Presentation on Marketing

Presentation on Marketing(channel Design Decision, Channel Management Decisions And Marketing Logistics)Presenters:Rakshak ShresthaRachana DhakalSandeep AdhikariContentsChannel Design DecisionsChannel Designs for Consumer ProductsChannel Designs for Industrial ProductsChannel Management DecisionsMarketing LogisticsChannel Design DecisionsChannel structure is a combination of channel components and channel levels.

Channel structure for consumer products and industrial products are different.

Types of channel component also differs between the two types of products.

Types of channel design:Channel Design for Consumer ProductsChannel Designs for industrial ProductsChannel Designs for Consumer ProductsChannel ParticipantsProducers

Producers of consumer products are manufacturers, processors and assembler who gather factors of production to make product to be used by individuals and households.

Many small producers perform all the distribution functions and directly deal with the consumer, while some manufacturers also maintain their own distribution networks.ContdAgents

Generally works for the principal, and negotiate the sales or purchase transaction on behalf of the principal.

Normally work on a commission on sales basis and do not take title to the goods they handle.

Usually make profits from commissions or fees paid for the services they provide to the producer and user.

Sales agents have full authority to negotiate the deal on behalf of the producer.ContdWholesaler

Are merchants who normally buy from several producers and sell to a large number of retailers and other institutional customers.

There are different types of wholesale establishments who differ in terms of merchandise they handle.

Also perform storing, promotion & credit extension functions in the channel system.ContdRetailer

They buy merchandise from the producers and wholesalers and sell them to consumers.

The retailer sell the products, that they purchase, directly to the end user for a profit.

They also take full title to the merchandise they handle and also perform storing, promotion and credit extension functions to a limited level.Channel Designs for Industrial ProductsChannel ParticipantsProducers

They can be of various types depending upon the type of product involved.

In case of capital goods, accessory equipment and parts they are mostly manufacturers.

In case of raw materials, such as oil and minerals, they are mostly mining companies.

Farmers are producers for most of the agricultural products.ContdIndustrial users

They are the manufactures, professors, assemblers or institutions that use the products for business or institutional purposes.

Industrial users may use the industrial products to manufacturer other products or provide services to consumers or institutions through the use of the products.

Industrial users include manufacturers, public utilities , government, airlines, hotels, hospitals etc.

ContdIndustrial distributors

They are wholesale establishments that purchase industrial products from producers and sell them to industrial users.

Most industrial distributors deal on a product line and maintain a full fledged marketing service including a large sales-force, product delivery systems, information systems.ContdAgents

Their functions and method of operations in the industrial marketing channel are similar to consumer marketing channels.

They neither take ownership nor are involved in the physical movement of the products.

They serve as a link between the producer and the industrial user.Channel Management DecisionsManagement of channel DynamicsThe channel system is dynamic.There are two types of dynamism in the channel systemBehavioural DynamismStructural Dynamism

1. Behavioural DynamismIt refers to the change in role and power relationships in the channel structures resulting in cooperation and conflicts among the channel members. It is a result out of a transfer of channel role, power and leadership positions in the channel systems.Channel RoleChannel roles are the sets of activities or behaviours assigned to each intermediary in a channel system.The channel system operates efficiently only if all participants perform their role without changing their respective positions.ContdChannel PowerChannel power results out of the control exercised by the channel participants and the leadership position of a participants in the channel system.

The channel leader exercises its authority and power in order to achieve control over the channel system.

Channel power may emerge from any five source:RewardCoercionReferent PowerExpert PowerLegitimate PowerContdChannel conflictsConflict can be caused by unfair manufacturer policies.Cross selling to make small profits has become a nuisance and cause of horizontal conflict in Nepalese market.Conflicts arise mainly due to the following factors: Goal incompatibility, Role incongruence, Communication gap, Perceptual differences, Ideological differences.Problem Solving, Bargaining, Politics and persuasion are the methods for resolution of the channel conflict. 2. Structural DynamismA conventional channel system is vertically organized in a hierarchy of levels, such as producer wholesaler retailer structure.This has resulted in the formation of new channel systems through vertical and horizontal integration.

