Classes of Shopping Mall
In many cases, regional and super-regional malls exist as parts of large superstructures which often also include office space, residential space, amusement parks and so forth. This trend can be seen in the construction and design of many modern supermalls such as Cevahir Mall in Turkey. The International Council of Shopping Centers’ 1999 definitions were not restricted to shopping centers in any particular country, but later editions were made specific to the U.S. with a separate set for Europe.
Regional malls
A Regional Mall is, per the International Council of Shopping Centers, in the United States, a shopping mall which is designed to service a larger area than a conventional shopping mall. As such, it is typically larger with 400,000 sq ft (37,000 m2) to 800,000 sq ft (74,000 m2) gross leasable area with at least two anchors and offers a wider selection of stores. Given their wider service area, these malls tend to have higher-end stores that need a larger area in order for their services to be profitable. Regional malls are also found as tourist attractions in vacation areas.
Super Regional Malls
A Super Regional Mall is, per the International Council of Shopping Centers, in the U.S. a shopping mall with over 800,000 sq ft (74,000 m2) of gross leasable area, and which serves as the dominant shopping venue for the region in which it is located.
Outlet Malls
An Outlet Mall (or outlet centre) is a type of shopping mall in which manufacturers sell their products directly to the public through their own stores. Other stores in outlet malls are operated by retailers selling returned goods and discontinued products, often at heavily reduced prices. Outlet stores were found as early as 1936, but the first multi-store outlet mall, Vanity Fair, located in Reading, PA didn't open until 1974. Belz Enterprises opened the first enclosed factory outlet mall in 1979, in Lakeland, TN, a suburb of Memphis
Component of a Shopping Mall
Shopping centers are buildings that contain multiple retail stores. The term generally applies to open-air complexes containing many buildings that adjoin pedestrian walkways. Enclosed shopping centers, in which all units are accessible under a single roof, are referred to as shopping malls. In the United Kingdom, they are known as retail parks or precincts.
The first shopping centers were the covered outdoor bazaars of ancient Europe. After World War II, suburban living in the United States led to the advent of the modern shopping center. As cities became crowded and dirty, people began to seek improved living conditions which resulted in the development of outdoor strip malls.
Fully enclosed shopping malls first appeared in the 1950s. The Northgate Mall built in Seattle, Washington, USA, and the Northland Shopping Center built near Detroit, Michigan, USA, were the first indoor malls. Constructed between 1950 and 1954, they were originally open-air shopping centers which were later enclosed.
Regional and super-regional malls are designed to service larger areas than traditional shopping centers. They are often part of larger superstructures which include residential and commercial office space. They serve as the primary shopping area for the region in which they are located.
Outlet malls are shopping centers in which goods are sold to the public directly from manufacturer stores. They also include shops selling discontinued and customer returned products at significantly lowered prices. The first outlet mall opened in Reading, Pennsylvania, USA, in 1974.
Food courts are common components of shopping malls. They feature vendors selling a variety of foods and a seating area. This area is generally an open plaza surrounded by the various vendors.
Large chain department stores are also a mainstay of many shopping malls. In the beginning, these anchor stores were financially necessary for the shopping centers to remain open. Today, they exist as a means of attracting traffic to the smaller stores found within malls. They are placed as far from one another as possible to maximize this traffic.
Shopping malls are typically owned by shopping property management firms. These firms specialize in the management and promotion of the shopping centers. Many own multiple properties and usually service one or more regional areas.
There has been some controversy surrounding modern shopping malls due to their displacement of traditional small businesses and main streets. Many modern consumers still prefer shopping centers with ample parking, entertainment, and private security over crowded downtown areas. This preference has led to the downfall of many "mom and pop" stores in local commercial centers
Top Five Largest Shopping Mall of the World
South China Mall
South China Mall is the largest mall in the world located in Dongguan, China. It contains around 1500 stores and is spread in more than 6 million square feet. Mall was opened in 2005 and since then it is facing the problem of not being occupied by enough sellers. The reason behind the mall being vacant is due to its suburban location that makes it difficult to approach. In 2009, South China Mall has been renamed to New South China Mall.
Golden Resources Mall
Golden Resource Mall is the second largest shopping mall of the world located in Beijing, China. Mall is also known as “Great Mall of China” and is spread across 7.3 million square feet and was the largest mall of the world till 2005. Mall receives more than 50,000 visitors everyday and the decrease in the number of shoppers is due to costly items of the mall that is not fit for most of the ordinary people.
SM City North EDSA
SM mall is one of the largest mall malls of the world located in Philippines. It is spread across 460,000 square meters of area and was opened in 1985 for public. Mall receives more than 4 million visitors during weekend and has a capacity of up to 6.5 million.
CentralWorld Mall
Central world mall is the largest shopping mall in Southeast Asia and contains office towers as well as hotel. It is spread across 500000 square meters. Earlier the mall was known as World Trade Center in 1990 and was taken over by Central Group in 2002. It is ideal for middle class as well as upper class customers in Bangkok, Thailand.
