We are the first to admit that we probably do not direct enough attention in our posts to the marketing area related to physical distribution. Yet, while product distribution may not be as glamorous as advertising or product design, it is enormously important for two reasons. First, a company's distribution system represents a cost. While there are some situations where distribution can create revenue (e.g., shipping products for someone else), by and large storing and moving products costs money. Consequently, a well-run distribution system offers benefits to the firm's bottom line by keeping costs low. In fact, even small changes that save only a few cents per pound of product handled can yield substantial gains. Why? Because many companies move thousands of pounds of product each day. Thus, saving just a few cents per pound will eventually add up to a sizable financial gain.

Second, and probably easier for the non-distribution person to understand, efficiently managing product movement can lead to greater customer satisfaction from distribution partners, such as retailers, and from the end customer, such as consumers. For retailers, they can only sell what they have in stock, so they strive to eliminate stockouts (i.e., no product available) by handling products from manufacturers with reliable distribution systems. For consumers, and especially those purchasing online, the ability for a retailer to deliver the order quickly can lead to positive evaluations of their purchasing experience.

For firms seeking to build efficiency into product movement they often turn to technology. For instance, companies utilize routing software to guide their trucks to destinations along the quickest path possible. Another way is through automated warehouses where pallets filled with product are moved to storage racks or onto trucks using computer-controlled pallet jacks.

Yet, one part of distribution that has always been a labor intensive problem involves product fulfillment for small individual purchases, such as small orders placed online. Internet orders are generally filled by an employee who must walk around a warehouse locating the requested items. Of course, this can be quite time consuming. Now there is technology that addresses order picking. As explained in this NPR story, Amazon is using specialized robots programmed to bring products to employees who fill the orders. According to the story, Amazon uses over 15,000 robots in its warehouses.

When this report of Amazon using robots in the warehouse is considered alongside their research into using drones to deliver orders, one has to wonder if many humans will be part of product distribution in the near future. While the story suggests jobs are actually increasing, the question of robots eventually replacing humans remains.

As we talk about in our Planning for the Product Life Cycle tutorial, the maturity stage of the PLC is a tough place to be. At this point in its life, a brand has seen the good times decline to the point where many in the company behind the product believe spending more to support it is not a good idea. Instead, they look to other strategies including trying to get rid of the problem by selling the product to another company that believes it has a better idea for resurrecting it. A second idea is to hold on to the brand but support it with very limited funding. Essentially the owner of the product lets the it fall to the PLC Decline Stage, where it has slim chance of recovering, though it may last there for some time and provide nice income thanks to purchases made by older, brand loyal customers.

However, for some products a third idea exists: try to grow the product again and extend the product life cycle. We note several strategies for extending a product's PLC but the success of these depends on many things, including whether the brand's management has figured out at the right time where the product is in the PLC and has not waited too long to try something new.

As discussed in this New York Times story, a cough drop brand by the name of Smith Brothers is trying to grow its business once again. The product has been around for many years, yet has been neglected by multiple owners. Now a somewhat none traditional owner, a New York hedge fund, is attempting to infuse new life into these cough drops. The story talks about the new owners' plans to improve sales of this product, including spending $2.5 million on advertising. Of course, whether this is too late remains to be seen.

In addition to talking about the Smith Brothers product, the story also lists a number of other once-famous brands that are also considered in the majority stage including once well-known names as Comet, Duncan Hines and Parkay.

Over the last ten years or so, many have predicted that the movie theater industry is heading for a major contraction. In fact, back in 2010, we noted that the movie industry was facing significant changes that not only affected theaters, but also impacted producers looking to gain distribution deals for their films.

When it comes to the reasons for the dire predictions for this industry, prognosticators often point to the evolution of such technologies as on-demand movies, stunningly large flat screen TVs and the ability to conveniently watch movies on tablet devices as being the principal contributors to the ultimate demise of theaters. These forecasters even go so far as to suggest movie theaters will fall victim to technology in the same way Blockbuster and other movie rental retailers suffered.

