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1、ALESSIEvolution of an Italian Design Factory,Marketing ManagementTeam CEMBA 06,How to control and expand distribution without compromising the brand image?,Distribution StructureDistribution and the Brand ImageChallenges Next Step,Why Controlling Distribution?,Control Brand Image Problem of heteroge
2、neity in retailer strategies over product displayDiversity in distribution channelsRecovering from price and brand confusion of past ten years Increase turnover,Distribution Structure,Use distribution asA channel of distributionDiversified channels:retail outlets,museum stores,gift shops,A place to
3、increase brand equityLuxury retail shops in ItalyOffering:between shopping and specialtyDesign-oriented table and kitchen productsShopping goods(not convenience goods!):about 50%purchases as gifts,wedding presents,Christmas:overall 25-30%of annual sales.Specialty goods:best sellers like M.Suicide,Ma
4、gic Bunny,etc Consumer side distribution structure 1983:Change into streamlined distribution system,Distribution Structure,Manufacturer,Independent Distributors,Retailers,Manufacturer,Retailers,orders-deliveries,orders-deliveries,orders,Single Country Independent agentsor subsidiaries,orders,deliver
5、ies,1983:streamlined distribution system,Hybrid channel administrationIndirect for orders and direct for deliveriesAgents:independent or company-owned subsidiaries Benefits:increase of control in distribution,reduction of functional discrepancies,reduction of delivery costs,economies of scale in ord
6、er management,better mapping in assortment of goods and better services by company-owned subsidiaries,Distribution Structure,Manufacturer,Retailers,orders,Single Country Agent,orders,deliveries,PUSH strategyInduce cooperation with retailers,keep inventory low,display products,and visibility on shelf
7、 spaces to win voluntary co-operation.,streamlined distribution system,Shift in market coverage strategyFrom intensive distribution to selective distribution:Agents as independent entities in exclusive geographical areasFrom 9000 retailers in 1989 to 5000 in 2000.,Management of Power in Distribution
8、 Channels,Avoidance Strategy Differentiation:design oriented and product naming Focus:Table and kitchen,high-quality Reduction in costs:Reduction in delivery costs by streamlined distribution system.Lately:Resistance and confrontation strategyDiversification of channels:selected retailers,own stores
9、,licensingControlled distribution system,Management of Power in Distribution Channels,Power Management increased by streamlined distribution systemBetter control over products and shorter delivery channels thus reduction of costs of opportunity.,Threat of revocationRetailer churn=5%in 03,TrainingsMe
10、rchandising Reference valueIdentification,Coercive sources,Non-coercive sources,Power,basicoffering,Services:support in merchandising,inventory risk,training,service offering,Distribution and the Brand,Distribution on Brand Image,Consistent retail experience to strengthen the brandBenefits:Customer
11、Loyalty,more inelastic consumer response,greater trace cooperation and support,possible licensing opportunity Shop-in-shop for control over product display,demanding retailer commitment:ask for minimal surfacesMono-brand stores:show rooms and flagship stores03:3 moves to expand distribution while in
12、creasing customer-based brand equity value:Consistent retail experienceIncreasing retail penetration in key markets Licensing the Brand for newer types of products like watches and cars,Distribution Challenges on Brand Image,80s:Too intensive distribution system Price discrepancy between luxury retailers and others confusing brand image Constant control challenge over product display,merchandising and pricing Though selective approach,Licensing still putting at risk the brand image by partners controlling manufacturing and distribution.,Luxury,Other retailers,Next Step:Multiple Trademarks,
