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Safaricom marketing mix and it's environment. Upcoming SlideShare.
4 Types of Marketing Intermediaries
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Actions Shares. No notes for slide. Safaricom marketing mix and it's environment 1. Nor does the Author warrant that the use of this information is free of any claims of copyright infringement. The Author does not endorse any commercial service providers or their products. It was converted into a public company with limited liability on 16 May With the growing subscriber base, the company has employed over employees and opened 10 retail shops in Nairobi, Mombasa, Nakuru and Kisumu.
The firm has a wide dealer network of over dealers countrywide, www. It is worth forty billion Kenyan shillings in shares. This is approximately four hundred million Euros. Its market capitalization is worth two hundred and twenty two billion Kenyan shillings as at 31st of March Safaricom is listed in the Nairobi stock exchange market with a rather low but steady share price ranging from Kenyan shillings.
This share price is interestingly low as it has been trading in the stock exchange market for more than 2 years having started at 5 shillings during its Initial Public Offering IPO way back in 28th March A marketing channel is a set of practices necessary to transfer the ownership of goods from producer to consumer. One of the ways companies gain a competitive advantage in the market is through successful incorporation and management of marketing channels.
A marketing channel is a set of practices or activities necessary to transfer the ownership of goods, and to move goods from production to consumption. This process typically consists of all the institutions and marketing activities involved in the promotion and distribution of goods. Management teams must evaluate competitive pressures to assess whether their marketing strategies are effective and profitable, or ineffective and costly to the organization.
Sales remains the most popular way to measure performance. Competition : Rebates and higher profit margins are tactics used by brands to gain favor with channel intermediaries and preference on store shelves.
When developing, implementing and measuring the effectiveness of marketing channels, businesses should consider:. All of these factors influence the positioning of products against their competitors in the marketplace.
Distribution—one of the primary elements in the marketing mix —is key in determining how and when to respond to competitive pressures in the promotion of goods and services. It is a path or pipeline through which goods and services flow in one direction from vendor to the consumerand the payments generated by them flow in the opposite direction from consumer to the vendor.
A marketing channel can be short, extending directly from the vendor to the consumer; or may include several interconnected usually independent but mutually dependent intermediaries such as wholesalers, distributors, agents, retailers.
For example, merchants are intermediaries that buy and resell products. Agents and brokers are intermediaries that act on behalf of the producer but do not take title to the products. Each intermediary receives the item at one pricing point, and moves it to the next highest pricing point until it reaches the final buyer. This grouping of organizations is often referred to as the supply chain of a company. Cost, flexibility and quick adaptation to changing markets and demand are usually the top factors sellers consider when assess and choosing distribution channels.
Distribution Channels – Definition, Types, & Functions
The types vary and heavily depend on product category and target market. These distribution types include:. Promotional tactics are often used by companies use to motivate channel intermediaries to stock their brand over other products. These techniques include higher profit margins, special deals, premiums and allowances for advertising or display on store shelves. Channels perform better if a party is in charge, providing a level of leadership to coordinate goals and efforts.
Power is our willingness to use force in a relationship. It is often the means by which we are able to control or influence the behavior of another party. In the channel mechanism, power refers to the capacity of a particular channel member to control or influence the behavior of another channel member.Unless the company that makes a product sells it directly to the customer, they will need middlemen to get the product from the manufacturer to the customer's hands.
In business, these middlemen are called marketing intermediaries, and they are an integral part of the supply chain. Functions of intermediaries include providing logistical support for manufacturers that can't afford to outsource those roles, or simply do not have the infrastructure in place to perform them efficiently. Whether a company should use a marketing intermediary or not depends on the scale of its operations and the cost factor of performing those tasks in-house. There are four types of intermediaries: wholesalers, distributors, retailers and brokers or agents.
Wholesalers are independent businesses that buy goods in bulk from manufacturers and then resell them to retailers and other businesses. These types of intermediaries do not sell to the customer; they instead focus on satisfying the demands of retailers and other businesses where the customer will shop.
