Dr Brian's SmartaMarketing 2

Smarta Marketing Ideas for Smarta Marketers

Category: Value

Distributing Services

Dr. Brian Monger
Service Product Distribution

Some would have it that services are intangible.  That is technically right, but logically if a Service Product was completely intangible, how would we be able to transfer it?

All organisations – whether producing tangibles or intangibles – are concerned with place decisions.  That is how to make their offerings available and accessible to users.  Even where a service or other intangible is marketed there are physical problems.  All are associated, somewhere or other, with tangible elements requiring physical handling, storage and transportation

The subject of place decisions for services is confused as people grapple with the concept of a ‘distribution channel’ for items which are intangible, often inseparable from the person performing the service and perishable, in the sense that inventory cannot be carried.  The subject is further confused because the generalisations made about services (e.g. no inventory carried) do not always apply in specific situations.

Methods of distributing services

A distribution channel for services is the sequence of firms involved in moving a service from producer to consumer.  The usual generalisation made about service distribution is that direct sale is the most common method and that channels are short.

Direct sale certainly is common in some services markets (e.g. professional services); but many service channels contain one or more intermediaries.  It would be incorrect to suggest that direct sale is the only method of distribution in services markets.

Intermediaries are quite common.  Some of these intermediaries assume ownership risks; some perform roles that change ownership (e.g. purchasing); some perform roles that enable physical movement (e.g. transporting).

Like this short article on services and distribution (Place)?  Please comment.  And have a look at another article on Distribution in our sister blog http://smartamarketing.wordpress and checkout the smartamarketing posts on SlideShare.

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Value, Pricing and Competitors

Dr Brian Monger

In the modern marketplace customers are faced with a wide choice of products that potentially offer it is important that an organisation understands the influence that competitors have on customers.

Value is comparison-based.  That is, value is perceived in terms of competitive offerings.

For a competitive advantage to eventuate, an organisation must be perceived to provide better value than its competitors. This requires a good understanding of the competitors’ strengths and weaknesses, their capabilities and, most importantly, the customer’s value perception of their offerings.

Pricing objectives

* Profit oriented Objectives – prices are set to maximise profits (maximise long-run profit or maximise short-run profit

* Sales Oriented objectives – prices are set to maximise sales volume (increase sales volume quantity; increase dollar sales; increase market share

* Survival – low prices, even under cost are set to create needed cash flow in the short term to ensure the survival of the firm

* Status quo objectives – prices are set to match and not exceed competitors’ prices

* Obtain a target rate of return – on investment (ROI) or rate of return on sales

* stabilise the market or stabilise market price – this objective aims to stabilise price in the marketplace and too compete on non-price considerations. The manager attempts to maintain the same margin regardless of changes in cost.

* Maintain price leadership

* Desensitise buyers to price

* Discourage new entrants into the market – encourage the exit of marginal firms from the industry

* Avoid government investigation or intervention

* Obtain and maintain the loyalty and enthusiasm of distributors and sales personnel

* Enhance image  – of the firm, and brand

* Social, or ideological objectives – be seen as honest and fair by customers and potential customers

* Build store traffic

* Prepare for the sale of the business (harvesting)

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