Chapter 10: Place (Distribution) and Market Research Flashcards
What is a marketing channel
A marketing channel consists of the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption.
Why is a marketing channel needed?
- Customers’ desire for product assortment
- Better rate of return on core business
- Improve efficiencies of distribution
3 Types of Marketing Channels
- Manufacturer -> Customer
- Manufacturer -> Retailer -> Customer
- Manufacturer -> Wholesaler -> Retailer -> Customer
What determines a marketing channel?
Characteristics of the Product
- Product or service
- Price
- Complexity
- Demonstration
Characteristics of the Customer
- Decision maker/decision making process
- Familiarity with product
- Shopping habit/places
Unique role of channel members
Collaborators
- Common interest to make the sale and grow
- Share information
(Increase size of the pie)
Competitors
- Want more share of the margin
- Retailers interested in selling competitor’s products
- Retailer selling own (store) brand
- The brand sells to other retailers
(Compete over the share of the pie)
Channel Functions: Physical Distribution
Physical Distribution
- Ordering (assortment, lot size,
availability..)
- Transportation and logistics
- Holding inventory
- Risk-taking
Channel Functions: Selling activities
Selling activities
- Promotion & Demand Generation
- Contact with prospective customers
- Negotiation
Channel Functions: Information/Market Feedback
Information/market feedback
- On Product, Customer, Competition…
Channel Functions: Service
Service
- Customization of augmented product
- Financing
Channel Member’s Economic Role
Manufacturer’s Transferred Business Cost to Channel Member:
- Inventory
- Order Handling
- Selling
- Credit
Channel Members: Wholesalers, Retailers, and Distributors.
Characteristics of Distribution Schemes
For Exclusive Distribution:
- # of Distributors/Retailers: One
- Market Coverage: Less Important
- Product Category: Specialty
- Profit margin: High
For Selective Distribution:
- # of Distributors/Retailers: Limited but more than one
- Market Coverage: Moderate
- Product Category: Specialty and some Shopping
- Profit Margin: Moderate
For Intensive Distribution:
- # of Distributors/Retailers: All Suitable
- Market Coverage: Critical
- Product Category: Convenience
- Profit Margin: Low
Channel Management Decisions
a. Selecting channel members
- Financial capability
- Stake in your firm and switching costs
- Category experience
- Organizational skills
b. Motivating Channel Members
- Promotions
- Training services
- Financing options
c. Evaluating Channel Members
- Sales quota attainment
- Customer service levels
- Treatment of lost and damaged goods
Distribution Systems
- Conventional marketing channel
- M-W-R-C - Vertical marketing system
- MWR-C - Horizontal marketing system
- (M1+M2)-C - Hybrid marketing system
- M-W-R-C1
- M-C2
Channel Conflict
- Vertical
- Coca-Cola and bottlers wanting to bottle Dr. Pepper - Horizontal
- Some Ford dealers complain about other dealers being too aggressive in their pricing
Managing Channel Conflict
- Diplomacy
- Focus on common goals
- Exchange of personnel
- Joint membership in trade associations
- Arbitration/mediation
4 Steps of Channel Design
- Find out what your customers want
- Identify alternatives, determine costs
- Bound the “ideal”. Impose constraints
- Evaluate and Compare Alternatives
Why is Marketing Research Necessary?
Value of Information:
- Decisions involve risk and uncertainty
when information is imperfect
- Information eliminates (or at least reduces) risk and uncertainty
Purpose of Marketing Research
To collect useful information
How can marketing research help?
- It can reduce risk and uncertainty
- It takes out some of the guess
work involved in making marketing
decision - It can supplement (not replace)
good sense
Why is Marketing Research Necessary?
- Competitive Pressure
- Expanding Markets
- Increasing Customer
expectations
Mistakes can be costly
Why study research methods? what is the purpose?