Retailers use wholesalers for easy access to products at a relatively low price. They also benefit from the time saved by going through wholesalers instead of directly through manufacturers — where the time it takes to receive a good can significantly increase.
Retailers that use wholesalers typically do not purchase their own products; they are instead buying other brands' products to sell. Distributors work much like wholesalers in the sense that they play middleman between manufacturers and retailers, but there are two fundamental differences between them as these examples of intermediaries illustrate: distributors provide more in-depth services and do not purchase the products from manufacturers. Whereas a wholesaler's key customer is retailers, distributors essentially work for manufacturers.
Distributors are actively involved in promoting a manufacturer's products, as well as selling them to retailers and wholesalers. Their job is more than just getting products from manufacturer to retailer; they actively search for market opportunities and ways to expand the brands of the products they sell. Retailers interact directly with the customer and are the most common example of a marketing intermediary. Examples can include convenience stores, shopping malls, grocery stores and e-commerce stores online.
These types of intermediaries do business with wholesalers and distributors in order to receive their inventory, which usually consists of products from multiple manufacturers. The customers have the benefit of being able to compare different brands of the same product, and the manufacturer benefits by having a location that gets their products directly into the customer's hands. With the rise of e-commerce, some marketing intermediaries are starting to become multifaceted.
While it has become easier than ever for small businesses to sell products online, it has also given many companies a platform to work as both manufacturer and retailer. Take Amazon, for example.
Although the initial products they sold were all made by different manufacturers, they have begun to produce their own products to sell on their platform. Brokers and agents sell products and services, but do not make any purchases; they instead connect a seller with a buyer and take a commission or percentage of the sale.
8.1 Marketing Channels and Channel Partners
Common examples are stockbrokers and real estate agents. Neither one of those parties owns the products they sell, they just actively work to find a fit for each client. Brokers typically work as marketing intermediaries on a one-time or short-term basis, while agents tend to have longer-term relationships with the parties involved.
After college, he went on to work sales and finance roles for a Fortune company before founding two tech companies. He is also the author of Finessin' Finances, a full-length book on personal finances. What Are the Different Channel Organizations in the Share on Facebook. The Wholesaler's Role Wholesalers are independent businesses that buy goods in bulk from manufacturers and then resell them to retailers and other businesses.
Distributing for Manufacturers Distributors work much like wholesalers in the sense that they play middleman between manufacturers and retailers, but there are two fundamental differences between them as these examples of intermediaries illustrate: distributors provide more in-depth services and do not purchase the products from manufacturers. Brokers and Agents Brokers and agents sell products and services, but do not make any purchases; they instead connect a seller with a buyer and take a commission or percentage of the sale.Developing a strong brand is a byproduct.
Make sure the Product or Service is excellent. Research and Planningexcellent. Employees, managers, staff, people and organizations engage in a number of tactics and activates we call Marketing. It starts with planning. I have found over the years that many seem to confuse advertising with Marketing or Marketing with advertising. There is so much more to marketing than one component under Promotion. Product mix, features, branding, designs, packaging, sizes, services, maintenance contracts, warranties, return policies.
A Product service is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. Look at branding; brand equity; brand name; quality; unique selling proposition USP and unique value proposition USP ; newness; complexity; physical appearance; packaging; labeling; ingredients; maintenance and service contracts; and others.
A product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed or sold through the same types of outlets, or fall within given price ranges. The major product line decision involves product line length the number of items in the product line. Set of buyers who share common needs or characteristics that the company decides to serve.
A Target Market consists of a set of buyers who share common needs or characteristics that the company decides to serve. Market targeting can be carried out at several different levels. A product focusing on a specific target market contrasts sharply with one following the marketing strategy of mass marketing. A target audience would be a media term. Defining a target market requires market segmentation; the process of segmenting the entire market as a whole and separating it into manageable units based on demographics, geographics, psychographics, behavior, technographics or technographical characteristics.
