Marketing 2008
THANKS TO RAHUL SINGH CHOUDHARY
PART A
Q1: What is Relational marketing?
Ans: Relationship marketing is not about having a "buddy-buddy" relationship with your customers. Customers do not want that. Relationship Marketing uses the event-driven tactics of customer retention marketing, but treats marketing as a process over time rather than single unconnected events. By molding the marketing message and tactics to the Lifecycle of the customer, the Relationship Marketing approach achieves very high customer satisfaction and is highly profitable.
The relationship marketing process is usually defined as a series of stages, and there are many different names given to these stages, depending on the marketing perspective and the type of business. For example, working from the relationship beginning to the end:
Interaction > Communication > Valuation > Termination
Q2: Explain marketing concept?
Ans: The Marketing Concept
The marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.
The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability.
Target market
No company can operate in every market and satisfy every need. Nor can it always do a good job within one broad market.
Marketing is about meeting needs of target markets profitably.
Integrated Marketing
When all the company’s department’s work together to serve the customer’s interests, the result is integrated marketing.
Profitability
The ultimate purpose of the marketing concept is to help organizations achieve their goals. In the case of private firms, the major goal is profit. Marketing managers have to provide value to the customer and profits to the organization. Marketing managers have to evaluate the profitability of all alternative marketing strategies and decisions and choose most profitable decisions for long-term survival and growth of the firm.
Q3: How do economic forces impact marketing forces?
Ans: Factors such as level of employment, rate of inflation, rate of interest, demographic changes, and fiscal and monetary policies, which determine the state of competitive environment in which a firm operates. These forces affect the outcome of the firm's marketing activities, by determining the volume and strength of demand for the its products.
Q4: What is the linkage between micro & macro environmental forces?
Ans:
The term micro-environment denotes those elements over which the marketing firm has control or which it can use in order to gain information that will better help it in its marketing operations. In other words, these are elements that can be manipulated, or used to glean information, in order to provide fuller satisfaction to the company’s customers. The objective of marketing philosophy is to make profits through satisfying customers.
The term macro-environment denotes all forces and agencies external to the marketing firm itself. Some of these forces and agencies will be closer to the operation of the firm than others, e.g. a firm’s suppliers, agents, distributors and other distributive intermediaries and competing firms.
Q5: What is reference group?
Ans: People whose attitudes, behavior, beliefs, opinions, preferences, and values are used by an individual as the basis for his or her judgment. One does not have to be (or even aspire to be) a member of a reference group to be negatively or positively influenced by its characteristics.
Group, class, or category of people to which individuals believe they belong, whether or not they actually do. Their relationship to their reference group may influence their buying behavior. For example, if a man buys a more expensive car than he normally would because his neighbors drive that particular model; his buying behavior is seen to be influenced by his reference group.
Q6: What is selective attention?
Ans: The issue of why people pay attention, how much they do and to what is often more referred to as selective attention. In any busy scene, be it a classroom or a freeway, it’s virtually impossible to note everything at once. What a person pays attention to in these circumstances is what they select to pay attention to, though it may be noted that selection is not necessarily conscious. Selected attention can then be viewed as the process by which people find something upon which to concentrate, and the level of concentration they can continue to exert as distractions arise.
Q7: What is behavioral segmentation?
Ans: Market segmentation based on differences in the consumption behavior of different groups of consumers their life-styles, patterns of buying and using, patterns of spending money and time, etc. One of the five common segmentation strategies, its objective is to define specific niches that require custom tailored promotion.
Q8: What is segmentation, targeting, & positioning?
Ans: Segmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment and communicating that we have made the choice to distinguish ourselves that way.
Q9: What is co-branding?
Ans: Co-branding is the practice of using multiple brand names together on a single product or service. The term can also refer to the display of multiple brand names or corporate logo s on a single Web site, so that people who visit the site see it as a joint enterprise. When effectively done, co-branding provides a way for companies to combine forces so that their marketing efforts work in synergy .
Q10: What is geographical pricing?
Ans: Geographical pricing in marketing, is the practice of modifying a basic list price based on the geographical location of the buyer. It is intended to reflect the costs of shipping to different locations.
There are several types of geographic pricing:
FOB origin - The shipping cost from the factory or warehouse is paid by the purchaser. Ownership of the goods is transferred to the buyer as soon as it leaves the point of origin. It can be either the buyer or seller that arranges for the transportation.
