1. MGT-519 STRATEGIC MARKETING AAMER SIDDIQI 1

2. LECTURE 22 2

3. RECAP Price Setting Prices Pricing activity What is a price Price Vs Cost Pricing as Marketing activity Three categories of pricing issues Buyer–seller interactivity in determining prices Price structure Price format Pricing matrix Pricing strategies 3

4. PLACE Definition: Place in the marketing mix refers to the channel, or the route, through which goods move from the source to the final user. Place could be the intermediaries, distributors, wholesalers and retailers It’s the method used to get the product or service through various distribution channels to the ultimate purchaser or end-user In other words, how and where the consumer buys the product or service. 4

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6. REACHING THE TARGET MARKET It is a vitally important activity that focuses on how to reach your target market and the: – location of your business – location of your target market – how to reach your target market – warehousing of your stock – transportation of your stock The right place means greater chances of sales over a longer period of time. This translates into greater market share, more profits and better ability to track the changes in the marketplace in thinking, styles, fashion and needs. 6

7. LOCATION The location of business depends on a number of factors as outlined below: – are you retailing direct to the public or working through an intermediary? – is it convenient for customers to visit you? – where is your target market located? – how important is exposure to your business? – where are your major competitors located? – what is the occupancy cost? 7

8. CHANNELS OF DISTRIBUTION Players that make up the 'place' aspect of the marketing mix: - Retailers, Wholesalers, Distributors, Warehouses The Internet All of these move, stock and sell goods. Retailers may brand themselves, and in fact, some of the largest companies in the world are retailers like Wal- Mart. As retailers consolidate and become bigger in the channel, their power for margins and goods also grows. 8

9. RETAILERS The final step in the chain- deal directly with customer Focused on consumer markets Various kinds of retailer: – Multiples- chains of shops owned by a single company – Specialist chains (Scentatization) – Department stores (Alfatah) – Convenience stores – Independents – Franchises 9

10. KEY TRENDS IN RETAILING Trend towards out-of-town stores Decline in independents Growth of retailer “own label” brands Continued growth in franchising Increase in international retailing within Europe Increasing technology in retailing 10

11. WHOLESALERS BREAK BULK Buy in large quantities from producers Break into smaller quantities to sell to retailers ADVANTAGES – Reduce the producer’s transport costs – Retailers can order smaller amounts from wholesalers Wholesalers makes money buying at a lower price from the producer and adding a profit margin onto the price paid by the retailer 11

12. DISTRIBUTORS Distribute products and serve as a local sales point Usually specialise in a particular industry e.g building supplies, industrial clothing Offer products from many producers=greater choice Different from agents- distributor holds stock 12

13. AGENT Specialist type of distributor Does not hold stock Tend to operate in tertiary sector- services Travel Insurance Publishing Earn commission based on Sales achieved 13

14. FUNCTIONS OF A DISTRIBUTOR CHANNEL Provide a link between production and consumption To gather market information Communicate promotional offers Find and communicate with prospective buyers Physical distribution- transporting and storing Financing- other parties finance the stock 14

15. CHANNEL STRATEGY DECISIONS Channel length- direct or indirect Choice of intermediary Use just one or several channels How to move the goods through the channel Control over the channel- e.g. who decides price, promotion, packaging 15

16. DIRECT OR INDIRECT CHANNELS A business faces a choice of using direct (short) or indirect (long) channels DIRECT – Channels where a producer and consumer deal directly with each other without the involvement of an intermediary INDIRECT – Involves the use of intermediary between the producer and consumer 16

17. DIRECT CHANNELS Increasingly popular Various methods Direct mailing E-commerce Telemarketing 17

18. FACTORS TO CONSIDER NATURE OF THE PRODUCT – Perishable/fragile – Technical/complex – Customised – Type of product, e.g convenience, specialty – Desired image of the product THE MARKET – Geographically spread – Extent and nature of competition THE BUSINESS – Its size – Its nature – Established distribution networks 18

19. DETERMINING THE BEST STRUCTURE In determining the best structure (or structures) for the business the following questions need to be considered : what is the most convenient means for customers to obtain the products or services they want? what is the specific level of customer service standard required? what is the most cost-efficient way of providing accessibility and service? how many customers are there, where are they located, what is their average transaction value? what structures do the competitors use and how efficient are they? 19

20. LOGISTICS Logistics: Planning, implementing and controlling the physical flow of raw materials, final products or services and related information from your business, or source of supply, to the final end-user (or consumer). Need to consider: – Planning and scheduling production – To Order and receive raw materials or finished products from your suppliers – how much of each finished product will be should carry in stock and what are the re-order points – how are the products stored to ensure they are ready for delivery to customers in good condition – how will the products delivered to customers – what stock control, invoicing and transportation administration systems are required 20

21. SUMMARY Objective of distribution Channels of distribution Functions of a distributor channel Channel strategy decisions Direct and indirect channels Determining the best structure Logistics 21

22. THANKYOU 22