Marketing

What is marketing channel' INTERMEDIARIES * Merchants Wholesalers, retailers * Agents Brokers, sales agents * Facilitators Warehouses, banks, advertising agencies IMPORTANCE OF CHANNELS * Represents opportunity cost * Convert potential buyers to profitable customers * Not just serve markets, they must make markets * Affects all other marketing decisions * Push strategy – sales force, trade promotion * Pull strategy – advertising * Both push and pull * Coca-cola, Intel, Nike CHANNEL DEVELOPMENT * New firm with existing intermediaries * Convincing intermediaries is a problem. * If firm is successful, Uses retailers, distributors, merchants, outlets, sales agents * Customer’s shopping habits vary * Retailers – Germany’s Aldi, UK’s Tesco * Marks & Spencer, Wal-Mart – same selling formula HYBRID CHANNEL * Go-to-market concept * Companies have to make sure that these channels work well together and should meet targeted customers’ demand. * Channel integration. * ICICI – branches, franchisees, kiosks, micro-finance institution. DEVELOPING DISTRIBUTION CHANNEL FOR RURAL MARKETING * Hub and Spoke model – Pepsi & Coke * Large distributors in bigger towns (HUB) * – served by the company with greater frequency. * BPCL – mobile rural marketing vehicle * New connection of LPG , refilling unit. * Essilor – van * Alegion insurance Services Ltd –brokerage firm * Maruti Omni van -> office unit * TTK prestige – SHG & NGO in ANDHRA to market its Pressure cooker. * HUL – linkage mechanism with SHG * Insurance companies like Birla Sun Life, Aviva, Max New York Life have entered in tie-up with SHG,NGO & cooperatives * Win-Win situation UNDERSTANDING CUSTOMER NEEDS Different consumers have diff needs during their purchase process. Acc to Research – Nunes & Cespedes said that buyers fall into one of four categories 1. Habitual shoppers 2. High-value deal seekers 3. Variety-loving shoppers 4. High-involvement shoppers CHANNEL FLOWS Forward flow – Physical , title , promotion Company to customers Backward flow – Ordering , Payment Customers to company Both directions – Negotiation, info, risk taking CHANNEL LEVELS Consumer marketing channel Industrial marketing channel 0 LEVEL 1 LEVEL 2 LEVEL 3 LEVEL Reverse flow channels – to reuse products & containers Eg: PepsiCo Ltd SERVICE SECTOR CHANNELS * Educational dissemination sys, health delivery sys.. Eg 1: Wharton school of business MBA , Executive MBA , doctoral degree , certificate programs Publish books, audio books, e-documents, CD-ROMs Monthly e-Newsletter * Online Business journal Eg 2: Kodak Minilabs in retail outlets Home printers Online services with Ofoto wbsite Self-service kiosks CHANNEL DESIGN DECISIONS Designing marketing channel system requires 1. Analyze customer needs 2. Establishing channel objectives & constraints 3. Identifying and evaluating major channel alternatives. 1.ANALYZING CUSTOMER NEEDS * Lot size – no. of units the channel permits a typical customer to purchase on one occasion * Waiting & Delivery time – The avg time customers of that channel wait for the receipt of goods * Spatial convenience – accessibility of the customers * Product variety – Assortment breadth provided by the marketing channel * Service backup – The add-on services provided by the channel 2.ESTABLISHING OBJECTIVES & CONSTRAINTS * Channel objectives vary with product characteristics * Perishable products * Bulky products * Non-std products * Products requiring installation or maintenance service * High unit value products * Channel constraints * Economic condition * Legal regulation & restriction 3.IDENTIFYING AND EVALUATING MAJOR CHANNEL ALTERNATIVES * Wide variety of channels – sales force, agents, distributors, dealers, direct mail, telemarketing, internet etc., * Each has unique strength & weakness * Channel alternative is described by 3 elements: 1. Types of intermediaries 2. No. of intermediaries 3. Terms & responsibilities of each channel member NUMBER OF INTERMEDIARIES * Companies must decide on the no. of intermediaries to use @ each level * 3 strategies: 1. Exclusive distribution eg: distri of new automobiles 2. Selective distribution eg: STIHL 3. Intensive distribution eg: Titan Watches TERMS & RESPONSIBILITIES OF CHANNEL MEMBERS Main elements in “Trade – relation mix” : * Price policy * Conditions of sale * Distributor’s territorial rights * Mutual services & responsibilities EVALUATING MAJOR ALTERNATIVES Each channel alternatives need to be evaluated against 3 criteria: * Economic criteria * Control criteria * Adaptive creteria CHANNEL MANAGEMENT DECISIONS After choosing channel systems, the company must * Select * Train, motivate * Evaluate the channel members CHANNEL POWER It is the ability to alter channel member’s behaviour so that they take actions, which they would not have taken otherwise. * Coercive power * Reward power * Legitimate power * Expert power * Referent power MODIFYING CHANNEL DESIGN & ARRANGEMENTS * Producer have to periodically review and modify its channel design & arrangements * Web marketing – www.sangam.com Coverage of rural mkt thru SHG – Project Shakti