1. Selecting the Distribution
Strategies:
Channel selection is a complex and challenging
task. It should be based on various strategic
consideration. They are -
Objective Consideration
Market Consideration
Product Consideration
Channel Consideration
Organizational Consideration
2. Objective Consideration
Distribution objective can be formulated
in terms of - control, coverage and cost.
Excessive control over channel, achieve
larger market coverage and minimize
distribution cost are to be considered.
Greater degree of control can be
exercised in short channel. Long
channels are difficult to control. Similarly
coverage depends on intensity of
distribution. It determines the no. of
channel participations. The coverage
can be intensive distribution, selective
distribution or exclusive distribution
3. Market Consideration
M.C. consists of type of market and
target customers. The market can be
consumer or industrial (business).
Industrial market channel structure are
shorter as compared to consumer
market channel structure. Customers
characterisitics greatly affect channel
selection. If customer no. is small, direct
channel can be used. More channel
levels may be needed if the customers
number are large.
4. Product Consideration
In product consideration, nature of the
product also determine the channel
selection strategy. Persishable
products (food, short lived products)
requires direct or short channel of
distribution. Long channel is suitable
only for the durable products. If the
product has technical complexity,
direct channel is used to provide post
sales services.
5. Channel Consideration
C.C. consists of channel available, range of
service provided and channel attitudes. The
desired channel most be available. The
available channel may carry competing
products or refused to carry the brand. The
channel may not be able to provide the
desired range of services. For eg. the
wholesaler may be unwilling to provide post
sales services. Channel members may not
like the manufacturer's policies.
Manufacturers or the manufacturing company
or industries may not favour the terms and
conditions of the middleman.
6. Organizational Consideration
It includes management capability and
financial resources. Organization may
lack capability and experiences in
marketing. Human resources
management may be lacking.
Organization may not be able to
promote their products; lack of sales
promotional tools. Financially stron
organization can use direct marketing
and other promotional tools.
Middlemen are needed if financial
position is weak.
7. Cost Pricing Method
Pricing method can be done on the basis of cost, competition and demand
oriented. It can be shown in the chart as below:-
As we know that prices are generally sat on the basis of cost. The main focus is cost for
selling prices. They are of 3 kinds.
8. Cost Oriented
Cost Plus Pricing
In this method, a desired profit margin
is added to the unit cost of a product.
Its also known as markup pricing.
Suppose, unit cost of any product is
Rs 100 and profit margin 20%.
So, cost plus pricing = 100 + 20% of
100
= 120
10. Breakeven Point/ Pricing/ Analysis
Breakeven analysis is done to
calculate BEP. The BEP is no profit
no loss point where revenue = cost. It
can be calculated in sales units or
total sales. Simple BE analysis chart
can be presented below.
11. Competition Oriented
They focus on market price.
a The price is set in relation to the
competition. The main objective can be
Meet Competition
In this method of pricing, price is set to
match the prevailing market price. This
method is used when market has many
sellers (perfect competition) or few
sellers (oligopoly) and the products are
similar. This method is popular where
cost are difficult to calculate.
12. Competition Oriented
Below Competition
In this method pricing, price is set below the
competitor's price level. This method aims to
attract more customers. Discount to retailers are
used in this methods.
Above Competition
In this method of pricing, price is set above the
competitor's price level. This is generally done
for prestige brand or high cost product. Rolex
watch, and mercidies, audy, BMW car, etc use
this method. Wai-wai noodles are sold at higher
price because of the high prestige of the brand.
So are Nebico biscuits.
13. Demand Oriented Method
Demand oriented pricing method focus on customer's value
perception. Cost and market prices are not considered. The
pricing method can be -
Value pricing
Perceived value pricing
Value Pricing
Value is the ratio of benefits to the cost. Low price is
changed for high quality product. The price represents
high value to the product. This aim to attract a large no. of
value concious customers.
Perceived Value Pricing
Customer's perceived value is used to set the price.
Demand and cost are not considered. Customer
Perception of product value is found through market
research. New products are generally priced by this
method.
15. Promotion:
In the word of Philip Kotler, "Promotion includes all
the activities the company undertakes to
communciate and promote its products to the
target market."
