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Introduction to Channels of Distribution
 

Introduction to Channels of Distribution

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An introductory workshop to channels of distribution

An introductory workshop to channels of distribution

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    Introduction to Channels of Distribution Introduction to Channels of Distribution Presentation Transcript

    • Introduction to Channels of Distribution Workshop
    • Learning Objectives Why study marketing Channels What a marketing Channel is Why manufacturers choose to use intermediaries between themselves and end- users What marketing flows define the work of the channel Who the members of marketing channels are and the flows in which they can specialise
    • Why Marketing Channels areimportant? 1. The channel is the gatekeeper 2. The channel is an important asset in the company’s overall marketing and positioning strategy. 3. Channel experience impacts end-user’s perception of a brand image. 4. Channel key strategic marketing asset 5. Useful to develop a framework for managing a channel to operate more effectively.
    • What is a Marketing Channel? A marketing channel is a set of interdependent organisations involved in the process of making a product or service available for use or consumption.
    • Primary Functions of Channel Members to be a stockist of your product to represent your brand in the market place to gather marketing intelligence to assume risk to deliver product and offer post sales support to add value to the sale
    • How Channel Members Add Value
    • What recent channel issues have Starbuck experienced with their outlets?
    • Distribution is Global http://video.google.com.au/videosearch?q=starbucks+distribution&hl=en&emb=1&aq=- 1&oq=#q=starbucks+store+closures&hl=en&emb=1
    • What challenges and opportunities does Wrigley’s face in distributing chewing gum in China?
    • Wrigley’ s Chewsthrough China•Distribution in China expandedfrom 20 stores to 1.6 millionoutlets (Shanghai accounts for30,000)•Outlets (Mum and Pop Shops)• A single pack of gum sold foronly 18 cents, its twentypercent profit margin led tohundreds, then thousands, thentens of thousands of loyaldealers.•"I make 0.3 yuan [about 4cents] from each pack," aChinese newspaper quoted onesatisfied storekeeper. "I dontsell other brands anymore."
    • How does Google earn it’s revenue?
    • Power of the Internet is ChangingDistribution
    • Harley Davidson 1300 Harley Dealerships in 60countries worldwide. Programs customised for individualdealers Treat customers as individuals “We’re a motorcycle company, andour distribution partners don’t liketo see our brand on sale”. “Harley-Davidson licensees meettwice a year at semi-annual dealershows where dealers have exclusiveaccess to preview and order licensedproducts.” The Harley Owners Group (H.O.G.),established in 1983, and the BuellRiders Adventure Group (BRAG) arehome to more than 900,000 membersWorldwide
    • Primary Questions 1. Which distributor, or distributor combination, is best suited for to take a new product or service to market? 2. How should the distributor network be managed once it is up and running?
    • Why do distribution channels exist?
    • Two Main Reasons 1. Demand Side Factors a. Facilitation of search b. Adjustment of Assortment discrepancy 1. Sorting (Alderson, 1957) - breaking down in separate stocks 2. Accumulation – bring similar stocks together 3. Allocation - smaller lots 4. Assorting - building assortment 2. Supply- Side Factors a. Routinisation of Transactions b. Reduction in number of contacts
    • FIGURE 1.2: MARKETING FLOWS IN CHANNELS Physical Physical Physical Possession Possession Possession Ownership Ownership Ownership Promotion Promotion Promotion Negotiation Negotiation Negotiation ConsumersProducers Wholesalers Retailers Industrial Financing Financing Financing and Household Risking Risking Risking Ordering Ordering Ordering Payment Payment Payment Commercial Channel Subsystem
    • Key Members? Manufacturers Intermediaries End-users
    • Consumer Marketing Channels
    • Multi Channel Distribution System
    • Table 1 The Need for a Multi-Channel Strategy Will Intensify Increasing need for multi-channel strategy High Strategic choice Channel substitutability Retail Strategic banking opportunity Retailing PC’s P&C Insurance Autos Airlines Low High Frequency of customer interactions
    • Summary• We defined concept of a marketing channel• We looked at how channels work and what functions and activities are performed inside the channel• Develop an analytical framework for channel design, modification and implementation• Framework for analyzing channel flows covered in Figure 1.2
    • You are welcome to contact Nigel Bairstow at B2BWhiteboard your source of B2B Asia / Pacificmarketing advicehttp://www.linkedin.com/pub/nigel-bairstow/6/41b/726http://twitter.com/#!/b2bwhiteboard