Selecting Distribution channels according to product life cycle

Product Life Cycle Stage and General Strategies for choosing a channel

Introductory Stage Product has recently been launched; hence there will be fewer distribution channels.

Strategy: You may be able to accept any intermediary, which is capable to paying any product you produce. At this stage You should try to convince them to carry your product

Growth Stage

Product has gained has its acceptability; hence more distribution channels will be added.

Strategy: More resellers will be interested, so you should move on to develop an appropriate criteria, policies and procedures that should help you to choose which reseller suits the most, here you would be executing an intensive distribution strategy

Mature Stage

Product has been embraced, but competition is a threat. Primary goal should be to maintain market share

Strategy: If your product lies at mature stage, you should Offer reseller discounts, include additional marketing channels to add convenient shopping, like catalogues, internet shopping, offer coupons e.t.c.

Decline Stage

Product has been embraced, but competition is a threat. Primary goal is to maintain market share

Significance of adopting a suitable distribution channel

It is important to select appropriate channel, because the distribution channel we select can determine the Level of success our organization achieves. Incase of retail items like T.V or DVDs, Those Intermediaries that use poor promotional techniques or are unable to keep up with consumer demand can damage our products marketability and sales. Having said that, it will be adequate to mention various factors that should be considered while selecting a distribution channels

• The size of target market
• Where the target market is located
• The details of buying habits of the target segment

Only, after having above information, one could adopt a suitable strategy that would guarantee success.

In 2007 clothing was sold in department stores, specialty stores, discount stores, warehouse stores, and warehouse clubs like Costco and Sam's. The apparel makers also marketed products in their own retail stores and factory outlets, from catalogs, and on the Internet. Cotton Incorporated, an industry group, conducted a Global Lifestyle Monitor survey in 2006, which included a survey of 4,000 U.S. consumers aged 15 to 54. The survey showed that U.S. consumers spend an average of $918 a year on apparel, buying 27 percent from department stores, 22 percent from chain stores, 19 percent from mass merchants, and 14 percent from specialty stores. When asked what was the most important factor when buying clothes, 77 percent said price.

In 2003 Chain Store Guide, a division of Lebhar-Friedman, conducted a study of 123 retailers operating 40,000 stores in 346 markets. The study concluded that discount apparel retailers had made dramatic gains in market share, accounting at that time for $70.2 billion of an estimated $182 billion apparel market. Wal-Mart held 24.6 percent of the $70.2 discount market. Other major discounters were T.J. Maxx/Marshalls (10.1 %), Target (8.4 %), Old Navy (7.8 %), Kmart (6.1 %), Ross (3.8 %), Charming Shops (3.2 %), Burlington Coat Factory (2.7 %), American Eagle Outfitters (1.9 %), and Value City Dept. Stores (1.7 %).

Harvard Business School conducted a study of the textile and apparel industries in 2000 to look at the potential of e-commerce. That study, supported by the Sloan Foundation, reported 1999 retail channels for an apparel and accessories business estimated at $179.8 billion as follows:

• Discounters, 20.5 percent
• Specialty stores, 22.4 percent
• Department Stores, 19.1 percent
• Major chains, 16.2 percent
• Off-price retailers, 6.5 percent
• Factory outlets, 3.7 percent
• Catalog, 9.6 percent
• Online, 0.6 percent
• Unreported, 1.4 percent

That study said the apparel industry could be segmented historically in several ways. When considering cost, a large segment of the industry competes on low cost, buying goods from distant suppliers and cutting costs by ordering and shipping in large lots. Such clothing was generally sold through mass merchants such as Kmart or Wal-Mart or at lower-end specialty stores and was a substantial part of the children's clothing market. Other firms chose higher costs for better quality, more fashionable goods. These companies generally sold through department stores or high-end specialty stores. Between 1999, the time of the Harvard study, and 2007, clothing sales on the Internet grew at an impressive rate. A study by Forrester Research, Inc. showed that the apparel, accessories, and footwear category had reached $18.3 billion in online sales in 2006 and was expected to exceed $22 billion in 2007. Ten percent of all clothing sales made in the United States were expected to be made online by 2010, the Forrester Research report said.

