Professional Documents
Culture Documents
Distribution:(Placement)
CustomervaluefulfilmentLearningobjectives
LECTURE9
MARK1012
Objective1
Objective2
DISTRIBUTION
AND CHANNELS
Objective3
MOHAMMED
RAZZAQUE
Objective4
2
L 9-S1
Describethenatureofmarketinglogisticsnetwork
managementandhowmarketingchannelsaddvalue
Describethenatureofmarketingchannelsandhow
theyorganisetoperformtheirmarketingchannelwork
Discusstraditionalandonlinestoreretailing,their
marketingdecisions,andthedifferentwaysof
classifyingstores,anddescriberetailingtrendsand
developments
Compareandcontrastthedifferenttypesof
wholesalers,andtheirmarketingdecisions,anddiscuss
wholesalingtrends
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
Logistics is:
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
lowering price;
increasing profit margin;
providing competitive advantages;
reducing cycle time ; and
improving customer satisfaction.
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S3
Totalcostanalysis
Marketing logistics functions
Inventory management
Transportation
Logistics information
management
Logistics objectives
Minimizingthetotal
costoflogisticsrather
thancostofeach
activity.
L 9-S4
Logistics
Warehousing
L 9-S2
Attemptstoreducethe
costofindividualactivities
mayleadtoincreasedtotal
costs(suboptimization).
Trade Off
Promotion
Process
Price
People
Product
Inventory
costs
Placement
(Customer
Service)
Logistics
Trade-offs
Conversion
(lot quantity)
costs
Information
costs
Transport
costs
Warehousing
costs
throughput costs,
not storage costs
Order-processing
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S5
Physical
evidence
L 9-S6
ValueAdditionbyMarketingChannelsandChannelMembers
AMarketingChannelisasetof
Interdependent organizations or
intermediaries that ease the transfer of
ownership as products move from
producer to business user or consumer.
Marketing
Channel
Members
interdependentorganisations involvedinthe
processofmakingaproductorservice
Specialization and
Division of Labor
availableforuseorconsumptionbythe
Channel members
Add value by fulfilling
three sets of
Important functions
consumerorindustrialuser.
Overcoming
Discrepancies
Providing Contactual
Efficiency
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S7
SpecializationandDivisionofLabor
Provideseconomiesofscale
Aidsproducerswholackresourcestomarketdirectly
Buildsgoodrelationshipswithcustomers
Information.Gatheringanddistributingmarketingresearchand
intelligenceabouttheenvironmentforplanningpurposes.
Promotion. Developingandspreadingpersuasivecommunications
OvercomingDiscrepancies
aboutanoffer.
Discrepancy
of Quantity
Discrepancy
of Assortment
Temporal
Discrepancy
Spatial
Discrepancy
L 9-S8
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
Contact. Findingandcommunicatingwithprospectivebuyers.
Matching. Consistsofshapingandfittingtheoffertothebuyers
needsbymanufacturing,grading,assembling,andpackaging.
Negotiation. Reachinganagreementonpriceandotherterms.
PhysicalDistribution.Involvestransportingandstoringofgoods.
Financing. Acquiring&usingfundstocoverthecostsofchannel.
RiskTaking. Assumestheriskofcarryingoutthechannelwork.
scattered markets).
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S9
L 9-S10
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
Manufacturer
Definition Explained
Manufacturer
Manufacturer
4 x4 = 16
contacts
Contactual Efficiency
Referstoreductionandoptimizationofnumberof
exchangecontactsneededtocompletetransactionswith
aviewtoattainapointofequilibriumbetweenthe
qualityandquantityofexchangerelationshipsbetween
channelmembers.
Consumer
Consumer
Consumer
Consumer
Manufacturer
Manufacturer
Manufacturer
Manufacturer
Enablesmassdistribution.
INTERMEDIARY
WHOLESALER OR RETAILER
Reducestimeandfinancialcostsofdistribution
Consumer
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
Manufacturer
Consumer
Consumer
4 + 4 = 8 contacts
Consumer
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S11
LL10-S12
9-S12
Channel 1
M
M
Channel 1
M
M
Channel 2
MM
Channel 2
Channel 3
MM
M
W
M
M
W
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
IC
MR
ID
IC
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S13
L 9-S14
Channel Levels
Marketingchannelscanbedescribedbythenumberof
channellevelsinvolved.
Achannellevelisdefinedaseachofthemarketing
intermediariesthatperformsomeworkinbringingthe
productanditsownershipclosertothefinalbuyer.
Distributionchannelscanbecategorisedbroadlyas:
Astraditionalchannel
organisationlacksa
specifiedcontrolling
authority,new
approacheshavebeen
developed
DirectMarketingChannel.Thisisamarketingchannel
thathasnointermediarylevels.Thecompanysells
directlytofinalconsumers.
IndirectMarketingChannels.Thesecontainoneormore
intermediarylevels.
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
ID
Channel 3
Channel 4
IC
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S15
L 9-S16
Degree
of
Direct
Control
Lesser
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S17
L 9-S18
InnovationsinChannelorganisation
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S19
AmountofServiceBased
classification.
ProductLineSoldBased
Classification.
Self-service;
Amount of service
Product line
Limited-service;
Full-service
Organisational
approach
Selfservice : convenience
goodssellersandmost
discounters.
Limitedservice :salesservice
tosupportshoppinggoods
linescarriedandmayoffer
additionalservicese.g.,credit.
Fullservice:specialtystores
withnarrowproductlines,
deepassortmentand
knowledgeablesalespeople.
Chain stores;
Corporate chain; Voluntary chain;
Retailer cooperative
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
Discountstores sellstandard
merchandiseatlowerpricesby
acceptinglowermarginsand
sellinghighervolumes.
