Page 96 - Marketing the Basics 2nd

88 Marketing: the Basics
dramatically decline. Firms do this in order to pre-empt consumers from buying a competitor’s product.
Products that offer the most value are the most successful products in their respective categories. Managers must find a balance between strategic and financial considerations to ensure the product mix offered to customers does in fact offer the highest value possible. Over time, customer preferences change, and as such, changes at the expected product level and augmented product level must be made periodically. Furthermore, for multi-product vendors, the product portfolio must be reviewed periodically to ensure every product offered is providing a higher value added return to shareholders.
PART B: PLACEMENT
The second element of the marketing mix is called placement. Manufacturers rarely sell directly to their customers. Instead, they sell their product through one or more marketing channels. Sometimes called a channel of distribution or trade channel, marketing channels are defined by the American Marketing Association as ‘an organized network of agencies and institutions which, in combination, perform all the functions required to link producers with end customers to accomplish the marketing task’. A marketing channel is a group of interdependent organizations involved in the process of production and distribution of a good or service.
Developing the right marketing channel to reach a target market is crucial to the success of a product. As E. Raymond Corey notes:
A distribution system...is a key external resource. Normally it takes years to build, and it is not easily changed. It ranks in importance with key internal resources such as manufacturing, research, engineering and field sales personnel and facilities. It represents a significant corporate commitment to large numbers of independent companies whose business is distribution – and to the particular markets they serve. It represents, as well, a commitment to a set of policies and practices that constitute the basic fabric on which is woven an exten- sive set of long-term relationships.