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1、1,Distribution Strategies for the Asia Pacific,Asia-Pacific Marketing FederationCertified Professional MarketerCopyrightMarketing Institute of Singapore,2,Outline,Basic channels&transaction costsCompetitive advantage of channelsAligning channels with how customers buyDistribution strategiesE-commerc
2、e:Online distributionM-commerce,3,Introduction,“Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption”Philip Kotler,4,Basic Channels of Distribution,5,Typical Distribution of Drugs,Manufacturers,Marketing A
3、gents,Retailers/Wholesalers/Distributors,Patient,Public Hospitals/Institutions,6,Distribution Objectives,Minimize total distribution costs for a given service outputDetermine the target segments and the best channels for each segmentObjectives may vary with product characteristicse.g.perishables,bul
4、ky products,non-standard items,products requiring installation&maintenance,7,Discussion,What do these three companies have in common?ADell ComputersPOEMS(Philips Securities),8,Transaction Cost by Channels,As the value-added increases,the cost of transaction also increasesDirect marketing channelslow
5、 value-added;low cost of transactions e.g.e-commerce,telemarketingIndirect marketing channelsmedium value-added;medium cost of transactions e.g.retail stores,distributorsDirect sales channelshigh value-added;high cost of transactions e.g.own sales force,9,Competitive Advantage of Channels,Traditiona
6、l means of achieving competitive advantage is through products but can be easily copiedLow-cost as a competitive advantageAlso suffer from sustainabilityBrands as competitive advantageOnly if you are a strong brandMarketers are turning more and more to channels as a competitive advantage e.g.Dell Co
7、mputerSource:The Channel Advantage by Friedman and Furey,10,Aligning Channels With How Customers Buy,Identify customers channel preferences and buying behaviorTabulate channel selection to key buying criteriaProvide flexible channel optionsMonitor(and respond to)changes in buying behaviorSource:The
8、Channel Advantage by Friedman and Furey,11,Example of buying criteria,Buying criteria for flowers:PriceOrdering speedDelivery flexibilityPersonal selection&customizationExpert adviceChannel appeal&attractivenessPurchasing events,12,Distribution-Scope Strategies,Exclusive DistributionLimiting the dis
9、tribution to only one intermediary in the territoryIntensive distributionDistribute from as many outlets as possible to provide location convenienceSelective distributionAppoint several but not all retailers,13,Example of Exclusive Distribution,LEICA was officially appointed Jebsen&Jebsen Marketing
10、as the exclusive distributor for Singapore,Malaysia,Thailand,Indonesia and BruneiA main factor in choosing J&J was its expertise in“high-quality technical products on the consumer market.”Source:Smartinvestor,Singapore Ed.June 2000,14,Exclusive Distribution:Advantages,Maximize control over service l
11、evel/outputEnhance products image&allow higher markupsPromotes dealers loyalty,better forecasting,better inventory and merchandising controlRestricts resellers from carrying competing brands,15,Exclusive Distribution:Disadvantages,Betting on one dealer in each marketOnly suitable for high price,high
12、 margin,and low volume products,16,Example of Intensive Distribution,NewspapersMost fast moving consumer goods you see in the newsstandPhoto processing shops,17,Advantages:Increased sales,wider customer recognition,and impulse buyingDisadvantages:Characteristically low price and low-margin products
13、that require a fast turnover Difficult to control large number of retailers,Intensive Distribution,18,Example of Selective Distribution,Daewoo have 2 distributors in Singapore“Starsauto,part of a larger Indonesian group,represents Daewoos traditional line of sedans.Homegrown family-owned JTA Motors
14、market Daewoos offroad vehicles like the Musso and Korando,and an upmarket model called the Chairman.(Source:BT,Motoring,Feb4/1999),19,Selective Distribution,Advantages:Better market coverage than exclusive distributionMore control and less cost than intensive distributionConcentrate effort on few p
15、roductive outletsSelected firms capable of carrying full product line and provide the required service,20,Selective Distribution(contd),Disadvantages:May not cover the market adequatelyDifficult to select dealers(retailers)that can match your requirement and goals,21,Multiple-Channel Strategy,Using
16、two or more different channels to distribute goods and servicesWhy?Permits optimal access to each market segmentIncrease market coverage,lower channel cost and provide more customized sellingWhat to look out for?More channels usually means more conflict and control problems,22,Complementary Channels
17、,Each channel handles a product or segment that is different or non-competing e.g.Toyota LexusMPH online portalsMagazine distributions,23,Competitive Channels,The same product is sold through two different and competing channels e.g.Non-prescriptive drugsElectronic goodsWhy?To increase salesWhat to
18、look out for?Over extending yourselfDealers resentmentControl problems,24,Modifying Distribution Strategies,Modify when the following changes occur:Consumer markets and buying habitsCustomer needsCompetitors perspectivesRelative importance of outlet typesManufacturers financial strengthSales volume
19、level of existing products,andThe marketing mix,25,Channel-Control Strategy,Vertical Marketing System(VMS)Also known as centrally coordinated,professionally managed and centrally programmed network systemsThe emerging trend in ASPAC replacing existing conventional marketing channelsClassified into c
20、orporate,administered and contractual VMS,26,Channel-Control Strategy(contd),Horizontal Marketing SystemTwo or more unrelated companies putting together resources to exploit a marketing opportunity Adler called this symbiotic marketing(HBR Nov-Dec86)Example:In Japan,small companies form HMS in the f
21、orm of Yugoka,27,E-Commerce:Online Distribution,The success depends on the characteristics of the consumers in the market in terms of their disposition to e-commerce and surfing habits e.g.South Korea has the most dynamic Internet surfers in Asia.They spend the least time28 secondson a web page befo
22、re moving onAustralian surfers were the“stickiest”,clocking one minute per page(Source:March 2001 figures from Nielsen/NetRatings Globel Index),28,The Future:M-Commerce,Mobile commerce is going to be the next revenue stream once the killer mobile-application is rolled outThe penetration of mobile data services is low in ASPAC(1%)compared to the Western Europe(23%),Japan(21%)and the US(7%)(Source:ARC Group,2000)Japans NTT DoCoMos recently launched i-Mode,a data communications service rather like Wap,and signed up several million customers(Source:Intelligent Enterprise Asia,July 2001),
