The Marketing Mix: Distribution Channels (Place) (Essay Sample)

Marketing
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Institution
The Marketing Mix: Distribution Channels (Place)
A distribution channel is a path that makes possible transfer of products and services from the supplier to the customers or payments from the client to the provider for the goods and services. A distribution channel could be direct from the vendor to the client or could be inclusive of interconnected intermediaries such as retailers, wholesalers, agents and distributors (Dent, 2011). A business person has to make wise decisions regarding the choice of the most suitable distribution channel for the product at hand. The chosen channel should be flexible, consistent and efficient. The marketing policies that are declared and followed in the firm should be compatible with the distribution channel selected. Further, comparison of costs, profits, volume and sales anticipated from other channels of distribution should be considered (Tanner & Raymond, 2012).
In addition, the type and nature of a product to be sold should aid in enabling the entrepreneur make the decision on the most appropriate channel. Small unit value products that are commonly used should be sold through middlemen. On the other hand, costly goods are best sold to customers directly from the vendor. Perishable products that are subject to decay or frequent changes in style or fashion, as well as bulky products, will preferably follow shorter routes. This minimizes the risk of losses may be incurred within a very short period as well as reduce distribution costs (Tanner & Raymond, 2012).
Industrial products that require demonstration, after sale services and installation will often follow a direct producer-consumer route. Whereas products of a technical nature are sold through retailers. A business owner with a large scale production with a variety of products will find it profitable to establish own retail outlets that will make it easy to make direct sales to consumers. However, businesses with a slim range of commodities, should distribute the products through retailers and wholesalers. Further, an entrepreneur should keep in mind that for any new product, greater promotional efforts are essential thus in the early stages few middlemen will be used.
Market consideration too is fundamental because understanding the target market is inevitable. For instance, if the customers of a product are industrial users, middlemen will not be required in the distribution process because the consumers make purchases in bulk. On the other hand, for domestic consumers, most probably they will small purchases therefore middlemen are essential (Dent, 2011). The number of the prospective consumers is another chief consideration in the decision-making process. If the number is small, or rather the market is geographically located in a constrained area, any business person will go for direct selling. Consequently, if the number of consumers is large, middlemen will be necessary for the process to reach as many as possible within a short period. In cases where consumers make large orders in big lots, no middlemen will be required. However, if a product is purchased in small amounts middlemen come in handy to distribute the products.
In respect to the above considerations, the automobile and jewellery industries are discussed below concerning the most appropriate distribution channel. The franchise system is preferably the finest method in the automotive industry for allocation of vehicles, especially the new ones in the market. Ford cars find new car franchises to create intra-brand competition and, as a result, the prices are lower. Further, there is more accountability for customers in warranty and protection recall situations. In addition, the method provides enormous cost effective benefits in terms of a shift from good jobs to billions (local taxes) (Dent, 2011).
On the part of the ford manufacturers, the most efficient, simple and efficient distributing technique is the franchise system. The ford manufacturers are allowed to put attention to their capital in the vital areas like designing, marketing, and building vehicles. This is accomplished as franchised dealers capitalize billions of dollars in the retail outlets as a platform to deliver maximum sales and service proficiencies (Dent, 2011). Over a decennium of years, the ford manufacturers have tried direct sales to consumers. Further, factory-owned stores, independent franchised dealers and independent distributors (under contract), were the methods used by manufacturers and sometimes simultaneously. Over time, they realized no method could do better than the franchise system. Franchise agreements ensured compliance to brand consistency and standards. In addition, the manufacturers found out that autonomous and entrepreneurial minded franchise owners who have made substantial investments concerning the community, as well as their businesses, were the highly motivated and fruitful retailers in comparison to factory employees (Dent, 2011).
On the other hand, the jewellery industry is best suited to use middlemen in the distribution process. Particularly the producer-wholesaler-retailer-customer chain is the most appropriate. This is the most common method, whereby the producer makes sales to a wholesaler and in turn the retailers purchase from wholesalers. The retailers are last to handle the product as it finally reaches the customer. The technique is suitable for products with a wide market. The distribution costs are low and promotional services are offered by wholesalers (Dent, 2011).
Rajesh Exports is an organization that manufactures over seventy tonnes of jewellery (gold) among other products made out of gold yearly. The jewellery is distributed worldwide and in the local market in India. The company is successful, and their response to what contributes to this success narrows down to the stable set-up of a dependable distribution network. The worldwide distribution network of the company spreads out across four continents; Europe, Asia, and Australia. In these continents, the company has several wholesale distribution networks; Chicago, Dallas, New York, London, Paris, Toronto, Dubai, Zurich, Muscat, Sharjah, Singapore, Kuwait, Sydney and Kuala Lumpur. Rajesh Exports, makes supplies in the above-named cities to large jewellery distributors, and in turn they wholesale the gold jewellery in their markets. Over the years, the company has built robust associations with these distributors. As a result, this ensures the volumes in the business flow in a stable manner. In addition, a relationship manager manages a particular export client. The relationship manager is accountable for the steady supply of products as well as the development of the entire business.
Rajesh Enterprises has also developed retail showrooms in the domestic Indian market. The showrooms are divided based on the geographic locations and mostly this are zones that are headed by managers responsible for the distribution of products in their respective areas. The product division is closely linked to the distribution network and together provide frequent feedback that aids in streamlining the current product range and invent new commodities with respect to the market demand.The Marketing Mix: Promotion
Market segmentation can be divided into divisions of non-users, ex-users, first-time users, regular users and potential users of the product. A different marketing strategy is applied for each of the above groups. The position of the company too in the market will have an influence on the focus. The leaders of the market share will aim at attracting potential users while small firms aim at taking the current users away from the market leaders (Christ, 2011).
The usage rate of the consumers is fundamental in market segmentation. A market can be segmented into non-users, medium users, light users and heavy users. The heavy users are a subtle percentage of the total population but will bring in masses of revenue because of the high consumption. The heavy users will often have common media habits, psychographics, and demographics. This information assists marketers to develop price, media strategies and message (Borgeon & Cellich, 2012).
A company’s interest is on the heavy consumers of the products since they represent more than half of the market. Nevertheless, the company may target the light users with an aim of inducing high usage or if the group is an attractive niche that is ignored by other firms that are concentrating on the heavy users. The loyalty status aids in market segmentation as understanding of the consumer loyalty patterns is indispensable. Customers are divided into groups concerning their commitment status:
Hard-core loyal are customers who stick to one brand and ignore the rest of the names. For example, men will mostly drink coke and ignore other cold beverages in the market. Split loyal are consumers that are loyal to more than one brand. It can be two, three or more names. The number in this group is increasing rapidly. Most people purchase from a small niche of acceptable brands according to their thoughts. A consumer could buy Coke or Pepsi anytime they are in need of a drink (Borgeon & Cellich, 2012).
Shifting loyal will keep shifting from one brand to another. For example a consumer shifting from Coke to Pepsi. Switcher’s will show no loyalty to any particular brand. The consumer does not show preference to a particular brand. This person could choose to consume any brand of the cold drinks in the market.
With reference to the above factors, below are the promotion strategies for the coke company in the carbonated soft drinks industry. The coke business market strategy is customer driven thus focuses first on the regional segmentation in terms of continent, state, country, regions,...