Can the segments be accessed? Marketing strategies need to be adapted for the different tiers or segments. Instead of viewing the market as a uniform group of customers with similar potential, the firm needs to view them as distinct groups or segments with differing potential. This means developing different marketing strategies for each tier, especially different strategies for price and product offering. Pricing decision making also involves adjusting prices concerning the competitive environment, economic situations and involve buyer perceptions.
Deceptive and misleading pricing practices may lead potential buyers and consumers to believe they will get more value and a better price than they will actually receive. Look at good, better, best pricing and values. Prices are a key positioning factor and must be decided in relation to the target market, the product and service assortment mix, and the competition.
Most retailers fall into the high-markup, lower volume group fine specialty stores or the low-markup, higher-volume group mass merchandisers and discount stores.
Kotler and Keller.
Pricing strategies include: cost- profit- competition- demand- value- customer led-based pricing. The communication element includes personal and non-personal communication activities.Manufacturers originally bear the responsibility to create the perfect marketing mix for their production.Project muse breaking the magic spell
To create the product so that it responds to the customer needs and expectations. To carefully manage the price so that it is affordable enough but prestigious enough to buy that product. To communicate to their customer base when they have new solutions.
Based on the scope, the type, and the diversity of your business, you will be faced with the need to delegate some of those responsibilities to third parties. Based on the time, cost and know-how it requires, distribution is usually the first one to go. This article will outline 3 classic distribution channels that might be a good fit for your organization and will argue there is a 4 thall-winner strategy you might want to employ in your business plan. Manufacturers have the ultimate interest to bring their production to the market and most manufacturers would be involved in the process as intermediaries.
Manufactures create a distribution path, a distribution chain or a distribution channel to get the product out of the factory, onto the physical location, put the price tag on it and on the shelf, ready for the customer reach for it. The links in those chains are intermediaries. They could be companies or individuals who act as wholesalers, retailers, brokers or other, that ultimately push the product closer to the customer, each at their price and with their added value. The distribution channels do not just affect the price — they influence other marketing decisions.
A distribution decision could give the product a unique position in the market. The same brand may use different distribution channels based on pricing. For example, while middle-range priced products are shipped to mass merchandisers, high-end products will only be offered to specialized stores through distributers.
The decision will also be influenced by how knowledgeable, how motivated, how available their partners would be to build a customer relationship and to recommend their product. Product development may also be held up depending on whether or not the established distribution channels will handle the new product or a new strategy would have to be developed. The distribution channel or actor may be involved in various ways, to a various extend, at various stages, on a various price, in delivering the product from the manufacturer to the customer.
The role of the distribution channel involves several functions that can each be performed by one or multiple intermediaries. Distribution channels are intended to limit the number of the transactions goods have to go through on their way towards its final destination. Wholesalers and retailers break bulk.
Which means they order large quantities of products from the manufacturer and then sell single products to the end customers. Channel intermediaries create assortments, which means that they will source different products and allow the customer a larger choice.
A main task of distribution channels is to have high efficiency. Transportation and storage, which is another task of distribution channels, are to be used at maximum capacity at minimum cost.
Wholesalers and retailers will move the goods from one location to another to store until there is demand for the product.
Intermediaries will usually offer more added value on the product, for example facilitate returns, offer customer support, etc. A common added value for all distribution channels is they all share the risk with the manufacturer.
That is why manufacturers have vested interest to sell in bulk, in large quantities, while retailers have a vested interest to carefully asses if a particular product will be sold. Distribution channel members handle communication with end customer, including being partially responsible for advertising.Geography of bulgaria climate control map
Distribution channels are responsible to create a two-sided connection from the manufacturer to the customer. We usually focus on one direction of that relationship — getting the product from the factory to the customer basket. However, the distribution channel returns profits, products for repair and customer feedback back to the manufacturer. The amount and role of distribution channel members determines the level of the distribution channel.