Brands are buying into entertainment. Just count the number of incidental exposures of products you've seen on television and movies. Take for example, American Idol. Judge Simon Cowell is often seen drinking from a cup with the Coca Cola logo. In fact if you watch closely, the logo is also seen on the plasma TV screens on stage. In other words, branded entertainment is about placing the product either subtly or prominently within an entertainment product.

Product Placement can be verbal, like a mention in the show or visual where the product is seen. It is increasingly a tool used by marketers to push their brands into the limelight and increase awareness through such exposures. What ticks for the marketing folks is that their brand is not just associated with the entertainment, eg. a blockbuster movie or a much anticipated television series, it is also seen being associated with a celebrity when the actor uses the brand in the movie or the television programme. The association has added value for the brand. But branded entertainment has its setbacks.

It can be a matter of too much too soon. If the brand exposure is too subtle, the audience may not see it. If it is too prominent, the audience may get brand fatigue and develop a negative perception towards the brand. That is something you don't want happen to your brand. Think about it. As an audience, you want to be entertained. The last you need is to have brands plastered all over your screen.

After all, there is a place for that in the form of commercials and advertisements. The key is to balance the exposure and the placement so that you can have an edge when it comes to promoting your brand without over-killing it.
Branded entertainment is here to stay. So the next time you're in the theatres or at home watching TV, see if you can remember the brands that caught your attention.

This is you if you have a brand to promote. You are the source of the brand. Together with your marketing communication agency, you decide on how to position your brand and who you want to reach. Once the brand position and the target audience are decided, you start developing your brand message.

The brand message

The brand message is what your company wants your customers and other stakeholders to perceive. All the information and experience of the brand should be designed into the message. Here's where the 4Ps of marketing; product, price, place (distribution) and promotion play a crucial part in how you design your brand message.

The communication channel

It's all about picking the right media to reach the right target audience. Knowing the habits of the target audience is important in deciding which media channel to communicate the brand message through. For example, if your target audience is car owners, advertising on radio would be a better bet than on a parenting magazine. Media channels include TV, radio, newspaper, magazines, billboards, internet, mailers and product placement on TV shows and movies.

Noise

People are being bombarded by advertisements every day, everywhere. So how do you get your brand message through all this noise and clutter? Well, your message will not be seen and heard if your copy is poorly produced, and has a lack of clarity. Bad timing of the release and clutter from your competitor's messages are also points you need to consider. So remember the lower the noise level, the higher chance of your brand message being seen and heard.

The customer

This is the group you want your brand message to reach and get a positive response. You want your customers to remember your brand, to like it enough to act upon a desire to purchase it. To help you hook the customer, your brand message needs to be simple and relevant. Also allow your customers to ask questions and to interact. This will create positive perception of your brand.

Feedback

You want to hear what your customers think about your product. This is an important key in any marketing communication. Besides gathering information about your customers, you can also generate more leads, provide more information to reinforce their liking for your brand and to be sure you are on the right track in your brand messaging and channel choices.

But before proceeding to each of these successive stages, management has to decide whether to proceed on the process, seek more information or abandon the new product development process.

