MM-CH-6-Organisation for Marketing.

7/30/2019 MM-CH-6-Organisation for Marketing.

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Chapter :- 6

Organization for Marketing


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What is a Marketing Channel?

A marketing channel system is the particular set ofinterdependent organizations involved in the processof making a product or service available for use or

consumption.

Interdependent organizations involved in the

process of making a product available for use


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Channels and

Marketing Decisions

A push strategyuses the manufacturerssales force, trade promotion money, andother means to induce intermediaries to carry,

promote, and sell the product to end users. A pull strategy uses advertising, promotion,

and other forms of communication topersuade consumers to demand the product

from intermediaries.


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Categories of Buyers

Habitual shoppers High value deal seekers

Variety-loving shoppers

High involvement shoppers


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Advantages of using intermediaries

The use of intermediaries bring greater efficiency inmaking goods available to target markets

They match the supply with the demand.

They reduce the amount of work that must be done

by both producers and consumers.


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Distribution Channel Functions

A distribution channel moves goods from producers toconsumers. Therefore they;

give information about the product and consumers

promote the offer

contact with the consumers

match the offer with the consumers needs

negotiate with the buyers about the price and offer

physically distribute (transport) the product

may finance the manufacturer to cover the costs of the channel

work therefore may take risk.


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Channel levels

Zero- level channel One-level channel

Two level channel


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Consumer and Business Channels


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Designing a

Marketing Channel System

Analyze customer needs

Evaluate major channel alternatives

Identify major channel alternatives

Establish channel objectives


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Channel Service Outputs

Lot size

Waiting/delivery time

Spatial convenience

Product variety

Service backup


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Identifying Channel Alternatives

Types of

intermediaries

Number of

intermediaries

Terms and

responsibilities


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Number of Intermediaries

Intensive distribution

Exclusive distribution

Selective distribution


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Number of Marketing Intermediaries

Companies must also determine the number

of channel members to use. There are threestrategies; intensive distribution; is a strategy in which

companies stock their products in as many outletsas possible. Convenience products and common

raw materials must be available where and whenconsumers want them e.g. toothpaste, candyProcter & Gamble, Coca-Cola distributes itsproducts in this way. Here, the advantages aremaximum brand exposure and consumer

convenience. exclusive distribution; is a strategy (opposite to

intensive distribution) in which the producer givesonly a limited number of dealers the exclusive rightto


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distribute its products in their territories. Often found

in new automobiles and prestige womens clothing

e.g. Rolls-Royce. Here, the advantages are

establishing image and getting higher markups.

selective distribution; (is between intensive andexclusive distribution) is a strategy in which the

company uses more than one but fewer than all of

the intermediaries. Most television, furniture brandsare distributed in this way. Here, the advantages

are; it provides good market coverage with more

control and less cost than intensive distribution + it

does not spread its efforts over many outlets as inintensive distribution.


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Evaluating the Major Alternatives

In order to select the channel that satisfy thecompany objectives in the best way, each

alternative should be evaluated by using;

economic criteria; the company compares the

projected profits and costs of each channel. control issues; the company prefers to keep the

channel where it has the highest control.

adaptive criteria; the company prefers to keepthe channel which is the most flexible to the

changing marketing environment.


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Channel-Management Decisions

Selecting channel members

Training channel members

Motivating channel members

Evaluating channel members

Modifying channel members


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What is Retailing?

Retailing includes all the activities involved in sellinggoods or services directly to final consumers forpersonal, nonbusiness use.

Retailer

Business whose sales come primarily from retailing.


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Table 16.1 Major Retailer Types

Specialty store

Department store

Supermarket Convenience store

Discount store

Off-price retailer

Superstore Catalog showroom


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Specialty stores Narrow product lines with deep assortments

Department stores Wide variety of product lines

Supermarkets Convenience stores

Limited line

Superstores Food, nonfood, and services

Category killers Giant specialty stores


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Discount stores Low margins are offset by high volume

Off-price retailers Independent off-price retailers

TJ Maxx, Marshalls

Factory outlets

Levi Strauss, Reebok

Warehouse clubs

Sams Club, Costco


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Levels of Retail Service

Amount of service

Product lines

Relative prices Organizational approach

Self-service retailers Customers are willing to self-

serve to save money

Convenience stores and fastmoving shopping goods

Limited-service retailers Most department stores

Full-service retailers Salespeople assist customers

in every aspect of shoppingexperience

High-end department storesand specialty stores

Retailers Are

Classified By:


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Non- Store Retailers

Automatic Vending Machines-They are coinedoperated machines & most likely to be found in high

density of consumer traffic. (ATM)

Direct Selling-Selling personally door to door. ( Amway)

Buying Services-A Store less retailer serving specific

client groups, usually employees of large organizations

like companies, governments, hospitals etc


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Retailers Marketing Decisions

Target market

Product assortment

Procurement

Prices

Services


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Retailers Marketing Decisions (cont.)

Store atmosphere

Store activities

Communications

Locations


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Retailer Services Mix

Prepurchase services

Postpurchase services

Ancillary services


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What is a Franchising System?

A franchising system is a system of individualfranchisees, a tightly knit group of enterprises whosesystematic operations are planned, directed, and

controlled by the operations franchisor.


