Channel structure Channel structure varies considerably according to whether the product is consumer or business to business oriented. The former tends to have a variety of formats, whereas the latter is less complicated. The choice of which one is used depends on the requirements listed above. The converse is the scenario in many less developed countries.
Instead, a business and marketing plan should suggest how the firm can best put its unique resources to use to maximize stockholder value. A number of resources come into play—e. It is essential that different firms in the same business not attempt to compete on exactly the same variables.
If they do, competition will invariably degenerate into price—there is nothing else that would differentiate the firms. In general, firms that attempt riskier ventures—and their stockholders—expect a higher rate of return.
Risks can come in many forms, including immediate loss of profit due to lower sales and long term damage to the brand because of a poor product being released or because of distribution through a channel perceived to carry low quality merchandise.
However, when a firm holds several different brands, different marketing and distribution plans may be required for each. Several variables come into play in maximizing value. Profits can be maximized in the short run, or an investment can be made into future earnings.
Product profit can be measured in several ways. A decision that is essential at the brand level is positioning.
Options here may range from a high quality, premium product to a lower priced value product. Note here that the same answer will not be appropriate for all firms in the same market since this will result in market imbalance—there should be some firms perceiving each strategy, with others being intermediate.
Distribution issues come into play heavily in deciding brand level strategy. In order to secure a more exclusive brand label, for example, it is usually necessary to sacrifice volume—it would do no good, for Mercedes-Benz to create a large number of low priced automobiles.
Some firms can be very profitable going for quantity where economies of scale come into play and smaller margins on a large number of units add up—e. Some firms choose to engage in a niching strategy where they forsake most customers to focus on a small segment where less competition exists e.
Since not all retailers are willing to provide these services, insisting on them will likely reduce the intensity of distribution given to the product. Firms make money on the totality of products and services that they sell, and sometimes, profit can be maximized by settling for small margins on some, making up on others.
For example, both manufacturers and retailers currently tend to sell inkjet printers at low prices, hoping to make up by selling high margin replacement cartridges.
Here again, it may be important for the manufacturer that the retailer carry as much of the product line as possible. For example, as we have discussed, more exclusive and higher service distribution will generally entail less intensity and lesser reach.
Cost has to be traded off against speed of delivery and intensity it is much more expensive to have a product available in convenience stores than in supermarkets, for example. The extent to which a firm should seek narrow exclusive vs.
For example, most consumers will switch soft drink brands rather than walking from a vending machine to a convenience store several blocks away, so intensity of distribution is essential here. However, for sewing machines, consumers will expect to travel at least to a department or discount store, and premium brands may have more credibility if they are carried only in full service specialty stores.
On the surface, Compaq passed up the opportunity to sell large numbers of computers directly to large firms without sharing the profits with dealers. On the other hand, dealers were more likely to recommend Compaq since they knew that consumers would be buying these from dealers.
Distribution provides a number of opportunities for the marketer that may normally be associated with other elements of the marketing mix. Placement is also an opportunity for promotion—e. Similarly, it may be useful to give away, or sell at low prices, certain premiums e.
Partnerships and joint promotions may involve distribution e. Deciding on a strategy. In view of the need for markets to be balanced, the same distribution strategy is unlikely to be successful for each firm.
The question, then, is exactly which strategy should one use? It may not be obvious whether higher margins in a selective distribution setting will compensate for smaller unit sales. Here, various research tools are useful.
In focus groups, it is possible to assess what consumers are looking for an which attributes are more important. Scanner data, indicating how frequently various products are purchased and items whose sales correlate with each other may suggest the best placement strategies.
It may also, to the extent ethically possible, be useful to observe consumers in the field using products and making purchase decisions.
Here, one can observe factors such as 1 how much time is devoted to selecting a product in a given category, 2 how many products are compared, 3 what different kinds of products are compared or are substitutes e. Channel members—both wholesalers and retailers—may have valuable information, but their comments should be viewed with suspicion as they have their own agendas and may distort information.
Most grocery products are most efficiently sold to the consumer through retail stores that take a modest mark-up—it would not make sense for manufacturers to ship their grocery products in small quantities directly to consumers.
Intermediaries perform tasks such as Moving the goods efficiently e.6 Social Media Trends That Will Take Over Photo of the author, Alex York by Alex York Share to twitter Share to facebook Share to linkedin Share to Google Plus Share to Email.
There were no shortage of changes to the social media industry last year, which included several new features, consumer preferences and brand opportunities. Looking. Fashion. Fashion Designers Dec 22, Raf Simons Leaves Calvin Klein The designer is parting ways with the brand "effective immediately." By Amy Mackelden.
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Chanel has extended her influence not only in the field high fashion but also designer. This is the group discussion on "Foreign Television Channels are Destroying Our Culture".
Well. I feel that foreign TV channels are destroying our culture through influence. Am a Nigerian and I have seen a lot. foreign television channels are destroying our Indian culture, because if anyone watch any TV channel, they think that mentally. What Are Formal and Informal Communication Channels?
Formal communication is the art of conveying messages either written or unwritten in a serious manner, while informal communication is the passing of messages casually or in a relaxed manner.
Then I drew a tear coming out of one of the eyes and wrote, “Please, Daddy Don’t Smoke” above and below the child’s face. I won either second or third place.
The poster vanished a long time ago. But I never forgot the feeling of suddenly realizing that combining these images said more and spoke faster than a wordy essay.