CustomersNeeds and other

SegmentingDimensions

CompanyMission, Objectives,

& Resources

CompetitorsCurrent &

Prospective

S.W.O.T.

External Market EnvironmentExternal Market EnvironmentTechnology Political & Legal Social & Cultural EconomicTechnology Political & Legal Social & Cultural Economic

Targeting &Segmentation

Positioning &DifferentiationPositioning &Differentiation

Narrowing down to focused strategy with quantitative and qualitative screening criteria

Marketing Strategy Planning ProcessMarketing Strategy Planning Process

Strategy Planning for DistributionStrategy Planning for Distribution

Channels of distribution

Any series of firms or individuals who participate in the flow of products from producer to final user or consumer

Any series of firms or individuals who participate in the flow of products from producer to final user or consumer

Two differentperspectives

Two differentperspectives

Strategy Planning for DistributionStrategy Planning for Distribution

Logistics(Physical distribution)

Transporting, storing, and handling of goods to match target customer needs and a firm’s marketing mix--both within individual firms and along a channel of distribution

Transporting, storing, and handling of goods to match target customer needs and a firm’s marketing mix--both within individual firms and along a channel of distribution

Channels of distribution

Any series of firms or individuals who participate in the flow of products from producer to final user or consumer

Any series of firms or individuals who participate in the flow of products from producer to final user or consumer

Two differentperspectives

Two differentperspectives

Major Strategy Planning Decisions for PlaceMajor Strategy Planning Decisions for Place

• Distribution availability goals

• Ideal market exposure level

• Distribution customer service level

• Channel type (direct, indirect)

• Who manages the overall channel

• How to manage transportation, storage and materials handling

• Kinds of middlemen

Market ExposureMarket Exposure

MarketExposureStrategies

= number ofoutlets

IntensiveIntensive

Market ExposureMarket Exposure

MarketExposureStrategies

ExclusiveExclusive

= number ofoutlets

IntensiveIntensive

Market ExposureMarket Exposure

MarketExposureStrategies

SelectiveSelective

ExclusiveExclusive

= number ofoutlets

IntensiveIntensive

Customer Service and Costs TradeoffsCustomer Service and Costs Tradeoffs

Co

sts

($

)

Customer Service Level

0

0

90%

Lost Sales

Customer Service and Costs TradeoffsCustomer Service and Costs Tradeoffs

Co

sts

($

)

Customer Service Level

0

0

90%

Lost Sales

Total Cost of PD

It is usually more expensive to provide higher service levels...It is usually more expensive to provide higher service levels...

Customer Service and Physical DistributionCustomer Service and Physical Distribution

Examples of How Information Tech Helps ImproveCoordination in PD Channel Systems

Examples of How Information Tech Helps ImproveCoordination in PD Channel Systems

Contin-uously

UpdatedInformation

Systems

Contin-uously

UpdatedInformation

SystemsAreas WhereComputers

Help PDService

Areas WhereComputers

Help PDService

Examples of How Information Tech Helps ImproveCoordination in PD Channel Systems

Examples of How Information Tech Helps ImproveCoordination in PD Channel Systems

ElectronicData

Interchange

ElectronicData

Interchange

Contin-uously

UpdatedInformation

Systems

Contin-uously

UpdatedInformation

SystemsAreas WhereComputers

Help PDService

Areas WhereComputers

Help PDService

Examples of How Information Tech Helps ImproveCoordination in PD Channel Systems

Examples of How Information Tech Helps ImproveCoordination in PD Channel Systems

ElectronicData

Interchange

ElectronicData

Interchange

Just-in-Time

Inventory

Just-in-Time

Inventory

Contin-uously

UpdatedInformation

Systems

Contin-uously

UpdatedInformation

SystemsAreas WhereComputers

Help PDService

Areas WhereComputers

Help PDService

Channel Structure OptionsChannel Structure Options

DualDual

ChannelChoices

DirectDirectIndirectIndirect

? ?

? ?

Dual DistributionDual Distribution

Why a Firm May Want to Use Direct Channels Why a Firm May Want to Use Direct Channels

SomeReasonsfor ChoosingDirect Channels

SomeReasonsfor ChoosingDirect Channels

Greater ControlGreater Control

Lower CostLower Cost

Value Added Subsequent to Production Process

Value Added Subsequent to Production Process

Direct Contact withCustomer Needs

Direct Contact withCustomer Needs

Quicker Response orChange in Marketing Mix

Quicker Response orChange in Marketing Mix

Suitable Middlemen NotAvailable

Suitable Middlemen NotAvailable

Direct-to-Customer May Not Be Easy or Right Direct-to-Customer May Not Be Easy or Right

Make and shiplarge quantities

Have narrow assortments

Want small quantities

Want wide assortments

Manufacturers Consumers

SpaceTime

InformationOwnership

Values

Regrouping ActivitiesRegrouping Activities

Dealing with discrepancies of quantity andassortment may require regrouping activities

AccumulatingAccumulatingBulk-

BreakingBulk-

Breaking

AssortingAssortingSortingSorting

General Types of WholesalersGeneral Types of Wholesalers

Does wholesaler own the products?

Limited-functionmerchant

Wholesalers

Servicemerchant

wholesalers

Agent middlemen

How many functions does the wholesaler

provide?

