CHAPTER 5

Distribution Management & Cost Analysis

 Group 3

Althea Heramis Mary Melody Aaron Anpher

Limbuhan Ambat

John Carlo
Seana Dipalac Freida Hnanguie
Marasigan
CHAPTER 5

STRATEGY IN
MARKETING
CHANNEL
Learning Objectives
Understand the meaning of Marketing Channel Strategy
Be able to describe the six basic distribution decisions that
most firms face.
Have an awareness of the potential for channel strategy to
play a major role in corporate objectives.
Recognize the relationship of distribution to the other
variables in the marketing mix and the role of channel
strategy.
Be alerted to the conditions that tend to favor an emphasis on
distribution strategy in developing the marketing mix.
 Part 2: Developing the Marketing Channel

Focus On Channels
“Hollywood’s Possible Abandonment of its”
Windowing” Distribution Strategy Could
Throw Movie Theater Owners Out the Window

“Windowing” “POVD”

the process of managing
the release sequence for
content so as to maximize
the returns from
intellectual property rights
(IPRs) – is changing
because of transformations
in the way that television is
distributed and consumed.
Or Premium Video On
Demand”
a revenue model where OTT
providers charge viewers a
premium price for exclusive
early access to video content.
It's similar to traditional video-
on-demand (VOD) — the
difference is that it offers
earlier access for a higher
price.
 Channel Strategy
Kotler defines marketing strategy as “the broad principles by
which the business unit expects to achieve its marketing
objectives in a target market.”
1 Marketing channel strategy can be viewed as a special case of
the more general marketing strategy.
 Channel Strategy
This definition focuses on the principles or guidelines for
achieving the firm’s distribution objectives rather than on its
general marketing objectives. Thus marketing channel strategy is
concerned with the place aspect of marketing strategy.
 Schematic
Overview of
Marketing
Channel
Strategy in
Relation to
Basic
Distribution
Decisions
Covered in the
Text
Marketing Channel Strategy and the Role of
Distribution in Corporate

The most fundamental distribution decision for any firm or organization

to consider is the role that distribution is expected to play in a
company’s long-term overall objectives and strategies. More specifically,
it has to decide whether the achievement of specific distribution
objectives is crucial to the long-run success of the firm. If the answer is
yes, then the role of distribution should be considered at the highest
management levels of the organization, including the president and
even chairman of the board in large corporate organizational structures.
The strategic Planning Process and role of
Distribution in the firm
 Determining the Priority
Given to Distribution
The most famous and widely acclaimed management guru in the last one
hundred years, Peter Drucker, had this to say about the importance of
distribution: “Changes in distributive channels may not matter much to
GNP and macroeconomics. But they should be a major concern to every
business and industry. Everyone knows how fast technology is changing.
Everyone knows about markets becoming global and about shifts in the
workforce and in demographics. But few people pay attention to
changing distribution channels.”
 Determining the Priority
Given to Distribution
The question of how much priority to
place on distribution is one that can be
answered only by the particular firm
involved. If a firm’s top management
believes that distribution is a core part of
its corporate strategy for achieving its
long-term goals, a high priority for, and a
strong focus on distribution strategy
become logical imperatives.
The world’s largest and best-known online
retailer, Amazon.com, for example, has an
enormous emphasis on distribution
strategy. The CEO chose to use a single,
online channel strategy rather thsn a multi-
channel strstegy.
In contrast to Amazon.com, Apple CEO Steve Jobs
made a strategic distribution decision soon after the
start of the twenty-first century that involved the
broadening of its channel mix to include the
establishment of its own “Brick and Mortar” retail
stores.
Giant consumer packaged goods manufacturer,
Procter & Gamble Company, has placed tremendous
emphasis on distribution, especially in terms of
building strategic alliances with giant retailers.
Walmart accounts for more than 10% of P&G’s
domestic sales volume. To satisfy Walmart's demand
for everyday low prices on P&G’s products, for special
oversized packaging for its Sam’s Clubs, and many
other demands, P&G has a whole team of executives
living in Walmart’s hometown.
 Determining the Priority
Given to Distribution

