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Chapter 16

Chapter 16. Direct Selling & Direct Marketing Channel Systems. Ch. 16 Major Topics. What are Direct Marketing Channels ? - Review on channel choices Structure and Trend of Direct Selling Variables to Consider for Direct Selling* Problems and Prospects of Direct Selling*

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Chapter 16

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  1. Chapter 16 Direct Selling & Direct Marketing Channel Systems

  2. Ch. 16 Major Topics • What are Direct Marketing Channels? • - Review on channel choices • Structure and Trend of Direct Selling • Variables to Consider for Direct Selling* • Problems and Prospects of Direct Selling* • Direct Marketing Channel

  3. Direct Selling Topic 1 Definition: the sale of a consumer product or service person-to-person, away from a fixed retail location Three key points: • Goes directly to consumers’ homes, offices, or other locations • Concerned with the sale of consumer products in consumer markets rather than industrial products • Involves salespeople meeting fact-to-face with customers

  4. Non-intermediary Channels* Growing in importance • Direct Selling (DS) (to consumers) • Compare with Direct Salesforce (to businesses)  Salesforce Management • Direct Marketing (DM)  Difference between DS and DM?

  5. Structure & Trends in Direct Selling Topic 2 - Markets Served - Types of Products Sold - Firms Involved in Direct Selling - Problems & Prospects for Direct Selling

  6. Markets Served Location of Direct Selling Channel Sales

  7. Types of Products Sold Major Product Categories Sold through Direct Selling Channels as a Percentage of Total Sales

  8. Firms Involved in Direct Selling • Hundreds exist • Range in size from those with annual sales over $1 billion to those with sales well under $1 million Facts • Tupperware Corp.* • Avon Products, Inc.* http://www.avon.com/ • Cutco Cutlery Corp. • Amway Corporation Examples

  9. Rationale for DesigningDirect Selling Channels Topic 3 A method of distribution for providing products & services to customers But: The decision should be based on an objective analysis of the advantages or disadvantages of each channel alternative.

  10. Variables To Consider for Direct Selling* 1) Market variables & DS channel* Product variables & DS channel* 3) Company variables & DS channel 4) Intermediary variables & DS channel 5) Behavioral variables & DS channel

  11. 1) Market Variables Developments in consumer attitudes & behaviors that could make direct selling more attractive: 3. Consumers are seeking increased convenience in shopping. 1. Consumers have less timeavailable for shopping in traditional stores. 2. Consumers are becoming more sophisticated and demand more & better product information.

  12. 2) Product Variables Products that are high quality, that are unique, or that require specialized information & advice are logical choices for direct selling: Product quality may become apparent only when consumers are informed about them in conjunction with hands-on demonstrations. Consumer satisfaction may depend on whether the consumer has proper information. Product uniqueness may become apparent only through the direct help of salespeople.

  13. 3) Company Variables Basic variables to consider: 4. Basic objectives & policies of the company 1. Size of the company 2. Financial capacity of the company 3. Managerial expertise in distribution*

  14. 4) Intermediary Variables Basic intermediary variables to consider: 3. Services that alternatives are capable of or willing to provide 1. Availability of alternatives 2. Cost of using channel alternatives

  15. 5) Behavioral Variables The “people” side of the marketing channel: Communications processes Conflict Power Role

  16. Problems & Prospectsfor Direct Selling* Topic 4 Lack an awareness of DS as an alternative. Negative impression on DS in general.* Lower availability of consumers for at-home sales calls and parties.* The perceived risk by consumers is high compared to other modes of shopping. 5. Recruitment of salespeople has become difficult.*

  17. Direct Marketing* Topic 5 Definition: An interactive system of marketing that uses more advertising media to effect a measurable response and/or transaction at any location Key Points: Direct marketing is a system or an approach to marketing. Direct marketing relies on one or a combination of advertising media to inform and stimulate customer purchase responses. (including order taking) Direct marketing includes the ability to measure responses. Ex) Dell, L.L. Bean, QVC

  18. Structure & Trends in Direct Marketing Estimating total sales is tricky because various estimates often include different categories of products and/or services as well as different market segments Challenges Some sales data may be included or excluded that may or may not cover direct marketing sales

  19. Structure & Trendsin Direct Marketing

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