Transcript Steps in the design of a Channel

Distribution Management
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Test results week 2a
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Results
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Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
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Quiz
Name and describe briefly the 5 sources of power,
according to Rosenbloom that can be found in a DC?
5+5
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel power
• The ability of one channel member to control or
manipulate the behavior of another channel member
• Negative and positive power
6 Influencing Strategies
• Five sources (Rosenbloom)
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Reward
Coercive
Legitimate
Referent
Expert
•Promise Strategy
•Threat strategy
•Legal strategy
•Request strategy
•Info exchange strategy
•Recommendation strategy
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Recap
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Chapter 1 – Supply chain, Value chain and Distribution
1.Supply Chain
2.Value
Chain
analysis
3.Typical
Distribution
channel
Distribution
4.Intermediaries
5.Trends /
Issues
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
6.Distribution
Structure
decisions
Chapter 1 – Supply chain
Primary decisions
Development
Planning
Sourcing
Transport
logistics
Inventory
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Production
Value - Chain analysis
• The Supply chain is a value adding process.
10c / Kg
R2.50 / Kg
R35.00 / Kg
R18.00 / Kg
Hugo van Zyl
083-629 2069
[email protected]
R12.50 / Kg
Marketing 2B
Distribution Management
Trends and issues.
• Competition in Distribution channels
– Porter’s five forces:
Substitute
products
Supplier
power
Competitive
rivalry
Threat of
Potential
competitors
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Buyer power
Trends and issues.
• Supply chain issues in SAF
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High cost of Transport in SAF, due to being road based not rail based.
Mining generates more demand than other sectors due to weight
Geographical position of Steel industry related to harbors add cost
Geographic distribution of Agricultural sector adds complexity
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Franchising
“Being in business for yourself but not by yourself”
• Arrangement between the franchisor and the franchisee
• Franchisor – Seller and owner of the trademark or name
of the business
• Franchisee – purchases the right to use the name /
trademark and the processes of the business
• Highest are of growth in retail business globally
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Customer purchase process
1. Awareness of a need – Hunger
2. Information search – Page through the Mr. Delivery
menu
3. Purchase – Select a burger from Nando’s
4. Post purchase evaluation – Happy so put Number in
Cell phone for future reference
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
What will make you have a……
Positive experience
• Delivered in your expected
time frame
• Food was freshly prepared and
hot
• Price was not perceived as a
Rip off
• Delivery guy was clean and
neat
Negative experience
•
•
•
•
Food never delivered
Cold and soggy
Cost more than what they said
Delivery guy was smoking and
tipping ash on the package
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel power
• The ability of one channel member to control or
manipulate the behavior of another channel member
• Negative and positive power
6 Influencing Strategies
• Five sources (Rosenbloom)
–
–
–
–
–
Reward
Coercive
Legitimate
Referent
Expert
•Promise Strategy
•Threat strategy
•Legal strategy
•Request strategy
•Info exchange strategy
•Recommendation strategy
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Conflict resolution
Methods to resolve conflict
• Problem solving
– Super ordinate goals
– Communication process
• Persuasion
– Agreement to change objectives by all parties
• Negotiation
– All parties compromise on aspects of their goals
• Politics
– Coalitions
– Mediation / Arbitration
– Lobbying / Judicial appeal
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel design and selection
of Channel members
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel design and selection of
Channel members
Definition of channel
design
Steps in the design of a
Channel
1.
Channel objectives
2.
Specify distribution activities
3.
Possible alternatives
4.
Factors that may affect
selection
1.
Market
2.
Product
3.
Intermediaries
4.
Organization
5.
Selecting the best option
6.
Selecting intermediaries
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Modifying an
existing channel
1.
Changing consumer
needs
2.
New competition
Channel design
Why is the “design” of your distribution channel important?
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel design
•
Definition
– Decision made by an organization to form a new or change an existing
distribution channel.
•
Channel design ( New or change) is a Strategic design.
– What do I mean by that?
– When in the Strategic development process should this decision be made?
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel design
•
Definition
– Decision made by an organization to form a new or change an existing
distribution channel.
•
Channel design ( New or change) is a Strategic design.
– What do I mean by that?
– When in the Strategic development process should this decision be made?
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel design
•
Definition
– Decision made by an organization to form a new or change an existing
distribution channel.
•
Channel design ( New or change) is a Strategic design.
– What do I mean by that?
– When in the Strategic development process should this decision be made?
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel design
•
Definition
– Decision made by an organization to form a new or change an existing
distribution channel.
•
Channel design ( New or change) is a Strategic design.
– What do I mean by that?
– When in the Strategic development process should this decision be made?
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Channel design
•
Definition
– Decision made by an organization to form a new or change an existing
distribution channel.
