Unit – 2 New Age Marketing

Brick and Mortar Marketing

PRODUCT MANAGEMENT

Product management is a business practice that involves managing all aspects of developing,
marketing, and selling a product or service.

The goal is to create a product that is valuable to the target customer audience.

Product management can be broken down into two areas: product development and product
marketing, which work together to maximize sales and profits.

Product Manager

Major Responsibilities:
1. Product Planning: the product manager is responsible for the planning activities
related to the product or product line.
Thus, the product manager’s job involves analyzing the market, including customers,
competitors, and the external environment, and turning this information into marketing
objectives and strategies for the product.
2. Ensure support from the organisation: The product manager must get the
organization to support the marketing programs recommended in the plan.
This may involve coordinating with other areas of the firm, such as research and
development for product-line extensions, manufacturing, marketing research, and
finance.
It also involves internal marketing of the product to obtain the assistance and support
of more senior managers in the firm.

Difference between a Product Manager and a General Marketing Manager

Basis Product Manager General Marketing Manager

Scope of Product managers are in charge marketing managers are in charge of a
responsibility of a single product or a closely division or strategic business unit have
related product line, and they are more concerns about managing
not concerned on a day-to-day “portfolios” of products and about the
basis about the health of the long-term strategic direction of their
general business area in which business groups
they operate
Nature of Mainly tactical: involved with Mainly strategic: decisions about which
decision developing marketing objectives products to add or drop and manage to
making and strategies for their products, meet an overall divisional financial
revolve around the marketing objective.
mix: how much to spend on
advertising, how to react to a
competitor’s coupon promotion,
which channels of distribution
are appropriate, and similar
questions
Time Horizon Short-run: Product managers Long-run: They are also concerned with
face substantial pressure to attain short-run targets, but they more often
and hence focus on short-run take a longer-term perspective of where
market share, volume, or profit the business is going.
targets

Figure: A Product Manager’s Potential Interactions

COMPETITOR ANALYSIS
A competitor analysis, also referred to as a competitive analysis, is the process of identifying
competitors in your industry and researching their different marketing strategies. You can use
this information as a point of comparison to identify your company's strengths and weaknesses
relative to each competitor.

Competitive analysis largely has 2 parts:

1. Data collection
Product managers should always begin a competitor analysis with a search of secondary
sources of information.
Secondary sources are generally less expensive and easier to obtain than primary data. These
are:
• Internal sources – data collected in the past
• Local newspaper
• Annual reports
• Patent/Trademark Filings
• News Releases
• Trade Associations
• Government Sources

Primar sources of data also provide valuable information. These are:

• Sales force/Customers: Since they interact with customers on a regular basis,
salespeople are in an excellent position to find out about recent competitor sales pitches,
pricing, and many other dimensions.
 Of course, the salespeople must get the information from customers. Unfortunately,
customers may be reluctant to give away such information, believing it means playing
“dirty tricks” on the competition. To aid in overcoming this reluctance, the data
collection can be positioned as giving the vendor an opportunity to provide better
service or products to the customer; that is, the salesperson can clearly show that the
customer will benefit by passing along the information.
• Employee: If the product category in question is sold in the supermarket, an employee
can easily observe changes in price, packaging, and shelf display.
• Suppliers: Often competitors’ suppliers are willing to give information about shipments
to impress potential buyers.

2. Data Analysis

The analysis should answer the following questions:

a. Who are the major competitors?

b. How do the competing products/services stack up against each other?

Develop a product features matrix which charts the differences between the main products
or services offered in the category.

c. What are the objectives of the major competitor products?

An assessment of current objectives provides valuable information concerning the intended
aggressiveness of the competitors in the market in the future.
In the context of marketing planning, three basic product objectives can be identified.
- A growth objective usually implies increasing the brand’s units or market share, with
profit conditions being secondary.
- The hold or consolidation objective might be logical for a brand that is losing market
share, for which a reasonable first step in reversing its fortunes is to stop the slide.
- Finally, a harvest objective, also referred to as milking, describes a situation in which
profit is paramount relative to market share.

d. What is the current strategy being employed to achieve the objectives?

Determine how competitors are attempting to achieve their objectives by examining their
past and current marketing strategies.
At the product level, a marketing strategy can be thought of in terms of three major
components: target market selection, core strategy (i.e., positioning and differential
advantage), and implementation (i.e., supporting marketing mix).
- Target Market Selection: The first major component is the description of the
market segment(s) to which competing brands are being marketed. Since few
brands are truly mass marketed, that is, marketed equally to all potential customers,
the key is to determine which group(s) each competitor has targeted. This helps to
avoid segments in which there may be intense competition and to determine under-
or nontargeted segments that may represent opportunities.
- Core Strategy: The second strategy component is what is called the core strategy.
This is the basis on which the rival is competing, that is, its key claimed differential
 advantage(s) (either based on price/cost or product features). Differential advantage
is a critical component of strategy because it usually forms the basic selling
proposition around which the brand’s communications are formed. It is also called
the brand’s positioning or value proposition.
- Implementation: The final strategy component of competitors that must be
assessed is the supporting marketing mix. The mix provides insight into the basic
strategy of the competitor and specific tactical decisions. These decisions are what
customers actually see in the marketplace; neither are they exposed to nor do they
particularly care about a product’s marketing strategy. However, customers are
exposed to price, advertising, and other marketing mix elements.
Some of the most important areas to touch upon in the marketing mix are discussed
below:
The marketing mix, also known as the 4 P’s—product, price, promotion, and place—
covers the must-have elements when bringing a product to market. As part of your
research, ask yourself the following questions for each competitor you’ve selected.

Product

• What are they selling?

• What features are included in their product or service?
• What is most appealing to customers about the product or service? What are some weak
points of the product or service? (Pro tip: Check out customer reviews.)

Price

• What kind of pricing model do they use? Is it a one-time purchase or a subscription?

• How much do they charge for their product or service? Do they offer sales or discounts?
• How does their pricing reflect the quality, or perceived quality, of their product or
service?

Promotion

• How do they get the word out about their product or service? What advertising channels
(social media, email marketing, print advertisements, etc.) do they use?
• What elements of their product or service do they emphasize? What’s their unique
selling proposition?
• What’s their company story? How do they talk about their brand?

Place

• Where do they sell their product? Do they sell online or in brick-and-mortar locations?
• Do they sell to customers directly, or do they partner with retailers or third-party
marketplaces?

e. Who has the competitive edge?

f. What are they likely to do in the future?
The final step is to put it all together and answer the question: What are they likely to do in the
future? In particular, we are interested in their likely strategies over the subsequent planning
horizon, usually a year.
 PRODUCT STRATEGY
What is a product?
A product is a bundle of utilities. It can be defined as anything that can be offered to a market
for attention, acquisition, use, or consumption that might satisfy a want or need. Products not
only include tangible objects, such as cars, clothing, or smartphones but also include services,
solutions, events, persons, places, organizations, and ideas or a mixture of these.

What is a product strategy?

A product strategy is an action plan for a product or a roadmap that guides the development,
marketing, and management of a product or service.
It defines the direction and scope of the product portfolio, aligning it with the overall business
objectives and market demands.
A well-defined product strategy enhances coordination among functional areas of the organization
and helps organizations make informed decisions about resource allocation, investment, and
innovation to meet customer needs and stay ahead of the competition.

A well-defined strategy should answer three questions:

1. Where are we headed? Here the focus is on basic objectives such as growth versus
profits.
2. How will we get there? This is the core of marketing/product strategy that addresses
issues such as whether to focus on existing versus new customers. It is summarized in
a Targeting and Positioning statement.
3. What will we do? This addresses specific programs or tactics to be employed in order
to implement the core strategy. Basically, it entails describing the marketing mix
(product, pricing, promotion, distribution, service).

