MARKETING & ITS CHANNELS

 Marketing

The word marketing is derived from the Latin word “Morcates”. It means trade, merchandise, or place where business is conducted. It is the place where the buyers and sellers gather to exchange goods and services.

Marketing can be considered as a comprehensive term. It comprises all the activities that performed from the producers to the buyers. It is a two way process of exchanging goods in understanding the needs and wants of both buyers and sellers. Stapleton(2004),“Marketing is a fundamental policy, forming activity devoted to selecting and developing suitable products for sale promoting and distributing these products in a manner providing the optical return on capital employed”.

Logistics

Logistics is most referred to the process of coordinating and moving resources like equipment’s, inventories, people and materials from one place to another. In simple words it can be explained as the process of planning and executing an efficient storage and transportation of goods from its origin. The main objective of use of logistics is to satisfy the requirements of the customers on time and in a cost-effective manner.

Transportation management mainly focuses on the planning, executing and optimizing the use of vehicles used to move the goods between the manufacturers, to retails and to the end customers. Transportation is divided into four parts as ocean, rail, air and roads. It also involves warehouse management. The logistics are of different types like military logistics, business logistics, production logistics, medical logistics and supply chain management. There are five elements of logistics like Information and control, Packaging and utilization, Inventory, Transport, and Storage ,warehousing and material handling.

There are several components for logistics like:

• Inbound Logistics
• Outbound Logistics
• Reverse Logistics

1.  Inbound Logistics: It is the process of inflow or incoming flow of resources which is needed to produce a product or service. In this process it includes costs, inventory, managing suppliers and transportation which can ensure the right components are arrived in the factory on time.
2.  Outbound Logistics: Outbound Logistics is the process of delivering the right goods or products to the customers in the right time with minimum cost. Companies bring out their value in the customers with the outbound logistics. Distribution systems play a major role in outbound logistics.
3.  Reverse Logistics: Reverse Logistics can be defined as the process of moving products from the end customer for the purpose of proper disposal or for recover value. The product’s value is recovered from the customers through refurbishment, rework, reuse and scrap recycling. As an example for the reverse logistics can use the Apple iPhones. If an iPhone becomes defective within the warranty period, the company takes it back for refurbishment.

 Channels of Distribution

In today’s economy, most producers do not sell their goods directly to the consumers. Between them and the final users stand a lot of marketing middlemen performing a variety of functions and bearing a variety of names.

“A channel of distribution is basically a distribution system; more specially it is a complex system of physical flows and information flows that is subject to many outside influences”. A channel of distribution is the form usually the set of firms directly involved in selling a product. The final development of a channel depends on

1. The number of customers,
2. The functions which the channel is expected to perform,
3. The cost alternative channels, and
4.  The importance of the marketing process.

Manufacturer to Consumer

In this channel of distribution, goods are directly from the producers to the consumers. No middlemen’s are involved, because their services are not required. Today few consumer products are distributed in this way, some examples remain in the distribution of milk, bread and fresh vegetables.

Manufacturer to Retailer to Consumer

This channel is often used to distribute products through large retailers such as corporate chain supermarkets and department stores. Usually, wholesalers are not employed in this channel, as retailers’ size enables them to perform the service of collection, subdividing and dispersing without the wholesaler’s assistance.

Manufacturer to Wholesaler to Retailer to Consumers

This is the channel of distribution which is traditionally used for consumer goods and is found most frequently where the firm’s products are sold through many small widely scattered retail stores. Because the acquire store’s order is small, a manufacturing firm does not usually find it economical to have its own salespeople call on these stores; wholesalers are called instead.

Middlemen

In today’s economy, most producers do not sell their products directly to the final consumers. In many cases they will leave the task of distribution in the hands of some specialized persons. These specialized persons working between the users or consumers and helping in the distribution of products are called middlemen’s. They act as intermediates between the producers and consumers. The middlemen’s are mainly classified into three categories like:

• Merchant middlemen
• Agent middlemen
• Facilitators

The main difference between merchant middlemen and agent middlemen is that the former take title goods and the latter and do not take title to the goods. Facilitators are those that assist in the performance of distribution but neither take to goods nor undertake purchase and sales.

 Functions of Middlemen

• The help in the distribution of goods.
• They help in the operation of place, time and possession utilities.
• They direct the flow of goods from the point of production to the point of consumption.
• They provide valuable market information.
• They undertake advertising and publicity.
• They undertake transport, warehousing and storing of goods.
• They collect big orders, this leads to large scale production.
• They help to keep the price steady.

Merchant Middlemen

Merchant middlemen are those who obtain title to goods with a view to selling  them at profit. They buy and sell goods at their own risk. They help in the distribution of goods by acting as intermediaries between the producers and consumers. They can be divided into two as:

1. Wholesaler
2. Retailer

Wholesalers

A wholesaler is a middleman that neither produces nor consumers the finished product, but instead sells to retailers and other institutions that use the product for ultimate resale. Wholesalers are persons or firms who sell primarily to retailers and to ultimate consumers. Wholesalers are important members of marketing channels, especially for the consumer goods. They are often involved in a variety of functional activities like storing, financing, transporting etc…. Some wholesaling operations are independent businesses, others are owned by manufacturers. Independent wholesalers can be classified as either merchant wholesale or agent wholesale, merchant wholesalers take legal title to the goods. Agent wholesalers can take possession of the goods but not legal title.

 Type of Wholesalers

1. Merchant Wholesalers

Merchant wholesalers own the goods they sell. They are two basic kinds of merchant like a) Sometimes called full-service-wholesalers and b) Limited function or limited service wholesalers. Their names explain their difference.

