Management Consulting/Marketing for managers


1.   (a) What do you understand by the term market planning and its  role in marketing
of  good and services?

     (b) Discuss the various elements of marketing mix both in case of product and
       services and   their complementary role in effectively marketing the firms offerings.

2.  (a) What is STP strategy? The success of product/service largely depends on the effectiveness of proper segmentation by the marketer. Justify by taking two examples of your choice.

    (b) What is Marketing Research (MR)? Discuss its role and Importance in the marketing decision in a competitive environment. Comment on the application of MR and their benefits.

3.  (a)  Why it is  essential for a marketer to have a sound knowledge of Consumer Behavior in the Promotion/ Marketing of a  firms product. Discuss

    (b) What do you understand by the terms branding and packaging of products? How does these enhance the consumer acceptance and adoption. Illustrate with suitable example.

4.  (a) What make pricing of product an important product decision? Justify its significance in    the light of the growth and profitability of the business.

    (b) Marketing is conducted outside the four walls of the company. Discuss the importance of distribution function in the light of the above statement in the following
         (i)  Dairy Product (ii) Banking Services (iii) Essential commodity.


I  will send  the balance  asap.

4.  (a) What make pricing of product an important product decision? Justify its significance in    the light of the growth and profitability of the business.


**the  newness  of  the  product.
*is it  completly  new  [ never  marketed  before]
*is it  another  competitive brand.
**target  customers
**competitive  position
**relation  to  highest  selling  brand
**relation  to  lowest  selling  brand
**cost of  production
*labor  cost
*material cost
*finance cost
**demand / supply  situation
**what customer  is willing to pay.
**gross margin [company  objective ]
**new  profit [  ""          ""        ]
**channel  selection.
**distribution  cost
**trade  discount
*after  sales  service [ warranty, if applicable ]
**product  life  cycle
**product  development cost

Is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organisation. The remaining 3p’s are the variable cost for the organisation. It costs to produce and design a product, it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation.

Marketing Mix?
The  role  of  marketing  in  achieving  the  marketing  objectives.