All the functions

Some functions

Yes (merchant wholesaler) No (agent middleman)

Types of Merchant WholesalersTypes of Merchant Wholesalers

Typesof

MerchantWholesalers

Rack JobbersRack Jobbers GeneralMerchandise

GeneralMerchandise

Producers’Cooperative

Producers’Cooperative

Single- orGeneral-Line

Single- orGeneral-Line

Mail-OrderMail-Order SpecialtySpecialty

Drop-ShippersDrop-Shippers

TruckTruck Cash-and-CarryCash-and-Carry

Types of Merchant WholesalersTypes of Merchant Wholesalers

Typesof

MerchantWholesalers

Rack JobbersRack Jobbers GeneralMerchandise

GeneralMerchandise

Producers’Cooperative

Producers’Cooperative

Single- orGeneral-Line

Single- orGeneral-Line

Mail-OrderMail-Order SpecialtySpecialty

Drop-ShippersDrop-Shippers

TruckTruck Cash-and-CarryCash-and-Carry

Agent MiddlemenAgent Middlemen

Manufacturers’Agent

AuctionHouses Brokers

CommissionMerchants Selling

Agents

Types of Agent

Middlemen

Types of Agent

Middlemen

Agent MiddlemenAgent Middlemen

Manufacturers’Agent

AuctionHouses Brokers

CommissionMerchants Selling

Agents

Types of Agent

Middlemen

Types of Agent

Middlemen

Types of RetailersTypes of Retailers

Conven-tionalOfferings

ExpandedAssortmentand Service

ExpandedAssortmentand/or ReducedMargins/Service

Added ConvenienceHigher MarginsLess Assortment

Specialty Shops andDepartment Stores

Supermarkets, DiscountHouses, Mass- Merchandisers,Catalog Showrooms,Superstores

Telephone/Mail OrderVending MachinesDoor-to-DoorConvenience StoresElectronic Shopping

Single- andLimited-lineStores

Ways Retailers Try to Get Scale EconomiesWays Retailers Try to Get Scale Economies

CorporateChains

Retailerswanting economies

of scale

Retailerswanting economies

of scale

Ways Retailers Try to Get Scale EconomiesWays Retailers Try to Get Scale Economies

CorporateChains

Franchise Operations

Retailerswanting economies

of scale

Retailerswanting economies

of scale

Ways Retailers Try to Get Scale EconomiesWays Retailers Try to Get Scale Economies

CorporateChains

Franchise Operations

VoluntaryChains

Cooperative Chains

Retailerswanting economies

of scale

Retailerswanting economies

of scale

Characteristics of Traditional and Vertical Marketing SystemsCharacteristics of Traditional and Vertical Marketing Systems

Control Maintained By

Amount of Cooperation

Characteristics

Type of Channel

“Market”

Little or None

Traditional

Characteristics of Traditional and Vertical Marketing SystemsCharacteristics of Traditional and Vertical Marketing Systems

Vertical Marketing Systems

Economic Power and Leadership

Some to Good

Administered

Control Maintained By

Amount of Cooperation

Characteristics

Type of Channel

“Market”

Little or None

Traditional

An Administered Channel SystemAn Administered Channel System

Characteristics of Traditional and Vertical Marketing SystemsCharacteristics of Traditional and Vertical Marketing Systems

Vertical Marketing Systems

Economic Power and Leadership

Some to Good

Administered

Contracts

Fairly Good to Good

Contractual

Control Maintained By

Amount of Cooperation

Characteristics

Type of Channel

“Market”

Little or None

Traditional

An Example of a Contractual SystemAn Example of a Contractual System

Characteristics of Traditional and Vertical Marketing SystemsCharacteristics of Traditional and Vertical Marketing Systems

Vertical Marketing Systems

Economic Power and Leadership

Some to Good

Administered

Contracts

Fairly Good to Good

Contractual

Control Maintained By

Amount of Cooperation

Characteristics

Type of Channel

Ownership by One

Company

Complete

Corporate

“Market”

Little or None

Traditional

Vertical Marketing Systems May Require a “Channel Captain”Vertical Marketing Systems May Require a “Channel Captain”

Channel captain takes the lead

Channel captain takes the lead

Choose channelswell

Choose channelswell

Managing channel conflict

Managing channel conflict

Common product-marketcommitment

Common product-marketcommitment

Focus on commonobjectives

Focus on commonobjectives

The Transporting FunctionThe Transporting Function

Modesof

Transportation

Modesof

Transportation

Rail Truck

Air

PipelineWater

The Storing Function (Goods, not Services)The Storing Function (Goods, not Services)

Price StabilityPrice Stability

FlexibilityFlexibility

CostsCosts

Specialized FunctionSpecialized Function

CustomersNeeds and other

SegmentingDimensions

CompanyMission, Objectives,

& Resources

CompetitorsCurrent &

Prospective

S.W.O.T.

External Market EnvironmentExternal Market EnvironmentTechnology Political & Legal Social & Cultural EconomicTechnology Political & Legal Social & Cultural Economic

Targeting &Segmentation

Positioning &DifferentiationPositioning &Differentiation

Narrowing down to focused strategy with quantitative and qualitative screening criteria

Marketing Strategy Planning ProcessMarketing Strategy Planning Process