Elements of a Product Strategy

A more complete statement of marketing strategy for a product consists of seven parts:
1. Statement of the objective(s) the product should attain.
The two objectives most commonly set for specific products or services are growth—in
terms of sales revenues or market share—and profitability. It is usually not possible to
optimize both simultaneously during the time span of an annual marketing plan. The kinds
of activities necessary to achieve an ambitious market share objective work against
satisfying an ambitious profit objective.
Further, the objectives should be SMART (specific, measurable, achievable, relevant,
time-bound)

2. Selection of strategic alternative(s).

The choice of strategic alternatives follows the selection of the primary objective. This is
the first step in developing the marketing strategy for the product or service that provides
broad guidelines for the ultimate strategy selected.
 Increasing Market Share
Market Development Strategies:
These strategies are aimed at noncustomers of the product (i.e., customer acquisition). One
approach is to pursue nonusers in segments already targeted.
A second approach is to enter new markets, developing segments previously ignored by the
product category. For example, Apple initially targeting high-end consumers and professional
with its premium ranged iPhones and then launching iPhone SE, mid-range smartphone
segment.

Market Penetration Strategies:

An alternative, and often overlooked, way to increase market share or sales volume is to
increase the usage rate of the brand’s existing customers (i.e., customer expansion). The
biggest asset a company has is its customer base, and it should be leveraged as much as
possible. Product managers can obtain more volume from existing customers by, for example,
using larger package sizes, promoting more frequent use, or getting a larger share of the
business if the customer uses several vendors (i.e., share of wallet).
A second route to increasing sales or market share is to attract competitors’ customers (i.e.,
customer acquisition), that is, to induce brand switching.

Increasing Profitability
Decreasing Inputs/Cost:
Obvious candidates for reduction are costs of marketing such as advertising, promotion,
selling expenses, marketing research, and so forth. Unfortunately, reducing these inputs may
have adverse long-run effects as it can result in a commensurate reduction in the outputs. A
better way would be to make some minor changes to product so that it requires lesser raw
materials to be produced.
A second way to decrease inputs is to improve the utilization of the assets. This might mean
keeping down accounts receivable and, for a manufactured product, the costs of inventories.
One of the most obvious ways to improve profits is to reduce customer turnover/churn, (i.e.,
increase customer retention).

Increasing Outputs:
The easiest way to increase revenues from existing unit sales is to improve prices. This can be
done in a variety of ways, including increasing the list price, reducing discounts (think rebates
on car purchases), reducing trade allowances, and so forth. However, this can lead to a
substantial drop in unit sales and hence lost revenue. There is also the issue of competitive
reaction.
The other way to increase revenues is to improve the sales mix. The 80/20 rule often holds:
20 percent of the product variants (sizes, colors, etc.) produce 80 percent of the sales or profits.
In such an instance, it may make sense to emphasize selling more of the profitable items.
Alternatively, if we apply the rule to customers, the product manager may want to de-
emphasize unprofitable customers and concentrate resources on those producing 80 percent of
the profits (i.e., customer deletion).
3. Selection of customer targets.
In selecting a customer target, three key considerations are critical:
1. Size/growth of the segment. An important part of customer analysis focuses on which
customer groups are growing and how fast.
2. Opportunities for obtaining competitive advantage. Competitor analysis assesses
which market segments competitors are pursuing and their claimed competitive
advantages, the resources they can put into the market, and their likely future marketing
strategies.
3. Resources available. This is covered in the self-analysis part of the assessment of
competition analysis.

4. Choice of competitor targets.

It is important to consider which competitors are the primary targets of the strategy. For a
penetration strategy that involves stealing competitors’ customers, the targeted customers
should be identified based on an analysis of which competitor’s customers are both valuable
and the most easily pried away. However, all strategic alternatives at least implicitly involve
competition because of the necessity to position the product against major competitors.

5. Statement of the core strategy.

The core strategy defines the differential advantage to be communicated to the target
customers, often referred to as product positioning. The advantages that can be employed fall
into two basic categories:
(1) cost/price (economic) differential advantage, and
(2) differentiation based on product offering or service features. (levels of a product -
augmented [features or benefits that can be delivered now to go beyond expectations] and
potential [features or benefits that can be added to a product or service sometime in the future]
products are often what give rise to differential advantage).

In general, the positioning decision has four steps:

1. Identify alternative positioning themes by consulting the advertising account team,
the product team, and past marketing plans.
2. Screen the alternatives according to whether each is (a) meaningful to customers, (b)
feasible given the firm and product resources and customer perceptions, (c) competitively,
or (d) helpful for meeting the product objective.
3. Select the position that best satisfies these criteria and can be sold to the marketing
organization.
4. Implement programs (e.g., advertising) consistent with the product position selected.

6. Description of supporting marketing mix. (explain the 4Ps)

 ADAPTING PRODUCT STRATEGY OVER THE PRODUCT LIFE CYCLE

The product life cycle shows the course of a product’s sales and profits over its lifetime. It
contains four distinct stages: introduction, growth, maturity and decline. Each stage is
associated with changes in the product's marketing position. A company’s products are born,
grow, mature, and then decline, just as living things do. To remain vital, the firm must
continually develop new products and manage them effectively throughout their life cycles.
Stages of PLC:
1. Product development: The company finds and develops a new product idea. During product
development, sales are zero, and the company’s investment costs mount.
2. Introduction: A period of slow sales growth as the product is introduced in the market. Profits
are non-existent in this stage because of the heavy expenses of product introduction.
3. Growth: A period of rapid market acceptance and increasing profits.
4. Maturity: A period of slowdown in sales growth because the product has achieved acceptance
by most potential buyers. Profits level off or decline because of increased marketing outlays to
defend the product against competition.
5. Decline: The period when sales fall off and profits drop.

Product introduction strategies

Characteristics of the stage:
1. There are often few competitors, perhaps only one.
2. Sales volume increases slowly due to the small number of firms marketing the product
and the reluctance on the part of customers to purchase it.
3. Early on, selling and advertising focus on selling the generic product; the effort is on
product form benefits.
 4. Distributors also have the power in the relationship because the product is still unproven
with customers, so securing distribution is a major issue. (In the Internet world this
means developing links from other sites, etc.)
5. Prices can be high or low depending on the entry strategy of the firm(s) marketing the
product.

Strategy options:
There are two well-known options: skimming and penetration.
The skimming strategy assumes a product feature–based differential advantage that allows
the product manager to enter and stay in the market during the introductory period with a high
price. Target customers are the least price sensitive, that is, the pioneers or early adopters of
the product.
So, skimming strategy can be used where:
1. Target customers are less price sensitive.
2. Cost structure of the product is largely variable costs, usually the case when the product
is a manufactured good. A high margin can be sustained because the product manager is
not under intense pressure to cover large fixed costs.
3. Distribution outlets are limited to protect the high price.
4. High entry barriers exist because the high price and high margins make the category
very attractive to potential competitors.
5. The margins can then be used to fund investment in research and development, leading
to new products which can be skim priced when the inevitable competition arrives in the
current product category.
6. Used mostly in cases of new technology. For example, when flatscreen TVs, VCRs were
first introduced, they were priced high initially which fell over time. Customers were less
price sensitive and products needed word-of-mouth to help spread information about
their utility.

On the contrary, in a penetration strategy the product manager uses a low-price core strategy
and attempts to get as many customers and establish a significant market share position as
quickly as possible. This is particularly beneficial if purchase by one customer makes the
product more attractive to others.
Penetration strategy is more appropriate where:
1. Fixed costs are high (e.g., many services, general purpose computer software).
2. When a broad segment is being pursued and it is important to obtain wide distribution
and thus spend heavily on trade-oriented promotion.
3. If the seller wants a ‘first-mover advantage’
4. Target customers are price sensitive.
5. Used mostly in case of FMCG products as market share is very important for them for
retaining shelf space in supermarkets.
Product growth strategies
The growth phase of the product life cycle encompasses two different kinds of market behavior:
early growth—the phase just following the introductory phase—and;
late growth—the phase in which the rapid increase in sales begins to flatten out.

Characteristics of the stage:

1. The number of competitors increases. This puts pressure on product managers to hold
distribution channels and changes the focus of sales and communications to the
superiority of the product over others in the category.
2. As customers become more knowledgeable about the product and the available
options, this puts pressure on price.
3. Finally, with the increased competition, market segmentation begins to be a key issue
facing product managers.

Strategy options:
The general strategic options relate to the product’s position in the market: whether it is a
leader (the brand with the leading market share) or a follower.