Uniform delivery pricing - (also called postage stamp pricing) - The same price is charged to all.
Zone pricing - Prices increase as shipping distances increase. This is sometimes done by drawing concentric circles on a map with the plant or warehouse at the center and each circle defining the boundary of a price zone. Instead of using circles, irregularly shaped price boundaries can be drawn that reflect geography, population density, transportation infrastructure, and shipping cost.
Basing point pricing - Certain cities are designated as basing points. All goods shipped from a given basis point are charged the same amount.
Freight-absorption pricing - The seller absorbs all or part of the cost of transportation. This amounts to a price discount, and is used as a promotional tactic.
Q11: What is convenience store?
Ans: Convenience stores are small-sized stores that offer a limited range of grocery and other items that people are likely to need or want as a matter of convenience. Most convenience stores are located on busy street corners or in gas stations. Both travelers and locals use convenience stores.
Travelers stopping for gas or for washroom facilities often appreciate the convenience of having food, drinks, reading material and maps available without having to go to a supermarket. Convenience stores are usually open even when supermarkets are closed and usually allow for quicker shopping and service. To compensate for the convenience they offer, the prices are often higher at convenience stores than they are at supermarkets.
Q12: What is selective distribution?
Ans: Selective distribution is a retail strategy that involves making a product or group of products available only in certain markets. This is the opposite of open distribution, where a product line is distributed to as many markets as possible. There are several reasons for employing this approach, including the potential for limiting competition and minimizing distribution costs so that net profits are higher.
The process of selective distribution focuses on identifying specific markets where a company’s products are highly likely to be favored by consumers in the area, while avoiding distribution to areas where there is less of a chance of gaining a significant market share. Often, this situation comes about because a number of similar products.
PART B
Q13: Does marketing create or satisfy needs?
Ans:
A. Marketing merely reflects the needs and wants of customers.
B. Marketing shapes consumer needs and wants.
Part A
'Marketing merely reflects the needs and wants of customers.' We all need to eat, drink and sleep and reproduce, this is all part of who we are as human beings. Therefore at the basic level companies will strive to satisfy these functions and keep doing so by once in a while showing advertisements that tells the public that they are around and can provide the products they need.
The other aspect is that needs vary depending on what country you live in. "For example a consumer in the United States may need food but may want a hamburger, french fries and a soft drink and a person that lives in Mauritius that needs food may want a mango, rice, lentils and beans. Wants are shaped by our society." The other part is wants, everybody can want something but only a few has the means to acquire it. A good example would be that everyone wants to eat out at expensive restaurants everyday but in reality only very few people can actually afford that lifestyle. This is why various segments have been created to target different groups and classes of people.
Part B
Regarding the second argument 'Marketing shapes consumer needs and wants.' I have to also agree with this statement. My reasons are many and varied. After seeing so many television commercials and advertisements both on the Internet and on newspapers I have concluded that some companies construct their ads to create a need in the consumer's mind even if originally they were not interested in the product. I took some time to research some of the words that advertisements commonly use and I found an interesting mix of words and phrases. The word 'free' is the most common denominator I found in the ads, free is used in combinations such as free home trial, free inspection, buy one get one free, free installation, free estimates, free parking, free demonstration and free consultation. The word free is usually a powerful catalyst that springs the consumer into buying that particular product or idea even though he or she might not need it. I think other terms also kind of bait people into buying things they don't need.
Q14: What are the socio-cultural factors of the marketing environment?
Ans: The socio-cultural environment, in regards to marketing a small business, has many facets. One of the most important is the atmospherics of the store. When customers enter they want to feel welcomed and that the staff is friendly. This is also important when marketing because the business will want to attract a certain psychographic segment of the populous. You want to accommodate your specific target market by making sure that their needs coincide with what you have to offer and how they perceive that.
Also when customers do perceive that their cultural values are being respected by the business as evident in its market(ing) strategy and customer handling, they will respond more positively to the business and its revenues will increase.
Q15: What are the major factors which will influence the purchase decision?
Ans: As we discussed the decision-making process for consumers is anything but straight forward. There are many factors that can affect this process as a person works through the purchase decision. The number of potential influences on consumer behavior is limitless. However, marketers are well served to understand the KEY influences. By doing so they may be in a position to tailor their marketing efforts to take advantage of these influences in a way that will satisfy the consumer and the marketer (remember this is a key part of the definition of marketing).
