Services decisions
Customer service is another element of product strategy. A company's offer to the
marketplace usually includes some services, which can be a minor or a major part of the total offer.
services that augment actual products. More and more companies are using product support
services as a major tool in gaining competitive advantage.
A company should design its product and support services to profitably meet the needs of
target
customers. The first step is to survey customers periodically to assess the value of current
services
and to obtain ideas for new ones. For example, Cadillac holds regular focus group interviews
with
owners and carefully watches complaints that come into its dealerships. From this careful
monitoring, Cadillac has learned that buyers are very upset by repairs that are not done
correctly
the first time.
Once the company has assessed the value of various support services to customers, it must
next assess the costs of providing these services. It can then develop a package of services
that will both delight customers and yield profits to the company.
(Unit II end for DBM)
Marketing channel decisions
Of the four elements of marketing mix, product, price, promotion and distribution,
distribution [i.e., the channels of distribution and physical distribution] is the most important
element. The success or failure of a firm depends largely upon the efficiency of distribution
The term channel‘ is derived from the French word canal‘ meaning artificial water
way for transportation or irrigation so, channel of distribution refers to the pathway, path or
route taken by goods as they flow or move from the point of production to the point of
consumption or use.
In the words of Prof. W. Stanton ―channel of distribution is the route taken by the goods as they
move from the producer to the ultimate consumer or industrial user‖
According to Philip kotler ―every producer seeks to link together the set of marketing
intermediaries that best fulfill the firm‘s objective. This set of marketing intermediaries is
called the marketing channel [also trade channel or channel of distribution]
Levels of Channels
By channel level we mean how many intermediaries are there between the producer
and consumer. Distribution channels are usually of two types, namely zero level channel or
direct marketing channel and indirect marketing channel.
Direct Marketing Channel or Zero Level Channel
This type of channel has no intermediaries In this distribution system, the goods go from the
producer direct to the consumer. Companies use their own sales force to reach consumers.
Eg. Eureka Forbes which markets water purifiers in Indian market, Dell Computers.
Producer Consumer
ZERO LEVEL CHANNEL
Indirect Marketing Channel – These are typical channels in which a third party is involved
in the distribution of products and services of a firm. It can be classified into following
categories:
One-Level Channel- In this type of channel there is only one intermediary between
producer and consumer. This intermediary may be a retailer or a distributor. It is used for
specialty products like washing machines, refrigerators, Automobiles etc.
Producer Distributor / Retailer Consumer
Two-Level Channel – This type of channel has two intermediaries, namely,
wholesaler/distributor and retailer between producer and consumer. It can be seen in
pharmaceuticals, liquor, expensive readymade garments.
Producer Wholesaler Retailer Consumer
Producer
er
Three-Level channel – This type of channel has three intermediaries namely distributor,
wholesaler and retailer. This pattern is used for convenience products like soaps, toothpaste,
icecreams, soft drinks etc.
Producer
Producer Agent Wholesaler Retailer Consumer
Factors affecting the choice of channels are as follows
It is a firm and its customer oriented and it should be proper.
1. Market considerations:
a. Type of the market
b. Number of potential customers
c. Geographic concentration of the market
d. Order size.
2. Product considerations
a. Unit value
b. Perishability
c. Technical nature
3. Middlemen considerations
a. Services provided by middlemen
b. Availability of desired middlemen
c. Producer’s and middlemen’s policies
4. Company considerations
a. Desire for channel control
b. Service provided by seller
c. Financial resources.
Retailing
Includes all activities involved in selling goods or services directly to final consumers
for personal, non-business use. A retailer or retail store is any business enterprise whose sales
volume comes primarily from retailing.
Major Retailer Types
➢ Specialty Store – Narrow product line with a deep assortment. Eg. Park Avenue Men’s
Clothing Store.
➢ Department Store – Several product lines-typically clothing, home furnishings and
household goods-with each line operated as a separate department managed by specialist
buyers. Eg. Shoppers Stop, Pantaloons
➢ Supermarket – Relatively large, low cost, low margin, high volume, self-service
operation designed to serve total needs for food, laundry and household products. Eg.
Food World, Food Bazaar, Reliance Fresh etc.
➢ Convenience Store – Relatively small store located near residential area, open long
hours, seven days a week and carrying a limited line of high-turnover convenience
products at slightly higher prices. Nearby Mom n Pop Stores in the residential area..
➢ Discount store – Standard merchandise sold at lower prices with lower margins and
higher volumes. Eg. Wal-Mart, Metro
➢ Hypermarket – Large sized store and product assortment includes furniture, large and
small appliances, clothing and many other items. Eg. Spar Hypermarket.
Wholesaling
Includes all the activities in selling goods or services to those who buy for resale or
business use. Buy from manufacturer and sell to retailers.
Functions –
• Selling and promoting – Wholesaler’s sales force helps manufacturers reach many
small business customers at a relatively low cost. Wholesalers have more contacts, and
often buyers trust wholesalers more than they trust a distant manufacturer.
• Buying and assortment building – Wholesalers are able to select items and build the
assortments their customers need, saving the customers considerable work.
• Bulk breaking – Wholesalers achieve savings for their customers through buying in
large carload lots and breaking the bulk into smaller units.
• Warehousing – Wholesalers hold inventories, thereby reducing inventory costs and risks
to suppliers and customers.
• Transportation – Wholesalers can often provide quicker delivery to buyers because they
are closer to the buyers.
• Financing – Wholesalers finance customers by granting credit, and finance suppliers by
ordering early and paying bills on time.
• Risk bearing – Wholesalers absorb some risk by taking title and bearing the cost of theft,
damage, spoilage and obsolescence.
• Market Information – Wholesalers supply information to suppliers and customers
regarding competitor’s activities, new products, price developments and so on.
• Management services and counseling – Wholesalers often help retailers improve their operations by training sales clerks, helping with store layouts and displays and setting up accounting and inventory control systems.
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