SM Mall of Asia
SM mall is located in Philippines and spread across 410 thousand square meters. Mall has the capacity of 4.2 million and has four buildings connected to each other. The parking space of the mall is divided into six stories and has a tram traveling around the mall with 20 people holding capacity
Monday, September 28, 2009
Retailing
What is Retailing?
The sale of goods or commodities in small quantities directly to consumers
Retailing is a distribution channel function where one organization buys products from supplying firms or manufactures the product themselves, and then sells these directly to consumers. A retailer is a reseller (i.e., obtains product from one party in order to sell to another) from which a consumer purchases products
Retail Pricing
The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.
Retail Pricing Strategies
There are many outside influences that affect profitability and a retailer's bottom line. Setting the right price is a crucial step toward achieving that profit. Retailers are in business to make a profit, but figuring out what and how to price products may not come easily. Before we can determine which retail pricing strategy to use in setting the right price, we must know the costs associated with the products. Two key elements in factoring product cost is the cost of goods and the amount of operating expense.
The cost of goods includes the amount paid for the product, plus any shipping or handling expenses. The cost of operating the business, or operating expense, includes overhead, payroll, marketing and office supplies.
Regardless of the pricing strategy used, the retail price of the products should more than cover the cost of obtaining the goods plus the expenses related to operating the business. A retailer simply cannot succeed in business if they continue to sell their products below cost.
Now that we understand what our products actually cost, we should look at how our competition is pricing their products. Retailers will also need to examine their channels of distribution and research what the market is willing to pay.
Many pricing strategies exist and each is used based on particular a set of circumstances. Here are a few of the more popular pricing strategies to consider:
Mark-up Pricing
Markup on cost can be calculated by adding a pre-set (often industry standard) profit margin, or percentage, to the cost of the merchandise.
Markup on retail is determined by dividing the dollar markup by retail.
Be sure to keep the initial mark-up high enough to cover price reductions, discounts, shrinkage and other anticipated expenses, and still achieve a satisfactory profit. Retailers with a varied product selection can use different mark-ups on each product line.
Vendor Pricing
Manufacturer suggested retail price (MSRP) is a common strategy used by the smaller retail shops to avoid price wars and still maintain a decent profit. Some suppliers have minimum advertised prices but also suggest the retail pricing. By pricing products with the suggested retail prices supplied by the vendor, the retailer is out of the decision-making process. Another issue with using pre-set prices is that it doesn't allow a retailer to have an advantage over the competition.
Competitive Pricing
Consumers have many choices and are generally willing to shop around to receive the best price. Retailers considering a competitive pricing strategy will need to provide outstanding customer service to stand above the competition.
Pricing below competition simply means pricing products lower than the competitor's price. This strategy works well if the retailer negotiates the best prices, reduces costs and develops a marketing strategy to focus on price specials.
Prestige pricing, or pricing above competition, may be considered when location, exclusivity or unique customer service can justify higher prices. Retailers that stock high-quality merchandise that isn't available at any other location may be quite successful in pricing their products above competitors.
Psychological Pricing
Psychological pricing is used when prices are set to a certain level where the consumer perceives the price to be fair. The most common method is odd-pricing using figures that end in 5, 7 or 9. It is believed that consumers tend to round down a price of $9.95 to $9, rather than $10.
Other Pricing Strategies
Keystone pricing is not used as often as it once was. Doubling the cost paid for merchandise was once the rule of pricing products, but very few products these days allow a retailer to keystone the product price.
Multiple pricing is a method which involves selling more than one product for one price, such as three items for $1.00. Not only is this strategy great for markdowns or sales events, but retailers have noticed consumers tend to purchase in larger amounts where the multiple pricing strategy is used.
Discount pricing and price reductions are a natural part of retailing. Discounting can include coupons, rebates, seasonal prices and other promotional markdowns.
Merchandise priced below cost is referred to as loss leaders. Although retailers make no profit on these discounted items, the hope is consumers will purchase other products at higher margins during their visit to the store.
As you develop the best pricing model for your retail business, understand the ideal pricing strategy will depend on more than costs. It also depends on good pricing practices.
It is difficult to say which component of pricing is more important than another. Just keep in mind, the right product price is the price the consumer is willing to pay, while providing a profit to the retailer.
Important of Retailing
As the final link between consumers and manufacturers, retailers are a vital part of the business world. Retailers add value to products by making it easier for manufactures to sell and consumers to buy. It would be very costly and time consuming for you to locate, contact and make a purchase from the manufacturer every time you wanted to buy a candy bar, a sweater or a bar of soap. Similarly, it would be very costly for the manufactures of these products to locate and distribute them to consumers individually. By bringing multitudes of manufacturers and consumers together at a single point, retailers make it possible for products to be sold, and, consequently, business to be done.
Retailers also provide services that make it less risky and more fun to buy products. They have salespeople on hand who can answer questions, may offer credit, and display products so that consumers know what is available and can see it before buying. In addition, retailers may provide many extra services, from personal shopping to gift wrapping to delivery, that increase the value of products and services to consumers.
