Overview of Channels (14) Flashcards
What is a channel?
a path to market for goods and services.
What is distribution?
getting your new, innovative product to a place where customers can buy it
The inability to find the best distribution channels for products can…
limit a company’s success or even doom them to failure
distribution channels are also referred to as…
simply channels
distribution channels are also referred to simply as…
channels
A channel is a ____ to market for goods and services.
path A chain of retail stores is an example of a channel, as is an online store or a team of sales representatives. Amazon and Walmart serve as huge channels for the products of other brands. T
What are the two strategic questions many companies rely on channels to help answer?
- HOW DO YOU WANT TO SELL YOUR PRODUCT? 2. HOW DOES THE CUSTOMER WANT TO BUY YOUR PRODUCT?
For brands that make products, what method of distribution is best?
The answer is usually the one that get products into the biggest, most promising markets in ways that maximize product sales.
Brand that make products want to get their products int the biggest, most promising markets in ways that ________ product sales.
maximize
Bands may wish to sell their products through certain types of distribution channels, but how do customers want to buy those products?
Building the ideal channel for a product requires understanding how customers wish to buy it. Customers’ purchasing patterns may not match a company’s preferred channel for selling its products.
What the benefits of using a channel?
They create convenience for customers and for the brands that use them by providing access and availability to products that the brand itself cannot easily provide.
Channels create _______ for customers and for the brands that use them by providing access and ________ to products that the brand itself cannot easily provide.
convenience, availability
In most cases, a distribution channel is an ___________ between the products a brand manufactures and the customers who buy those products.
intermediary
An intermediary is a _______ _______
third party sometimes adding a third party is inefficient
In the business world, channel intermediaries help…
- source the goods or services that customers need, - place them where customers want to buy them
- have them available when customers are ready to buy.
In the business world channels help source the goods or services that customers ____, place them where customers _____ to buy them, and have them ________ when customers are ready to buy.
need, want, available
Under the classic 4 P’s framework which P are distribution channels under?
Place
Why ar channels needed?
- to get products where they’re needed so customers can buy them
- differentiation
- access to new markets
- economies of scale
- efficiency
- create barriers to competition
The right channels can provide ________ for the products distributed through those channels.
differentiation
. A previous chapter of this book discussed the importance of differentiation when it comes to positioning products. A relationship with the right distribution partner can sometimes provide this differentiation that causes customers to view a product as better, or more ideal.
Suppose that two companies have virtually identical product offerings. They have the same price and similar functionality, and neither has a brand strength advantage. What would cause a consumer to choose one brand over the other?
It’s difficult to know since there isn’t any obvious differentiation. Now, suppose that one of those brands arranges to distribute its product through a popular retail outlet, one in which the competing brand is not in. Almost immediately, a much larger number of consumers gain exposure to the brand, and sales take off. In this example, the distribution channel creates significant differentiation for the product sold through it.
A relationship with the right distribution partner can sometimes provide this ___________ that causes customers to view a product as better, or more ideal.
differntiation
very common reason for a brand to enter a channel distribution relationship is to get its products into…
new markets
Regardless of whether the new market is ________ or an industry ______, when the need is to enter a new market quickly, finding the right channel partner is often the fastest way.
geogrpahic, segment
Many products cost more to __________ than they do to __________
distribute, produce
The right mix of channels can create ______ or convenience for the customers, the suppliers, or both.
efficiency
Give an example for how channels create efficiency?
onsider the situation of a small company that manufacturers its products and then sells them. Without any channel partners to help sell its products, this company must rely on its own sales efforts to move its inventory. Selling takes time because consumers just buy one or two products per transaction, and the dollar value of the transaction amounts are low, so many sales transactions are necessary to move all the inventory.
With the right channel partner in this scenario, all the company has to do is sell its entire inventory to that partner. It requires just a single transaction that happens quickly, generating substantial revenue. The company no longer worries about selling to individual consumers because the channel partner assumes that role. This approach is very efficient for the supplier.
How do channels create efficiency for consumers?
Consider residential builders who require a variety of supplies to build a new house. If they had to go to each supplier individually to get all the supplies they need, it would look something like this.There are many transactions occurring in this illustration, and the builders have to spend time transacting business with each supplier.
When a Contractor’s Warehouse is placed between the builders and the suppliers, serving as the channel, the diagram looks quite different:
When a brand recruits a channel partner and the resulting relationship is mutually profitable, both sides see the advantages of the preserving the ________.
alliance
In other words, both the brand and its channel partners know that they have a good thing going, and they don’t want to mess it up.
The channel partner will stay _______ to the brand, and the brand will _______ that faithfulness with better partnership terms, margins, or both.
faithful, reward
There’s a willingness to make a few concessions to each other.
If their relationship is mutually beneficial, both brand and channel partner might willingly agree to limit their _________ with others.
Relationships
for example, to use its current channel partner exclusively, and reward it with a bigger margin in exchange for the partner agreeing not to represent competing brands..
The strength of the relationship between the brand and its channel partners can create a ______ to the brand’s competitors, who are put at a serious ______ if they don’t have effective distribution.
barrier, disadantage
When does an enduring relationhsip between a brand a channel partner emerge?
when the relationship works well for both parties.
When it isn’t, there’s no motivation to preserve the relationship. The channel partner may in fact actively search for new brands to represent.
When a relationship doesnt work well between brand and distribution channel, there’s no _______ to preserve the relationship.
motivation
The channel partner may in fact actively search for new brands to represent.
