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Marketing > Types of Channels (14) > Flashcards

Types of Channels (14) Flashcards

1
Q

All types of channels are either…

A

direct and indirect

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2
Q

When learning about channels, the major distinction is whether a channel is _____ or _______

A

direct, indirect

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3
Q

What is a direct channel?

A

A direct distribution channel is one that the manufacturer or supplier owns.

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4
Q

Who owns a direct channel?

A

a supplier or manufacturer

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5
Q

In a direct channel there are no ____-_____ intermediaries involved in selling or handling the brand’s products.

A

third party

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6
Q

IN a direct channel no ______ comes between the selling manufacturer and the buying customer.

A

distributor

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7
Q

No distributor comes between the…

A

selling manufacturer and the buying customer.

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8
Q

Brands that use direct channels own all the _______ and ______ functions as well as the relationships the brand has with its customers.

A

sales, delivery

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9
Q

What are some examples of direct channels?

A
  • A company sales team - A company store (e.g. Apple stores are a direct channel for Apple) - A company’s online store - A company’s catalog
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10
Q

A manufacturer has total _______ over its brand and every aspect of the experience a customer has when interacting through direct channels.

A

control

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11
Q

A manufacturer has total control over its brand and every aspect of the experience a customer has when interacting through…

A

direct channels

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12
Q

When are direct channels prevalent?

A
  • when customers are large - when customers insist on it - when the sales process is complex - When the sales process delivers value
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13
Q

When a brand has ______ customers, it typically doesn’t want anyone or anything to come between it and those customers.

A

For example, IBM has a sales force that calls directly on its most important commercial customers. Likewise, large pharmaceutical companies employ sales representatives that sell directly to healthcare organizations. think B to B

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14
Q

When the buying journey for a solution involves extensive customer education, negotiations, solution customization, special terms and conditions, or concessions, these sales usually occur through a…

A

direct channel

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15
Q

When the buying journey for a solution involves extensive customer ______ ,_______, solution customization, _____ ______ and conditions, or concessions, these sales usually occur through a direct channel.

A

education, negotiations, special terms

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16
Q

It’s not uncommon for customers to receive a lot of _______ through the sales process in the form of advice, expertise, and consulting.

A

value

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17
Q

It’s not uncommon for customers to receive a lot of value through the sales process in the form of…

A

advice, expertise, and consulting.

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18
Q

What are the factors that could cause a brand to opt for direct distribution?

A
  • Margin - faster supply chain - support and expertise - discounts - adding value
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19
Q

distribution channels have a _____.

A

cost

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20
Q

Indirect channels are usually paid a percentage of the sales they make, or what’s commonly referred to as a…

A

margin

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21
Q

When the speed of getting products into the hands of customers is a major part of the value AND when indirect channels slow down the supply chain, then…

A

brands will use direct channels.

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22
Q

When the solutions a brand sells require specific ______, support, or ______ that only the brand can provide, then sales must occur through direct channels.

A

advice, expertise

23
Q

What are the downsides of using direct channels?

A

When a company opts to use direct channels only, it assumes all the financial risks since there are no retail or other indirect distribution channels to share them. I

24
Q

It’s sometimes also expensive to go only with direct channels because brands must develop the _______ to do so.

A

infrastructure Direct distribution may require warehouses, a fleet of delivery trucks, forklifts, and other expensive equipment.

25
Q

What is an indirect distribution channel?

A

An indirect distribution channel is any third-party intermediary that is between the selling brand and the buying customer.

26
Q

An indirect distribution channel is any third-party _________ that is between the selling brand and the buying customer.

A

intermediary

27
Q

what is a third-party intermediary?

A

simply another business, one that is separate from the brand whose products it carries

28
Q

what is a common type of indirect distribution channel?

A

retailer

29
Q

what are some examples of retailers?

A

Amazon, Target, and Walmart, which sell many brands but don’t manufacture or produce anything they sell. T

30
Q

Amazon, Target, and Walmart carry the brand products that we buy and get a _____ for what they sell.

A

margin

31
Q

In the United States, _________ distribution is how consumers purchase most goods, products, and services.

A

indirect

32
Q

What are the advantages of having an indirect distribution channel?

