the time and possession utility.
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42. Setting distribution objectives
The distribution objectives
communicates with the entire
distribution system, explaining what is
expected of the channel in terms of the
service that it provides to the
consumer.
The objectives are set in the terms of
the service output demands of the
target consumer. The service
expectations from a consumer can be
in terms of dimensions such as the
waiting time for taking possession of
the goods ordered, spatial convenience
etc. that the channel could provide.
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43. Organizing channel activity
• Once the set of activities is identified, a company ahs to decide
about the performance.
• This involves decision on the extent of outsourcing the company is
willing to tolerate, as well as the extent of direct involvement the
company desires in the distribution function.
• The more the outsourcing, the more variable cost of distribution,
and hence the reduced profitability when the demand increases.
• Once the channel structure is chosen, the next component of
organization is establishing the channel, involving the guidelines for
selection and appointment of channel members.
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44. Distribution channel strategy.
Distribution channel strategy
•Channel objective
•Activity finalization
•Organizing the activities
•Developing policy guidlines
Designing
channel structure
Establishing
the channel
Motivating
channel members
Resolving conflicts
among channel
members
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45. Pharmaceutical distribution in India
The pharmaceutical distribution system in India has
witnessed very little channel in its basic structure
and process. In India the strict government
regulations that puts a cap on the price at which
certain drugs can be sold and the margin that can be
given to the stockiest.
Given estimated 60,000 stockiest and more than
0.55 millions retailers in the country, plus the rising
population of dispensing doctors, estimated to be
comprising toughly 10% of the pharma market,
ensuring availability at every level is not as easy
task.
The penetration of medicine has reached the
interior areas of India. More than three fifth of
the population is still not estimated to have
access to modern medicines.
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46. Where the products in India move through a chain of intermediaries,
unlike the west where a manufacturer can directly supply goods at
the retail level. A manufacturer supplies goods to the first layer
comprising a clearing and forwarding agent, a super stockiest, or a
company owned depot.
But here the manufacturers can directly supply to the institutions and
hospitals but never to a retailer.
Pharmaceutical distribution in India
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47. Manufacturer
C&F/Depot/Super stockiest
Stockiest
Wholesaler
Retail/Chemist
Patient
Institution Hospitals
Pharmaceutical distribution in India
47

48. Sales Distribution
Channel
Designing a channel strategy should be a natural extension of
existing areas of focus for marketers (e.g. thinking through
patient pathways, adding value to customers, managing costs).
Channel strategy goals can range from investing to differentiate
and add value, to simply getting a product out at lowest cost
Intermediaries improve the efficiency of distribution channels
by decreasing the number of required interactions between
members of the channel.
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49. Typical channels for Drugs
Sales Distribution Channel jfjg
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50. • Channels are paths through which goods, information, and payment travel
on their way from the producer (e.g., manufacturer) to ultimate consumer
(e.g., patient)
• In pharmacy, there are channels for-
1)
Distributing
medications
2) Financing
and paying
for those
medications
3) insuring
risk
associated
with
medications
4)
Facilitating
their
appropriate
use
Sales Distribution Channel nfbff
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51. Supply or service channel
Wholesaler
Direct to Hospital/Pharmacy
Specialty supplier
Direct to Patient
Homecare
Mail order
Patient support programme suppliers
Sales Distribution Channel vhj
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52. Manufacturers
National Warehouses
Importers and
wholesalers
Distributors
Regional Medical
Stores
Private Subscribers
District medical
stores and direct
hospitals
Sub-wholesalers
Pharmacies
Health center
Second tier pharmacies
and chemical sellers Community health
worker
Clinics
Sales Distribution Channel nfjgb
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53. OTC Distribution
OTC distribution is a network closely
resembling ethical prescription
pharmaceuticals' distribution. But,
based on the relaxed regulations
concerning the sale of OTC
medications, it is a much wider
network, which includes food
wholesalers, health food distributors,
confectionery distributors,
convenience outlets, gas stations, or
health food stores.
Sales Distribution Channel fjdhh
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Example: 10
Dettol and Revital are
commonly used OTC
drugs.

54. Web Distribution
• The expansion of the World Wide Web revolution around the globe has
given rise to a new pharmaceutical dispensing method: patients receiving
their medications by contacting a Web-based, or "virtual," pharmacy and
having their prescription medications shipped to their home.
• Some of the different drug dispensing scenarios appearing around the
globe are:
Sales Distribution Channel jcvnb
1. Pharmaceutical manufacturer-operated Web pharmacies;
2. Medical Web sites offering information, education, prescribing, and dispensing;
3. Web pharmacies offering cutthroat drug prices;
4. Self-medication medical sites offering medical advice, computerized diagnosis of
selected diseases, and pharmacy referrals.
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55. Extent of distribution
• The extent of the distribution decision determines
the number of wholesalers, and, ultimately, retail
outlets that will be carrying the product. As far as
prescription pharmaceuticals are concerned, most
countries have pharmaceutical distribution laws that
mandate full and uninterrupted availability of all
prescriptions at all retail pharmacies.
• Therefore, it is not up to the manufacturer to decide
which retail pharmacies to use, but only to decide on
the number of distributors who will supply these
pharmacies.
Sales Distribution Channel
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56. Extent of distribution
• A frequently chosen strategy is the manufacturer (or a wholesaler) contacting
its collaborating retail pharmacies, informing them of the new product launch,
and offering special introductory payment terms if the pharmacists stock the
new medicine.
• The decision to stock or have it delivered just-in-time is a critical decision for
the pharmacist too, because a critical case (e.g., a life-threatening infection)
cannot wait for a distribution delivery to the pharmacy and the patient's family
may decide to search for it at another location.
Sales Distribution Channel
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Distribution on different stages

57. Bibliography
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•http://www.tutorsonnet.com/functions-of-distribution-channel-
homework-help.php
•Distribution channel management, Sales and distribution management
by Tapan K. Panda, Sunil Sahadev, Second Edition, Published by
Oxford University Press, 2012.
•Micromarketing http://www.investopedia.com/terms/m/micromarketin
g.asp#ixzz4ZZppJ7Ik http://www.entrepreneur.com/encyclopedia/term/
82498.html
•http://sbinfocanada.about.com/cs/marketing/a/targetmarket_2.htm
•http://www.answers.com/topic/focus-group#ixzz1HQx89zFu
•http://www.freedigitalphotos.net/

58. Thank you.
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