Session 09 - Chap12-13 PLACE

7/19/21
Topic 09
Distribution Channels
(PLACE)
Delivering Customer Value
Copyright © 2009 Pearson Education, Inc.
Chapter 12 - slide 7
Publishing as Prentice Hall
Marketing Channels
Delivering Customer Value
Topic Outline
Types of marketing
intermediaries/channel members
Supply chain & logistics
Distribution
systems
Channel
decisions

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DEFINITION: “PLACE”
WHAT IS “PLACE”?
• In the marketing mix, place refers to
where your product or service will be
sold or accessed.
– For tangible goods, this will include physical
locations such as your own store, or a retailer
where your product will be resold.
– In case of services determine where is
the service product going to be located.

EXAMPLE: COCACOLA’S DISTRIBUTION CHANNELS

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EXAMPLE: A BANK’S DISTRIBUTION CHANNELS

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How Distribution Affects Pricing
Note the total

distribution
cost (75
cents)
compared to
what the
farmer gets
(25 cents)
out of the
dollar and
profit 3.5
cents.

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Distribution of Products
• There are various methods by which

products are distributed.
• Marketing channel (distribution

channel) is a set of interdependent
organizations that help make a product
or service available for use or
consumption by the consumer or
business user.
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The Nature and Importance of

Marketing Channels
How Channel Members Add Value
Marketing Intermediaries offer

producers greater efficiency in making
goods available to target markets. Through
their contacts, experience, specialization,
and scale of operations, intermediaries
usually offer the firm more than it can
achieve on its own.

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The Nature and Importance of Marketing Channels
Copyright © 2010 Pearson Education, Inc. Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.
15

How Channel Members Add Value
Information Promotion Contact
Physical
Matching Negotiation
distribution
Financing Risk taking
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.
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The Nature and Importance of

Marketing Channels
Number of Channel Members
Connected by types of flows:

• Physical flow of products: transportation
• Flow of ownership: agents, brokers,
wholesalers and retailers.
• Payment flow: banks, e-pay tools
• Information flow: newspapers, TV, market
research agencies…
• Promotion flow: ads agencies
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Retail Intermediaries
Retailers are businesses whose sales come
primarily from retailing.
Product Line Classifications
Specialty stores
• Narrow product line with deep assortment (dienmaycholon, Guardian,
NhaXinh)
Department stores
• Wide variety of product lines (Robins, Diamond Plaza)
Convenience stores
• Limited line of high-turnover goods (Coop Food, Kmart)
Superstores
• Non-food goods (Metro/MegaMarket)
Category killers
• Deep in category with sales staff (Toys R Us, IKEA, Office Depot)
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Retailer Marketing Decisions

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Retailing

Product Assortment and Service
Product assortment and service decisions

include:
• Product assortment e.g. Robins vs. BigC
• Services mix e.g. NguyenKim
• Store atmosphere e.g. Crescent Mall
(entertainment complex)

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Retailing

Price Decision
Price policy must fit the target market and

positioning, product and service assortment,
and competition
• High markup on lower volume
• Low markup on higher volume
– EDLP or high-low pricing

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Promotion Decision
Personal Sales
Advertising selling promotion
Public Direct
relations marketing
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Place Decision
Central business districts are located in cities and include department and
specialty stores, banks, and movie theaters.
A shopping center is a group of retail businesses planned, developed,
owned, and managed as a unit.
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Education, Inc.
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Non-store Retailing: Direct/ Online/

Mobile /Social Media
• Electronic Retailing (e-tailing) -

selling products over the
internet
• Telemarketing – by telephone
• Vending machines, carts, etc.
• Direct Selling – selling at their
homes or work place.
• Catalogue shopping
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Retailing Trends and Developments
Growth of Non-Store Retailing
Showrooming: the practice of checking out merchandise in stores,

then buying it online.
Webrooming: the practice of first checking out merchandise online,

then buying it in traditional stores.
THINK ABOUT HOW YOUR CUSTOMERS BEHAVE!!!
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Copyright © 2016 Pearson 34

Education, Inc.
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Retailing Trends and Developments

Omni-Channel Retailing
• The boundaries between in-store and online retailing rapidly blurring
• Internet, digital, and mobile devices
• Buyers shift seamlessly across channels
• Integrating store and online channels into a single shopper experience
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Wholesaling
Wholesaling includes all activities involved in

selling goods and services to those buying for
resale or business use.

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Wholesaling

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The Supply Chain

• The sequence of activities to move
goods from the source of raw materials
to consumers.
Supplier s Manufacturer Wholesalers Retailers Consumers

Plants

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Supply Chain Partners
The supply chain consists of two types of

partners:
Upstream partners include raw material

suppliers, components, parts, information,
finances, and expertise to create a product
or service
Downstream partners include the marketing

channels or distribution channels that look
toward the customer
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Logistics
Logistics are the activities to transport material from

point of production to points of consumptions.
² Inbound logistics – bringing material from suppliers to

producers
² Outbound logistics – taking products from production
centers to consumers
² Reverse logistics – bring back products to production
centers for defects or to recycle material

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Marketing Logistics and Supply Chain

Management
Major Logistics Functions
Inventory
Warehousing management
Logistics
Transportation information
management
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Channel Behavior and

Organization
Conventional Distributions Systems
Conventional distribution systems

consist of one or more independent
producers, wholesalers, and retailers.
Each seeks to maximize its own profits, and
there is little control over the other members
and no formal means for assigning roles and
resolving conflict.

