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BXY207 Reading 7: The Marketing Mix - Place (Distribution channels) -…
BXY207 Reading 7: The Marketing Mix - Place (Distribution channels)
An offering needs to be made available in a way that customers are able to purchase it easily.
E.g. Sufficient quantities, appropriate outlet and delivery costs (Dibb et al., 2016)
Marketers need to collaborate effectively with the operations management function to achieve this.
Distribution Channels
Kotler and Armstrong 2016, p. 377 Value delivery network
A complex set of channel members, suppliers and distributors
Functions some channel members may perform:
Information (About other stakeholders and forces in the marketing environment
Promotion (Communicating promotions)
Contact (Potential buyers or consumers)
Matching (May influence the product to met customer needs better)
Negotiation
Financing
Risk Taking
Traditional distribution channels consisted of one or more links in a chain from the manufacturer to consumer
Vertical Marketing System (VMS
Channel members act as a unified system under the leadership of one channel member usually due to:
Ownership
Contractual arrangements
Superioer size or power
Franchises are an example of contractual VMS
Collaborative Distribution
Unified channel systems can also take place horizontally (organisations at the same level collaborate)
Types of collaborative distribution:
Backhaul (sharing opportunity routes)
Co-loading (sharing capacity in the same direction)
Continuous move routing (multi-stop trips)
Physical Internet (Shared network, interconnected logistics system, shared facilities)
Choosing the right distribution channel
Distribution objectives and choices may be infuenced by:
Service they with to provide
Size of the company
Type of product
Competitors
Environmental factors
Poor performance by a channel member can cause conflicts
Organisations need to consider both needs of end buyers and other members in the distribution network (Jobber and Ellis-Chadwick, 2013)
Channel agreements must comply with laws relating to issues such as competition rules on 'vertical agrements'
Exclusive distribution or exclusive dealing are arrangements whereby a manufacturer requires its distributors to sell only its product - distributors cannot sell competitors products