class15

marketing

What is Distribution?

A set of interdependent organizations that help make a product or service available for use or consumption by the consumer.

Why do we need distributors/intermediaries, and how do they add value?

They reduce the amount of work that must be done by producers and consumers by bridging the gap between them. They offer firms more efficiency than they could achieve on their own.

How do intermediaries "transform" product assortments to add value?

Producers make narrow assortments of products in large quantities. Intermediaries transform this because consumers want broad assortments of products in small quantities.

Compare the characteristics of a Direct Channel vs. an Indirect Channel.

Direct Channel (Producer ➔ Consumer): Maximum control, minimum issues, maximum customer knowledge, and maximum revenue.

Indirect Channel (Producer ➔ Intermediaries ➔ Consumer): Less work for the producer, but lower control and much lower customer knowledge.

What is a Multichannel Distribution System?

A system where a single firm sets up two or more marketing channels to reach one or more customer segments (e.g., selling online, in retail stores, and through catalogs simultaneously).

What are the Pros and Cons of a Multichannel Distribution System?

Pros: More touchpoints, greater reach, and greater sales.

Cons: Harder to control and much more complex.

What are the 4 steps of Channel Design Decisions?

1. Analyzing customer needs

2. Setting channel objectives

3. Identifying channel alternatives

4. Evaluating channel alternatives

When "Identifying Channel Alternatives" (Step 3 of Design), what 3 specific things are you deciding on?

1. Types of intermediaries

2. Number of intermediaries (Distribution Intensity)

3. Responsibilities of channel members

Define the 3 levels of Distribution Intensity.

1. Intensive: Distributing through as many outlets as possible.

2. Selective: Distributing through more than one, but fewer than all possible intermediaries.

3. Exclusive: Giving a limited number of dealers the exclusive right to distribute the product.

What is Disintermediation?

When product or service producers cut out traditional marketing channel intermediaries, or when radically new types of intermediaries displace traditional ones (e.g., Uber displacing traditional taxi dispatch systems).

What are the 4 steps of Channel Management Decisions?

1. Selecting channel members

2. Managing channel members

3. Motivating channel members

4. Evaluating channel members

What 4 core factors should a company consider when selecting its overall distribution strategy?

1. Product: Prestige, perishability, fragility, category.

2. Company: Capacity, resources, profit margins.

3. Target Market: Customer patronage and needs.

4. Competition: Whether to mimic competitor channels or avoid them.