No. 63 Monday, March 8, 2010
We continue to look at the four P's of Marketing and in particular Place/distribution that we started last week.
We continue to look at the four P's of Marketing and in particular Place/distribution that we started last week.
Instead of selling directly to the consumer, you may decide to sell through an intermediary such as a wholesaler or retailer who will resell your product. Doing this may provide you with a wider distribution than selling direct while decreasing the pressure of managing your own distribution system. Additionally, you may also reduce the storage space necessary for inventory. One of the most important reasons for selling through an intermediary is access to customers. In many situations, wholesalers and retailers have customer connections that would not be possible to obtain on your own. However, in selling to a reseller you may lose contact with your end consumer. In some cases, you may also lose some of your company identity. For example, your distributor may request that your product be sold under the reseller's brand name. One factor that may influence whether you can find an intermediary to handle your product is production flow.
Wholesalers want a steady year-round supply of product to distribute. If you can deliver a steady year-round supply that is of consistent quality, then selling through an intermediary may be a good strategy for you.
MARKET COVERAGE
No matter whether you sell your product direct or through a reseller, you must decide what your coverage will be in distributing your product. Will you pursue intensive, selective, or exclusive coverage?
Intensive distribution is widespread placement in as many places as possible, often at low prices. Large businesses often market on a nationwide level with this method.
Convenience products-ones that consumers buy regularly and spend little time shopping for, like chewing gum-do better with intensive (widespread) distribution.
Selective distribution narrows distribution to a few businesses. Often, upscale products are sold through retailers that only sell high-quality products. With this option, it may be easier to establish relationships with customers. Products that people shop around for sell better with selective distribution.
Exclusive distribution restricts distribution to a single rese11er. You may become the sole supplier to a reseller who, in turn, might sell only your product. You may be able to
promote your product as prestigious with this method, though you might sacrifice sales - volume. Specialty products tend to perform better with exclusive distribution.
Other Place Decisions
Product characteristics and your sales volumes will dictate what inventories to maintain and how best to transport your products. Additionally, the logistics associated with acquiring raw materials and ensuring that your final product is in the right place at the right time for the right customers can comprise a large percentage of your total costs and needs careful monitoring.
You may decide to have a combination of all the distribution methods. Whatever you decide, choose the method which you believe will work best for you.
PROMOTION
We end this feature on the four P's of marketing, with the final P, Promotion.
Promotion refers to the advertising and selling part of marketing. It is how you let people know what you've got for sale. The purpose of promotion is to get people to understand what your product is, what they can use it for, and why they should want it. You want the customers who are looking for a product to know that your product satisfies their needs.
To be effective, your promotional efforts should contain a clear message targeted to a specific audience reached via an appropriate channel. Your target audience will be the people who use or influence the purchase of your product. You should focus your market research efforts on identifying these individuals. Your message must be consistent with your overall marketing image, get your target audience's attention, and elicit the response you desire, whether it is to purchase your product or to form an opinion. The channel you select for your message will likely involve use of a few key marketing channels.
Promotion may involve advertising, public relations, personal selling, and sales promotions.
ADVERTISING
A key channel is advertising.
The Western Mirror continues to be the most effective means of advertising in Western Jamaica, however advertising methods to promote your product or service include the following.
• Radio: Radio advertisements are relatively inexpensive ways to inform potential local customers about your business. Mid-to-late week is generally the best time to run your radio ad.
• Television: Television allows access to regional or national audiences, but may be more expensive than other options.
• Print: Direct mail and printed materials, including newspapers, consumer and trade magazines, flyers, and a logo, allow you to explain what, when, where, and why people should buy from you. You can send letters, fact sheets, contests, coupons, and brochures directly to new or old customers on local, regional, or national levels. The
• Electronic: Company Web sites provide useful information to interested consumers and clients. Password-protected areas allow users to more intimately interact with you. Advertisements allow broad promotion of your products. Direct e-mail contact is possible if you have collected detailed
customer information.
• Word of Mouth: Word of mouth depends on satisfied customers (or dissatisfied customers) telling their acquaintances about the effectiveness of your products.
• Generic: Generic promotion occurs when no specific brand of product is promoted, but rather a whole industry is advertised. For instance, generic advertising is commonly found for milk, beef, and pork.
PUBLIC RELATIONS ETC
Public relations (PR) usually focuses on creating a favorable business image. Important components of a good public relations program include being a good neighbor, being involved in the community, and providing open house days.
News stories, often initiated through press releases, can be good sources of publicity.
Personal selling focuses on the role of a salesperson in your communication plans. Salespeople can tailor communication to customers and are very important in building relationships.
While personal selling is an important tool, it is costly. So you should make efforts to target personal selling carefully.
Sales promotions are special offerings designed to encourage
purchases. Promotions might include free samples, coupons, contests, incentives, loyalty programs, prizes, and rebates.
Other programs might focus on educating customers through seminars or reaching them through trade shows. Your target audience may be more receptive to one method than another.
Additional sources of promotion may be attending or participating in trade shows, setting up displays at public events, and networking socially at civic and business. organizations.
The four P's-product, price, place, and promotion-should work together in your marketing mix. Often, decisions on one element will influence the choices available in others.
Selecting an effective mix for your market will take time and effort, but these will payoff as you satisfy customers and create a profitable business. Once you have a good marketing mix-the right product at the right price, offered in the right place and promoted in the right way-you will need to continue to stay on top of market changes and adopt your marketing mix as necessary.
Join us next week as we look at methods of business financing.
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