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Week 9: Distribution (Place) (Channel functions (Physical distribution…
Week 9: Distribution (Place)
Marketing channels
A set of interdependent organisations involved in the process of making a product or service available to users
Importance of intermediaries
More efficient in making products available to target market
Facilitate mass distribution
Reduce channel transactions
Channel functions
Collecting marketing information
Marketing research and intelligence
Promotion
Analysing effective communications
Contact with customers
Finding and communicating with buyers
Negotiation
Reaching an agreement on price and other terms
Matching product with buyer(s)
e.g Manufacturing, Importing, Grading
Physical distribution
Transportation
Storage
Financing the exchange
Own funds to fund
Product in the channel
Channel itself
Risk taking
Channel organisation
Need
Without it, each channel member will operate independently, and show little concern for the overall channel performance
Structures
Vertical marketing networks
Unified network of producers, wholesalers and retailers
Corporate
One business, all decision made for profit maximisation
Contractual
Not one business, contracts that tie them together
Administered
One channel member has huge power, where other members need to conform
Horizontal marketing networks
A network of two or more companies at one level working together
Hybrid marketing channel networks
Multi-channel distribution systems in which a firm sets up two or more marketing channels to reach one or more segments.
Design
Meet customer/consumer needs
Deliver reasonable return
Set objectives and constraints
Identify alternatives
Types of intermediaries
Number of intermediaries
Intensive distribution
Selective distribution
Exclusive distribution
Evaluating alternatives
Economic
Control
Adaptive
Role
Risk
Minimise and share risk
Power
Manage various sources of power
Conflict
Manage both vertical and horizontal conflict
Channel Management
Selecting channel members
business experience
Other lines carried
Growth
Motivating channel members
Gaining cooperation
Evaluating channel members
Monitoring performance of intermediaries
Logistics
Strategic management of the flow of materials and associated information between suppliers and customers with the aim of maximising customer value at the lowest possible cost
Adds value
Product design, manufacturing and ordering decisions
Inventory
Need
Production economies
Seasonality
Contingencies
Increase customer service
Increase customer costs
Warehousing
Network of handling and storage
Decisions
Ownership
Number of warehouses
Increases customer service
Increase company costs
Transport
Physical delivery of goods (value)
Decisions
Water
Rail
Road
Increases customer service levels
Increases company costs
Information
Reducing uncertainty
Invetory
Warehousing
Transportation
Retailing
Selling th eproduct directly to the final consumer
Types
Store, non-store and organisations
Decisions
Segmentation, targeting, positioning
Retail product decisions
e.g offer assortment
Retail promotion decisions
e.g advertising
Trends
New combinations of retail
Fuel/convenience
Giant retailers
Category killers
Non-store retailing growth
Online
Increasing retail technology
Payment methods