•
Channel design ( New or change) is a Strategic design.
– What do I mean by that?
– When in the Strategic development process should this decision be made?
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Steps in the design of a Channel
1. Determine Channel objectives
2. Specify distribution activities
3. Develop possible alternatives
4. Evaluate factors that may affect selection
5. Select best distribution channel
6. Select specific intermediaries
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Step 1
Determine Channel objectives
• What is the overall marketing strategy of the:
– Company
– Portfolio
– Brand
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Steps in the design of a Channel
1. Determine Channel objectives
2. Specify distribution activities
3. Develop possible alternatives
4. Evaluate factors that may affect selection
5. Select best distribution channel
6. Select specific intermediaries
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Step 2
Specify the distribution activities
Gather and Disseminate info
Info and the flow of Communication across
the intermediaries is critical to success
Marketing communication
Marketing campaigns and programs
Negotiations
Price, Quantity and Financing of product/s
Risk taking
At any given point of the DC we find risk.
Taking title of product
By handing over the product to the next
intermediary the title is passed on.
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Steps in the design of a Channel
1. Determine Channel objectives
2. Specify distribution activities
3. Develop possible alternatives
4. Evaluate factors that may affect selection
5. Select best distribution channel
6. Select specific intermediaries
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Step 3
Develop possible alternatives
• Decision made to allocate the previous activities to
intermediaries. – Channel structure!
• Design decision made with following in mind:
– Number of levels in DC
– Number of intermediaries in DC
– Types of intermediaries in the DC
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Step 3
Develop possible alternatives
Number of Levels?
0
Manufacturer
Consumer
1
Retailer
2
Wholesaler
3
Wholesaler
Retailer
Agent
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Retailer
Step 3
Develop possible alternatives
Number of Levels?
0
Manufacturer
Consumer
1
Retailer
2
Wholesaler
3
Wholesaler
Retailer
Agent
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Retailer
Step 3
Develop possible alternatives
Number of Levels?
0
Manufacturer
Consumer
1
Retailer
2
Wholesaler
3
Wholesaler
Retailer
Agent
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Retailer
Step 3
Develop possible alternatives
Number of Levels?
0
Manufacturer
Consumer
1
Retailer
2
Wholesaler
3
Wholesaler
Retailer
Agent
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Retailer
Step 3
Decide on Number of intermediaries
Number of
Intermediaries
Many
Few
One
Exclusive
Selective
Intensity of Distribution
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Intensive
Step 3
Decide on Type of intermediaries
•
•
•
•
•
Supermarkets?
Hypermarkets?
Discount Family stores?
Small retailers?
Etc?
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Steps in the design of a Channel
1. Determine Channel objectives
2. Specify distribution activities
3. Develop possible alternatives
4. Evaluate factors that may affect selection
5. Select best distribution channel
6. Select specific intermediaries
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Step 4
Evaluate the factors that may affect selection
of a DC
Market Factors
Product Factors
Intermediaries
Organizational
factors
•Size
•Perish ability
•Availability
•Geographic
concentration
•Unit value
•Services provided
•Channel control
•Tech nature
•Attitude towards
policies
•Services provided
•Order size
•Customer buying
behavior
•Life Cycle
•Bulk / Weight
•Financial
resources
Hugo van Zyl
083-629 2069
[email protected]
•Managerial
capability
Marketing 2B
Distribution Management
Steps in the design of a Channel
1. Determine Channel objectives
2. Specify distribution activities
3. Develop possible alternatives
4. Evaluate factors that may affect selection
5. Select best distribution channel
6. Select specific intermediaries
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Step 5
Select the best Distribution channel
• Weighted Factor Score model
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Step 1 – Identify decision factors which are most important
Step 2 - Assign a weighting to each factor
Step 3 - Rate each channel against factors
Step 4 - Multiply factors rating by the weighting and total up.
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Steps in the design of a Channel
1. Determine Channel objectives
2. Specify distribution activities
3. Develop possible alternatives
4. Evaluate factors that may affect selection
5. Select best distribution channel
6. Select specific intermediaries
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Step 6
Select specific intermediaries
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Financial position of intermediaries
Sales Capacity
Product lines carried
Reputation
Market coverage
Strength of management
Attitude
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Steps in the design of a Channel
1. Determine Channel objectives
2. Specify distribution activities
3. Develop possible alternatives
4. Evaluate factors that may affect selection
5. Select best distribution channel
6. Select specific intermediaries
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management
Modifying the design of an existing channel
• Changing consumer needs
– E.g. Post office
• New Competition
– Alternative products (Mail vs email)
• New distribution alternatives
– Internet shopping vs. Sandton city
Hugo van Zyl
083-629 2069
[email protected]
Marketing 2B
Distribution Management