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Principles of Marketing > 9. Distributing value: retail and digital distribution > Flashcards

9. Distributing value: retail and digital distribution Flashcards

1
Q

What is the definition of place in the marketing mix?

A

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.

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2
Q

What is distribution?

A

Making products available, at the right, time, location, price, quantity to the right customer

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3
Q

What does distribution influence?

A

Distribution influence and are influenced by product, pricing, promotion and branding.

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4
Q

What is supply chain?

A

The supply chain is the system of organisations and people involved in creating the product and delivering it to the customer

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5
Q

What is the definition of marketing distribution?

A

It is a set of interdependent organisations involved in making the product available for consumption.

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6
Q

What are the functions of the distribution channel?

A
  • 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,
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7
Q

How to determine a distribution strategy?

A

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?

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8
Q

How does product characteristics affect the distribution strategy?

A
  • 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
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9
Q

What is the definition of merchants?

A

Stakeholders that buy, take stock to and resell the merchandise

e.g wholesalers, retailers, dealers

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10
Q

What is the definition of agents/brokers?

A

They search for customers and may negotiate on the manufacturer’s behalf. They don’t take stock.

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11
Q

What is the definition of facilitators?

A

They assist in the distribution process but don’t take stock or sales

E.g transport companies, banks, ad agencies

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12
Q

What is the aim of the marketing channel?

A

to reflect the strength and weaknesses of different types of intermediaries in handling key functions

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13
Q

What needs to be consider for channel members?

A
  • Selecting appropriate channel members
  • Monitoring the channel’s performance over time
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14
Q

What is the definition of competitive characteristics?

A

The tension between distributing near competitors and avoiding competition

e.g Coles & Woolworths

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15
Q

How the market competition affects the company?

A
  • 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
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16
Q

What are the factors around the company characteristics?

A
  • Company size and financial resources
    • > resources >channel functions
  • Company’s value proposition
    • E.g speedy delivery, customer service excellence
17
Q
  1. Direct or indirect?
    What is the definition of direct distribution?
A

Face-to-face sales telemarketing; direct marketing; specialised retail store (wholly owned/franchised); Internet

18
Q
  1. Direct or indirect?

What is the definition of indirect distribution?

A

Using intermediaries (e.g retailers, wholesalers)

19
Q
  1. Channel length/levels

What are the different channels?

A
  • 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)
20
Q

What is difference between long & short channels?

A
  • Long channels
    • Widely dispersed customer population
    • Small amount, purchased frequently
  • Shorter channels
    • High involvement / specialty goods
    • High service component
21
Q

How the different consumer products affect the distribution?

A
  • 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.
22
Q

What are the determinants of channel structure? Describe them.

A
  • 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
23
Q

What are the types of distribution system?

A

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

24
Q

What are the difference between each system within vertical marketing systems?

A

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

25
Q

What is an vertical integration?

A

A competitive strategy which a company takes control over one or more stages in the production/distribution of a product

Example:
Netflix → making movies instead of just marketing (upstream)

Apple → using Mac city to having own store (downstream)

26
Q

How to describe the intensity of a company?

A
  • Channel length (number of intermediaries)
  • Intensity of distribution at various levels
27
Q
  1. Distribution intensity/breadth

Describe the different distribution intensities.

A

Intensive distribution
- Stocking a product in as many outlets as possible
- Aim to achieve maximum coverage
- Used for convenience, shopping goods

Exclusive distribution
- Few stores/One outlet making it more exclusive
- Results in a more aggressive selling effort by distributor
- Used for prestige/specialty goods
- Inventory is reachable and available

  • Selective distribution
    • The use of >1 intermediaries to carry a particular product
    • Heterogeneous shopping products
28
Q
  1. Single or multiple channels

What are the different types of channels?

A

Multi-channel
- Multi-channel (”many” channels) allows customers to purchase natively whenever they prefer to browse and shop
- Multi-channel marketing is the bleeding of different distribution and promotional channels. Distribution channels range from a retail storefront, a website, or a mail-order catalogue
- The aim is to make it easy for a consumer to buy from them in whatever way is most appropriate

Omni-channel shopping (”all” channels)
- Unifies sales and marketing to make a single commerce experience across the brand
- It allows consumers to purchase wherever they are while communicating in a way that shows awareness of their individual stage in the customer lifecycle
- It merges the worlds of online and offline platforms to show customers personalised offers, products, and messages that align and respond every step of the way

29
Q

What are the benefits of Multi channel

A
  • Low-cost access to new markets
  • Increased customer satisfaction and loyalty
  • Creation of a strategic (knowledge) advantage
30
Q
  1. Selecting partners
    How to select channel partners?
A

Selecting channel partners: normally a long-term commitment

31
Q

What are the risks of selecting partners?

A
  • Goal incompatibility
  • Unclear roles and rights
  • Differences in perception
  • Intermediaries’ dependence on manufacturer
32
Q

Describe the channel conflicts

A

Vertical
- Different levels in the same channels
- e.g a toy manufacturer’s products arriving later than scheduled at Big W (the retail store where it is sold)

Horizontal
- Same level within the channel
- e.g McDonalds stores in the same area

Multi-channel
- Different market channels
- e.g Nike retail store selling shoes at a higher price than the Nike website.

33
Q

What are some positive actions to motivate channel members?

A

e.g offering higher margins to the intermediary, special deals, premiums and allowances for advertising or display

34
Q

What are some negative actions to motivate channel members?

A

e.g threatening to cut back on margin, or hold back delivery of product

35
Q
  1. Push or pull strategy
    What is the push strategy?
A

A push strategy uses the intermediaries to promote and sell the product to end users

36
Q

What is the pull strategy?

A

A pull strategy uses promotion to persuade consumers to demand the product from intermediaries

Principles of Marketing (12 decks)

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