The Marketing Mix model (also known as the 4 P's) can be used by marketers as a tool to assist in implementing the marketing strategy. Marketing managers use this method to attempt to generate the optimal response in the target market by blending 4 (or 5, or 7) variables in an optimal way. It is important to understand that the Marketing Mix principles are controllable variables. The Marketing Mix can be adjusted on a frequent basis to meet the changing needs of the target group and the other dynamics of the marketing environment.
P 1  ---  Product
Historically, the thinking was: a good product will sell itself. However there are no bad products anymore in today's highly competitive markets. Plus there are many laws giving customers the right to send back products that he perceives as bad. Therefore the question on product has become: does the organization create what its intended customers want? Define the characteristics of your product or service that meets the needs of your customers.
Functionality; Quality; Appearance; Packaging; Brand; Service; Support; Warranty.
P 2  ---  Price
How much are the intended customers willing to pay? Here we decide on a pricing strategy - do not let it just happen! Even if you decide not to ask (enough) money for a product or service, you must realize that this is a conscious decision and forms part of the pricing strategy. Although competing on price is as old as mankind, the consumer is often still sensitive for price discounts and special offers. Price has also an irrational side: something that is expensive must be good. Permanently competing on price is for many companies not a very sensible approach.
List Price; Discounts; Financing; Leasing Options; Allowances.
P 3  ---  Place
Available at the right place, at the right time, in the right quantities? Some of the recent major changes in business have come about by changing Place. Think of the Internet and mobile telephones.
Locations; Logistics; Channel members; Channel Motivation; Market Coverage; Service Levels; Internet; Mobile.
P 4  ---  Promotion
(How) are the chosen target groups informed or educated about the organization and its products? This includes all the weapons in the marketing armory - advertising, selling, sales promotions, Direct Marketing, Public Relations, etc. While the other three P's have lost much of their meanings in today's markets, Promotion has become the most important P to focus on.
Advertising; Public Relations; Message; Direct Sales; Sales; Media; SALES  PROMOTION.
The function of the Marketing Mix is to help develop a package (mix) that will not only satisfy the needs of the customers within the target markets, but simultaneously to maximize the performance of the organization.
Importance of Pricing  IN  THE  MARKETING  MIX
When marketers talk about what they do as part of their responsibilities for marketing products, the tasks associated with setting price are often not at the top of the list. Marketers are much more likely to discuss their activities related to promotion, product development, market research and other tasks that are viewed as the more interesting and exciting parts of the job.
Yet pricing decisions can have important consequences for the marketing organization and the attention given by the marketer to pricing is just as important as the attention given to more recognizable marketing activities. Some reasons pricing is important include:
•   Most Flexible Marketing Mix Variable – For marketers price is the most adjustable of all marketing decisions. Unlike product and distribution decisions, which can take months or years to change, or some forms of promotion which can be time consuming to alter (e.g., television advertisement), price can be changed very rapidly. The flexibility of pricing decisions is particularly important in times when the marketer seeks to quickly stimulate demand or respond to competitor price actions. For instance, a marketer can agree to a field salesperson’s request to lower price for a potential prospect during a phone conversation. Likewise a marketer in charge of online operations can raise prices on hot selling products with the click of a few website buttons.
•   Setting the Right Price – Pricing decisions made hastily without sufficient research, analysis, and strategic evaluation can lead to the marketing organization losing revenue. Prices set too low may mean the company is missing out on additional profits that could be earned if the target market is willing to spend more to acquire the product. Additionally, attempts to raise an initially low priced product to a higher price may be met by customer resistance as they may feel the marketer is attempting to take advantage of their customers. Prices set too high can also impact revenue as it prevents interested customers from purchasing the product. Setting the right price level often takes considerable market knowledge and, especially with new products, testing of different pricing options.
•   Trigger of First Impressions - Often times customers’ perception of a product is formed as soon as they learn the price, such as when a product is first seen when walking down the aisle of a store. While the final decision to make a purchase may be based on the value offered by the entire marketing offering (i.e., entire product), it is possible the customer will not evaluate a marketer’s product at all based on price alone. It is important for marketers to know if customers are more likely to dismiss a product when all they know is its price. If so, pricing may become the most important of all marketing decisions if it can be shown that customers are avoiding learning more about the product because of the price.
•   Important Part of Sales Promotion – Many times price adjustments are part of sales promotions that lower price for a short term to stimulate interest in the product. Marketers must guard against the temptation to adjust prices too frequently since continually increasing and decreasing price can lead customers to be conditioned to anticipate price reductions and, consequently, withhold purchase until the price reduction occurs again.
Pricing Objectives

The  firm’s  pricing  objectives  must  be  identified  in order  to  determine
The  optimal  pricing. Common  objectives  include  the  following:


-seeks to  maximize current  profit,taking into  account  revenue  and  costs. Current  profit  maximization may not  be  the best  objective
if  it  results in lower  long-term  profits.


-seeks  to  maximize  current  revenue  with no regard  to  profit  margins.
The  underlying objective  often is to  maximize  long  term  profits
By  increasing  market  share  and  lowering  costs.


-seeks  to  maximize  the  number  of  units  sold  or  the  number  of  customers  served  in  order  to  decrease  long-term  costs  as  predicted
by  the  experience  curve.

• Maximize profit margin - attempts to maximize the unit profit margin, recognizing that quantities will be low.
• Quality leadership - use price to signal high quality in an attempt to position the product as the quality leader.
• Partial cost recovery - an organization that has other revenue sources may seek only partial cost recovery.
• Survival - in situations such as market decline and overcapacity, the goal may be to select a price that will cover costs and permit the firm to remain in the market. In this case, survival may take a priority over profits, so this objective is considered temporary.

" Status quo - the firm may seek price stabilization in order to avoid price wars and maintain a moderate but stable level of profit.

