Marketing Management Notes PDF

MARKETING MANAGEMENT DR ANAND NANDWANI, ASSOCIATE PROFESSOR, MERI  Channels of Distribution Channels of Distribution Distribution / Marketing Channels  A distribution channel is the network of individuals and organizations involved in the process of moving a...

MARKETING MANAGEMENT DR ANAND NANDWANI, ASSOCIATE PROFESSOR, MERI  Channels of Distribution Channels of Distribution Distribution / Marketing Channels  A distribution channel is the network of individuals and organizations involved in the process of moving a product or service from the producer to the end user.  A distribution channel is the chain of individuals and organizations involved in getting a product or service from the producer to the consumer.  Distribution channels are also known as marketing channels or marketing distribution channels.  A marketing channel is a set of practices or activities necessary to transfer the ownership of goods, and to move goods, from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process. Distribution System  Manufacturer – the one who sources raw materials, land, labor and applies his entrepreneurial skills in the production of goods.  Wholesaler – deploys huge investments in warehousing and stocking of goods bought in bulk quantities from the manufacturer to sell them at a wholesale mark up i.e. profit margin to the retailers.  Retailers – selling the goods bought from the manufacturer to the final consumer.  Consumers – they are the people who buy goods from the retailer to satisfy their daily needs. Types of Distribution Channels Types of Distribution Channels  (A) Direct Channel or Zero Level Channels  (B) Indirect Channels:  1. One Level Channel  2. Two Level Channel  3. Three Level Channel Types of Distribution Channels  (A) Direct Channel or Zero Level Channels  When the manufacturer instead of selling the goods to the intermediary sells it directly to the consumer then this is known as Zero Level Channel. e.g. mail order selling, internet selling etc. Types of Distribution Channels  (B) Indirect Channels: When a manufacturer gets the help of one or more middlemen to move goods from the production place to the place of consumption, the distribution channel is called indirect channel. Following are the main types of it:  1. One Level Channel: In this method an intermediary is used. Here a manufacturer sells the goods directly to the retailer instead of selling it to agents or wholesalers. This method is used for expensive watches and other like products. This method is also useful for selling FMCG (Fast Moving Consumer Goods). This channel is clarified in the following diagram:  2. Two Level Channel: In this method a manufacturer sells the material to a wholesaler, the wholesaler to the retailer and then the retailer to the consumer. Here, the wholesaler after purchasing the material in large quantity from the manufacturer sells it in small quantity to the retailer. Then the retailers make the products available to the consumers. This medium is mainly used to sell soap, tea, salt, cigarette, sugar, ghee etc. This channel is more clarified in the following diagram:  3. Three Level Channel: Under this one more level is added to Two Level Channel in the form of agent. An agent facilitates to reduce the distance between the manufacturer and the wholesaler. Some big companies who cannot directly contact the wholesaler, they take the help of agents. Such companies appoint their agents in every region and sell the material to them. Then the agents sell the material to the wholesalers, the wholesaler to the retailer and in the end the retailer sells the material to the consumers. Types of Intermediaries in Distribution  (1) Exclusive distribution: The use of a single or very few outlets.  (2) Intensive distribution: The manufacturer attempts to get as many intermediaries of a particular type as possible to carry the product. (e.g. candy)  (3) Selective distribution: an intermediary strategy, with the exact number of outlets in any given market dependent upon market potential, density of population, dispersion of sales, and competitors' distribution policies. Factors Affecting Decisions for Selecting Types of Intermediaries in Distribution  Type of Product  Purpose  Budget  Competitors  Government Policy Role / Objectives of Marketing Intermediaries  Effective coverage of the target market.  Efficient and cost-effective distribution.  Ensuring that consumers incur minimum exertion in procuring the product.  Helping the firm to carry on manufacturing uninterrupted, confident that the channels will take care of sales.  Partnering the firm in financing and sub-distribution tasks. Functions of Intermediaries  1. Contacting Function: Purpose: Reducing the number of sales contacts needed to reach all customers. Example: When you buy a smartphone, you don’t directly contact the manufacturer; instead, you visit a retailer or an online store.  2. Matching and Sorting Function: Purpose: Shaping and fitting the product offer to buyers’ needs. Example: Wholesalers break down bulk quantities into smaller units for resale, ensuring products match consumer preferences.  3. Physical Distribution Function: Purpose: Ensuring products reach their desired locations efficiently. Example: Transportation companies move goods from manufacturers to retailers or warehouses, creating utility by making products available where needed.  4. Warehousing and Storage: Purpose: Ensuring continuous production by managing inventory. Example: Distributors store products until they are ready for resale, maintaining a steady flow of goods.  5. Demand Stimulation: Purpose: Encouraging sales by promoting products. Example: Retailers engage in marketing activities, stimulating demand for their stock and competitor products. Channel Design Decisions  Channel design refers to the strategic process of identifying and selecting the most efficient marketing channels to reach target customers and achieve company objectives.  