Distribution and Integrated

Promotion Decision

M Arief Amruzar
Listya Diani Pramudyaningtias
Maria Rini Setia
Michael Susanto
Milki Umar
Nia Nurita
Nicholas Arizona
Muadz Akbar
Julius Ceasar Panggabean

Distribution Channel Decision

Marketing Channel

Middlemen Improves Market Efficiency

1. Functional efficiency
2. Scale efficiency
3. Transactional efficiency

Product
Availabili
ty
Meeting
Customer
Service
Requirem
et

Flexiblit
y

Distributi
on
Channel
Objective
Cost
Effectivene
ss

Promotion
al Effort

Market
Informatio
n

Wholesal
er

Facilitatin
g
Agencies

Institution
in Marketing
Channel

Retailers

Agent
Middleme
n

Exhibit 12.5

Consider the channel design options for a consumer

product

Producer

Producer

Producer

Producer

Producer

Agents

Agents

Consumer

Wholesaler

Wholesaler

Retailer

Retailer

Retailer

Retailer

Consumer

Consumer

Consumer

Consumer

How should we decide which channel structure is best?

Exhibit 12.6

Consider the channel options for industrial goods and

services

Producer

Producer

Producer

Producer

Agent

Agent

Wholesaler
Industrial Buyer

Industrial Buyer

Wholesaler
Industrial Buyer

Industrial Buyer

Exhibit 12. 8

Example of a Hybrid Marketing Channel

Company Website
& Sales Force

Supplier

Wholesale
Distributor

Company
Help Line &
Outside
Service Centers

Demand Generation

Physical
Distribution

Post-Sale Service

Customer

Channel Designs

Tangible Goods

Export
Contractual
Agreement

Market Entry
Strategies

Intangible Goods

Retail Structures in
Foreign Countries

Direct Investment
Domestic
Middlemen
Foreign
Middlemen
Shorter Channel

Franchising

Channel Management Decisions

Vertical Marketing
Systems

Channel Control
Strategies

Pull Strategy
Push Strategy

Corporate VMS
Contractual VMS
Administered VMS
Relational VMS

Trade
Promotions
Reseller
Purchase and
Inventories
Local
Promotional
Effort

Incentives for
Motivating
Channel
Members
Personal Selling
Effort
Customer
Service

Channel Conflicts
Reasons of
Conflict
Incompatible
Goals
Unclear
Rights and
Responsibilitie
s
Misperception
Poor
Communicatio
n

Several
Approaches
Involving Channel
Members in Policy
Decision
Increasing
Interaction among
Personnel
Focusing on
Common Goals
Use of Mediation
and Arbitration

Integrated Promotion Decisions

Decision Sequence for Developing the Promotion Mix

1

Define the audience(s) to be

targeted

Who the customers are

Where they are
How they behave

Set the promotional objectives

SMART
Good objectives should include :
Defining the target audience
Spesific aspect(s)of the audiences perceptions, attitudes or behavior
should change
How quickly such change expected to occur
Degree of change required

Set the promotion budget

Percentage of sales method

Competitive parity method
Objective and task method

Design the promotion mix

Which promotion components to use

Choose specific activities within each component
Decide which specific vehicle to employ

Evaluate the result

whether the objectives of the promotional activity have

been met (marketing research)
whether the firm attained its distribution objectives

Strategic Circumstances and the Relative Importance of

Advertising and Personal Selling as Promotional Tools

Promotion Mix
Amount of
Information
Communicated

Promotion Mix
Element
Advertising

Personal Selling

Radio & TV : <

Website : >

Credibility

Control
Over The
Message

Cost to
reach one
Customer

Strategic
Suitability

Low

Good

Low

Pull Strategy

Lots of information

Depends :
Company
Personality
Sales skills

Poor, but
training
helps

High in
developed
country

Push
Strategy

Sales Promotion

Virtually No
Information

Not applicable

Good

Low & self

liquidating

Consumer :
Pull Strategy
Trade : Push
Strategy

Public Relation

Lots of information

High

Poor

Very Low

Push & Pull

Strategy

Making Advertising Decisions

1. Setting Advertising Objectives
Goals that advertising attempts to achieve

Ex: Consumer awareness, influencing product/brand benefits, encouraging to

trial purchase.
Define the target market/audience

2. Setting Advertising Budgets

Reach percent of the target audience
Frequency measure of repetition

3. Making Media Choices

Traditional Media

Ex: TV, Radio, Print Media, Out-of-home, Exhibition, Supplementary Media,

Direct Marketing using advertising Media.
New Media (internet based)
Ex: Banner Ads, Search Keywords, Portal Deals, Social Networks, Email,
Blogging, Podcasting.

