Download - Advertising Promotion Mgmt

7/31/2019 Advertising Promotion Mgmt

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Channel Planning

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Designing Distribution

Channels

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Definition

Channel design refers to those decisions

involving the development of new marketing

channels where none had existed before, or

the modification of existing channels


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Analyzing Consumer Service Needs

Setting Channel Objectives & Constraints

ExclusiveDistribution

SelectiveDistribution

IntensiveDistribution

Identifying Major Alternatives

Evaluating the Major Alternatives

Channel Design


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Variables

Market coverage

Sales contact

Inventory Order processing

Gathering market information

Customer support Volumes


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Objectives

Channel positioning: Ease or exclusivity

Comfort

Technical or service support Inventory levels to hold


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Volkswagen

Where Volkswagen might trip, say analysts, is

distribution. India is a large country and

hundreds of dealers are required to cover its

length and breadth. With about 300 dealers,

industry norms suggest, a car maker can cover

up to 80 per cent of the market. How does

Volkswagen measure against this benchmark?At the moment, Volkswagen has 43 dealers in

32 cities.


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Channel formats

Push strategy or pull strategy

Zero level to three level

Producer driven: Company owned outlets

Licensed outlets

Franchises, CSAs

Brokers, Vending machines


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Channel formats

Seller driven:

Retailers

Department stores/supermarkets

Specialty stores

Door-to-door


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Channel formats

Service driven

Restaurants

Automobiles

Other formats

Direct marketing

Horizontal Marketing System

Hybrid Marketing Systems


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Any company must ensure that:

Distribution channels meet the companys objectives.

Channels are created to match with brand perception createdby advertising.

It is aware of market trends and change distribution strategiesaccordingly.

The product receives the display and attention by all channelpartners.

Consumers either find it easy to buy products or are willing tobear some difficulty in acquiring the companys products.


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VMS (3 types)

Corporate VMS: When successive stages of

distribution are under a single ownership.

Contractual VMS: When independent firms at

different levels of distribution join together throughcontracts it is known as Contractual VMS. (3 types)

Administered VMS: A channel member controls the

other channel members in the distribution chain by

the sheer power of its size.


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Contractual VMS

Producer-Wholesaler: When Maruti appointsdealers, it would be under a certain contract.

Producer-Retailer: A Samsung store will not

be owned by the company. Wholesaler-Retailer: Co-operatives fall under

this category. Retailers buy from the jointly-

owned wholesaler and share the profits thosepurchases generate.


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Logistics

Suppliers, agents, marketers, channel members, and

customers

Inbound and outbound logistics

Technologies: product codes, satellite tracking,electronic data interchange (EDI), and electronic

funds transfer (EFT)

Includes: Order receiving and processing,Warehousing and storage, Inventory management,

Scheduling and Transportation


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HUL Go To Market Strategy (GTM)

HUL total 2400 distributors

Mumbai: 21 distributors into four mega

distributors [Rs 480 crore]

Target: of1.5 billion (Rs 9,855 crore)

Orders logged in evening, delivered the next

evening to the distributor by C&F

Consumers get fresher stock, more visibility


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Inventory held by distributor: 0

HUL salesmen use handheld terminals

Replenishment orders from retailers

Mahindra Logistics: 0 losses in transit

Single distributor per store model


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Choosing a channel: the Aspinwall

Approach

Characteristic Red Orange Yellow

Replacement

rate

High Medium Low

Gross margin Low Medium HighAdjustment Low Medium High

Time of

Consumption

Low Medium High

Searching

time

Low Medium High


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Aspinwall Technique

Red Orange Yellow

Long Medium Short


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Financial Approach

C&F 0.5% - 1%

Distributor 4%

Wholesaler 4 10% Retailer 7.5 25%

Logistics 5 10%


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Channel Strategy

The broad principles by which the firm

expects to achieve its distribution

objectives for its target market/s


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Peter Drucker

Everybody knows how fast technology is

changing. Everyone knows about markets

becoming global and about shifts in the

workforce and in demographics. But fewpeople pay attention to changing distributive

channels

Manage by Walking Around Outside


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Tom Peters

Most firms make the mistake of paying toolittle attention to the somewhat attenuatedmembers of their marketing team [marketing

channel]. The few companies that mind theirdistribution reap tangible rewards

Ignore Distribution Channels at your ownrisk


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Good channel management is good general

management

Frank Cespedes


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Channel Power, Conflict &

Policies


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Selection of channel

partners


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Selection of channel partners

Channel selection is a vital part of the channel

strategy and management process.

