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Practicum 5: Marketing Channels: Delivering
Customer Value
Alex Fertig
Dolyn Hall
Lauren Blankenship
Isaac Okebiorun
Distribution Channels
Channel of distribution- a set of interdependent organizations that help make
a product or service available for use or consumption by the consumer or
business user
PRODUCERS
CONSUMERS
Distribution channels offer a variety of services that ease and enhance selling
and buying goods
Companies pay too little attention to their distribution channels
Channel Members
Producers use intermediaries to make their products easily available to target
markets
● Intermediaries play an important role in
matching supply and demand
●
Producers narrow down the different
types of products in large quantities
●
Consumers want broad types of products
in small quantities
●
Intermediaries buy large quantities from
the producers and create small quantities
of different types of products that are
wanted by the consumers
Marketing Logistics
● Marketing Logistics is also known
as physical distribution
● Involved planning, implementing,
and controlling the flow of the
product
● As the textbook Principles of
Marketing states,
o “It involves getting the right
product to the right customer
in the right place at the right
time.”
(Kotler & Armstrong, 2014)
Types of Intermediaries
● Intensive Distribution is stocking the certain product in as many outlets
as possible
o Products such as Coca-Cola, Kraft, etc.
● Exclusive Distribution which is giving a limited number of dealers the
exclusive right to distribute the company’s products in their territories
o A more extreme form compared to intensive
o Examples: Bentley automobiles
● Selective Distribution is the use of more than one but fewer than all of
the intermediaries who are willing to carry the companies products
o Selective is in between intensive and exclusive
o Gives producers more control and less cost than intensive
Direct vs. Indirect Channels
The number of intermediary levels, determines the length of a channel
Direct marketing channels is a marketing channel that has no intermediary
levels
This means that the producer sells directly to the consumer
Ex. GEICO sells insurance directly online; selling door-to-door
and through telephone
Indirect market channels contain one or more intermediary levels
Most of the products we buy today use the indirect method
Ex. Toothpaste, cosmetics, cameras, etc.
Netflix
Innovation has become a vital part in Netflix’s success.
Due to the new ideas, it has completely changed the way people watch movies
and TV shows online
Companies have noticed Netflix’s success and have tried to create their own
digital streaming
Because of this, Netflix is forced to come up with new ideas to stay
competitive.
This company wiped out all movie rental services
They are forced to keep their distribution strategies up to date so they will not
be overtaken by companies such as Amazon Video, Hulu and YouTube
Our Product
Old Spice
○ Established in 1937
○ Wide variety of body care
products ranging from
antiperspirants to shaving
products.
○ Has a total of 6 online
retailers
Market Channels
● Since Old Spice uses more than
one intermediary level, it uses
indirect marketing channels.
o Producer = Old Spice
o Wholesaler = Yosemite
Wholesalers
o Retailers = Save Mart,
Target, Amazon, etc.
o Consumer = You, me,
anyone interested in the
product
Producer
● This is the production of the
product Old Spice.
● Old Spice makes millions of
soaps, deodorants, and body
sprays that then get shipped to
the Wholesaler.
Wholesaler
● Known as the “Middle Man”
● Buy producers product and sell it
to retailers for profit.
● Some wholesale warehouses sell
directly to consumers (Costco,
Sam’s Club)
● Advantages:
○ Ability to produce in volume
○ Able to move the product
along to the Retailer
● Disadvantages:
○ Low demand= Big Losses
Retailer
● These are the neighborhood
grocery stores.
● The Retailer takes the large
quantities from the Producer and
Wholesaler and makes smaller
quantities.
● This is what the consumer sees
in stores, and ultimately
purchases.
Consumer
● An individual that buys products
for personal use or consumption
● They can make the decision
whether or not to purchase an
item
References
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About Us. (2014, January 1). Retrieved October 14, 2014, from http://www.savemart.com/aboutus
Marketing Channels and Supply Management. (2006, January 1). Retrieved October 12, 2014,
from http://www.laukamm.de/fomweb/elearning/marketing/channel/kotl_channels1.htm
Old Spice. (2014, January 1). Retrieved October 14, 2014, from http://www.oldspice.com/enUS/where-to-buy.aspx
Old Spice Products. (2012, August 4). Retrieved October 28, 2014, from
http://fashioniseverywhere.com/2014/04/08
Procter & Gamble. (2011, January 1). Retrieved October 28, 2014, from
http://news.oldspice.com/about/history_timeline
Saltmarsh, N. (2004, April 30). Retrieved October 28, 2014.