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Importance of Physical Distribution

Importance of Physical Distribution

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Published by: Shri Sharma on Dec 20, 2011
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Importance of Physical distribution Physical distribution / marketing logistics form a pivotal part of the marketing task.

It is physical distribution that confers place-utility and time-utility to a product by making it available to the user at the right place and at the right time thereby it maximizes the chance to sell the product and strengthen the company’s competitive position. If any product made in any place could be consumed in it’s entirely at the very place of production and at the very time of production, there would be no need for physical distribution of that product. But such products are very rare. In practice, almost every product gets consumed at places and times that are different fro those of their manufacture. They have to be carried to places of consumption; they have to be stored; and they have to be distributed. Where Production Locations and Markets are distanced, Physical Distribution becomes more crucial. In some cases, production locations are totally dictated by considerations like proximity to sources of raw material. As a result, the points of production might be far away from the markets for the product. In some cases, huge production capacities get established at a given location on consideration of technology and economies of scale. In all such cases, the product has to be marketed over an extended territory; it has to be transported over long distances, stored for a considerable length of time and sold. There are products, which are impacted by the seasonality factor- either production is continuous but demand is seasonal, or demand is continuous but production is seasonal. Here too, physical distribution becomes particularly crucial. It has to perform the balancing act between production and consumption.
Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another.

Usually a horizontal marketing system is established so that the individual members can combine resources to make the most out of the marketing situation.Nestle & Coke in Europe . conflicts can arise that reduce profits for the entire channel. such as a bottle manufacturer combining with a producer of dehydrated salad dressing preparations. Joining of two or more corporations on the same level for the purposes of pursuing a new marketing opportunity. The two products are marketed together. and retailer—work together as a unified group in order to meet consumer needs. to produce synergistic benefits for all members Vertical marketing System Example . and retailers are separate businesses that are all trying to maximize their profits. To address this problem. in addition to their marketing and distribution resources. Corporations in a horizontal marketing system also have the option of combining their capital and production capabilities. wholesaler. Products from each member can be marketed and/or distributed together. producers. wholesalers.HUL's Distribution Set Up Horizontal marketing System Examples . more and more companies are forming vertical marketing systems.A vertical marketing system (VMS) is one in which the main members of a distribution channel—producer. allowing the two companies to combine their marketing resources and accomplish much more than either one might accomplish alone. When the effort of one channel member to maximize profits comes at the expense of other members. In conventional marketing systems.

[edit]Online Tools With the expansion of digital technology and tools.   [edit]Mobile Through mobile marketing. geo-based. Rich Push Notifications are full HTML Push Notifications. Customers can click on the ad to respond directly to the message or to find more detailed information. They include transactional. direct marketing is increasingly taking place through online channels. Location-Based Marketing: marketing messages delivered directly to a mobile device based on . marketers engage with prospective customers and donors in an interactive manner through a mobile device or network. including: [edit]Email Marketing Sending marketing messages through email is one of the most widely used direct-marketing methods. Mobile apps also contain Interactive ads that appear inside the mobile application or app. such as Facebook and Twitter. Push Notifications are direct messages sent to a user either automatically or as part of a campaign. while 86% use direct mail. marketing.  Display Ads are interactive ads that appear on the Web next to content on Web pages or Web services. Direct Marketing Channels Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. where a product line is distributed to as many markets as possible. expenditures on online display ads rose 24. test. and more. including the potential for limiting competition and minimizing distributioncosts so that net profits are higher. video.5% between 2010 and [13] 2011. This is the opposite of open distribution.Selective distribution is a retail strategy that involves making a product or group of products available only in certain markets. Social Media Sites. According to research by eMarketer. also provide opportunities for direct marketers to communicate directly with customers by creating content to which customers can respond. and to accurately measure responses. MMS: (multi-media message service) — These messages use elements such as images. There are several reasons for employing this approach. One reason for email marketing's popularity is that it is relatively inexpensive to design. This paid placement industry generates more than $10 billion dollars for search companies. It also allows marketers to deliver messages around the clock. and send an email message. pop ups. Most online advertising is delivered to a focused group of customers and has a trackable response. smartphone. and audio. Formats include static banners. [12] According to one study. or tablet. Marketers also use search engine optimization to drive traffic to their sites. in which advertisers pay for prominent placement among listings in search engines whenever a potential customer enters a relevant search term. and floating units. Search: 49% of US spending on Internet ads goes to search. videos. allowing ads to be delivered to customers based upon their already[14] indicated search criteria. Mobile Applications: Smartphone-based mobile apps contain several types of messages. Types of mobile marketing messages include: SMS: (short message service) — marketing communications are sent in the form of text messages. also known as texting. email is used by 94% of marketers. such as a cellphone.

