Advance Marketing – Delivering Value
Components of distribution programming
In the world of business, having a competitive advantage over the rest is important as it ensures that one stays in business. One of the ways of gaining this competitive advantage is through a vertical marketing system. According to Kotler and Keller (2009) “it comprises of independent producer(s), wholesaler(s) and retailer(s)”.They are separate business entities and their objective is to maximize profit. The vertical marketing system is meant to make distribution cost-effective and efficient through economies of scale. This paper will consider how to Design and Manage Integrated Marketing Channels.
For these systems to work, all members are supposed to work together and shouldn’t seek to maximize their profit at the expense of others. This is made possible by vertical marketing systems. Kotler and Keller (2009) note that ”Vertical marketing systems (VMSs) arose as a result of strong channel members’ attempts to control channel behavior and eliminate the conflict that results when independent members pursue their own objectives.” This has led to many supply-distributor arrangements and advanced ways of administering vertical market systems which include distribution programming.
Distributions programming entails building a vertical market system that coordinates the needs of both the distributor and producer leading to satisfaction of both parties. In working together, the parties are able to share vital information so as formulate a means of how best they can use the resources of both parties to increase, level strengths, and minimize weakness.
Once a marketing plan is in place, the producer establishes a distribution department. Kotler and Keller (2009) observe that” Its job is to identify distributor needs and build up merchandising programs to help each distributor operate as efficiently as possible.” Its main aim is to change distributors from thinking they primarily make profits through their buying side to thinking that they make their profits through the selling side
Marketing channels services output
The service output level of a channel is an important consideration that marketers have to consider when designing a market channel.Considerations of the desired service output target of a consumer also have to be made.There are several channel service outputs which include:
- Product variety: it’s the range of commodities provided by a channel. The greater the range of products, the more the customer will be attracted. For example, a bar that has got a large variety of alcoholic products will attract more consumers.
- Spatial convenience: It’s the extent to which a marketing channel makes it easy for a consumer to buy a product. For example, Toyota Corporation has a greater spatial convenience compared to Ferrari because it has got more dealers all over the world. This reduces customers expenses when they need to repair or buy automobiles since there is less transportation cost
- Waiting time: The channel should avoid wastage of time and should deliver the products to the consumer at the required time.
- Lot size: It’s the number of units a consumer can purchase at one time. For instance; when buying cars in a fleet, the consumers want a channel where they can access a large lot size at once.
- Service backup: The additional services a channel has to offer like; credit, delivery, and repairs. For example, automobile dealership offers maintenance services and this encourages consumers to use this channel while they want to acquire automobiles. The more the backup services, the better the channel.
Disadvantages of setting quotas
Quotas are the targets a company wishes to achieve in a certain time. They can be in dollar sales, unit volume, or selling activities. The quotas can be set above the productivity of the sales representatives but should be attainable or they can be modestly set depending on the recent performances. It’s important to evaluate past performances before setting the quotas (Lymbersky, 2008). However, this system has got its own disadvantages which include:
- Difficult to integrate with other management systems: The management system of a company is based on a system that is not flexible. The various management aspects are correlated to each other and therefore introducing a new concept may be difficult to integrate
- Negative performance: If the quotas are set above the previous performances, it directly implicates more work and more stress. If the representatives are to work more and no change of pay, then it leads to less motivation hence reduced performances which may affect sales.
- The additional data processing required: there happens since there is increased work. There are more reports to be done and evaluation of the same so as to monitor progress. This consumes time that the representatives could have used facilitating more sales.
- Underutilization and underperformance: Setting general quotas for the department leads to the underperformance of some of the employees. Normally, some work better than others, and giving them a quota that is below their performance capability may lead them to underperforming, which leads them to be underutilized (Nigel, 2007).
Even though setting quotas can be disadvantageous to some extent, its gains are more and a company is in a position to maximize its potential and the potential of its employee.
Positions that can be covered by a sales representative
Sales representatives are not only capable of propagating sales but, are also capable of taking other positions in the company. Depending on the abilities, efficiency and personality of different individuals, they can take different positions that include:
- Sales managing: Sales department make the biggest part of many companies. This being the case, it needs to be managed and coordinated so as to maximize its potential. Generally, sales representatives make these departments and the most performing of them all could take the position of the sales manager (Hollensen, 2007).
- Distributions managing: Producers have to ensure that their products reach the consumer at the appropriate points and time. This calls for managers to coordinate this event which a sales representative can perform comfortably as he or she has an understanding of the market and the consumer.
- Promotions managing: For consumers to continue or improve their level of consumption, several promotions of the product are required. This requires proper management so as to make it cost-effective and achieve the desired output; a sales representative can take this position.
- Brand managing: In the case that a producer has different brands, there is a need for a manager to coordinate the sale, marketing and production of the individual brands. This requires a person who understands the consumer and the cost of production. A sales representative can perform these duties with a little more training.
- Marketing manager: The main purpose of marketing is to increase sales. One of the objectives of sales representatives is to do sales and improve on the consumption of the consumer.
Hollensen, S. (2007). Global marketing: A decision oriented approach (4th edition). New York: Prentice-Hall.
Kotler, P. & Keller, K. (2009). Marketing Management. New Jersey: Pearson Prentice Hall.
Lymbersky, C. (2008). Market Entry Strategies. Hamburg: Management Laboratory Press.
Nigel, B., (2007). Marketing Research: Tools and techniques. Oxford: Oxford University Press.