Establish and adjust marketing mix through distribution channels
1. 1
BSBMKG502B – Establish and adjust the
marketing mix
Presentation Three
Place (Distribution)
Fourth of the Four P’s
Product (and service)
Price
Promotion
Place(ment)
2. 2
Physical placement
• The process of planning,
implementing and controlling the
physical flow of materials from point
of origin to points of use for the
purpose of conforming to customer
requirements at a profit. (Kotler)
3. 3
Marketing Logistics Networks
• Logistics
• The process of planning, implementing and controlling the
efficient, cost-effective flow & storage of materials in-process
inventory, finished goods and related information from point of
origin to point of consumption for the purpose of conforming to
customer requirements ( U.S. Council of Logistics)
4. 4
Demand Chain Management
• Value-adding by coordinating flows from suppliers to
ultimate users
• Coordinating suppliers, purchasing agents,
manufacturers, marketers, channel members,
customers & end-users
• Managing information systems such as:
• computers, point-of-sale (P.O.S.) terminals, uniform
product codes, satellite tracking, electronic data
interchange (EDI) and electronic funds transfer (EFT)
5. 5
Demand Chain Management
• Sales Forecasting:
• production schedules, inventory levels, and distribution
• Production planning:
• materials to be ordered by purchasing
• Inbound materials management:
• inbound transportation, goods receiving,
storage and raw-materials inventory
6. 6
Demand Chain Management
(cont)
• Production:
Raw materials converted to finished goods,
recorded in finished-goods inventory, for order by
customers
• Customer Orders
Finished goods flow off the assembly line, pass
through packaging, in-plant warehousing, shipping-
room processing, outbound transportation, field
warehouse, customer delivery and servicing
7. 7
Marketing Channels
• A marketing channel is a set of interdependent
organisations involved in making a product or service
available for use or consumption by the consumer or end
user.
13. 13
Distribution channel Functions
• Information – gathering & distributing marketing
research & intelligence
• Promotion – developing & spreading promotional
communication
• Matching – shaping and fitting the offer to the buyer’s
needs
• Negotiation – reaching a price and agreeing terms
14. 14
Channel Design Decisions
• Types of middle channel members
• Company sales Force
• Manufacturer’s Agency
• Industrial Distributors
• Number of middle channel members
• Intensive Distribution – as many outlets as possible
• Exclusive Distribution – high prestige
• Selective Distribution – good market coverage
15. 15
Responsibility of Channel Members
• Agreement on Price Policies
• Conditions of Sale
• Territory rights (who is authorised to sell in a particular area)
• Specific services to be performed by
each member
16. 16
Evaluating Major Alternatives
• Economic Criteria - Different levels and cost for each
alternative
• Control Criteria – benefits of directing channel against
benefits of using outside businesses
• Adaptive Criteria – benefits of each criteria against loss
of flexibility of long-term contracts
17. 17
Channel Management Decisions
• Selecting Channel Members – to value-add to
process
• Motivating Channel Members – high margins,
special deals, premiums, advertising & promotional
allowances, sales contests
• Evaluating Channel Members – measurement
against criteria for sales, inventory control, customer
delivery time, training, customer service
18. 18
Channel Management Decisions
(cont)
• Cycle time reduction decisions – reduce time to
develop new products & to manufacture & distribute
finished products
• Quick response-systems solution: EDI (electronic data
interchange), EFTPOS, Quick Response Retail
Technology (QRRT), Quick Response Service
Technology (QRST) to reduce cycle time and
increase efficiency and improve customer service
19. 19
Channel Management Decisions
(cont)
• Conversion Operations Location Decisions –
location has major impact on costs
• Make or Buy Vertically Integrated or Network
Decisions
• Input Suppliers Networks - closer economic
relationships between channel members
• Manufacturing & Operations Decisions –to order
or to develop an inventory
20. 20
Channel Management Decisions
(cont)
• Order Processing Decisions – mail, telephone, fax,
salespersons, online, EDI, internet
• Warehousing Decisions – if inventory carried: storage,
distribution, company or intermediary owned
• Inventory Decisions – reduce unnecessary inventory
costs
23. 23
Choosing Modes of Transport
• Speed – measured in door-to-door time
• Dependability – Meeting Schedules on time
• Capability – The ability to handle various products
• Availability – the number of geographic locations served
• Cost – usually in tons-per-mile (US)
24. 24
Conclusion
• Logistics management requires great trade-offs
between functional units
• Management must focus on communication and
strategic objectives to ensure co-operation
• Distribution can often be that part of the mix which
irritates the customer the most e.g. failed deliveries,
damaged goods, wrong orders ....
