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Reading 7 - The Marketing Mix - Place (Distribution Channels)…
Reading 7 - The Marketing Mix - Place (Distribution Channels)
Introduction
The ease and availability of the offering is key to success.
This means ensuring that sufficient quantities, appropriate outlets and acceptable delivery costs are provided (Dibb et al., 2016)
Marketers need to collaborate effectively with the operations management function to achieve this.
Distribution Channels
Customers are typically offered a range through which to purchase an offering.
Kotler and Armstrong (2016, p. 377) refer to a set of channel members, such as suppliers and distributors, that enable an organisation to offer its products to customers as a value delivery network.
Channel members may perform the following:
Information - can aid strategic planning and provide vital information for marketers.
Promotion
Contact
Matching - may influence aspects of the product to enable it to
match the customers needs.
Negotiation
Financing
Risk taking
Three aspects of VMS:
Owning the other channel members - Corporate VMS
Example is Apple, manufactures chip and sensors for its products, a lab in Taiwan and purchased a manufacturing facility in North San Jose.
Enables flexibility and control over manufacturing.
Having contractual arrangements - Contractual VMS
Example - franchises such as McDonald's.
Exerting control over them through superior size or power - Administered VMS
Example - Major supermarkets such as Asda, Tescos etc.
Collaborative Distribution
Organisations can also have distribution agreements in which they collaborate through channels for a joint advantage.
Organisations can join or merge on a temporary basis to pursue a marketing opportunity.
There may be barriers to such joint ventures. Such as entrenched culture, some loss of control and sharing of sensitive data (Terr, 2015).
Different types of collaborative distribution (Environmental Defense Fund, cited in Terry, 2015):
Back haul - sharing opposite routes to fill empty capacity
Co Loading - Sharing capacity in the same direction to fill up loads.
Continuous move routing - replacing separate shipments with multi-stop trips.
Physical Internet - a shared network based on an interconnected logistics system of shared facilities for transporting and storing freight.
Multiple Distribution Channels
Different channels can be implemented to either help the products reach many different areas or to distribute multiple different products.
The use of a physical store/facility and the internet to meet the needs of customers who chose not to or can't purchase the product in person.
Choosing the right distribution Channel
Influences to choosing the right channels:
The level of service an organisation wishes to provide
The size of the company, which affects how much of the distribution it can provide itself.
The Type of product:
Convenience products - widespread, convenient locations.
Shopping products tend to use selective distribution
Speciality products - exclusive distribution through one or only a few selective outlets.
Perishable products - may need to have short distribution designs.
Competitors - whether grouped together, such as restaurants or distanced, such as concert stadia.
Environmental Factors (STEEPLE) - may affect choices. Amazon offers delivery slots of one hour in London owing to the population density.
Possible Causes of Conflict:
Expectations are breached
When a member acts on behalf of their own best interests which threatens the interests of the other member/members.
Poor performance by a member
Communication
Exclusive Distribution
Exclusive distribution or dealing are arrangements whereby a manufacturer requires its distributors to sell only its product(s) and precludes its distributors from selling competitors' product(s).
Other restrictions that manufacturers sometimes may try to place on distributors include sales territories restrictions which prohibit them from selling the manufacturers' product(s) outside a designated area, and types of tying agreements, in which a manufacturer ties a distributor to taking mire or all of its products.
