PowerPoint Presentation : Channels of distribution Factors influencing channel decisions Promotion mix Sales promotion tools UNIT IV
PowerPoint Presentation : CHANNELS OF DISTRIBUTION
MEANING : A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer MEANING
CONSUMER MARKETING CHANNELS : CONSUMER MARKETING CHANNELS Direct Indirect M W J R C ® ® ® ® M W R C ® ® M R C ® M C Channel 1 Channel 2 Channel 3 Channel 4
FUNCTIONS OF DISTRIBUTION CHANNELS : FUNCTIONS OF DISTRIBUTION CHANNELS Contact Financing Information Risk Taking Promotion Matching Negotiation Physical Distribution
CHANNEL CHOICE : CHANNEL CHOICE The decision of channel choice is “ economic criteria ” – cost & profit Other factors are:- a) PRODUCT - Perishable commodities – less channels - Durable commodities – long channels - Custom made products – direct distribution - Technical products – shortest channel
PowerPoint Presentation : b) MARKET - Consumer markets – retailers are needed - Industrial markets – retailers are eliminated - Large markets – many channels c) MIDDLEMEN - Middlemen providing marketing services & generating maximum profit will be given first preferences
PowerPoint Presentation : COMPANY - Company’s size - Company’s product mix - Company’s financial resources - Heavy advertising & sales promotion CHANNEL S I ZE MARKETING ENVIRONMENT - During recession or depression – shorter & cheaper channels COMPETITORS - Similar channels are used
CHANNEL DECISION : CHANNEL DECISION Extensive distribution - Max. no. of retail outlets - Low price of products - Immediate needs - Frequent buys Switching brands Selective distribution - Certain no. of outlets - Sales promotion - Limited no. of middlemen - After sales service - Long life of products - Brand preferences Exclusive distribution - Sole agency/ Sole distributorship - Loyal customers - Greater control over prices - After sales service
PowerPoint Presentation : FRANCHISE SELLING - Franchise is a privilege (or) exclusive right granted to a person to distribute a firms goods - The owner of the product issues a “license” to the independent dealer - Franchise agencies work as a registered organisation
MARKETING MIDDLEMEN : MARKETING MIDDLEMEN BROKERS - He is an agent who does not have direct physical possession of goods - Brokers may be individual, partnership firms or even companies - They act as agents for their clients – producers, dealers, manufacturers - They undertake all the marketing functions
PowerPoint Presentation : COMMISSION AGENTS - They are firms which buy & sell goods to other organisations - They make transactions on their own accord & risk - They finalize prices, deals, contracts & terms of condition - They are very important for the agricultural market - They work for a fee (or) commission – 3% or 5% on purchase or sales
PowerPoint Presentation : DEALERS - They are merchant dealers in the commodity market - They are middlemen in the physical & spot markets - They act as middlemen at their own risk, just to earn profit - They also act as warehouse keepers
PowerPoint Presentation : SOLE SELLING AGENTS - A well established firm may be appointed as a sole agent within a particular area - Sole agents must know the area very well & must be able to handle the given area very effectively - Sole agents are given a special commission
EVALUATION OF MARKETING MIDDLEMEN : EVALUATION OF MARKETING MIDDLEMEN PERFORMANCE MARKETING FUNCTIONS SURVIVAL COMPETITION
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PowerPoint Presentation : WHOLESALE TRADE
WHOLESALE TRADE : Wholesale trade is concerned solely with the distribution of large quantities of goods received directly from the manufacturers & sold in small quantities to retailers The wholesalers connect both the manufacturers & retailers – this is why they are called “Middlemen” WHOLESALE TRADE
WHY ARE WHOLESALERS USED? : WHY ARE WHOLESALERS USED? Functions Of Wholesalers Management Services & Advice Selling and Promoting Market Information Buying and Assortment Building Risk Bearing Bulk Breaking Transporting Financing Warehousing
CHARACTERISTICS OF WHOLESALERS : CHARACTERISTICS OF WHOLESALERS Assembling of different products & distributing it to retailers They deal in large quantities of goods Deal with a particular commodity Sells his goods to retailers He arranges to sort, grade, transport & finance
SERVICES TO MANUFACTURERS : SERVICES TO MANUFACTURERS Link between manufacturers & retailers He studies the trends in the market – changes in taste, fashion & demand Stocks goods for future sales Help the manufacturers for large scale production
SERVICES TO THE RETAILERS : SERVICES TO THE RETAILERS Discharge variety of goods to the retailers Provide credit facilities to retailers Get information about new products from manufacturers & pass it to the retailers Undertake sales promotion measures – which makes the job easier for the retailers
WHOLESALE ORGANISATION : WHOLESALE ORGANISATION Capital required is greater than retail business Carry huge stocks for each traded commodity Maintain huge & up-to-date warehouse with cold storage facilities. Offer extensive credit facilities to retailers They have a board , which formulates policies, reviews trends & manages the day – to- day affairs
PowerPoint Presentation : RETAIL TRADE
RETAIL TRADE : RETAIL TRADE All the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use. Retailers - businesses whose sales come primarily from retailing.