While it is still possible that in the future theaters will die out, right now theater operators are not sitting back waiting for their business to fail. Instead, they are fighting back with a number of new marketing strategies they believe will excite customers. As discussed in this story from Time, marketers for movie theaters have become quite creative in an effort to attract more moviegoers. Even though overall ticket sales have indeed declined (down by 4% compared to last year), this has only led theater marketers to be more creative. They have introduced a number of new approaches that include: a pricing deal that enables customers to watch the movie Interstellar as many times as they want; a product change where the layout of theaters includes more comfortable seating; a ticketing option that combines entry to a movie with certain food options; and more theaters adopting the dine-and-watch-a-movie format that has been made famous by the Movie Tavern.

It remains to be seen how these new marketing ideas will impact attendance at movies. But it is nice to see marketers are sending a message that they will not go down without a fight.

If you have visited New York City in the last few years and wandered over to Times Square at night you would almost think it was the middle of the day. Not only are there a large number of people but the number of brightly lit billboards and advertising signs makes it seem like its a sunny day. Of course, New York is not alone in lighting the night sky.  Plenty of large cities in Europe, Asia and around the world have plastered their shopping areas with lighted signs. And, while the total number of signs in these areas has probably not grown that much in recent years, what has changed is the growth in the number and the size of digital signs.

Digital signage advertising has become big business for several reasons. First, unlike old-style billboards, where an advertiser purchases the space for a particular period such as six months, digital signage can be easily programmed to change to different ads, thus allowing the space to be shared by several advertisers. Second, digital signage is not limited to a still image and, instead, can include moving video.  For both reasons, frequent passersby may be more likely to pay attention and not ignore the sign in the same way they may if the ad remains unchanged for an extended period.

So if you think digital signs are more like television or website advertising then that is probably correct. Essentially, it is video advertising brought to public locations. Moreover, just as we see with television and desktop computers, the size of outdoor video screens is expanding. As discussed in this New York Times story, a new digital sign was just unveiled in Times Square. It is massive, measuring eight stories tall and spanning an entire city block (nearly 300 feet). Initially, this space will be occupied by a single advertiser, in this case Google. And how much will they pay to advertise? Well, this is not entirely clear though the story suggests it may cost $2.5 million for one month. At this price expect to see this space move from a space dedicated to single advertiser to one that is shared by multiple advertisers.

As discussed in this Stores Magazine story, the Chinese economy continues to grow at double-digit rates and has averaged 15% growth for the last five years. The number of people who are now in the middle class or higher has also soared. Moreover, these people are buying more, with one research firm predicting that by 2022 retail spending in China will be double that of the U.S. market.

Many leading U.S. and European retailers have been drawn by the potential of the Chinese market and have been doing business there for several years. For instance, in the last few years Gap,Walmart and Apple have seen enough positive response to their presence in the country that they now plan major expansions. Starbucks is also going strong to the point where customers are willing to pay a high price for the opportunity to not only drink the product but to show others they are doing so as holding a Starbucks branded cup has become something of a status symbol.

While the potential for retailers to open stores in China is extremely tempting, the story says that any company considering this needs to proceed cautiously. The key issues are primarily cultural and governmental. For instance, on the cultural side, there is a thriving counterfeit market for top products, including store brands, which can potentially erode a brand's image. While governmental issues include the potential for Chinese officials to become involved in ways that can potentially derail a successful business.

Unfortunately, several U.S. retailers, including Best Buy and Home Depot, entered the market without fully understanding what they were getting into. After several years of being unsuccessful, both have departed China with many pointing to their lack of fully adapting to the market as a reason for their failure. Others, such as Walmart, Carrefour and Tesco, found it took much time and money before they found the right strategy.  And Starbucks has not been immune as they have faced criticism from the Chinese media.

For anyone curious about what the retail market is like in China, this is definitely a story worth reading.