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PLACEMENT STRATEGY

BLENDED EDUCATION

PROFESSOR Antonio Fontanini

Marketing Strategy Planning Process

04/08/14

Customers Needs and other

Segmenting Dimensions

Company Mission, Objectives,

& Resources

Competitors Current & Prospective

S. W. O. T.

External Market Environment Technology, Political & Legal, Social & Cultural, Economic

Targeting & Segmentation

Positioning & Differentiation

Narrowing down to focused strategy with quantitative and qualitative screening criteria

Marketing Channels are sets of independent

organizations involved in the process of

making a product or service available for use

or consumption.

The importance of Channels

• Channels affect all other marketing decisions. • Channels cannot be changed in the short term. • Push vs pull strategy

Advantages of a distribution system

• Key external resource • Takes years to build • Significant corporate commitment to a large numbers of firms • Commitment to a set of policies that nourishes long term relationships

Caterpillar 50 Year worldwide leader in heavy

equipment for building and mining + 20B$ Revenues/ Year + 50% of his direct competitor 35% worldwide market share + 300 products to + 200 countries SUCCESS FORMULA High Quality products Flexible and Efficient Production Continuos Innovation Market Oriented Organization

Caterpillar 211 DEALERS WORLDWIDE Conocen el mercado local, a los clientes, dan todo

el servicio, acompañan al producto toda la vida “Compre la maquina, obtenga la empresa” PRINCIPLES •  Caterpillar No compite con sus canales •  1 sola red mundial, con todos conectados:

desde cualquier sitio hay visibilidad total •  Servicio y disponibilidad 7/24 Mine in Indonesia (Free Port Mc Moran). Biggest

open sky copper and gold 500 equipos (Cargadores, Tractores, Camiones de

240 Tons y 2000 HP): each > 1M$ Service is key.

Caterpillar Dealers rentability is guaranteed: Since 1925 +50 years same family; personal relationship Mid `80s: worldwide crisis >1B$ losses It did not loose any dealer Extraordinary support to deliveries: •  36 centros de distribución •  1,500 Instalaciones de servicios •  320,000 componentes en existencia •  84,000 artículos expedidos/día •  Entrega de repuestos en 48 horas •  80% pedidos: entrega inmediata •  99% en el mismo día

Types of consume intermediaries

• Distributors • Wholesalers • Retailers • Department stores

Different kind of Channels • Direct Channels • Indirect Channels • Hybrid Channels – E.g.: IBM • For large accounts direct sales executives • For SMEs Telemarketing • For Consumers Retailers

CASO: G.E. APPLIANCES (Electrodomésticos) STATUS: Venta y saturación a los dealers para dejar menos espacios para otras marcas; presión para vender un gran stock: tenía problemas de fidelidad y competitividad. GE CUSTOMER´S NET: + 8,000 DEALERS Los dealers reciben on-line toda la información sobre modelos, precios, plazos de entrega, benchmarking con el mercado, .. Estado de los pedidos, inventario virtual, .. En las tiendas hay sólo modelos en exhibición (muestras) con teminales remotos para personalizarl los productos: 24 horas de plazo de entrega.

Different kind of Channels

Different kind of Channels Horizontal Channels (Lamar Saving Bank offices

in Safeway, McDonald´s in Wal Mart, Starbuck Coffee in Barnes & Nobles, …)

q Creation of contact points inside the channel

q “P&G” has 100 people at Wal Mart HW for process optimization

q “Western Publishing” created “Book´R Us” inside “Toys´R Us”: “golden little books”

q “Sara Lee” has “dealer teams” inside “Target” shops to optimize invenories and know customers

Manufacturer or producer

Consumer

Procter & Gamble

Del Monte Nissan Citibank

Wholesaler

Wholesaler

Retailer

Wholesaler

Retailer Retailer

Four Examples of Basic Channels of Distribution for Consumer Products

Why not going direct? • Many distributors lack the

financial resources to direct marketing • Producers who can establish

their own channels can find a higher return by increasing investment in their main business. • In some cases direct marketing

is simply not possible.