CHARACTERISTICS OF RETAILING : CHARACTERISTICS OF RETAILING Key Characteristics of Retail trade Immediate Orders Response Measurement Targeted Individuals Variety Customized Offer Continuous Relationship Higher Response Testing
SERVICES TO CONSUMERS : SERVICES TO CONSUMERS Sells in small quantities according to requirements of the consumers They operate in residential areas Bring new products the customers notice Provides a variety of goods Customers seek guidance from retailer for product choice They provide credit facilities Provision of after sale service Retailers also undertake home delivery
SERVICES TO MANUFACTURERS : SERVICES TO MANUFACTURERS Link between the manufacturer and the customer Product & consumer Information is passed on to manufacturers from retailers They reduce the manufacturers burden
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PowerPoint Presentation : ITINERANT TRADERS Don’t have a fixed place for business They have limited capital , limited stock , limited variety of goods HAWKERS & PEDDLARS Hawkers use a hand cart/animal for transporting Peddler carries goods on his head Goods are of inferior quality
PowerPoint Presentation : b) PAVEMENT SHOP/ STREET TRADERS Arrange their goods on the road Found in busy & crowded places Deal with a particular line of good c) MARKET TRADERS Arrange their goods before a main shop which are closed on weekends d) CHEAP JACKS - Hire small shops in residential areas & display their goods
PowerPoint Presentation : FIXED SHOP RETAILERS SMALL SCALE RETAIL SHOPS The size of the business firm is small It is usually a one man affair Overhead cost & selling price is very low Limited variety of goods & services STREET STALLS - Located in street corners with limited space
PowerPoint Presentation : b) SECOND HAND GOODS DEALERS Sell second hand books & spare parts Cater to the needs of the economically weaker section c) GENERAL STORES Set up in residential areas Supply variety of goods d) SPECIALITY SHOPS They deal with a particular line of goods Also called single line stores
LARGE SCALE RETAIL SHOPS : LARGE SCALE RETAIL SHOPS MAIL ORDER BUSINESS Orders of goods are received by mail It is called “retailing by post” Goods are accompanied by money order & dispatched by registered post They are sent by VPP Advertising is the life blood of this business
PowerPoint Presentation : DEPARMENTAL STORE It is a large retail establishment having a lot of departments under one roof Each department will deal with a single line of goods Features Centrally located Heavy promotion Principle of “division of labour” Cost of operation is very high
PowerPoint Presentation : MULTIPLE SHOPS / CHAIN STORES It is a extension of a retail shop When a retail store has many branches , it becomes a chain store Goods are received from the head office & the sale price is determined Located in central areas Are mainly established to eliminate middlemen
PowerPoint Presentation : CUSTOMER’S CO-OPERATIVE SOCIETIES - They are associations of consumers particularly the middle class people. - The main objective is to help people in a locality to purchase their daily requirement - They operate as retail business - Owned & managed by its members - Functions on a service motive - Members are paid a fixed interest
PowerPoint Presentation : VENDING MACHINE Coin operated vending machines are used as complementary form of retailing Pre-packed goods with a high rate of turn over are sold very successfully Such goods should be small & uniform in size Maintenance & repair cost are very high The machines should be very attractive
PowerPoint Presentation : DISCOUNT HOUSES They sell goods below the list price Features :- Large retail stores Stock only branded goods Target the middle class Operate in commercial areas Offer very few customer services
PowerPoint Presentation : SUPERMARKET Specialize in convenience & necessary goods Concentrate on groceries, fruits, vegetables, meet & tinned goods All the goods sold are branded
FEATURES OF SUPERMARKETS : FEATURES OF SUPERMARKETS Situated in a central location They are run by limited companies Very wide variety of goods Very large in terms of credit facilities No sales pressure . Buyer is at ease & has enough time for selection Packaging, branding & labeling are very attractive Lot of discounts are provided
PowerPoint Presentation : SUPER STORE It is a “hypermarket” or a “super-super market” It is a method of diversifying retail trade Try to satisfy all consumer needs
PowerPoint Presentation : SHOPPING CENTRES Modern trend in retailing & shopping It is a group of commercial establishments planned, developed, owned & managed as a single unit Very well designed, operated & situated in commercial areas Consumers can save time, energy & travel cost