The Future of Retailing
Advances in technology, like the Internet, have helped make retailing an even more challenging and exciting field in recent years. The nature of the business and the way retailing is done are currently undergoing fundamental changes. However, retailing in some form will always be necessary. For example, even though the Internet is beginning to make it possible for manufacturers to sell directly to consumers, the very vastness of cyberspace will still make it very difficult for a consumer to purchase every product he or she uses directly. On-line retailers, like Amazon.com, bring together assortments of products for consumers to buy in the same way that bricks-and-mortar retailers do.
In addition, traditional retailers with physical stores will continue to be necessary. Of course, retailers who offer personal services, like hair styling, will need to have face-to-face interaction with the consumer. But even with products, consumers often want to see, touch and try them before they buy. Or, they may want products immediately and won't want to wait for them to be shipped. Also, and perhaps most importantly, in many cases the experience of visiting the retailer is an important part of the purchase. Everything that the retailer can do to make the shopping experience pleasurable and fun can help ensure that customers come back.
Kinds of retailers
A large shop is called a superstore or megastore. A shop with many different kinds of articles is called a department store.
Many shops are part of a chain: a number of similar shops with the same name selling the same products in different locations. The shops may be owned by one company, or there may be a franchising company that has franchising agreements with the shop owners
Some shops sell second-hand goods. Often the public can also sell goods to such shops. In other cases, especially in the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shops goods can be taken for free.
The term retailer is also applied where a service provider services the needs of a large number of individuals, such as with telephone or electric power.
The sale of goods or commodities in small quantities directly to consumers
Retailing is a distribution channel function where one organization buys products from supplying firms or manufactures the product themselves, and then sells these directly to consumers. A retailer is a reseller (i.e., obtains product from one party in order to sell to another) from which a consumer purchases products
Retail Pricing
The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.
Retail Pricing Strategies
There are many outside influences that affect profitability and a retailer's bottom line. Setting the right price is a crucial step toward achieving that profit. Retailers are in business to make a profit, but figuring out what and how to price products may not come easily. Before we can determine which retail pricing strategy to use in setting the right price, we must know the costs associated with the products. Two key elements in factoring product cost is the cost of goods and the amount of operating expense.
The cost of goods includes the amount paid for the product, plus any shipping or handling expenses. The cost of operating the business, or operating expense, includes overhead, payroll, marketing and office supplies.
Regardless of the pricing strategy used, the retail price of the products should more than cover the cost of obtaining the goods plus the expenses related to operating the business. A retailer simply cannot succeed in business if they continue to sell their products below cost.
Now that we understand what our products actually cost, we should look at how our competition is pricing their products. Retailers will also need to examine their channels of distribution and research what the market is willing to pay.
Many pricing strategies exist and each is used based on particular a set of circumstances. Here are a few of the more popular pricing strategies to consider:
Mark-up Pricing
Markup on cost can be calculated by adding a pre-set (often industry standard) profit margin, or percentage, to the cost of the merchandise.
Markup on retail is determined by dividing the dollar markup by retail.
Be sure to keep the initial mark-up high enough to cover price reductions, discounts, shrinkage and other anticipated expenses, and still achieve a satisfactory profit. Retailers with a varied product selection can use different mark-ups on each product line.
Vendor Pricing
Manufacturer suggested retail price (MSRP) is a common strategy used by the smaller retail shops to avoid price wars and still maintain a decent profit. Some suppliers have minimum advertised prices but also suggest the retail pricing. By pricing products with the suggested retail prices supplied by the vendor, the retailer is out of the decision-making process. Another issue with using pre-set prices is that it doesn't allow a retailer to have an advantage over the competition.
Competitive Pricing
Consumers have many choices and are generally willing to shop around to receive the best price. Retailers considering a competitive pricing strategy will need to provide outstanding customer service to stand above the competition.
Pricing below competition simply means pricing products lower than the competitor's price. This strategy works well if the retailer negotiates the best prices, reduces costs and develops a marketing strategy to focus on price specials.
Prestige pricing, or pricing above competition, may be considered when location, exclusivity or unique customer service can justify higher prices. Retailers that stock high-quality merchandise that isn't available at any other location may be quite successful in pricing their products above competitors.
Psychological Pricing
Psychological pricing is used when prices are set to a certain level where the consumer perceives the price to be fair. The most common method is odd-pricing using figures that end in 5, 7 or 9. It is believed that consumers tend to round down a price of $9.95 to $9, rather than $10.
Other Pricing Strategies
Keystone pricing is not used as often as it once was. Doubling the cost paid for merchandise was once the rule of pricing products, but very few products these days allow a retailer to keystone the product price.
Multiple pricing is a method which involves selling more than one product for one price, such as three items for $1.00. Not only is this strategy great for markdowns or sales events, but retailers have noticed consumers tend to purchase in larger amounts where the multiple pricing strategy is used.
Discount pricing and price reductions are a natural part of retailing. Discounting can include coupons, rebates, seasonal prices and other promotional markdowns.
Merchandise priced below cost is referred to as loss leaders. Although retailers make no profit on these discounted items, the hope is consumers will purchase other products at higher margins during their visit to the store.
As you develop the best pricing model for your retail business, understand the ideal pricing strategy will depend on more than costs. It also depends on good pricing practices.