Objective is to develop a systematic and

effective process for identifying the channel

partners to fit your needs.


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Cont..........

How to evaluate marketing channel partners is a

common problem when seeking to new market

It provides a framework for identifying the

primary strategic intent of entering into the

partnership in the chosen market.


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Nine quality of successful channel

partners

Level of alignment between the dealer and

organization.

The commission structure.

The commission structure should be base on

the volume of sales not the margin.

Match with the organizational philosophy.

Ability to use resources optimally.

Assessment of financial exposure.


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Speed on distribution.

Flexibility

Competitive edge & better focus.

Cont..........


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Channel Power

The ability of a channel member to influence

the actions of other channel members is

called channel power.


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Types of Power

Reward

Coercive

Expert

Legitimate

Referent


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Channel Conflict

The situation of disagreement between the

channel members is called channel conflict.


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Stages of Conflict

Latent

Perceived

Felt

Manifest


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Reasons for Channel Conflict

Roles not properly defined

Resource scarcity

Difference in perception

Pricing

Philosophy differences

Goal incompatibility

Communication difficulties

Expectation Differences


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Managing conflict

Understanding the nature & impact of conflict

Tracing the source of Conflict

Understanding the impact of conflict

Strategy & plan of action for resolution


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Ways to manage Channel Conflict

Vertical marketing systems (VMS)

Hybrid marketing systems

Disintermediation

Conventional Channel versus


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Conventional Channel versus

Vertical Marketing System

Wholesaler

Retailer

Manufacturer

Wholesaler

Retailer

Consumer

Wholesaler

Retailer

Manufacturer

Wholesaler

Retailer

Consumer ConsumerConsumer

RetailerRetailerRetailer

ManufacturerManufacturer

WholesalerWholesalerWholesalerWholesaler

Retailer


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Hybrid Marketing System

ManufacturerManufacturer

WholesalerWholesalerWholesalerDistributor

Retailers

Dealers

Catalogs, telephone, Internet

Sales force

consumer

consumer

business

business

Catalogue, telephone,internet

Sales force


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Disintermediation

Catalogs, telephone, Internet

Sales force

Wholesaler

Retailer

Manufacturer

Wholesaler

Retailer

Consumer

Wholesaler

Retailer

Manufacturer

Wholesaler

Retailer

Consumer

Manufacturer

Consumer

Manufacturer

Consumer


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Channel policies

Which market to service

Customer coverage

Pricing

Product line to be handled

Selection of the right channel

Termination of a channel membership

Ownership of the channel


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Case: Maruti Suzuki

Nilesh Parmar Roll No: 37


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History

Established in 1982

Joint venture of Govt. of India & Japanese

company Suzuki Motors Corporation

Previously Govt. of India owned 80%

equity & Suzuki had 20%.

Now Indian Financial Institute has 18.28%,

Suzuki has 54.24% & 25% equity is public

offering.


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MD & CEO of

Maruti- Suzuki Ltd

MR. SHINZO NAKANISHI

There is reason to believe that

Nakanishi, 60, will make the transition

in a most unobtrusive manner. He has

served Suzuki Motor Co, which owns

54.2 per cent of Maruti, for 36 years and

yet not many in Maruti seem to know

that he is related to O Suzuki, the

chairman of his eponymous company.

He is Chairman of Maruti for 5 yrs.


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Key Factors

Functioning Better facilities

Increasing usage & market expansion

Offering gamut of services

SWOT analysis Strong distribution network

Customer satisfaction

Pre-owned car business

Exports Ecological environment

Technological development

Maruti & Road Safety


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Functioning

Production Management System (PMS) :-It is a

strategy to achieve Manufacturing Excellence evolved

through participative approach.

