Marketing: Essential Principles, New Realities
In the case of Avon, cosmetics are essentially delivered to the consumer from the manufacturer through a substantial sales force of thousands of saleswomen. This is essentially a direct channel where cosmetics are moved to ultimate user from the producer. The other channel participants in this case are in the same channel of distribution essentially because of the cost reductions involved. The eight universal marketing flows include physical possession, ownership, promotion, negotiation, financing, risking, ordering and finally payment.
When it comes to member participation as far as the eight universal marketing flows are concerned, we have most of the players using the forward flows, that is, to the consumer from the producer. When it comes to the risking, financing as well as the negotiation flows the move is exhibited in two directions while the backward flows comprises of payment and ordering.
When it comes to shifting of the flows, it is important to note that in the current scenario, financing remains to be most critical flow. It shall also be noted that when a single member of the channel holds stocks, operation contains an element of financing. However, when it comes to the forward flow of financing, all the members participating in this channel adopt the same. Product attributes information is under normal circumstances passed down the channel. In my opinion, a shift would only affect non-dominant members in the marketplace but in the case of Avon which tends to have a higher influence as far as this function is concerned; it shall not be affected adversely essentially because it is the dominant channel member.
As far as the customer’s role from the flow absorption perspective is concerned whilst taking into consideration each of the distribution systems, it shall be noted that by dint of the manufacturer having a direct contact with the marketplace, the consumer must seek and find information regarding the specific product in the marketplace. This is essentially because we do not have middle men who come in to assist with issues revolving around promotions etc.
This is particularly the case for Avon. When it comes to MDR, Medical research Co., the absence of middlemen also complicates promotional issues and hence the consumer is expected to play a big role as far as locating information concerning the supplements is concerned. However, with regard to Sara Lee’s Corporation, the customer needs only to make comparisons in the marketplace with regard to the L’eggs pantyhose. Regarding the consumer’s compensation level, the first two instances lower the compensation levels of customers while the last instance increases the consumer’s compensation levels.
Segmentation concerns itself with the creation of given products for a market which is targeted. Small, medium and large cannot be used as a strong segmentation scheme for service outputs as it might be for product attributes. This is essentially because it is easy to carry out a strategy of product differentiation and in that regard, come up with a clear difference between those products produced by a given company from those availed at the marketplace by the competitors. When it comes to services, it is inherently difficult to come up with a clear difference between what competitors offer and what a specific company is availing to customers or clients. Groucutt et al. (2004) notes that with product attributes; it becomes easier to underline differences between products.
When it comes to consumer goods, buyers do not exhibit a well defined decision making process before the purchase is executed. Hence in that regard, the demand for consumer goods is based on the availability of funds within the populace. This is more so for household products or those products that are not used on a daily to daily basis. On the other hand, industrial products include the various raw materials including but not in any way limited to those components that may be used to come up with a good in its finished form. As regards the channels, consumer goods are better of delivered using the direct channel.
This is essentially because when it comes to consumer goods, they may be needed at the marketplace as soon as they can be delivered. When it comes to the direct channel, the elimination of middle men makes the channel more efficient and hence for items which may be needed at the marketplace as soon as they can be delivered i.e. consumer goods like bread; the direct channel is more practicable. On the other hand, for industrial goods, their urgency is not apparent and in some instances, they are availed at the marketplace on demand or once an order is placed. In that regard, an indirect channel may be appropriate for industrial goods i.e. data processing equipment.
It is important to note that before the selection of the necessary channel flow, there is need to consider the objectives of the seller as well as the various customers’ needs. When it comes to selling an servicing an ultrasound machine (a piece of medical equipment) to academic medical researcher on a tight government-funded budget; the indirect channel may turn out being more effective because of the incorporation of middlemen who enhance selling, storage, grading as well as packaging and transporting.
On the other hand, for a hospital emergency room it may be appropriate to consider the indirect channel.
With regard to the target manager, it is important to note that targeting the maximum possible number of segments to sell to may be the best option. This is essentially because it offers them an opportunity to lower the costs on several fronts including but not in any way limited to selling, grading as well as promotion. In this case, promotions are not carried market-wide and in that regard the savings made when it comes to targeted marketing are what channel managers should concern themselves with as far as targeting the possible number of segments to sell to is concerned.
Though the service on high-end automobiles may be exceptional as recounted in the scenario given, a demand-size gap can still be evidenced. In this regard, a demand curve and still exist where clients are not being offered what they want by the firm. This essentially means that the service may be superior but only on the end of the high-end automobiles. However, on the side of the customers, there may be a dissatisfaction as this may not be what they essentially want. Next, it may be important to note that what the firm is charging may not be what the clients want to pay. According to Gray (2000) there is a ceiling to what clients want to pay as per the service they are receiving. Exceeding that ceiling hence means that there shall be a demand side gap as far as the service channel is concerned.
According to Groucutt et al. (2004), a supply side gap is informed by the realization that the services being advanced to clients has changed to become costly than it was previously and hence the increased cost cannot under any circumstance justify the availed services. In that regard, keeping up with the advances in technology can go a long way towards increasing the costs of availing services to clients in such a way that the cost does not justify the very value of services produced.
Understanding the channel power sources as well as the channel conflict sources is of the essence because the very success of the product depends on this two things. Further, the channel manager must seek and analyze the suitability of a given channel to a given product, that is, whether a product is a consumer good or an industrial good. Hence it cannot be recommended to come up with a channel that is zero-based.