For new products, the pricing objective often is either to maximize profit margin or to maximize quantity (market share). To meet these objectives, skim pricing and enetration pricing strategies often are employed.

SKIN pricing attempts to "skim the cream" off the top of the market by setting a nigh price and selling to those customers who are less price sensitive. Skimming is a ,. r.itegy used to pursue the objective of profit margin maximization.

Skimming is most appropriate when:
• Demand is expected to be relatively inelastic; that is, the customers are not highly price sensitive.
• Large cost savings are not expected at high volumes, or it is difficult to predict the cost savings that would be achieved at high volume.
*The company does not have the resources to finance the large capital expenditures necessary for high volume production with initially low profit margins.

Penetration pricing pursues the objective of quantity maximization by means of a ,.v price. It is most appropriate when:
* Demand is expected to be highly elastic; that is, customers are price sensitive and the quantity demanded will increase significantly as price declines,
• Large decreases in cost are expected as cumulative volume increases,
• The product is of the nature of something that can gain mass appeal fairly quickly.’
•' There is a threat of impending competition.

'As  the product lifecycle  progresses, there  likely  will be  changes in  the  demand
curve  and  costs. As  such, the  pricing  policy should  reevaluated  over  time.


Pricing Methods
to set the specific price level that achieves their pricing objectives, managers may ke use of several pricing methods. These methods include:
• Cost-plus pricing - set the price at the production cost plus a certain profit margin.

• Target return pricing - set the price to achieve a target return-on-investment.

*Value-based pricing - base the price on the effective value to the customer relative to alternative products.

• Psychological pricing - base the price on factors such as signals of product quality, popular price points, and what the consumer perceives to be fair.

In  addition to setting the price level, managers have the opportunity to design innovative pricing models that better meet the needs of both the firm and its customers.

Price Discounts
normally quoted price to end users is known as the list price. This price usually is discounted for distribution channel members and some end users. There are several types of  discounts, as outlined below.

• Quantity discount - offered to customers who purchase in large quantities.
• Cumulative quantity discount - a discount that increases as the cumulative quantity increases.
Cumulative discounts may be offered to resellers who purchase large quantities over time but who notwish to place large individual orders.
*Seasonal discount - based on the time that the purchase is made and designed to reduce seasonal variation in sales. For example, the travel industry offers much lower off-season rates. Such discounts do not have to be based on time of the year; they also can be based on day of the week or time of the day, such as pricing offered by long distance and wireless service providers.
*Cash discount - extended to customers who pay their bill before a specified date.
• Trade discount - a functional discount offered to channel members for
•performing their roles. For example, a trade discount may be offered to a small retailer who may not purchase in quantity but nonetheless performs the importantretail function.

