Distribution Channel Decisions Flashcards
Effective Distribution Channel
Makes right quantities, right product, right place, right time, to satisfy target customer
Marketing Channel
a set of interdependent organisations in the process of making product or service available for use or consumption
3 ways middlemen improve market efficiency
- functional efficiency - specialization and economies of scale (selling)
- scale efficiency - large quantity purchases
- transaction efficiency - variety of selection
Distribution Channel Objectives (6)
- Increase availability of the good or service to potential customers
- Satisfy customer requirements by providing high levels of service
- Ensure promotional effort
- Obtain timely and detailed market information
- Increase cost-effectiveness
- Maintain flexibility
Product Availability
Coverage of relevant retailers, in-store positioning, coverage of geographic markets
Meeting customer service requirements (5)
- Order cycle time
- Dependability
- Communication
- Convenience
- Post-sale services
Promotional Effort - important when: (3)
- marketing technically complex, expensive goods
- market is highly competitive
- sustaining competitive advantage based on superior quality or customer service
Market information
Needed in particular for highly competitive industries with rapid changes in product technology and customer preferences
Flexibility
Easy to switch channel structures without generating economic or legal conflicts
Merchant Wholesalers
Take title to the goods they handle; sell primarily to other resellers, industrial and commercial customers
Agent Middlemen
Include manufacturer;s representatives and brokers. Also sell to other resellers but to not take title of the goods. Usually specialize in selling function working on commissions
Retailers
Sell directly to ultimate customer. Usually take title of goods, and are compensated by margin
Facilitating Agencies
Include advertising agencies, market research firms, collection agencies, transport; specialize on one or more marketing functions, work on fee for service
Online retailer key capabilities
Ability to attract traffic to their sales platform, making transaction as easy as possible, using online connection to cross sell and up sell
Omnichannel Retailing
Multichannel approach to retailing with focus on creating seamless consumer experience
Obstacles to channel integration (8)
- Non-integrated tech platforms
- Disparate sources of data
- Organizational structure
- Complexity of customer journey
- Lack of budget
- Company budget
- Lack of marketing skills
- Lack of senior level buy in
B2B Online Intermediary One-to-One
A company has an online store (Walmart)
B2B Online Intermediary Many-to-Many
Companies join together in wider B2B marketplace (Amazon)
Consumer Goods/Services 3 Strategies of Retail Coverage
- Intensive - maximum availability, lack of retailer support, convenience goods
- Exclusive - Single match retailer with clientele closely, risky with 1 retailer, specialist goods
- Selective - Limited, adequate coverage, infrequently purchased goods
Franchise Systems (4)
- Manufacturer Retailer - automotive and fuel
- Manufacturer Wholesaler - Coke selling syrup to bottlers
- Wholesaler Retailer
- Service sponsor retailer - fast food
Sources of Channel Power (5)
- Economic
- Referent
- Coercive
- Expert
- Legitimate
Channel Control Strategies (2)
- Pull Strategy - manufacturer builds selective demand and brand loyalty to promote economic rewards in return for cooperation
- Push Strategy - Direct inducements to gain cooperation from wholesalers or retailers
Good Distribution
Customers won’t buy the product unless it is conveniently available when and where they want to buy it
