Distribution Channels and Marketing Strategies Overview

Five Linkages of Channels

1. Product Flow: Wholesaler-retailer-consumer 2. Title Flow: Ownership is being transferred 3. Payment Flow: Credit or transaction's actual funding 4. Information Flow: Manufacturers share with other channel members and back again 5. Promotion Flow

Wholesalers' Functions

Buy, Sell, Finance, Promote, Provide Info, Store, Transport, Buy in Bulk, Sell in Small Quantities

Merchant Wholesalers

Take title own the product

Agent/Broker

Don't take title negotiator

Full-Service

All 8 functions + branding & marketing

specialty -Line

one type of product

Rack Jobbers

stock inventory track inventory

Drop Shippers

Owns but don't handle goods

Mail Order Houses

(e.g. FedEx)

Commission Merchants

Physical control over product, no ownership

Manufacturer's Reps

Manufacturer owns wholesalers functions - store, delivery

Sales Branches/Offices

Usually smaller than headquarter without all working departments.

Retailers (AMA)

Sell directly to the end user

Department Stores

Wide, shallow product lines (e.g. Macy's)

Mass Merchandisers/Discount Houses

TJ Maxx, Dollar Store

Superstores/Hypermarkets

Walmart Supercenter

Specialty Retailers

Deep, narrow (e.g. Sherwin Williams)

Non-Store

In-home, online, vending machines, catalogs

Franchise

Why sell: Capital, low costs, motivation; Why buy: Established brand, less risk, provided systems

Retail Models

Chain Stores: Central ownership (e.g. Barnes & Noble); Shopping Centers: Malls and strip malls

Industrial Market Channels

Industrial Distributors: Wholesale + Retail; Manufacturer's Rep: Sales-only, non-competing products

Distribution Levels

Intensive: Max exposure, low control, low profits (e.g. Coke); Selective: Some control, trained staff, moderate profits (e.g. Apple); Exclusive: Prestige, high margins, few outlets (e.g. Aston Martin)

Pricing

Price Definition: The value assigned to what is exchanged

Pricing Policies

Pioneer Pricing: Skimming: High intro price (e.g. tech); Penetration: Low price to gain share; Psychological Pricing: Odd-Even: $1.99 vs $2.00; Customary: Based on traditional expectations; Prestige: High price = high status; Promotional Pricing: Price Leaders: Loss leaders (e.g. cheap eggs at Easter); Special Events: Holiday sales

Pricing Objectives

Profit Max, ROI, Market Share, Competitive, Survival, Status Quo

Pricing Methods

Cost-Oriented: Cost-Plus: Add markup to cost; Markup Pricing: % of cost or price; Cards = 100%, Grocery = 5%, Jewelry = 100%+; Demand-Oriented: Based on elasticity; Elastic = price-sensitive; Inelastic = price-insensitive; Competitive-Oriented: Match or beat rivals; Consumer-Oriented: Price based on perceived value

International Marketing

Macro Environments: Cultural/Social (most important), Legal/Political, Economic, Technological, Ecological, Competitive

Cultural Mishaps

Coors: "Suffer from diarrhea"; Pepsi: "Brings ancestors back from grave"; Ford Nova: "No Go" in Spanish

Degrees of Internationalness

Exporting → Licensing → Joint Venture → Direct Investment

International Product Strategies

Extension: No change; Adaptation: Modify (e.g. cake mix in UK); Invention: Create new (e.g. hand-cranked washer)

Nonprofit Marketing

Definition: Marketing for missions, not profits

Nonprofit Characteristics

Multiple Publics (e.g. alumni, donors); Multiple Objectives (e.g. educate & entertain); Intangible Services; Public Scrutiny; Non-Market Pressures (e.g. deal with outsiders); No Direct-Line Responsibility (volunteer challenges)

Market Research Problems

Expensive, limited data, untruthful responses

4 Ps for Nonprofits

Product: Still have names, logos; Price: Tuition, fees; Place: Mostly direct; Promotion: Often PSAs, not professional

Marketing Careers

Retail, Sales, Advertising & Public Relations, Product Management, Marketing Research

Ethics in Marketing

Serve public responsibly; Example: Nestlé formula scandal in poor nations