OffpriceRetailers buyatlower
thanregularwholesaleandsell
underregularretail.
ControlofOutletsBased
Classification.
80%ofretailoperationsare
independents,althoughlarger
chainscontrolamuchlarger
share.
FactoryOutlets thatareowned&
operatedbymanufacturers;
Independents ownedby
entrepreneursordivisionsoflarger
corporations;and
Merchandising
Conglomerate
Wholesaleclubs selldeeply
discountedmerchandisetopaying
members.
Franchise
CatalogueShowrooms sellhighmark
up,fastmovingbrandnamesat
discountprices.
Corporate
Chain
Categories
by Control
of Outlets Voluntary
Chain
Retailer
Cooperative
RetailersbytypeofStoreCluster.
centralbusinessdistrictsretailers
L 9-S22
CorporateChains consistoftwoormoreoutlets
thatarecommonlyownedandcontrolled,employ
centralbuying,andsellsimilarlines.
VoluntaryChains arewholesalersponsoredchains
thatnominallyindependentoutletsjointosavein
costs.Thewholesalercontrolsplanning
(centralized)buying,andpromotiondecisions.
RetailerCooperativesarejointlyownedwholesale
operationscontrolledbytheretailmembers.
Franchises areacontractualassociationbetweena
manufacturer,wholesaler,orserviceorganization
andindependentbusinesspeople.
shoppingcenters.
Specialtystorescarrynarrowproduct
lines.
Departmentstorescarryawide
varietyoflines.
Supermarkets featurelowcost,high
volume,selfserviceonfood,laundry,
andhouseholditems.
Conveniencestores aresmallunits
thatcarryalimitedlineofhigh
turnoveritems.
Superstores,CombinationStores,and
Hypermarketsarevariationsonmuch
largerversionsofsupermarketsalso
offeringotherlinesand/oreservices.
Offpriceretailers
L 9-S21
L 9-S20
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S23
L 9-S24
RetailerMarketingDecisionsII
PriceDecision.
Product Assortment
and Services
Decision. Involves
matching product
assortment width
and depth and
quality levels to
shopper
expectations.
Thisisnecessaryto
makeconsistent
decisionsabout
productassortment,
services,pricing,
advertising,store
decor,oranyofthe
otherdecisionsthat
mustsupporttheir
positions.
Highmargin/lowvolume?lowmargin/highvolume?
Mayinclude trafficbuilders orlossleader tactics.
PromotionDecision.
Allelementsofthepromotionalmix.
Majordecisionsmayincludetieins withproducerpromotions.
Placement .
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
Keyplacedecisionsremainthree:location,location,location!
People,processandphysicalevidencedecisions
Atmosphere,physicallayout
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S25
Wholesaling
Newtypesofretailerusuallybeginaslowmargin,lowprice,low
statusoperationsbutlaterevolveintohigherpriced,higher
serviceoperations,eventuallybecomingliketheconventional
retailerstheyreplaced
Management
Advice
Retailingtrendsanddevelopmentslikelytoimpactfuture
development
Grading, Buying
And Assortment
Wholesaler
Functions
Bulk-Breaking
Risk Bearing
Financing
Rapidgrowthofdirectandonlineformsofretailing.
Newretailtechnologiesplayanimportantroleincompetition.
Warehousing
Transporting
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S27
Wholesaler Functions
L 9-S28
Types of Wholesalers
Fullservice Wholesalers
provide a full set of services such as
credit, inventorying, salesforce delivery,
and management assistance.
mostly sell to retailers while Industrial
distributors to producers.
Brokers
Merchant
and
Wholesalers
Agents
Types of
Wholesalers
Manufacturers
Sales Branches
and Offices
Selling and
Promoting
Market
Information
slowdowninpopulationandeconomicgrowth;
greatercompetitionandnewtypesofretailer;and
changingofconsumerdemographics,lifestylesandshopping
patterns;
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S26
L 9-S29
L 9-S30
ClassificationsofWholesalers
Brokers assistinbringingbuyersandsellerstogether,helpin
negotiationandarepaidbythepartyhiringthem.Thedonotcarry
inventory,assumeriskortitle,ordofinancing.
Agents representbuyersandsellersmorepermanentlyandinclude:
Manufacturesagentssellrelatedlinesoftwoormoreproducers.
Sellingagents selltheproducer'sentireoutput.
Cash and
Carry
Purchasingagents representbuyers.
Commissionmerchantstakepossessionandnegotiatesales.
Manufacturer'sSalesBranches&Offices.
Mail
Order
Types of
Limited
Wholesalers Drop
Producers
Cooperative
Shippers
Theseareownedbybuyersorsellers.
Formanufacturers,salesbranches carryinventory.
Rack
Jobbers
Salesoffices donotcarryinventory.
Purchasingoffices arebuyerownedversionsofbrokersandagents.
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
L 9-S31
PriceDecision.Markingupproductsbyafixedpercentage.
Aftercostdeduction,leftwithsmallprofitmargin;volumeisthekey.
PromotionDecision.Typically,wholesalersarenotpromotionminded.
Increasedcompetitionandfragmentationofthewholesalemarketmay
changethesituation.
PlaceDecision.Traditionallydecisionsweremadeonlowcostfactors,
withlittleinvestmentinfacilities.
Moderninventorytracking,loading,androutingsystemsaremakingplace
locationsmorestrategicthansimplyfindinglargelowcostbuildings.
UNSW:SCHOOLOFMARKETING:MOHAMMEDABDURRAZZAQUE
Truck
Key Jobbers
L 9-S33
L 9-S32