In the first instance, we have a high demand for spatial convenience. This is essentially because the customer does not in any way possess any valuable information on the product she wants to purchase. Further, the customer is not empowered resource wise. For the second scenario, the demand is for bulk breaking essentially because the quantity required in this case is large. As a manufacturer with a production process that is large-scale and with the other raw materials being availed in a just-in-time fashion for its plant operations bulk braking demand can be said t be relatively high. On the other hand, when it comes to the third scenario, there is a relatively low demand for waiting-delivery time.
For the first scenario in question 1, the marketing channel that would meet the service outputs demands for the target end used is the indirect channel. This is because the consumer shall have to access the product after it has gone through middlemen who are extremely critical when it comes to the financing, dispatching, grading, parking and most importantly transportation and promotion. This is based on the fact that the consumer lacks sufficient information with regard to the suitability of the product which in this case is given as cosmetics. When it comes to the second scenario, direct channel of marketing may also be most appropriate as compared to the indirect channel.
The reasoning here is that the order for the industrial chemical may be placed at short notice and hence, its delivery may be needed in the shortest time possible. In the third scenario, the direct channel of marketing may come in handy for some of the same reasons advanced above for scenario two. Based on the nature of the product and the short notice in which it may be needed at that marketplace, it is important to note that the channel to be used must be not only the most direct but also the shortest. In this case, that would be the direct channel.
Some of the three buying decisions include major re-purchase, major new purchase and minor new purchase. When it comes to minor new purchase, all the buying decisions made here pertain to something that though new to the buyer, they cannot be taken to be very important to the customer as far as his or her needs are concerned. When it comes to major new purchase, it is important to note that the buying decisions in this case are quite difficult as the customer purchasing the given product has a need that needs to be satisfied but in that regard, he does not possess the capability to make such a purchase decision. Last but not least, with regard to the major re-purchase a decision, customers have the ability to make the buy decisions and just like is the case with major new purchase, they also need the product in question.
An example of a service output demand that goes beyond the standard ones of bulk breaking, spatial convergence as well as assortment variety is a designer suit for men in their mid thirties and who are employed. As far as a service is concerned, a perfect example of this may be a restaurant offering an assortment f services to its clients different from the traditional food and beverage specialty.
In a scenario where a company sells a wide range of cooking equipment, a change of distribution channels would be changed or modified by gaining a perfect understanding of how clients handle their buy decisions. His would help the firm under consideration to manage a given market a well as its demands through understanding the various needs of clients and how best to address them, i.e. which channel to use. Further, a perfect understanding of consumer behaviors comes in handy in such a scenario.
Because market segmentation basically concerns itself with grouping members as per he characteristics they have in common, an appropriate market segmentation for product design may be in the case where one is seeking to issue for sale a product that appeals to the youthful generation. In such a case, it would be appropriate to carry out appropriate market segmentation so as to ensure that the brand in question appeals to the target market. This example can also apply for the purposes of marketing channel design.
By dint of the demographic profile of grocery shoppers, Peapod should not target the same segment as it would impact negatively on its bottom line no matter the volumes sold. However, should Peapod come to the conclusion that it should target these shoppers, then the provision of service outputs to the market may be affected as the quality of what is offered for sale goes down so as to lower costs and hence enhance the margins.
For the case where a channel member performs a single flow for the channel yet his relevance is still maintained in the marketplace can be brought out incase of a monopoly or near-monopoly where we have a given producer controlling or occupying vast sections of the marketplace. On the other hand, when it comes to a channel member participating in all the eight channel flows, we can have such a situation presenting itself at a perfect competition marketplace where no single producer, distributor or otherwise can be said to be controlling vast sections of the market.
As far as consumer goods that are serviceable is concerned, the direct channel may prove to be more appropriate that the indirect channel of marketing essentially because in a direct channel, the customer has direct links with the producer or manufacturer and hence the manufacturer can be able to follow up on after sale services. On the other hand, when it comes to whereby a product is being sold, an indirect channel may be more appropriate as no service is essentially needed in the latter case.
If a customer buys an item over the phone through a catalogue and chooses to pay by utilizing a credit card, the credit care company cannot be taken to be a channel member. However, if the product is delivered by FedEx, FedEx is a channel member and it performs the role of facilitation to ensure that the product is availed on time to the consumer. It also accts as a facilitator on the supplier or manufacturer side to ensure that the goods of the manufacturer reach the market on time so as to have time utility.
When targeted at one segment, a channel can be zero based. However, when targeted at another segment, it may not be zero-based. This is essentially because, when a channel is targeted at one channel, costs are substantially reduced as the promotional undertakings in such a case are in one way or the other targeted at a single market characteristic or demographic, that is, aimed to satisfy a given segment of the market. On the other hand, when a channel is targeted in multiple segments, the ire is a possibility that the promotional costs will go up and in such a way; it cannot be zero based.
In instances when a set of channel participants decides to spare no expense as far as meeting all the service output demands of their target market is concerned, some conditions may come into play assuming they do meet the various unexpressed demands to make their channels non-zero based. These conditions include instances where the expenses do not in any justify the quality of services offered at the marketplace. Further, consumers may under such instances fail to appreciate the services offered.
In the electronic data interchange example, deviations from the equity principle can occur due to competitive reasons, in the short run. However, when it comes to the long run, such a statement might be untrue. This is essentially because in the long run, competitors tend to crowd the marketplace and their actions will inevitably influence the direction the market takes. For instance, while price cuts may not be felt across the market in a perfectly competitive marketplace, price raises will have a domino effect across the market.
Groucutt, J., & Leadley, P. (2004). Marketing: essential principles, new realities. Kogan
Gray, T. (2000). Marketing. Heinemann