Leader:
The leader can choose either to fight, that is, keep the leadership position, or to flee, which
cedes market leadership to another product.
If the leader chooses to fight, it can attempt to either simply maintain the current position (a
dangerous approach, since it is difficult to know exactly what it takes to maintain the position)
or keep enhancing the product or service.
Why would the leader flee? It is possible that the new entrants in the market are just too strong
(as indicated by the competitive analysis) and raise the stakes for competing to a level the
incumbent cannot sustain. For example: MySpace had a first mover advantage as the first social
networking site but had to shut its business soon after Facebook entered the scene.
Other options are to attempt to reposition the product so it can be a strong number two or
three brand, which can be accomplished through resegmenting the market, or to retreat to a
specific niche. For example: Blackberry could not maintain its market share once smartphones
entered the market. Despite attempts to innovate and release touchscreen models, BlackBerry
could not regain its market dominance. Eventually, it was forced to reposition itself as a niche
player, focusing on security software and enterprise services rather than competing in the
mainstream smartphone market.

Follower:

The follower also has a number of options, the choice of which depends on the strength of the
leader, its own strength, and market conditions.
One option is to exit quickly and invest in some other product that has better long-term
potential.
A follower can also be content to be a strong number two or three by protecting its position.
The riskiest move is to try to leapfrog the competition. Some companies do this successfully
through pure marketing muscle and an imitative product. For example, Johnson & Johnson
often allows another company to establish the market and then becomes number one through
superior marketing.

Product maturity strategies

Product categories exhibiting fierce battles for market share and access to distribution channels,
large amounts of money spent on trade and customer promotion, and aggressive pricing are
often in this stage of the product life cycle.

Characteristics of the stage:

1. The sales curve has flattened out and relatively few new buyers enter the market.
2. While some untapped market potential usually remains, it is difficult and/or
expensive to reach.
3. Buyers are sophisticated and well versed in product features and benefits.
4. Market segments are also well defined, and finding new ones that are untapped is a
struggle.

Strategy options:
The general strategies in mature markets are similar to those in growth markets, and depend on
the relative market position of the product in question.
If the product manager is committed to a product for an extended time period, the objective is
usually to invest just enough money to maintain share.
An alternative objective is to “harvest” the product, i.e., cut back expenditure of all kinds on
the product in order to maximise profit from it, even if in doing so it continues to lose market
share.
Other firms have alternatives that depend on the leader’s strategy.
If the leader is harvesting the product, the number one position may be left open for an
aggressive number two brand.
If the leader is intent on maintaining that position for a long time (many leading consumer
packaged goods brands have been number one for over 50 years!), the follower may choose to
be a profitable number two or to exit the category.

Product decline strategies

Markets reach the decline stage for a variety of reasons. Perhaps the most obvious is
technological obsolescence. However, shifts in customer tastes also can create declining
categories.

Characteristics of the stage:

1. Sales of the category are dropping.
2. The number of competitors is also declining.

Strategy options:
The clearest strategy is to try to be the last in the market (maintain the product and wait for
competitors to withdraw from the market first). By being last, a product gains monopoly rights
to the few customers left. This, of course, results in the ability to charge commensurately
high prices.

Some alternate strategies that can be used are:

- reduce your promotional expenditure on the products
- reduce the number of distribution outlets that sell them
- implement price cuts to get the customers to buy the product
- find another use for the product
- harvest the product or service before discontinuing it
Another option is for your business to discontinue the product from your offering. You may
choose to:
- sell the brand to another business
- significantly reduce the price to get rid of all the inventory
 RETAIL MANAGEMENT
Retailing encompasses the business activities involved in selling goods and services to
consumers for their personal, family, or household use. It includes every sale to the final
consumer—ranging from cars to apparel to meals at restaurants to movie tickets. Retailing is
the last stage in the distribution process from supplier to consumer.
There is a tendency to think of retailing as primarily involving the sale of tangible (physical)
goods. However, retailing also includes the sale of services and digital goods. And this is a big
part of retailing! A service may be the shopper’s primary purchase (such as a haircut) or it may
be part of the shopper’s purchase of a good (such as furniture delivery). Sales in many physical
goods—product categories such as books, movies, and music—are now dominated by their
digital applications in the format of downloads. Obviously, retailing does not have to involve
a store. Mail and phone orders, direct selling to consumers in their homes and offices, Web
transactions, kiosks, and vending machine sales all fall within the scope of retailing. In fact,
retailing does not even have to include a “retailer.” Manufacturers, importers, nonprofit
firms, wholesalers, and individual artisans on online platforms, such as Etsy.com, act as
retailers when they sell to final consumers.

Characteristics of Retailing

a. Retailers collect an assortment of goods from various sources, buy in large quantity,
and sell in small amounts. This is the sorting process.
b. Retailers communicates both with customers and with manufacturers and
wholesalers. Shoppers learn about the availability and characteristics of goods and
services, store hours, sales, and so on from retailer ads, salespeople, and displays.
Manufacturers and wholesalers are informed by their retailers with regard to sales
forecasts, delivery delays, customer complaints, defective items, inventory turnover,
and more. Many goods and services have been modified due to retailer feedback.
c. For small suppliers, retailers can provide assistance by transporting, storing, marking,
advertising,
and pre-paying for products.
d. Retailers also complete transactions with customers. This means having convenient
locations, filling orders promptly and accurately, and processing credit purchases.
Some retailers also provide customer services such as gift wrapping, delivery, and
installation.

Retailing Formats

- Single-Channel Retailing
When it begins, a retailer often relies on single-channel retailing, whereby it sells to
consumers through one retail format. (example, only store: small-scale kirana stores; only web:
Bewakoof.com)
That one format may be store-based (a corner shoe store) or nonstore-based (catalog retailing,
direct selling, or Web retailing).
As the firm grows, it may turn to multichannel retailing, whereby a retailer sells to consumers
through multiple retail formats.

- Traditional Multichannel Retailing vs Omnichannel Retailing

Multichannel retailing is associated with a retailer having separate channels—store and Web—
as alternatives either of which can be used by shoppers to make a purchase. However, important
linkages among these channel alternatives may not exist.
For example, consumers may not be able to view store inventories online, can be charged
different prices in each channel, cannot arrange for store pickup on a Web order, may not return
Web purchases to a local store, and a store and Web site can have separate customer databases.

In contrast, omnichannel retailing delivers a consistent, uninterrupted, and seamless

brand experience regardless of channel or device (store, laptop computer, iPad, smartphone,
etc.). Omnichannel retailing assumes that there are various shopping journey maps that use
mobile, Web, and stores quite differently.
As an example, product discovery can be Web or social media– based, information search can
use the Web or in-store observation, and consumers can purchase an item via a mobile device
but seek to return it to a store. Omnichannel retailing is by nature seamless and integrated
optimizing efficiency and enhancing customer experiences.

- Store-based vs non-store-based Retailing

Retailers—single-channel, multichannel, and omnichannel—engage in non-store retailing
when they use strategies that are not store-based to reach consumers and complete transactions.

Store- based Retail Formats

Department stores: These stores sell a wide variety of products, including household items,
under one roof. Each product line is operated as a separate department, managed by specialists.

Every department has an individual specialization of merchandise, and each such store is
handled separately in terms of location, management, and accounting.

There’s the latest trend in department stores wherein sections for recreational equipment,
sports, and automotive aspects are included along with services such as insurance, travel
advice, and income tax preparations.

Factory outlet stores: These stores sell only products produced by one brand.
Pop-up stores: These temporary stores are operated to provide experiences and are often only
open for a few weeks.
Specialty stores: These chain stores are dominant in their product category and offer a large
selection of merchandise at low prices.

They are usually small in size, generally offering limited product categories but offering a
high level of service.
Be it a drug store, a DIY store, or likewise, speciality stores cater to niche demographics and
benefit from garnering widespread attention within those communities. They might not be
multi-purpose, but they are best at what they do.

Discount stores: These stores sell products at lower prices than the full retail price. They keep
costs down by purchasing in bulk and distributing efficiently.
Discount house is a type of retail format which operates at low cost and almost no customer’s
service. These stores are large in size, open for public and advertised heavily. They sell a wide
range of products of well-known brands, housewares, appliances, sporting goods, house
furnishing, toy and automotive services, and clothing, etc.
These stores operate on a self-service basis and no customer service is provided in them.
Discount houses can be of different types such as small store, Full line limited service, catalogs
type order offices. The stocks in discounts houses are bought from both wholesalers as well as
manufacturers.

