Distribution
What is distribution channel
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A set of interdependent organizations
(intermediaries) involved in the process of
making a product or service available for
use or consumption by the consumer or
business user
Channel decisions are among the most
important decisions that management
faces and will directly affect every other
marketing decision
Six basic channel decisions
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Direct or indirect channels
Single or multiple channels
Length of channel
Types of intermediaries
Number of intermediaries at each level
Which intermediaries? Avoid
intrachannel conflict
Why are Marketing Intermediaries
Used?
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Greater efficiency in making goods
available to target markets
Offer the firm more than it can achieve
on it’s own through the intermediaries
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Contacts
Experience
Specialization
Scale of operation
Match supply and demand
Channel intermediaries Wholesalers
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Break down ‘bulk’
buys from producers and sell small quantities
to retailers
Provides storage facilities
reduces contact cost between producer and
consumer
Wholesaler takes some of the marketing
responsibility e.g sales force, promotions
Channel intermediaries Agents
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Mainly used in international markets
Commission agent - does not take title
of the goods. Secures orders.
Stockist agent - hold ‘consignment’
stock
Control is difficult due to cultural
differences
Training, motivation, etc are expensive
Channel intermediaries Retailer
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Much stronger personal relationship
with the consumer
Hold a variety of products
Offer consumers credit
Promote and merchandise products
Price the final product
Build retailer ‘brand’ in the high street
Channel intermediaries Internet
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Sell to a geographically disperse market
Able to target and focus on specific
segments
Relatively low set-up costs
Use of e-commerce technology (for
payment, shopping software, etc)
Paradigm shift in commerce and
consumption
MARKET FACTORS
Customer Profiles
Consumer or Industrial
Customer
Size of Market
Market Factors
That Affect
Channel
Choices
Geographic Location
PRODUCT FACTORS
Product Complexity
Product Price
Product Life Cycle
Product Factors
That Affect
Channel
Choices
Product Delicacy
PRODUCER FACTORS
Producer Resources
Number of Product Lines
Producer Factors
That Affect
Channel
Choices
Desire for Channel Control
LEVELS OF DISTRIBUTION
INTENSITY
Intensity Level
Objective
Number of
Intermediaries
Intensive
Achieve mass market
selling.
Convenience goods.
Many
Selective
Work with selected
intermediaries.
Shopping and some
specialty goods.
Several
Exclusive
Work with single
intermediary. Specialty
goods and industrial
equipment.
One