Chapter 10: Distribution
Structure
A. INTRODUCTION
1. Overview and Strategy Blueprint
2. Marketing Strategy: Analysis &
perspectives
C. WHERE DO WE WANT TO BE?
4. Strategic Marketing Decisions,
B. WHERE ARE WE NOW?
Choices & Mistakes
5. Segmentation, Targeting
3. Environmental & Internal Analysis:
& Positioning Strategies
Market Information & Intelligence
6. Branding Strategies
7. Relational & Sustainability
Strategies
D. HOW WILL WE GET THERE?
8. Product Innovation & Development
Strategies
E. DID WE GET THERE? 9. Service Marketing
14. Strategy Implementation, Control
& Metrics
10. Pricing & Distribution
11. Marketing Communications
12. E-Marketing Strategies
13. Social and Ethical Strategies
Up stream
Down stream
Direct Indirect
Learning Objectives
1. Evaluate the buyer’s perspective of distribution and its implications
for strategy.
2. Primary Concern of Buyers.
3. Navigation
4. Distribution Options/ Strategies
5. Principle Channels, Multi Channel and Grey Market
6. Price & Distribution Strategies for Market Leaders, Challengers,
Followers and Nichers
Buyer’s Perspective of Distribution
1. Availability
2. Speedy
delivery
3. Reliable
supply
4. Range of
choice POS +
PAYMENT
MODES
5. Empathy
when
supply’s
interrupted
6. Convenience
7. Service and
support
Primary Concerns of Buyers
1. Access
C
O
N
2. Search V
E
N
I
E
3. Possession N
C
E
4.Transaction
From the customer’s POV, convenience means ‘speed and ease’. Speed and
Primary Concerns of Buyers: 1.Access
• Access is about being easy to reach.
• Accessibility factors include parking, location of the store ,
availability of stores, hours of opening and proximity to other
outlets, telephone, e/mail and internet.
At 7-11 you can pay your utility bills.
Concert tickets can be made available at certain key locations in Dhaka –
say at North End or Pizza Hut.
Primary Concerns of Buyers: 2. Search
Search convenience is about enabling customers to speedily identify
what they want.
It helps with identifying and selecting the products you want
is connected to
• product focused intelligent outlet design and layout,
• knowledgeable staff,
• interactive systems
• product displays, packaging and signage.
Primary Concerns of Buyers: 3. Possession
• Possession convenience relates to the ease
of obtaining products/ availability of the
product.
• When you want to physically purchase
something you have to go to the store and
attain it and the company needs to ensure
that the product that it advertised is indeed
available. Especially during promotional
offers.
• In Ghana for instance, where road
infrastructure is really poor, P&G, Unilever
and Colgate rely on handcarts and bicycles
for difficult to reach.
• When customers purchase something online,
they might save a trip to the store buy have
to wait for the purchase to reach. Be promt
Primary Concerns of Buyers: 4. Transaction
Transaction is about the ease of purchase and return of products online and offline.
Filling out online billing, shipping and return forms with many personal info head
might annoy some customers.
Navigation
Navigation is the process of steering between the mass and variety of
information and choices in both physical and e/m/f com.
Customer rely on retailers to help them with navigation. Amazon.com
Navigation: 4 Dimensions
Reach
Affiliation SUSTAINABLE
Navigation COMPETITIVE
ADVANTAGE (SCA)
Richness
Range
Navigation: 4 Dimensions : 1. Reach
• Reach is the extent to which a
retailer can manage its value
chain to connect to its
customers
• Not just the ability of
customers to reach the firm
but also the firm’s ability to
reach the customer with its
products and services.
• Co-distribution
Navigation: 4 Dimensions : 2. Affiliation
• Affiliation is about transparency and trust between retailers and
their customers
• The difference online is that customers cannot tangibly experience
the products. Image and promises are all that they have.
