Channel Marketing Flashcards by Susanne Schibler

Definition of Channel Management (2)

Channel Design:
Involves developing a channel structure, that links the SBU’s strategy with the needs of the market

Channel Operations:
the development of policies & procedures to gain & maintain the cooperation of institutions & organisations in the distribution channel. Selecting, recruiting, motivate channel members.

How well did you know this?

Not at all

Perfectly

Definition of a channel

… is all players that participate and support the process of shifiting goods from the producer to the end user.

How well did you know this?

Not at all

Perfectly

Typical decision criteria to answer “direct” or “inderect” channel

complexity of product
individuality of product
price level of product
single product in customer’s shopping basekt
local, national, global demand
number of customers
niche or volume product
market in or outside home country….

How well did you know this?

Not at all

Perfectly

Sales means -> Power.

What are the 1. PRO’s and 2. CON’s

PRO:
multiplying sales work -> volume increase
Integrating sales specialists -> efficiency ingrease
CONS:
loss of control -> confidence and verification
distance to end user -> difficult product enhancements

How well did you know this?

Not at all

Perfectly

What is the main target of channels?

CHANNEL brings them together
Sellers:
uncertain how to reach the targeted end-user
End-user:
uncertain where to find the products they want

How well did you know this?

Not at all

Perfectly

Demand-side factors:

Adjustment of Assortment discrepancy (4)

sorting
accumulation
allocation
assorting

How well did you know this?

Not at all

Perfectly

Demand-side factors:

Overcoming space and time (3)

Spatial convenience (stationary location)
waiting and delivery time (stock)
near customer service (support, advice)

How well did you know this?

Not at all

Perfectly

Demand-side factors:
Adjustment of Assortment discrepancy
SORTING

breaking down a heterogeneous supply into separate stocks that are relatively homogeneous
(e.g. a citrus packing house sorts oranges by size and grade.

How well did you know this?

Not at all

Perfectly

Demand-side factors:
Adjustment of Assortment discrepancy
ACCUMULATION

bringing together similar stocks from many sources into a larger homogeneous supply

(e.g. wholesalers accumulate varied goods for retailers, and retailers accumulate goods for their consumers.

How well did you know this?

Not at all

Perfectly

Demand-side factors:
Adjustment of Assortment discrepancy
ALLOCATION

breaking down a homogeneous supply into smaller and smaller lots (bulk breaking)

(e.g., goods received in carloads are sold in small volumes. A buyer of small lots in turn sells individual single units)

How well did you know this?

Not at all

Perfectly

Demand-side factors:
Adjustment of Assortment discrepancy
ASSORTING

building up of an assortment of products for resale in association with each other

(e.g. wholesalers build assortments of goods for retailers, and retailers build assortments for their consumers.)

How well did you know this?

Not at all

Perfectly

Demand-side factors:
Overcoming space and time
SPATIAL CONVENIENCE

making goods physically available for easy and fast access

typically in shops (consumer products) or in warehouses with speed delivery (business products)

How well did you know this?

Not at all

Perfectly

Demand-side factors:
Overcoming space and time
WAITING AND DELIVERY TIME

reducing waiting time for the customer by having a stock of goods being in demand available

How well did you know this?

Not at all

Perfectly

Demand-side factors:
Overcoming space and time
NEAR CUSTOMER SERVICE

providing the know-how to support the customer on all kinds of questions or problems.

How well did you know this?

Not at all

Perfectly

Supply-side factors:

are… (2)

routinization of transactions

reduction in number of contacts

How well did you know this?

Not at all

Perfectly

Players in the channel:

Category 1

Manufacturer, Importer, Supplier

How well did you know this?

Not at all

Perfectly

Players in the channel:

Category 2

Intermediaries

… wholesalers, distributors, agents, brokers, retailer, resellers

How well did you know this?

