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The Marketing Mix - Place (Distribution Channels: Block 1 - Reading 7 -…
The Marketing Mix - Place (Distribution Channels: Block 1 - Reading 7
Distribution Channels and Value Delivery Networks
Key Functions - beyond physical distribution and storage, channel members provide information, promotion, customer contact, product matching, price negotiation, financing and risk-taking.
Definition - a value delivery network consists of channel members (suppliers, distributors, retailers) that work together to make offerings accessible and provide efficiency, expertise and reach.
Channel Structures and Systems
Traditional Channels - independent channel members (manufacturer > wholesaler > retailer > consumer) pursuing individual goals which can lead to channel conflict.
Vertical Marketing Systems (VMS) - Channel members act as a unified system under one leader.
Contractual VMS - formed through contractual agreements/franchises (e.g. McDonalds, Hertz, Ford).
Administered VMS - controlled through dominant size or power (e.g. Walmart, major supermarkets).
Corporate VMS - single ownership of production and distribution (e.g. Apple owning labs, factories and retail stores).
Horizontal Collaborative Distribution - organisations at the same level collaborate to share capacity, transport and warehouse (e.g. backhaul sharing, co-loading, physical internet).
Choosing Distribution Strategies & Channels
Distribution Intensley
Selective distribution - fewer, selected outlets for shopping products.
Exclusive Distribution - One or very few exclusive outlets for speciality products.
Intensive Distribution - widespread, convenient locations for convenience products.
Influencing Factors - service level required, company size, product type/perishability, competitor location and STEEPLE environment factors.
Multiple Channels - combining physical stores, catalogues and online platforms to meet diverse customer purchasing preferences.
Channel Management, Conflict and Legal Issues
Legal Restrictions - compliance with competition laws regarding vertical agreements, sales territory restrictions, typing agreements and exclusive dealing.
The Omni-Channel Challenge - ensuring consistent, seamless messaging and availability across all physical and digital touchpoints along the customer journey.
Managing Conflict - conflict arises from breached expectations, poor performance or goal misalignment, managed through clear agreements on roles, rights and responsibilities.