Page 211 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes
Example: High-involvement products such as consumer durable items that include TV,
washing machine, refrigerators, stereo systems, PCs for home and personal use, branded clothing,
and sportswear etc., use selective distribution.
3. Exclusive Distribution: An extreme case of selective distribution in which only one outlet
in a market territory is allowed to carry a product or a product line. This is a case when the
company wants to maintain control over the market and channel. In many instances such
arrangements are exclusive in nature and companies do not allow the intermediaries to
carry competitor’s product(s).

Example: Brands like Porsche, Christian Dior products, Rolex watches, Professional
Nikon cameras, and French perfumes etc., are sold through exclusive dealers.
Terms and Responsibilities of Channel Members

The next task is to determine rights and responsibilities of participating channel members. It is the
duty of the marketing manager to see that the channel members become profitable. The marketing
manager should take care of the pricing policy, territorial rights, conditions of sales and credit and
specification of services to be undertaken by each member of the channel. The pricing issue
demands setting up of list price, schedule of discounts and decision on equitable and sufficient
compensation pattern. Conditions of sale refer to payment patterns and guarantee of the producer.
Many companies provide cash discounts to intermediaries; provide replacements for defective
products and price decline guarantees to motivate the channel members to procure more of the
goods. The producer also guarantees territorial rights in the form of exclusive distribution to a
few of the channel members. Mutual services and responsibilities include issues related to
brand and store promotion; marketing research and information collection. The producer needs
to develop a channel promotion and development model for motivating channel members to
commit higher sales.

Caselet New Distribution Channels for Insurance Companies
and Banks

he financial services industry is expanding its sales horizons. As growth through
traditional sales channels loses steam, insurance companies and banks are tapping
Tinto new distribution channels outside their industry.
For example, banks in the United Kingdom have been partnering with retailers, such as
Tesco and Marks & Spencer, to offer financial services. Now banks and financial services
firms in other countries are beginning to build similar partnerships—with some hesitation,
however, given the number of failed partnerships in recent years.
Partnership approaches for insurance companies and banks
A.T. Kearney has researched four partnership approaches that can be successful for financial
services firms and their partners. These include:
Advanced marketing where the partner only supplies a space for a product next to
its own products, for example partnerships with discount grocery retailers such as
Migros, ALDI or Coop, and newsstands, or tobacconists
Contd...

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