1. Idea Generation: New products stem from various sources. The most important sources are customers, employees, distributors, competitors, research and development, and outside consultants (Lamb et al 1992).
   • Customers: The marketing concept suggests that customers are the spring board for developing new products. An organization may learn of promising products and programmes developed outside the company from either the customers themselves or the company's field representatives. Some companies also encourage customer input. For instance, many customer packaged goods provide numbers for customers to call with problems, complaints and/or possible suggestions.
   • Employees: Marketing personnel often create new product ideas because they analyze and are involved in market places. This applies to advertising and marketing research personnel as well as sales persons. Firms should encourage there employees to submit new product ideas and reward them if their ideas are productive and finally adopted.
   • Distributors: A well trained sales force will routinely question distributors about needs that are inadequately met because they are closer to end users. Distributors are often more aware of customer's needs than are manufacturers.
   • Competitors: No firm relies solely on internally generated new product ideas. A significant component of any organization's marketing intelligence system should be monitoring the performance of competitor's products. One purpose of competitive monitoring is to determine which, if any, of the competitors' products should be copied. Competitive monitoring may even include tracking products manufactured and sold in foreign countries.
   • Research and Development: Research and Development is carried out in four distinct ways from the basic research in scientific research aimed at discovering new technologies, applied research that takes these new technologies and attempts to find useful applications for them, product development goes one step further by converting these applications to marketable products and finally product modification makes changes in products and/or functional product improvement. Many new product breakthroughs come from R&D activities. For example Kodak developed the lithium battery in one of its R&D labs. R&D scientists at Bell laboratories discovered the transistor, the laser, the solar cell and the first communications satellite.
   • Consultants: Consultants are available to examine a business and recommend product ideas. Traditionally, consultants adopt a strategic posture, assessing company product needs as well as market opportunities. They determine if a company has a balance portfolio of products, and if not, what new product ideas are needed to offset the imbalance of the company's present product mix.
2. Idea Screening: After these new ideas are generated and passed through the first filter in the product development process, the next stage, called screening, eliminate new product ideas that are inconsistent with the organizations new product strategy or are obviously in appropriate for some other reason. The new product committee, the new product department, or some other formally appointed group performs screening review. Most new product ideas generated are rejected at the screening stage. Rejecting good ideas lead to lost of opportunity. Accepting poor ideas leads to increasing cost, because the cost associated with the later stages with the development process are much higher than those in idea stages. The longer it takes to scrap the poor idea, the more costly it is to the firm.
3. BUSSINESS ANALYSIS: new product ideas that survives the initial screening process progresses to the business analysis stage, were preliminary demands, cost, sales and profitability estimate are made. This is the first time the estimate cost and revenues are made and compared, depending on the nature of the product and the company. This process may be simple or complex. The newness of the product, the size of the market, and the nature of competition all affect the accuracy of revenue projections. In an established market like soft drinks for example, industries estimate of total, markets size are available, the challenge is to forecast market share for a new entry.
4. Product Development: In the early stage of development, the research and development (R&D) or engineering department may develop a prototype of the product. During this stage, firms should begging sketching out a marketing strategy. They should decide the packaging, branding, labeling and so forth. In addition. Firms should map out their preliminary promotion, price and distribution strategies. In the development stage, the technical feasibility of manufacturing the product at an acceptable cost is thoroughly examined. This stage can last a long time and thus be very expensive. For example, a toothpaste company was in the development stage of their new product for ten years. It took eighteen years to develop minute's prize, fifteen years to develop the Polaroid color pack camera, fifteen years to develop Xerox copy machine and fifty-five to develop the television (lee Adler, 1966).
5. Test Marketing: Test marketing involves the limited introduction of new product in selected markets. The purpose of test marketing is to try out the product and the rest of the proposed marketing strategy in the market place and to correct any defects in the strategy prior to large scale introduction. Many companies use test marketing to minimize the risk of major product failure. Test markets are usually cities that marketing management believes will be representatives of the overall national consumer reaction to the product cost. Due to high cost of test marketing, usually, only two or three test cities are chosen. Testing time may vary from two months to two years, depending on the company's lead over competition, the repurchase rate of the product, and the desire for secrecy. The goal of test marketing is to gather information on the sales of the product. It's repurchase rate, the characteristics of consumers, where the product is bought, competitive reactions, and the strength and weaknesses of distribution, promotion and price.
6. Commercialization: This is the final stage in the new product development process. Whether the company runs test market or not, at some point it either drops the product or goes into full scale introduction. The commercialization step involves developing, manufacturing and distribution systems to deliver the product to all intended markets. Pricing policies are set, and promotional messages are sent to all market .any changes of fund necessary in the test market are made, and the product's complete marketing strategy is implemented. Commercialization is to an extent extremely expensive .the company commits capital expenditures to manufacturing and distribution systems and begins advertising and promoting the product on a massive scale. In many cases, the cost of carrying inventory at all retail locations and at distribution points will into reasonably huge amount of money.

