Distribution policy Prerequisites: Resource 265 "Targeting your customers" Resource 1549 "Positioning your offer" Resource 268 "Presentation of the marketing mix"

Objectives in terms of expertise n Act on the distribution variable n Know how to choose a circuit n Know how to argue in favour of this choice n Know how to calculate sales according to the choice of circuit

Objectives in terms of content n Defining a distribution channel, n The functions of a channel, n The criteria for choosing a channel Laurence Chérel and Catherine Madrid

Objectives in terms of content n A definition of the concept n Fixing methods n Reactions to changes in price Laurence Chérel and Catherine Madrid

Logistics Distribution policy Distribution Point of sale marketing Laurence Chérel and Catherine Madrid Links with other NC subjects

DEFINING A DISTRIBUTION CHANNEL Laurence Chérel and Catherine Madrid

Why talk about distribution? n From the Phoenicians’ trading posts… n Making products available to users Laurence Chérel and Catherine Madrid

From trade to distribution policy n To sell off production n Part of the marketing strategy n To make products available to users –in the right place, time and size to suit the user, –with the required service Laurence Chérel and Catherine Madrid

Definitions: n CHANNEL: a set of economic agents that intervene between the producer and the final consumer –there are several types of channels (associated resource) n CIRCUIT: a set of channels chosen by a company to distribute its product Laurence Chérel and Catherine Madrid

The special features in the case of a service Laurence Chérel and Catherine Madrid

THE FUNCTIONS OF A DISTRIBUTION CHANNEL Laurence Chérel and Catherine Madrid

The functions n transport the products from the production location to the consumer location, n build up an assortment, –reduce research costs, n provide pre-sale service and all the after-sales services –advise, create a climate of trust Product B Product A Product C Laurence Chérel and Catherine Madrid

The functions, (cont.) n To enable the manufacturer to create a set of trade relations that are sources of added value for the final consumer n in terms of: –access to the product – service, –its purchase –its use Laurence Chérel and Catherine Madrid

The value linked to the buying experience n The experience enjoyed by the consumer at the moment of purchase n Sometimes more important than the channel’s trading purpose Laurence Chérel and Catherine Madrid

A few examples of experiences associated with a channel n Buying online: a pragmatic experience n Buying in a shop: sharing your interests with other consumers n Buying a farm product from the producer: reinforces the authentic character of the food product Laurence Chérel and Catherine Madrid

Other examples of experiences associated with a channel n Distribution may form part of the offer proposed to the consumer n A strategic decision n Resource to consult: milk in automatic dispensers Laurence Chérel and Catherine Madrid

THE CRITERIA FOR CHOOSING A DISTRIBUTION CHANNEL Laurence Chérel and Catherine Madrid

Short channel Long channel WHAT FUNCTION(S) MUST THE PRODUCER DELEGATE? Delegation of the functions Costs of the distribution functions Laurence Chérel and Catherine Madrid

Comparison between short and long channels CharacteristicsAdvantagesConstraints Short channel The manufacturer covers all the distribution functions Consumer relations Organizational and logistical Long channel The manufacturer delegates all the distribution functions Reduction in business costs Screened off from the market Laurence Chérel and Catherine Madrid

n PFR manufacturer Ex-VAT retail price VAT-inclusive retail price PFR manufacturer Sale price to the distributor Distributor’s margin Ex-VAT retail price VAT-inclusive retail price Choice of channel and revenues

Price and length of the channel n The final price doesn’t necessarily depend on the number of people involved in the channel, but on their ability to optimize the logistics chain –By cutting a middle-man out of the channel, you’re not eliminating a function Laurence Chérel and Catherine Madrid

The margin: n N.B. it should not be confused with the sales budget dedicated to point of sale actions, more often known as the distribution budget in the case of a push strategy Laurence Chérel and Catherine Madrid

The criteria for choosing n Depending on the market n Depending on the product n Depending on the company Laurence Chérel and Catherine Madrid

The market criteria n Buying behaviour, n Customer spread, n Order frequency. Laurence Chérel and Catherine Madrid

The product criteria n The need for advice at the point of sale, n The phase in the life cycle, n The experiential dimension sought during the purchase, n The type of purchase: everyday or other consumption Laurence Chérel and Catherine Madrid

TYPES OF PURCHASES AND TYPES OF CHANNELS: Everyday purchase: Considered purchase Speciality purchase Intensive distribution Selective distribution Sole distribution Resource to consult: The Dukan Group wants to increase its intensive distribution

The company criteria n Financial resources, n Prior establishment in the channel, n Negotiating power with the different people involved in the channel Resource: the example of Nuxe, the consistency between distribution choices and positioning Laurence Chérel and Catherine Madrid

A few elements that favour a balance of power in favour of the Supers/Hypers n Development of central buying consortiums n Existence of a listing right n The appearance of distributor-brand products Laurence Chérel and Catherine Madrid

The manufacturers’ advantages –Brand reputation –“Pull” type strategies –The ability to supply volume –Logistics organization Laurence Chérel and Catherine Madrid

Summary: MarketProductCompany Online sales++- Automatic dispenser ++-+ Super/Hyper sales ++-- Laurence Chérel and Catherine Madrid

Conclusion: n Key point : slide no. 32 n Take into account the target market, the company and the product n Manage the risk of conflicts between the different channels n Be creative… Laurence Chérel and Catherine Madrid

Bibliography n FILSER Marc, PACHE Gilles, Des GARETS Véronique (2012). - La distribution: organisation et stratégie. -2 nd edition. - Cormelles-le-Royal: EMS, Éd. Management et société, 393 pages. - (Les Essentiels de la gestion). n KOTLER Philip, DUBOIS Bernard (2012). - Marketing management. – 14th edition. - Paris: Pearson Education, XL- 841 pages. (chap 15. Choisir et animer les canaux de distribution) n COLLIN-LACHAUD Isabelle (2014). - Repenser le commerce: vers une perspective socio-culturelle de la distribution. - Cormelles-le-Royal (Calvados): Management etsociété, 419 pages. -(Societing).

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