Channel functions • Gathers information on

customers, competitors and other external market data • Develop and disseminate

persuasive communication to stimulate purchases • Agreement on price and other

terms • Placing orders with

manufacturers

Channel functions • To finance inventories and the

market access • Assume responsibility of all risks

of the trade • Successive storage and

movement of products • Helps buyers in getting their

payments through • Oversee actual transfer of

ownership

INDUSTRY CHANNELS INDIVIDUAL ACCESS DIRECT Subsidiaries (commercial rep, local company) INDIRECT Agents, Distributors,Vars SHARED ACCESS Piggy-back Temporary Association Joint Ventures Trading Companies Licence/Technology Licencing FRANCHISING Multinacionals Off-Shores

producto precio comunicación distribución

VENTA  DIRE C TA Bueno Bueno Bueno Suficiente

AG ENTE Suficiente Suficiente Malo Malo

IMPORTADOR Suficiente Muy  malo Malo Malo

FIL IAL Bueno Bueno Bueno Bueno

AGRUPAC ION  E XPORT Bueno Suficiente Suficiente Suficiente

J O INT  VENTURE Bueno Suficiente Suficiente Suficiente

PIGGY -­‐BAC K Suficiente Suficiente Regular Malo

   

CONTROL DEGREE IN THE MIX

MULTINATIONALS Geografical diversification of enterprises –  Etnocentric/ Policentric/ Geocentric (global vision)

–  Multiple bases

–  Globalization of economic resources, organization, technologies, planning and managements

–  M&A, Holding, Associates, Participates.

–  Programas integrales de compra, producción, ventas, financiación y prestación de servicios a escala intl

–  Programas de I+d de productos subvencionados con medios estatales en los países filiales

–  Holding in “off shore” (tax heaven) countries

–  Earnings fiscal management through “transfer pricing” technics, avoiding currency change risks

–  Lobbying) at local governments.

Sigla Descripción

GRUPO E (Salida) EXW Ex Works

GRUPO F (Sin pago trans) FCA Free Carrier

FAS Free Along Ship

FOB Free On Board

GRUPO C (Con pago trans) CFR Cost and Freight

CIF Cost, Insurance and Freight

CPT Carriage Paid To

GRUPO D (Llegada) CIP Carriage and Insurance Paid to

DDU Delivered Duty Unpaid

DDP Delivered Duty Paid

INCOTERMS 2010

INCOTERMS

INCOTERM SIGLAS GTOS EN ORIGEN 1 2 3 4 5

GTOS INTERNAC. 6 7

GTOS EN DESTINO 8 9 10 11

M/T T/V

En Fábrica EXW V C C C C C C C C C C G S Franco al Costado del Buque Franco Transportista Franco A Bordo

FAS FCA FOB

V V V V C V V V V C V V V V V

C C C C C C

C C C C C C C C C C C C

M G M

S S S

Coste y Flete Transporte Pagado Hasta Coste, Seguro y Flete Transporte y Seguro Pagados

CFR CPT CIF CIP

V V V V V V V V V V V V V V V V V V V V

V C V C V V V V

C C C C C C C C C C C C C C C C

M G M G

S S S S

Entregada en Frontera Entregada Sobre Buque Entregada Sobre Muelle Entregada Derechos No Pagados Entregada Derechos Pagados

DAF DES DEQ DDU DDP

V V V V V V V V V V V V V V V V V V V V V V V V V

N N V V V V V V V V

C C C C C C C C V C C C V C V V V V V V

G M M G G

LL LL LL LL LL

GASTOS EN ORIGEN GTOS INTERNACIONALES GASTOS EN DESTINO 1. Embalaje y verificación 2. Recogida en fábrica/almacén 3. Transporte interior 4. Despacho exportación 5. Gastos de terminal

6. Transporte internacional 7. Seguro de transporte

8. Gastos de terminal 9. Despacho importación 10.Transporte interior 11.Entrega en fábrica/almacén

V: Vendedor/Exportador C: Comprador/Importador N: Negociable M/T: Modalidad de Transporte (G: General, M: Marítimo) T/V: Tipo de venta (S: a la salida, LL: a la llegada)

Channel Design Decisions 1.   Analyzing customers desired service

output levels 2.   Establishing objectives and

constraints 3.   Identifying major channel

alternatives 4.   Evaluating the major alternatives 5.   Deciding your channel alternatives

(selective vs intensive distribution)

Channel Advantage is gained when you are

able to switch customers to lower-cost channels, with no loss

of sales or deterioration in service quality.

