SMElink Project Marketing Training July 2009 - Kathmandu Nepal Session 3 Distribution and Promotion Strategy by Mr

2. Session 3� Distribution Strategies

6. 6 Basic Channels of Distribution

8. 8 Distribution Objectives Minimize total distribution costs for a given service output Determine the target segments and the best channels for each segment Objectives may vary with product characteristics e.g. perishables, bulky products, non-standard items, products requiring installation & maintenance

9. Functions of Distribution Channels

10. The main function of a distribution channel is to provide a link between production and consumption. Information Promotion Contact Finding and communicating with prospective buyers Matching Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging Negotiation Reaching agreement on price and other terms of the offer Physical distribution Transporting and storing goods Financing Acquiring and using funds to cover the costs of the distribution channel Risk taking Assuming some commercial risks by operating the channel (e.g. holding stock)

11. 11 Transaction Cost by Channels As the value-added increases, the cost of transaction also increases Direct marketing channels�low value-added; low cost of transactions e.g. e-commerce, telemarketing Indirect marketing channels�medium value-added; medium cost of transactions e.g. retail stores, distributors Direct sales channels�high value-added; high cost of transactions e.g. own sales force

12. 12 Aligning Channels With How Customers Buy Identify customers� channel preferences and buying behavior Tabulate channel selection to key buying criteria Provide flexible channel options Monitor (and respond to) changes in buying behavior

13. 13 Example of buying criteria Buying criteria for flowers: Price Ordering speed Delivery flexibility Personal selection & customization Expert advice Channel appeal & attractiveness Purchasing events

16. 16 Distribution-Scope Strategies Exclusive Distribution Limiting the distribution to only one intermediary in the territory Intensive distribution Distribute from as many outlets as possible to provide location convenience Selective distribution Appoint several but not all retailers

17. 17 Multiple-Channel Strategy Using two or more different channels to distribute goods and services Why? Permits optimal access to each market segment Increase market coverage, lower channel cost and provide more customized selling What to look out for? More channels usually means more conflict and control problems

18. 18 Complementary Channels Each channel handles a product or segment that is different or non-competing e.g. Toyota Lexus Magazine distributions

19. 19 Competitive Channels The same product is sold through two different and competing channels e.g. Non-prescriptive drugs Electronic goods Why? To increase sales What to look out for? Over extending yourself Dealers� resentment Control problems

20. 20 Modifying Distribution Strategies Modify when the following changes occur: Consumer markets and buying habits Customer needs Competitor�s perspectives Relative importance of outlet types Manufacturer�s financial strength Sales volume level of existing products, and The marketing mix

22. Choices Available

23. Session 3� Promotion Strategies

29. 18-29 Promotional Strategies Distinct promotional strategies based on combination of three alternatives Marketing the same physical product everywhere Adapting the physical product for foreign markets Designing a different physical product with (a) the same message (b) adapted message or (c) different message

30. 18-30 Six Common Promotional Strategies Same product-same message Avon Same product-different message Honda�s campaign in America is different than in Brazil Product adaptation-same message In Japan, Lever Brothers puts Lux soap in fancy boxes to encourage gift sales

31. 18-31 Six Common Promotional Strategies cont�d. Product adaptation-message adaptation In Latin America, Tang is sweetened and promoted as mealtime drink Different product-same message Product is produced in low cost plastic squeeze bottle for developing countries, but advertised the same Different product for the same use-different message Welding torches rather than automatic welding machines are sold in developing countries

32. 18-32 The Promotional Mix Advertising Personal selling Sales promotion Public relations Publicity

33. Advertising:� Is any non personal paid form of communication using any form of mass media. Public relations: Involves developing positive relationships with the organisation media public. The art of good public relations is not only to obtain favorable publicity within the media, but it is also involves being able to handle successfully negative attention.

34. Sales promotion: Commonly used to obtain an increase in sales short term. Could involve using money off coupons or special offers. Personal selling: Selling a product service one to one. Direct Mail: Is the sending of publicity material to a named person within an organisation.

35. Direct mail allows an organisation to use their resources more effectively by allowing them to send publicity material to a named person within their target segment. By personalising advertising, response rates increase thus increasing the chance of improving sales.� Listed below are links to organisation who's business involves direct mail.