These channels serve as the pathways through which products flow from producers to consumers.  Effective channel design optimizes customer engagement while minimizing costs.  Effective channel design ensures that products reach consumers efficiently while considering their preferences and needs. Whether through direct sales or intermediaries, well-designed channels enhance customer satisfaction and drive business success! Importance of Channel Design Decisions  Customer-Centric Approach: Channel design begins with understanding customer needs and preferences. Marketing channels encompass all touchpoints a customer has with a company, from awareness to post-purchase support.  Cost Optimization: Well-designed channels reduce unnecessary expenses. Companies can save money by focusing on channels that effectively reach their target customers.  Enhanced Customer Service: A thoughtful channel design improves customer experience. By aligning channels with customer needs, companies can provide better service and support. Elements of Channel Design  Channel Flow:  The path that products and services take from the producer to the customer.  Example: A smartphone manufacturer’s flow might involve wholesalers, retailers, and online platforms.  Channel Members:  Intermediaries (wholesalers, retailers) who facilitate product movement.  Example: Wholesalers purchase goods in bulk from manufacturers and distribute them to retailers.  Channel Objectives:  Goals related to market coverage, service levels, and profitability.  Example: A luxury brand may prioritize exclusivity over widespread availability.  Channel Alternatives:  Different ways to reach customers (direct sales, online platforms, distributors).  Example: A software company may choose direct sales for enterprise clients but use online platforms for individual users.  Channel Strategy:  The overall plan for managing distribution channels.  Example: A global electronics brand may use different strategies for developed markets versus emerging markets. Selecting Channel Members  Selecting channel members is a critical decision in the distribution process. These intermediaries play a vital role in connecting manufacturers with end-users.  The right channel members ensure efficient product flow, effective customer engagement, and successful market penetration.  Selecting channel members involves a strategic approach based on expertise, market coverage, financial stability, and geographic reach. By choosing the right partners, companies can optimize distribution efficiency and enhance customer satisfaction! Basis for Selecting Channel Members  Expertise and Resources:  Consider the intermediary’s knowledge, experience, and financial capabilities.  Example: A distributor with expertise in electronics can effectively handle technical products.  Market Coverage:  Evaluate the intermediary’s reach and ability to cover target markets.  Example: A retailer with a strong presence in urban areas may not be suitable for rural markets.  Customer Base:  Assess whether the intermediary’s existing customer base aligns with the product or service.  Example: A wholesaler serving small retailers may not be suitable for luxury brands.  Geographic Coverage:  Consider the intermediary’s geographic reach.  Example: A logistics company with nationwide distribution capabilities can efficiently cover large territories.  Financial Stability:  Evaluate financial health to ensure timely payments and stability.  Example: A financially unstable distributor may disrupt supply chains. Methods for Selecting Channel Members  Direct Solicitation:  Companies actively seek out potential channel members.  Example: A manufacturer directly approaches retailers to discuss collaboration.  Advertising and Trade Publications:  Advertise partnership opportunities in industry-specific publications.  Example: A software company advertises for reseller inquiries in technology magazines.  Trade Shows and Exhibitions:  Attend industry events to meet potential channel partners.  Example: An agricultural equipment manufacturer meets distributors at an agricultural trade show.  Referrals and Recommendations:  Seek recommendations from existing business contacts or industry experts.  Example: A supplier asks its current distributors for referrals to other potential partners.  Online Platforms and Networks:  Use online platforms or B2B networks to connect with potential intermediaries.  Example: LinkedIn groups for specific industries facilitate networking. Channel Management  Channel management refers to the strategic process through which companies manage their marketing and distribution channels to effectively reach customers.  These channels serve as the pathways connecting manufacturers to end-users, ensuring that products and services flow efficiently.  Channel management involves selecting, supporting, and optimizing intermediaries or partners involved in selling, distributing, and marketing a company’s offerings. Importance of Channel Management  Maximizing Reach: Well-managed channels allow companies to reach a broad customer base through various marketing and sales channels.  Efficiency: Effective channel management optimizes revenue and ensures efficient product distribution.  Customer Experience: Channels impact customer satisfaction. A well- designed channel strategy enhances the overall experience. Emerging Channels of Distribution  Promotion Mix Promotion Mix  The Promotion Mix is a crucial element within the broader marketing mix.  It encompasses all the promotional variables that businesses use to create, maintain, and increase demand for their brands or offerings.  