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Distribution and Retailing. Dr. Amit Joshi MAR 6816. Manufacturer. Retailer. Distributor. Consumers. Distribution Channel (PLACE). Business Structure. Logistics or Physical Distribution. Physical Distribution Gets It to Customers.

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Distribution and retailing

Distribution and Retailing

Dr. Amit Joshi

MAR 6816


Distribution channel place

Manufacturer

Retailer

Distributor

Consumers

Distribution Channel (PLACE)

Business

Structure


Physical distribution gets it to customers

LogisticsorPhysicalDistribution

Physical Distribution Gets It to Customers

Coordinating the flow of information among channel members


The nature of marketing channels
The Nature of Marketing Channels

  • Marketing Channel – Network of marketing institutions.

  • Channel Members / Marketing Intermediaries: Reseller or middlemen.

  • Functions

    • Transactional (promote & negotiate)

    • Logistical

    • Facilitating (researching and financing)


Supply chain management
Supply Chain Management

  • Customer-driven philosophy

  • Goal is enhanced value

  • Two roles

    • Communicator of customer demand

    • Manager of the physical flow process


Channel specialists adjust discrepancies with regrouping activities

Accumulating

Bulk-Breaking

Assorting

Channel Specialists Adjust Discrepancies with Regrouping Activities

Accumulating

(EGGS)

Allocating

or

Bulk-Breaking

QUANTITY

Heterogeneity

Sorting

(Grading Oranges)

Assorting

(Winn Dixie)

ASSORTMENT


Channel specialists increase contact efficiencies
Channel Specialists Increase Contact Efficiencies

Multiplicative

Rock Fan

Pioneer

Pop Fan

Classical Fan

JVC

"Dr. E"

Country Fan

Magnavox

Reggae Fan

New Age Fan

Sony

Rap Fan


Channel specialists increase contact efficiencies1
Channel Specialists Increase Contact Efficiencies

Rock Fan

Pioneer

Pop Fan

Classical

JVC

Dapper

Dan’s

Stereos

"Dr. E"

Country Fan

Magnavox

Reggae Fan

New Age Fan

Sony

Rap Fan

Additive


Channel intermediaries

Retailers

Take Title to Goods

Merchant

Wholesalers

Take Title to Goods

Agents

and

Brokers

Do NOT Take Title to Goods

Channel Intermediaries


Factors suggesting type of wholesaling intermediary to use
Factors Suggesting Type of Wholesaling Intermediary to Use


Types of marketing channels channels for consumer products
Types of Marketing ChannelsChannels for Consumer Products

Direct Channel

TRADITIONAL


Types of marketing channels channels for industrial products
Types of Marketing ChannelsChannels for Industrial Products


Channel strategy decisions
CHANNEL STRATEGY DECISIONS

Market exposure – optimal

Selection of a Marketing Channel

Intensity of

Distribution

Management of

Relationships


Intensity of market coverage
Intensity of Market Coverage

Intensive

Distribution

Sell it where they buy it!


Intensity of market coverage1
Intensity of Market Coverage

Limited #;

Enables price control

Selective

Distribution

Sell it where it sells best!


Intensity of market coverage2
Intensity of Market Coverage

Exclusive

Distribution

Extreme case of Selective

Distribution. UNIQUE Positioning.


Channel conflicts inequitable relationships

Pepsi-Cola

Coca-Cola

Pepsi-Cola bottler

Coca-Cola bottler

Kroger supermarket

Publix supermarket

Channel Conflicts (Inequitable Relationships)


Manufacturer

Retailer

Distributor

Consumers

Vertical


Retailer

Retailer

Retailer

Retailer

Distributor

Horizontal



Introduction
Introduction

Retailer

  • An intermediary involved in selling goods and services to ultimate consumers

Wholesaler

  • An intermediary that takes title to the goods it handles and redistributes them to retailers, other distributors, and sometimes end consumers


Strategic implications retail marketing strategy
STRATEGIC IMPLICATIONS: RETAIL MARKETING STRATEGY

  • A retailer develops a marketing strategy based on the firm’s goals and strategic plans

  • Two fundamental steps:

    • Picking a target market: size and profit potential. POSITION.