Supermarkets: These are self-serving stores selling a wide range of food and other products.
Supermarkets usually have at least four basic departments: dairy produce, self-service grocery,
meat, and household items.
They are either operated by owners or given on lease. In supermarkets, you will see goods
displayed in bulk, most of all at low prices. They are typically located in a nearby housing area
to facilitate easy access.
Features of supermarkets:
- Goods are displayed in bulk.
- Supermarkets are located in nearby housing areas so that people have easy access.
- These stores offer a wide range of products, low prices, nationally advertised brands,
and also convenient parking.
- It follows the “cash and carry” policy.
- Minimum customers service is provided in these stores as these stores work on the basis
of self- service.

Mom and Pop Stores: A small, family-owned, independent retail format that often faces tough
competition from well-established big businesses. Mom-and-pop stores can rarely afford fancy
product marketing. It can be a bookstore, an insurance agency, a restaurant, an automotive
repair shop, or pretty much anything. With the demand for personalized products and services
at an all-time high, the popularity and recognition of mom-and-pop stores have been on a steady
rise.
Franchising: Franchising involves a business person who owns a business or a franchiser and
a franchisee who runs the business. The companies can take up the name of an already-
established business to run their own business, given the franchiser’s conditions are met.
The franchiser decides the site location, management, training, financing, marketing,
promotions, and record-keeping in most cases. He has the right to advise on standard operating
procedures and the trade name of the franchise’s business.
Franchising is an excellent way to conserve capital, lower marketing costs and fixed expenses,
and quickly establish a distribution system in no time. The only downside is the lack of liberty
for the franchise.
Non-Store Based Retailing
Online retailers: These stores sell products solely through the internet. Online retailing is
when a firm offers products on their website and people and organizations purchase from the
website of this company. In this way, both entities engage in the online transaction also known
as internet marketing or electronic transactions.
The number of online retail firms are rapidly increasing such as Pets Mart, Busy.com,
CDNow.com, Amazon.com, etc. Some online retailers launch general products form retailers
such as Wal-Mart and Target.
On the other hand, there are some firms like “Amazon” which uses different methods broaden
their business. it takes some investments to set up online operations. Online retailers use
attractive advertising to attract shoppers and retain them. sometimes, online marketing proves
to be expensive and unprofitable because of the offers and discount offered by online marketers.

Telemarketing: Telemarketing, also known as telephone selling, involves a salesperson

initiating a sale over the call to a prospective buyer and closing it over the same phone call.
Through cold canvassing from a directory, telemarketing agents can attempt to sell a diverse
range of products, from magazine subscriptions, club memberships, and pest control devices
to credit cards. The transaction is over the call and does not involve real-time store visits.
Telemarketing is often criticized by the broad customer base for violating their right to privacy.
This has resulted in numerous places restricting telemarketing activities, though telemarketers
are still rising.
Many people like the convenient concept of phone shopping. With the introduction of
computers that can dial automatically, deliver pre-recorded messages, or record information,
the cost of selling through telephones has also gone down considerably.

Automatic Vending
This one is interesting. It requires no contact between a seller and a buyer. Not even a delivery
executive! Through automatic vending machines, products from well-known brands can be
sold with great turn-overs.
Automatic vending machines are usually used for the 4 Cs- coffee, cigarettes, cold drinks, and
candies. This is a great way to attract sales at places with no stores nearby.
Vending machines are installed in colleges, schools, public facilities, and workplaces. It might
be expensive to operate these machines since they require repeated refilling and maintenance.
Moreover, frequent vending machine scams often keep entrepreneurs from spending in this
retail format. However, technological advancement is touted to take this form of retail forward,
with fewer casualties related to out-of-stock products, out-of-order machines, and general
theft.

Emerging trends in retailing

Emerging trends in retailing reflect the rapid shifts in technology, consumer behavior, and
market dynamics. Here are some of the key trends currently shaping the retail landscape:
1. Omnichannel Retailing
Retailers are increasingly integrating their physical stores with online channels, creating
seamless shopping experiences across all touchpoints. Consumers can browse online, make in-
store pickups, or return items purchased online at a physical store. This trend emphasizes
convenience and consistency across mobile apps, websites, and brick-and-mortar outlets.
2. Personalization & AI-Driven Recommendations
Artificial Intelligence (AI) is being leveraged to offer personalized shopping experiences.
Retailers are using data from customers' browsing habits, purchase history, and preferences to
recommend products. This extends to personalized marketing, pricing, and offers that align
with customer interests.
3. Sustainability and Ethical Retail
Consumers are increasingly demanding eco-friendly products and transparent supply chains.
Retailers are responding by promoting sustainable sourcing, reducing packaging waste,
offering recyclable products, and showcasing ethical practices like fair trade and cruelty-free
production.
4. Subscription Models
Subscription-based retail models, like Dollar Shave Club or Stitch Fix, are becoming popular,
offering customers regular deliveries of curated products. These models encourage customer
loyalty and provide retailers with predictable revenue streams.
5. Augmented Reality (AR) and Virtual Reality (VR)
AR and VR are transforming how customers interact with products. For example, customers
can virtually try on clothes, preview furniture in their homes, or see how makeup looks on their
skin without visiting a physical store. This technology enhances customer engagement and
reduces product return rates.
6. Contactless Payments and Cashless Stores
The COVID-19 pandemic accelerated the adoption of contactless payment methods like digital
wallets (Apple Pay, Google Pay) and QR code payments. Some stores have adopted completely
cashless systems where customers can check out via mobile apps without interacting with a
cashier (e.g., Amazon Go stores).
7. Direct-to-Consumer (DTC) Expansion
Brands are increasingly bypassing traditional retail channels and selling directly to consumers
via their websites or dedicated stores. DTC brands like Warby Parker and Glossier have built
strong online presences and are expanding into physical retail to strengthen their customer
relationships.
8. Social Commerce
Social media platforms like Instagram, TikTok, and Facebook are now integrated with
shopping features that allow users to purchase products directly through the apps. Influencers
and social media ads play a huge role in driving this trend, blending entertainment with
seamless shopping.
9. Same-Day Delivery & Micro-Fulfillment
Fast shipping options, such as same-day or next-day delivery, are becoming a competitive
advantage for retailers. Retailers are using micro-fulfillment centers and partnerships with
delivery services to ensure quick delivery times.
10. Livestream Shopping
Popularized in Asia, livestream shopping combines video content with e-commerce, allowing
hosts to showcase products in real-time and viewers to make purchases instantly. It is gaining
traction worldwide, especially for fashion, beauty, and tech products.
11. AI-Powered Inventory Management & Automation
Retailers are leveraging AI to optimize their supply chains, automate inventory management,
and predict demand. Automation in warehouses (e.g., robotics) and the use of AI-driven
analytics are improving efficiency and reducing costs.
12. Experiential Retail
To compete with online shopping, physical stores are transforming into destinations that offer
more than just products. Retailers are creating in-store experiences such as workshops, events,
and personalized services to build stronger customer engagement and loyalty.
13. Secondhand and Resale Marketplaces
With growing interest in sustainability, the resale market for secondhand goods is booming.
Retailers like ThredUp and Poshmark are capitalizing on this trend, while established brands
are launching their own resale platforms to promote circular consumption.
14. Voice Commerce
Voice-activated shopping through devices like Amazon Alexa and Google Assistant is on the
rise. Consumers can use voice commands to order products, create shopping lists, or check
product information, simplifying the buying process.
15. Blockchain for Transparency
Retailers are starting to use blockchain technology to enhance transparency in the supply chain.
Customers can trace the origin of products, verify authenticity, and check compliance with
ethical or environmental standards.
These trends are likely to continue evolving as technology advances and consumer expectations
change. Retailers that adapt to these trends will be better positioned to thrive in the competitive
landscape.
 SALES MANAGEMENT

Sales management refers to “the planning, direction, and control of personal selling, including
recruiting, selecting, equipping, assigning, routing, supervising, paying, and motivating as
these tasks apply to the personal salesforce.”
- America Marketing Association

Responsibilities of Sales Managers:

- Sales managers are responsible for organizing the sales effort, both within and outside
their companies.
- Within the company, the sales manager builds formal and informal organizational
structures that ensure effective communication not only inside the sales department but
in its relations with other organizational units.
- Outside the company, the sales manager serves as a key contact with customers and other
external publics and is responsible for building and maintaining an effective distribution
network.
- They are responsible for participating in the preparation of information critical to the
making of key marketing decisions, such as those on budgeting, sales quotas, and
territories.
- They participate—to an extent that varies with the company—in decisions on products,
marketing channels and distribution policies, advertising and other promotion, and pricing.
- Employing and onboarding new hires and organizing sales training programs
Thus, the sales manager is both an administrator in charge of personal-selling activity and a
member of the executive group that makes marketing decisions of all types.

