Customers Needs and other Segmenting Dimensions Company Mission, Objectives, & Resources Competitors Current & Prospective S. W. O. T. External Market Environment External Market Environment Technology Political & Legal Social & Cultural Economic Targeting & Segmentation Positioning & Differentiation Narrowing down to focused strategy with quantitative and qualitative screening criteria Marketing Strategy Planning Process

Strategy 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 Two different perspectives Two different perspectives

Strategy 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 Channels of distribution Any series of firms or individuals who participate in the flow of products from producer to final user or consumer Two different perspectives Two different perspectives

Major 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 Exposure Market Exposure Strategies = number of outlets Intensive

Market Exposure Market Exposure Strategies Exclusive = number of outlets Intensive

Market Exposure Market Exposure Strategies Selective Exclusive = number of outlets Intensive

Customer Service and Costs Tradeoffs Costs ($) Customer Service Level % Lost Sales

Customer Service and Costs Tradeoffs Costs ($) Customer Service Level % Lost Sales Total Cost of PD It is usually more expensive to provide higher service levels...

Customer Service and Physical Distribution

Examples of How Information Tech Helps Improve Coordination in PD Channel Systems Contin- uously Updated Information Systems Contin- uously Updated Information Systems Areas Where Computers Help PD Service Areas Where Computers Help PD Service

Examples of How Information Tech Helps Improve Coordination in PD Channel Systems Electronic Data Interchange Electronic Data Interchange Contin- uously Updated Information Systems Contin- uously Updated Information Systems Areas Where Computers Help PD Service Areas Where Computers Help PD Service

Examples of How Information Tech Helps Improve Coordination in PD Channel Systems Electronic Data Interchange Electronic Data Interchange Just-in- Time Inventory Just-in- Time Inventory Contin- uously Updated Information Systems Contin- uously Updated Information Systems Areas Where Computers Help PD Service Areas Where Computers Help PD Service

Channel Structure Options Dual Channel Choices Direct Indirect ?? ? ?

Dual Distribution

Why a Firm May Want to Use Direct Channels Some Reasons for Choosing Direct Channels Some Reasons for Choosing Direct Channels Greater Control Lower Cost Value Added Subsequent to Production Process Value Added Subsequent to Production Process Direct Contact with Customer Needs Direct Contact with Customer Needs Quicker Response or Change in Marketing Mix Quicker Response or Change in Marketing Mix Suitable Middlemen Not Available Suitable Middlemen Not Available

Direct-to-Customer May Not Be Easy or Right Make and ship large quantities Have narrow assortments Want small quantities Want wide assortments Manufacturers Consumers Space Time Information Ownership Values

Regrouping Activities Dealing with discrepancies of quantity and assortment may require regrouping activities Accumulating Bulk- Breaking Bulk- Breaking Assorting Sorting

General Types of Wholesalers Does wholesaler own the products? Limited-function merchant Wholesalers Service merchant wholesalers Agent middlemen How many functions does the wholesaler provide? All the functions Some functions Yes (merchant wholesaler)No (agent middleman)

Types of Merchant Wholesalers Types of Merchant Wholesalers Rack Jobbers General Merchandise General Merchandise Producers’ Cooperative Producers’ Cooperative Single- or General-Line Single- or General-Line Mail-Order Specialty Drop-Shippers Truck Cash-and-Carry

Types of Merchant Wholesalers Types of Merchant Wholesalers Rack Jobbers General Merchandise General Merchandise Producers’ Cooperative Producers’ Cooperative Single- or General-Line Single- or General-Line Mail-Order Specialty Drop-Shippers Truck Cash-and-Carry

Agent Middlemen Manufacturers’ Agent Auction Houses Brokers Commission Merchants Selling Agents Types of Agent Middlemen Types of Agent Middlemen

Agent Middlemen Manufacturers’ Agent Auction Houses Brokers Commission Merchants Selling Agents Types of Agent Middlemen Types of Agent Middlemen

Types of Retailers Conven- tional Offerings Expanded Assortment and Service Expanded Assortment and/or Reduced Margins/Service Added Convenience Higher Margins Less Assortment Specialty Shops and Department Stores Supermarkets, Discount Houses, Mass- Merchandisers, Catalog Showrooms, Superstores Telephone/Mail Order Vending Machines Door-to-Door Convenience Stores Electronic Shopping Single- and Limited- line Stores

Ways Retailers Try to Get Scale Economies Corporate Chains Retailers wanting economies of scale Retailers wanting economies of scale

Ways Retailers Try to Get Scale Economies Corporate Chains Franchise Operations Retailers wanting economies of scale Retailers wanting economies of scale

Ways Retailers Try to Get Scale Economies Corporate Chains Franchise Operations Voluntary Chains Cooperative Chains Retailers wanting economies of scale Retailers wanting economies of scale

Characteristics 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 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 System

Characteristics 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 System

Characteristics 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” Channel captain takes the lead Channel captain takes the lead Choose channels well Choose channels well Managing channel conflict Managing channel conflict Common product-market commitment Common product-market commitment Focus on common objectives Focus on common objectives

The Transporting Function Modes of Transportation Modes of Transportation RailTruck Air Pipeline Water

The Storing Function (Goods, not Services) Price Stability Flexibility Costs Specialized Function

Customers Needs and other Segmenting Dimensions Company Mission, Objectives, & Resources Competitors Current & Prospective S. W. O. T. External Market Environment External Market Environment Technology Political & Legal Social & Cultural Economic Targeting & Segmentation Positioning & Differentiation Narrowing down to focused strategy with quantitative and qualitative screening criteria Marketing Strategy Planning Process