    • Developing a retailing mix to satisfy the chosen target market

      • 4Ps + Personnel & Presentation used to create a retail image


The retailing mix

Product

Personnel

Place

TargetMarket

Presentation

Promotion

Price

The Retailing Mix


Choosing the merchandising mix
Choosing the Merchandising Mix

The mix of products offered to the consumer by the retailer; also called the product assortmentor merchandise mix.


Merchandising product strategy
Merchandising (Product) Strategy

  • Category management: Retailing strategy which views each product category as an individual profit center.

  • Slotting Allowances: lump-sum payments by manufacturers for stocking new products. (Also includes pay-to-stay allowances.)

  • Scrambled Merchandising: Combining dissimilar product lines to boost sales volume. (Diversity in merchandising).

  • Growth of Store brands – Battle for shelf space


Business 2 0 2005
Business 2.0 (2005)

  • 'Today every major U.S. consumer-packaged-goods retailer, from Albertson's to Petsmart practices category management. Even at Kmart, Target and Wal-Mart, what you see on the shelves is largely the result of recommendations by category captains like Gillette, Nestle Purina and SC Johnson.' "


Conwood v ustc
Conwood V. USTC

  • A $1.05 billion antitrust award against the United States Tobacco Co. in favor of Conwood Co.

  • Conwood filed the suit alleging that United States Tobacco unfairly dominated the smokeless tobacco industry through its category captain arrangements.

  • It also marked the first time an appeals court condemned as an antitrust violation a system that gives a company some control over merchandise displays of its own and competitors' products.


Presentation of the retail store atmosphere
Presentation of the Retail Store - Atmosphere

The overall impression conveyed by a store’s physical layout, décor, and surroundings.

Five Senses.


Atmospherics
Atmospherics

  • Five Senses

    • Sight - darker colors are more intense!

    • Sound - potato chips; packaged in crinkling bags.

    • Feel – texture, temperatures.

    • Taste

    • Smell –

      • developing a new car smell for used car dealers

      • a fresh-baked cookie air treatment product for Realtors to use when showing homes

      • fresh bread aerosols for markets

      • malls putting pizza aroma through air ducts to draw people to food courts


Sexy smells
Sexy Smells

  • Smell and Taste Treatment and Research Foundation, Chicago

    • Dr. Alan Hirsch

  • What odors make people happy?

  • Subjected volunteers to various odors while measuring blood flow.


Personnel and customer service

Two Common

SellingTechniques

Trading Up

Suggestion Selling

Personnel and Customer Service


Retail prices
Retail Prices

Low Price

High Price

Quality

Image

Good ValueSingle Price PointEDLP


Pricing strategy
Pricing Strategy

  • EDLP – Everyday Low Pricing

  • Markup – amount added to a retailer’s cost

  • Gross margin


Gross margin
Gross Margin

The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.


High margins low margins
High Margins Low Margins

HIGH

INVENTORY TURNOVER

LOW

Profitability of a Retailer


Classification of retail operations
Classification of Retail Operations

Level of Service

Product Assortment

Price


Major types of retail operations
Major Types of Retail Operations

Department Stores

Wide variety. J.C Penney, Macy’s

Given type of merchandise.

The Children’s Place

Specialty Stores

Compete on low prices,

high turnover.

Discount Stores

Convenience Stores

Miniature supermarkets

Supermarkets

Large, self service, specialize in food.

Publix.


Categories of discount stores mass merchandising strategies

Full-LineDiscounters

Low prices, broad assortment, self service, branded goods; Wal-Mart

Specialty Discount Stores

Niche, often single line. Best Buy, Staples

WarehouseClubs

Limited selection, bulk, members only. Costco, Sam’s Club

Off-PriceDiscount Retailers

At least 25% discount, irregular merchandise. T.J. Maxx, Ross

Categories of Discount Stores (Mass merchandising strategies)


Wheel of retailing
Wheel of Retailing

  • Newer, low-price types of retailing arise to challenge older established “bigger” retailers.


Wheel of retailing1
Wheel of Retailing

3

Motel

+ Free Breakfast+ HBO

Motel

+ Free Breakfast+ HBO

+ Happy Hour

4

2

New Entrant

Motel

+ Free Breakfast

1

No Frills Motel

a theory to explain the institutional changes


Wheel of retailing2
Wheel of Retailing

  • Newer, low-price types of retailing arise to challenge older established “bigger” retailers.


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