distribution channel decision

8/12/2019 Distribution channel Decision

1/21

Slides Developed by:

Micaela L. SaguidMBA-1

Distribution Channel

Decision


2/21

Channel Design Decision

It concerned with developing a channel

structure that links the firms marketing

strategy with the needs of its target market.


3/21

Channel Management

It involves the development of policies

and procedures to gain and maintain the

cooperation of and often to form

mutually beneficial long-termrelationship with the various

institutions within the channel.


4/21

Objectives of Distribution Channels

Increase the availability of the good or

service to potential customers.

Satisfy customer requirements by

providing high levels of service. Ensure promotional effort.

Obtain timely and detailed market

information.

Increase cost- effectiveness.

Maintain flexibility.


5/21

Institutions Found in Marketing

Channels Merchant Wholesalers

Agent Middleman

Retailers

Nonstore Retailing


6/21

Merchant Wholesalers

It is independently owned establishments

which take title to the merchandise they

carry.

It may be classified into the following:

General line merchant

Specialty line merchant


7/21

Agent Middleman

Agent middlemen do not take title to, or

physical possession of, the goods they

deal in.

Manufacturers agents or manufacturersreps

Sales agents

Brokers

E-Hubs


8/21

Retailers

Sell goods and services directly

to final consumers for their

personal, nonbusiness use.


9/21

Nonstore Retailing

Refers to those who sell outside of a store

They consist of the following:

1. At-home retailers

2. Telephone retailers

3. Vending machine retailers

4. Mail-order retailers


10/21

Marketing Channels for

Consumer Goods and Services

Figure 1-1


11/21

Marketing Channels for

Industrial Goods and Services

Figure 1-2


12/21

Channel Design for Global Markets

Market entry strategies

Exporting is simple because it involves

the least commitment and risk.

Contractual entry modes are nonequityarrangements that involve the transfer of

technology and/or skills to an entity in a

foreign country.

Overseas direct investment can beimplemented in two waysthrough joint

ventures or sole ownership.


13/21


Contractual entry modes:

Licensing

Franchising

Include contract manufacturing

Turnkey construction contract

Coproduction

Countertrade


14/21


Channel alternatives

The use of domestic middlemen who

provide marketing services from a

domestic base.The use of foreign middlemen.


15/21

Channel Management Decision

Vertical Marketing Systems

Corporate VMSs

Contractual VMSs

Administered VMSs

Relational VMSs


16/21


Sources of channel power

Economic power

Coercive power

Expert power Referent power

Legitimate power

The power of any firm within a

distribution channel is inverselyproportional to how dependent the otherchannel members are on that firm.


17/21


Channel control strategies

Pull Strategy

Push Strategy


18/21


Trade promotions

Manufacturers typically use a

combination of incentives to gain reseller

support and push their products throughthe channel.

Most of these incentives constitute sales

promotion activities.

Categories of sales promotion activities: Consumer promotions

Trade promotions


19/21


Trade promotions

Incentives to increase reseller purchases

and inventories

Incentives to increase personal sellingeffort

Incentives to increase local promotional

effort

Incentives to improve customer service

The changing role of incentives in

relational distribution systems


20/21


21/21

End Of SlidesThank You

Distribution Channel

Decision

distribution channel decision

Documents