BMGT 411: Week #9

Kottler:Chapters 13 - Integrated Marketing ChannelsChapter 14 - Retailing, Wholesaling, and LogisticsWood:Chapter 8 - Channel and Logistic Strategy

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BMGT 411: Chapter 13

Designing and Managing Integrated Marketing Channels

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Chapter Questions

• What is a marketing channel system and value network?

• What work do marketing channels perform?

• What decisions do companies face in designing, managing, and integrating their channels?

• What key issues do marketers face with e-commerce and m-commerce?

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What is a Marketing Channel?

• A marketing channel system is the particular set of interdependent organizations involved in the process of making a product or service available for use or consumption.

• The set of pathways a product or service follows after production, culminating in purchase and consumption of the final end user

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Path to Supermarket

http://www.youtube.com/watch?v=CAbFLBM6uHM

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Channels and Marketing Decisions

• A push strategy uses the manufacturer’s sales force, trade promotion money, and other means to induce intermediaries to carry, promote, and sell the product to end users

• A pull strategy uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries

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Push Strategy Example: Paying for Shelf Space

http://www.youtube.com/watch?v=pDxSX-BAs0U

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Pull Strategy Example: Advertising and Branding

Apple iPhone and Carriers

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Multi-Channel Marketing

• When a single firm uses two or more marketing channels to reach customer segments

• Ability to order a product online and pick it up at a convenient retail location

• Ability to return an online-ordered product to a nearby store

• Right to receive discounts based on total online and offline purchases

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Table 13.1 Channel Member Functions

• Gather information

• Develop and disseminate persuasive communications

• Reach agreements on price and terms

• Acquire funds to finance inventories

• Assume risks

• Provide for storage

• Provide for buyers’ payment of their bills

• Oversee actual transfer of ownership

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Figure 13.1 Marketing Flows

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Figure 13.2 Consumer Markets

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Figure 13.2 Consumer Markets

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Figure 13.2 Consumer Markets

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Figure 13.2 Industrial Markets

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Reverse-Flow Channels

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Designing a Marketing Channel System

• Analyze customer needs: based on price, product assortment, and convenience, as well as shopping goals

• Establish channel objectives: Maximizing the desired level of output while also reducing costs

• Identify major channel alternatives: The types of intermediaries, the number needed, and terms and responsibilities of each

• Evaluate major channel alternatives: Comparing the costs of each channel and customer expectations to decide on the best one

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Identifying Channel Alternatives

Types of intermediaries: Merchants or Retailers: Buy take title of goods and resell

Example: Mass Market Stores, Grocery Stores, etc Agents, Brokers, Sales Agents: Negotiating on the producers behalf,

but not taking ownership of the product Travel agencies, Financial Consultants

Facilitators: Assist in getting the product to market, but do not take ownership nor assist in the sales Trains, Trucking, Warehousing, etc

Number of intermediaries Terms and responsibilities

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Identifying Channel Alternatives

Number of intermediaries: Exclusive: Severely limiting the intermediaries, controlling the service

levels and outputs Ex. Product’s like Tiffany, sold only in their stores

Selective: Gaining adequate market coverage by being selective about who carries your product Ex. Whole Foods Vendors

Intensive Distribution: Offering product in as many places as possible, often in convenience goods Ex. Soft Drinks

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Figure 13.3 The Value-Adds versus

Costs of Different Channels

C

B

A

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Channel-Management Decisions

• Selecting channel members: Negative experience at intermediary can cause a negative reaction at the company

• Training channel members: The power has shifted in most cases from producers to intermediaries

• Evaluating channel members: Constant evaluation of most profitable intermediaries, reducing and adding intermediaries by Modifying channel members over time

• Consolidation of stores

• Shifting to direct selling

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P&G eStore

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Different Types of Companies and Intermediaries

• Wal Mart

• Starbucks

• Amazon

• Giant Eagle

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Channel Conflict (Page 208)

• What types of conflict arise in channels?

• What causes conflict?

• Goal incompatibility

• Unclear roles and rights

• Differences in perception

• Intermediaries’ dependence on manufacturer

• What can marketers do to resolve it?

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E-Commerce

• Pure Click: No Physical Stores

• Brick and Click: Existing companies adding an online component

• M-Commerce: Selling directly to customers on smartphones and tablets

• Have any of you purchased something on your smartphone?