2. Service Wholesalers

A service wholesaler provides all the wholesaling functions within this basic group there are some subtypes like: A) General Merchandise B) Single line and C) Specialty

1. General Merchandise Wholesalers

General merchandise wholesalers carry a wide variety of non perishable items such as hardware, electrical suppliers, plumbing suppliers, furniture, drugs, cosmetics and automobile equipment’s.

Single —line (or general line) Wholesalers

They carry narrower line of merchandise than general merchandise

Specialty Wholesalers

They carry a very narrow range of products. A consumer goods specially wholesale might carry only health foods or oriental foods instead of a full line of groceries.

Functions of Wholesaler

• Store the goods in proper warehouses till they are sold to the retailers.
• Distribution of goods from the place of producers to their warehouses from there to the retail stores.
• Transferring the retail trade by setting the goods to retailers on credit basis.
• They cost the goods according to quality, size, quality, color etc.
• Assuming risk resulting from the change in price change in demand and from spoilage.
• Stabilizing the prices.

 Retailers

Retailers are the second category of middlemen. On the other hand wholesalers are the first category of middlemen. Retailers buy goods from manufacturers for wholesalers and then resell the good to consumers. But they are fundamentally different from other middlemen. All middlemen are either retailing or wholesaling middlemen. Most retailers are merchant middlemen who take title to the products they sell. A retailer can be seen as a purchasing agent for consumers performing the services of selecting, submitting and dispersing the output of various producers and suppliers. The retailer must have merchandise carrying stock to meet present and anticipated demands of their customers. Transportation and its costs are important considerations to the retailers and may affect their decision as to source the supply. Delivery of merchandise that is purchased by the customers has in most cases become a competitive necessity and the retailer must make arrangements for that.

Type of Retailers/Retail Outlets

Retail outlets can be divided into various categories. It is very difficult to classify stores, following are the categories usually recognized:

• General store

The earliest type of retailers in general stocks can still be found in sonic localities; they offer a wide variety of general merchandise. Today such stores are usually located in rural areas and are small non departmentalized stores which carry a wide range of staple goods including groceries, clothing dry goods, frontier, hardware and sporting goods.

• Department stores

Department stores are large retail establishments that bring together under one roof a vast variety of merchandise/shopping goods. It is a large departmentalized establishment usually the dominant store in a community. The merchandise is carried in second different price ranges. Department stores in some parts of the world are thriving because so many customers are attached by departments.

• They offer many services including credit delivery and the right to return merchandise.
• They spend more money for advertising than any other type of retail outlet.
• They are casually located in key locations both in the downtown area and in shopping centers.

• Specialty store/shops

The current examples of specialty stores are footlockers and the plant lost. They carry only a particular type of goods. However some retailers follow a marketing strategy if offering a complete selection in a narrow range of merchandise. By specializing in their offering, they can concentrate on particular consumers segments and can provide technical knowledge and  services to those segments. A specialty shop is usually small and has a distinct personality.

•  Convenience stores

Some retailers focus on convenient locations. Long store hours, rapid checkout service and adequate parking facilities. A convenience store is a convenient place to shop either centrally located downtown or in the neighborhood. Such stores attract customers because they are so handy convenience stores and relatively small food stores carrying a limited line of convenience goods.

•  Chain stores

Two or more stores in some general line of business which are centrally owned and managed by a corporate chain are known as chain stores. About half of the following types of establishments are operated by chain department stores, discount stores and women’s ready to wear stores.

• Discount houses/stores

Most retail discounters have emerged since World War II, traditionally offering lower prices and customer’s service than other retailers. But following the wheel of retailing pattern, some of today’s discount houses are beginning to resemble general merchandise retailers. Statistics indicate that the discount house is not a major segment of retailing. The distinguishing feature of discount stores is that they sell a variety of goods at cut rate prices.

• Catalogue showroom retailers

One of the major growth areas in retailing during the post 20 years have been that of category retailing. Catalogue retailers send catalogues by mail to their customers who may come to a showroom in which are displayed samples of each product. Customers select the product or product they wish to buy and orders are filled from the bookroom warehouse. Major catalogue showroom retailers include best products, service merchandise, giant stores, Vern ode, needle and garden jewelers co-operation.

• Supermarket

This is a large self retail store. It carries a wide variety of consumer products under one roof. It has a sales area between 25000 and 50000 sq.ft.a hypermarket is larger than a supermarket. It has an area exceeding 50000 sq.ft.it provides its own parking area.

• Off-price retailers

These stores buy manufactures second goods, factory owners, off season production and return etc. At less than wholesaler’s prices and sell to consumers of very low retail prices.

• Category killers

These are huge specialty retailers that dominate a single product line of categories. They sell products at lower prices.

Functions of Retailers

• Collection and assembling of a variety of goods from different wholesalers.
• Undertaking transport for carrying the goods purchased.
• Selling products in small quantities for the convenience of consumers.
• Storing and grading of goods.
• Giving credit facilities to regular customers cultivating personal relationships undertaking some sales promotion through displaying of goods in the shops.
• Undertaking the risk of fire theft and damage of goods while in stock.
• Collecting the marketing information and supplying it wholesalers.
• Service to the consumers.
• The retailer stocks different varieties of goods. Hence the consumer can purchase almost all items from one retailer.
• The retailer sells goods in small quantities to the consumers as and when they require, hence the consumer need not buy and stock large quantities.
• They keep a large variety of goods produced by different manufactures. This enables the consumers to choose from a large variety of goods displayed in the shop.
• They supply information to the consumer about the arrival of new products that enables the consumer to purchase the latest type of goods.