Promotional discount - a short-term discounted price offered to stimulate

Pricing should take into account the following factors:
•   Fixed and variable costs.
•   Competition
•   Company objectives
•   Proposed positioning strategies.
•   Target group and willingness to pay.
here are some of the factors that you need to consider:
•   Positioning - How are you positioning your product in the market? Is pricing going to be a key part of that positioning? If you're running a discount store, you're always going to be trying to keep your prices as low as possible (or at least lower than your competitors). On the other hand, if you're positioning your product as an exclusive luxury product, a price that's too low may actually hurt your image. The pricing has to be consistent with the positioning. People really do hold strongly to the idea that you get what you pay for.
•   Demand Curve - How will your pricing affect demand? You're going to have to do some basic market research to find this out, even if it's informal. Get 10 people to answer a simple questionnaire, asking them, "Would you buy this product/service at X price? Y price? Z price?" For a larger venture, you'll want to do something more formal, of course -- perhaps hire a market research firm. But even a sole practitioner can chart a basic curve that says that at X price, X' percentage will buy, at Y price, Y' will buy, and at Z price Z' will buy.
•   Cost - Calculate the fixed and variable costs associated with your product or service. How much is the "cost of goods", i.e., a cost associated with each item sold or service delivered, and how much is "fixed overhead", i.e., it doesn't change unless your company changes dramatically in size? Remember that your gross margin (price minus cost of goods) has to amply cover your fixed overhead in order for you to turn a profit. Many entrepreneurs under-estimate this and it gets them into trouble.
•   Environmental factors - Are there any legal or other constraints on pricing? For example, in some cities, towing fees from auto accidents are set at a fixed price by law. Or for doctors, insurance companies and Medicare will only reimburse a certain price. Also, what possible actions might your competitors take? Will too low a price from you trigger a price war? Find out what external factors may affect your pricing.
The next step is to determine your pricing objectives. What are you trying to accomplish with your pricing?
•   Short-term profit maximization - While this sounds great, it may not actually be the optimal approach for long-term profits. This approach is common in companies that are bootstrapping, as cash flow is the overriding consideration. It's also common among smaller companies hoping to attract venture funding by demonstrating profitability as soon as possible.
•   Short-term revenue maximization - This approach seeks to maximize long-term profits by increasing market share and lowering costs through economy of scale. For a well-funded company, or a newly public company, revenues are considered more important than profits in building investor confidence. Higher revenues at a slim profit, or even a loss, show that the company is building market share and will likely reach profitability., for example, posted record-breaking revenues for several years before ever showing a profit, and its market capitalization reflected the high investor confidence those revenues generated.
•   Maximize quantity - There are a couple of possible reasons to choose the strategy. It may be to focus on reducing long-term costs by achieving economies of scale. This approach might be used by a company well-funded by its founders and other "close" investors. Or it may be to maximize market penetration - particularly appropriate when you expect to have a lot repeat customers. The plan may be to increase profits by reducing costs, or to upsell existing customers on higher-profit products down the road.
•   Maximize profit margin - This strategy is most appropriate when the number of sales is either expected to be very low or sporadic and unpredictable. Examples include custom jewelry, art, hand-made automobiles and other luxury items.
•   Differentiation - At one extreme, being the low-cost leader is a form of differentiation from the competition. At the other end, a high price signals high quality and/or a high level of service. Some people really do order lobster just because it's the most expensive thing on the menu.
•   Survival - In certain situations, such as a price war, market decline or market saturation, you must temporarily set a price that will cover costs and allow you to continue operations.
Now that we have the information we need and are clear about what we're trying to achieve, we're ready to take a look at specific pricing methods to help us arrive at our actual numbers.
Here are four ways to calculate prices:
•   Cost-plus pricing - Set the price at your production cost, including both cost of goods and fixed costs at your current volume, plus a certain profit margin. For example, your widgets cost $20 in raw materials and production costs, and at current sales volume (or anticipated initial sales volume), your fixed costs come to $30 per unit. Your total cost is $50 per unit. You decide that you want to operate at a 20% markup, so you add $10 (20% x $50) to the cost and come up with a price of $60 per unit. So long as you have your costs calculated correctly and have accurately predicted your sales volume, you will always be operating at a profit.
•   Target return pricing - Set your price to achieve a target return-on-investment (ROI). For example, let's use the same situation as above, and assume that you have $10,000 invested in the company. Your expected sales volume is 1,000 units in the first year. You want to recoup all your investment in the first year, so you need to make $10,000 profit on 1,000 units, or $10 profit per unit, giving you again a price of $60 per unit.
•   Value-based pricing - Price your product based on the value it creates for the customer. This is usually the most profitable form of pricing, if you can achieve it. The most extreme variation on this is "pay for performance" pricing for services, in which you charge on a variable scale according to the results you achieve. Let's say that your widget above saves the typical customer $1,000 a year in, say, energy costs. In that case, $60 seems like a bargain - maybe even too cheap. If your product reliably produced that kind of cost savings, you could easily charge $200, $300 or more for it, and customers would gladly pay it, since they would get their money back in a matter of months. However, there is one more major factor that must be considered.
•   Psychological pricing - Ultimately, you must take into consideration the consumer's perception of your price, figuring things like:
•   Positioning - If you want to be the "low-cost leader", you must be priced lower than your competition. If you want to signal high quality, you should probably be priced higher than most of your competition.
•   Popular price points - There are certain "price points" (specific prices) at which people become much more willing to buy a certain type of product. For example, "under $100" is a popular price point. "Enough under $20 to be under $20 with sales tax" is another popular price point, because it's "one bill" that people commonly carry. Meals under $5 are still a popular price point, as are entree or snack items under $1 (notice how many fast-food places have a $0.99 "value menu"). Dropping your price to a popular price point might mean a lower margin, but more than enough increase in sales to offset it.
•   Fair pricing - Sometimes it simply doesn't matter what the value of the product is, even if you don't have any direct competition. There is simply a limit to what consumers perceive as "fair". If it's obvious that your product only cost $20 to manufacture, even if it delivered $10,000 in value, you'd have a hard time charging two or three thousand dollars for it -- people would just feel like they were being gouged. A little market testing will help you determine the maximum price consumers will perceive as fair.
•   Market-oriented pricing
•   Setting a price based upon analysis and research compiled from the target market. This means that marketers will set prices depending on the results from the research. For instance if the competitors are pricing their products at a lower price, then it's up to them to either price their goods at an above price or below, depending on what the company wants to achieve .
•   Penetration pricing
•   Setting the price low in order to attract customers and gain market share. The price will be raised later once this market share is gained.
•   Price discrimination
•   Setting a different price for the same product in different segments to the market. For example, this can be for different ages, such as classes, or for different opening times, .

