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INTRODUCTION TO MARKETING MANAGEMENT

Dr. Franck VIGNERON

CSUN – College of Business & Economics

Review for Quiz 3Chapters

12, 13 14,15, part of 16 and 18

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Chapter 13 Distribution Channels and

Logistics Management

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What is a Distribution Channel?

• A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user.

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Contact

Financing

InformationRisk Taking

Promotion

MatchingNegotiation

PhysicalDistribution

Members of the marketing channel perform many key functions.

They are:

Distribution Channel Functions

55M W J R C

M W R C

M R C

M C

Channel 1

Channel 2

Channel 3

Channel 4

Channel Level= Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer.

Number of Channel Levels

Direct Channel

Indirect Channel

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Channel Behavior & Conflict

• For the channel to perform well, each channel member’s role must be specified and conflict must be managed.

• When this doesn’t happen, conflict occurs:– Horizontal Conflict occurs among firms at the same

level of the channel, i.e retailer to retailer.– Vertical Conflict occurs between different levels of

the same channel, i.e. wholesaler to retailer.

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Conventional Marketing Channel Vs. a Vertical Marketing System

Conventional Marketing Channel

Vertical Marketing

System

Manufacturer

Retailer

Manufacturer

Retailer

Wh

ole

sale

rW

hole

sale

rManufacturer

Wholesaler

Retailer

Consumer Consumer

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ContractualVMS

RetailerCooperatives

FranchiseOrganizations

Wholesaler SponsoredVoluntary Chain

Service-Firm-Sponsored

Franchise System

Manufacturer-Sponsored Wholesaler

Franchise System

Manufacturer-Sponsored RetailerFranchise System

Vertical Marketing Systems (VMS)

CorporateVMS

AdministeredVMS

Types of Vertical Marketing Systems

40% of Retail Sales

Ford + dealers Coca-Cola Hertz/Avis, McDo/Bking, H/R Inn

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Innovations in Marketing Systems

Horizontal Marketing System

Two or More Companies at One Channel Level Join

Together to Follow a New Marketing Opportunity.

Example:

Banks in Grocery Stores

Competitors helping each other

E.g., Outside US Néstlé selling General Mills cereals

Horizontal Marketing System

Two or More Companies at One Channel Level Join

Together to Follow a New Marketing Opportunity.

Example:

Banks in Grocery Stores

Competitors helping each other

E.g., Outside US Néstlé selling General Mills cereals

Hybrid Marketing System

A Single Firm Sets Up Two or More Marketing Channels to Reach One or More Customer

Segments.

Example:

Retailers, Catalogs, and Sales Force

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1. Analyzing Consumer Service Needs

2. Setting Channel Objectives & Constraints

ExclusiveDistribution

SelectiveDistribution

IntensiveDistribution

3. Identifying Major Alternatives

4. Evaluating the Major Alternatives

5. Designing International Distribution Channels

Channel Design Decisions

Rolls-RoyceMaytagFast Moving C. G.

Review Economic, Control, and Adaptive Criteria

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Push and Pull Strategies

Producer Wholesalers Retailers Customers

Producer Wholesalers Retailers Customers

Push StrategyPush Strategy

Pull StrategyPull Strategy

Push/Pull StrategiesPush/Pull Strategies

Producer Wholesalers Retailers Customers

Advertising and Promotion

Distribution Strategies

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InventoryWhen to order

How much to orderJust-in-time

CostsMinimize Costs ofAttaining Logistics

Objectives

WarehousingStorage

DistributionAutomated

Order ProcessingReceivedProcessedShipped

Logistics

FunctionsTransportation Rail, Truck,

Water, Pipeline, Air, Intermodal

Major Logistics Functions

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Marketing Logistics

• Involves planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at profit.

• INBOUND + OUTBOUND = Market Logistics

• Supply Chain + value chain management

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RailNation’s largest carrier, cost-effective for shipping bulk products, piggyback

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goodsWater

Low cost for shipping bulky, low-value, non perishable goods, slowest form

PipelineShip petroleum, natural gas, and chemicals

from sources to markets

AirHigh cost, ideal when speed is needed or

distance markets have to be reached

Transportation Modes

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1. Speed (door-to-door time)2. Dependability (meet schedules)3. Availability (area served)4. Costs (per ton-distance)5. Flexibility

Checklist for ChoosingTransportation Modes

Choosing Transportation Modes

(ability to handle various products)

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INTRODUCTION TO MARKETING MANAGEMENT

Dr. Franck VIGNERON

CSUN – School of Business & Economics

Chapter 14 Distribution Strategies

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What is Retailing?