Sales management skills for success

Sales managers need to master a number of sales management skills, including:
Planning: Setting targets, assigning areas of coverage, designing lead generation tactics
Recruitment: Hiring the best team for the job
Training: Keeping sales staff up-to-date with professional development and training in new
products, the competition and potential lead sources.
Directing: Leading the team day-to-day and being on-hand for feedback and guidance
Evaluating: Constantly fine-tuning the sales strategy to meet clients’ needs
Assessment: Analysing the performance of both tactics and the team, and ensuring that sales
staff are deployed efficiently.
Compensation: Keeping staff motivated and working hard with the right bonus incentives and
realistic but ambitious targets.
When all these elements are in place, sales managers can help their team achieve their targets
and have a positive impact on the bottom line.
The benefits of effective sales management include:
- Increased sales revenue and profitability
- Improved sales forecast reliability, thereby reducing revenue variability
- Better satisfaction and loyalty both from customers and staff
- Reduced staff turnover and therefore reduced recruitment and retention costs
- Increased productivity per staff member

Sales Management Process

1. Describing the Personal Selling Function

Because sales managers are responsible for managing the personal selling function, they must
thoroughly understand it.
Personal selling, a crucial part of marketing, involves interpersonal communications
between buyers and sellers to initiate, develop, and enhance customer relationships. In the best
sales organizations, salespeople earn the trust of their customers and utilize selling strategies
that satisfy customer needs. In such organizations, salespeople help create customer value
and, over time, increase the value delivered to customers.
In terms of money spent, personal selling is the most important part of marketing
communications, especially in business-to-business markets where purchasing situations often
involve complex technical products, large dollar amounts, professional buyers, and multiple
parties who influence purchase decisions.

2. Defining the Strategic Role of the Sales Function

Many firms in the contemporary business world consist of collections of relatively autonomous
business units that market multiple products to diverse customer groups. These multiple-
business, multiple-product firms must develop and integrate strategic decisions at different
organizational levels which are corporate, business, marketing, and sales levels.
Corporate strategy consists of decisions that determine the mission, business portfolio, and
future growth directions for the entire corporate entity.
A separate business strategy must be developed for each strategic business unit (SBU) in the
corporate family, defining how that SBU plans to compete effectively within its industry.
An SBU is a designated unit within a corporation that operates like an individual business.
SBUs typically consist of a single product or line of related products marketed to defined
market segments. Most SBUs include all of the basic business functions with managers
responsible for the performance of each function and the SBU. Because an SBU typically
consists of multiple products serving different markets, each product/market combination
requires a specific marketing strategy.
Each marketing strategy includes the selection of target market segments and the development
of a marketing mix to serve each target market. A key consideration is the role that personal
selling will play in the marketing communications mix for a particular marketing strategy.
A sales strategy is designed to execute an organization’s marketing strategy for individual
accounts. For example, a marketing strategy consists of selecting a target market and
developing a marketing mix. The major purpose of a sales strategy is to develop a specific
approach for selling to individual accounts within a target market. A sales strategy capitalizes
on the important differences among individual accounts or groups of similar accounts.
A sales strategy is a plan that helps a company sell its products and services by guiding sales
teams on how to attract new customers and increase revenue.

3. Developing the salesforce

The sales strategy, sales organization, and salesforce deployment decisions produce the basic
structure for personal selling efforts and can be considered similar to the “machine” decisions
in a production operation. Sales managers must also make a number of “people” decisions
(including recruitment, selection, and training of salesforce) to ensure that the right types of
salespeople are available and have the skills to operate the “machine” structure effectively and
efficiently.

4. Directing the salesforce

Hiring the best salespeople and providing them with the skills required for success is one thing;
directing their efforts to meet sales organization goals and objectives is another. Sales managers
spend a great deal of their time in motivating, supervising, and leading members of the
salesforce.
Motivational activities include all monetary and non-monetary rewards used by organizations
in order to facilitate better productivity and efficiency from their salesforce
Supervisory activities are concerned with day-to-day control of the salesforce under routine
operating conditions.
Leadership activities focus on influencing salespeople through communication processes to
attain specific goals and objectives.

5. Determining Salesforce Effectiveness and Performance

Sales managers must continually monitor the progress of the salesforce to determine current
effectiveness and performance. This is a diffcult task, because these evaluations should address
both the effectiveness of units within the sales organization and the performance of individual
salespeople.

Types of Selling according to the Salespeople Involved

Within the role of personal selling, there are various types of selling functions. Many
organizations utilize more than one type of personal selling. Various sales personnel within an
organization may fulfill several of the roles. The type of personal selling is dependent on the
nature of the product as well as the customer. These are listed below.

Selling Function

Order Takers Order Creators Order Getters

Inside Order Missionary Frontline Sales Support

taker Salespeople Salespeople Salespeople

Outside Order New Business Technical Support

Taker Salespeople Salespeople

Delivery Organizational
Merchandisers
Salespeople Salespeople

Consumer Trade
Salespeople Salespeople

Service
Salespeople

1. Order Takers

An Order Taker can be defined as a sales person who collects orders but does not attempt to
find new customers or persuade existing customers to increase the size or frequency of their
orders. Rather, they are only supposed to book customers’ orders and pass on the information
to the company for delivery arrangements. Order takers should provide accurate information
to the company and customer about the booking of orders and date of delivery.

1. Inside order-takers: They are retail sales assistants (like sales assistants in Vishal
Megamart). The customer has full freedom to choose products without the presence of
a salesperson. The sales assistant’s task is purely transactional – receiving payment and
passing over the goods. Another form of inside order-taker is the telemarketing sales
team who support field sales by taking customers’ orders over the telephone.
2. Outside order-takers: They travel to customers. Use laptop computers to improve
tracking of inventory and orders etc. These salespeople visit customers, but their
primary function is to respond to customer requests rather than actively seek to
persuade. They are being replaced by the more cost-efficient telemarketing teams who
call customers and book their orders.
3. Delivery salespeople: The salesperson’s task is primarily concerned with delivering
the product. In India, milk, newspapers and magazines are delivered to the door. There
is little attempt to persuade the household to increase the milk order or the number of
newspapers taken: changes in order size are customer-driven. Winning and losing
orders is dependent on the reliability of delivery and the personality of the salesperson.

2. Order-Creators/Missionary Salespeople

Order creators are the salespeople who help in pulling the customer toward the product.
Missionary salespeople are the best order creators. Missionary salespeople do not take purchase
orders. Rather, they are involved in dissemination of information about the product. They help
in increasing the goodwill of the company and educate customers about the product. They
do not call the ultimate buyers but approach to those who make advices to the buyer
about the product. For example, A salesperson from a book publisher calls a professor urging
them to use certain books, but the actual buyers are the students who buy and use the books.
Similarly, medical representatives approach to the doctors, the doctor does not use the drugs
but advises patients to buy the drugs.

3. Order-Getters

An Order Getter can be defined as a sales person who increases the firm’s sales revenue by
acquiring orders from new customer and more orders from the existing customers. An order
getter persuades a customer to make a purchase. He is a frontline salesperson, and is in a typical
selling job. He is supported by technical support staff and merchandisers.

Frontline Salesperson

1. New business salespeople:

Their selling task is to win new businesses by identifying and selling to prospects. These
salespersons should maintain good relations with current customers who can provide
leads. They should also be prepared to make a lot of cold calls and visits.