It is difficult to say which component of pricing is more important than another. Just keep in mind, the right product price is the price the consumer is willing to pay, while providing a profit to the retailer.
Important of Retailing
As the final link between consumers and manufacturers, retailers are a vital part of the business world. Retailers add value to products by making it easier for manufactures to sell and consumers to buy. It would be very costly and time consuming for you to locate, contact and make a purchase from the manufacturer every time you wanted to buy a candy bar, a sweater or a bar of soap. Similarly, it would be very costly for the manufactures of these products to locate and distribute them to consumers individually. By bringing multitudes of manufacturers and consumers together at a single point, retailers make it possible for products to be sold, and, consequently, business to be done.
Retailers also provide services that make it less risky and more fun to buy products. They have salespeople on hand who can answer questions, may offer credit, and display products so that consumers know what is available and can see it before buying. In addition, retailers may provide many extra services, from personal shopping to gift wrapping to delivery, that increase the value of products and services to consumers.
The Future of Retailing
Advances in technology, like the Internet, have helped make retailing an even more challenging and exciting field in recent years. The nature of the business and the way retailing is done are currently undergoing fundamental changes. However, retailing in some form will always be necessary. For example, even though the Internet is beginning to make it possible for manufacturers to sell directly to consumers, the very vastness of cyberspace will still make it very difficult for a consumer to purchase every product he or she uses directly. On-line retailers, like Amazon.com, bring together assortments of products for consumers to buy in the same way that bricks-and-mortar retailers do.
In addition, traditional retailers with physical stores will continue to be necessary. Of course, retailers who offer personal services, like hair styling, will need to have face-to-face interaction with the consumer. But even with products, consumers often want to see, touch and try them before they buy. Or, they may want products immediately and won't want to wait for them to be shipped. Also, and perhaps most importantly, in many cases the experience of visiting the retailer is an important part of the purchase. Everything that the retailer can do to make the shopping experience pleasurable and fun can help ensure that customers come back.
Kinds of retailers
A large shop is called a superstore or megastore. A shop with many different kinds of articles is called a department store.
Many shops are part of a chain: a number of similar shops with the same name selling the same products in different locations. The shops may be owned by one company, or there may be a franchising company that has franchising agreements with the shop owners
Some shops sell second-hand goods. Often the public can also sell goods to such shops. In other cases, especially in the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shops goods can be taken for free.
The term retailer is also applied where a service provider services the needs of a large number of individuals, such as with telephone or electric power.
Distribution Channel
Definitions
•A distribution channel is the method a company uses to get their products into the marketplace for consumer use. The traditional channel goes from supplier, manufacturer, distributor, wholesaler and retailer.
•Distribution Channel (also known as Channel of distribution or marketing channel) is Path or 'pipeline' through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor). A distribution channel can be as short as being direct from the vendor to the consumer or may include several inter-connected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer.
Two types of distribution channels exist, indirect and direct, namely:
Indirect Channel
•The indirect channel is used by companies who do not sell their goods directly to consumers. Suppliers and manufacturers typically use indirect channels because they exist early in the supply chain Depending on the industry and product, direct distribution channels have become more prevalent due to the Internet.
Direct Channel
•A direct distribution channel is where a company sells their products direct to consumers. While direct channels were not popular many years ago, the Internet has greatly increased the use of direct channels. Additionally, companies needing to cut costs may use direct channels to avoid middlemen markups on their products.
Indirect Channel Methods
•Distributors, wholesalers and retailers are the primary indirect channels a company may use when selling their products in the marketplace. Companies choose the indirect channel best suited for their product to obtain the best market share; it also allows them to focus on producing their goods.
Direct Channel Methods
•Selling agents and Internet sales are two types of direct distribution channels. Selling agents work for the company and market their products directly to consumers through mail order, storefronts or other means. The Internet is an easy distribution channel because of the global availability to consumers
For instant:
Paper is available from a variety of paper suppliers, however, not all suppliers provide paper to the end user. The following diagram illustrates how the distribution channel works for purchasing paper stocks.
The Paper Mill sells larger volume orders direct to the Paper Retailer, Distributor, or Printer who then resell the product. The Paper Distributor handles full and partial carton orders, which are considered smaller orders, to fit the needs of the Paper Retailer or Printer when the End User places an order for paper that is not considered to be at a volume level that a Paper Mill will sell directly to the Printer or Retailer.
The newest entry to the paper distribution channel is the Paper Portal which enables Printers, Retailers, and Paper Mills to source paper needs to a wider network of potential buyers and sellers via the Web, regardless of whether they are Paper Retailers, Paper Distributors, Printers, or End Users. Buyers and sellers of paper access the portal and use it as a marketplace to locate paper, to negotiate pricing, and to complete the transaction of either buying or selling.
Distribution - channel strategy
The following table describes the factors that influence the choice of distribution channel by a business:
Influence Comments
Market factors An important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars.
The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing).
Another important factor is intermediary cost. Intermediaries typically charge a"mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business.
Producer factors A key question is whether the producer has the resources to perform the functions of the channel? For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors.
