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WEEK 6: PLACE - Coggle Diagram
WEEK 6: PLACE
CHANNEL ORGANIZATION/ DISTRIBUTION CHANNEL
Conventional Marketing Channel
Consists of one or more INDEPENDENT producers, wholesalers and retailers, each channel member is a separate business seeking to maximise its own profits
Obsolete method
Resulting in damaging conflict and poor performance
Vertical Marketing Network (VMN) A unified network
(One channel member owns the others, has contracts with them or wields so much power that all channel members cooperate)
In a Corporate VMN
Coordination and conflict management attained through regular organizational channel
Combines successive stages of production and distribution under single ownership
In a Contractual VMM
Franchise organization (2types)
Manufacturer-sponsored retailer franchise networks
Service-firm-sponsored retailer franchise networks
Attained through contractual agreements among channel members
Obtain more economies or sales than each could achieve alone
In an Administered VMN
leadership is assumed throug the size and power of one of the dominant channel members.
Ex: Manufacturers of top brand such as Procter & Gamble, Kraft, Unilever can command unusual cooperation from resellers regarding displays, shelf space, promotions and pricing.
Ex: In turn, large retailers such as Walmart; or in case of Vietnam Saigon Coopmart or Big C can have strong influence on the many manufacturers that supply the products they sell
Horizontical Marketing Network
Happens when two or more companies at one level join together to follow a new marketing opportunity.
companies can combine their financial, production, or marketing resources to accomplish more than any one company could alone
Companies might join forces with competitors or non-competitors
Ex: Bphone + Mobiphone (only 3,9 million VND per Bphone if customers use Mobiphone service)
Multichannel Distribution Network
A multichannel distribution system in which a single firm sets up two or more marketing channels to reach one or more marketing segments
MARKETING CHANNEL DESIGN
Setting channel objectives
Evaluating Major Alternative
Analyzing customer needs
Identifying Major Alternative
3 types of distribution strategies
Selective distribution
Just selected channel can sell that kind of product
More control but less cost than intensive distribution
Intensive distribution
It is a strategy in which they stock their products in as many outlets as possible
Ideal for producers of convenience products and common raw materials
Exclusive distribution
Purposely limit the number of intermediaries handling products. The producer gives only a limited number of dealers the exclusive right to distribute its products in their territories
WHAT IS PLACE/ MARKETING CHANNEL/ DISTRIBUTION CHANNEL?
Supply chain and Value delivery networks
Supply chain
A system of efficiently and effectively producing, making and getting products to end-users
Upstream partner
raw material suppliers, components, parts, information, finances, and expertise to create a product or service.
Downstream partner
the marketing channels or distribution channels that look toward the customer
Value delivery network
marketing organisation + suppliers + distributors + customers who partner with each other to improve the performance of the entire system in delivering customer value
The nature of marketing channels and value creation
Marketing channel
a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user
Intermediaries
offer producers greater efficiency in making goods available to target markets
Function of marketing channel members
promotion
developing and spreading persuasive communications about an offer
contact
finding and communicating with prospective buyers (retailers & their customers & the manufacturers).
Information
gathering and distributing marketing research and intelligence information
matching
shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling, and packaging
negotiation
reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred
Physical distribution
transporting and storing goods.
financing
acquiring and using funds to cover the costs of the channel work.
risk taking
assuming the risks of carrying out the channel work
Channel level (layer of intermediaries)
direct marketing channel
indirect marketing channel
a greater number of levels mean less control and greater channel complexity
CHANNEL BEHAVIOUR AND CHANNEL ORGANIZATION
Channel conflict
Horizontal conflicts
occurs among firms at the same level of the channel
Ex:
Some Ford dealers in Chicago might complain that other dealers in the city steal sales from them by pricing too low or advertising outside their assigned territories.
Vertical conflicts
occurs between different levels of the same channel
Ex: Burger King has had a steady stream of conflicts with its franchised dealers over everything from increased ad spending and offensive ads to the prices it charges for cheeseburgers.