Marketing management - 21/03/2023

Challenge of distribution

Most companies don't sell their products directly to the end customer even in

B2B Market

(Business to business)

(Business to customer)

Between companies and end customers there are a set of intermediaries

performing a variety of functions. These intermediaries constitute market

channels or tray channels as they are alternatively known as follows

Three sets of intermediaries are possible:

1. Merchants

Retailers and wholesalers, who buy merchandise, hence take title from the

company and resale the merchandise in smaller lots, to other channel members

or customers.

2. Agents
They represent the company, look for a new customer and negotiate on behalf

of the company. It helps the company to reach customers directly and take their

feedback personally but they do not take the title with themselves.

3. Facilitators

Transportation companies, warehouse companies and companies which give

after sale service are known as facilitators. They facilitate the distribution

process but do not take the title of goods nor negotiate for purchase or sale.

Channel Structure

Variety of channel participant can be combine in many different ways to create

an effective channel are as follows:

1. Direct or Indirect distribution channel

A company may undertake to distribute its goods to customers or retailers

without involving any intermediaries which are referred to as direct channels.

They are the shortest channel. Direct mail, selling through catalogs or sending

direct samples are certain ways involved in direct channels.

Ex - Tupperware, Innova
It gives a limited reach of customers to the company and is suited to those

target markets where geographical concentration is involved.

Alternatively goods may be distributed through several intermediaries such as

wholesales, agents, retailers before they finally reach the end customer. These

channels are known as indirect channels

2. Vertical marketing system (VMS)

It includes parties like wholesalers, producers, and retailers acting as a unified

system. Tightly coordinated distribution channel design to statistically improve

operational efficiency and marketing efficiency. One channel member who's

known as channel captain owns other products so they all the power of

cooperation

There can be 3 type of VMS

1) Corporate VMS

A firm at one level of channels own a firm

VMS here combines successive stage of production and distribution under

single ownership, giving higher degree of control to the manufacturer

2) Administrative VMS

The coordination of the system is secure through the size and power of one

member. Manufacturer of dominant brand will be able to use strong trade

support from seller

Ex- FMCG products

3) Contractual VMS

It consists of independent firms at different levels of production and

distribution integrating their program to Contractual basis to obtain more

economy than they would achieve alone. It is the fastest growing and most

significant development of economy

3. Multiple channel

Rarely does a company use just one type of channel structure for its

distribution system.

They usually choose to use several different or alternative channels which

include multiple non-traditional channels and strategic channel alliances. When

a company select two or more different channels structure to distribute their

products to its target market, this arrangement known as multiple or dual

distribution

4. Horizontal marketing system

Companies form strategic channel alliances also known as horizontal marketing

system which enables the company to use already established channels

ATM

5. Internet

It allows customers to directly access manufacturers and vice versa as a result

channels are increasing rapidly in many industries. The role of channel

intermediaries is rapidly changing.

For ex- In the travel industry as more and more airlines rapidly administrating

travel agents are now positioning as travel consultant for holiday

Promotion mix

It's an essential component of marketing communication. It aims to reach the

target audience and influence the customer's purchase journey. The main tasks

include differentiating the product and brand from competitors enforcing the

brand's presence and managing information transformation with customers.

This process stands for differentiation, enforcement, informing and persuasion.

Ex - Nike uses a combination of promotional tools. They offer a variety of

seasonal sale promotions, advertise their product using traditional (print and

digital (social media)) and run various public campaigns.

Stages in market communication

1) Identify your Target audience

2) Determine communicational objective

3) Select appropriate communication channel and media

Another important step in the promotional mix is developing promotional

strategy.

There are 2 main strategies to consider

Pull and Push strategy

1) Push Strategy

It involves pushing the product to customers.

Push strategies start with product's producers who push their marketing

communication to intermediate people who eventually promote the product to

the final customer. The producer's goal is to encourage these intermediaries to

take the product and communicate with the customer. They use various

promotional techniques like seasonal selling or promotion to convince channel

members to carry and promote it to the end users. On the other hand

Pull strategy involves direct communication efforts to the final customer. The

producer may use traditional or digital promotional channels to directly address

end users and trigger the actions thus creating demand for the product as a

result a customer ends up pulling the product through main channels.

Key objective of any communication by a firm to any target market or

stakeholders are essential to inform, persuade and remind about the product

The starting point of developing a communication, the company needs to put

down and clear their objectives of communication.

Firm need to inform their target market about no of things as follows :-

1) New product concept, new brand launch, a new model, a new packaging size

or even a new feature or benefit being offered.

2) Brand differentiate its advertisement over its competitors

3) Outlet where a brand is available in the city or the opening of a new outlet in

the city.

4) A new offer or deal or pricing being offered to the market.

5) Explain how the product works and the utility of the product.

6) Suggest new uses of the product or new ways to use the product

7) A new packaging design or packaging changes

8) New technology a company has developed or acquired

9) A cost or competitive advantage that a company may have achieved and

want its target market to know about it

10) Correct a negative perspective that might have developed or countered a

competitive claim
Persuading its target marketing to buy can also means no of things specifically

1) Stimulus purchase by keeping the brand in consideration.

2) Persuade customers to buy now

3) Courage switching from a competitors by giving clear reason

4) Persuade the customer to stay loyal to companies brand

The task of any communication program does not end with information and

persuading. Even the most memorable communication can and will be

forgotten by the customer. Hence the reminder communication is very

important element of firm's communication plan

Customer need to remind about no of things are as follows:

1) Maintaining brand awareness. Even the most popular brands need to inform

their customers about their quality.

2) When a product will be needed in the near future this is especially true in the

case of seasonal products like air conditioner, air coolers, fans, ice cream and

cold drinks. These products set up their reminder prior to a set of seasons to

remind their brand quality.

3) Remind customers of occasions to use the product.

goal, marketing managers need to write down explicit and clear objectives for

their marketing program in advance.