•   Premium pricing
•   Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. The practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that expensive items enjoy an exceptional reputation, are more reliable or desirable, or represent exceptional quality and distinction.

Predatory pricing
•   Aggressive pricing (also known as "undercutting") intended to drive out competitors from a market. It is illegal in some countries.
Contribution margin-based pricing
•   Contribution margin-based pricing maximizes the profit derived from an individual product, based on the difference between the product's price and variable costs (the product's contribution margin per unit), and on one’s assumptions regarding the relationship between the product’s price and the number of units that can be sold at that price. The product's contribution to total firm profit (i.e. to operating income) is maximized when a price is chosen that maximizes the following: (contribution margin per unit) X (number of units sold)..

Psychological pricing
•   Pricing designed to have a positive psychological impact. For example, selling a product at $3.95 or $3.99, rather than $4.00.

Dynamic pricing
•   A flexible pricing mechanism made possible by advances in information technology, and employed mostly by Internet based companies. By responding to market fluctuations or large amounts of data gathered from customers - ranging from where they live to what they buy to how much they have spent on past purchases - dynamic pricing allows online companies to adjust the prices of identical goods to correspond to a customer’s willingness to pay. The airline industry is often cited as a dynamic pricing success story. In fact, it employs the technique so artfully that most of the passengers on any given airplane have paid different ticket prices for the same flight.

Price leadership
An observation made of oligopolistic business behavior in which one company, usually the dominant competitor among several, leads the way in determining prices, the others soon following. The context is a state of limited competition, in which a market is shared by a small number of producers or sellers.

Target pricing
•   Pricing method whereby the selling price of a product is calculated to produce a particular rate of return on investment for a specific volume of production. The target pricing method is used most often by public utilities, like electric and gas companies, and companies whose capital investment is high, like automobile manufacturers.
•   Target pricing is not useful for companies whose capital investment is low because, according to this formula, the selling price will be understated. Also the target pricing method is not keyed to the demand for the product, and if the entire volume is not sold, a company might sustain an overall budgetary loss on the product.

Absorption pricing
•   Method of pricing in which all costs are recovered. The price of the product includes the variable cost of each item plus a proportionate amount of the fixed costs and is a form of cost-plus pricing
High-low pricing
•   Method of pricing for an organization where the goods or services offered by the organization are regularly priced higher than competitors, but through promotions, advertisements, and or coupons, lower prices are offered on key items. The lower promotional prices are designed to bring customers to the organization where the customer is offered the promotional product as well as the regular higher priced products.

