Chapter 16 Direct Selling & Direct Marketing Channel Systems.
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Transcript of Chapter 16 Direct Selling & Direct Marketing Channel Systems.
Alternative ChannelsAlternative Channels1166
Objective 1:
Growing in importance
1. Direct Selling
2. Direct Marketing
Growing in importance
1. Direct Selling
2. Direct Marketing
1616Direct SellingDirect Selling
Objective 2:
Direct selling is the sale of a consumer product or service person-to-person, away from a fixed retail location
Three key points:
• Goes directly to consumers’ homes, offices, or other locations• Concerned with the sale of consumer products in
consumer markets rather than industrial products in industrial markets
• Involves salespeople meeting fact-to-face with customers
1616Structure & Trends Structure & Trends in Direct Sellingin Direct Selling
Objective 3:
Markets Served
Types of Products Sold
Firms Involved in Direct Selling
Problems & Prospects for Direct Selling
1616Markets ServedMarkets Served
Location Percent of Sales
Home 64.4
Telephone 14.7
Workplace 8.7
Internet 5.5
Temporary locations 4.1
Other 2.6
Location of Direct Selling Channel Sales, 2001
1616Types of Products SoldTypes of Products Sold
Product Category Percent of Total Sales
Personal Care Products 26.4
Home/Family Care
Products
33.7
Leisure/Educational
Products
6.5
Services/Miscellaneous/
Other
33.4
Major Product Categories Sold through Direct SellingChannels as a Percentage of Total Sales
1616Firms Involved in Direct SellingFirms Involved in Direct Selling
• Hundreds exist• Range in size from those with annual
sales over $1 billion to those with sales well under $1 million
• Tupperware Corp.• Avon Products, Inc.• Worldbook, Inc.• Amway Corporation
Facts
Examples
Problems & ProspectsProblems & Prospectsfor Direct Sellingfor Direct Selling
1616
1. Many potential customers lack an awarenessof direct selling as an alternative.
2. A significant portion of potential customers havea negative impression of direct selling in general.
3. There is a lower availability of consumers for at-homesales calls and parties.
4. The perceived risk indicated by consumers towardbuying products through direct sales in the home is high compared to other modes of shopping.
5. Recruitment of salespeople has become more difficult.
1616Rationale for DesigningRationale for DesigningDirect Selling ChannelsDirect Selling Channels
Objective 4:
A method of distribution for providing products & services to customers
The decision to choose the direct selling channel or some other
channel should be based on an objective analysis of the advantages or
disadvantages of each channel alternative.
But:
1616Categories of VariablesCategories of Variables
1) Market variables & the direct selling channel
2) Product variables & the direct sellingchannel
3) Company variables & the direct selling channel
4) Intermediary variables & the direct selling channel
5) Environmental variables & the direct selling channel
6) Behavioral variables & the direct selling channel
1616Market VariablesMarket Variables
Developments in consumer attitudes & behaviorsthat could make direct selling more attractive:
1.Increasing numbers of consumers have less
time available for shoppingin traditional stores.
2. Consumers are becoming more sophisticated
& demanding more & better product information.
3. Consumers are seekingincreased convenience
in all spheres of their lives,including shopping.
1616Product VariablesProduct Variables
Products that are high quality, that are unique, orthat require specialized information & advice are logical
choices for direct selling:
Product quality may become apparent only when consumers
are informed about themin conjunction with hands-on
demonstrations.
Product uniqueness may become apparent only throughthe direct help of salespeople.
Consumer satisfaction maydepend on whether the consumer has proper
information.
Basic variables to consider:
1616
2.Financial capacityof the company
Company VariablesCompany Variables
3. Managerial expertise
in distribution
1.Size of the company
4.Basic objectives &
policies of the company
1616Intermediary VariablesIntermediary Variables
Basic intermediary variables to consider:
1.
Availability ofalternatives
2.
Cost of using channelalternatives
3.Services that
alternatives arecapable of or
willing to provide
Environmental VariablesEnvironmental Variables1166
Major categories:
1.Economic
5.Legal
4.Technological
3.Sociocultural
2.Competitive
1166
The “people” side of the marketing channel:
Conflict Communicationsprocesses
RolePower
Behavioral VariablesBehavioral Variables
Direct MarketingDirect Marketing1166
Objective 5:
An interactive system of marketing that usesmore advertising media to effect a measurable
response and/or transaction at any location
Key Points:
1. Direct marketing is a system or an approach to marketing.
2. Direct marketing relies on one or a combination of advertising media to inform and stimulate customer purchase responses.
3. Direct marketing includes the ability to measure responses.
Key Points:
1. Direct marketing is a system or an approach to marketing.
2. Direct marketing relies on one or a combination of advertising media to inform and stimulate customer purchase responses.
3. Direct marketing includes the ability to measure responses.
Structure & Trends Structure & Trends in Direct Marketingin Direct Marketing
1166
Objective 6:
Challenges
Estimating total sales is tricky because various estimates often include different categories
of products and/or services as well as different market segments
Some sales data may be included or excluded that may or may not
cover direct marketing sales
1616Structure & TrendsStructure & Trendsin Direct Marketingin Direct Marketing
Markets Served Firms are increasingly targeting affluent customers
Types of
Products Sold
Apparel, sporting goods, consumer electronics, books, records, gourmet foods, insurance, etc.
Firms Involved Many are well-known retailers or manufacturers that supplement their conventional methods
Problems &
Prospects
Potential customers cannot examine or touch product; high operating costs; low response rates; intense competition;
image problem
1616Rationale for Designing aRationale for Designing aDirect Marketing ChannelDirect Marketing Channel
Objective 7:
One of several alternative marketing channel structures
When deciding whether to use direct marketing, direct selling, conventional retail,
or some combination of these, the channel manager should apply
objective analysis of relevant variables & circumstances.
But:
1616Categories of VariablesCategories of Variables
1) Market variables & the direct marketing channel
2) Product variables & the direct marketing channel
3) Company variables & the direct marketing channel
4) Intermediary variables & the direct marketing channel
5) Environmental variables & the direct marketing channel
6) Behavioral variables & the direct marketing channel