Developing Mktg Strategies 2012 - Session 1 (1)

GCCMM13 – Developing Marketing StrategiesSession 1

Prof. Irene Vilá

International University of Southern Europe

Course Overview

• All organizations must formulate broad strategies and define specific marketing mixes and action plans to optimize their long-run performance.

• In this course, students will be introduced to strategies for managing product lines and brands, different channels, as well as the integrated marketing communication efforts.


Course Structure

• Session 1: Designing and Managing Value Networks and Marketing Channels.

• Session 2: Managing Retailing, Wholesaling, and Market Logistics.

• Session 3: Managing Integrated Marketing Communications.

• Session 4: Managing Advertising, Sales Promotion, Public Relations, and Direct Marketing. Managing Personal Communications.


Course Content

• Designing and managing marketing channels

– Managing retailing, wholesale and logistics

– Managing direct and on-line marketing

• Managing integrated marketing communications

– Managing mass communications: Advertising, sales promotion, events, and public relations

– Managing personal communication and the sales force


Course Evaluation

• 70% for the 10 questions

• 30% the final 2-hour exam


Reading

• Marketing Management, 13/E (chapter 15-19)Philip Kotler, Northwestern University Kevin Keller, Dartmouth College

Publisher: Prentice Hall, Copyright: 2009

• Global Marketing Management, 7/E Warren J. Keegan, Pace University

Publisher: Prentice Hall, Copyright: 2002


Session 1

• Designing and managing value networks and marketing channels

• E-commerce marketing practices

• Business case - DHL


Designing and managing value networks and marketing channels

Establish channels for different target markets

and aim for efficiency, control, and adaptability


What is a marketing channel?

Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.

A marketing channel system is the particular set of marketing channels a firm employs, and decisions about it are among the most critical ones

management faces.


Push versus pull marketing

• In managing its intermediaries, the firm must decide how much effort to devote to push versus pull marketing.

• A push strategy uses the manufacturer’s sales force, trade promotion money, or other means to induce intermediaries to carry, promote, and sell the product end users.

• In a pull strategy the manufacturer uses advertising, promotion and other forms of communication to persuade consumers to demand the product from intermediaries, thus inducing the intermediaries to order it.


Push strategy

• A push strategy is appropriate when brand choice is made in the store, the product is an impulse item, and product benefits are well understood.


Manufacturer

Intermediares

End User

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Pull strategy

• A pull strategy is appropriate when there is high brand loyalty and high involvement in the category, when consumers are able to perceive differences between brands, and when they choose the brand before they go to the store.


Manufacturer

Intermediares

End User

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The role of marketing channels

• Producers can often gain in effectiveness and efficiency by using intermediaries.

• Through their contacts, experience, specialization and scale of operation, intermediaries make goods widely available and accessible to target markets, usually offering the firm more than it can achieve on its own.


Channel functions and flows

A marketing channel performs the work of moving goods from producers to consumers. It performs a number of key functions:

1. Gather information about potential and current customers, competitors, and others.

2. Develop and disseminate persuasive communications to stimulate purchasing.

3. Reach agreements on price and other terms so that transfer of ownership or possession can be effected.

4. Place orders with manufacturers


Channel functions and flows

5. Acquire funds to finance inventories at different levels in the marketing channel

6. Assume risk connected with carrying out channel work

7. Provide for the successive storage and movement of physical products

8. Provide for buyers’ payment of their bills through banks and other financial institutions

9. Oversee actual transfer of ownership from one organization or person to another


Designing a channel system

Designing a channel system involves four steps:


Analyzing marketing

needs

Establishing channel

objectives

Identifying major

channel alternatives

Evaluating major


1. Analyzing marketing needs

Analyze customers’ desired service output levels:

1. Lot size

2. Waiting time

3. Spatial convenience

4. Product variety

5. Service backup


Analyzing marketing

needs


objectives

Identifying major


Evaluating major



1. Lot size : the number of units the channel permits a typical customer to purchase on one occasion.

2. Waiting and delivery time: the average time customers of that channel wait for receipt of the goods.

3. Spatial convenience: the degree to which the marketing channel makes it easy for customers to purchase the product.


Analyzing marketing

needs


objectives

Identifying major


Evaluating major



4. Product variety: the assortment breadth provided by the marketing channel.

5. Service backup: the add-on services (credit, delivery, installation, repairs) provided by the channel.

Providing greater service outputs also means increasing channel costs and rising prices for customers. Different customers have different service needs.


Analyzing marketing

needs


objectives

Identifying major


Evaluating major


Analyzing marketing

needs


objectives

Identifying major


Evaluating major


2. Establishing channel objectives

• Marketers should state their channel objectives in terms of targeted service output levels.