36. Push and Pull Strategies

37. Push A �push� promotional strategy makes use of a company's sales force and trade promotion activities to create consumer demand for a product. The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers.

38. A good example of "push" selling is mobile phones, where the major handset manufacturers such as Nokia promote their products via retailers such as Carphone Warehouse. Personal selling and trade promotions are often the most effective promotional tools for companies such as Nokia - for example offering subsidies on the handsets to encourage retailers to sell higher volumes

39. A "push" strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools.

40. Pull A �pull� selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product. If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers.

41. A good example of a pull is the heavy advertising and promotion of children's� toys � mainly on television. Consider the recent BBC promotional campaign for its new pre-school programme � the Fimbles. Aimed at two to four-year-olds, 130 episodes of Fimbles have been made and are featured everyday on digital children's channel CBeebies and BBC2.

42. As part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher-Price to market products based on the show, which it hopes will emulate the popularity of the Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and distribute a range of Fimbles products including soft, plastic and electronic learning toys for the UK and Ireland.

43. In 2001, BBC Worldwide (the commercial division of the BBC) achieved sales of �90m from its children's brands and properties last year. The demand created from broadcasting of the Fimbles and a major advertising campaign is likely to �pull� demand from children and encourage retailers to stock Fimbles toys in the stores for Christmas 2002.

44. Balancing the channel and the advertising lever will help to counter an increasingly competitive market

45. Why Advertise ?

46. To create awareness, customer interest or desire To boost sales To build brand loyalty To launch a new product To change customer To support the activities of the distribution channel (e.g. supporting a �pull� strategy) To build the company or brand image To reminds and reassure customers To offset competitor advertising To boost public standing To support the sales force

47. Find the right balance to compete in your marketplace

48. Hierarchy of effects Communication Process

49. What to advertise?

50. Firstly, does the business/product have a Unique Selling Proposition (�USP�) Secondly, does the thing that is being advertised �add value� and if so, how? Whatever is advertised, it is important that the message is: � Seen� Read� Believed� Remembered� Action upon by target customers

52. Creative Strategy

53. Emotional Appeal Rational Appeal Fear Appeal Humor Fantasy

54. Media Strategy : Who�s your target market ? Reach Frequency Exposure Impact

56. Personal Selling

57. Personal selling is oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale"

58. What are the main roles of the sales force? Prospecting Communicating Selling Servicing Information Gathering Allocating

59. Advantages: Personal selling is a face-to-face activity; high degree of personal attention The sales message can be customised Two way � Direct and Prompt Too many information can be given Chance to demonstrate the products Frequent meetings between sales force and customer provide an opportunity to build good long-term relationships

60. Disadvantages: Cost of employing sales force Not cost effective way of reaching mass market.

61. Public Relations

62. �The planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics�

63. Who are Publics ? (Stakeholders) Employees� Shareholders� Trade unions� Members of the �general public�� Customers (past and present)� Pressure groups� The medical profession� Charities funding medical research� Professional research bodies and policy-forming organisations� The media� Government and politicians

64. Role of public relation: Identify the relevant publics Influence the opinions of those publics by:Reinforcing favourable opinions Transforming perhaps neutral opinions into positive ones Changing or neutralising hostile opinions

65. Public Relations Techniques

66. Consumer communication Customer press releasesTrade press releasesPromotional videosConsumer exhibitionsCompetitions and prizesProduct launch eventsCelebrity endorsementsWeb sites

67. Consumer communication Customer press releasesTrade press releasesPromotional videosConsumer exhibitionsCompetitions and prizesProduct launch eventsCelebrity endorsementsWeb sites

68. Internal / employee communication In-house newsletters and magazinesIntranetNotice boardsEmployee conferencesEmail

69. External corporate communication Company literature (brochures, videos etc.)Community involvement programmesTrade, local, national and international media relations

70. Financial communication Financial media relationsAnnual report and accountsMeetings with stock market analysts, fund managers etcShareholder meetings (including the annual general meeting

71. Sales Promotion

72. advertising campaign, increased PR activity, a free-sample campaign, offering free gifts or trading stamps, arranging demonstrations or exhibitions, setting up competitions with attractive prizes, temporary price reductions, door-to-door calling, telemarketing, personal letters

73. It is about stimulating customers to buy a product. It is not designed to be informative � a role which advertising is much better suited to.