This use of database analysis is a type of database marketing. Voicemail marketing presented a cost effective means by which to reach . The most successful telemarketing service providers focus on generating more "qualified" leads that have a higher probability of getting converted into actual sales. free-trial CDs.the user's location. Mobile Banner Ads: Like standard banner ads for desktop Web pages but smaller to fit on mobile screens and run on the mobile content network [edit]Direct Mail Main article: Advertising mail See also: Direct mail fundraising The term "direct mail" is used to refer to communications sent to potential customers or donors via the postal service and other delivery services. [edit]Telemarketing Another common form of direct marketing is telemarketing. In other countries it is voluntary. [edit]Voicemail Marketing Voicemail marketing emerged out of the market prevalence of personal voice mailboxes. such as the New Zealand Name Removal Service. which helps businesses increase sales volume and customer base. profession. there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. charities. The National Do Not Call Registry was created in 2003 to offer consumers a choice whether to receive telemarketing calls at home. The primary benefit to businesses is increased lead generation. location. In order to qualify for these rates. pre-approved credit card applications. marketers send over 90 billion pieces of direct mail per year Advertisers often refine direct mail practices into targeted mailing. income. telephone surveyors. and travel and tourism industries. Direct mail includes advertising circulars. program. marketers must format and sort the mail in particular ways – which reduces the handling (and therefore costs) required by the postal [15] service. in which marketers contact customers by phone. for example. direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. The provisions do not cover calls from political organizations. This technology is increasingly being used for everything from special offers to product information. or [17] companies with which a customer has an existing business relationship. a person who has demonstrated an interest in golf may receive direct mail for golf-related products or perhaps for goods and services that are appropriate for golfers. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services. home computer. Direct mail is sent to customers based on criteria such as age. buying pattern. or campaign to sell goods or services through interstate phone calls. For example. In the US. etc. and business voicemail systems. in which mail is sent out following database analysis to select recipients considered most likely to respond positively. The FTC created the National Do Not Call Registry after a [16] comprehensive review of the Telemarketing Sales Rule (TSR). and other unsolicited merchandising invitations delivered by mail to homes and businesses.QR Codes (quick-response barcodes): This is a type of 2D barcode with an encoded link that can be accessed from a smartphone. Canada has its own National Do Not Call List (DNCL). In the United States and United Kingdom. The do-not-call provisions of the TSR cover any plan. catalogs. In many developed countries. The United States Postal Service calls this form of mail "advertising mail" (admail for short).