Producers may also feel that they do not possess the customer-based skills to distribute their products. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers.
Another factor is the extent to which producers want to maintain control over how, to whom and at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control over the final consumer price, since the retailer sets the price and any relevant discounts or promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. Direct distribution gives a producer much more control over these issues.
Product factors Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers.
Distribution Intensity
There are three broad options - intensive, selective and exclusive distribution:
Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another.
Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply.
Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.
Distribution channels are the pathways that companies use to sell their products to end-users. B2B companies can sell through a single channel or through multiple channels that may include
Direct/sales team: One or more sales teams that you employ directly. You may use multiple teams that specialize in different products or customer segments.
Direct/internet: Selling through your own e-commerce website.
Direct/catalog: Selling through your own catalog.
Wholesaler/distributor: A company that buys products in bulk from many manufacturers and then re-sells smaller volumes to resellers or retailers.
Value-added reseller (VAR): A VAR works with end-users to provide custom solutions that may include multiple products and services from different manufacturers.
Consultant: A consultant develops relationships with companies and provides either specific or very broad services; they may recommend a manufacturer’s product or simply purchase it to deliver a solution for the customer.
Dealer: A company or person who buys inventory from either a manufacturer or distributor, then re-sells to an end-user.
Retail: Retailers sell directly to end-users via a physical store, website or catalog.
Sales agent/manufacturer’s rep: You can outsource your sales function to a company that sells different manufacturers’ products to a group of similar customers in a specific territory.
Distribution is one of the classic “4 Ps” of marketing (product, promotion, price, placement a.k.a. distribution). It’s a key element in your entire marketing strategy — it helps you expand your reach and grow revenue.
If they need personalized service, you can utilize a local dealer network or reseller program to provide that service.
If your users prefer to buy online, you can create an e-commerce website and fulfillment system and sell direct; you can also sell to another online retailer or a distributor to offer your product on their own sites.
You can build your own specialized sales team to prospect and close deals directly with customers.
Wholesalers, resellers, retailers, consultants and agents already have resources and relationships to quickly bring your product to market. If you sell through these groups instead of (or in addition to) selling direct, treat the entire channel as a group of customers – and they are, since they’re buying your product and re-selling it. Understand their needs and deliver strong marketing programs; you’ll maximize everyone’s revenue in the process.
Key concepts & steps
Before you begin
You can evaluate a new distribution channel or improve your channel marketing / management at any time. It’s especially important to think about distribution when you’re going after a new customer segment, releasing a new product, or looking for ways to aggressively grow your business.
Evaluate how your end-users need to buy
Your distribution strategy should deliver the information and service your prospects need. For each customer segment, consider
How and where they prefer to buy
Whether they need personalized education and training
Whether they need additional products or services to be used alongside yours
Whether your product needs to be customized or installed
Whether your product needs to be serviced
Match end-user needs to a distribution strategy
If your end-users need a great deal of information and service, your company can deliver it directly through a sales force. You can also build a channel of qualified resellers, consultants or resellers. The size of the market and your price will probably dictate which scenario is best.
If the buying process is fairly straightforward, you can sell direct via a website/catalog or perhaps through a wholesale/retail structure. You may also use an inbound telemarketing group or a field sales team.
If you need complete control over your product’s delivery and service, adding a channel probably isn’t right for you.
Identify natural partners
If you want to grow beyond the direct model, look for companies that have relationships with your end-users. If consultants, wholesalers or retailers already reach your customer base, they’re natural partners.
Build your channel
If you’re setting up a distribution channel with one or more partners, treat it as a sales process:
Approach the potential channel partner and “sell” the value of the partnership
Establish goals, service requirements and reporting requirements
Deliver inventory (if necessary) and sales/support materials
Train the partner
Run promotions and programs to support the partner and help them increase sales
Minimize pricing conflicts
If you use multiple channels, carefully map out the price for each step in your channel and include a fair profit for each type of partner. Then compare the price that the end-user will pay; if a customer can buy from one channel at a lower price than another, your partners will rightfully have concerns. Pricing conflict is common but it can jeopardize your entire strategy, so do your best to map out the price at each step and develop the best solution possible.
Drive revenue through the channel
Service your channel partners as you’d service your best customers and work with them to drive revenue. For example, provide them with marketing funds or materials to promote your products; run campaigns to generate leads and forward them to your partners
•A distribution channel is the method a company uses to get their products into the marketplace for consumer use. The traditional channel goes from supplier, manufacturer, distributor, wholesaler and retailer.
•Distribution Channel (also known as Channel of distribution or marketing channel) is Path or 'pipeline' through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor). A distribution channel can be as short as being direct from the vendor to the consumer or may include several inter-connected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer.
Two types of distribution channels exist, indirect and direct, namely:
Indirect Channel
•The indirect channel is used by companies who do not sell their goods directly to consumers. Suppliers and manufacturers typically use indirect channels because they exist early in the supply chain Depending on the industry and product, direct distribution channels have become more prevalent due to the Internet.
Direct Channel
•A direct distribution channel is where a company sells their products direct to consumers. While direct channels were not popular many years ago, the Internet has greatly increased the use of direct channels. Additionally, companies needing to cut costs may use direct channels to avoid middlemen markups on their products.