74. Sales promotion can be directed at: The ultimate consumer (a �pull strategy� encouraging purchase) The distribution channel (a �push strategy� encouraging the channels to stock the product). This is usually known as �selling into the trade�

75. Methods of sales promotion Price Promotions Coupons Gift with purchase Competitions and Prizes Money Refunds Frequent Users/ Loyalty Incentives Point of Sale Displays

76. Price promotions commonly known as �price discounting� These offer either (1) a discount to the normal selling price of a product, or (2) more of the product at the normal price. A producer must also guard against the possible negative effect of discounting on a brand�s reputation

77. Coupons Consider the following examples of the use of coupons: - On a pack to encourage repeat purchase- In coupon books sent out in newspapers allowing customers to redeem the coupon at a retailer- A cut-out coupon as part of an advert- On the back of bill receipts To maximise the redemption rate � this is the proportion of customers actually using the coupon. Use of coupon promotions is, often best for new products or perhaps to encourage sales of existing products that are slowing down.

78. Gift with purchase It is also known as a �premium promotion� in that the customer gets something in addition to the main purchase.

80. WORD OF MOUTH Strongest of All

83. Publicity

86. Sponsorship

87. Television and Radio Program Sponsorship Event Sponsorship Arts Sponsorship Educational Sponsorship

88. Factors of Influence

89. (1) Resource availability and the cost of each promotional tool (2) Market size and concentration (3) Customer information needs

90. Societal Marketing Concept

91. ENTREPRENEURAL MARKETING

92. The Marketing System

93. Steps in preparing the marketing plan Defining the Business Situation (Situation Analysis) Defining the target market/ Opportunities and Threats Considering Strengths and Weaknesses Establishing Goals and Objectives Defining Marketing Strategy and Action Programs Designating responsibility for implementation Budgeting the marketing strategy Implementation of the marketing plan Monitoring progress of marketing actions Contingency Planning

94. CHECKLIST FOR ARRIVING AT A SPECIFIC MARKETING STRATEGY

95. 95 1. List information on the industry that the business will compete in Current Size Growth Potential Geographic Locations Industry Trends Seasonal Factors Profit Potential Sales Patterns (single, bulk, direct, etc.)

96. 96 2. What is the profile of the customer or various customer groups? Include age, sex, profession, income, geographic location and other demographics. 3. Describe the benefits provided to the customer? What problems are you solving?

97. 97 4. Describe the customer�s need for the product / service. How much will they save? What return will the customer receive on the dollars they spend? Will they have to change their ways of doing things? Will they be required to purchase other goods / services to utilize yours? Will they have to change their work habits?

98. 98 5. Describe the new venture�s market niche. A particular appeal, identify, or place in the market that the product / service has.

99. 99 6. Describe the target market(s) and the potential dollar volume of each that the business has selected for penetration Prioritize the list by naming the best target markets first. Note that your target market might not be the end user but instead your distribution channels.

100. 100 7. Describe approach for selling the product / service to the end user. Distribution channels, sales representatives, direct sales force, direct mail, telemarketing 8. List the costs for penetrating each target market Dollars and Time (sales, lead time needed, etc.)

101. 9. What advertising / promotion media will be used for the distribution system and for the end users? Address each area that will be used: radio, newspaper, trade journals & magazines, and / or television advertising Include a sample of the advertising (if possible) and list costs.

102. 102 10. How will the packaging and labeling enhance name identification and brand loyalty? If possible, include sample of packaging 11. What kind of service, warranties, and guarantees will be offered? How will these be promoted? How many of these will affect profits?

103. 103 12. What are the reactions to the product / service from prospective customers? Include any testimonials, market surveys, focus group studies, etc. 13. State why the market efforts are unique or different from competitors Avon pioneered door-to-door cosmetics

104. 104 14. What is the role of trade show? Which trade shows will be best for exhibiting the product / service? Give name, location, date, booth size, etc 15. Explain opportunities in future markets. Include size, method of penetration, costs, etc.

105. Make your Marketing Strategy