STRATEGIC SUPPLY

CHAIN MANAGEMENT
LGSC-6005

Marketing Strategy Workshops

Handouts adapted by
Iyare + Pilgrim

WEEKS 2-3

Strategic Options

Variations
in Value
Price
Sensitivity
Customer
Costs

Reverse
Cost-Plus
POS

Successful
Pricing

Competitor
Reaction
Emotion

Individual?
Bundled?

Key Elements to Pricing

Value: Price is fundamentally about value. Customers place prices within the
context of perceived value
Variable: Prices can be changed in a number of ways apart from the absolute level,
such as by time form or terms of payment
Variety: Prices can be set at different levels across multiple products and services
to achieve different objectives for positioning and contribution as with bundling or
unbundling items
Visible/Invisible: Prices may be open and visible or hidden and confusing for
customers
Virtual: of all the decisions marketers make, a price change is arguably the easiest
and quickest decision to make. It might not prove to be successful but the decision
to raise or lower a price can be made quite straightforwardly in most organisations

(Goldenberg, Horowitz, Levav and Mazursky, 2003)

Implementing Pricing Strategy

Human Capital
Systems Capital

Companies need to invest

in all three
capitals for pricing
strategy to work

Social Capital

Buyers Perspective of
Distribution
Availability
Speedy delivery
Reliable supply
Range of choice
Empathy when supply is interrupted
Convenience
Service and support
A good price

Primary Concern of Buyers

Access

Search

Possession

Transaction

C
O
N
V
E
N
I
E
N
C
E

Distribution Options*

Direct
Internet
Telephone
Mail
Catalogue
Own channel

Salesforce
Own
Another firms
Contract

Intermediary
Franchise
Wholesaler
Agent/Merchant
Distributor
Partner

*More limited for services

Principal channels
Principal Channels
Agent or
Merchant

Distributor
Wholesaler

Partner
Direct

Franchise

Issues in
Placement/Distribution
Ways of reaching customers
Channels

Direct mail, distributor, retail, value added

reseller, cooperatives, vertical

Issues/norms:

Timing of sales cycle (time of year, length)

Expected materials, order forms, support, etc
Sales force implications
Coverage: Geographic, cultural
Fees
Logistics

Keys to
Effective distribution
Ensure Complementary, strategic channels
Set Clear objectives for each channel that
facilitate measures of success

Increase number of stores carrying our product by 25%

Keep 90% of our current customers this year
Increase sales volume to 100 largest accounts by 20%

Set Budget & timeline

Prepare detailed outline of required logistics.
Include sensitive measures of success, and
methods for absorbing and adjusting to data
Egs: UPS vs DHL, Courts

Keys to an effective
Sales team
People

Experience, reach
Team structure

Support structure

Sales plan
Marketing intelligence
Incentives
Materials
Logistics

Introduction to:
Price & Distribution strategy
Pricing and distribution are distinct yet
complementary elements in marketing
Strategically they are difficult to separate
E.g.1: A premium priced watch cannot be sold at a
discount jewellers
Eg.2: It would be a mismatch to distribute high
priced luxury handbags in discount stores and
would only confuse potential buyers

Price & Distribution contd

Appropriate strategies for price and
distribution should be synchronised
A tractor producer that wants a specific
mark-up is going to find it difficult to control
margin if it sells through intermediaries
The inherent brand position and direction
must be taken into account

Price & Distribution

CONTD

Market position is another factor. A follower brand with a

relatively small market share is likely to follow the price
and distribution patterns of leaders and generally be sold at
a lower price and be placed in slightly less favourable
positions by distributors
The product life cycle (PLC) is also a consideration. The
PLC is a tool in widespread managerial use (despite its
problems) given it ability to provide some strategic
insights

Price & Distribution Strategies

Market Leader
Distribution in place
Price main weapon
Premium price
Variety of options

Market Follower
Cloning
Set lower prices

Market Challenger
Focus on flanks
Direct or indirect attack

Market Niche
Stay with markets
Add niches
Premium price
Selective distribution

Conclusion
Value holds the key to both pricing and distribution
Buyers are savvy and smart, most markets are mature with
products and services near (or at) parity and distribution
channels are varied and largely accessible physically and/or
virtually
Any strategies attempting to rip off or over charge will fail
and longer-term trust will evaporate, particularly with the
information rich web
As a consequence of these challenges, price and distribution
are likely to remain key issues in marketing strategy in the
immediate future

Exercise 1:
Placement/ Distribution
Choose a product or service and Outline
how you will deliver it to your
customers? Include the following:

Channels
Sales support
Marketing support
Logistics
Costs
Measures of success/feedback loops

Contacts
Professor Sunday Iyare, Head, Department
of Economics, UWI
Tel: +246 417-4278
Lecturer, Stephen Pilgrim

Department of Economics, UWI

Vice President, USC
Tel: +246 268-0657