A
  • The brand gets access to the channel partners’ customers without having to spend its own resources, time, or money to recruit those customers. - Brands also can exploit their partners’ logistics, sales, support systems, and other infrastructure such as warehouses. - Not having to worry about these systems and infrastructure allows a brand to focus on and invest in its products.
33
Q

Indirect channels allow brand to: - get access to the channel partners’ ________ without having to spend its own resources, time, or money to recruit those customers. - exploit their partners’… - Not having to worry about these systems and infrastructure allows a brand to focus on and invest in its…

A
  • customers - logistics, sales, support systems, and other infrastructure such as warehouses. - products
34
Q

The _______ that brands must pay to indirect channel partners can lower profits.

A

margin

35
Q

Brands that partner with large, indirect channel distributors may find that they lose the ability to completely control things like…

A

pricing, packaging

36
Q

What are the advantages of indirect channels?

A
  1. access to new markets 2. ability to handle small purchases 3. assortment that consumers value
37
Q

Indirect distributors are often in _______ that brands aren’t yet in, giving brands an almost instant presence in those ______

A

markets, markets

38
Q

Brands often manufacture in bulk and don’t have the ______ or infrastructure to handle single product sales to consumers.

A

systems

39
Q

Brands often manufacture in bulk and don’t have the systems or infrastructure to handle….

A

single product sales to consumers.

40
Q

Many brands manufacture things that consumers don’t buy ________. Instead, a brand’s products often go into the shopping cart alongside many other brands’ products that consumers like to purchase _________.

A

individually, collectively

41
Q

What are some types of indirect channels?

A

wholesalers, retailers, agents, brokers, dealers, franchisees,

42
Q

Give your channel partners too little margin and they’ll have no ____________ to sell your product. Give them too much and you’ll sacrifice ______

A

motivation, profits

43
Q

How do indirect channels make money?

A

indirect channels usually earn a percentage of what the consumer pays to buy a product.

44
Q

What key numbers do you have to understand when investing in an indirect channel?

A

what it costs to make a brand’s product

what margin indirect channel partners customarily earn.

45
Q

What are wholesale retailers?

A

firms that buy from manufacturers and then sell to other retailers

46
Q

READ THIS

A

Looking first at what indirect distribution channels make in margin, the percentages may surprise you! In general, wholesale distributors (firms that buy from manufacturers and then sell to other retailers) command 60 to 70 percent of what consumers pay for a product. So, a skirt or pair of pants purchased at retail for $99 may put between $59 to $69 in the wholesaler’s pocket. If there is no wholesaler that supplies those retailers (the retailers buy product direct from the manufacturer), the retailers themselves typically get between 40 and 60 percent, which in this example puts about $40 to $59 in their cash registers. One of the authors worked for years in the enterprise software industry, where indirect channel partners could expect to keep half of the revenue from every software license sold.

The surprising part of these figures is how little it actually costs to make many of the products that consumers buy. According the Business Insider, that small popcorn you paid $6.50 for at the movie theater cost about $0.35 to make. That 12-ounce soft drink you purchase at the local convenience store for about $1 costs $0.16 to produce. The $28 to $32 printer ink cartridge you bought cost about $4 to $5 to make. You might think that brands could lower prices with all this margin between what products cost to make and what we pay for them. There is more, however, to this picture.

47
Q

Manufacturers must know precisely what it costs to ______ and ______their products.

A

make , sell

48
Q

In accounting terms what precise costs to make and sell a product?

A

Cost of Goods Sold (COGS)

49
Q

Cost of Goods Sold (COGS) is..

A

precisely what it costs to make and sell their products.

50
Q

What goes into the COGS?

A

raw materials, the production costs, the packaging costs, printing, labeling, handling, packing, shipping, and anything else the brand has to do to get its products ready to sell through indirect distribution.

51
Q

What are several factors and conditions that could cause a brand to opt for indirect distribution?

A
  • order size
  • Assortment
  • market presence
  • customer understanding
  • added value
52
Q

It’s very common for a channel partner to distribute a brand’s products or solutions by integrating the brand’s solution with some…

A

added value

additional features, functions, or services that the channel partner provides.

53
Q

It is therefore necessary for brands to make sure they provide the proper _______ and ________ to keep their indirect channel partners fully engaged.

A

incentives, training

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