Recall Tests
Before Tests
Sales Tests

Measuring
Advertising
Results

Recognition
Tests
After Tests
Recall Test

Making Personal Selling Decisions

Communication
Objectives for
Salesforce

Salesforce
Organization

Account
Management
Policies

Deployment

Quotas

Recruitment &
Selection

Salespersons
Understanding
of Job
Requirements
Role
Expectations

Training

Salespersons
Job
Performance

Salespersons
SKills

Program
Implementation

Planning Sales
Program

SALESPERSONs JOB
PERFORMANCE

Compensation
& Incentives

Salespersons
Motivation

Making Sales Promotion Decisions

Sales promotion is less risky than advertising
Performance is usually easily measurable
Primary sales promotion techniques :
1. Price-off Promotions
2. Premiums
3. Sampling
4. Rebates
5. Contests and Sweepstakes
6. Trade Promotions

Making Public Relation Decisions

Public relations has several unique
advantages :
1. Lots of information can be communicated
2. High credibility
3. Very low or nil cost top reach customer
4. Supports bith pull and push strategies

The Turnaround of Tata

Nano Reinventing the
Wheel

Overview
Company Background
History
1945

Established as Tata Engineering & Locomotive Company Ltd. (Telco)

Indias premier automobile companies
1954 1969 Telcom & Deimler-Benz - produce commercial vehicles
uhwahfhf Telco independently produce engineering equipment & construction
1961
Export to global market
23 July 2003 Finally settle down to automobile as Tata Motors Ltd.
2005
Tata Motors Ltd. industrial joint venture with Fiat Automobile Group and Fiat powertrains

Production
Toto Motors Ltd. was Indias largest automobile company
Leader in commercial vehicles :
- World 4th largest truck manufacturer
- World 2nd largest bus manufacturer
Innovation
First indigenously developed Light Commercial Vehicle
India first Sport Utility Vehicle
First fully indigenous passenger car
Indias first indigenously developed mini-truck

equipment machinery
produce Fiat and Tata cars

Tata Nano Cars

Idea
: Provide a safe, affordable, all-weather form of personal transport
afford for motor cycle.

Concept : - A vehicle that could be affordable and low cost enough to be

within everyone
reach, peoples car.
- Meet all safety standards, exceed emission norms, low in pollution and
high in fuel efficiency.

Notes : I will add more

new market for cars which does not exist

for family who only

Misfired
Strategies
Confusion about its positioning
Communication campaign aimed to be costeffective and innovative
The distribution network different from
contemporary
Financing Bottleneck
Price Protected for first 100.000 cars,
regardless of rising costs
Technical failure

Tata Nano Strategy

( Current)
Product

Price

Positionin
g
Promotion

Place

Tatas Strategies for

Revival

Tatas Strategies for

Revival
Price

Promotion :

Affordability
Affordability
Product :

Changing
Changing Ads
Ads Concept
Concept

Cars
Cars people
people want
want to
to own
own something
something they
they can
can aspire
aspire for
for
and
be
proud
of
and be proud of

Placement :

Fix
Fix Products
Products Issues
Issues

-- Re-engineered
Re-engineered to
to fix
fix the
the issues
issues related
related to
to the
the fire
fire and
and
safety
safety
-- Offer
Offer free
free safety
safety upgrades
upgrades for
for costumers
costumers Nano
Nano

---

New
New Distribution
Distribution System
System

F
F Class
Class showrooms
showrooms
More
More outlets
outlets on
on smaller
smaller cities
cities and
and towns
towns

Re-Positioning
Tata Nano RE-Positioning Strategy

Smart City Car

Segment : Small vehicle

Market target : Youth and middle income families

Product :

Promotion :

(Add)
(Add) Intelligent
Intelligent Features
Features

-- Focusing
Focusing on
on the
the youth
youth to
to rejuvenate
rejuvenate its
its
image,
image, moving
moving away
away from
from the
the concept
concept of
of
being
being an
an affordable
affordable four-wheeler.
four-wheeler.
-- With
the
upgrades,
Tata
With the upgrades, Tata Motors
Motors is
is trying
trying
to
to increase
increase the
the value
value for
for money
money
proposition
proposition it
it offers
offers to
to customers.
customers.

Celebrate
Celebrate Awesomeness
Awesomeness

Engage
Engage youngsters
youngsters aspiring
aspiring for
for a
a car
car that
that
can
customized
can be
be
customized for
for colour
colour and
and
features.
features.

Multi-pronged
Multi-pronged Approach
Approach

Company
Company use
use devices
devices such
such as
as floats
floats to
to
communicate
communicate the
the basic
basic values
values of
of the
the Nano
Nano
brand
brand such
such as
as fuel
fuel efficiency
efficiency and
and total
total cost
cost
of
ownership
of ownership