| Marketing |
| Key concepts |
Product / Pricing / Promotion |
| Promotional content |
Advertising / Branding |
| Promotional media |
Printing / Publication / Broadcasting |
Distribution (or placement) is one of the four aspects of marketing. In popular usage "marketing" is the promotion of products especially Advertising and Branding However in professional usage the term has a wider meaning of Product marketing deals with the first of the "4P"'s of Marketing, which are Product, Pricing, Place, and Promotion. Pricing is one of the Four p's of the Marketing mix. The other three aspects are product promotion and place. Promotion involves disseminating information about a product, Product line, Brand, or company A service is the non-material equivalent of a good. A service provision is an economic activity that does not result in Ownership, and this is what differentiates Brand management is the application of Marketing techniques to a specific product, Product line, or Brand. Marketing effectiveness is the quality of how marketers go to market with the goal of optimizing their spending to achieve good results for both the short-term and long-term Market research is the process of systematically gathering recording and analyzing data and information about Customers, Competitors and the Market A marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive Marketing management is a Business discipline focused on the practical application of marketing techniques and the Management of a firm's marketing resources Market dominance is a measure of the strength of a Brand, product, service, or firm, relative to competitive offerings Advertising is a form of Communication that typically attempts to persuade potential Customers to Purchase or to consume more of a particular Brand A brand is a collection of Images and ideas representing an economic producer more specifically it refers to the descriptive verbal attributes and concrete symbols such as a Direct marketing is a sub-discipline and type of Marketing. There are two main definitional characteristics which distinguish it from other types of marketing Product placement, or embedded marketing, is a type of Advertising, in which promotional Advertisements placed by marketers using Public relations (PR is the practice of managing the flow of Information between an Organization and its Publics Public relations - often referred Publicity is the deliberate attempt to manage the public's perception of a subject Sales promotion is one of the four aspects of Promotional mix. An underwriting spot is an announcement made on Public broadcasting outlets especially in the United States in exchange for funding Printing is a process for reproducing text and image typically with ink on Paper using a printing press To publish is to make content Publicly known. The term is most frequently applied to the distribution of text or images on paper or to the placing of content For the band see Broadcast (band Broadcasting is the distribution of audio and/or Video signals which transmit Out-of-home advertising (also referred to as OOH) is essentially any type of Advertising that reaches the consumer while he or she is outside the home (or office Internet marketing, also referred to as web marketing, online marketing, Internet advertising, or eMarketing, is the Marketing A point-of-sale display (POS is a specialized form of Sales promotion that is found near on or next to a checkout counter (the "point of sale" Promotional items or promotional products refers to articles of merchandise that are used in marketing and communication programs Digital Marketing is the practice of promoting products and services using digital distribution channels to reach consumers in a timely relevant personal and cost-effective manner In-game advertising ( IGA) refers to the use of Computer and video games as a medium in which to deliver Advertising. Word of mouth, is a reference to the passing of Information by verbal means especially recommendations but also general information in an informal person-to-person In popular usage "marketing" is the promotion of products especially Advertising and Branding However in professional usage the term has a wider meaning of A distributor is the middleman between the manufacturer and retailer. Middle Man is an Album by Boz Scaggs released on Columbia Records in 1980 After a product is manufactured, it may be warehoused or shipped to the next echelon in the supply chain, typically either a distributor, retailer or consumer. A supply chain or logistics network is the system of organizations people technology activities information and resources involved in moving a product or service from
The other three parts of the marketing mix are product management, pricing, and promotion. The marketing mix is generally accepted as the use and specification of 'the four Ps' describing the strategic position of a product in the Marketplace. Product management is an organizational function within a company dealing with the planning or marketing of a product or products at all stages of the Product lifecycle. Pricing is one of the Four p's of the Marketing mix. The other three aspects are product promotion and place. Promotion involves disseminating information about a product, Product line, Brand, or company
Contents |
The distribution channel
Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel. ' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.
