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Chapter 16. Direct Selling & Direct Marketing Channel Systems. Ch. 16 Major Topics. What are Direct Marketing Channels ? - Review on channel choices Structure and Trend of Direct Selling Variables to Consider for Direct Selling* Problems and Prospects of Direct Selling*
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Chapter 16 Direct Selling & Direct Marketing Channel Systems
Ch. 16 Major Topics • What are Direct Marketing Channels? • - Review on channel choices • Structure and Trend of Direct Selling • Variables to Consider for Direct Selling* • Problems and Prospects of Direct Selling* • Direct Marketing Channel
Direct Selling Topic 1 Definition: the sale of a consumer product or service person-to-person, away from a fixed retail location Three key points: • Goes directly to consumers’ homes, offices, or other locations • Concerned with the sale of consumer products in consumer markets rather than industrial products • Involves salespeople meeting fact-to-face with customers
Non-intermediary Channels* Growing in importance • Direct Selling (DS) (to consumers) • Compare with Direct Salesforce (to businesses) Salesforce Management • Direct Marketing (DM) Difference between DS and DM?
Structure & Trends in Direct Selling Topic 2 - Markets Served - Types of Products Sold - Firms Involved in Direct Selling - Problems & Prospects for Direct Selling
Markets Served Location of Direct Selling Channel Sales
Types of Products Sold Major Product Categories Sold through Direct Selling Channels as a Percentage of Total Sales
Firms Involved in Direct Selling • Hundreds exist • Range in size from those with annual sales over $1 billion to those with sales well under $1 million Facts • Tupperware Corp.* • Avon Products, Inc.* http://www.avon.com/ • Cutco Cutlery Corp. • Amway Corporation Examples
Rationale for DesigningDirect Selling Channels Topic 3 A method of distribution for providing products & services to customers But: The decision should be based on an objective analysis of the advantages or disadvantages of each channel alternative.
Variables To Consider for Direct Selling* 1) Market variables & DS channel* Product variables & DS channel* 3) Company variables & DS channel 4) Intermediary variables & DS channel 5) Behavioral variables & DS channel
1) Market Variables Developments in consumer attitudes & behaviors that could make direct selling more attractive: 3. Consumers are seeking increased convenience in shopping. 1. Consumers have less timeavailable for shopping in traditional stores. 2. Consumers are becoming more sophisticated and demand more & better product information.
2) Product Variables Products that are high quality, that are unique, or that require specialized information & advice are logical choices for direct selling: Product quality may become apparent only when consumers are informed about them in conjunction with hands-on demonstrations. Consumer satisfaction may depend on whether the consumer has proper information. Product uniqueness may become apparent only through the direct help of salespeople.
3) Company Variables Basic variables to consider: 4. Basic objectives & policies of the company 1. Size of the company 2. Financial capacity of the company 3. Managerial expertise in distribution*
4) Intermediary Variables Basic intermediary variables to consider: 3. Services that alternatives are capable of or willing to provide 1. Availability of alternatives 2. Cost of using channel alternatives
5) Behavioral Variables The “people” side of the marketing channel: Communications processes Conflict Power Role
Problems & Prospectsfor Direct Selling* Topic 4 Lack an awareness of DS as an alternative. Negative impression on DS in general.* Lower availability of consumers for at-home sales calls and parties.* The perceived risk by consumers is high compared to other modes of shopping. 5. Recruitment of salespeople has become difficult.*
Direct Marketing* Topic 5 Definition: An interactive system of marketing that uses more advertising media to effect a measurable response and/or transaction at any location Key Points: Direct marketing is a system or an approach to marketing. Direct marketing relies on one or a combination of advertising media to inform and stimulate customer purchase responses. (including order taking) Direct marketing includes the ability to measure responses. Ex) Dell, L.L. Bean, QVC
Structure & Trends in Direct Marketing Estimating total sales is tricky because various estimates often include different categories of products and/or services as well as different market segments Challenges Some sales data may be included or excluded that may or may not cover direct marketing sales