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PLACE AND DEVELOPMENT OF CHANNEL SYSTEMS

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Juan Paolo Llantino

on 1 August 2014

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Transcript of PLACE AND DEVELOPMENT OF CHANNEL SYSTEMS

PLACE AND DEVELOPMENT OF CHANNEL SYSTEMS
Place
Objectives
Direct vs.
Indirect
Channel
Specialist
Channel
Relationships
Other
Strategy Decisions
Intermediaries
Discrepancies & Assortments
Regrouping Activities
1. Discrepancy of Quality
the difference between the quantity of products it is economical for a producer to make and the quantity final users or consumers normally want.

2.Discrepancy of Assortment
the difference between the lines a typical producer makes and the assortment final consumers or users want.

1. Making bulk or Accumulating
Collecting products from many small producers

Adjusting Quantity Discrepancies
2. Bulk-breaking or Allocating
Dividing larger quantities into smaller quantities as products get closer to the final market

Regrouping Activities
Adjusting Assortment discrepancies
1. Sorting
- separating products into grades & qualities desired by different target markets
2. Assorting
- putting together a variety of product to give a target market what it wants
Bits and Bytes need distribution too.
Ex. Netflix
Implementing Strategy
1. Marketing manager must choose type of channel relationship
2. The whole channel should have a product-market commitment
3. Traditional channel systems involve weak relationships
Conflicts in channels of distribution
1. Vertical conflicts
2. Horizontal conflicts
Channel Captain can guide channel relationships

Some producers lead their channels

Powerful retailers can lead channels

Managing Channel Conflicts
Vertical Marketing Systems
-A dominant force in the marketplace
Corporate Channel Systems
Administered Channel Systems
Contractual
Channel Systems
Firms that handle manufacturing, wholesaling, and retailing all at the same time. It has it’s pros and cons.
Informal agreement in sharing inventory and sales information over computer networks.
Agreement by contract to cooperate with each other.
Ideal Market Exposure
Intensive
Distribution
Selective
Distribution
Exclusive
Distribution
Sell it where they buy it
Sell it where it sells best
Let the product itself attract the customers’ attention
Multichannel & Reverse channels
Multichannel
Reverse
Firms use more than one
channel of distribution
Downside of different channels
increases competition
price competition
Why?
- Different mark ups
Multichannel distribution
Several competing channels to reach the same target market

Examples – Apple – store,website,retailers
Zynga – Farmville,Cityville

Why multichannel distribution?
Retrieve products that customers no longer want or if the need arises

Ex. Repairs, warranties, buying errors

International
Market Entry
EXPORTING
LICENSING
MANAGEMENT CONTRACTING
JOINT VENTURE
DIRECT INVESTMENT

Ex. Eric Loves Mary Jane Deeply.
5 Basic Approaches
GROUP
4
Hao, Kevin
Leon, Alvin
Llantino, JP
Magpali, Micha
Consumer Product Classes
Product Classes
Business Product Classes
Product Life Cycle
Convenience Product
Shopping Product
Specialty Products
Unsought Products
Emergency
Impulse
Staple
-Bought routinely
-w/o much thought
-bought quickly, unplanned
-strongly felt of need
-immediate purchase when need is great
Heterogeneous
- see products different
-inspect for quality & suitability
-quality & style matters
Homogenous
-See the product same
-price matters
Consumer really wants
Effort in finding it
branded
Regular unsought
-might be a need but not motivated to buy
New unsought
-new product
-offer new ideas
1. Installation
2. Accessory equipments
3. Raw materials
4. Components
5. Supplies
6. Professional service

Direct Channel
Indirect Channel
Maintains control
Internet utilization
e-commerce, delivery services
Suitable intermediaries not available
Common with business customers and services
less investment in facility

reduce need for working capital

Help producers serve customer needs better & lower cost
THE
END
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