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Distribution Presentation: Strategic Marketing Management
Distribution Presentation: Strategic Marketing Management
Presented By:
Peenaz Choksi Chirag Bhuta Ashish Khanduri Rahil Naik Saurabh Jhaveri Kumar Ankur
Introduction-Why Distribution?
To reach market profitably-Reduce Costs. Influences purchasing decision. Cliff hanger for Planning marketing efforts. Acts as a media platform. Control the flow of products from producer
Distribution Problem
There are 3 ways in which distribution channel can be established:1.Corporate Channel. 2.Adminstered Channel. 3.Contractual Channel. Which one do you patronize?
Producer
Middlema n
Customer
Producer
Customer
Distribution Strategy
Distribution Strategy
Analysis of Channel Objectives Analysis of Company, Analysis of tasks to be Competitive & Environmental performed by the channel Conditions Specification of Feasible Channel Alternative Evaluation of Alternatives
Quantitative
Qualitative
48.7 %
Industrial Customers
Channel-Classification
Vertically Integrated Channels Link 2, 4 & 5
Prices are Lower, sales are higher and channel profits are higher for vertically integrated channels So choosing independent channel a wrong decision?
Graphical Representation
Pric e Demand Curve R1->Retail Price under independent Channels. Rv->Retail Price under vertical Integration. W+r->Retailers effective marginal cost under independent channels. m+r->Retailers effective marginal W=wholesale Price cost under vertical integration. m=Manufacturers Marginal Cost r=retailers marginal cost Marginal Revenue Curve
Proposition-Independent Channel
1,Usage of Non-Linear wholesale pricing scheme.
1. Offer Trade Promotions Only 2. Offer Consumer Promotions Only 3. Offer Mix of both. Competition, consumer
2. In Inter brand rebate promotions is better than trade proposition or combination of both. 3. Making retailer a monopolist in the territory.
Proposition-Contd..
4.Providing exclusive territory to independent retailers. 5.Independent exclusive retailers are preferred when manufacturer have differentiated products.
Distribution Location
Store Sizing/Design
Primary Indicators
Number of Outlets Decision (Lilien-Rao
Model).
Site Selection Decision (Reinitz Model). Store Size & Characteristics
Outlets Decision
1. Small Outlet share produce smaller market shares.
Market Share=Out let Share
2. After proportionate growth , if outlet share continue to increase, the rate of market share growth decreases. 3. The market share m can be analyzed as m= k2s/(1-s)+(1+k2-k1)s where k1, k2 constants & s is the outlet share
Outlet Share
Lilien-Rao Model
They postulated that the share of market is
closely related to the age of outlets relative to competition. Firms tend to support market that have large share of new outlets with aggressive advertising. Customers simply love to try out at new outlets. The aggressiveness index can be calculated as:a=(number of recently built company outlets)*(total industry outlets)/(number of
A*=1. A*=0. 25 85
CFtj= Cash flow associated with mark area j in year t r=discount rate Share of Outlets J=number of market areas. A*=Aggressiveness Index
them by a number of predetermined attributes. Let r ij=rating of outlet in trading area, along attribute j
Obtain importance weights for these attributes
/Wi
ij
most important. Store size is directly proportional to product assortment. Some measure is necessary for relationship between store size and store sales. Baumel & Ide developed a model for this based on variety of items a retailer have.
+ve
Postulate Greater the number of different items ,the more likely is the shopper being attracted , due to greater confidence of finding his/her products. -ve Postulate Greater number of items means more difficult to find the item of his/her choice
f(N,D)=k1p(N)-k2(CdD +N Cn + Ci) f(N,D) =measure of consumers expected net benefit from shopping at store with N different items and Distance D. p(N)=probability that the consumer will find some set of items in store that will make his trip successful. Cd, Cn, Ci=Cost Parameters. k1, k2= Respective weights for benefit and cost of shopping k k =1 and 0<=k <=1
store with very few items may be negative. The expected net benefit of shopping in a store with excessive items may also turn out to be negative. Sales are likely to increase with store size at an increasing and then diminishing rate , which eventually becomes negative. Fixing the size of outlet , the amount of display space to allocate for different items is a crucial retailer decision.
Distribution Logistics
products will be sourced. The inventory levels maintained in it. The packaging and handling procedures. Transportation Carriers.
Distribution Center Custom ers Distributi on Center
Sour ce
be diarized. Warehouse location is very critical. Production costs by product at the plants All warehouse and inventory costs. Transit time between Plant Warehouse Retailor should be minimum.
Thank you!