Premium decoy pricing
•   Method of pricing where an organization artificially sets one product price high, in order to boost sales of a lower priced product.

Marginal-cost pricing
•   In business, the practice of setting the price of a product to equal the extra cost of producing an extra unit of output. By this policy, a producer charges, for each product unit sold, only the addition to total cost resulting from materials and direct labor. Businesses often set prices close to marginal cost during periods of poor sales. If, for example, an item has a marginal cost of $1.00 and a normal selling price is $2.00, the firm selling the item might wish to lower the price to $1.10 if demand has waned. The business would choose this approach because the incremental profit of 10 cents from the transaction is better than no sale at all.
•   ] Value-based pricing
•   Pricing a product based on the perceived value and not on any other factor. Pricing based on the demand for a specific product would have a likely change in the market place.

Pay what you want
•   Pay what you want is a pricing system where buyers pay any desired amount for a given commodity, sometimes including zero. In some cases, a minimum (floor) price may be set, and/or a suggested price may be indicated as guidance for the buyer. The buyer can also select an amount higher than the standard price for the commodity.
•   Giving buyers the freedom to pay what they want may seem to not make much sense for a seller, but in some situations it can be very successful. While most uses of pay what you want have been at the margins of the economy, or for special promotions, there are emerging efforts to expand its utility to broader and more regular use.

•   Freemium is a business model that works by offering a product or service free of charge (typically digital offerings such as software, content, games, web services or other) while charging a premium for advanced features, functionality, or related products and services. The word "freemium" is a portmanteau combining the two aspects of the business model: "free" and "premium". It has become a highly popular model, with notable success.

Now, how do you combine all of these calculations to come up with a price? Here are some basic guidelines:
•   Your price must be enough higher than costs to cover reasonable variations in sales volume. If your sales forecast is inaccurate, how far off can you be and still be profitable? Ideally, you want to be able to be off by a factor of two or more (your sales are half of your forecast) and still be profitable.
•   You have to make a living. Have you figured salary for yourself in your costs? If not, your profit has to be enough for you to live on and still have money to reinvest in the company.
•   Your price should almost never be lower than your costs or higher than what most consumers consider "fair". This may seem obvious, but many entrepreneurs seem to miss this simple concept, either by miscalculating costs or by inadequate market research to determine fair pricing. Simply put, if people won't readily pay enough more than your cost to make you a fair profit, you need to reconsider your business model entirely. How can you cut your costs substantially? Or change your product positioning to justify higher pricing?
Pricing is a tricky business. You're certainly entitled to make a fair profit on your product, and even a substantial one if you create value for your customers. But remember, something is ultimately worth only what someone is willing to pay for it.

    (b) Marketing is conducted outside the four walls of the company. Discuss the importance of distribution function in the light of the above statement in the following
         (i)  Dairy Product (ii) Banking Services (iii) Essential commodity.   


marketing concept
The marketing  concept  is the  philosophy  that  the  firm  should  analyze
the needs of  their  customers[ current /potential ]   and  then make
the  decisions to  satisfy  those needs , better  than the  competition.


What  is  Marketing ?

It  is  a  process  by  which  

-one  identifies  the  needs and wants  of  the  people.
-one determines  and  creates a  product/service to meet  the  needs
and  wants. [PRODUCT]
-one determines  a way  of  taking the  product/service to the market
place. [PLACE]
-one determines the  way of  communicating the product  to the
market  place. [PROMOTIONS]
-one determines the value for the product.[PRICE].

-one determines  the  people, who have  needs/ wants. [PEOPLE]

and then  creating a  transaction for exchanging the product for  
a  value.
and  thus  creating a  satisfaction to the buyer's needs/wants.