Indirect Channel Methods
•Distributors, wholesalers and retailers are the primary indirect channels a company may use when selling their products in the marketplace. Companies choose the indirect channel best suited for their product to obtain the best market share; it also allows them to focus on producing their goods.
Direct Channel Methods
•Selling agents and Internet sales are two types of direct distribution channels. Selling agents work for the company and market their products directly to consumers through mail order, storefronts or other means. The Internet is an easy distribution channel because of the global availability to consumers
For instant:
Paper is available from a variety of paper suppliers, however, not all suppliers provide paper to the end user. The following diagram illustrates how the distribution channel works for purchasing paper stocks.
The Paper Mill sells larger volume orders direct to the Paper Retailer, Distributor, or Printer who then resell the product. The Paper Distributor handles full and partial carton orders, which are considered smaller orders, to fit the needs of the Paper Retailer or Printer when the End User places an order for paper that is not considered to be at a volume level that a Paper Mill will sell directly to the Printer or Retailer.
The newest entry to the paper distribution channel is the Paper Portal which enables Printers, Retailers, and Paper Mills to source paper needs to a wider network of potential buyers and sellers via the Web, regardless of whether they are Paper Retailers, Paper Distributors, Printers, or End Users. Buyers and sellers of paper access the portal and use it as a marketplace to locate paper, to negotiate pricing, and to complete the transaction of either buying or selling.
Distribution - channel strategy
The following table describes the factors that influence the choice of distribution channel by a business:
Influence Comments
Market factors An important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars.
The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing).
Another important factor is intermediary cost. Intermediaries typically charge a"mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business.
Producer factors A key question is whether the producer has the resources to perform the functions of the channel? For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors.
Producers may also feel that they do not possess the customer-based skills to distribute their products. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers.
Another factor is the extent to which producers want to maintain control over how, to whom and at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control over the final consumer price, since the retailer sets the price and any relevant discounts or promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. Direct distribution gives a producer much more control over these issues.
Product factors Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers.
Distribution Intensity
There are three broad options - intensive, selective and exclusive distribution:
Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another.
Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply.
Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.
Distribution channels are the pathways that companies use to sell their products to end-users. B2B companies can sell through a single channel or through multiple channels that may include
Direct/sales team: One or more sales teams that you employ directly. You may use multiple teams that specialize in different products or customer segments.
Direct/internet: Selling through your own e-commerce website.
Direct/catalog: Selling through your own catalog.
Wholesaler/distributor: A company that buys products in bulk from many manufacturers and then re-sells smaller volumes to resellers or retailers.
Value-added reseller (VAR): A VAR works with end-users to provide custom solutions that may include multiple products and services from different manufacturers.
Consultant: A consultant develops relationships with companies and provides either specific or very broad services; they may recommend a manufacturer’s product or simply purchase it to deliver a solution for the customer.
Dealer: A company or person who buys inventory from either a manufacturer or distributor, then re-sells to an end-user.
Retail: Retailers sell directly to end-users via a physical store, website or catalog.
Sales agent/manufacturer’s rep: You can outsource your sales function to a company that sells different manufacturers’ products to a group of similar customers in a specific territory.
Distribution is one of the classic “4 Ps” of marketing (product, promotion, price, placement a.k.a. distribution). It’s a key element in your entire marketing strategy — it helps you expand your reach and grow revenue.
If they need personalized service, you can utilize a local dealer network or reseller program to provide that service.
If your users prefer to buy online, you can create an e-commerce website and fulfillment system and sell direct; you can also sell to another online retailer or a distributor to offer your product on their own sites.
You can build your own specialized sales team to prospect and close deals directly with customers.
Wholesalers, resellers, retailers, consultants and agents already have resources and relationships to quickly bring your product to market. If you sell through these groups instead of (or in addition to) selling direct, treat the entire channel as a group of customers – and they are, since they’re buying your product and re-selling it. Understand their needs and deliver strong marketing programs; you’ll maximize everyone’s revenue in the process.
Key concepts & steps
Before you begin
You can evaluate a new distribution channel or improve your channel marketing / management at any time. It’s especially important to think about distribution when you’re going after a new customer segment, releasing a new product, or looking for ways to aggressively grow your business.
Evaluate how your end-users need to buy
Your distribution strategy should deliver the information and service your prospects need. For each customer segment, consider
How and where they prefer to buy
Whether they need personalized education and training
Whether they need additional products or services to be used alongside yours
Whether your product needs to be customized or installed
Whether your product needs to be serviced
Match end-user needs to a distribution strategy
If your end-users need a great deal of information and service, your company can deliver it directly through a sales force. You can also build a channel of qualified resellers, consultants or resellers. The size of the market and your price will probably dictate which scenario is best.
If the buying process is fairly straightforward, you can sell direct via a website/catalog or perhaps through a wholesale/retail structure. You may also use an inbound telemarketing group or a field sales team.
If you need complete control over your product’s delivery and service, adding a channel probably isn’t right for you.