The process of developing a new product might not be very attractive to young entrepreneur and he would just have to select the product/service to handle from amongst existing products and services and try to find new markets or customers for himself. He of course has to work within the law by obtaining permission of the owner of the product (patented or registered) or by producing his own or selling for other producers.

The customer is always right. Well not always, but usually. I know all about replenishment systems, shrinkage, stock turns, product packs and visual merchandising, so don't patronise me with your ‘this is my first day' speech. I'm certainly not buying that! If you choose to work in the customer service industry, be prepared to smile. Make an appointment with your dentist before you start because somewhere along the line, you lost the ability to smile. Oh, and by the way, clenching your teeth isn't a very nice look. Tuck your shirt in, straighten your clothes and for God's sake, do something with your hair. Don't show me 7 different products that are nothing like what I have asked for, and don't ask if I want fries with that. I'd ask for them if I did.

When did service stop? And where did it go? I don't have the energy to argue with you, but gee, its fun to watch others stand their ground. It's impressive to see grandma get out of her motorised scooter just to hit you around the head with her bag full of change. All we want is a smile, products we want to buy, and information that's truthful. You know, I can Google anything, I know what the computer does when I push that button. Tell me something new, so when I take it home, I sound like an expert.

When companies realise that the biggest investment they should be making is in their people, the whole consumer industry will boom. Instead of focusing on the bottom line, focus on what helps you to achieve it. Your people are your image. Your gateway to the millions of dollars burning holes in peoples pockets every single day. What is so important that the General Manager can't get on the floor every once in a while and sell to someone like me. Never forget that the ring in the till only happens if I choose to make it happen. Have fun with your people, set a good vibe in your store so I'll want to keep coming back. Make me want to work for you!

Don't get me wrong, I'm a shopper from way back. Impulse buys, buying for gifts, buying for myself, buying because I can, buying, buying, and buying. I have the money; I have the ability to put it on the counter without your help. But do I have to do your job as well and sell it to myself? Please, please stop talking about your fabulous weekend at the beach. Oh and Sally, no, I don't think the guy in aisle 4 thinks your hot. In fact, I think he's eyeballing you because he needs some service...you know, the job you were hired to do?

After the product has been created, it should be well field tested to get out all the kinks. You want to make sure any adjustments and/or additions that should be made are made before you present it to your customer. You want as much feedback as you can get because when the product is finally brought to market you do not want a customer coming back and complaining about problems with the item you created.

Anything connected with your product in any way shape should be perfected also. Nothing should be left to chance once the product is perfected. The product should feel completed. The product should be constantly gone over because nothing can be left for chance, not even the colors or name of the product.

Once these items have been chosen you should make sure the packaging reflects the product also. If your product requires such things as instruction manuals and warranties, they should also be included. The product has to reflect the image of your company as to the packaging and anything associated with the company. The idea being that if you pickup followers who have bought something from your company that they will come back for more. The image you convey should also reflect your buyers. It is what the customer has come to expect and the whole point is always to please the customer.

Over ten years ago, I worked as a window display demonstrator for a magnetic window company that was based in St. Louis, Missouri. The company made magnetic windows that were installed on the inside of people's existing windows to stop drafts, noise, water and damaging sunlight from coming through. I was eventually promoted to a trainer who taught new hires to do the demonstrations at local stores. I will teach you how to present yourself as a demonstrator or salesperson in the retail field.