Vertically integrated channel systems

This integration is achieved through combining two or more channel hierarchies under one management and control.

The combination may be acquired through a purchase or acquiring the operations of a channel member by another channel member.

Vertical integration has resulted into three forms of new channel structures: corporate vertical, contractual vertical and administered vertical marketing system.ContdHorizontally integrated channel system

This is achieved through combining activities of channel participants working at the same level of channel hierarchy.

Such combination may be achieved at the level of manufacturers or service providers, wholesalers and retailers.

Horizontal integration is mostly achieved through contractual agreements.Contd..Multi-channel or hybrid marketing system

In this system, an organization uses several channel structures to reach different market segments.

Multi-channel marketing runs into problem if all channel structures try to sell the product to sell the same consumer groups.Marketing LogisticsConcept and NatureIt is concerned with the management of flow of goods from the point of origin to the point of consumption.Physical distribution functions have been performed by all productive enterprises through the ages.In the 2nd world war, the military logistics played important part in the victory of allied forces. Encouraged by this example, business organizations realized the importance of logistics and embraced physical distribution as a competitive tool in marketing.Objectives of marketing logisticsIs to provide a better customer service at the minimum total distribution costs.It manages a cost trade-off between various physical distribution costs to provide a reliable product movement system without affecting the level of customer service.Major Logistics FunctionsThere are five major components of marketing logistics. They are:TransportationWarehousingInventory controlMaterial handlingOrder processingTransportationTransportation is the major tools for creating place utility on products.It moves products from the point of origin to point of consumption.An organization may have three options for the development of the transportation capabilities.Option 1: The organization may maintain its own private fleet of vehicles to provide the movement of products. This option requires heavy investments in equipment and personnel and is also perceived to be difficult to manage.Option 2: The organization may use private transports on a job or long-term contract basis. These contract carries are specialists and provide efficient and professional transport service.Option 3: The organization may use common carriers that offers point to point movement of products under specified charges.The major modes of transports available for a marketers are: road, air, railway and sea.The various means of transports offer varying level of costs, speed, consistency and product safety.WarehousingWarehouse is a fixed facility in which products are stored until demand arises for them in the market.The distribution warehouses stores products for a minimum of time before they are delivered to the target markets.The physical distribution(PD) manager needs to take four major warehousing decision: use of private or public warehouse, determining the number of warehouses, location of the warehouses, and use of third-party logistics.Inventory management and controlIs concerned with developing a system of maintaining an adequate level of product assortments to meet the customers demand.Inventory planning is highly essential as shortages of products normally result in customer disappointments, and hence a lower level of customer servicing.Inventory managers deal with issues, such as when to reorder and in what quantity to reorder. Factors that affect the reorder point:The re-order point: The reorder point is the inventory level that signals that more inventories should be ordered. The anticipation time between the date of reorder and date of delivery.The rate at which the products are sold and consumed.The level of safety stock on hand or the inventory level maintained in order to prevent stock outs.The reorder quantity: The reorder quantity refers to the quantity of a specific product item that needs to be replenished to meet the market demand. The EOQ model specifies the order size that minimizes the total cost of ordering and carrying inventories.Material HandlingMaterial handling of products is closely associated with warehousing since most of the work of physical transfer is performed within the warehouse.They are designed to enhanced the usable capacity of a warehouse, reduce number of times the products are handled, and improve the customer service and satisfaction factor.Physical handling can be mechanical as well as non-mechanical.In mechanical handling fork-lift trucks, cranes and conveyor belts are used in order to move products.In non-mechanical handling, human labor is used.Order ProcessingIs the receipt and transmissions of sales order information.Is an important distribution function as its efficiency may result in better customer satisfaction, repeat orders and higher profit levels.The order processing involves three major tasks:Order entryOrder handlingOrder deliveryIntegrated Logistics ManagementThis concept is based on the idea that the twin objectives of providing better customer services and cost minimization can be achieved only by integrating all logistics functions through an internal team work with good coordination with channel members and other agencies involved.This strategy is based on the following ILM activities:Cross-functional teamworkChannel partnershipProactive distribution

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