In simpler terms, it’s about getting the word out to potential customers and influencing their purchase decisions. Elements of Promotion Mix Importance of Promotion Mix  Effective Communication:  Optimizing Resources:  Building Trust:  Segmentation: Advertising  Advertising - Presentation and promotion of ideas, goods, or services by an identified sponsor.  Examples: Print ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays, posters, motion pictures, Web pages, banner ads, and emails. Nature of Advertising  Paid form of communication  Non-personal  Identified sponsor  Speedy communication  Mass Communication  It is an art  An important element of the promotion mix  Persuasive Objectives of Advertising  Informative  Persuasive  Reminder Importance of Advertising  I. Importance of Advertising to Producers  1. Increase in Demand:  2. Large-Scale Production  3. Cuts Costs  4. Good Selling Tool  5. Explores New Markets  6. Facilitates Innovation  7. New Industries and New Jobs  8. Lowers Prices  9. More Profits  10. Control on Trade Cycles  11. Competitive and Promotional Weapon  12. Builds Brand Image  13. Other Benefits: It increases business activities, It increases goodwill of the firm, It increases Interest among dealers in manufacturer‘s goods Importance of Advertising  II. Importance of Advertising to Consumers  1. Help in Rational Buying  2. Ensures Quality Products at Reasonable Prices  3. More Products  4. Creates Varied Tastes  5. Information  6. Offers Solutions to Buying Problems  7. Better Standard of Living  8. Saves Time  9. Reduces Dissonance  10. Educates Consumers Importance of Advertising  III. Importance of Advertising to Middlemen  1. Guarantees Quick Sales: Advertising quickens the pace of sales by brining products to the knowledge of the consumers.  2. Acts as a Salesman: Advertising is a very potent and effective salesman of middlemen.  3. Price Maintenance: Customers always remain interested in getting quality products at stable prices over longer time. If the prices constantly change, the budgets of consumers are disturbed. Advertising also discourages bargaining with retailers. Importance of Advertising  IV. Importance of Advertising to Salesmen  1. Drives the Consumers: While marketing drives products towards the consumer, advertising helps to drive the consumer towards the salesmen at the point of sale.  2. Creates Colourful Environment: Advertising creates an inducing and colourful environment. Personal selling alone is like a song without music.  3. Lightens the Selling Job: Selling job is highly complex and difficult, if performed alone. In the absence of advertising, salesman is forced to play a double role. With the help of advertising, the salesman can easily explain the product and its benefits, can meet the objections raised by customers and may close the sale.  4. Instills Self-Confidence and Initiative: Advertising acts as a creative force. It educates the sales-force. It instills self-confidence and initiative in them. Importance of Advertising  V. Importance of Advertising to Society and Economy  1. Socio-economic Institution  2. Instrument of Social Influence and Control  3. Wide Power of Persuasion  4. Component of the educational System  5. Upholds the Culture of a Nation  6. Uplifts the Standard of Living  7. Social Guide  8. Generates Employment Opportunities  9. Fosters Economic Growth  10. Growth of Media Evils and Criticisms  1. Increase in Unnecessary Wants  2. Increase in Costs and Prices  3. Creates Indecisiveness  4. Too Much Puffery and Deception  5. Arouses Emotions  6. Obscene and Unethical  7. Promotes Social Evils  8. Endangers Competition  9. It is Wasteful  11. Encourages Materialism  12. Hampers Consumer Choice Evils And Criticisms  13. Other Evils and Limits:  (a) Advertising has a harmful effect on children as it can easily influence the delicate feelings of children.  (b) Many ads are offensive and exercise high pressure on consumers.  (c) It leads to industrial concentration.  (d) Advertisements are rigid. The message once set cannot adjust to the reactions of consumers.  (e) They may cause road accidents as people see hoardings and posters while driving the vehicles or walking on roads. Advertising Media  Print  Broadcast  Outdoor  Specialty  Transit  Advanced  Covert Advertising? Covert Advertising  Covert Advertising - This is a unique way of advertising in which the product or the message is subtly included in a movie or TV serial.  There is no actual ad, just the mention of the product in the movie.  For example, Tom Cruise used the Nokia phone in the movie Minority Report. Personal selling  Personal selling - A process of helping and persuading one or more prospects to purchase a good or service or to act on any idea through the use of an oral presentation.  Examples: Sales presentations, sales meetings, sales training and incentive programs for intermediary salespeople, samples, and telemarketing.  Can be face-to-face selling or via telephone. Key features of personal selling  Human Contact:  Personal selling involves direct interaction between the seller and the buyer.  Salespeople engage with potential customers, understand their needs, and tailor their approach accordingly.  Relationship Development:  Trust is established between the seller and the buyer.  Prospective buyers rely on the salesperson’s expertise and guidance.  Customized Approach:  Salespeople develop personalized connections.  They communicate the value of the offering in a way that persuades the customer to make a purchase. Objective of Personal Selling  Build Brand and Product Awareness:  Educate customers about the company’s offerings and their benefits.  Create awareness by explaining how the product or service can address specific needs.  Increase Sales:  Identify prospects and persuade them to buy.  Personal selling aims to close deals by understanding customer preferences.  Build Long-Term Relationships:  Enforce two-way communication.  