COMM 204 - Place and Distribution Notes

PLACE AND DISTRIBUTION - COMM 204

MARKETING CHANNELS (INTERMEDIARIES)

• Organizations that facilitate availability of products/services for consumers or business customers.

• Functions:

  • Facilitate exchange processes

  • Sort and standardize products

  • Hold inventories

  • Reduce marketing costs

INTERMEDIARIES = YOUR VALUE DELIVERY NETWORK

• Functions of Intermediaries:

  • Transactional: Buying, selling, sharing risks

  • Logistics: Gathering, storing, transporting

  • Facilitating: Providing financing and information

• At least one party must perform each function; no single party can perform all three.

CONSUMER BENEFITS FROM INTERMEDIARIES

• Time Utility: Availability of the product when needed

• Place Utility: Accessibility where consumers want it

• Form Utility: Enhancement of product for greater appeal

• Information Utility: Informing consumers for better decision-making

• Possession Utility: Helping buyers in acquiring the product

MARKETING CHANNELS

• Channel choices influence other marketing decisions such as:

  • Pricing Strategy: Depends on channel selection (e.g., direct, indirect, international)

  • Marketing Tactics: Training needs and persuasive methods

• Channel choices should be strategic and aligned with brand identities.

• Relationships with marketing channels are typically long-term.

CHANNEL STRUCTURE AND ORGANIZATION FOR CONSUMERS

• Direct Channel:

  • Producer and consumers interact directly

  • Value must be added at every step

• Indirect Channel:

  • Involves intermediaries (agents, wholesalers, retailers)

  • Aims to increase product variety and reduce costs

• Electronic Marketing Channels:

  • Use of digital platforms for consumer access

CHANNEL STRUCTURE AND ORGANIZATION FOR BUSINESSES

• Typically shorter channels, often relying on one intermediary or none

• Direct interactions usually occur with large buyers which require extensive negotiation.

• Indirect channels may involve agents and distributors performing various functions.

EXAMPLE OF CHANNEL PARTNERS

• Philips Lighting:

  • Includes contractors, electricians, resellers

  • Utilizes agents for technical sales

CHANNEL PARTNERS HAVE PURPOSE

• Information Gathering: Access to market intelligence

• Point of Purchase Promotion: Local advertising managed by distributors

• Lead Generation: Find new customers through field agents

MULTIPLE MARKETING CHANNELS

• Dual Distribution: Different channels for the same product

• Strategic Channel Alliances: Collaboration between companies for shared marketing channels, prevalent in global markets.

VERTICAL MARKETING SYSTEM

• Professionally managed marketing channels aimed at maximizing marketing impact.

  • Corporate: One ownership across production and distribution

  • Contractual: Franchising models

  • Administered: Coordination by influential members rather than ownership

TYPES OF CHANNEL PARTNERS

• Retailers: Sell directly to consumers

• Wholesalers: Sell to retailers

• Drop Shipping: Order handled directly by manufacturers

• Rack Jobbers: Manage retail space merchandise

• Brokers: Assist in negotiations without carrying inventory

CHANNEL CHOICE AND MANAGEMENT

• Influenced by:

  • Market Factors: Geography and customer size

  • Product Factors: Specifications, perishability, life cycle

  • Company Factors: Financial resources and desire for control

CHANNEL DESIGN CONSIDERATIONS

• Target market coverage and profitability are key considerations

• Understand customer value and objectives to ensure effective design

Satisfying Buyer Requirements

• Access to channels aligning with buyer interests (e.g., delivery)

• Consider the cost involved in distribution and marketing

CHANNEL CONFLICT

• Horizontal Conflict: Disagreements between firms at the same level

• Vertical Conflict: Issues between different levels in the channel

• Requires agreement among channels on policies

LOGISTICS OR SUPPLY CHAIN MANAGEMENT

• Series of firms involved in creating and delivering goods/services

• Key logistics areas include transportation, order processing, inventory management, warehousing

• Outbound, Inbound, and Reverse Distribution are key functions

LOGISTICS IMPORTANCE FROM MARKETING PERSPECTIVE

• Competitive advantage through improved logistics

• Cost savings significantly impact consumers and companies

INVENTORY MANAGEMENT

• Utilization of RFID tags for tracking

• Continuous replenishment systems

RETAILING AND WHOLESALING

• Retailing: Selling directly to consumers for nonbusiness use

• Retail outlets classified by service, product lines, pricing, and organization

RETAILING MIX

• Involves product levels, pricing strategies, location, and promotional methods

TYPES OF RETAILERS

• Self-serve, Limited Service, Full Service

• Different service models cater to diverse shopping needs

NON-STORE RETAILING

• Involves innovative methods such as vending, home shopping, direct marketing, telemarketing, and direct selling.