President Bush signed into law S. Digital coupons are available on company websites. is now less common than in the [citation needed] past. This is partly due to laws in the United States and elsewhere which regulate its use for consumer marketing. and enables them to obtain customers' phone numbers as targets for telemarketing. [edit]Broadcast Faxing Broadcast faxing. it is exempt from Do Not Call regulations in place for other forms of voicemail marketing. [edit]Direct Response TV Direct marketing via television (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form. Because guided voicemail is used to contact only businesses. social media outlets. This allows marketers to reasonably conclude that the calls are due to a particular campaign. and email alerts. Purchases are often made using a special coupon code or promotional code. Voicemail courier is a similar form of voicemail marketing with both business-to-business and business-to-consumer applications. infomercials — can be considered a form of direct marketing. [19] Groupon. in which faxes are sent to multiple recipients. the overall use of faxes is less than in the past. TV-response marketing — i. Digital Coupons: Manufacturers and retailers make coupons available online for electronic orders that can be downloaded and printed. has over 83 million subscribers. but imposes some new requirements." and prompted many jurisdictions to pass laws regulating consumer voicemail marketing. businesses have utilized guided voicemail (an application where pre-recorded voicemails are guided by live callers) to accomplish personalized business-to-business marketing formerly reserved for telemarketing. which allows marketers to send commercial faxes to those with whom they have an established business relationship (EBR). mostly for business-to[18] business marketing campaigns. the Junk Fax Prevention Act of 2005 (JFPA). by voice. Daily Deal Sites offer local and online deals each day. since responses are in the form of calls to telephone numbers given on-air. The largest of these sites.people directly. One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products. which refers to typical 30-second or 60-second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website). In 2005. such as its use of adding items to the offer and the guarantee of satisfaction were much copied. and are becoming increasingly popular. Several aspects of ad. [edit]Couponing Couponing is used in print and digital media to elicit a response from the reader. Customers sign up to receive notice of discounts and offers. Also. Inc. Roughly 2% of direct marketers use fax. Fax senders must begin complying with these new requirements. texts. of RI. More recently. which are described in this fact sheet. An example is a coupon which the reader receives through the mail and takes to a store's check-out counter to receive a discount. and came to be considered part of the formula for success with short-form direct-response TV ads (DRTV) . These requirements include providing an opt-out notice on the first page of faxes and establishing a system to accept optouts at any time of the day. Abuse of consumer marketing applications of voicemail marketing resulted in an abundance of "voice-spam. 714. which are sent daily by email. due to the popularity of a variety of digital communication methods.e. There are an increasing number of mobile phone applications offering digital coupons for direct use.

bus benches. revenue. [edit]Direct Selling Direct selling is the sale of products by face-to-face contact with the customer. college campus/high schools. or address lists with the names of home occupants. Coop or shared mail. customers. movies. package. in-store. such as a catalog. because they elicit a direct and measurable action from the customer. this tracking mechanism is a "call now" prompt with a toll-free phone number or a unique Web URL. bus shelters. Often. envelopes. and costs a fraction of the amount of a mailshot. . sales. taxis — that contain a call-to-action for the customer to respond. this method is targeted purely by area and community. stadiums. fast food companies. airports. or through indirect means such as Tupperwareparties. a coupon redeemable at a brick-and-mortar store. including transit. either by having salespeople approach potential customers in person. newspaper. hotels. [edit]Out-of-Home Out of home direct marketing refers to a wide array of media designed to reach the consumer outside the home. leads. aerials. or bill. [edit]Insert Media Another form of direct marketing. is also considered insert media. insert media are marketing materials that are inserted into other communications. [edit]Grassroots/Community Marketing The door-to-door distribution of flyers and leaflets within a local community is a business-to-consumer form of direct marketing used extensively by restaurants. orders. where marketing offers from several companies are delivered via a single envelope. [edit]Direct Response Magazines and Newspapers Magazine and newspaper ads often include a direct response call-to-action. magazine.[edit]Direct Response Radio In direct response radio. such as a toll-free number. and many other business focusing on a local catchment. since it is not necessary to purchase stamps. sport facilities. Similar to direct mail marketing. in-flight. and profits that result from the airing of those ads. shopping malls. or a QR code that can be scanned by a mobile device — these methods are all forms of direct marketing. Results of the ad can be tracked in terms of calls. ads contain a call to action with a specific tracking mechanism.

Hardcastle Restaurants Pvt. owns and operates McDonald's in North and East India Celebrating over 15 years of leadership in food service retailing in India. Amit Jatia. owns and spearheads McDonald's operations in West & South India. In India. . More than 80% of McDonald's restaurants worldwide are owned and operated by independent local men and women. McDonald's now has a network of over 235 restaurants across the country. Connaught Plaza Restaurants Private Limited. Vice Chairman. Vikram Bakshi.000 locations serving approximately 64 million customers in 118 countries each day.cDonald's India . MD and Joint Venture Partner. Ltd. McDonald's is managed by two Indian entrepreneurs.A Profile A Locally Owned Company: McDonald's is the world's leading global foodservice retailer with more than 33. Hardcastle Restaurants was appointed Development Licensee for McDonald's in India in 2010. a progression from Joint Venture partner.

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