- Information of higher accuracy is more valuable
- Study of research method gives insight into accuracy and reliability
of information being generated
(4 Steps) Marketing Research Process
- Formulate Research Problem
- Develop Research Plan: Research Objectives
Exploratory, Descriptive, Causal - Implement Plan:
a. Identify Data Source: Primary, Secondary
b. Develop Questionnaire Design, Sample Size - Analysis and interpretation
a. Analysis
b. Reporting
Stage 1: Problem Formulation
- Decision Problem: What should the manager do?
–> You (manager) must develop a new product package. - Research Problem: What
information is needed, and how do you obtain the information?
–> Evaluate effectiveness of alternative package design: - Product freshness
- Visual Appeal
- Comparison to other options
- Comparison to competition
Stage 2, Develop Plan: Sources of Data
Primary: Data gathered for the specific problem
at hand
- Demographics, psychographics, attitudes, intentions,
behavior
Secondary: Data that have been previously
gathered for some purpose. Relatively
inexpensive and fast, but inaccurate and ill-
fitting the problem
- Internal: Sales data, warranty cards
- Published: Directories, periodicals, statistical sources
- Commercial: Ad exposures, scanner data, store audits
Stage 2: Develop Plan and Research Design
Research Objectives:
a. To Define the Problem and Suggest Hypotheses:
Exploratory Research:
- To gain ideas and insights
- Newspaper facing decreasing sales generates possible
explanations
b. To Describe Market Situation: Descriptive
Research:
- To obtain summary measures
- Trends in lifestyle of current users
c. To Predict Hypothesis about Cause and Effect:
Causal Research:
- For cause-effect connection
- How people react to a newspaper’s topic selection and space
allocation
Different ways to Operationalize
- Exploratory
- Observation and Focus groups
- Qualitative research
- Descriptive
- Survey
- Quantitative
- Causal Research
- Experiments
- Hypothesis
Exploratory
- No sense of what is going on, why
- Need to find out more even to form a hypothesis
- Provides a starting point
Observation and Focus groups
- Best suited for exploratory research
- Observing consumer behave (in stores) gives
pointers to ‘why’ they behave - In-depth interviews
- Focus groups
Qualitative Research
Very special skills to get it right!
Descriptive
- Need to get quantitative estimate of sizes
- Sample size critical
Survey
- Best suited for descriptive research
- You have a sense of what you want to find out –
need to get a sense of population proportions - Design of survey is critical - wording, ordering,
response format - Do not want to bias the responses
[Note: all surveys should be pre-tested]
Quantitative
Requires good quantitative skills to analyze data
Causal Research
Need to establish causality: ‘x’ causes ‘y’; e.g.,
change in price affects sales
Experiments
- Take comparable situations – just change one
element to test its effect. (e.g., two similar cities
with high vs. low price effect on sales) - Test market is another example
Hypothesis
Specific hypothesis being tested
Stage 3, Implement Plan: Developing the Questionnaire (survey)
Specify what information is sought
- Determine method of administration
- Determine content, wording, response format
for each question
- Determine question sequence
- Pretest questionnaire and revise if necessary
Stage 3, Implement Plan: Sampling
- Simple random sampling: Each element of population
has an equal probability of being selected - Stratified sampling: Entire population is divided into
strata, and do simple random sampling from each
stratum - Cluster sampling: Entire population is divided into
clusters –each representing the population, and do
random sampling of clusters - Key considerations:
a. Cost: Sample size, method of data collection
b. Information accuracy: Sample representativeness,
respondent error, administrative error
Contact Methods (For primary data collection)
- Telephone
- Internet
- Personal
a. individual (one-on-one)
b. group (focus groups) - Sampling Plans (for primary data collection)
a. Who to survey? (individuals? families?)
b. How many people?
c. Sampling procedure?
Q: How reliable and/or valid are the results?
Typical Problems in Wording Questions
- Leading question
- Ambigous question
- Unanswerable question
- Two questions in one
- Non-exhaustive question
- Mutually non-exclusive question
Stage 4, Analysis and Reporting
- Did the research meet its objectives?
- Was the information helpful in making the
decision? Did the managers use the information? - Was there an ‘aha’ factor?
- Did the analysis throw open some additional
issues?