For the purposes of this tutorial we will break these influences down into three main categories: Internal, External and Marketing. However, those interested in learning more about customer buying activity may want to consult one or more consumer behavior books where they will find additional methods for explaining consumer buying behavior.
For the most part the influences are not mutually exclusive. Instead, they are all interconnected and, as we will see, work together to form who we are and how we behave.
For each of the influences that are discussed we will provide a basic description and also suggest its implication to marketers. Bear in mind we only provide a few marketing implications for each influence; clearly there are many more.
Q16: Explain the concept of “Differentiation”?
Ans: In marketing, product differentiation (also known simply as "differentiation") is the process of distinguishing a product or offering from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as a firm's own product offerings.
Differentiation can be a source of competitive advantage. Although research in a niche market may result in changing a product in order to improve differentiation, the changes themselves are not differentiation. Marketing or product differentiation is the process of describing the differences between products or services, or the resulting list of differences. This is done in order to demonstrate the unique aspects of a firm's product and create a sense of value. Marketing textbooks are firm on the point that any differentiation must be valued by buyers (e.g. [1]). The term unique selling proposition refers to advertising to communicate a product's differentiation
In economics, successful product differentiation leads to monopolistic competition and is inconsistent with the conditions for perfect competition, which include the requirement that the products of competing firms should be perfect substitutes. There are three types of product differentiation: 1. Simple: based on a variety of characteristics 2. Horizontal : based on a single characteristic but consumers are not clear on quality 3. Vertical : based on a single characteristic and consumers are clear on its quality [3]
The brand differences are usually minor; they can be merely a difference in packaging or an advertising theme. The physical product need not change, but it could. Differentiation is due to buyers perceiving a difference; hence causes of differentiation may be functional aspects of the product or service, how it is distributed and marketed, or who buys it. The major sources of product differentiation are as follows.
• Differences in quality which are usually accompanied by differences in price
• Differences in functional features or design
• Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing
• Sales promotion activities of sellers and, in particular, advertising
• Differences in availability (e.g. timing and location).
The objective of differentiation is to develop a position that potential customers see as unique. The term is used frequently when dealing with fermium business models, in which businesses market a free and paid version of a given product. Given they target a same group of customers, it is imperative that free and paid versions be effectively differentiated.
Differentiation primarily impacts performance through reducing directness of competition: As the product becomes more different, categorization becomes more difficult and hence draws fewer comparisons with its competition. A successful product differentiation strategy will move your product from competing based primarily on price to competing on non-price factors (such as product characteristics, distribution strategy, or promotional variables).
Most people would say that the implication of differentiation is the possibility of charging a price premium; however, this is a gross simplification. If customers value the firm's offer, they will be less sensitive to aspects of competing offers; price may not be one of these aspects. Differentiation makes customers in a given segment have a lower sensitivity to other features (non-price) of the product
Q17: What are the components of product mix?
Ans: Product: A Part of the Marketing Mix
Product is actually a complex, multidimensional concept. It is defined broadly enough to include services, programs, and attitudes and includes whatever you are offering the target market in an effort to meet their needs. It involves all tangible and intangible aspects of the good or service you offer your target market. These are things which have value and are balanced against the value you expect to receive from the target consumer. Product in the NPS world would probably be interpreted as programs, activities, interpretation, as well as services.
Product Mix: Every organization has a product mix that is made up of product lines. Product lines contain product items. Each product item is a product or service as well as the brand, package, and services associated with it. There are six components as follows:
Services: Interpreters in visitor centers are providing an information service.
Package: In the product world this is the container. In the NPS world this could be the surroundings in which a program is delivered. The atmosphere of a visitor center might be considered the package in which the visitor center experience is delivered.
Brand: The brand in our case is the National Park Service and all of the image attributes that are associated with the NPS.
Product Item: A distinct unit within a product line that is distinguishable by size, price, appearance, function, or some other attribute. A guided hike along a particular trail might be a product item.
Product Line: A group of products within a product mix that are closely related, either because they meet the same need, function in a similar manner, or share some other characteristic. Interpretation might be considered a product line.
Product Mix (assortment): the set of all product lines and items that an organization offers its target market(s). Everything the NPS offers target market(s) constitutes its product mix.