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Organization
Vertical Marketing Systems
Vertical marketing systems (VMS)

provide channel leadership and consist of
producers, wholesalers, and retailers acting
as a unified system and consist of:
• Corporate marketing systems
• Contractual marketing systems
• Administered marketing systems

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Channel Behavior and Organization
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Organization
1. Corporate vertical marketing system

integrates successive stages of production and
distribution under single ownership.
Apple Company has place for the designing and also the
making of the products. These products that are made by
the company are sold in the retailer shops of the company
itself. They need not have to depend on any of the other
people for the purpose of production or even selling of the
products.

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Organization
2.Contractual vertical marketing system consists of

independent firms at different levels of production and
distribution who join together through contracts to obtain
more economies or sales impact than each could
achieve alone. The most common form is the franchise
organization.
A common form of contractual VMS is franchising.

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Organization
3. Administered vertical marketing system has a few
dominant channel members without common
ownership. Leadership comes from size and power.
Campbells Soup is considered an administrative VMS.

Campbell Foods and other dominant brands can command
high levels of cooperation from their resellers when it comes
to in-store product displays, the amount of shelf space
allotted for their products, promotions of the products, and
price policies.
Massive retail chain stores, such as Walmart, often preside over

administered vertical marketing systems.
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Organization
Horizontal Marketing Systems
Horizontal marketing systems are when two
or more companies at one level join together to
follow a new marketing opportunity. Companies
combine financial, production, or marketing
resources to accomplish more than any one
company could alone.
An example is Apple and Starbucks, who announced a music

partnership in 2007. The purpose of this partnership was to
allow Starbucks' customers to wirelessly browse, search,
preview, buy, and download music from iTunes Store onto their
iPod touch, iPhone, or PC or Mac running iTunes. Apple’s
leadership in digital music, together with the unique Starbucks
experience, created a partnership that offered customers a
world class digital music experience.
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Organization
Multichannel Distribution Systems
Hybrid Marketing Channels
Multichannel Distribution systems (Hybrid
marketing channels) are when a single firm
sets up two or more marketing channels to reach
one or more customer segments.
JC Penney was the first department store to sell online. Today, it

also displays its catalog through Facebook, allowing
Facebook fans to make purchases without ever leaving the
social media website. Also on Facebook is U.K. fashion
retailer ASOS, where users can browse, buy, comment on,
and share discoveries with their friends.
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Channel Behavior and Organization
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Channel Design Decisions
Analyzing
consumer
needs
Setting
Evaluation channel
objectives
Identifying
major
channel
alternatives

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Setting Channel Objectives
• Targeted levels of customer service

• What segments to serve
• Best channels to use
• Minimizing the cost of meeting customer
service requirements

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Identifying Major Alternatives
• Types of intermediaries
• Number of intermediaries
• Responsibilities of each channel
member

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Identifying Major Alternatives
Intensive distribution
• Candy and toothpaste
Exclusive distribution
• Luxury automobiles and prestige
clothing
Selective distribution
• Television and home appliance
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Evaluating the Major Alternatives
Each alternative should be evaluated

against:
• Economic criteria
• Control
• Adaptive criteria

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Designing International Distribution Channels
• Channel systems can vary from country

to country
• Must be able to adapt channel

strategies to the existing structures
within each country

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Channel Management Decisions
Selecting Managing Motivating Evaluating

channel channel channel channel
members members members members

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Reflective Activity 09
• Choosing the wrong “place” for your

product/service can be the killer for
the firm’ s overall marketing
performance. Discuss some failures
in “place” strategy of real firms to
explain the connection between
“place” and other Ps in the
marketing mix.
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FOR NEXT WEEK…
• Each student should prepare at least 2

examples of a successful and a failure
advertisements (can be printed or
TV/online ads) for class discussion.
• Think about:
– The purpose of such ads
– Consumers’ response
– Why did it succeed or fail? (key impactful
factors)
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retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.


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7/19/21

Supply chain & logistics

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

How Distribution Affects Pricing

Note the total

Copyright © 2010 Pearson Education, Inc.

• There are various methods by which

• Marketing channel (distribution

The Nature and Importance of

Marketing Intermediaries offer

Copyright © 2010 Pearson Education, Inc.

The Nature and Importance of Marketing Channels

The Nature and Importance of Marketing Channels

Information Promotion Contact

Financing Risk taking

The Nature and Importance of

Connected by types of flows:

Copyright © 2010 Pearson Education, Inc.

The Nature and Importance of Marketing Channels

Retailer Marketing Decisions

Copyright © 2010 Pearson Education, Inc.

Retailer Marketing Decisions

Product assortment and service decisions

Copyright © 2010 Pearson Education, Inc.

Retailer Marketing Decisions

Price policy must fit the target market and

Copyright © 2010 Pearson Education, Inc.

Retailer Marketing Decisions

Retailer Marketing Decisions

Copyright © 2016 Pearson 30

Non-store Retailing: Direct/ Online/

• Electronic Retailing (e-tailing) -

Retailing Trends and Developments

Growth of Non-Store Retailing

Showrooming: the practice of checking out merchandise in stores,

Webrooming: the practice of first checking out merchandise online,

THINK ABOUT HOW YOUR CUSTOMERS BEHAVE!!!

Copyright © 2016 Pearson 34

Retailing Trends and Developments

Wholesaling includes all activities involved in

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

The Supply Chain

Supplier s Manufacturer Wholesalers Retailers Consumers

Copyright © 2010 Pearson Education, Inc.

Supply Chain Partners

The supply chain consists of two types of

Upstream partners include raw material

Downstream partners include the marketing

Logistics are the activities to transport material from

² Inbound logistics – bringing material from suppliers to

Copyright © 2010 Pearson Education, Inc.

Marketing Logistics and Supply Chain

Channel Behavior and

Conventional distribution systems