2. Organizational salespeople:
They maintain close long-term relationships with organizational customers. These
salespersons should be very sensitive to customers’ problems on a day-to-day basis.
They have to act as mediators between the customer and the functional departments of
their own company. The selling job may involve team selling where salespeople are
supported by product and financial specialists.

3. Consumer salespeople:
They sell to individual customer’s products and services such as cars, insurance. These
salespeople have to be sensitive to customers’ time and they should not be insistent
even when customers have declined to buy.

Sensing that a customer does not want the product is as important as sensing that he
may want the company’s product. A consumer salesperson should be always wary of
putting off the customers by being too persistent. Exemplary behaviour is imperative
for consumer salespersons.

Sales Support Salespeople

1. Technical support salespeople: This type of salesperson provides sales support to

front-line salespeople. When a product is highly technical and negotiations are
complex, a salesperson may be supported by product and financial specialists who can
provide the detailed technical information required by customers.
2. Merchandisers: These people provide sales support in retail and wholesale selling
situations. Orders may be negotiated nationally at head office, but sales to individual
 outlets are supported by merchandisers who give advice on display, implement sales
promotions, check stock levels and maintain contact with store managers.
3. Trade Salespeople: Spend much time helping customers, especially in retail stores,
Restock the shelves, set up displays.
4. Service Salespeople: Interacts with customers after the sale is complete.

Types of Selling

Selling comes in various forms, depending on the context, product type, customer base, and
relationship with the buyer. Below are some of the main types of selling:

1. Transactional Selling

This is the most basic form of selling where the focus is primarily on the single transaction
rather than building long-term relationships. The goal is to close the deal quickly, with minimal
interaction after the sale. It’s often used in retail environments or for low-value products.
• Example: Selling a one-time-use product like a phone charger in a store.

2. Solution Selling

Here, the seller focuses on understanding the customer’s specific needs or problems and offers
a product or service that provides a solution. It's about problem-solving rather than just pushing
a product.

• Example: A software company analyzing a business’s inefficiencies and selling a

custom ERP (Enterprise Resource Planning) solution.

3. Consultative Selling

Consultative selling involves acting as an advisor to the buyer. The salesperson works closely
with the client, providing expertise and recommendations. It requires deep understanding of
the customer’s business and long-term partnership building.

• Example: A financial advisor recommending investment options after assessing the

client’s financial situation and goals.

4. Relationship Selling

This type of selling emphasizes building and maintaining long-term relationships with
customers. It involves frequent, personalized interactions and is aimed at customer retention,
loyalty, and repeat business. Trust and rapport are key components.
• Example: A luxury car salesperson maintaining regular contact with high-end clients,
sending updates about new models or personalized services.
5. SPIN Selling
SPIN Selling is an abbreviation of four types of questions (Situation, Problem, Implication,
and Need-payoff). It emphasizes that the quality of questions asked by a salesperson are critical
to a successful sales presentation. The right questions posed by the salespeople could fasten up
the selling process, whereas the wrong questions could delay or kill the sales presentation.
Situation Questions. Deal with buyer’s existing situation and form the starting point of the
discussion between the customer and sales person.
Problem Questions. These questions deal with the buyer’s pain point. The salesperson asks
questions about problems, difficulties, or dissatisfactions of the customer. These questions help
to uncover the implied needs of the customers. For example: Which parts of the equipment
create errors?
Implication Questions. These questions are used to discuss the implications of a particular
problem uncovered with the problem questions. Salespersons ask these questions to develop
the seriousness of the problem and to increase the customer’s motivation to change. For
example: What was the potential loss as a result of the slow speed of the system?
Need-payoff Questions. The questions help to focus the buyer’s attention on the solution. Need-
payoff Questions (NQs) contribute to creating a problem-solving environment where attention
is focused on solutions and actions rather than problems and implications. For example: How
do you think a safe anti-allergic medicine will help you?

5. Inside Selling

Inside selling refers to selling done remotely, typically over the phone, email, or online.
Salespeople interact with potential customers from inside the office, and it's common in
industries where the physical presence of a salesperson isn’t required.
• Example: Telemarketing or online customer service representatives selling internet
subscriptions.

6. Outside (Field) Selling

In contrast to inside selling, outside selling involves salespeople meeting with clients face-to-
face, often traveling to the customer’s location. It is common in B2B (business-to-business)
selling or industries where personal interaction is necessary to close high-value deals.
Example: A pharmaceutical sales rep visiting doctors and hospitals to pitch new drugs.

7. B2B Selling (Business-to-Business)

This type of selling involves selling products or services to other businesses rather than
individual consumers. B2B selling typically requires longer sales cycles, relationship-building,
and in-depth knowledge of the industry.
Example: A company selling industrial equipment to manufacturing firms.

8. B2C Selling (Business-to-Consumer)

B2C selling involves direct sales to individual consumers. It’s typically faster and less complex
than B2B selling, with a focus on appealing to emotions, desires, and quick decision-making.
• Example: Selling fashion products through an e-commerce site like Amazon.

9. High-Pressure Selling

In high-pressure selling, the salesperson uses aggressive tactics and persuasion to push the
customer into making a quick decision. While sometimes effective for short-term gains, it can
harm long-term relationships and damage the company’s reputation.
• Example: A car salesperson who uses time-limited offers to urge customers to make
immediate purchases.

10. Cold Calling

Cold calling involves contacting individuals or businesses without prior interaction to sell a
product or service. This method often has lower success rates because customers are not
expecting the call or may not be interested in the product.

• Example: A real estate agent calling homeowners to offer property listings or services.

11. Social Selling

Social selling is the practice of using social media platforms to interact with potential buyers,
build relationships, and eventually sell products or services. It’s often subtle and focuses on
relationship-building rather than direct selling.

• Example: A business professional using LinkedIn to connect with prospects and share
industry insights before offering services.

12. Tactical Selling

Tactical selling is about using specific, pre-planned strategies to close deals. It often involves
a detailed understanding of the buyer’s objections and using persuasive techniques to overcome
them.

• Example: A software salesperson who uses data on how their solution saved a similar
client money to address a buyer's concern about cost.

13. Cross-Selling and Upselling

• Cross-Selling: This involves offering additional products that complement the original
purchase.
o Example: A fast-food cashier asking if you want fries with your burger.
• Upselling: This involves encouraging customers to purchase a more expensive version
or add-ons.
 o Example: A salesperson at an electronics store offering a premium version of a
laptop with better features.

14. Direct Selling

In direct selling, products are sold directly to consumers outside of a traditional retail
environment, often through personal interactions or home parties.

• Example: A representative from Avon or Amway visiting homes to sell products

directly to customers.

Each type of selling method is suited to different industries, products, and customer
preferences, and understanding the appropriate one can lead to more effective sales strategies.
DISTRIBUTION MANAGEMENT

Distribution refers to the act of carrying products to consumers. It is also used to describe the
extent of market coverage for a given product.

Distribution management refers to the process of overseeing the movement of goods from
supplier or manufacturer to point of sale. It is an overarching term that refers to numerous
activities and processes such as packaging, inventory, warehousing, supply chain, logistics,
transportation, and customer service.

Distribution Management Strategies

• Direct distribution
In the direct distribution strategy, manufacturers sell and send their products directly to
consumers. They may accept consumer orders through an e-commerce website, catalog or over
the phone. Once the manufacturer receives an order, they ship the product directly to the
consumer's preferred address. Using the direct distribution strategy can benefit you by
providing you with access to more data about your consumers and target audience. It can
also give you more control over the entire consumer experience.

• Indirect distribution
An indirect distribution strategy involves an intermediary that assists with the logistics and
placement of products to ensure they reach customers in a timely manner and at an optimal
location based on the consumer's habits or preferences. The actual manufacturer of the product
may not have any direct interactions with the end-user or consumer. For example, a consumer
might purchase a product from a large, third-party retailer where the manufacturer sends their
products. Using the indirect distribution strategy can benefit you by improving the overall
consumer experience, granting you access to more locations and increasing brand
awareness. The different types of intermediaries are:

- Wholesaler: A wholesaler purchases products from a manufacturer in bulk and then

sells them to retailers. They may receive a discount for purchasing a large quantity of
products at once, which allows them to make a profit off of the products when they
resell them.
- Retailer: Retailers may purchase products directly from a manufacturer or from a
wholesaler. They may resell the products directly to consumers through their physical
storefronts, e-commerce websites, social media platforms, catalogs or over the
phone.
- Franchisor: Instead of building their own physical storefronts, manufacturers may sell
the rights to their product or service and their brand name to an individual so they can
open a franchise location. While the individual owns the franchise, the manufacturer
still maintains a significant level of control through contractual agreements.
 - Distributor: A distributor partners with a manufacturer to help them transport their
products to retailers or other endpoint locations. Manufacturers may choose to work
with a designated distributor to save on logistics and transportation.

