Distribute or die: Offline and online
distribution strategy
Hoorcollege marketing blok 2 week 7
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Learning goals
 By the end of the reading and colleges you should
understand:
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How place fits into the overall marketing mix
The types of distribution channels available
What is channel conflict and some solutions for this issue
How distribution relates to interactive media products
Some of the main trends in distribution
Some ways of choosing distribution channels
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Agenda
 Introduction: what is place?
 Types of distribution channels
 Channel conflict
 Trends in distribution
 Interactive media and distribution
 10 tips for choosing and managing distribution
channels
 Summary
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What is place?
 Place in the 4Ps of marketing refers to all aspects of getting
the product/service/idea from the producer to the end
consumer
 It is also called distribution or distribution channels
 It is an important, but often neglected element of the marketing
mix
 When done well it can help ensure success
 When things go wrong it can lead to big problems
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Why is place part of the marketing
mix?
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Place: the golden rule
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What sort of things can go wrong?
 Choosing the wrong place
 A place where the customer isn’t
 A place that is not consistent with positioning / marketing mix
 Fighting between places
 Not enough product in the right place
 Imagine this happening during a promotional activity
 Too much product in the right or wrong place
 Not developing distribution channels to keep up with
customers
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Types of distribution channels
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Distribution channels
 These are the routes that companies use to get their
product to the customer
 Channels are normally split by:
 Customer type
 Business to consumer channels (B2C)
 Business to business channels (B2B)
 Distribution type
 Direct channels
 Indirect channels
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Indirect channels cost money
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Why do organizations do indirect
business?
 Because distributors do a lot of work including:
 Distribution
 Financing
 Risk taking
 Esp. inventories
 Providing information
 Marketing intelligence to producer
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Promotion
Customer management
Acquisition
Matching needs to products
Negotiation of contracts / prices
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Examples of direct channels
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Examples of indirect channels
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Channel conflict
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What is channel conflict?
 Most distribution channels are made up of separate
companies
 Often these companies are competitors
 One of the main problems is that they often conflict
 This uses time
 And can drive the going price down
 Two sorts of channel conflict:
 Horizontal conflict
 Vertical conflict
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Horizontal conflict
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Vertical conflict
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Managing channel conflict
 The key is to manage your channels
 Options include
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Avoid large pricing differences between channels
Maintain regular contact
Develop channel specific line-ups
Channel specific support
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Logistics
Promotions
Service
Financing
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Interactive media and distribution
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Interactive media is a distribution
channel
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Tangible products
 The web has opened up
many new distribution
channels for tangible
products
 Both direct and indirect
channels
 Consumers are moving to
these channels
 Increased risk of channel
conflict
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Services
 Interactive media has
opened new channels for
services and is especially
popular with financial
services
 ATMs (pinautomaats) online
& mobile banking are
revolutionizing banks
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Software
 Online distribution of
software is an obvious step
 A number of different
models
 Direct sales
 Shareware
 Free software
 The “free” model has been
very successful for Adobe
 Risk of channel conflict very
high in some areas
 Music / film
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Interactive media products
 Interactive media also
provides a channel for
interactive media products
 E.g. Google search (site
search, desktop, mobile),
adwords
 This is a new trend, but it
seems to have potential
 Part of Google’s success is
its innovative approach to
“distribution” of its products
 The phenomenon of
“widgets” and “embedding”
make this a more interesting
option in future
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Trends in distribution
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Shopping as a lifestyle and
experience
 Shopping is a leisure activity
 84% of UK adults enjoy
shopping
 Shopping is social
 Shopping is used by some
as therapy
 Shopping can be an
enjoyable experience
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 Many retailers and shopping
centres are trying to tie into
this trend
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Move online
 More people shopping
online (672m worldwide)*
 Europeans purchase more
frequently online than North
Americans
 Security issues being
resolved
 Familiarity helps
* Source: AC Nielson
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Growth in retailer strength
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 Large retailers have more
power than ever before
 This leads to better prices
for consumers
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 But killing smaller
specialists
 May reduce choice longterm
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10 tips for choosing and managing
distribution channels
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10 tips for choosing and managing
distribution channels
1. Be where the customer is
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Ready to buy
Open to influence
2. Ensure the channel fits
positioning
3. Visibility is everything
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Ensure you have shelf-space
4. Treat your distribution as
partners
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Look after them and they will
look after you
6. Follow the customer
7. Develop new channels
8. Different channels require /
expect different profit margins
These might not fit your business
model
9. No distribution channel “has to
have you”
10. Never underestimate how
difficult it is to enter new
channels
5. Minimize channel conflict
through strong management
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Summary
 Distribution is important though sometimes
neglected
 The “place” should reflect positioning (and support
the rest of the marketing mix)
 Distribution needs to be strongly managed to avoid
channel conflict
 Place includes interactive media, in the case of
interactive media products there are many new
opportunities to distribute products
 Trends in online and offline distribution are leading
to many opportunities and threats of channel conflict
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