9. Distributing value: retail and digital distribution Flashcards
What is the definition of place in the marketing mix?
It focuses on the where aspect of the marketing strategy and the distribution channels from the creation of the product until it is in the customer’s possession.
What is distribution?
Making products available, at the right, time, location, price, quantity to the right customer
What does distribution influence?
Distribution influence and are influenced by product, pricing, promotion and branding.
What is supply chain?
The supply chain is the system of organisations and people involved in creating the product and delivering it to the customer
What is the definition of marketing distribution?
It is a set of interdependent organisations involved in making the product available for consumption.
What are the functions of the distribution channel?
- Research
- Promotion
- Contact
- Negotiation
- Physical distribution
- Financing
- Risk taking
- Matching
- Taking care of logistics between consumers and producers such as quantity, assortment, time (delivery) and the place,
How to determine a distribution strategy?
Evaluate internal and external environmental influences to develop best/realistic channel structure
- Will consumers use the channel?
- Is it a good fit with the product?
- Will the channel impact the brand positively?
- is it a good fit with the overall brand strategy?
- How does the competition distribute its products?
How does product characteristics affect the distribution strategy?
- Bulky products
- Direct distribution might be required in order to minimise the shipping distance and number of handlings
- Non-standardised products (customised)
- Products requiring installation or maintenance services
- Might be sold through a limited network (such as sole agents)
- High unit value products
- Perishable products
What is the definition of merchants?
Stakeholders that buy, take stock to and resell the merchandise
e.g wholesalers, retailers, dealers
What is the definition of agents/brokers?
They search for customers and may negotiate on the manufacturer’s behalf. They don’t take stock.
What is the definition of facilitators?
They assist in the distribution process but don’t take stock or sales
E.g transport companies, banks, ad agencies
What is the aim of the marketing channel?
to reflect the strength and weaknesses of different types of intermediaries in handling key functions
What needs to be consider for channel members?
- Selecting appropriate channel members
- Monitoring the channel’s performance over time
What is the definition of competitive characteristics?
The tension between distributing near competitors and avoiding competition
e.g Coles & Woolworths
How the market competition affects the company?
- If it is high, companies will choose the maximum kinds of channels for reaching customers
- If it is low, companies will focus on the improvement of quality and choose only convenient channels for reaching customers
What are the factors around the company characteristics?
- Company size and financial resources
- > resources >channel functions
- Company’s value proposition
- E.g speedy delivery, customer service excellence
- Direct or indirect?
What is the definition of direct distribution?
Face-to-face sales telemarketing; direct marketing; specialised retail store (wholly owned/franchised); Internet
- Direct or indirect?
What is the definition of indirect distribution?
Using intermediaries (e.g retailers, wholesalers)
- Channel length/levels
What are the different channels?
- Direct channel (producer → Consumer)
- Farmer’s market
- Retail channel (producer → retailer → consumer)
- Nike
- Wholesale channel (producer → wholesaler→retailer → consumer)
- Woolworths
- Agent channel (producer → agent → wholesaler → retailer → consumers)
What is difference between long & short channels?
- Long channels
- Widely dispersed customer population
- Small amount, purchased frequently
- Shorter channels
- High involvement / specialty goods
- High service component
How the different consumer products affect the distribution?
- Convenience
- Routine, often purchase and appeals to a large target market.
- Shopping
- Requires research and comparison of brands
- Homogenous products are usually determined on the lowest price.
- Heterogenous products are signified by the features than the price.
- Specialty
- Products where consumers are concerned with brand image and the quality of their purchases
- Consumers really do not want substitutes and are brand loyal.
- Unsought
- Unknown product that buyer doesn’t actively seek.
What are the determinants of channel structure? Describe them.
- Economics of distribution functions
- Specialisation/division of labour without intermediaries
- Transaction efficiency
- Specialisation/division of labour with intermediaries
- Transaction efficiency & lower costs for manufacturers and customers
- Specialisation/division of labour without intermediaries
What are the types of distribution system?
Conventional marketing system
- Members work independently of one another
- Maximising own profits even at the expense of the maximising the overall profit
Vertical marketing system (VMS)
- Formal cooperation among channel members
- administered
- corporate
- contractual
Horizontal marketing system: Two or more firms at the same channel level agree to work together
What are the difference between each system within vertical marketing systems?
Corporate
- Combines successive stages of production and distribution under single ownership
- Often the result of backward or forward integration
Contractual
- Independent firms at different levels of production and distribution integrating their programs on a contractual basis (formal agreement)
Administered
- Coordinates successive stages of production and distribution through the size and power of one of the parties
- Coordination might also be achieved through relational (i.e trust, norms, reciprocity) means