Channels
A number of alternate 'channels' of distribution may be available:
- Selling direct, such as via mail order, Internet and telephone sales
- Agent, who typically sells direct on behalf of the producer
- Distributor (also called wholesaler), who sells to retailers
- Retailer (also called dealer or reseller), who sells to end customers
- Advertisement typically used for consumption goods
Distribution channels may not be restricted to physical products alone. A reseller is a company or individual that purchases goods or services with the intention of reselling them rather than consuming or using them They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc.
There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. Franchising refers to the methods of practicing and using another person's Philosophy of business. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas.
Channel members
Distribution channels can thus have a number of levels. Kotler defined the simplest level, that of direct contact with no intermediaries involved, as the 'zero-level' channel.
The next level, the 'one-level' channel, features just one intermediary; in consumer goods a retailer, for industrial goods a distributor. In small markets (such as small countries) it is practical to reach the whole market using just one- and zero-level channels.
In large markets (such as larger countries) a second level, a wholesaler for example, is now mainly used to extend distribution to the large number of small, neighborhood retailers.
In Japan the chain of distribution is often complex and further levels are used, even for the simplest of consumer goods.
In Bangladesh Telecom Operators are using different Chains of Distribution, especially 'second level'.
In IT and Telecom industry levels are named "tiers". A one tier channel means that vendors IT product manufacturers (or software publishers) work directly with the dealers. Information technology ( IT) as defined by the Information Technology Association of America (ITAA is "the study design development implementation support A one tier / two tier channel means that vendors work directly with dealers and with distributors who sell to dealers. But the most important is the distributor or wholesaler.
The internal market
Many of the marketing principles and techniques which are applied to the external customers of an organization can be just as effectively applied to each subsidiary's, or each department's, 'internal' customers.
In some parts of certain organizations this may in fact be formalized, as goods are transferred between separate parts of the organization at a `transfer price'. To all intents and purposes, with the possible exception of the pricing mechanism itself, this process can and should be viewed as a normal buyer-seller relationship. The fact that this is a captive market, resulting in a `monopoly price', should not discourage the participants from employing marketing techniques. Captive markets are Markets where the potential Consumers face a severely limited amount of competitive Suppliers; their only choices are to purchase
Less obvious, but just as practical, is the use of `marketing' by service and administrative departments; to optimize their contribution to their `customers' (the rest of the organization in general, and those parts of it which deal directly with them in particular). In all of this, the lessons of the non-profit organizations, in dealing with their clients, offer a very useful parallel.
Channel Decisions
- Channel strategy
- Product (or service)<>Cost<>Consumer location
Channel management
The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods manufacturers could never justify the cost of selling direct to their consumers, except by mail order. In practice, if the producer is large enough, the use of intermediaries (particularly at the agent and wholesaler level) can sometimes cost more than going direct.
Many of the theoretical arguments about channels therefore revolve around cost. On the other hand, most of the practical decisions are concerned with control of the consumer. The small company has no alternative but to use intermediaries, often several layers of them, but large companies 'do' have the choice.
However, many suppliers seem to assume that once their product has been sold into the channel, into the beginning of the distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if he has any aspirations to be market-oriented, his job should really be extended to managing, albeit very indirectly, all the processes involved in that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of the supplier:
- Channel membership
- Channel motivation
- Monitoring and managing channels
Channel membership
- Intensive distribution - Where the majority of resellers stock the 'product' (with convenience products, for example, and particularly the brand leaders in consumer goods markets) price competition may be evident.
- Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product.
- Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'. Often this form of distribution stipulates the contracted resellers cannot offer competing products.
Channel motivation
It is difficult enough to motivate direct employees to provide the necessary sales and service support. Motivating the owners and employees of the independent organizations in a distribution chain requires even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is `incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a competition is offered to the distributors' sales personnel, so that they are tempted to push the product. At the other end of the spectrum is the almost symbiotic relationship that the all too rare supplier in the computer field develops with its agents; where the agent's personnel, support as well as sales, are trained to almost the same standard as the supplier's own staff.
Monitoring and managing channels
In much the same way that the organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain.
In practice, many organizations use a mix of different channels; in particular, they may complement a direct salesforce, calling on the larger accounts, with agents, covering the smaller customers and prospects.