The system is people driven and ensures involvementof all levels (Managers, Executives, and Supervisors).

Achieved the target of selling a million cars in the

financial year 2009 - 2010

PMS has lead the production team towards greater

enhanced productivity with perfection.


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Better facilities


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Increasing usage & market expansion

Better value for money

Presence across multiple segments

Product innovation thereby increasing

penetration levels.


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Offering gamut of services


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Maruti Suzuki EECO


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Wagon R

Wagon R known as Theblue eyed boy re-launched

on 23rd april 2010.

It is designed with ample

and convertible inner space

Launched to compete with

Hyundai Santro, Ford Figo,

Chevrolet Beat,

Volkswagen Polo, Nissan

Micra.etc

Available in the 3 variants

(LX,Lxi,Vxi).


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Swift

B-segment carMost powerful & fuel

efficient in this segment

Sporty in looks

Dynamic European

stylingLaunched to compete

Tata Indica , Hyundai

Getz, chevy SRV

Car of the year 2006

CNBC auto car award


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SX- 4

Sedan model SX4meets BS4 Emission

norms

CNG kit fitted for

enhancing performance

of carLaunched to compete

against Ford fiesta ,

Honda city , Hyundai

verna , Fiat linea.


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Grand VitaraLaunched in Japan in

1988 as Vitara.

With superior

engineering i,e 2.4 VVT

Engine ,4 wheel drive

launched as Grand

vitara

2.5 million units sold all

over

SUV of the year by

NDTV profit car award

in 2008.


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UPCOMING : Maruti Kizashi

D segment of cars

Launched to compete

with Honda civic , Toyota

Corrola , Skoda Octavia

& Volkswagen Jetta,Volkswagen Vento

Estimated price range

above 14 Lakhs


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Maruti Cervo

Compact carsegment

660 cc engine

Estimated price

range Rs 1.5 to 2lakhs

To be launched in

month of nov.2011.


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Strong Distribution Network

Largest distribution & service network

Over 400 sales showroom

Over 600 dealer network

Over 1900 authorized service stations

Over 1190 cities


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Customer satisfaction :-

Largest distribution & service network

MUL has tied up with SBI (State Bank of India)

to offer financial help to customers

Maruti Suzuki offers 13 models ranging from

peoples car Maruti 800 for less than Rs 2lakh

to premium sedan SX4 & luxury SUV Grand

Vitara.


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Technological environment:-

Launched CNG kit for Alto its highest selling

car

Development of small & fuel efficient car

engines

Use of next generation KB series engine in A-

star

Alternate fuel technology using LPG in MPI

engines


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Institute of driving training &research(IDTR):-

Maruti & Govt.ofIndia Intiative

Over 5.5 Lakh

commercial drivers

trained in Delhi.Train 5 lakh in next

3years towards

Safety Driving.


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M ti S ki


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Maruti-Suzukitoday:-

Company holdsmore than 50% of

domestic car market

.

Company is listedon NSE & BSE. On

BSE it has highest

market capitalization

in auto sector.


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Certificates & Awards:-

1999:-Certified as per ISO 14001:1996 formaintaining EMS.(environment managementsystem)

Certified for changing its EMS from ISO

14001:1996 to ISO 14001:2004.Golden peacock award by world environment

foundation in 2007.

1

st

prize for excellence in energy conservationby Haryana govt.

1st company in world in automobile industry toget an ISO 9001-2000 certification.


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CONCLUSION

Today, the Suzuki brand is synonymous with 'value-packed'products, which offer quality, reliability and originality.

An integral part of the Suzuki concept to deliver 'value-packed'products lies in ensuring that the company use the most modern

manufacturing equipment and technologies together with factoryworkers and engineers. In addition, various activities are aimed atcontinually enhancing productivity, strict quality controls andeffective communication.

Suzuki develops products for the new generation and changeable

lifestyles, constantly creating new technologies and applying themto products with affluent imagination. The team covers a widerange of latest advances in energy, environment, electronics,communication, information and control applications.


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