Establish close, long-term relationships with customers.  Provide Technical Support:  Assist customers with complex, technical, or high-priced items.  Offer detailed technical information to help them make informed decisions. Sales Promotion  Sales Promotion - Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability.  Examples: Coupons, sweepstakes, contests, product samples, rebates, trade shows, and exhibitions etc. Sales Promotion Examples  Discounts: Offering percentage-based or fixed amount discounts on products or services. For instance, “Get 20% off your first purchase.”  BOGO (Buy One, Get One): Encouraging customers to buy more by offering a second item for free or at a reduced price when they purchase one.  Coupon Codes: Distributing unique coupon codes for online purchases.  Free Shipping: Providing free shipping on orders over a certain amount.  Bundle Deals: Offering related products together at a lower combined price.  Contests and Giveaways: Engaging customers through social media contests with prizes.  Money back: it is given after purchasing a product.  Refer-a-Friend Programs: Encouraging referrals in exchange for discounts or rewards.  Flash Sales: Creating urgency with limited-time discounts (e.g., “24-hour flash sale”).  Loyalty Programs: Rewarding loyal customers with exclusive discounts or points. Direct Marketing  Direct Marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertising. Examples of Direct Marketing  Direct Mail:  Sending promotional materials (brochures, coupons, samples) directly to customers via mail.  Example: A fitness center sends water bottles to loyal customers with personalized coupon codes  Email Marketing:  Sending targeted email campaigns directly to customers.  Companies use newsletters or special promos to engage and build relationships with subscribers.  Tracking open rates and click-throughs helps refine future email campaigns  Telemarketing:  Calling potential customers over the phone to convince them to buy.  Real-time feedback helps gauge interest in products or services  Quick Response Advertising:  Encouraging immediate action from prospects.  Offers may include clicking a link, making a purchase, or subscribing to a newsletter Public relations  Public relations - Paid intimate stimulation of supply for a product, service, or business unit by planting significant news about it or a favorable presentation of it in the media.  Examples: Newspaper and magazine articles/reports, TVs and radio presentations, charitable contributions, speeches, issue advertising, and seminars. Publicity  Publicity is a powerful communication tool that creates public awareness about a brand, product, service, or individual.  Unlike paid advertising, publicity relies on organic media reach and doesn’t involve direct payment for time and space in the media.  In essence, it’s the dissemination of information through media coverage and other non-paid mass media sources.  Integrated Marketing Communication (IMC) Integrated Marketing Communication (IMC)  Marketing communications is 'promotion' from the marketing mix.  Integrated Marketing Communication is a strategic approach that ensures consistent messaging across all communication channels used by a brand.  It unifies various aspects of communication—such as advertising, public relations, digital media, and traditional print media—into a cohesive whole.  The goal is to strengthen the relationship between the company and its customers while driving sales. Integrated Marketing Communication (IMC)  One need to be very particular about different messages that are going to convey through different mediums.  Traditionally printed marketing was the whole sole method of conveying the messages to the consumers.  However, in recent times, emails, sms, blogs, television and company websites have become the trendy way of conveying the organization’s message to the consumers.  It is important though that the message one give in one medium should tally with the message provided in other medium.  For example, one should use the same logo in on the website as the one use in email messages. Similarly, television messages should convey the same message as blogs and websites.  For the above reason, people controlling the marketing communication process are very important for the company. These executives make it an integrated marketing communication process. Key Components of IMC  Consistent Messaging: IMC ensures that all messages sent out by the company align with a unified theme. Whether it’s an ad, a social media post, or a press release, the brand’s voice remains recognizable and on target.  Audience Segmentation: Different audiences have varying preferences. IMC involves tailoring messages to specific groups based on factors like age, gender, or income level.  Effective Distribution: Choosing the right mix of online and offline channels ensures that messages reach the widest possible audience. Factors contributing to IMC growing popularity  Fragmentation of the media  Better audience assessment through database technology  Consumer empowerment  Increased advertising clutter  Desire for greater accountability  Performance based compensation instead of traditional compensation  24/7 internet availability in comparison to the earlier limited access to media Objectives of Marketing Communication  To create a brand awareness  To define a need of the product / service  To encourage action  To persuade the customer  To crate the interest  To provide the information  To stimulate demand  To reinforce the brand Challenges in IMC  Insufficient marketing budget  Lack of standard measurement process  Lack of needed skill sets among marketing staff  Lack of strategic consistency across communication discipline  Need to develop the ‘big creative idea’ that can be leveraged across different media disciplines  THANK YOU