Principles of Marketing Place (Distribution)
Why intermediaries? • System-wide efficiency • Functional specialization • Management of discrepancies: • Discrepancy of Quantity • Discrepancy of Assortment
Discrepancy of Quantity • Production Efficiency • Transportation Efficiency
Discrepancy of Assortment • Producers specialize • Consumers generalize • Direct contact is expensive • Intermediaries offer value through assortments
Analyzing Consumer Service Needs Setting Channel Objectives & Constraints Identifying Major Alternatives Channel Design Decisions Evaluating the Major Alternatives Designing International Distribution Channels Intensive Distribution Exclusive Distribution Selective Distribution
Channel Conflict Sources of channel conflict • Goals • Product line strategies • Inherent channel design • Length • Variety • Density
Managing Channel Conflict Design Choice Power and Dependency Management Vertical integration
Nature and Importance of Marketing Logistics • Product, customers, place, time. • Companies today place greater emphasis on logistics because: • service and satisfaction • cost • product variety • information technology
Goals of the Logistics System Higher Distribution Costs; Higher Customer Service Levels • Goal: • To Provide a Targeted Level of Customer Service • at the Least Cost. Maximize Profits, Not Sales Lower Distribution Costs; Lower Customer Service Levels
Major Logistics Functions Order Processing Received Processed Shipped Materials Handling Loading/Unloading Fulfillment Logistics Functions Warehousing Storage Distribution Automated Transportation Rail, Truck, Water, Pipeline, Air, Intermodal Inventory When to order How much to order Just-in-time
Customer Service • Speed of delivery • Dependability of delivery • Accuracy of shipment • Safety of shipment Strategic Decision • Segmentation variable
Most Mass Marketing Involves One-Way Communications Aimed At Consumers. Direct Marketing Involves Two-Way Interactions With Customers. Mass Marketing and Direct Marketing
Benefits and Growth of Direct Marketing Convenient Consumer Relationship Building Buyers Benefits Sellers Benefits Easy & Private Reduces Costs Product Access & Selection Increases Speed & Efficiency Abundance of Information Provides Flexibility Global Medium Interactive & Immediate
Mass Marketing Vs. One-to-One Marketing (Tab. 17.1) Mass Marketing One-to-One Marketing Average Consumer Individual Customer Customer Anonymity Customer Profile Standard Product Customized Market Offering Mass Production Customized Production Mass Distribution Individualized Distribution Individualized Message Mass Advertising Individualized Incentives Mass Promotion Two-Way Messages One-Way Message Economies of Scope Economies of Scale Share of Mind Share of Customer All Customers Profitable Customers Customer Attraction Customer Retention
Customer Databases • Customer Databases are an Organized Collection of Comprehensive Data About Individual Customers or Prospects Including: • Geographic, • Demographic, • Psychographic, and • Behavioral Data.
Database Marketing Identifying Prospects Database Marketing is the Process of Building, Maintaining, and Using Customer Databases and Other Databases for the Purposes of Contacting and Transacting With Customers. How Companies Use Their Databases: Deciding Which Customers Should Receive a Particular Offer Deepening Customer Loyalty Reactivating Customer Purchases
Forms of Direct Marketing Face-to-Face Selling Online Marketing Telemarketing Kiosk Marketing Direct Mail Direct-Response TV Marketing Catalog
What to put on the Web Page • Cues • Predictive power: ability to predict quality • Confidence: consumer understanding • What do consumers want in a website? • High confidence: free shipping, credit cards accepted, “professional look,” product brand and information • Low confidence: celebrity endorsers, company history, 3rd party ratings • High predictivity: easy returns, free shipping, product brand and information, shipment tracking • Low predictivity: celebrities, company history, street address, radio/tv/print ads. • Best: free shipping, credit cards accepted, product brand and information, easy returns.
Limited Consumer Exposure and Buying Skewed User Demographics and Psychographics Promise and Challenge of Online Marketing Chaos and Clutter Security Ethical Concerns
E-mail • Spam • Consumers • ISPs • E-mail ads • E-commerce • Employers
Responses to Spam • Laissez faire • Technology • Third-party • Legislation • Permission schemes • Implicit (opt-out) • Deceptive (hidden box trick) • Permission “creep” • Permanence?
Ideal E-mail Permission • Explicit process • Verification • Relationship • Consumer access • Consumer control • Frictionless exit