MT 219 Marketing Unit Six Marketing Channels Retailing and Wholesaling Note: This seminar will be recorded by the instructor.

Review of Unit 5 How did Unit 5 go? Questions or concerns? Instructor suggestions for Unit 6 Research Projects on segmentation this week? Additional questions?

Our Topics for This Week Channel importance, functions, types, and coverage Physical distribution and supply chain management Retailing types and trends Wholesaling types and role in marketing

Important Definitions Marketing Channel – A group of individuals and organizations directing products from producers to customers Value Delivery Network- Composed of the company, intermediaries, suppliers and consumers who are in partnership to deliver customer value system- wide.

Integrated Channels A marketing channel system is the particular set of interdependent organizations involved in the process of making a product or service available for use or consumption.

Why do we need channels? Channels create value for the consumer Help facilitate transactions: -Act as information conduits -Promote the product and company -Provide a contact for the consumer -Match products with the consumers needs by developing appropriate offers -Negotiate the terms of the sale with the consumer Fulfill completed transaction: - Physically transport or store goods and products -Finance transactions -Assume risk in undertaking channel activities

Buyer Expectations – Online channels Ability to order a product online and pick it up at a convenient retail location Ability to return an online- ordered product to a nearby store Right to receive discounts based on total online and offline purchases

Types of Conventional Channels Producer - Consumer (no intermediary) Producer - Retailer - Consumer Producer – Wholesaler – Retailer – Consumer Producer-agent/broker – Wholesaler-Retailer – Consumer These intermediaries are independent entities

Channel Flows

Vertical Marketing Systems System where the producer and intermediaries act as one system. Corporate VMS- One entity owns the other intermediaries. Example: Kroger Contractual VMS- Uses legal agreements between independent producer and intermediaries to provide product or services. Example: McDonalds. Administered VMS- System is controlled by size and power of one of the intermediaries or the producer. Example: Wal-Mart.

Reaching Consumers

Channel Issues and Decisions Number of distribution channels (coverage intensity)- selective, intensive or exclusive distribution Conflict- horizontal and vertical Leadership and Power- Concept of Channel Captain Disintermediation (Cutting off a member of the channel)

Designing the Marketing Channel Analyze customer needs Evaluate major channel alternatives Identify major channel alternatives Establish channel objectives

Add Value – or Costs?

Channel POWER! Coercive Reward Legitimate Expert Referent

What is Supply Chain Management? Long term partnerships among marketing channel members that reduce inefficiencies, costs, and redundancies. They also develop innovative approaches to satisfy customers. Emphasis is on stability for customers

Marketing Logistics Warehousing Inventory Management Transportation Logistics Information Management

What are Integrated Logistics Systems? An integrated logistics system (ILS) includes materials management, material flow systems, and physical distribution, aided by information technology.

Market Logistics – what is needed? Sales forecasting Distribution scheduling Production plans Finished-goods inventory decisions Packaging In-plant warehousing Shipping-room processing Outbound transportation Field warehousing Customer delivery and servicing

Retailing Activities associated with providing products to the final consumer for their own use

Types of Retailers Retailers can be classified in different ways Amount of Service -Self-service, limited-service or full-service Product Line -Specialty, department, supermarket, convenience, superstore Relative Price -Discount, off-price, factory outlet, warehouse club Organizational Approach -Chain, franchise

E-Commerce Decisions Pure-click Brick-and-click

Retailer Marketing Decisions- Strategy Segmentation and targeting- Seeks to identify those groups of people that the retailer will target. Store differentiation and positioning- Seeking to set the retailer apart from the competition in the eyes of the consumer.

Retailer Marketing Decisions- Marketing Mix Product and service assortment- -Product assortment decisions impact the types of brands that will be carried and the level of quality the assortment will have -Service assortment looks at the level of support, advice or assistance that will be available for customers. -Store atmosphere looks at what the general ambiance and store environment will be like. Price- Looks at the prices that will be charged by the store. Place- Involves where stores will be located. Will it be stand-alone or part of a shopping center or mall? Many bricks and mortar retailers have website retail locations also. Promotion- Involves how and where the retail store will promote to their customers and public.

Store Atmosphere/Environment Walls Lighting Signage Product placement Floors Surface space Music The Fornarina flagship store features award- winning retail design.

Retailing Trends Retail life cycles are shortening and new retail forms are appearing. -Retailing is dynamic and always evolving -Wheel of Retailing concept Slower economies means consumers are becoming thriftier -In difficult times consumers curtail discretionary spending -As economic conditions improve consumers will purchase more -Consider that some products sell better in difficult times

Retailing Trends- continued Growth of non-store retailing as consumers buy off the internet and through direct marketing Retail convergence is taking place where retailers sell the same products to the same consumers across all competition. This makes for keen competition. Megaretailers are increasingly becoming prevalent and making it challenging for smaller retailers to compete on the basis of price.

Retailing Trends- continued The growth of retail technology that help retailers manage inventory and keep track of sales Major retailers are expanding internationally Retail stores are trying to create a community atmosphere to provide a social retail environment

Wholesaling Activities involving marketing intermediaries who purchase or represent products for resale or business use. Types of wholesalers -Merchant wholesalers- Independent companies that take title to the goods -Agents and brokers- Do not take title to merchandise -Manufacturer’s sales branches and offices- Owned by maker of the products

Wholesaler Activities Promote and sell the products they carry Build assortments of goods for customers Bulk-break goods for their customers Offer warehouse services and often transport goods Offer financing of purchases Channel market information Assume risk of title for manufacturers Provide training and promotional services to retailers

Any Questions? Thank you for attending! See you next week!