Product Life Cycle: Products, services, programs, activities, etc., don't last forever! They have a life ... and then, often, they die. Businesses have a clear signal ... customers quit making a purchase. But government agencies do not receive such a clear cut signal. Unfortunately, they can continue to offer these outdated programs, services, etc., and operate outmoded facilities long after they should have been retired ... and would have in the business sector. How does the NPS address this problem?
The product life cycle is generally considered to have four stages:
Introduction: a period of slow program growth as it is introduced to the target market.
Growth: a period of rapid market acceptance.
Maturity: a period of a slowdown in sales growth due to acceptance by most of the potential buyers.
Decline: the period when sales turn downward because the offering no longer meets the needs of the target market as it once did.
Not all products experience a full life cycle. Some never take off in growth. Further, the length of time it takes a product or service to go through the cycle varies drastically. There are "staple" programs, for instance, that will probably always be around. To guard against problems associated with continuing to offer products, programs, etc., that no longer meet the needs of the target market, Edward Mahoney of Michigan State University suggests a periodic audit of programs and services. He defines an audit as a critical, unbiased review, from the customer's point of view, at two different levels:
Individual programs, facilities, services; and,
The mix (product line) of programs, facilities and services offered by an organization.
Offerings which no longer meet the needs of the target market are modified or withdrawn and resources reallocated elsewhere in order to use them more effectively in pursuit of organizational objectives.
Q18: Explain the break even or target profit pricing method?
Ans: Pricing Methods
As we said earlier, there is no "one right way" to calculate your pricing. Once you've considered the various factors involved and determined your objectives for your pricing strategy, now you need some way to crunch the actual numbers. Here are four ways to calculate prices:
Cost-plus pricing - Set the price at your production cost, including both cost of goods and fixed costs at your current volume, plus a certain profit margin. For example, your widgets cost $20 in raw materials and production costs, and at current sales volume (or anticipated initial sales volume), your fixed costs come to $30 per unit. Your total cost is $50 per unit. You decide that you want to operate at a 20% markup, so you add $10 (20% x $50) to the cost and come up with a price of $60 per unit. So long as you have your costs calculated correctly and have accurately predicted your sales volume, you will always be operating at a profit.
Target return pricing - Set your price to achieve a target return-on-investment (ROI). For example, let's use the same situation as above, and assume that you have $10,000 invested in the company. Your expected sales volume is 1,000 units in the first year. You want to recoup all your investment in the first year, so you need to make $10,000 profit on 1,000 units, or $10 profit per unit, giving you again a price of $60 per unit.
Value-based pricing - Price your product based on the value it creates for the customer. This is usually the most profitable form of pricing, if you can achieve it. The most extreme variation on this is "pay for performance" pricing for services, in which you charge on a variable scale according to the results you achieve. Let's say that your widget above saves the typical customer $1,000 a year in, say, energy costs. In that case, $60 seems like a bargain - maybe even too cheap. If your product reliably produced that kind of cost savings, you could easily charge $200, $300 or more for it, and customers would gladly pay it, since they would get their money back in a matter of months. However, there is one more major factor that must be considered.
Psychological pricing - Ultimately, you must take into consideration the consumer's perception of your price, figuring things like:
Positioning - If you want to be the "low-cost leader", you must be priced lower than your competition. If you want to signal high quality, you should probably be priced higher than most of your competition.
Popular price points - There are certain "price points" (specific prices) at which people become much more willing to buy a certain type of product. For example, "under $100" is a popular price point. "Enough under $20 to be under $20 with sales tax" is another popular price point, because it's "one bill" that people commonly carry. Meals under $5 are still a popular price point, as are entree or snack items under $1 (notice how many fast-food places have a $0.99 "value menu"). Dropping your price to a popular price point might mean a lower margin, but more than enough increase in sales to offset it.
Fair pricing - Sometimes it simply doesn't matter what the value of the product is, even if you don't have any direct competition. There is simply a limit to what consumers perceive as "fair". If it's obvious that your product only cost $20 to manufacture, even if it delivered $10,000 in value, you'd have a hard time charging two or three thousand dollars for it -- people would just feel like they were being gouged. A little market testing will help you determine the maximum price consumers will perceive as fair.
Q19: Describe the major types of retailers & give example of each?