Many other examples of firms that place distribution at the heart of their corporate
objectives and strategies could also be cited. And of course, there are many examples of
firms that relegate distribution to a much lower priority. It is not possible to claim that
those who look at distribution as a top management priority are right and those who do
not are wrong. What is fair to say, however, is that to automatically dismiss distribution as
a decision area for top management concern in formulating corporate objectives and
strategies limits the firm’s ability to compete effectively in today’s global market.
Marketing Channel Strategy & Marketing Mix
whether or not the firm distribuition as worthy top management concern when developing
overall objectives and strategies, it must still deal with the issue of the role of distribuition in the
Marketing Mix. developing a marketing mix of product, price, promotion, and Distribuition
(place) strategies that meets the demands of the firms target markets better than the
competition is the essence of modern marketing management.

T= f ( p1,p2,p3,p4)

where

Ts= degree of target market satisfaction

P1= product strategy
P2= pricing strategy
P3= promotional strategy
P4= place (distribuition) strategy
 even if we acknowledge the wide range of variables in the marketing mix that
any given firm might choose for strategic emphasis, a general cases for
stressing distribuition strategy can still be made if any one of certain condition
prevails.

1. Distribuition is the most relevant variable for satisfying target market

demands.
2. parity exists among competitors in the others three variables of the
marketing mix.
3. A high degree of vulnerability exists because of competitors neglect of
distribuition.
4. Distribuition can enhance the firm by creating synergy from marketing
channels.
Distribution Relevance to target
market Demand
Target market demand is the basis for developing appropriate mix. Therefore
distribution becomes relevant because the target market wants it that way.

Moreover. As firms have become more oriented to target markets over the
past two decades by listening more closely to the customer, the relevance of
distribution has become a parent to an increasing number of companies
because it is not accurate in providing customer satisfaction. Why are
marketing channels so closely linked to customer satisfaction? because it is
through distribution that the firm can provide the kinds and level of service
that make for satisfied customers
Distribution Relevance to target
Market Demand
A case in point involved Volvo gm wherein, Volvo gm dealers We're losing
business to competitors because of problem in providing prompt service, All
too often dealers and the regional warehouse supplying them out of stock of
the parts needed for the All too often dealers and the regional warehouse
supplying them out of stock of the parts needed for the repairs, Even though
parts and inventories at the dealership and warehouse were increasing. Volvo
gm knew the problem was caused by dealers inability to predict the demand
for parts and services accurately.
Competitive Parity in other
marketing mix variables
This refers to a strategy where a company aims to match its competitor,
level of investment or performance in various marketing mix variables,
such as product quality, pricing, promotion, and distribution. this
approach assumes the competitive equilibrium is achieved when a
company’s marketing effort are on par with it’s rivals.

the goal of competitive parity is not to outperform competitors in these

areas but to avoid falling left behind.
Thank You
for listening :)
 QUIZ TIME!!
1.) What is the meaning of P.O.V.D?
a. Playing on Video Demand
b. Premium Video on Demand
c. Playing Video on Demand
d. Premium on Video Demand

2.) Who is the one who defines marketing strategy as the broad principles, by
which the business unit expects to achieve its marketing objective in a target
market.
a. James Kotler
b. Arthur Kotler
c. Philip Kotler
d. John Kotler
3.) The heart and soul of distribution when viewed from marketing
channel management perspective is the
a. Channel Strategy
b. Marketing Mix
c. Basic Distribution Decision
d. Distribution Relevance. _____ Is the basic for developing appropriate
mix

4. _____ Is the basic for developing appropriate mix

a. Channel Strategy
b. Target Market Demand
c. Marketing Mix
d. Market Demand
5. _____ Refers to strategy where a company aims to match its
competitors level of investment performance.
a. Target Market Demand
b. Channel Strategy
c. Market Demand
d. Competitive Parity