Product and Place with Nutritional Supplements - Assignment Example

? Individual Project Principles of Marketing This paper is an assessment of various distribution channels through which goods and services are marketed. The paper describes what a distribution channel is and it classifies distribution channels into: direct and indirect distribution channels. These channels are normally organized into vertical, horizontal, conventional and multichannel marketing systems. The author of this paper also notes that depending on the target market available, the distribution of goods and services can be done intensively, selectively or exclusively. Product and Place with Nutritional Supplements Introduction Product, place (distribution), promotion and price are the four most important marketing considerations. According to Nevin, the nature of a product and how it appeals to customers determine its marketability. The distribution of the product in the market can be done selectively, exclusively or over a large area depending on the choice of the producer. The sale of the product is also influenced by its price and consumers probably go in for cheaper products. Moreover, customers tend to be attracted by marketers who give them appropriate promotions (Nevin, 2002). 1.) An Overview of Distribution Channels A distribution channel can be defined as a pathway through which goods and services move from the producer to the consumer (Frazier & Summers, 2000). It involves all the institutions through which goods and services must pass from the point of their production to the point of their consumption (Kerin, Hartley & Rudelius, 2011). Lyndon and Sally argue that any meaningful definition of a distribution channel should include the flow of payments (generated from the sale of goods and products) from the consumer to the producer (Lyndon & Sally, 1998). Thus as Nevin notes, a distribution channel is an element of marketing mix that is effected through two directions: from the producer to the consumer and from the consumer to the producer (Nevin, 2002). 1. A) Channel Levels: Direct versus Indirect Distribution A distribution channel is effected at two levels: the direct and indirect distribution channels (Frazier & Summers, 2000). In a direct distribution channel, the producer delivers goods and services to the consumer without using intermediaries or middlemen (Nevin, 2002). Thus the producer sells goods and services directly to the consumer. On the other hand, in an indirect distribution channel, the producer delivers goods and services to the consumer through the assistance of intermediaries (Nevin, 2002). Thus in this case, producers use a third party in selling their products in the market. Examples of intermediaries include wholesalers, agents and retailers among others (Kerin, Hartley & Rudelius, 2011). Using intermediaries normally results in greater sales than selling directly from the point of production to that of consumption (Lyndon & Sally, 1998). 1. B) Channel Organizations: Conventional, Vertical, Horizontal and Multichannel Marketing Systems There are four main forms of marketing systems along which most distribution channels are organized. Firstly, we have a conventional marketing system which involves one or more producers, wholesalers and retailers acting independently and separately in efforts to maximize their own gains (Kerin, Hartley & Rudelius, 2011). Secondly, we have a vertical marketing system in which producers, wholesalers and retailers function as a unified unit. Here, one of the channel members acts as the owner of all the others and exercises power over them (Frazier & Summers, 2000). Thirdly, there exist horizontal marketing systems in which two or more business companies at the same level combine their financial and marketing resources in pursuit of marketing opportunities (Lyndon & Sally, 1998). Finally, we have a multichannel marketing system where the producer uses two or more marketing channels in distributing goods and services (Nevin, 2002). 2.) Analyze your target market's needs Customers in different target markets pursued by nutritional supplements marketers have different nutritional needs (Lyndon & Sally, 1998). In an age target market, children have high nutritional needs compared to adults. This can be attributed to the fact that children are the most affected by diseases related to poor nutrition (Frazier & Summers, 2000). Due to their increased aspiration for ideal body images, women are likely to have high nutritional needs than men in a gender specific market. In an income sensitive market, the prices of the nutritional supplements need to be relatively cheaper for even the customers with low incomes to afford them (Nevin, 2002). In a geographical target market, marketers should bear in mind that customers from different regions have different nutritional needs. For instance, protein supplements might be of less significance in lake regions (Frazier & Summers, 2000). 