1. School of Business Management
Universiti Kebangsaan Malaysia
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2. ACTUAL PRODUCT LEVEL
Marketing channels are set of
interdependent organizations involved
in the process of making a product or
service available for use or
consumption.
3. ACTUAL PRODUCT LEVEL Product variety
Service backup
Lot size
Spatial convenience
The higher the level of the service output, the
higher the price would be to the consumers.
7. School of Business Management
Universiti Kebangsaan Malaysia
_______________________________________________________________________________________
• Exclusive Distribution
• Intensive Distribution
• Selective Distribution
8. School of Business Management
Universiti Kebangsaan Malaysia
_______________________________________________________________________________________
Exclusive Distribution
• Limiting the number of intermediaries.
• Used when producer want to maintain control
over the service level and output offered by the
resellers.
9. School of Business Management
Universiti Kebangsaan Malaysia
_______________________________________________________________________________________
Selective Distribution
• The use of more than a few but less than all of
the intermediaries.
• Used by established companies and new
companies seeking distributors.
• Gained adequate market coverage with more
control and less cost than intensive distribution.
.
10. School of Business Management
Universiti Kebangsaan Malaysia
_______________________________________________________________________________________
Intensive Distribution
• Manufacturer placing the products in as many
outlets as possible.
• Used for products which the consumer requires
a great deal of location convenience
11. 12
TERMS & RESPONSIBILITIES OF CHANNEL
MEMBERS
Determine rights & responsibilities of
participating channel members
“Trade-Relations Mix”
1. Price policies
2. Conditions of sale
3. Distributors’ territorial rights
4. Mutual services & responsibilities
12. ACTUAL PRODUCT LEVEL
• Comprises an independent producer, wholesaler(s)
and retailer(s).
• Each is a separate business seeking to maximize
its own profits, even if the goal reduces profit for the
system as a whole.
• No channel member has complete or substantial
control over other members.
13. ACTUAL PRODUCT LEVEL
• Comprises the producer, wholesaler(s), and
retailer(s) acting as a unified system.
• One channel member, the channel captain,
owns the others or franchises them, or has so
much power that they all cooperate.
• The channel captain can be the producer,
the wholesaler, or the retailer.
14. ACTUAL PRODUCT LEVEL
Should be reviewed when:
•Significant change in consumption pattern
•New and strong competitor enters the market
•The product moves into other stages in its PLC
15. ACTUAL PRODUCT LEVEL
Includes all the activities involved in selling goods
or services directly to final consumers for
personal, non-business use.
A retailer or retail store is any business
enterprises whose sales volume comes primarily
from retailing.
18. 19
Figure 16.1 Retail Positioning Map
By combining
different service
levels with
different
assortment
breadths, we can
distinguish the 4
broad positioning
strategies
available to
retailers
19. 20
Non-store retailing has grown faster than
store retailing
Falls into 3 major categories:
1. Direct Selling
2. Direct Marketing
3. Automatic Vending
20. 21
Increasing number of retail stores form
corporate retailing
Achieve economies of scale
Greater purchasing power
Wider brand recognition
Better-trained employees
23. ACTUAL PRODUCT LEVEL
• Strong retail brand approachStrong retail brand approach
Promote themselves as brands rather than brands
that they carry.
Introduce in-house brands and promote actively.
• The showcase storeThe showcase store
Sell other brands and often gets the vendor of those
brands to take responsibility for stock, staff, and even
the selling space.
The vendor then hand over a percentage of the sales
to the store’s owner. This translates into lower gross
margins for the department store but also lower
operating costs.
24. ACTUAL PRODUCT LEVEL
The services mix is a key tool for differentiating one store
from another.
• Prepurchase services:Prepurchase services:
Include accepting telephone and mail orders,
advertising, window and interior display, fitting rooms,
shopping hours, fashion show, and trade-ins.
• Postpurchase services:Postpurchase services:
Include shipping and delivery, gift wrapping,
adjustments and returns, alteration and tailoring,
installations, and engraving.
• Ancillary services:Ancillary services:
Include general info, check cashing, parking,
restaurants, credit, rest-rooms, and children-attendant
service.
26. ACTUAL PRODUCT LEVEL
Includes all the activities involved in selling goods
or services to those who buy for resale or
business uses.
Wholesalers pay less attention to promotion,
atmosphere, and location because they are
dealing with business customers.
Wholesale transactions are usually larger than
retail transactions and cover a larger trade area
27. 28
Wholesaling , major feature of distribution in Asia
A number of factors explain this:
Growth of factories located far from buyers
Advanced production orders rather than in
response to specific orders
Increase in intermediate producers & users
To adapt products to needs of intermediate &
final users
28. ACTUAL PRODUCT LEVEL
Exercise on PricingExercise on Pricing
Rushdy started a small company that makes and sells
home-made kaya. People who tried the kaya really
seemed to like it. One of the first problems Rushdy faced
was pricing. She had thought of pricing the kaya high
enough so her money would earn the interest it would
have received if she had left in her investment account.
On the other hand, pricing the kaya low would help to
acquire loyal customers. After some thought, Rushdy
decided to fix the price at RM2.95 a bottle, which was
cheaper than other brands of kaya in the market. In its
first year of operation, the company sold 144,000 bottles
to retailers in various parts of the city. The company
fixed costs were RM32,000 and its variable unit costs
were RM1.25 per bottle.