Be knowledgeable about your product. Read your company's product information and rehearse your presentation frequently. Always think of answers to questions your prospects might ask. Be creative when you are asked an unusual question. If you give poor presentations and cannot think quickly, you will not be successful.

Always smile at your sales job. If you stop smiling after someone rejects your sales pitch, others might think you are someone who gets discouraged easily.

Keep all necessary materials at your work station. I put ice inside my display booth to give the windows a cold, frosty appearance and feel to reinforce window drafts my prospects might have. I kept a “6x9” clipboard that contained lead-generation sheets on the booth. You should use a small clipboard to avoid making prospects think they will have to give or fill out a lot of information. I also kept customer discount coupons on hand to give everyone signing up for an in-home window inspection.

Be receptive to everyone. I once ignored a child who came up to my display booth because I was too focused on finding potential homeowners to talk with. When I approached the kid's mother as she came by, she said, “I'm not going to listen to you because you wouldn't talk to my kid.” I should have quickly showed the kid the booth.

Employ a good approach to encourage plenty of people coming your way to stop and listen to your presentation. Your approach should combine enthusiasm with respect, proximity and clarity. Approach shoppers with a smile on your face and make your pitch with firmness. You will have more trouble getting people to stop if your voice is too weak or soft.

If your product is a window, you could meet a shopper with a small window sample from your booth and say, “Good morning, Madam. Have you seen our magnetic windows? Feel how light this is.” “It is light,” she will probably say. Using an approach like this in which you are friendly and get the prospects directly involved is necessary to build a rapport and make your prospects more willing to give you the opportunity to do your presentation.

Once you begin your presentation, you must qualify your prospect. I usually began my presentation by saying, “Put your hand on this (frosty) window. Feel how cold it is.” After the prospect affirmed the window was cold, I said, “Our magnetic windows keep out cold and hot air. Do you feel any drafts coming through the windows in your house?” I mentioned the word "house" to make sure the prospect was a homeowner.

Present all the features and benefits of your product. Ask your prospects questions regarding your product and listen to them. If the prospect does not display interest during your presentation or does not have problems that can be solved by your product, thank him or her for listening to you and start approaching others.

Do what it takes to overcome objections. For example, if my prospects said they were not ready for an inspection when it was time to write a lead, I said, “You're under no obligation. Let me give you this discount coupon so that when you are ready, you will save a lot of money. What's your last name?”

Offer your prospects flexibility. As I scheduled an appointment with prospects who agreed to let my company come inspect their windows, I would say, “Would 5:00 PM or 8:00 PM be a better time for you?”

Take advantage of special shows. Events such as home shows will bring you many prospects looking to buy your product now.

Follow these steps to have more success with your sales job!

Business success can be referred to as an achievement of common objectives such as profitability, growth, or increasing market share. A good quality product undeniably brings positive contributions to the success of a business. One benefit is customer satisfaction. Once they are satisfied with the product, the customer will be likely to make repeat purchases, and over time develop a strong loyalty towards the brand. When the business has a reputation for producing good quality products with a strong customer base, it establishes itself in a strong position in the market, giving it the opportunity to increase its market share. As a result, retailers would be more willing to stock their products, giving the business more options in terms of the channel of distribution, and thus giving them a competitive advantage. This can also lead to marketing economies of scale, whereby a cross marketing of brands can be used to strongly promote different products simultaneously because an overall positive brand image has been created. Another cost saving is that fewer complaints will need to be dealt with, and because of this, fewer repairs and wastage costs will be incurred. These savings of average costs could then be kept as retained profits, or invested in business growth, proving beneficial to business success.

It is evident, then, that businesses must find some sort of way of monitoring quality that best suits them to ensure quality products are consistently produced. This could involve quality control, where inspectors check a sample of finished products for defects, or quality assurance, where quality is the responsibility of each worker and is built into the production process. Quality control could perhaps work better with management that believe in a more strictly controlled work environment, whereas quality assurance works better if management empower and trust workers more, allowing them participation in the improvement process. Provided these methods are implemented well enough, and are appropriate to the corporate culture of the business, this crucial aspect influencing business success can be ensured.

