ABSTRACT
Distribution channels provide the means by which products and services are made available to end-user customers
Marketing channels are the means by which customers can access the products and services they want, at their convenience
The number of exchanges the manufacturer needs to undertake is reduced when an intermediary is introduced to the channel structure and the direct channel becomes an indirect channel
Source: Hughes and Fill: CIM Coursebook Marketing Communications (Elsevier Butterworth-Heinemann, 2004)
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S Intermediary B
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Marketing channels consist of a number of different organizations (aka intermediaries), each of which fulfils a particular role in adding value
Supply chains extend from the customer to the individual suppliers and are concerned with the physical aspects of distribution (aka logistics management)
Channel management is concerned with the management of customer behaviour in order to achieve marketing goals
Source: Hughes and Fill: CIM Coursebook Marketing Communications (Elsevier Butterworth-Heinemann, 2004)
Membership of a marketing channel will vary according to a range of factors, but intermediaries play a key role in enabling manufacturers to reach their end-user markets. Channel members can usually only survive if they collaborate and cooperate with other channel members
n Break bulk n Provide different assortments for retailers n Stockholding
to be completed properly, there needs to be a flow of information up and down the channel, a flow of finance (either investment or purchase), a flow of orders and negotiation flow
There is also a flow of marketing communications that can smooth the relationships between channel members. These are an important aspect of marketing channel management
n Provide wholesalers with outlets n Purchase small quantities on a regular basis n Focus on end-user motivations
The use of Internet technologies has had a major impact on marketing channel structures. Deciding to provide an only ‘direct to customers’ channel or to add a direct channel, often results in eliminating some intermediaries (known as disintermediation or depopulating of a marketing channel)
Many direct channels have been developed to allow for new services, such as booking airfares direct (in b2c markets) or dealerships ordering car parts via paperless systems direct from the manufacturer (in b2b markets)
Advances in digital technology have brought about new business models that emphasize virtual integration, leading to new forms of intermediary (known as reintermediation or repopulating of a marketing channel)
The use of extranets can assist channel members to share information and improve order processing
n Competing goals
n Differences over domains
n Perceptions of reality
Channel conflict cannot be stopped but it can be managed by the strength of relationship between channel members and the quality of marketing communications
by creating trust and commitment. The interdependence of channel members’ needs is to be based on trust. Trust is the confidence one channel member has when interacting with another member with respect to their reliability and integrity
Commitment is based on the desire to continue and maintain a valued relationship
Communications between members is an important coordinating mechanism. A planned push communications strategy will reinforce channel relationships
Promotional communication targeted at different intermediaries is known as a push strategy
Source: Hughes and Fill: CIM Coursebook Marketing Communications (Elsevier Butterworth-Heinemann, 2004)
WhoIesalar
n Improved control over branding/positioning n Encourages retailers to stock n Provides support for channel partners n Reduces overall promotional costs with pull
strategy savings
n Needs consolidation with product knowledge n Could be expensive if there is a large number
of distributors n Could result in information deviance if
campaign is not planned properly
n Power – Is it distributed equally? n Direction – Is it one or two-way? n Frequency – How often should it occur? n Style/content – Should tone be in/formal? n Distortion – Will information be received,
stored, processed and actioned in the way intended?