• Intensive distribution
In the intensive distribution strategy, companies place their products in as many retail locations
as possible. Products that require minimal effort to sell typically perform the best with this type
of distribution strategy. This strategy is suitable for inexpensive products that customers
purchase routinely. For example, a company that produces breath mints may distribute to
grocery stores, petrol pumps, vending machines and other popular retail locations. Using the
intensive distribution strategy can help the manufacturer improve brand awareness, expand
into new markets and acquire new customers.

• Exclusive distribution
Through the exclusive distribution strategy, manufacturers make a deal to sell their product
only to one specific retailer. They may also choose to sell their products only through their own
brand via their website or physical storefronts. For example, if you sell luxury cars, your
customers may only be able to purchase them directly from one of your company's stores. This
strategy works well for expensive, highly sought-after items. Using the exclusive distribution
strategy can help the brand increase revenue margins, enhance product value and improve
brand loyalty. For example, the manufacturers of Ford vehicles sell only to authorized Ford
dealerships, and producers of Gucci-brand goods only sell to a narrow slice of luxury goods
retailers.

• Selective distribution
The selective distribution strategy is a hybrid of intensive and exclusive distribution.
Companies who use this strategy distribute their products to more than one location, but they
are more selective about which retailers they work with than companies who use the intensive
distribution strategy. For example, a high-end clothing company may choose to sell its products
in its own stores and through a handful of carefully selected boutique shops instead of
distributing its products to large chain retailers. Using the selective distribution strategy can
provide the manufacturer with more control over the customer experience and brand
messaging. It can also help them enhance their product's value and increase opportunities for
consumers to purchase their product.

Need for Distribution Channels

Improved Economic Efficiency: In absence of intermediaries, a producer will have to
maintain an unsustainably large number of interactions with a large number of customers. Such
interactions are not only considered unsustainable, but also believed to create inefficiency in
the transaction process. Intermediaries reduce the complexity of the exchange system, thereby
facilitating efficient transactions.
Assortment of goods and services: Manufacturers typically produces large quantity of only a
limited variety of goods, whereas consumers usually desire only a limited quantity of a wide
variety of goods, Therefore, intermediaries are required to smoothen the flow of goods and
services by engaging themselves in the sorting function.
Routinized transactions: The cost of distribution is minimised if transactions are routinized;
locations from where the cartons are broken down into boxes to be sent to various smaller
localities from where again the products are probably sent to the various selling points in still
smaller quantities so that the consumers can buy goods in quantities of one or two. The breaking
down of the bulk happens simultaneously with the consolidations of the payments from the
consumers’ end to the manufacturer’s end. Transactions at the consumers’ end happen in small
amounts and if all the transactions are to be processed by just one entity, it will become an
enormous task.
Identify opportunities and threats: Modern distribution management encompasses more than
just moving products from point A to point B. It also involves gathering and sharing relevant
information that can be used to identify key opportunities for growth and competitiveness in
the market. Most progressive companies now use their distribution forces to obtain market
intelligence which is vital in assessing their competitive position.

Functions of Intermediaries:
The important function performed by middlemen are
• Sorting: Middlemen procure supplies of goods from a variety of sources, which is often
not of the same quality, nature and size. These goods are sorted into homogeneous
groups on the basis of the size or quality.
• Accumulation: This function involves accumulation of goods into larger homogeneous
stock, which help in maintaining continuous flow of supply.
• Allocation: Allocation involves breaking homogeneous stock into smaller, marketable
lots to sell them to different types of buyers.
• Assorting: Middlemen build assortment of products for resale. There is usually a
difference between the product lines made by manufacturers and the assortment or
combinations desired by the users. Middlemen produce variety of goods from different
sources and deliver them in combinations, desired by customers.
• Product Promotion: Middlemen also participate in some sales promotion activities,
such as demonstration, special display, contests etc. to increase the sale of products.
• Negotiation: Channels operate with manufacturers on the one hand and customer on
the other. They negotiate the price, quality guarantee and other related matters with
customers, so that transfer of ownership is properly affected.
• Risk Taking: In the process of distribution of goods, the merchant middlemen take title
of the goods and thereby assume risks on account of price and demand fluctuations,
spoilage, destinations etc.
Factors That Influence Distribution Management

Many things can influence distribution management. The five most common are:
 1. Unit perishability – if it’s a perishable item then time is of the essence to prevent loss.
2. Buyer purchasing habits – peaks and troughs in purchasing habits can influence
distribution patterns and therefore varying distribution needs that can be predicted,
3. Buyer requirements — e.g. changes in a retailer’s or manufacturer’s just in time
inventory demands,
4. Product mix forecasting – optimal product mixes vary according to seasons and weather
or other factors
5. Truckload optimization – relies on logistics and fleet management software to ensure
every truck is full to capacity and routed according to the most efficient path. Shipping
optimization is another factor that can impact effective distribution management. For
example, it is more cost-efficient for a company to ship all of the goods going to one
destination together, such as in a single truckload, compared to creating multiple, less
than capacity shipments to the same destination.
6. Othe factors: Potential changes in government regulations regarding transportation
or shipping are another factor that distribution management teams must create plans for
dealing with. Product recalls or packaging problems can also affect distribution.
Buyers may derail efficient distribution by doing things such as making changes to
orders or to the address for delivery of goods.
Distribution Management System
When properly conceived, a DMS can become the backbone of the entire distribution effort
that ultimately puts the products up on retail shelves for consumers. Elements like promotions,
inventory management, invoicing, insights, tracking, and more are part of DMS functions. It
also allows brands to proactively prevent stock outages and overstocking via real-time data
collection from distributors.

Typically, a DMS has a database for storing information on retailers, etc., along with various
tools for analyses, report generation, and inventory management. Among the plethora of
benefits that a DMS offers, perhaps the most striking is the ability of real-time monitoring of
the entire supply chain from manufacturing to retail. What this does is arm brands with the
power to make intelligent and effective decisions on strategizing, resource allocation, and
problem solving.

LOGISTICS MANAGEMENT
Logistics Management is conventionally defined as the process that has the responsibility to
ensure the delivery of the right product at the right place at the right time in right quantities and
quality to the right customer at the right cost.
The objective of logistics management is to facilitate an efficient transportation or timely
movement of products from one place to another with optimum inventory level consistent
with customer service goals at lowest possible total logistics cost.

Logistics are of two types:

Inbound Logistics: This takes care of the delivery of raw materials whenever required.
Outbound Logistics: This takes care of the delivery of the finished goods and services to the
customers from the manufacturer’s end. This is a critical activity as it directly links the
company to its consumers and comprises a set of activities that complements the marketing
function of the firm.
How does Logistics work?

• A buyer and a seller of the product have agreed to sell and buy the product at certain
conditions that include delivery price and time.
• As per the agreed conditions, transport and/or logistics service provider will be hired (by
the buyer or seller depending on the sales terms) to move cargo from the seller’s premises
to the buyer’s premises. When it is in transit or under logistics service, the “product” will
be termed as “cargo” or “goods.”
• As per the agreement, the cargo may need to be stored in somewhere along the transit; this
service is termed as ‘warehousing’ and depending on the necessity and type of cargo, the
warehouse location, size, type, etc. will be determined.
• The product is expected to be suitably packed for transport and warehousing services.
Product packaging will depend on the type of product.
• The buyers may purchase the product in a big lot or a smaller lot depending upon the market
demand and the level of inventory the buyer has to maintain. To find the optimum level of
the inventory, there are strategies like Just-in-time (JIT), which is a “pull” approach wherein
the buyer will receive the product only when it is required or ordered. The goal of this
strategy is having an effective inventory level of “zero.” This is quite different to the
traditional “push” approach, where the buyer is required to purchase the product in a lot
and is also required to maintain some degree of inventory.

