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Marketing Chiara Mauri 9. Distribution strategy

Marketing Chiara Mauri 9. Distribution strategy. Go-to-market: overall framework. Manufacturer. Trade marketing & Salesforce management. Salesforce (Agents). Wholesaler, Distributor. Salesforce. Retailer. Retail management and economics. Visual merchandising management. Salesforce.

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Marketing Chiara Mauri 9. Distribution strategy

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  1. MarketingChiara Mauri9. Distribution strategy

  2. Go-to-market: overallframework Manufacturer Trade marketing & Salesforce management Salesforce (Agents) Wholesaler, Distributor Salesforce Retailer Retail management and economics Visual merchandising management Salesforce Purchaser (Shopper) Consumer

  3. Reasons for having a distributor From 3x3=9 to 3+3=6 contacts M C M C M C M D C M C M C

  4. Marketing functionsperformed in distributionchannels Buying Selling Sorting Stocking Allocating Assorting Negotiating Market research Delivering Financing Risk taking All these functions must be performed. The issue is who is doing what, and at which costs

  5. “Manufacturer” Sold to Kellog’s in 2012 because of distribution efficiency Cloetta’s business model is to offer strong local brands in Munchy Moments and provide effective sales and distribution to the retail trade. Together, this will ensure continued positive development of the company’s leading market positions. Value drivers Excellent availability in the retail trade with the help of a strong and effective sales and distribution organisation. European group Portfolio of brands: internally developed, bought, licensed. Local leading brands. 2nd player in the sugar confectionery market: MS=13% (1st Perfetti – MS=26%) Sales SEK 5.9 billion in 2016, ≈ 613 million € In 2017, Cloetta-Sperlari was bought by Katjes International

  6. Wholesaler Assortment of 67 brands http://www.dolciariapezzella.it/ricercabrand.aspx

  7. Anotherwholesaler From Acqua San Benedetto to Zuegg European Group ≈100 partners, hundreds of brands Brand Lekkerland (100 items) http://www.lekkerland.it/it/partner/marchi/elenco/C

  8. Retailer

  9. Store and non-store retailing Store formats Small independent stores vs chain stores Traditional stores, supermarkets, hypermarkets, Discount stores Department stores Non-store formats Catalogs and direct mail Vending machines Television home shopping Direct sales, door to door or telephone E-commerce

  10. Go-to-market  How manylevels? ? ?

  11. Importers (wholesalers) “Nassau Candy is a manufacturer, importer & distributor of specialty confections, gourmet foods & perishables.... We carry more than 10,000 items & are proud of our historical 97% percent fulfillment rate.” Bulk candy: 972 SKU Distribution Centers 300 Duffy Avenue, Hicksville, NY 1180135521 Industrial Road, Livonia, MI 481507835 Central Industrial Drive, Suite 50, Riviera Beach, FL 33404660 N. Dorothy Drive, Suite 400, Richardson, TX 7508118537 E. Gale Avenue, City of Industry, CA 91748258 Little Field Avenue, South San Francisco, CA 94080 www.nassaucandy.com

  12. … and specialized retailers «The volume isn’t there for a lot of SKU’s, so it can be hard to spend the time to import and warehouse products. ... about half of our specialty foods, gourmet kitchen tools and wines we source ourselves, and go through specialty distributors for the other half.. The real challenges are finding small businesses in other countries and shipping logistics. Logistics can be very tricky ... You have to make sure that the product goes into the right container ...»

  13. Channels of distribution Combination of institutions through which a seller markets its products to the final user. Role of intermediaries: to transform the heterogeneity of supply into meaningful and effective assortments. Intermediaries fill the gaps of time, place, and ownership that separate sellers from buyers.

  14. MANUFACTURER MANUFACTURER MANUFACTURER WHOLESALER RETAILER RETAILER CONSUMER/USER CONSUMER/USER CONSUMER/USER Conventional channels Zero-level channel = Direct channel 1-level channel: M-D-C = Short channel 2- (or +) level channel: M-W-D-C = Long channel

  15. MANUFACTURER MANUFACTURER MANUFACTURER WHOLESALER RETAILER RETAILER CONSUMER CONSUMER CONSUMER Multi-channel management Caffebueno – Brescia Sells coffee (Illy) to bar, restaurants, pizzerias

  16. Manufacturer Manufacturer Manufacturer Manufacturer Logistics providers Financial institutions Logistics providers, banks Retailer Retailer Retailer Retailer Logistics providers, banks Logistics providers Financial institutions Connsumer Consumer Consumer Consumer Flows in distribution channels • Physical flow + Title flow • Pipeline, Supply chain • LEAD TIME Payments + Information  Value chain VALUE CREATED

  17. Customer value Peck cheese specialties Cheese 0-100€ Fontina della Valle d’Aosta 26€/kg Peck cheese specialties Cheese 100-200€ Parmigiano Reggiano 4,8kg 115€ (23,90€/kg) Euro 7,12Euro 10,18 Fontina DOP 15,90€/kg Parmigiano Reggiano DOP 12,95€/kg

  18. 4 things to do • Draw the pipeline mapping • Weigth the channels in terms of volumes and revenues • Segmentchannels • Understand the valuecreated in eachchannel Then define distribution strategy

  19. Task assigned to a young graduate hired at AB InBev • AB InBevcovers the big volume outlets • Off-Trade: supermarkets & hypermarkets • On-Trade: high volume POCs(Points of contact) throughwholesalers. • Butthereis a hugechunck of small “convenienceoutlets” that are uncovered and offeropportunities in terms of: • Volume • Margin • New business • Brand

  20. Use available sources to construt a POC list • Record, analyze and segment this uncovered POC universe & analyze market opportunities • Identify a list of 10 highly significant POC’s in Milan • Hit the market with pre-prepared convenience kits for our markets: visibility, distribution, shelf/fridge share, displays

  21. Define goals and constraints Identify channel alternatives Weight the alternatives and define the channel mix Channel strategy

  22. Channel selection decision Products vary in terms of the intensity of distribution coverage they require: Intensive distribution: the manufacturer attempts to gain exposure to as many wholesalers and retailers as possible ( Coca Cola, Ferrero) Selective distribution: more than one, but less than all possible intermediaries (Illy, Venchi) Exclusive distribution: the manufacturer severely limits the distribution, and intermediaries are provided exclusive rights within a specific territory (Rolex)

  23. Conventional and vertical marketing systems Conventional channels: highly fragmented networks in which manufacturers and intermediaries negotiate every single transaction, and behave independendly. Vertical systems: channels in which members are more dependent on one another and develop long-term relationships to improve the efficiency and effectiveness of the system. M-D-R act partially or totally as a unique system. They can be manufacturer-dominated, wholesaler-dominated, or retailer-dominated.

  24. Vertical systems Selex (10.780€ billion) is a voluntary chain managed by a wholesaler Retail brands are A&O, Famila, il Gigante, .. Retailer co-op www.afstores.com Franchising organizations www.selexgc.it

  25. Horizontal systems October 6th, 2010 R. Twining and Company Ltd. signed an agreement with A. Loacker AG Spa, which operates in the wafer and chocolate specialties market. Loacker is the exclusive distributor in Italy of Twinings tea and Ovomaltina for all channels. A strategic choice to develop synergies among complementary products and to offer retailers a better service.

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