Ans: Over the years, the retailing business has gained momentum to a tremendously commendable extent. Be it any part of the world, the importance of retailers couldn't be disregarded as they are the final and direct people who come in contact with the consumers. As for types of retailers, there are four types of retailers:
High-service retailers are the first type of retailers. They are those retailers who provide a large or selective choice of merchandise with the elements of service, location and other kinds of attractive features which other regular retailers don't offer to their customers.
The second type of retailers is Price Focus retailers. These retailers have their main focus on low prices, which is a point of immense attraction for most customers.
The third category of retailers are called Convenience retailers. These retailers neither focus on services nor on low prices. In lieu they offer convenience to their customers in terms of location and accessibility.
The last class of retailers is One-stop-shopping retailers. They are all-rounder’s in the retailing business and provide all of the above-mentioned features to their customers along with an offering of eclectic range of merchandise.
Q20: Explain what is contemporary marketing?
Ans: In the last blog entry we discussed how marketing has evolved over time and how its definition and scope underwent the consequent changes. The earlier marketing approaches slowly gave way to the newer approaches, corresponding to the changing trends in the consumer's buying behaviors, perceptions and expectations about the products and services. Today, we will describe what constitutes the contemporary approaches in marketing.
The contemporary approaches refer to an era when 'marketing' as a business discipline became the most important element of the business marketing strategy. The stress was now on the customers, their specific needs and perceptions about the products or services. In other words, the customer was really the 'King', and every firm strove to find ways to please him the best and win his loyalty in return.
The 'marketing orientation' is perhaps the most popular orientation among all contemporary orientations. It involves a process in which a firm essentially prioritises its marketing plans around the 'marketing concept' and then supplies products or offers services to suit changing consumer tastes. A good example of this approach is to observe how many firms nowadays utilize market researches to analyze the consumer's desires and expectations and then try to match those desires and expectations by suitable R&D (research and development) efforts. This way they can come up with products or services that have high probability to be welcomed by consumers and more importantly have potential to satisfy their needs. The next step is to utilise the effective and efficient promotion techniques to address the desired target markets. These are the guiding principles on which all the contemporary approaches are based with or without minor variations.
The contemporary approaches can be subdivided into the following types :-
• Relationship Marketing
• Business / Industrial Marketing
• Social Marketing
Relationship marketing is all about building healthy and long lasting relationships between the firm and its customers and then to efficiently leverage this customer base using suitable marketing techniques. This approach has been used since the 1960s and is followed till today.
Business Marketing, as the name implies, is applicable to the B2B (Business to Business) domain. In this context the marketing takes place between businesses or organisations. Consequently the marketing efforts have to be altered in a way to suit corporate customer needs as compared to end customer needs. This approach has been used since the 1980s and is followed till today.
Social Marketing is the same as the basic marketing orientation except that more emphasis is put on complying with existing social norms and abstaining from any activities that might be detrimental to society at large. Social marketing is a relatively newer addition to the marketing approaches but it is rapidly becoming a critical component of marketing strategies.
PART C
Q21: How internets change consumers & marketers?
Ans: In regard to consumers, shoppers have more options because they are not limited to their geographical area. Convenience has also increased because shoppers can shop online 24/7 long after brick & mortar stores are closed. In addition, online stores generally offer lower prices because they do not have the expenses associated with retail stores, such as labor, monthly leases, security, electricity, etc.
for marketers, they have opportunities for a broader reach through the internet. No longer are they restricted to media within their general area. Through social networks, blogs, videos and other sources, they can promote a product (or service) nationally or internationally.
Q22: Buyers decision influence by personal characteristics?
Ans: Categories that Affect the Consumer Buying Decision Process
A consumer, making a purchase decision will be affected by the following three factors:
• Personal
• Psychological
• Social
The marketer must be aware of these factors in order to develop an appropriate MM for its target market.
Personal
• Unique to a particular person. Demographic Factors. Sex, Race, Age etc.
Who in the family is responsible for the decision making?
Young people purchase things for different reasons than older people.
Psychological factors
Psychological factors include:
Motives--
A motive is an internal energizing force that orients a person's activities toward satisfying a need or achieving a goal.
Actions are effected by a set of motives, not just one. If marketers can identify motives then they can better develop a marketing mix.
MASLOW hierarchy of needs!!
• Physiological
• Safety
• Love and Belonging
• Esteem
• Self Actualization
Social Factors
Consumer wants, learning, motives etc. are influenced by opinion leaders, person's family, reference groups, social class and culture
Q23: List of bases of segmenting consumer & business marketers?