Identify natural partners
If you want to grow beyond the direct model, look for companies that have relationships with your end-users. If consultants, wholesalers or retailers already reach your customer base, they’re natural partners.
Build your channel
If you’re setting up a distribution channel with one or more partners, treat it as a sales process:
Approach the potential channel partner and “sell” the value of the partnership
Establish goals, service requirements and reporting requirements
Deliver inventory (if necessary) and sales/support materials
Train the partner
Run promotions and programs to support the partner and help them increase sales
Minimize pricing conflicts
If you use multiple channels, carefully map out the price for each step in your channel and include a fair profit for each type of partner. Then compare the price that the end-user will pay; if a customer can buy from one channel at a lower price than another, your partners will rightfully have concerns. Pricing conflict is common but it can jeopardize your entire strategy, so do your best to map out the price at each step and develop the best solution possible.
Drive revenue through the channel
Service your channel partners as you’d service your best customers and work with them to drive revenue. For example, provide them with marketing funds or materials to promote your products; run campaigns to generate leads and forward them to your partners
Cause Marketing
What is Cause Marketing?
•“A commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefit.” Business in the Community, the leading British corporate social responsibility organization
•“A strategic positioning and marketing tool that links a company or brand to a relevant social cause or issue, for mutual benefit.”
Cause Marketing is Not:
•“Social marketing,” the use by nonprofit and public organizations of marketing techniques to impact societal behavior (e.g. stop smoking, don’t pollute, don’t use drugs, don’t drive drunk.)
Nor is it:
•“Corporate Philanthropy,” the giving (without expectation of direct corporate gain) of charitable financial and in-kind grants by companies or their corporate foundations.
History of Cause Marketing
One of the first "cause marketing" campaigns occurred in 1976 through a partnership between Marriott Corporation and the March of Dimes. Marriott’s objective was to generate highly cost-effective public relations and media coverage for the opening of their 200-acre family entertainment center, Marriott’s Great America in Santa Clara, CA. The March of Dimes' objective was to greatly increase fundraising while motivating the collection of pledges by the program’s deadline. The promotion was conducted simultaneously in 67 cities throughout the Western United States. It exceeded all goals to become the most successful promotion in the history of Chapters West of the March of Dimes, while providing hundreds of thousands of dollars in free publicity and stimulated the record-breaking opening of the Marriott entertainment complex.
The program was conceived and directed by Bruce Burtch, who went on to become a nationally-recognized catalyst for cause marketing programs. Indeed, Bruce is credited with coining the phrase, "Do Well by Doing Good", which was his answer to the CEO of a major corporate foundation when asked what his goal in life was...in 1977.
Another of the first examples of a "cause-related marketing" campaign was initiated in 1979 by Rosica, Mulhern & Associates for Famous Amos cookies . In this campaign, Wally Amos become the National Spokesperson for the Literacy Volunteers of America. According to the organization, Wally has alerted more people to the illiteracy problem than any other person in history. This strategic cause-marketing tie-in helped to tell the Famous Amos Cookie story while maintaining visibility and is responsible for many new and expanded literacy programs. This case study is now used in university classrooms nationwide as an example of successful "cause-related marketing".
The creation of the term "cause-related marketing" is attributed to American Express, and it was coined to describe efforts to support locally based charitable causes in a way that also promoted business. The term was then used to describe the marketing campaign led by American Express in 1983 for the Statue of Liberty Restoration project. A penny for each use of the American Express card, and a dollar for each new card issued was given to the Statue of Liberty renovation program. Over a four-month period, $2 million was raised for Lady Liberty, transaction activity jumped 28 percent and the concept that doing good was good for business, was born. The terms "cause-related marketing" and "cause marketing" continued to grow in usage since that time. In more recent years the term has come to describe a wider variety of marketing initiatives based on the cooperative efforts of business and charitable causes.
There are six business benefits to cause marketing:
1.Cause-related marketing can directly enhance sponsor sales and brand.
2.Cause-related marketing is respected and accepted business practice.
3.Cause-related marketing can heighten customer loyalty.
4.Cause-related marketing can boost a company's public image and helps distinguish it from the competition. I would add that it can also give corporate PR officers a new story to tell.
5.Cause-related marketing can help build employee morale and loyalty.
6.Cause-related marketing can improve employee productivity, skills and teamwork
Types of Cause marketing
Cause marketing can take on many forms, including:
•Product, service, or transaction specific
•Promotion of a common message
•Product licensing, endorsements, and certifications
•Local partnerships
•Employee service programs
CAUSE MARKETING TOOLS
There are 7P’s Cause Marketing Practises
Cause-marketing 7 P’s follow into three major categories: products, promotions, and programs
Products Cause-marketing products are sales driven and transactional based. This form of cause marketing is linked to sales of product and generates revenue and awareness for a non-profit and its cause. The products can be directly tied to a non-profit’s brand through a percentage of sales going to a cause or by facilitating giving at point of sale.
•Product Purchases: Doing Good by Buying Goods
•Purchase Plus: Facilitating Giving
•Products License: Using Non-profit logos, Brand Identities and Assets
Promotions Cause marketing issue promotions involve businesses supporting a non-profit cause by using their brand, marketing, and promotional resources to actively engage in raising awareness of a non-profit cause.