TERMS  to  understand.
1.Product/Service  means  a  product or service or idea to satisfy
  the  people's  needs /  wants.
2.Needs  mean  when  a  person feels deprived of something.
3.Wants  mean  when a  person's  need  is  formed / shaped
  by  personality, culture, and  knowledge.
4.Value  means  the  benefits  that the  customer  gains from
   owning  and  using the  product  and  the  cost  of  the product.
5.Satisfaction  means  the extent  to  which  a  product's
  perceived  performance  matches  a  buyer's expectation.
6.Exchange means the  act of obtaining a needed/ wanted
  object  by  offering  something  in  return.
7.Transactions  mean a  trade  off  between  a  buyer / a seller
  that  involves  an  exchange  at  agreed  conditions.

Marketing is based on identifying, anticipating and satisfying customer needs effectively and profitably. It encompasses
-market research,
-customer care,
-brand image and
much more.

-who  are  the  buyers
-where  do  they  buy
-why  do  they buy
-where  the   market areas--geographically
-what  conveniences  do  they  require
horizontal, vertical, corporate, administered, contractual.
middleman, agent, broker, wholesaler, retailer, distributor, dealer,
reseller, franchise holder.
legal, regulatory, language, customs, government policies,
logistics, currency, costs.
intensive, selective, exclusive.
centralised, decentralised.

performance criteria
1. Related goals for producers and channel members are assessed for their
ability to provide effective links between producers and end users.
2. Customer service policies are investigated in terms of consistent
implementation throughout channel organisations.
3. The effectiveness of communication and support systems in fostering
cooperation between channel members is assessed.
4. Potential sources of channel conflict are identified.
bypassing channels, oversaturating markets, complex channel
links, inadequate channel support, inconsistent channel
5. Leadership functions of channel leaders are defined in terms of coordinating
channel systems.
6. Channel power sources are identified.  
reward, expert, legitimate, coercive.
MARKETING Assesses  customer channel service needs.
performance criteria
1. Unit quantities that meet customer needs are established.
2. Delivery lead times that meet customer needs are established.
3.Product variety preferences that meet customer needs are established.
4. Required product and channel service levels that meet customer needs are
analysed and determined.
MARKETING Determines distribution channel structures.
performance criteria
1. Target market, marketing mix factors and customer preferences are analysed
and distribution channel requirements are determined.
2. Estimated market sales levels, channel establishment and maintenance costs
are assessed for distribution channel alternatives.
3. Expertise of channel members is assessed for channel alternatives.
4. Product factors are analysed in relation to distribution channel options.
life cycle, complexity, value, physical factors, consumer
perceptions, product line breadth.
5.Organisational objectives and constraints for distribution channels are
6. Resource requirements for distribution channel options are assessed.
7. The organisation’s ability to effectively manage distribution is evaluated for
channel alternatives.
8. Distribution channel structures are recommended from options evaluated for
products and target markets.

9.Channel objectives and standards are established and agreed with channel
10.Individual channel member agreements that meet organisational, legal and
regulatory requirements are produced.
11. Communication processes that ensure information is disseminated within and  across channel structures are established.
12. Channel structure operations that provide for support and motivation needs of  channel members to be assessed and met are established.
13. Channel structure agreements that include provisions for monitoring, evaluation and adjustment of individual channel policies to meet organisational and individual channel objectives are produced.
-does this  enormous  research / data collection.
-makes  the  initial   decisions.
-monitors  / takes  corrective  steps in  policies
A  successful Distribution Strategy is one that for a particular company, the
benefits it gains are reduction of its channel inventory, increases the company’ s advocacy
and streamlines the company’s operations.

Distribution strategy is far more than logistics and transportation. It comprises the
interplay between four major strategic considerations: Company Portfolio, Company
Operations, Channel, and Customer Considerations. Only after all of these have been
considered can a company truly develop a comprehensive strategy.

1.Customer Considerations . The appropriate channel strategy is heavily affected
-by customers' knowledge of the products,
-their price sensitivity in the product category,
-how they make purchase decisions,
-their logistics and
-customer service needs, and
-comfort using technology to meet their needs.

