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Chapter 10-Place and Development of Channel Systems

Chapter 10-Place and Development of Channel Systems -...

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Chapter 10-Place and Development of Channel Systems Monday, April 04, 2011 6:00 PM 1. Marketing Strategy Planning Decisions for Place 1.a. Place: making goods and services available in the right quantities and locations, when customers want them 1.a.i. When different target markets have different needs, a number of Place variations may be required 1.a. Channel of distribution: any series of firms or individuals who participate in the flow of products from producer to final user or consumer 1. Place Decisions are Guided by "Ideal" Place Objectives 1.a. Product classes suggest place objectives 1.b. Place system is not automatic 1.c. Place decisions have long-run effects (place objectives in relation to product life cycle) 1. Channel System may be Direct or Indirect 1.a. Direct 1.a.i. Why a firm might want to use direct distribution 1.a.i.1. Prefer to distribute directly to the final customer or consumer because they want to control the whole marketing job 1.a.i. The internet makes direct distribution easier 1.a.i. Direct contact with customers 1.a.i.1. If a firm is in direct contact with its customers, it is more aware of changes in customer attitudes 1.a.i. Suitable intermediaries are not available 1.a.i.1. Many new products fail because the producer can't find willing channel partners and doesn't have the resources to handle direct distribution 1.a.i. Common with business customers and services 1.a.i.1. Understandable because in business markets, there are fewer transactions, orders are larger, and customers may be concentrated in one geographic area 1.a.i. Some consumer products are sold direct 1.a.i.1. Most consumer products are sold through intermediaries 1.a.i. Don’t be confused by the term direct marketing 1.a.i.1. Direct marketing: direct communication between a seller and an individual customer using a promotion method other than face-to-face personal selling 1.a.i.1. Many firms that use direct marketing promotion distribute their products through intermediaries 1.a.i.1.a. Term "direct marketing" is primarily concerned with the promotion area, not place decisions 1.a. Indirect 1.a.i. When indirect channels are best 1.a.i.1. Consumers are spread throughout many geographic areas and often prefer to shop for certain products at specific places
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1.a.i.2. A company that has limited financial resources or that wants to retain flexibility may want to avoid that investment by working with established intermediaries 1.a.i.1. Intermediaries may further reduce a producer's need for working capital by buying the producer's output and carrying it in inventory until it's sold 1.a.i.1.
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