Many companies are collaborating with third-party logistics (3PL) and fourth-party logistics
(4PL) providers to effectively manage their logistics and transportation costs. The 3PL focuses
on logistics, such as inventory management, warehousing, and fulfillment. 3PL providers work
with a company's internal supply chain management team to ensure operations run smoothly.
4PL is an integrator that accrues resources, capabilities, and technologies to offer complete
supply chain solutions to companies. 4PL providers act as a consultant or middleman between
the merchant and the 3PL. 4PL operation costs are more than the 3PL costs as it requires the
building of an entire supply chain.

Elements of Logistics Management

Transportation Management Infrastructure
Transport modes options
Modal transport points
Load planning
Routing and scheduling
Warehousing Management Location
Number
 Size
Type
Cargo handling system
Inventory Management What to stock?
Where to stock?
How much to stock?
Packaging Unit size
Protective packing
Handling system
Information Processing Information systems
Control
Forecasting

TRANSPORTATION MANAGEMENT

Transportation is the primary element of logistics. Transportation costs take one-third of the
amount in the logistics costs and transportation management influences the performance of
the complete logistics system. Transportation is required in the whole logistics chain, from
manufacturing to delivery to the final consumers and returns.

While one of the objectives of transportation management is to reduce the inventory storage
time, it is also important for transportation efficiency to supply the products to the customers
in a short period of time. Here, routing and scheduling of vehicles play a critical role.

Key elements of transportation management

• Transport infrastructure: The fundamental physical structures and facilities that support
the movement of people, goods, and services.
• Modes of transport (such as road, rail, air, pipeline, and water)
• Type of delivery (express, normal)
• Temperature: should be maintained in the vehicles as per the requirement of the goods
• Load planning: This element involves optimizing how goods are loaded onto
transportation vehicles to maximize space, reduce costs, and ensure safe transit. Proper load
building also reduces fuel consumption and the number of trips required.
• Routing: Routing involves determining the most efficient paths for vehicles to take when
delivering goods. The goal is to minimize fuel consumption, travel time, and distance while
meeting delivery deadlines and handling constraints such as vehicle capacity, road
conditions, and traffic patterns.
• Scheduling: Scheduling involves planning the precise timing of deliveries to meet
customer demands, ensuring that vehicles arrive at the right place at the right time. This
also includes allocating resources (vehicles, drivers) based on demand, capacity, and order
urgency.

WAREHOUSING MANAGEMENT
Warehouse Management refers to the processes and systems involved in the efficient
operation of a warehouse. This includes the control and handling of materials, inventory, and
the movement of goods from when they enter the warehouse until they are shipped out.
Effective warehouse management is critical for ensuring that goods are stored, organized,
and distributed in a way that optimizes efficiency, reduces costs, and improves customer
satisfaction.
A warehouse is used for receiving, storing, and distributing products. The important
considerations of warehouse management include the location, number, size, type of storage,
and material handling equipment.

The location and number of warehouses is a major factor as it directly affects the inventory
costs, transportation costs, and warehousing costs.
Location: The location of the warehouse is also related to the time of delivery. Improper
warehousing or delayed shipment of products can result in stock-outs in the market. This is
when the channel partners do not fulfil the customers’ orders because of a shortage of goods.
Stock-outs not only result in the loss of sales but can also affect customer satisfaction.
Number: The increase in the number of warehouses can help to reduce the possibilities of stock-
outs and will also contribute to reducing the time and costs of transportation. On the other hand,
the increase in the number of warehouses can increase the warehousing costs. A company has
to decide an optimal number of warehouses at the optimal number of locations by identifying
the optimal trade-offs between the number of warehouses and customer service levels.

Key responsibilities in warehouse management

• Inventory Control: Maintaining optimal inventory levels to meet demand without

overstocking or understocking
• Picking and Packing: The process of retrieving items from storage to fulfill customer
orders and ensuring items are packaged securely and efficiently before shipment.
• Order Fulfillment: Ensuring orders are accurately picked, packed, and shipped on time.
• Warehouse Layout Optimization: Designing an efficient warehouse layout to minimize
movement and maximize warehouse space utilization
• Logistics Coordination: Managing inbound and outbound logistics to ensure smooth flow
of goods

INVENTORY MANAGEMENT
Inventory management is the process of regulating the constant flow of products into and out
of the existing inventory. The goal of inventory management is to ensure that the right
quantity of items is available at the right time to meet customer demand while minimizing
costs associated with excess stock or shortages.
The strategic decisions in inventory management include what to stock, how much to stock,
and where to stock. Inventories are like opportunity costs, and high levels of inventory can
lower the profits. Efficient inventory management will maintain a sufficient level of stocks that
is neither too high to increase the inventory carrying costs nor too low to cause shortages in the
market.

Key elements:

Demand Forecasting: This involves predicting future inventory needs based on historical data,
market trends, and sales projections. Accurate forecasting helps in preventing stockouts or
overstock situations, ensuring smooth operations.

Stock Levels and Replenishment:

• Reorder Point: The specific level of stock at which an order should be placed to
replenish inventory before it runs out.
• Safety Stock: Extra stock kept on hand to prevent stockouts in case of unexpected
demand spikes or supply chain delays.
• Economic Order Quantity (EOQ): A formula used to determine the optimal order
size that minimizes total inventory costs, including ordering and holding costs.

Inventory Classification:

• ABC Analysis: Classifying inventory into three categories (A, B, C) based on value
and importance. 'A' items are the most valuable, while 'C' items are the least.
• This helps in prioritizing resources for managing high-value items more closely.

Stock Valuation Methods:

• First-In, First-Out (FIFO): Assumes that the first items added to inventory are sold
first. This method is useful for products with expiration dates or that deteriorate over
time.
• Last-In, First-Out (LIFO): Assumes that the most recently added inventory is sold
first, which can be useful in times of rising prices.
• Weighted Average Cost (WAC): An average cost per unit is calculated based on the
total cost of all inventory.

Lead Time Management:

Lead Time refers to the time it takes from placing an order to receiving it. Managing
lead times helps in ensuring that inventory arrives on time to meet customer demand.

Inventory Optimization:

• Just-in-Time (JIT): A strategy where inventory is replenished only when it’s needed,
reducing holding costs but requiring precise timing and supplier reliability.
 • Vendor-Managed Inventory (VMI): Suppliers take responsibility for managing the
buyer's inventory levels, often using sales and usage data.

Challenges in Inventory Management:

• Demand Uncertainty: Inaccurate demand forecasting can lead to overstocking or

stockouts.
• Supplier Reliability: Delays or inconsistencies in supply chains can affect inventory
levels.
• Inventory Shrinkage: Loss of inventory due to theft, damage, or administrative errors.
• Global Supply Chain Disruptions: Events like pandemics or natural disasters can
disrupt supply chains and impact inventory availability.

PACKAGING
Packaging refers to designing the package for the product. Packaging is a coordinated system
of preparing goods for transport, distribution, storage, retailing, and end use. The essential
functions of packaging are protection, containment, preservation, unitisation, convenience,
and communication of the product.
Packaging is the means of ensuring safe delivery to the ultimate consumer in sound condition
at minimum cost.
Packaging can be classified as primary, secondary, or tertiary. Primary packaging is the
packaging which is in direct contact with the product, while the secondary packaging is
designed to hold one or many primary packages. While Tertiary packaging Protects the product,
its secondary packaging, and itself for bulk storage and transportation.

The key features of packaging include the type, cost, etc., which is linked to the value and the
type of product. For example, for high-value products, the packaging cost can be high whereas
for the low-value products the packaging cost is relatively less and more affordable.

INFORMATION PROCESSING

• Information processing is vital for the success of logistics management.

• Converting data to information and processing it to make it viable for decision making is
an essential element of the information system.
• The key features of information processing are information systems, controls, and
forecasting. Processing the data in the right manner helps in the right analysis of the data.
• It is vital to process the logistics data accurately, efficiently, and satisfactorily.
• Data processing errors in logistics can result in flawed decision making, wrong
forecasting, increased inventory costs, stock-outs, and ultimately, customer
dissatisfaction.