However, because businesses operate in complex environments there are many other contributing factors to business success, which, if not integrated with good product quality, will have negative effects. From a marketing perspective, in the research and development stage, market research must be conducted accurately to predict demand; otherwise, even if a very good quality product is produced, if a target market is not defined or there is no demand for it at all, then the product will fail. In the development process, value analysis should be conducted, where the appearance, performance and the economy of manufacture of the product should be compared to achieve an ideal balance. If the business solely relied on product quality, it would focus on appearance and performance and neglect the economy of manufacture, which could lead to the production of a good that customers find to be of high quality, but costs so much to produce that it is not profitable to the business, and not worth making.

For example, while Georgie Pie's one-dollar menus proved popular because of their excellent quality, because they were selling each pie at a loss it eventually caused the business to fail. Therefore, while a business should always strive for high quality, it must also constantly be aware of the costs involved in maintaining this quality and either find ways to reduce the additional costs or raise prices to recoup them. This also relates to the marketing mix, which must be integrated to ensure success. If prices are raised, the quality the customer expects will also be higher, so somehow value must be added to the product without raising costs proportionally. Once the price and product are integrated, a suitable promotional strategy is just as crucial in ensuring success, as there is no use of a good quality product with a reasonable price if no one knows about it. Similarly, the channel of distribution must be carefully thought out so that anyone in the target market should be able to have access to the product in order to maximise sales. If these elements are not integrated, success will be hindered. Product quality alone cannot fix these problems.

Good, motivated staff is just as important for business success as good quality products. Staff must be well motivated in order for the quality product to be produced efficiently. If guidelines are too strict that staff do not get any autonomy, especially with inspectors constantly appraising their work, they will feel like they are not being trusted, leading to lack of motivation. While product quality would remain at the same level, having a lack of a motivated staff tends to increase rates of absenteeism and labour turnover, meaning lower productivity. The impact of this is that if the business sells the quality product very well, but not enough of it is produced due to low productivity, then maximum sales cannot be achieved and business success is again limited.

If the business owns the retail store for the product too, the selling staff also has an important role in ensuring a successful business. They must be knowledgeable about the product, especially in technological industries where customers are likely to ask many questions regarding the functions of a product before purchasing. Customer service in general must also be excellent as there is no room for mistakes. Even if a product is of good quality, if the unique features are poorly explained to the customer, or the customer feels neglected by sales staff, they will be put off the product and purchase a competitor's. Furthermore, the reputation of having bad quality service would spread through word-of-mouth, and trying to correct this image could be costly.

Therefore, it is clear that while product quality should be an integral focus for a manufacturing business, it should not be the sole focus, or its advantages will be undermined by problems arising in other departments of the business, which could ultimately hinder the success of the business. It must be remembered that businesses require all departments to work towards a common objective in order to be successful, so stating that one element can guarantee success is too simplistic in approach.

Unless your product is very well-known, you can never expect its sales to go high. So, you need to have a well-defined plan or strategy to advertise your product. Here are some proven tips:

1. Know the ins and outs of the market industry where you are trying to sell your product.
2. Study your competitors and the strategies they use to market their products.
3. Determine your product's differences from that of your competitors?
4. Define a time line when you need to achieve your targets.
5. Define the budget for your marketing and advertising along with the options.
6. Conduct market research.
7. Earn more than you spend. That's what profit is. Define the best strategy, choose the most suitable advertising media, analyze the costs required to implement your plan.
8. Consult experts if necessary.
9. Approach advertising from users' point of view (needs analysis). Once you know, start developing products strategically based on their requirements.
10. Give trial versions to few of your trusted customers. Get their feedback and then start modifying your products.
11. Keep quality in mind while you can try to avoid unnecessary costs.