1. Hogeschool van Amsterdam Interactieve Media Distribute or die: Offline and online distribution strategy Hoorcollege marketing blok 2 week 7

2. Hogeschool van Amsterdam Interactieve Media Learning goals  By the end of the reading and colleges you should understand:  How place fits into the overall marketing mix  The types of distribution channels available  What is channel conflict and some solutions for this issue  How distribution relates to interactive media products  Some of the main trends in distribution  Some ways of choosing distribution channels

3. Hogeschool van Amsterdam Interactieve Media Agenda  Introduction: what is place?  Types of distribution channels  Channel conflict  Trends in distribution  Interactive media and distribution  10 tips for choosing and managing distribution channels  Summary

4. Hogeschool van Amsterdam Interactieve Media What is place?  Place in the 4Ps of marketing refers to all aspects of getting the product/service/idea from the producer to the end consumer  It is also called distribution or distribution channels  It is an important, but often neglected element of the marketing mix  When done well it can help ensure success  When things go wrong it can lead to big problems

5. Hogeschool van Amsterdam Interactieve Media Why is place part of the marketing mix?

6. Hogeschool van Amsterdam Interactieve Media Place: the golden rule Location!

7. Hogeschool van Amsterdam Interactieve Media What sort of things can go wrong?  Choosing the wrong place  A place where the customer isn’t  A place that is not consistent with positioning / marketing mix  Fighting between places  Not enough product in the right place  Imagine this happening during a promotional activity  Too much product in the right or wrong place  Not developing distribution channels to keep up with customers

8. Hogeschool van Amsterdam Interactieve Media Types of distribution channels

9. Hogeschool van Amsterdam Interactieve Media Distribution channels  These are the routes that companies use to get their product to the customer  Channels are normally split by:  Customer type  Business to consumer channels (B2C)  Business to business channels (B2B)  Distribution type  Direct channels  Indirect channels

10. Hogeschool van Amsterdam Interactieve Media Indirect channels cost money

11. Hogeschool van Amsterdam Interactieve Media Why do organizations do indirect business?  Because distributors do a lot of work including:  Distribution  Financing  Risk taking  Esp. inventories  Providing information  Marketing intelligence to producer  Promotion  Customer management  Acquisition  Matching needs to products  Negotiation of contracts / prices

12. Hogeschool van Amsterdam Interactieve Media Examples of direct channels

13. Hogeschool van Amsterdam Interactieve Media Examples of indirect channels

14. Hogeschool van Amsterdam Interactieve Media Channel conflict

15. Hogeschool van Amsterdam Interactieve Media What is channel conflict?  Most distribution channels are made up of separate companies  Often these companies are competitors  One of the main problems is that they often conflict  This uses time  And can drive the going price down  Two sorts of channel conflict:  Horizontal conflict  Vertical conflict

16. Hogeschool van Amsterdam Interactieve Media Horizontal conflict

17. Hogeschool van Amsterdam Interactieve Media Vertical conflict

18. Hogeschool van Amsterdam Interactieve Media Managing channel conflict  The key is to manage your channels  Options include  Avoid large pricing differences between channels  Maintain regular contact  Develop channel specific line-ups  Channel specific support  Logistics  Promotions  Service  Financing

19. Hogeschool van Amsterdam Interactieve Media Interactive media and distribution

20. Hogeschool van Amsterdam Interactieve Media Interactive media is a distribution channel

21. Hogeschool van Amsterdam Interactieve Media Tangible products  The web has opened up many new distribution channels for tangible products  Both direct and indirect channels  Consumers are moving to these channels  Increased risk of channel conflict

22. Hogeschool van Amsterdam Interactieve Media Services  Interactive media has opened new channels for services and is especially popular with financial services  ATMs (pinautomaats) online & mobile banking are revolutionizing banks

23. Hogeschool van Amsterdam Interactieve Media Software  Online distribution of software is an obvious step  A number of different models  Direct sales  Shareware  Free software  The “free” model has been very successful for Adobe  Risk of channel conflict very high in some areas  Music / film

24. Hogeschool van Amsterdam Interactieve Media Interactive media products  Interactive media also provides a channel for interactive media products  E.g. Google search (site search, desktop, mobile), adwords  This is a new trend, but it seems to have potential  Part of Google’s success is its innovative approach to “distribution” of its products  The phenomenon of “widgets” and “embedding” make this a more interesting option in future

25. Hogeschool van Amsterdam Interactieve Media Trends in distribution

26. Hogeschool van Amsterdam Interactieve Media Shopping as a lifestyle and experience  Shopping is a leisure activity  84% of UK adults enjoy shopping  Shopping is social  Shopping is used by some as therapy  Shopping can be an enjoyable experience  Many retailers and shopping centres are trying to tie into this trend

27. Hogeschool van Amsterdam Interactieve Media Move online  More people shopping online (672m worldwide)*  Europeans purchase more frequently online than North Americans  Security issues being resolved  Familiarity helps * Source: AC Nielson

28. Hogeschool van Amsterdam Interactieve Media Growth in retailer strength  Large retailers have more power than ever before  This leads to better prices for consumers  But killing smaller specialists  May reduce choice long- term

29. Hogeschool van Amsterdam Interactieve Media 10 tips for choosing and managing distribution channels

30. Hogeschool van Amsterdam Interactieve Media 10 tips for choosing and managing distribution channels 1.Be where the customer is  Ready to buy  Open to influence 2.Ensure the channel fits positioning 3.Visibility is everything  Ensure you have shelf-space 4.Treat your distribution as partners  Look after them and they will look after you 5.Minimize channel conflict through strong management 6.Follow the customer 7.Develop new channels 8.Different channels require / expect different profit margins These might not fit your business model 9.No distribution channel “has to have you” 10.Never underestimate how difficult it is to enter new channels

31. Hogeschool van Amsterdam Interactieve Media Summary  Distribution is important though sometimes neglected  The “place” should reflect positioning (and support the rest of the marketing mix)  Distribution needs to be strongly managed to avoid channel conflict  Place includes interactive media, in the case of interactive media products there are many new opportunities to distribute products  Trends in online and offline distribution are leading to many opportunities and threats of channel conflict