Lecture 11: Distribution Channels Flashcards
distribution
activities required to get right product to right place at right time
what does a distribution channel do?
transfer the ownership of goods and moves them from point of production to point of consumption (usually to retailers); part of overall supply chain
direct distribution
no intermediaries between buyer and seller; avoids cost of using retailers
indirect distribution
one or more intermediaries working with manufacturers to provide for consumers (e.g, dealers acting a retailer, wholesalers instead of retailers for chips/candy)
multi-channel distribution
- multiple channels (e.g., retail and own branded stores, direct and catalogues)
push marketing strategy
focuses promotional efforts to convince them to carry its product
pull strategy
directed at consumers to build demand for products which might convince retailers to carry them
benefit of a wholesaler of retailer
each add value
channel conflict
when channel members are not in agreement about their goals, roles or rewards
vertical conflict
manufacturer with retailer conflict (e.g., Stanley wants Home Depot to carry all its tools and no other, but Home Depot wants to maximize sales in tools category)
horizontal conflict
retailer with retailer (e.g., Amazon with Target)
vertical marketing channel
members act as a unified system (work together to make distribution system more efficient)
administered vertical marketing system
dominant channel member controls channel relationship and operation of the supply chain (e.g., Walmart’s power over its suppliers)
contractual vertical marketing system
independent firms at different levels of supply chain join together through contracts e.g., franchising
corporate vertical marketing system
parent company has complete control and can dictate the priorities/objectives of marketing channel (e.g., Warby Parker designing glasses iin-house and selling online/own retail stores)