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Distribution & Retailing (Retailing (Stores
Specialty Stores: Narrow…
Distribution & Retailing
EG: FedEx was the first to implement a worldwide courier system.
EG: Netflix started its business by renting DVD, but wanted to make it more convenient for people and hence leveraged on the internet.
*Top companies have a solid distribution system
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Other Marketing Systems
Horizontal: 2 or more companies at one channel join together to follow a new marketing opportunity
Hybrid: 1 firm sets up 2 or more marketing channels to reach 1 or more segments
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Channel Design Decisions
Analyze consumer service needs
Set channel objectives & constraints
Identifying major alternatives
Select between: Intensive/Selective/Exclusive Distribution
Evaluate major alternatives
Design International Distribution channels
Retailing
Definition
All activities involved in selling goods or services directly to final consumers for their personal use
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Stores
Specialty Stores: Narrow Product Line, Deep Assortment EG: Limited edt
Department Stores: Wide Product Line EG: Metro
Convenience Stores: Limited Product Line, High Turnover Goods EG: 7-11
Supermarkets: Wide Product Line EG: NTUC
Super Stores: Large Product Line, Products purchased routinely EG: Toys R Us
Discount Stores: Low prices products EG: Walmart
Off-Price Retailers: High-quality products at reduced price EG: TJ Maxx
Warehouse Club: Limited Product Line EG: Sam's Club
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Marketing Logistics
Involves getting the right products to the right customers at the right time
Companies place a higher emphasis on logistics as
1) Customer service & satisfaction is important
2) 15% of the cost is attributed to logistic
3) Explosion of product varieties requires better logistic management
4) Improvements in infotech resulted in better distribution efficiency
BestBuy & Amazon
As Amazon sells cheaper products, BestBuy became a showroom for Amazon.
If BestBuy closes down, companies who use BestBuy solely for distribution will be hurt
Samsung & LG will have to spend alot to create their own flagship stores if BestBuy falls
BestBuy changed its business and rented the store space instead.
Individual manufacturers will send their own sales force to entice consumers to buy.
BestBuy survived because of the change
Future of Retailing (NIGGGRR)
New retail forms and shorter retail life cycle - it took 100yrs for department stores to reach maturity but only 10yrs for retail stores
Growth of nonstore retailing - online stores
Increase intertype competition
Rise of megaretailer - Amazon
Growing importance of retail technology - Consumers reliance on online shopping
Global expansion of major retailers - Pushes out small players EG: Walmart
Retail stores as communities/hangouts - EG: Hispeter/Book cafes
Wheel of Retailing
Retailers start off with low margin, price and status
Once they get to high status, new retailers will come in and replace the retailers and start low
Channel is most effective when
1) Members are assigned tasks it can do best
2) Members cooperate to attain overall channel goals
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When those 2 aren't met
1) Horizontal conflict - Same level (retailer to retailer)
2) Vertical Conflict - different level (wholesaler to retailer)
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Cost of distributing yourself might be higher
Greater efficiency in distribution
Offers firm more than it can achieve on its own
Purpose
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To match supply from producers to consumers' demand. However, there is often a mismatch
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EG: 1 firm creates trouble, all firms associated gets into trouble/ 1 firm steals all consumers within the district
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EG: Samsung used to sell its products in Best Denki. But now they sell to other retailers. This action affects Best Denki's business
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Types
1) Corporate - Common ownership at different level of channel
2) Contractual - Contractual agreement among channel members
3) Administered - Leadership is assumed by 1 or afew dominant leaders
Degree of direct control diminishes from 1 to 3
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Benefits
EG: Gallo wine shop grows their own grapes, refine their own wines and does their own retailing
EG: Samsung in Korea makes own semi-conductors and smartphone, sells it in their own retail stores
Downside
Not as efficient as marketing intermediaries
Less flexible - Cannot get out of the business
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EG: P&G male 70% of the things in supermarkets, hence they have more power to keep small manufacturers in check
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DBS & OCBC join with NTUC and places atm at every supermarket.
Consumers will make DBS and OCBC card instead
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