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Characteristics of Franchises

The franchisor owns a trade or service mark and

licenses it to franchisees in return for royalty

payments

The franchisee pays for the right to be part of the

system The franchisor provides its franchisees with a system

for doing business


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Changes in the

Retail Environment

New retail forms and combinations

Growth of intertype competition

Competition between store-based and non-store-based retailing

Growth of giant retailers Decline of middle market retailers

Growing investment in technology

Global profile of major retailers


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Private Label Brands

Private labels are ubiquitous

Consumers accepts private labels

Private-label buyers come from all

socioeconomic strata Private labels are not a recessionary

phenomenon

Consumer loyalty shifts from manufacturers to

retailers


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Organized rural retailing

Rural retail has a large potential Traditionally rural retail was done by local traders

Some companies have entered organized rural retail

Hariyali Kissan Bazaar, is a pioneer in new format

rural retailing

Chaupal Sagar by ITC acts as a collection centre as

well as retail outlet


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Definitions

Wholeselling

All activities involved in selling goods and services to

those buying for resale or business use.

Wholesaler

A firm engaged primarily in wholesaling activity.


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Wholesaling

Wholesalers add value by performing thefollowing functions: Selling and promoting Buying and assortment building Bulk-breaking

Warehousing Transportation Financing Risk bearing Market information Management services and advice


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Wholesaling

Merchant Wholesalers

Brokers and Agents

Manufacturers and

retailers branches and

offices

Full-service wholesalers

Wholesale merchants

Industrial distributors

Limited-service wholesalers

Cash-and-carry wholesalers

Truck wholesalers (jobbers)

Drop shippers

Rack jobbers

Producers cooperatives Mail-order wholesalers

Types ofWholesalers


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Wholesaling


Brokers and Agents

Manufacturers and

retailers branches andoffices

Brokers and agents do not

take title of the goods.

Brokers

Bring buyers and sellers

together and assist in

negotiation

Agents

Manufacturers agents

Selling agents

Purchasing agents

Commission merchants

Types ofWholesalers


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Wholesaling


Brokers and Agents

Manufacturers and

retailers branches andoffices

Sales branches and offices

Branches carry inventory:lumber, auto equipment, parts

Offices do not carry inventory:dry goods

Purchasing officers

Perform roles similar to brokersand agents; however, theseindividuals are employees of

the organization

Types ofWholesalers


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Wholesaling

Wholesaler Marketing Decisions Target market and positioning

Targeting may be made on the basis of size of customer, type of

retailer, need for service

Marketing mix decisions

Product and service assortment

Pricing: usually markup standard percent

Promotion: largely disorganized and unplanned

Place: location, facilities


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International Marketing


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What is a Global Firm?

A global firm is one that operates in more than onecountry and captures R&D, production, logistical,

marketing, and financial advantages in its costs and

reputation that are not available to purely domestic

competitors.


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Table 21.2 Global Marketing

Advantages

Economies of scale

Lower marketing costs

Power and scope

Consistency in brand

image

Ability to leverage

Uniformity of marketingpractices

Disadvantages

Differences in consumer

needs, wants, usage

patterns

Differences in consumer

response to marketing mix

Differences in brand

development process

Differences in

environment


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Major Decisions in

International Marketing (details are ahead)

Deciding whether to go

Deciding which markets to enter

Deciding how to enter

Deciding on the

marketing program

Deciding on the

marketing organization

D idi hi h k t t t


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Deciding which markets to enter

How many Markets to enter

Developed versus developing Markets


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Regional Free Trade Zones

European Union

NAFTA

MERCOSUL

APEC ASEAN

SAFTA


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P d t


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Product :

1. Straight extension

2. Product adaptation

Communication :

1.Communication adaption

2.Dual adaption

Price :-1. Set a uniform price everywhere

2. Set a market based price in each country

3.Set a cost based price in each country


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Distribution Channels


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Key Developing Markets

Brazil

Russia

India

China

South Africa


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What is a Gray Market?

A gray market consists of branded products divertedfrom normal or authorized distributions channels in

the country of product origin or cross international

borders; dealers in lower priced countries sell

products in higher priced countries.


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What is Organizational Buying?

MM/M2/SS

Organizational buying refers to thedecision-making process by which formal

organizations establish the need for purchased

products and services, and identify, evaluate,

and choose among alternative brands and

suppliers.


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Copyright 2009 DorlingKindersley (India) Pvt. Ltd.

Basic Marketing Control Process

What do we want to achieve?

What is happening?

Why is it happening?

What should we do about it?


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Types of Marketing Control

Annual plan control

Profitability control

Efficiency control

Strategic control


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Approaches to Annual Plan Control

Sales analysis

Market share analysis

Sales-to-expense ratios

Financial analysis

Market-based scorecard analysis


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Marketing Profitability Analysis

Step 1: Identify functional expenses

Step 2: Assign functional expenses to marketing

entities

Step 3: Prepare a profit-and-loss statement for each

marketing entity Profitability by:

Product

Territory

Customer Segment

Order Size

Measures Tracked for


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Measures Tracked for

Efficiency Control

Efficiency of

Sales Force

Advertising

Sales Promotion

Distribution


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What is a Marketing Audit?

A marketing audit is a comprehensive,systematic, independent, periodic examination of

a companys or business units marketingenvironment, objectives, strategies, and activities

with a view to determining problem areas and

opportunities, and recommending a plan ofaction to improve the companys marketing

performance.

Characteristics of


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Characteristics of

Marketing Audits

Comprehensive

Systematic

Independent

Periodic


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Components of Marketing Audit

Microenvironment Demographic

Economic

Environment Technological

Political

Cultural


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Task Environment Markets

Customer

Competitor Distribution & Dealers

Suppliers

Facilitators & Marketing ServiceProviders

Publics


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Marketing Strategy Audit Business Mission

Marketing objectives & Goals

Strategy

Marketing Organization Audit

Formal Structure

Functional Efficiency

Interface Efficiency


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Marketing Productivity Audit Profitability Analysis

Cost-Effectiveness Analysis

Marketing Function Audit (4 / 7 Ps)

Product

Price

Distribution

Marketing Communication

Sales Force

MM-CH-6-Organisation for Marketing.

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