2A.) Explain what you know about your target market and what they want from a channel of distribution. Although different factors may influence the demand for nutritional supplements in different target markets, what matters most is the extent to which one is informed about the importance of the dietary supplements (Nevin, 2002). Frazier and Summers argue that to some people, nutritional supplements can be seen as a luxury for those who have extra money to spend (Frazier & Summers, 2000). Therefore, a more informed customer will be much willing to purchase nutritional supplements than one who has no knowledge about the importance of nutritional supplements. According to Lyndon and Sally, in target markets characterized by such circumstances, a relatively longer and indirect channel of distribution is needed (Lyndon & Sally, 1998). An example is one comprising manufacturers’ representatives, dealers, wholesalers and retailers. This can be effected through intensive distribution channels and multichannel marketing systems. These channel members can play a significant role in popularizing the nutritional supplements. 3.) Determine which channel members you will use and explain why (Indirect: retailer, wholesaler, dealer, manufacturer's rep, etc. Direct: catalog, telephone, sales force, etc.). Indirect channels are important in that most customers are familiar with intermediaries than producers (Kerin, Hartley & Rudelius, 2011). In the sale of nutritional supplements, wholesales and retailers can be used by manufacturers to reach customers. Wholesalers buy the producer’s goods in bulky and then break them into manageable quantities for retailers. The retailers in turn ensure that the final consumers of the product get the right quality and quantity (Frazier & Summers, 2000). On the other hand, a direct channel enables the producer to serve its customers faster and at low prices than when using intermediaries (Nevin, 2002). In marketing nutritional supplements, using sales forces to sell a producer’s good directly to consumers is the most appropriate method of distribution. However, to reach a large market, on-line cataloguing system can also be used (Lyndon & Sally, 1998). 4.) Discuss how many channel members you will use and explain why (intensive distribution, exclusive distribution or selective distribution). Due to the existence of different market segments, the producers of nutritional supplements can apply each of the three main forms of distribution to a separate segment. In intensive distribution, a product is distributed in an area through all the available channels. This ensures that a large number of customers are reached (Frazier & Summers, 2000). Exclusive distribution is effected through using one particular wholesaler or retailer in a given area (Lyndon & Sally, 1998). This ensures that all the marketers of the products cooperate appropriately in decision making and price regulation. In selective distribution, a product is distributed through a limited number of outlets. According to Nevin, this form of distribution reduces marketing costs (Nevin, 2002). 5.) Recommend a channel organization and explain why (conventional, vertical, horizontal or multichannel marketing system). A horizontal marketing system is the most suitable system for marketing nutritional supplements. According to Lyndon and Sally, it allows both the competitors and non-competitors of the same level to combine resources and efforts in their pursuit for good marketing opportunities (Lyndon & Sally, 1998). This ensures that a task that cannot be done single handedly is accomplished. Due to large market coverage, a multichannel marketing system has to contend with a fierce competition for sales and customers (Frazier & summers, 2000). A conventional marketing system ignites a conflict of interest due to the independence of channel members to maximize their own gains at the expense of the whole system (Nevin, 2002). In a vertical marketing system, the dominant channel member might become too authoritative to an extent of interfering with the individual freedom of the other members (Kerin, Hartley & Rudelius, 2011). Conclusion A distribution channel enhances a smooth flow of goods and services from the producer to the consumer. The length of a distribution channel depends on the choice of the producer and the type of target market available. It can be short as in being direct from the producer to the consumer or it may include several intermediaries (wholesalers, agents, distributors and retailers). The distribution of goods and services can be done intensively, selectively or exclusively, depending on the needs of that particular target market. References Frazier, G. L. & Summers, J. O. (2000): Interim Influence Strategies and their Application within Distribution Channels, The Journal of Marketing, 48 (3): 43-55. Kerin, R. A., Hartley, S. W., & Rudelius W. (2011). Marketing (10th ed.). NY, NY: McGraw-Hill Companies, Inc. Lyndon S. & Sally D. (1998). Prioritizing Target Markets: Marketing Intelligence and Planning, Journal of Marketing Practice: Applied Marketing Science, 16 (7): 407 – 417. Nevin, J. R. (2002).Relationship Marketing and Distribution Channels: Exploring Fundamental Issues, Journal of the Academy of Marketing Science, 23(4):327-334. Read More