Managing Distribution Pertemuan 20 Matakuliah: J0114/Manajemen Pemasaran Tahun: 2008
Bina Nusantara Learning Outcome Students can design a proper distribution strategy
Bina Nusantara Material Outline: Marketing channel strategy and the role of distribution Designing the marketing channel Selecting channel members Target markets and channel design strategy
Bina Nusantara Marketing Channel and The Role of Distribution Marketing channel strategy as one of the major strategic areas of marketing management, fits under the distribution variable in the marketing mix.
Bina Nusantara Designing The Marketing Channel Identify need for channel design decision: –Situations require channel design: Developing a new product or product line Aiming an existing product at a new target market. Study of new target market behaviour is necessary. Developing some changes in some other component of the marketing mix. A new product positioning requires a new design of channel member. Entering into a newly geographic market Dealing with major environmental changes. These changes may relate to technological, competitive changes.
Bina Nusantara Designing The Marketing Channel Setting and Coordinating Distribution Objectives: –In order to develop channel structure, manager should decide some goals trying to be achieved. –These goals must be in line with some other component of marketing mix, to anticipate collision among them. –These goals must be congruent with marketing and other general objectives and strategies of the firm
Bina Nusantara Designing The Marketing Channel Specifying the channel tasks: –Gathering information on target market shopping patterns –Promoting product availability in the target market –Maintaining inventory storage –Compiling information about product features Developing possible channel structures: –Number of levels in the channel –Intensity at the various levels –Types of intermediaries at each level
Bina Nusantara Selecting Channel Members Finding prospective channel members: –Customers –Advertising –Trade shows –Field sales organization Applying selection criteria: –Financial performance: What is his financial performance? Has he the ability to discount his bills? –Sales performance: Is he aggressive? How many field men has he? –Inventory performance: Which ones doesn’t he sell? –Market coverage: How far does he cover his territory with his field men? –Business management: How many inside employees has he? Does he believe in active cooperation, sales training and sales promotion? –Warehousing facilities: What is the size of his plant? –Ownership: how well established is he? –A history of stability: What is his reputation among his customers? Does he maintain stable prices? –Recommendation: Who has known him well?
Bina Nusantara Selecting Channel Members Securing the prospective channel members as actual channel members: –Prospective channel members want to know at the outset precisely “what is in it for them” if they join the manufacturer’s marketing channel. Good, profitable product line Advertising and promotional support Management assistance Fair dealing policies and good relationship
Bina Nusantara Target Markets and Channel Design Strategy Market behavior and channel design strategy: –When the market buys: weekly and daily variations in buyer behavior are common at the retail level and vary across different trade areas throughout the country and cities –Where the market buys: the types of outlets from which final buyers choose to make their purchases and the location of those outlets determine where the market buys. A great deal survey has shown that consumer is seen as engaged in a balancing desirability of near and distant retailers against the cost, time and energy that must be spent in overcoming distance
Bina Nusantara Target Markets and Channel Design Strategy How the market buys: –Large quantities versus small quantities –Self-service versus assistance by salespeople –One-stop shopping versus buying from several stores –Impulse buying versus extensive decision making prior to purchase –Using cash versus credit –Shopping at home versus shopping at stores –Expending substantial effort through comparison shopping versus little effort –Demanding extensive service versus little service
Bina Nusantara Target Markets and Channel Design Strategy Who buys: –Who makes the physical purchase: from a channel design standpoint, who actually buys the product can affect the type of retailers chosen in the consumer market and may also influence the kinds of channel members used to serve industrial market –Who takes part in the buying decisions: It is to determine whether the planned or existing channel structure will inhibit or facilitate the firm’s attempt to reach the more influential parties to buying decisions.
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Bina Nusantara Conclusions: Channel selection is a part of major effort made to maximize the role of distribution in marketing management Choosing channel structure and member must be adapted to the goals, not in a distribution term only but also in corporate term as a whole Selection criteria must be developed prior to recruiting some prospective channel members In adjusting target market with channel design, some major aspects such as market geography, market size, market density and market behavior must be taken into account.