MGCR 352 - Chapter 12 Distribution Channels

marketing channel

individuals/firm involved in the process of making goods/services available

functions performed by intermediaries

• buying

• selling

• promotion

distribution channels

pathway by which product/service is moved from point of production to point of consumption

importance of distribution

• good distribution is critical to marketing success

• thought-out distribution strategy is critical attempting to convince retailers to carry firms products

supply chain management

set of approaches firms employ to efficiently integrate suppliers, manufacturers, warehouses, stores, transportation intermediaries into seamless value chain

→ DONE THE RIGHT WAY

logistics management

organizing and controlling the flow of goods from origin to destination efficiently.

Distribution Components

Suppliers, Producers, Consumers
overseen by Logistics Management

what are different channel structures

• direct distribution

• indirect distribution

• multichannel distribution

some combination of these forms

pull marketing

Pull marketing means attracting customers so they ask for or look for the product themselves

push marketing

Push marketing means actively driving products toward customers rather than waiting for them to find the product.

distribution intensity

refers to number of channel members to use at each level of supply chain

• exclusive (one or few, Tiffany n Co, Cartier

• selective (very few fetail customers so no retailers can sell particular brand ,hudson’s bay, simons)

• intensive (designed to get products into many outlets, walmart, loblaws)

how do distribution channels add value?

• buying/ selling process

• information

• facilitate exchange

channel conflict

• when channel members not in agreement about goals, roles, rewards

• marketing strategy of one is conflict with interest of other

managing channels through vertical marketing systems

Manufacturer → Wholesaler → Retailer → Consumer

Types/Phase of Vertical Marketing Systems

• Administered

• Contractual

• Corporate

each phase increases in the level of formalization/control

more formal = less likely conflict will arise

licensing-out

outward movement by licensor

licensing in

inward movement by licensee

What are the (dis)advantages of licensing/franchising

• advantages:

  • increase cash-flow

  • faster diffusion of IP internationally

  • short PLC/TLC

• disadvantages:

  • potential abuse

  • assisting potential future competitors

Franchising

franchisor licenses brand/business to franchisee who runs business pays fees/royalties

Direct franchising model

Host country → franchisor

Indirect franchising model

host country < — > home country

Six aspects in adding value in distribution channels

1) Data warehouse

2) Electronic Data interchange

3)vendor managed inventory

4) logistics management: making merchandise flow efficiently

5) inbound transportation

6) receiving/checking

just in time systems

• ensures goods are delivered only when they’re needed

• known as quick response in retailing

• reduced lead time

• increase product availability

• lower inventory investment