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Remarkr

Distribution Channels

1. Marketing Channels

Definition:

  • A set of intermediaries that help make a product/service available to the end consumer (Kotler & Armstrong).
  • Path from producer → customer.

Types:

  1. Direct Channels:

    • No intermediaries (e.g., online stores, company-owned outlets).

  2. Indirect Channels:

    • Involve intermediaries like wholesalers, retailers, agents.
    • Subtypes:
      • Retail
      • Wholesale
      • Agent/Broker
      • Distributor

Functions:

  • Information gathering
  • Promotion
  • Negotiation
  • Physical distribution
  • Financing

2. Channel Structure

Channel Level:

  • Direct: Producer → Consumer
  • One-level: Producer → Retailer → Consumer
  • Two-level: Producer → Wholesaler → Retailer → Consumer
  • Three-level: Producer → Distributor → Wholesaler → Retailer → Consumer

Channel Length:

  • Total intermediaries in the chain.

Channel Intensity:

  • Intensive: Many retailers (e.g., toothpaste).
  • Selective: Few retailers (e.g., luxury watches).

Factors Influencing Choice:

  • Target market
  • Product type (perishable = shorter channels)
  • Company objectives
  • Capabilities

3. Criteria for Selecting Channels

  1. Target Market Accessibility: Align with customer demographics/location.
  2. Cost: Balance affordability and reach.
  3. Expertise: Partner experience/reputation.
  4. Brand Alignment: Consistency with brand values.
  5. Competitive Edge: Differentiate from competitors.
  6. Flexibility: Adapt to market changes.
  7. Legal Compliance: Follow regulations.

4. Wholesaling (Distributors)

Definition:

Selling goods to retailers/businesses (not end consumers).

How It Works:

  • Bulk buying → Storage → Distribution to retailers.

Types:

  1. Merchant Wholesalers: Own products (Full-service/Limited-service).
  2. Agents/Brokers: No ownership; earn commissions.
  3. Manufacturers’ Branches: Direct sales by producers.
  4. Specialty/Cash & Carry/Drop Shippers/Rack Jobbers.

5. Retailing

Definition:

Direct sales to end consumers.

Types:

  • Department Stores: Multi-category (e.g., Macy’s).
  • Supermarkets: Food/household items.
  • Discount Retailers: Low-cost (e.g., Walmart).
  • Specialty Stores: Niche products (e.g., Apple Stores).
  • E-commerce: Online sales (e.g., Amazon).
  • Pop-Up Shops: Temporary retail spaces.

6. Physical Distribution (Logistics)

Components:

  1. Transportation: Modes (road, air, sea).
  2. Inventory Management: Stock optimization.
  3. Warehousing: Storage solutions.
  4. Packaging: Safety/branding.
  5. Order Fulfillment: Efficient delivery.
  6. Reverse Logistics: Returns/recycling.

7. Channel Management & Conflict

Channel Design:

  • Based on target market, product type, company goals.
  • Options:
    • Direct
    • Indirect
    • Multi-channel

Conflict Types:

  • Vertical: Between different levels (e.g., producer vs. retailer).
  • Horizontal: Between same-level members (e.g., rival retailers).

Resolution Strategies:

  • Clear agreements
  • Performance tracking
  • Mediation