•Promotions: Co-branding through issue promotion and awareness
•Promotional Events: Co-branding for active engagement and awareness
Programs This area of cause-marketing practices is one of the deepest forms of support. A specific program or cause message aimed at having an impact on or changing behavior and attitude is the focus of this cause-marketing support.
•Program: Co-branding to create awareness and change attitudes through program collaborations
•Public/Social Marketing: Encourage attitude and behavioural change
•“A commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefit.” Business in the Community, the leading British corporate social responsibility organization
•“A strategic positioning and marketing tool that links a company or brand to a relevant social cause or issue, for mutual benefit.”
Cause Marketing is Not:
•“Social marketing,” the use by nonprofit and public organizations of marketing techniques to impact societal behavior (e.g. stop smoking, don’t pollute, don’t use drugs, don’t drive drunk.)
Nor is it:
•“Corporate Philanthropy,” the giving (without expectation of direct corporate gain) of charitable financial and in-kind grants by companies or their corporate foundations.
History of Cause Marketing
One of the first "cause marketing" campaigns occurred in 1976 through a partnership between Marriott Corporation and the March of Dimes. Marriott’s objective was to generate highly cost-effective public relations and media coverage for the opening of their 200-acre family entertainment center, Marriott’s Great America in Santa Clara, CA. The March of Dimes' objective was to greatly increase fundraising while motivating the collection of pledges by the program’s deadline. The promotion was conducted simultaneously in 67 cities throughout the Western United States. It exceeded all goals to become the most successful promotion in the history of Chapters West of the March of Dimes, while providing hundreds of thousands of dollars in free publicity and stimulated the record-breaking opening of the Marriott entertainment complex.
The program was conceived and directed by Bruce Burtch, who went on to become a nationally-recognized catalyst for cause marketing programs. Indeed, Bruce is credited with coining the phrase, "Do Well by Doing Good", which was his answer to the CEO of a major corporate foundation when asked what his goal in life was...in 1977.
Another of the first examples of a "cause-related marketing" campaign was initiated in 1979 by Rosica, Mulhern & Associates for Famous Amos cookies . In this campaign, Wally Amos become the National Spokesperson for the Literacy Volunteers of America. According to the organization, Wally has alerted more people to the illiteracy problem than any other person in history. This strategic cause-marketing tie-in helped to tell the Famous Amos Cookie story while maintaining visibility and is responsible for many new and expanded literacy programs. This case study is now used in university classrooms nationwide as an example of successful "cause-related marketing".
The creation of the term "cause-related marketing" is attributed to American Express, and it was coined to describe efforts to support locally based charitable causes in a way that also promoted business. The term was then used to describe the marketing campaign led by American Express in 1983 for the Statue of Liberty Restoration project. A penny for each use of the American Express card, and a dollar for each new card issued was given to the Statue of Liberty renovation program. Over a four-month period, $2 million was raised for Lady Liberty, transaction activity jumped 28 percent and the concept that doing good was good for business, was born. The terms "cause-related marketing" and "cause marketing" continued to grow in usage since that time. In more recent years the term has come to describe a wider variety of marketing initiatives based on the cooperative efforts of business and charitable causes.
There are six business benefits to cause marketing:
1.Cause-related marketing can directly enhance sponsor sales and brand.
2.Cause-related marketing is respected and accepted business practice.
3.Cause-related marketing can heighten customer loyalty.
4.Cause-related marketing can boost a company's public image and helps distinguish it from the competition. I would add that it can also give corporate PR officers a new story to tell.
5.Cause-related marketing can help build employee morale and loyalty.
6.Cause-related marketing can improve employee productivity, skills and teamwork
Types of Cause marketing
Cause marketing can take on many forms, including:
•Product, service, or transaction specific
•Promotion of a common message
•Product licensing, endorsements, and certifications
•Local partnerships
•Employee service programs
CAUSE MARKETING TOOLS
There are 7P’s Cause Marketing Practises
Cause-marketing 7 P’s follow into three major categories: products, promotions, and programs
Products Cause-marketing products are sales driven and transactional based. This form of cause marketing is linked to sales of product and generates revenue and awareness for a non-profit and its cause. The products can be directly tied to a non-profit’s brand through a percentage of sales going to a cause or by facilitating giving at point of sale.
•Product Purchases: Doing Good by Buying Goods
•Purchase Plus: Facilitating Giving
•Products License: Using Non-profit logos, Brand Identities and Assets
Promotions Cause marketing issue promotions involve businesses supporting a non-profit cause by using their brand, marketing, and promotional resources to actively engage in raising awareness of a non-profit cause.
•Promotions: Co-branding through issue promotion and awareness
•Promotional Events: Co-branding for active engagement and awareness
Programs This area of cause-marketing practices is one of the deepest forms of support. A specific program or cause message aimed at having an impact on or changing behavior and attitude is the focus of this cause-marketing support.
•Program: Co-branding to create awareness and change attitudes through program collaborations
•Public/Social Marketing: Encourage attitude and behavioural change
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