Ans: market segmentation - bases of segmentation
It is widely thought in marketing that than segmentation is an art, not a science.
The key task is to find the variable, or variables that split the market into actionable segments
There are two types of segmentation variables:
(1) Needs
(2) Profilers
The basic criteria for segmenting a market are customer needs. To find the needs of customers in a market, it is necessary to undertake market research.
Profilers are the descriptive, measurable customer characteristics (such as location, age, nationality, gender, income) that can be used to inform a segmentation exercise.
The most common profilers used in customer segmentation include the following:
Profiler Examples
Geographic
• Region of the country
• Urban or rural
Demographic
• Age, sex, family size
• Income, occupation, education
• Religion, race, nationality
Psychographic
• Social class
• Lifestyle type
• Personality type
Behavioral
• Product usage - e.g. light, medium, heavy users
• Brand loyalty: none, medium, high
• Type of user (e.g. with meals, special occasions)
Q24: Brand extension and product line extension with examples?
Ans: Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. Organizations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name).
When done successfully, brand extension can have several advantages:
• Distributors may perceive there is less risk with a new product if it carries a familiar brand name. If a new food product carries the Heinz brand, it is likely that customers will buy it
• Customers will associate the quality of the established brand name with the new product. They will be more likely to trust the new product.
• The new product will attract quicker customer awareness and willingness to trial or sample the product
• Promotional launch costs (particularly advertising) are likely to be substantially lower.
While there can be significant benefits in brand extension strategies, there can also be significant risks, resulting in a diluted or severely damaged brand image. Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity.
Product extensions are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke in same product category of soft drinks. This tactic is undertaken due to the brand loyalty and brand awareness they enjoy consumers are more likely to buy a new product that has a tried and trusted brand name on it.
Line extensions examples are different variant of 7Up, Coke, Nachos, Dove soap etc.
Indian example is HUL's Wheel Vs RIN both which offer the same core benefit which is a washing detergent, but targeted at different segments.
This is where the confusion between line and product extensions occur, because under which area would you put a Good Night mosquito mat and a Good Night mosquito Liquid. They fall under the same core benefit, which is eradicating mosquitoes, but are different categories.
Yamaha music instruments and Yamaha bikes can be termed as Product extensions, since here each category, i.e. music does not leverage upon their presence in bikes and vice versa.
But if this is true, then Good Night would fall under Line extension.
Ans: Buying a computer in the post, petrol at a supermarket, mortgages over the phone and phones themselves from vending machines are just some innovations in distribution which create competitive advantage as customers are offered newer, faster, cheaper, safer and easier ways of buying products and services.
Without distribution even the best product or service fails. Author Jean-Jacques Lambin believes a marketer has two roles: (1) to organise exchange through distribution and (2) to organise communication.
Physical distribution, or Place, must integrate with the other 'P's in the marketing mix. For example, the design of product packaging must fit onto a pallet, into a truck and onto a shelf; prices are often determined by distribution channels; and the image of the channel must fit in with the supplier's required 'positioning'. You can see how Coca Cola further integrate the timing of distribution and promotion in the Hall Of Fame later. In fact, they see distribution as one of their "core competencies".
Distribution is important because:
Firstly, it affects sales - if it's not available it can't be sold. Most customers won't wait.
Secondly, distribution affects profits and competitiveness since it can contribute up to 50 percent of the final selling price of some goods. This affects cost competitiveness as well as profits since margins are squeezed by distribution costs.
Thirdly, delivery is seen as part of the product influencing customer satisfaction. Distribution and its associated customer service play a big part in relationship marketing.
Decisions about physical distribution are key strategic decisions. They are not short term. Increasingly it involves strategic alliances and partnerships which are founded on trust and mutual benefits. We are seeing the birth of strategic distribution alliances. You can see Southwestern Bell in the Hall Of Fame explain how marketing marriages provide new ways of getting products and services in front of customers.
Channels change throughout a product's life cycle. Changing lifestyles, aspirations and expectations along with the IT explosion offer new opportunities of using distribution to create a competitive edge.
Controlling the flow of products and services from producer to customer requires careful consideration. It can determine success or failure in the market place.
The choice of channel includes choosing among and between distributors, agents, retailers, franchisees, direct marketing and a sales force.
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