Navigation: 4 Dimensions : 3. Richness
• Richness is the degree to
which a retailer can match
customers’ exact wants and
needs. Customization.
• Interaction between a local
tailoring shop and customer is
extremely rich
• Online gift stores can alert
customers with impending
birthday information and
flower suggestions. Push Tech/
1:1 marketing
• Purchase behavior can be
compared between similar
customers and played back to
similar profiled customers
Navigation: 4 Dimensions : 4. Range
• Range relates to the breadth and degree of products offered by
retailers
• Can be category specific (like Dell that allows customization) or cross-
category (like Walmart with minimal customization if any)
Distribution Options
Direct Intermediary
Salesforce
• Internet • Franchise
• Telephone • Own • Wholesaler
• Mail • Another firm’s • Agent/Merchant
• Catalogue • Contract • Distributor
• Own channel • Partner
Direct channels can provide a reliable supply and a good price, and can be extremely
convenient by saving the physical requirement to shop. They are however prone to
problems of availability, speedy supply, range of choice, empathy when supply is
interrupted and service and support
Own Sales force is common in the B2B industry. Companies in the aerospace
industry would employ their own sales force and so would software companies.
Intermediary
• An agent acts as principal intermediary between the seller and
supplier of a product or service and finds buyers without taking
ownership
• Wholesalers stock products before the next level of distribution
• Distributors distribute a product within a market
• Franchising is where a company offers a complete brand concept,
supplies and logistics to a franchisee who invests an initial lump
sum and thereafter pays regular fees to continue the relationship
Principle Channels
Multi-channel Marketing
• Multi-channel marketing strategy is required for buyers who use
more than one channel when interacting with an organization
• Customers go online for information but then go offline to complete a
purchase, or the reverse process
Grey Marketing
Grey marketing is when distributors purchase goods from authorized
dealers or directly from the manufacturer, and resell the same goods in
another market at a lower price.
Issues in Grey Marketing
• The Company pursuing grey marketing can face legal challenges as
unauthorized imports might not meet local import regulations.
• Price Discounting can affect the image of the brand and can create
loss in profits.
• Poor service can also have a negative impact on brand image.
Price & Distribution Strategies
Market Leader
• Distribution in place Market Challenger
• Price main weapon • Focus on flanks
• Premium price • Direct or indirect attack
• Variety of options
Market Niche
Market Follower • Stay with markets
• ‘Cloning’ • Add niches
• Set lower prices • Premium price
• Selective distribution
Positioning & Distribution Strategies
Exclusive : high tagged luxurious : high end shopping malls/ own store
Selective : for mid range specialty products : mid and mid to high
shopping places
Intensive : for low priced convenience products/FMCG/ Impulsive
products : convenient stores
Competition & Distribution Strategies
Super market selling gasoline
Gasoline station with mini marts
Market Leader: needs to expand the total market as much as possible.
They can achieve this with strategies for market usage and new
applications. Distribution networks are fully in place, price is their main
weapon. They might directly attack challengers by reducing price.
however if a challenger decreases price, the leader has to take stock of
the situation before deciding on the best form of counter attack. This is
because they have the strength to wait and decide on the best
approach.
Market Challenger: are substantial firms. They do not wipe out the
business of market leaders but edge their way towards equality or
gradually take over the leader. They have little alternative but to attack
leaders directly or indirectly. They need to make better use of pricing
and distribution to help do this and attack a leader’s strengths or
weaker spots. Can opt to discretely build shares by attacking other
challengers, followers or smaller niche players.
Followers: they may clone prices and distribution of leaders and or
challengers. Generally they build distribution behind leaders and
challengers and set prices somewhat lower. Followers by nature do not
seek leadership rather they make good profits simply by providing
imitations of leader or challenger products .
Market Niche:
• Select a zone leaders or challengers are less interested to dive in
• Have good niche mix
• Offer high end differentiated products: organic zero sugar chocolates
vs Cadbury.