Philip Kotler came up with the definition of the zero-level distribution channel where one manufacturer sells directly to the customers. If the manufacturer uses a distributer to get the customer, that would be a one-level channel. And if that distributer sells to a retailer, that would be a two-level distribution channel.
As we already established, the distribution channel influences multiple other marketing decisions — the pricethe product development, employee management, organizational structure etc. This article aims to give you examples of successful strategies with different distribution channels, as well as traps to look out for when you choose one or the other.Today, marketing channel decisions are as important as the decisions companies make about the features and prices of products Littleson, Consumers have become more demanding.
They are used to getting what they want. In other words, how companies sell has become as important as what they sell 1. The firms a company partners with to actively promote and sell a product as it travels through its marketing channel to users are referred to by the firm as its channel members or partners. Companies strive to choose not only the best marketing channels but also the best channel partners.
A strong channel partner like Walmart can promote and sell the heck out of a product that might not otherwise turn a profit for its producer. In turn, Walmart wants to work with strong channel partners it can depend on to continuously provide it with great products that fly off the shelves.
By contrast, a weak channel partner can be a liability. The simplest marketing channel consists of just two parties—a producer and a consumer. Your haircut is a good example. When you get a haircut, it travels straight from your hairdresser to you. No one else owns, handles, or remarkets the haircut to you before you get it.
However, many other products and services pass through multiple organizations before they get to you.Earth penetrating weapons
These organizations are called intermediaries or middlemen or resellers. Companies partner with intermediaries not because they necessarily want to ideally they could sell their products straight to users but because the intermediaries can help them sell the products better than they could working alone. In other words, they have some sort of capabilities the producer needs: contact with many customers or the right customers, marketing expertise, shipping and handling capabilities, and the ability to lend the producer credit are among the types of help a firm can get by utilizing a channel partner.
There are four forms of utility, or value, that channels offer. These are time, form, place, and ownership. Intermediaries also create efficiencies by streamlining the number of transactions an organization must make, each of which takes time and costs money to conduct.
As Figure 8.Dell was established in by Michael Dell at the age of 19 when he decided to cut out the middle man and directly connect himself with the customer supplying computers without the expense of a distribution channel. Manufacturers selling direct to the consumer as Dell did eliminates costs associated with marketing and distribution as there is a reduction in the number of links between the product being sold to the consumer and the consumer buying the product.
A computer is relatively easy to transport and can be easily distributed from the manufacturer to the consumer. This removes the need for consumers to go into a retail outlet to make a purchase. Consumers can call Dell during the purchase process or request sales assistance online and receive a cal back within approximately 48 hours. This enables Dell to compete with their competitors and reduce the wait time for commercial consumers which was previously seven to ten days.
With Dell now offering their commercial companies the option to have their approved custom software image added by allowing 48 hours for shipping. They have continued with their brand segmentation by allowing commercial companies to also make purchases that are quick, convenient and have the ability to be configured in a small way to their needs, building upon their position in the market and continuing to collaborate with customers. Dell now has a variety of products such as laptops, desktops, Cloud software and servers all available online and ready to suit the growing market of online shoppers and improve profit by targeting their current consumers.
Ow, T. T, Wood, C. You are commenting using your WordPress. You are commenting using your Google account. You are commenting using your Twitter account. You are commenting using your Facebook account.
Notify me of new comments via email. Notify me of new posts via email. Search for:. By removing the Intermediary in the channel process this enables Dell to have greater control over their product and control the price as there is no retail outlet attempting to price cut their product Iacobucci, This is a an essential marketing strategy for Dell as they target consumers looking for the convenience of purchasing a PC which is tailored to their needs at an affordable price with comparable quality to the store brought product.
Topic Marketing Evaluation. Topic 2: Marketing Strategy and Plans. Topic 3: Consumer Behaviour. Topic 4: Segmentation, Targeting and Positioning.
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