Channel Management Decisions

• Selecting Channel Members • Selecting Channel Levels (Accreditation) • Training Channel Members • Motivating Channel Members • Evaluating Channel Members

What kind of distribution?

• Exclusive (Rolls Royce, Rolex, Chanel) • Selective (General Electric) • Intensive (Colgate, Palmolive)

Terms and Responsibilities

• Rights and responsibilities are drawn up • Territorial rights are fixed • Pricing policies and conditions of sales are fixed

Channel modification • With time channels need to

change along with product as it get older in the PLC • Introduction – boutiques,

company showrooms • Growth – chain stores,

departmental stores • Maturity – Mass merchandisers • Decline – ‘sales stores’, discount

stores

Adding channels Advantages • Increased market coverage • Lower channel costs • More customised selling Disadvantages • Increases selling costs • Increases channel control • Breeds channel conflict

The Canon Example • Large and Public Companies: Direct Sales Force • SMEs: Specialized dealers in office equipment • Consumer, small companies and SCFW: Retailers

Recommendations

• Be sure that you are offering the right level of service with the right channel. • Be sure to define what is the target group for each channel. • Be sure to consider what the channel is good at

Handling the Channel conflict

Channel conflict • Interest of different business

interests do not necessarily coincide • Conflicts can occur at various

levels: vertical horizontal multichannel

Conflict causes

• Goal incompatibility • Differences in perception • Great dependence

Legal and ethical issues

• Exclusive dealings • Exclusive territories • Tying agreements • Dealer rights

Total Industry

Profit

+

-

$ 0

Market Introduction

Market Growth

Market Maturity

Sales Decline

Time

Total Industry

Sales

Placement Build Channels Maybe selective distribution

More of the same, but more channel outlets available

Move toward more intensive distribution

Find a way to reach loyal laggards

The Product Life Cycle

Retailing includes all activities involved in

selling goods or services directly to final consumers.

Types of Retailers • Self – service – discount stores (no

assistance) • Self – selection – dept. store

(assistance is available if required) • Limited service – counter sales men

are there • Full service – Co. showrooms.

Salesmen are available to explain, demonstrate, give technical help and promote the products

The target market will define

• Assortment of goods to be stocked • Store atmospherics and services • Pricing decision • Promotion decision • Place decision

Retail sales effectiveness

• No. of people passing by on an average day • % who enter the store (footfalls) • % entering who buy • Amount spent per buyer

Store Brands

• With the increase in size and buying strength of retailers, companies are forced to now customize products for them. • These are known as store brands. They may compete at the store with the company’s own brands.

What is wholesaling? • It includes all activities involved in selling goods and services for resale or business use. They are the intermediaries between manufacturers and retailers.

Characteristics of wholesalers • Less attention to promotion,

atmosphere and location • Transactions are usually large

and cover a wider geographical area • Could have different tax

implications, regulations,etc. because of its status as a wholesaler

Functions of a wholesaler

•  Financing •  Risk bearing •  Market

information •  Management

services and counselling

•  Selling and promoting •  Buying and

assortment building •  Bulk breaking •  Warehousing •  Transportation

Market Logistics • Involves the planning,

implementing and controlling the physical flows of materials and final goods from point of origin to points of use to meet customer requirements at a profit. • It involves materials management,

distribution systems and IT systems interlinked with one another.

Logistics objective

• Getting the right goods at the right place at the right time for the least cost • ‘the last frontier for cost economies’.

Market Logistics decisions

• Order processing • Warehousing • Inventory • Transportation

Inventory vs Service levels

inventory

cost

Serv

ice

leve

l

100%

Reorder point should balance the risks of stockouts against costs of overstocking

Company needs to balance ordering costs vs inventory carrying costs

Logistics vs. Sales

• Objectives can be conflicting • Conflict resolution can be done by trading off costs vis -a- vis customer satisfaction

Gracias, gracias, gracias fontanini@learning.eoi.es