This presentation discusses distribution channels in supply chain management. It defines distribution channels as the set of organizations involved in making a product available to consumers. The presentation covers traditional distribution functions and how digitalization is impacting distribution. It also discusses the differences between direct and indirect channels, as well as push and pull strategies. Major issues and challenges in distribution channels are also addressed.

1. Presentation on:
Supply Chain Management
Topic:
Distribution Channels
Presented by:
Abdinasir Ahmed Ali
Program: Post graduated Diploma in
Supply chain management
Presented to
Professor,
Mohammed Shamsuddoha
11th
November,
2016

2. Distribution Channels
 A distribution channel - set of
independent organizations involved in the
process of making a product or service
available to the consumer or business user
 Used to move the customer towards the
product or the product to the customer
 Organic development of an industry

3. Place = Distribution
 The 4Ps
 Product, Price, Place, Promotion
 What the “P” of Price is to Revenue
Management, the “P” of Place is to
Distribution

4. Distribution also describes
 Locations for hotel brand distribution
 Franchising
 Ownership
 Management contracts
 The sales staff and system
 Group sales or volume accounts
 Reservations and transient sales
 National sales offices
 Representation firms, consortia

5. Distribution
Today “distribution” in the hospitality industry
generally references transient sales today
Revenue management and distribution merging
together
Internet marketing includes distribution issues

6. Distribution Channel Functions
 Information: consumer behavior “search
stage”
 Promotion: messaging
 Negotiation: price and other terms
 (how is this done online?
 Physical distribution: think e-tickets?
 Prospecting: finding, communicating, and
tracking prospective buyers

7. Digitalization and Connectivity
 Digitalization - converting text, data,
sound, and image into a stream of bits
that can be dispatched at high speeds
from one platform to another
 Connectivity - building networks
connecting people and companies;
social and mobile convergence

8. Direct versus Indirect Channels
 Direct Channels
 Employed sales staff
 National sales staff
 Brand.com
 Voice/CRS/Mobile
 Indirect – Intermediaries
 Why use them?
 Why so many of them?

9. Push vs. Pull strategies
 Pushing the product “down” through the
distribution channel TO the customer
 Incentives to travel agents and intermediaries
 Pulling the customer “up” through the
distribution to the channel
 Traditional media/private sales/CRM

10. Why Use Intermediaries?
 History of travel
 Selling through wholesalers and retailers usually is
much more efficient and cost effective than direct
sales
 Fragmentation of the travel purchase and travel
inventory, transportation (idea of “lift”), hotels,
attractions, meeting facilities, restaurants, and so on.

11. E-Commerce & E-Marketing
 E-commerce involves buying and selling
processes supported by electronic means,
primarily the Internet
 E-marketing is company efforts to
communicate about, promote, and sell
products and other services over the Intranet;
also web or Internet Marketing
 Not easy to separate but different issues

12. E-Commerce Domains
 B2C (business to consumer)
 Branded websites
 B2B (business to business)
 Passkey
 C2B (consumer to business)
 User groups
 C2C (consumer to consumer)
 Blogs; review sites are blends of above

13. Internet Intermediaries
 History of the internet as a discount channel
 Price and convenience key drivers still
 Dominance about inventory allocation
 Consistency of all 4Ps by channel
 How Product is described
 Pricing parity
 Channel profitability
 Communication needs to vary by segment (channel)

14. Major Issues/Challenges
 Costs have risen as has competition
 Global differences in systems
 Technology also flattening this
 System hard to change and complex to manage
 Historical controls of GDS, OTA
 Diversity of travel “parts” makes all of the
distribution points part of the experience and if an
intermediary fails, so does the experience

15. Evaluation of Channels
 Control and cost of each channel
 Tracking of statistics to better negotiate
contracts in the future
 Understand when and why to use a channel
 Good channel management ensures
customer satisfaction AND revenue
optimization AND profit maximization