PowerPoint Presentation : ONE PRICE SHOP One identical price is fixed to a large variety of goods Very profitable Usually operates as a chain store All units come under one ownership, management & control Since the price is uniform , the buyer is a t ease to select his goods
PowerPoint Presentation : DEFERRED PAYMENT SYSTEM - Method of selling goods on credit - The seller permits the buyer to pay the money within a certain period of installments HIRE PURCHASE SYSTEM - It is an agreement to sell - On payment of the first installment, the goods are transferred to the buyer - Only on the payment of the last installment, the ownership is transferred b) INSTALMENT SALE - Ownership is transferred , immediately after the payment of first installment
PowerPoint Presentation : PROMOTION MIX
ELEMENTS OF THE PROMOTION MIX : PERSONAL SELLING ADVERTISING PUBLICITY SALES PROMOTION ELEMENTS OF THE PROMOTION MIX
ROLE OF PROMOTION MIX : ROLE OF PROMOTION MIX Designed to influence selected target audiences into desirable responses Who says what to whom, in what setting , by which channels, with what purposes Facilitates exchange
ADVERTISING : ADVERTISING Paid, non-personal message, identified sponsor A monologue not a dialogue Increase long-term awareness
PERSONAL SELLING : PERSONAL SELLING Immediate feedback Oldest & most powerful Forces buyer response Very expensive
PUBLICITY : PUBLICITY Non personal Not paid, sponsor cannot identified Very dramatic Difficult to control
SALES PROMOTION : SALES PROMOTION Marketing activities , other than advertising, personal selling & publicity Complements the other elements of the promotion mix
COMMUNICATION PROCESS : COMMUNICATION PROCESS
AIDA FORMULA : AIDA FORMULA
PowerPoint Presentation : PROMOTION STRATEGY
PUSH STRATEGY : PUSH STRATEGY Product is pushed through the channel The manufacturer directs all promotional efforts on the distributors, wholesalers and retailers.
PULL STRATEGY : PULL STRATEGY The product is pulled through the channel by creating end user demand Consumers demand, forces the retailer to stock the promoted products
PowerPoint Presentation : SALES PROMOTION
OBJECTIVES : OBJECTIVES Increase buying response selling efforts Introducing new products Overcoming competition
ADVANTAGES : ADVANTAGES Motivation Short-term sales increase Defined role/objectives Indirect roles (e.g., wider distribution)
DISADVANTAGES : DISADVANTAGES Only short-term Hidden costs Price cutting -Brand image Lack of effectiveness sometimes
PowerPoint Presentation : SALES PROMOTION TOOLS
PowerPoint Presentation : SAMPLES They are offers of a free amount or a trial of a product for consumers Effective & expensive way of introducing a new product
PowerPoint Presentation : COUPONS They are certificates which entitle a consumer to buy the product at a reduced prices Can be mailed & attached to magazines
PowerPoint Presentation : REBATES It is a price reduction after purchase is done Customer sends a “proof of purchase” Strengthens brand loyalty
PowerPoint Presentation : PRICE PACKS Also called “Cents – off deals” Discounts are given at the rate of Rs.1 One Dollar shop
PowerPoint Presentation : PREMIUMS They are merchandise offered at a low cost FREE TRIALS It is an incentive to invite prospective purchasers to try a new product
PowerPoint Presentation : PATRONAGE AWARDS They are values in cash or other forms Such awards are given to loyal customers who shop in a particular
PowerPoint Presentation : PRIZES They are offers of the chance to win cash, trips & merchandise CONTESTS - Jingles, estimates & suggestions
PowerPoint Presentation : SWEEPSTAKES - Customers will submit their names, which will be included in a drawing of prize winners
PowerPoint Presentation : TIE-IN-PROMOTIONS Two or more companies team up on coupons, refunds and contests to increase their pulling power POINT OF – PURCHASE - Displays & demonstrations take place
PowerPoint Presentation : PRICE OFF It is straight discount off the list price This is used to make immediate profit, advertising or pricing reductions
PowerPoint Presentation : FREE GOODS Offers to dealers for carrying new products It is in the form of cash gifts & corporate gifts
PowerPoint Presentation : SALES CONTESTS It is a contest involving the sales force or dealers , aimed at inducing them to increase their sales results
PowerPoint Presentation : SPECIALITY ADVERTISING - It consists of useful, low cost items given by sales people to prospective customers
EXHIBITION & TRADE FAIR : EXHIBITION & TRADE FAIR Temporary market places at which buyers & sellers meet. Levels – International, national, regional