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School of Business Management
Universiti Kebangsaan Malaysia
_______________________________________________________________________________________
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.
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.
4
Consumer
Marketing
Channels
5
 Distribution coverage: Number of them
needed
 Types of marketing intermediaries
 Terms & responsibilities of each
6
Channels Alternatives for a Cellular Car Phone Maker
School of Business Management
Universiti Kebangsaan Malaysia
_______________________________________________________________________________________
• Exclusive Distribution
• Intensive Distribution
• Selective Distribution
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.
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.
.
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
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
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.
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.
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
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.
17
Major Retailer Types
18
 store retailers
 non-store retailers
 retail organizations
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
20
 Non-store retailing has grown faster than
store retailing
 Falls into 3 major categories:
1. Direct Selling
2. Direct Marketing
3. Automatic Vending
21
 Increasing number of retail stores form
corporate retailing
 Achieve economies of scale
 Greater purchasing power
 Wider brand recognition
 Better-trained employees
22
Major Types of Corporate Retail Organizations
23
GIORDANO Junior targetsGIORDANO Junior targets
couples with childrencouples with children
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.
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.
ACTUAL PRODUCT LEVELPls read on “Wheel-of-Retailing”
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
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
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.

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Cd6813 channel

  • 1. School of Business Management Universiti Kebangsaan Malaysia _______________________________________________________________________________________
  • 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.
  • 5. 5  Distribution coverage: Number of them needed  Types of marketing intermediaries  Terms & responsibilities of each
  • 6. 6 Channels Alternatives for a Cellular Car Phone Maker
  • 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.
  • 17. 18  store retailers  non-store retailers  retail organizations
  • 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
  • 21. 22 Major Types of Corporate Retail Organizations
  • 22. 23 GIORDANO Junior targetsGIORDANO Junior targets couples with childrencouples with children
  • 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.
  • 25. ACTUAL PRODUCT LEVELPls read on “Wheel-of-Retailing”
  • 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.

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