Promotion is persuasive communication which is
highly visible components of marketing mix. It
supports the product, price & place mix. It simply
known as marketing communication. in modern
marketing, promotion is most essential. A good
product, an attractive price and selective
distribution must be supported by an effective
promotion to satisfy customer needs.
The promotion mix is the combination of
advertising, publicity, public relation, sales
promotion, personal selling and direct marketing.
16. Integrated Marketing Commn:
(IMC)
IMC blends various promotional tools and communication,
marketing, advertising, services and techniques to maximize
the profit. IMC is a term that is related to marketing in the
sense that it provides a platform for the blending of different,
but related, marketing tools in order to help to make the
marketing process easier.
The main aim of IMC is the integration of different forms of
marketing or promotional tools that ensures the message
behind the marketing effort will be disseminated through a
wide variety of platform. For eg. IMC will include an analysis
of the company's corporate objectives as well as the culture
in place in the organization.
IMC is not just that the public relation dept and mktng dept
need to operate from the same branding strategy, but all that
depts ultimately impact how customers view a company.
Finally, IMC will involve internal commn that motivates
employees and helps them understand the corporate plans of
their organization.
17. Developing and Selecting
Promotional Strategies
The promotional strategies provides
long-term direction and scope to
promotional aspects of marketing.
They affect the selection of
promotional mix. The promotional
strategies can be -
Push or Pull Strategy
Interpersonal or Mass promotion
strategy
Product life cycle promotion strategy
18. Push or Pull Strategy
Push Strategy
In this strategy the promotion program is
directed at middlemen. The product is
pushed through the channels where the
channel members are persuaded to
order, carry and promote products. The
manufacturer promotes their products to
wholesaler, the wholesaler promotes to
retailer and retailer promotes to
customer finally. Personal selling are
emphasized in push strategy.
19. Push or Pull Strategy
Pull Strategy
In this strategy, the promotion program is directed
at customers. The customers are persuaded to
ask the product from the retailers, the retailer ask
the product from wholesaler and the wholesaler
order the product from the manufacturer.
Aggressive advertising and consumer promotion is
emphasized in pull strategy. It can be shown as
21. Interpersonal or Mass
Promotion Strategy
Interpersonal strategy emphasizes personal
selling as a tool for face to face promotion.
In this process, the flow of two ways
common must be done. Alternating to
interpersonal strategy, mass promotion
strategy emphasizes advertising, sales
promotion and publicity as a tools for non-
personal promotion.
22. PLC Strategy
This strategy modifies promotion mix at different stages
of PLC
In introduction stage, advertising publicity, personal
selling are emphasized to built product awareness.
Promotion budget is high in this stage.
In growth stage, Adv is done to built product
preference. Sales promotion is done to built brand
preference. Promotion budget is increased to pull the
customers.
In maturity stage, sales promotion is done to
encourage brand switching Advertising is done through
strengthen brand loyalty. Channel promotions are done
to push the product.
In decline stage, Adv is done to reenforce loyal
customers. However the promotion budget is minimal.
23. Competitive Response Strategy
The promotion tools and budget are designed with a
view to respond to competitor's moves. The strategies
can be
In meet competition strategy, promotion budget is set to
match the competitors budget. The promotion tools
used also match the competitor's tools. For eg:- Cokes
cap prices are matched by Pepsi's cap-prices,
Rumpum's cupoun prices are matched by Tai-pai
cupoun prices.
In above competition strategy, promotion budget is set
above the competitors budget level. For an example -
goodlife biscuits entered the Nepalese mkt with much
higher promotion budget than that of quality biscuits.
In below competition strategy the promotion budget is
set below the competition budget level. The promotion
tools are directed at the loyal customers. For an eg:
Wai-wai, NTC, Nebico Biscuits, etc.
24. E-commerce Strategy
This strategy uses promotion for direct marketing.
Middlemen are not involved. Internet and websites
are used for promotion purpose. Its non-personal
in nature. The main promotional tools used is
internet advertising in different websites. This
strategy is gaining importance in modern
marketing.
