Distribution Channel Strategy Flashcards
What is the importance of distribution strategy as a marketing tool?
Strong distribution channels help assist competitive advantage as channel decision involve long term commitments
Where does the distribution sit in the supply chain?
- Manufacture service
- Distribution channel
- Consumers
What is the role of a distribution channel?
To bridge time, place, and possession gaps that separate products from users. With this it also reduces the number of transactions and costs.
What do the marketing activities with distribution involve?
Contact with customers, promoting the product, storage, and financing.
What is the channel decision process?
marketing and consumer analysis to channel design to channel and member selection.
What is channel level in channel design?
Direct Channel: Selling products directly to consumers without intermediaries (e.g., online stores, company outlets).
Indirect Channel: Selling products through intermediaries like wholesalers, retailers, or agents.
What is channel ownership in channel design there are two parts?
Conventional Channel: Independent businesses work separately to move products to consumers.
Vertical Marketing System (VMS): Businesses work together in a unified system to streamline product flow.
What are the three parts of channel coverage?
Intensive Coverage: Product is available in as many outlets as possible for maximum exposure.
Selective Coverage: Product is sold through a limited number of carefully chosen retailers.
Exclusive Coverage: Product is sold through a single or very few authorized retailers.
What are the consumer characteristics for distribution channel strategy?
The number of consumers, shopping frequency, order size, and geographic decision are all important to analyze.
What are the product characteristics of distribution channel strategy?
Customized vs standardized, Price, Product life cycle, Technical complexity
What are the producer factors for distribution channel?
Desired channel control, financial resources.
What are direct channels?
Where manufactures sell straight to consumers.
What are indirect channels?
When manufacturers move their products to retailers or wholesalers first before going to consumers.
Why are indirect channels preferred?
Because they make goods more convenient, lower level of service is required, and it has access to a larger market of consumers.
What are conventional channels and their issues?
Where there are one or more independent channel members. This causes goal conflicts or lack in leadership and power which leads to poor performance.
What are vertical marketing systems?
They consist of members acting as a unified system which use contracts, ownership, or power.
What is corporate VMS?
Where VMS is owned by either manufacturers or intermediaries(Starbucks).
What is contractual VMS?
VMS by contract between channel members. This can be seen with franchise systems.
What is administered VMS?
Where channel coordination is achieved by the influence of one channel member rather than ownership(Walmart leveraging substantial market power)
What are the three types of channel coverage as well as the goods they serve?
- Intensive which serve convenience goods(Convenience stores)
- Selective which serve shopping goods(Apple selling goods through selective retailers)
- Exclusive: Specialty goods like BMW
What are the factors to consider with channel coverage decision?
Type of product, degree of control desired, image issue.
What are the 4 different stores in channel member selection?
Specialty stores, department stores, convenience stores, supermarkets.
What is channel conflict with channel conflict management?
Disagreement among marketing channel members on goals and roles.
What are horizontal conflicts with channel conflict management?
Conflicts among firms on the same level of distribution.(Disputes between businesses at the same level of the channel (e.g., two retailers competing for the same market).)