Not at all

Perfectly

Players in the channel:

Category 3

End-users

… business users, consumers

competence and interests of the players (4)

Manufacturer 
... product, assortment, brand, marketing
Wholesaler
... procurement, logistics, supply chain
Retailer, dealer
... industries end-users, sales, point of sales
End-user
... product feature, quality, image

Relevance of channels: a sales channel can… (5)

.. be a strategic advantage
.. use economies of scale and economies of scope
.. boost your market presence
.. reduces no of contacts
.. offer a One-Stop-Shopping for the customer

the different views of producer and dealer concerning their goals
PRODUCER

◊ High coverage of (his) target group
◊ „Committed“ intermediaries (meaning, the own brand is No 1 out there)
◊ Positioning and selling his brands actively
◊ Producer marketing has to be implemented on the trade level

the different views of producer and dealer concerning their goals
INTERMEDIARY

◊ Broad offering (meaning, all relevant producers)
◊ Little sales effort („Cash cows“, fast-selling items)
◊ Independent marketing, financed by the producer
◊ Minimal follow-up efforts (meaning, no returns due to good product quality)

Definition of wholesaler

a market operator who procures goods from manufacturerers or other suppliers and sell them to resellers

Difference between

Distributor and Wholesaler

Distributor handles exclusively for a producer

Wholesaler represents many producers

Different business models in wholesale (3)

Value added distributor (economies of scope) Broadline distributor ( economies of scale) Fulfilment (optimized logistics processes)

Different business models in wholesale | BROADLINE distributor

Product characteristics: high volume ready-to-use Earnings: low margin product sale possibly logistic services (same day delivery)

Different business models in wholesale | VALUE ADD distributor

Product characteristics: high-end expensive specialized ``` Earnings: high margin product sale consultancy training project management ```

Different business models in wholesale | FULFILLMENT distributor

Product characteristics: High volume Earnings: For each performed transaction

Types of retail

``` Department Store Supermarket Discounter Specialist store (market) Shopping Center ```

Types of retail | Differentiation by "location"

``` Sales space (stationary trade): Migros, Wal-Mart, Shopping center ``` without sales space Amazon, ? Non-fixed locations door-to-door sales, sales van, market trade

Types of retail | Differentiation by "attraction focus"

Convenience Shopping Center, Convenience Store, Gas station shop, Kiosk, drive-in-store Assortment Supermarket, Boutique, Drugstore, Department Store Price Discounter, Second-Hand shop, factory outlet, duty free shop

Types of retail | Differentiation by "sales policy"

Specialist Store Specialist Market Supermarkets, Hypermarkets Discounter

Industry developed channel concepts (3) | New channel approaches

Verticalisation Factory outlets, flagship stores, franchise systems, Rack Jobbing, shop in shop Direct Sales online sales, vending machines, door-to-door sales New Sales Channels gas station, post offices, train stations

eShop of a PRODUCER | chances / problems

chances: - limiting channel power - expanding available market - enhancing gross margin (reducing channel costs) problems - irritation of resellers (loss of commitment, turnover, etc.) - handling volume

eShop of an (existing) RESELLER | chances / problems

chances: - attracting customers by different channels (for information, buy, payment, pick-up, service, etc.) - increasing customer base problems: - irritation of end users (inconsistencies between channels) - eShop might cannibalize stationary store

eShop as a (new) RESELLER | chances / problems

chances: New business models possible without regards to existing business problems: - one under thousands - getting good products

the different views of producer and dealer | PRODUCER's targets (3):

increasing turnover increasing number of customer increasing customer loyalty

the different views of producer and dealer | DEALER's targets (3):

increasing turnover increasing number of customer increasing customer loyalty

Evaluation criteria of a new supplier:

``` ◊ turnover, margin, profit ◊ costs (initial, on-going) ◊ (additional) resources? ◊ image value? ◊ „easy selling“? ◊ post-sales problems? ```

strategic decision for a sales partnership (6) | view of the sales partner

- Management commitment of the producer - Product offer - Sales strategy - Sales partner program - collaboration - Sustainability

Reasons for partner recruitment

- Setting up a new sales channel - Setting up a complementary sales channel - Enlarging the existing partner base - Compensation of a lost partner resources

Process of partner recruitment

- define criterias - systematic search - contact - sell the partnership - contract

Partner performance (4)

Loyality - Commitment - Management - Success Measure

Partner loyalty arises...

from economical advantages and emotional effects