Vertical marketing
This relatively recent development integrates the channel with the original supplier - producer, wholesalers and retailers working in one unified system. This may arise because one member of the chain owns the other elements (often called `corporate systems integration'); a supplier owning its own retail outlets, this being 'forward' integration. It is perhaps more likely that a retailer will own its own suppliers, this being 'backward' integration. (For example, MFI, the furniture retailer, owns Hygena which makes its kitchen and bedroom units. ) The integration can also be by franchise (such as that offered by McDonald's hamburgers and Benetton clothes) or simple co-operation (in the way that Marks & Spencer co-operates with its suppliers).
Alternative approaches are 'contractual systems', often led by a wholesale or retail co-operative, and `administered marketing systems' where one (dominant) member of the distribution chain uses its position to co-ordinate the other members' activities. This has traditionally been the form led by manufacturers.
The intention of vertical marketing is to give all those involved (and particularly the supplier at one end, and the retailer at the other) 'control' over the distribution chain. This removes one set of variables from the marketing equations.
Other research indicates that vertical integration is a strategy which is best pursued at the mature stage of the market (or product). At earlier stages it can actually reduce profits. It is arguable that it also diverts attention from the real business of the organization. Suppliers rarely excel in retail operations and, in theory, retailers should focus on their sales outlets rather than on manufacturing facilities ( Marks & Spencer, for example, very deliberately provides considerable amounts of technical assistance to its suppliers, but does not own them).
Horizontal marketing
A rather less frequent example of new approaches to channels is where two or more non-competing organizations agree on a joint venture - a joint marketing operation - because it is beyond the capacity of each individual organization alone. In general, this is less likely to revolve around marketing synergy.
References
- Louis W. Stern et al, 'Marketing Channels', (Prentice-Hall, 7th ed. ,2006)
- Richard E. Wilson, 'A Blueprint for Designing Marketing Channels', (www. chicagostrategy. com)
- P. Kotler, 'Marketing Management' (Prentice-Hall, 7th ed. , 1991)
- G. Lancaster and L. Massingham, 'Essentials of Marketing' (McGraw-Hill, 1988)
- Julian Dent, "Distribution Channels: Understanding and Managing Channels to Market" (Kogan Page, 2008)
See also
- Extended Enterprise
- Marketing
- Marketing plan
- Marketing management
- Marketing mix
- Logistics
- Liquid Logistics
- Predictive analytics
- Packaging and labelling
- Supply Chain
- Good Distribution Practice (GDP)
- All commodity volume
Specific types of distribution
- Film
- Records
- Insurance
- Electricity
- Liquids
- Laboratory
External links
In popular usage "marketing" is the promotion of products especially Advertising and Branding However in professional usage the term has a wider meaning of A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives Marketing management is a Business discipline focused on the practical application of marketing techniques and the Management of a firm's marketing resources The marketing mix is generally accepted as the use and specification of 'the four Ps' describing the strategic position of a product in the Marketplace. Logistics is the management of the flow of Goods, Information and other resources including Energy and people between the point of origin and the point Liquid Logistics is a special category of Logistics that relates to Liquid products and is utilized extensively in the "Supply Chain for Liquids" discipline Predictive analytics encompasses a variety of techniques from Statistics and Data mining that analyze current and historical data to make predictions about future Packaging is the science art and technology of enclosing or protecting products for distribution storage sale and use A supply chain or logistics network is the system of organizations people technology activities information and resources involved in moving a product or service from Good Distribution Practice or GDP deals with the guidelines for the proper distribution of medicinal products for human use All commodity volume (value (ACV represents the total annual sales volume of retailers that can be aggregated from individual store-level up to larger Geographical sets A film distributor is an independent company a Subsidiary company or occasionally an individual which acts as the final agent between a film production company The music industry is the business of Music. Although it encompasses the activity of many music-related businesses and organizations it is currently dominated by the "big Insurance, in Law and Economics, is a form of Risk management primarily used to hedge against the Risk of a contingent loss Electricity distribution is the penultimate stage in the delivery (before retail) of Electricity to end users Liquid Logistics is a special category of Logistics that relates to Liquid products and is utilized extensively in the "Supply Chain for Liquids" disciplineDapyx Software network: MP3 Explorer | Ebook Manager | Zenithic