RetailingRetailing Includes all the activities Involved in Selling Goods or Services Directly to Final Consumers for Their Personal, Nonbusiness Use.

Retailers - those firms engaged primarily in wholesaling activity.

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Product Assortment and Services Decisions

Product Assortment• Width and Depth of Assortment• Quality of Products• Product Differentiation StrategiesServices Mix

Key Tool of Nonprice Competition

for Setting One Store Apart From

AnotherStore’s Atmosphere• Physical Layout• “Feel” That Suits the Target Market and Moves Customers to Buy

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Retail OrganizationsIndependent, Corporate, or

ContractualOwnership Organization

Amount of ServiceSelf-Service, Limited-Service and

Full-Service RetailerProduct Line

Depth/Length and Breadth of the ProductAssortment

Relative PricesPricing Structure that is Used

by the Retailer

Classification of Retailing

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Breadth vs. Depth of Breadth vs. Depth of Merchandise LinesMerchandise Lines

Nike running shoes

Florsheim dress shoes

Top Sider boat shoes

Adidas tennis shoes

Amana refrigerator

Sony TV setsJVC videocassette

recordersGeneral Electric

dishwashersSharp microwave

ovens

Classical

Rock

Jazz

Country Western

SuitsTies

JacketsOvercoats

SocksShirts

Depth:Number of

items withineach product

line

Breadth: Number of different product lines

Shoes Appliances CDs Men’s Clothing

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Specialty Stores

Department Stores

Supermarkets

Convenience Stores

Superstores

Discount Stores

Narrow Product Line, Deep Assortment i.e. The Limited or Athlete’s FootWide Variety of Product Lines i.e.

Clothing, Home Furnishings, Saks Fifth Avenue

Wide Variety of Food, Laundry, & Household Products i.e. KrogerLimited Line of High-Turnover

Convenience Goods i.e. 7-ElevenLarge Assortment of Routinely

Purchased Food & Nonfood Products i.e. Toys R Us

Standard Merchandise at Lower Pricesi.e. Wal-Mart

Off-Price Retailers Changing Collection of Higher-Quality Goods at a Reduced Price i.e. T.J. Maxx

Warehouse ClubsLimited Selection of Brand-Name

Grocery Items, Appliances, Etc. i.e. Sam’s Club

Classification of Retailing: Product Line

Store Description

E.g., + What is an HypermarketHypermarket?

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What is Wholesaling?

WholesalingWholesaling All the activities involved in selling goods and services to those buying for resale or business use.•Wholesaler - those firms engaged primarily in wholesaling activity.•Wholesalers buy mostly from producers and sell mostly to:–Retailers,–Industrial consumers, and –Other wholesalers.

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WholesalerWholesalerFunctionsFunctions

ManagementServices & Advice

Selling andPromoting

MarketInformation

Buying andAssortment Building

Risk Bearing Bulk Breaking

Transportation

Financing Warehousing

Wholesalers are Often Better at Performing One or More of the Following Channel Functions:

Why are Wholesalers Used?

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Types of Wholesalers

Merchant WholesalerIndependently Owned

Business that Takes Title to the

Merchandise it Handles.

Brokers/ AgentsThey Don’t Take Title

to the Goods, and TheyPerform Only a Few

Functions.

Manufacturers’ Sales Branches and Offices

Wholesaling by Sellers or Buyers Themselves Rather Than Through

Independent Wholesalers.

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Consolidation within the Industry is Reducing # of Wholsalers

Distinction Between Large Retailers and Wholesalers Blurs

Wholesalers Will Continue to Increase the Services Provided

Wholesalers Are Beginning to Go Global

Trends in Wholesaling

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Chapter 15

Integrated Marketing Communication Strategy

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AdvertisingPR

Place(Distribution)

Personal Selling

Product

SalesPromotion

Promotion

Place

The Promotional Mix

Advertising Strategies

4P’s

Price

Direct MKG

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Informative AdvertisingInform Consumers or Build Primary Demand

i.e CD Players

Comparison Advertising

Compares One Brand to Another

i.e. Avis vs. Hertz

Persuasive AdvertisingBuild Selective Demand

i.e Sony CD Players

Reminder AdvertisingKeeps Consumers Thinking

About a Producti.e. Coca-Cola

Advertising ObjectiveSpecific Communication Task Accomplished with a Specific

Target Audience During a Specific Period of Time

Setting Advertising Objectives

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Figure 9.3 Comprehensive Communication Model

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