Channel Considerations. Key factors include such items as
-ability to create differential product demand,
-coverage of targeted markets,
customer service capacity,
-physical distribution systems,
-overall cost control orientation, and
-ability to use technology in both demand creation and cost control.

Company Portfolio Considerations.
-Maturity of product portfolio often dictates
-support needed from the channel and therefore is a core driver of channel
For example, launching newer products that require significant end user
education without the active support of trusted channels with long-term customer
relationships can be very difficult.

Company Operational Considerations. Core operational considerations involve
-company philosophy towards demand creation through personal selling,
-internal customer service and
-logistics capabilities, and
-company approach to the use of information technology and
These  could be --
-limiting the  distribution to only  one intermediary in the  territory.
-distribution  from as  many  outlets as  possible to  provide local
-appoint  several  but at  selected  few locations.
These could  be ---
1.competitive  positioning
2.wide range of  services
3.lower transactions  costs
4.lower  prices
5.shorter lead time
6.integrated  with systems
Identify your product's features and benefits
What makes it unique and how can it enhance the life or work of your customer? Differentiate between a feature and a benefit and look at the product from your customer's perspective.

Look at your competition
What are others in your market doing? Evaluate your competitors' strengths and weaknesses. Analyse what methods they use to sell.
-other  brands

Define your target market
Who are you selling to? The more research you put into profiling your potential customers the more effective your sales strategy will be. Put yourself in their position by asking: "What benefit is there for me?"
-bank  branches --appoint  several  but at  selected  few locations.
-more  in  high life  areas
These could  be ---
1.competitive  positioning
2.wide range of  services
3.integrated  with systems
1.Customer Considerations . The appropriate channel strategy is heavily affected
-by customers' knowledge of the services,
-how they make services  decisions,
-their logistics and
-customer service needs, and

Channel Considerations. Key factors include such items as
-ability to create differential  services demand,
-coverage of targeted markets,
customer service capacity,
-physical distribution systems,

Company Portfolio Considerations.
-Maturity of product portfolio often dictates
-support needed from the channel and therefore is a core driver of channel

Company Operational Considerations. Core operational considerations involve
-company philosophy towards demand creation through personal selling,
-internal customer service and
-logistics capabilities.

-supermarkets/ convenience  stores  distribution  from as  many  outlets as  possible to  provide local
These could  be ---
1.competitive  positioning
2.wide range of  services
3.lower transactions  costs
4.lower  prices
1.Customer Considerations . The appropriate channel strategy is heavily affected
-by customers' knowledge of the products,
-their price sensitivity in the product category,
-how they make purchase decisions,
-their logistics.

Channel Considerations. Key factors include such items as
-ability to create differential product demand,
-coverage of targeted markets,
customer service capacity,
-physical distribution systems,

Company Portfolio Considerations.
-Maturity of product portfolio often dictates
-support needed from the channel and therefore is a core driver of channel strategy.

Company Operational Considerations. Core operational considerations involve
-company philosophy towards demand creation through personal selling,
-internal customer service and
-logistics capabilities.


-WHOLESALERS /supermarkets/ convenience  stores  distribution  from as  many  outlets as  possible to  provide local convenience.
These could  be ---
1.competitive  positioning
2.wide range of  services
3.lower transactions  costs
4.lower  prices
1.Customer Considerations . The appropriate channel strategy is heavily affected
-by customers' knowledge of the products,
-their price sensitivity in the product category,
-how they make purchase decisions,
-their logistics.

Channel Considerations. Key factors include such items as
-ability to create differential product demand,
-coverage of targeted markets,
customer service capacity,
-physical distribution systems,

Company Portfolio Considerations.
-Maturity of product portfolio often dictates
-support needed from the channel and therefore is a core driver of channel strategy.

Company Operational Considerations. Core operational considerations involve
-company philosophy towards demand creation through personal selling,
-internal customer service and
-logistics capabilities.

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Leo Lingham


management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc


18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc


24 years in management consulting which includes business planning, strategic planning, marketing , product management,
human resource management, management training, business coaching,
counseling etc




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