• Channel institutions should arrange their functional tasks to minimize total channel costs and still provide desired levels of service outputs.

• Effective planning requires identifying several market segments that want different service levels. Afterwards, it requires determining which market segments to serve and choosing the best channels for each.


2. Establishing channel objectives

Channel objectives vary with product characteristics:

• Perishable products require more direct marketing.

• Bulky products, such as building materials, require channels that minimize the shipping distance and the amount of handling.

• Nonstandard products, such as specialized business forms, are sold directly by company sales representatives.


Analyzing marketing

needs


objectives

Identifying major


Evaluating major


3. Identifying major channel alternatives

Companies can choose from a wide variety of channels for reaching customers. A channel alternative is described by three elements:

1. Types of intermediaries

2. Number of intermediaries

3. Terms and responsibilities of channel members


Analyzing marketing

needs


objectives

Identifying major


Evaluating major



1. Types of intermediaries

A firm needs to identify the types of intermediaries available to carry on its channel work.


Analyzing marketing

needs


objectives

Identifying major


Evaluating major



2. Number of intermediaries

– Exclusive distribution

– Selective distribution

– Intensive distribution


Analyzing marketing

needs


objectives

Identifying major


Evaluating major



3. Terms and responsibilities of channel members

– Price policy: price list, discounts

– Conditions of sale: payment terms and product guarantees

– Distributors’ territorial rights


Analyzing marketing

needs


objectives

Identifying major


Evaluating major


4. Evaluating major channel alternatives

1. Economic criteria: channel advantage


Analyzing marketing

needs


objectives

Identifying major


Evaluating major


The value-adds versus costs of different channels

4. Evaluating major channel alternatives

2. Control and adaptive criteria


Analyzing marketing

needs


objectives

Identifying major


Evaluating major


Break-even cost chart

Channel management decisions

1. Selecting channel members

2. Training and motivating channel members

3. Evaluating channel members

4. Modifying channel design and arrangements


E-Commerce marketing practices


E-commerce marketing practices

• E-commerce means that that the company or site offers to transact or facilitate the selling of products and services online.

• Online sales have exploded, growing at 30% a year.

• This is because online retailers can predictably provide convenient, informative and personalized experiences for many different types of consumers and businesses.


E-commerce marketing practices

Pure-click companies

• Those that have launched a Web site without any previous existence as a firm

Brick–and-click companies

• Existing companies that have added an online site for information or e-commerce.



• There are several kinds of pure-click companies:



• Customer service is critical

• Some inhibitors of online shopping are the absence of pleasurable experiences, social interaction, and personal consultation with a company representative.

• Firms are responding. Example: Ritz Camera use live online chat to give potential customers immediate advice about products for sale on their Web sites.


Brick-and-click companies

• There are a lot of brick-and-click companies:


Brick-and-click companies

• The question is how to sell both through intermediaries and online. There are at least three different strategies:

1. Offer different brands or products on the Internet

2. Offer off-line partners higher commissions to protect them from the negative impact on sales

3. Take orders on the Web site but have retailers deliver and collect payment


Questions Session 1


Question 1

Describe the channel service needs for:

1. Consumers buying a computer for home use

2. Retailers buying computers to resell to individual consumers

3. Purchasing agents buying computers for company use

• What channels would a computer manufacturer desing to satisfy these different service needs?


Question 2

Please read the Business Case DHL and answer the following questions:

a. When DHL acts as the logistics supplier for Kubota, Bendon, and Roche; what type of marketing system does this exemplify? What are the advantages of the partnership for each party?

b. Explain how DHL helps partners Kubota, Bendon and Roche with (a) order processing, (b) warehousing, (c) inventory, and (d) transportation.

c. Explain how DHL helps its other customers with (a) order processing, (b) warehousing, (c) inventory, and (d) transportation.

d. What are DHL’s primary competitive advantages and disadvantages in the air express service business? What are the competitive advantages and disadvantages of FedEx and UPS?

e. Why would obtaining a large share of the U.S. market be important to DHL? What actions would you suggest DHL take in order to achieve a larger share?


Question 3

Please read “Channel management decisions” ( Book “Marketing Management”, Philip Kotler, chapter 15) . After the reading, please answer the following questions:

1. What 3 characteristics distinguish the better intermediaries for the following brands:

2. Describe a training program for each brand

3. What kind of power would you use with each brand? Why?

4. Which modification would you suggest to each channel design?


Developing Mktg Strategies 2012 - Session 1 (1)

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