Distribution Strategy
Pertemuan Ke-17
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Channel of Distribution
Strategy
• The steps in the channel of distribution
strategy include:
– Determining the type of channel arrangement
– Deciding the intensity of distribution
– Selecting the channel configuration
2
Channel Objectives
• Product availability:
– Coverage of relevant retailers
– In-store positioning
– Coverage of geographic markets
• Promotional effort:
– Effective point of purchase promotion
– Effective personal selling support
• Customer service:
– Installation, training, repair
• Market information:
– Monitoring sales trends, inventory levels, competitor’s actions
• Cost-effectiveness:
– Cost of channel functions relative to sales volume
3
Type of Channel
• Vertical marketing systems (VMS);
– Ownership, a single firm in the channel may own all of
the participating organizations in the channel.
– Contractual, establishing formal operating
arrangements between channel participants.
– Administered, one firm manages the channel by
exerting power and influence rather than by
ownership or contractual ties. The administrator may
be a producer, and its product line.
4
Distribution Intensity
• Choosing the right distribution intensity
depends on management’s targeting and
positioning strategies and product and
market characteristics. The major issues
are:
– Identifying which distribution intensities are
feasible, taking into account the size and
characteristics of the market target, the
product and the requirements likely to be
imposed by prospective intermediaries.
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Distribution Intensity
– Selecting the alternatives that are compatible
with the proposed market target and
marketing program positioning strategy.
– Choosing the alternative that offers the best
strategic fit, meets management’s financial
performance expectations and is attractive
enough to intermediaries so that they will be
motivated to perform their assigned functions.
6
Channel Configurations
• Criteria to be considered:
– End-user considerations
– Product characteristics
– Manufacturer’s capabilities and resources
– Required functions
– Availability and skills of intermediaries
7
Selecting the Channel
Strategy
• Factors to be considered:
– Market access
– Financial considerations
– Flexibility and control considerations
8
Managing The Channel
• Issues to be discussed:
– Channel leadership
– Management structure and systems
– Physical distribution management
– Channel relationships
– Channel performance
– Conflict resolution
– Legal and ethical considerations
9
Conclusions
• The channel of distribution connects the
producer with the end users of goods and
services
• Manufacturers select the type of channel to be
used, determine distribution intensity, design the
channel configuration and manage various
aspects of channel operations.
• The choice of a channel strategy begins when
management decides whether to manage the
channel or to assume a participant role.
Strategic analysis identifies and evaluates the
channel alternatives.
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