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Distribution Analysis Report
Channels of Distribution Analysis Report
The current investigation looks at the marketing mix for Erb Asia, an Australian's company, which Keerati Plodprong, a Thai lady is the principle of Jowjin Pty Ltd. "Having examined the environment… the manager is prepared to design a marketing mix that will effectively meet customers' needs" (Etzel et. al, 1997, p. 552). But it is not just the manager's job at Erb: if they are working as an active listener as well as communicator, they will then be able to make creative decisions based on a framework of team thinking. "To the extent that the information is made public and transparent, it will make people better informed and able to make better choices. New economy organizations tend to be flat, decentralized, and open to employee initiative" (Kotler, et. al, 2002, p. 4).
The foundation of any effective multichannel management strategy is the ability gain insights into its performance using analytics (Kotler, et. al, 2002). Distribution channel strategies as a result continue to become more digitally-based as these mediums or channels are inherently more measurable in terms of their performance and tracking capability than their off-line counterparts. Internet-based communications, selling and service channels are flourishing today as a result of how effectively the performance of individual strategies can be measured over time (Lester, 2004). In addition, there is a gradual shift in how customers are choosing to learn about and buy new products, and this includes personal care and fragrances as well. Erb Asia can capitalize on this trend by concentrating their channel growth strategies to the Web, using e-commerce as a means to expand rapidly into other nations. One other aspect of how quickly companies are adopting Internet-based means of learning about products and buying is the rise of social networks. The growth of Facebook, Twitter and other social networks is now eclipsing any other type of website or portal by nearly 80% according to estimates from Forrester Research (Bernoff, Li, 2008). The use of social networks is now so dominant as a means to educate prospects with regard to new products and services that Facebook fan pages, blogs and Twitter accounts are routinely used to launch more products than traditional print media campaigns (Bernoff, Li, 2008). Integrating marketing mix factors into the distribution channel strategies needs to start with social media
Social networks are the foundation of the future of e-commerce. One of the key foundational elements of social networks is the concepts and design goals of Web 2.0. The concepts of Web 2.0 were originally designed by Tim O'Reilly, founder and CEO of O'Reilly Media (Bernoff, Li, 2008). Maps of the design goals for Web 2.0 are shown in Figure 1. These concepts of Web 2.0 need to also anchor the distribution channel strategies for Erb Asia, as prospects continue to expect this level of support and communication from brands they are interested in (Bernoff, Li, 2008).
Figure 1: Web 2.0 Design Objectives
Source: http://oreilly.com/web2/archive/what-is-web-20.html and (Bernoff, Li, 2008)
Social networks give prospects and customers alike greater freedom and flexibility in how they interact with Erb Asia. They also can personalize their experience using the many options available on Facebook, Twitter and other social networking sites (Bernoff, Li, 2008). Erb Asia needs to take the perspective of Web-based social networking applications as being crucial for the development of a personalized, highly interactive shopping and purchasing experience. If this can be accomplished, Erb Asia will be significantly more successful in its multichannel distribution strategy over the long-term. It is critical to see how all these channels coordinated together deliver an experience first, and a means to complete transactions second.
II. Background Information
The promotion strategy at Erb should focus on advertising almost exclusively, since personal selling is less of an option and sales promotion is limited to the purchaser. The advertising should be mainly in the form of television commercials and web ads aimed at the consumer, preferably during high traffic areas. The television commercials need to be produced with a focus on how to quickly get them onto YouTube and make them go viral on the Web. They need to underscore the exotic, rich heritage of Erb Asia and also make the unique value proposition of these beauty products so clear that prospects are motivated to buy quickly to try them. A few daytime spots should also be included, however, to keep the purchaser in mind as a specified target of promotion as well as the consumer. This shows one substantial benefit to instituting a system of promotion as a way of integrating in terms of two segments for target marketing, individual buyers and representative buyers.
The next step in product positioning is to determine how to convince these segments that they will be making a wise decision in buying this particular kind of herbal product, which is better than the competitors' choices, and that they can rely on the company to meet their needs. To do this, one needs to keep in mind that in terms of the marketing mix, there must be a balance of customer segmentation and product segmentation. All elements of the marketing mix need to take into account how best to create trust and value over the long-term. Having customer testimonials will definitely help, as will the use of video showing how the beauty products are made. All of these factors need to work together in order to create a high level of confidence in the product and also get prospects motivated to try it.
A key assumption of the marketing strategy across all channels is that there will need to be a high level of product trial in order to convert prospects into customers. The greater the level of activity on product trials, the higher the level of eventual loyal customers to the brand. This is critically important as each distribution channel needs to invite prospects to try the product at least once and see if they like it. It would be an excellent strategy for launching all digital or online channels to concentrate on free trials to begin with, as Erb Asia will certainly see churn of prospects to customers over time. Reducing this churn aspect of their marketing strategies with free trials will serve to more quickly grow the customer base over time. Second, a product trial also can be used effectively for creating trust throughout distribution channels over time (Neslin, Shankar, 2009). Third, using trial versions will also give Erb Asia insight into which demographic customer segments are most and least drawn to the scents and beauty products. This insight into the product, promotion and distribution or place aspects of Erb Asia's products will be invaluable in defining more effective strategies in the future. What Erb Aia needs to concentrate on is how to align their marketing mix variables of product, price and promotion to ensure that the emerging distribution channels of social networks
(Bernoff, Li, 2008) and long-standing e-commerce channels are used to the maximum extent possible. Realizing that consumers are more reliant than ever on social networks as a means to learn about new products, and Web-based channels are delivering more analytics and measures of performance than any off-line channel, Erb Asia needs to re-orient its channel management strategies to capitalize on these two strengths.
III. Marketing Channel Characteristics
The many benefits of relying primarily on a Web-based distribution channel strategy are discussed here, in addition to the marketing mix factors critical for their success. A pro-of marketing on the Internet would be a greater access to a larger customer base, 24-7. Another pro-is that it cuts down on the costs of having to operate an actual physical franchise. A con is that sometimes Internet-based sales can require complicated infrastructure. There is also the possibility that the network can crash. Overall it would be relevant for Erb to sell herbal products on the Internet. The company should be willing to take the risk that being the first mover entails in terms of moving fast in a changing market. There are also drawbacks to this situation: this can sometimes be traced to substitute products, which are increasingly available in the Internet's increasingly international marketplace.
What is also going to be very critical for the success of Erb Asia's channel management strategies is how they choose to create their channel partner organization. In the Visual Aids section of this analysis, the sales-oriented channel organization model illustrates how critical it is to have channel marketing, channel management and channel development all integrated with each other. The graphic illustrates how the design of an organizational structure needs to support and strengthen the channel management strategies of the company. Erb Asia needs to pay close attention to how their channel management organization is structured, as it will be an essential foundation for supporting its multichannel marketing strategies and efforts to attract resellers, distributors and dealers (Neslin, Shankar, 2009). Creating an effective multichannel management strategy will also be predicated on providing resellers with online applications…[continue]
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