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M Commerce Trends

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M Commerce Trends

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M Commerce Trends

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BMGT 411: Chapter 14

Managing Retailing, Wholesaling, and Logistics

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Chapter Questions

• What major types of marketing intermediaries occupy this sector and what marketing decisions do they face?

• What are the major trends with marketing intermediaries?

• What does the future hold for private label brands?

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Table 14.1 Major Retailer Types

• Specialty store

• Department store

• Supermarket

• Convenience store

• Discount store

• Off-price retailer

• Superstore

• Catalog showroom

• Club

• Drug Stores

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Speciality StoreNarrow Product LinesLower Volume, Higher Margins

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Department StoresSeveral Product LinesHigh Volume/High Margins (Depends on Store)

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Grocery StoreHigh Volume/Low MarginOften Regional due to Distribution Limitations

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Drug Stores

Lower Volume/Higher MarginsConvenient Locations

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Convenience StoresHigh Volume/Mixed MarginsGas = lowFood = High

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Superstore Mass Retailers

Very High Sales, Very Low Margin, Low PriceSells Groceries + Everything Else

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Superstore: Built on Distribution Systems Walmart distribution system

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Supply Chain Management

• Supply chain management starts before physical distribution and means strategically procuring the right inputs (raw materials, components, and capital equipment); converting them efficiently into finished products; and dispatching them to the final destinations.

• Integrated Logistics Systems: An integrated logistics system (ILS) includes materials management, material flow systems, and physical distribution, aided by information technology.

• http://www.youtube.com/watch?v=SUe-tSabKag

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Market Logistics

• Sales forecasting

• Distribution scheduling

• Production plans

• Finished-goods inventory decisions

• Packaging

• In-plant warehousing

• Shipping-room processing

• Outbound transportation

• Field warehousing

• Customer delivery and servicing

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Market Logistics Decisions

• How should orders be handled?

• Where should stock be located?

• How much stock should be held?

• How should goods be shipped?

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Figure 14.1 Determining Optimal Order Quantity

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Levels of Retail Service

• Self service: Grocery stores, etc

• Self selection: Customers can find their own goods, can ask for assistance

• Specialty stores

• Limited service: limited service based on needs

• Full service: Service every step of the way (Most expensive)

• Cars, Luxury items

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Trends in Retailing: Growth of Non-Store Selling

• Direct: Avon,

• Direct: 1-800 flowers

• Automatic Vending

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Table 14.2 Major Types of Corporate Retail Organizations

• Corporate chain store: Chain stores and wholesalers owned by the same company

• Voluntary chain: A group of retailers owned by different companies that use one wholesaler (IGA Group)

• Franchise organization: Independently owned, pay a fee to be part of the franchise system. Reduction in marketing costs because of scale (McDonald’s, Jiffy Lube)

• Merchandising conglomerate: Combines several retailing lines under one central ownership group

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Top Retailing Trends

• Entering Urban Areas

• Getting smaller

• Temporary Stores, or pop up stores

• Integrating technology into the experience

• http://www.youtube.com/watch?v=qJWcX3huiZs

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Urban Store Trend East Liberty Target/New York Aldi

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Walmart - Getting Smaller? Walmart Express

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Pop Up Stores Starbucks

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Retailers’ Marketing Decisions

• Target market

• Product assortment

• Procurement

• Prices

• Services

• Store atmosphere

• Store activities

• Store experiences

• Communications

• Location

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Store Atmosphere and Experiences

Bass Pro Shops

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Target Market Gap Inc

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Private Label Brands

• Private Label Brand: a brand that retailers or wholesalers develop

• Consumer accepts private labels

• Private-label buyers come from all socioeconomic strata

• Private labels are not a recessionary phenomenon

• Consumer loyalty shifts from manufacturers to retailers

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Private Label Brands are Often Manufactured by the Same Company

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Clean and Unique StyleTarget’s Up and Up

Brand55

Aldi - Only Sells Private Label

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Wood Chapter 8: Key Take Aways

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Multichannel Marketing

• “Multichannel marketing” or OmniChannel puts the emphasis on providing a range of choices for customers who buy through different channels at different times or for different reasons.

• http://www.lincoln.com/concierge-about/

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BMGT 411: Preparing for Week 10

• Review Chapter Notes:

• Kottler:

• Chapters 15 - Managing Integrated Marketing Communications

• Chapter 10 - Planning Metrics for Marketing

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