Design and Manage Marketing Channel
Explain why companies use distribution channels and discuss the functions these channel perform.
Answer:
Definition of Distribution Channel
One of the company goals is to deliver their value within the network through supplier, distributor, and also customer. In delivering the value, organization must have and build a distribution channel because most producers do not sell their product or service directly to the consumers. Distribution channel (also called marketing channel or trade channel) is sets of intermediaries that participating in the process of making a product or service available for use or consumption. In other words, distribution channel performs the work of moving goods from producers to final consumers. The activities can be illustrated in the form of a flow. Channel members are connected via a variety of flows. Five flows are illustrated in Figure 1 for the distribution or marketing of forklift truck. The more member that and organization has in their flow, the higher complexity of their distribution channel.
Figure 1 Five Marketing Flows in the Distribution Channel for Forklift Trucks
Importance of Distribution Channel
Distribution channel take part as an important function in an organization. It will affect all marketing decision and can be the key of the success of an organization. Example of marketing decision that comes from distribution channel is to decide the selling price of goods. If the distribution channel is long enough, then the price of goods will be higher compare to the one direct channel from producer to consumer. Distribution channel also represents an opportunity cost. It answers how to convert potential buyers into profitable consumers. In addition, distribution channel contribute to a decision of long-term commitments with other firm as a set of policies and procedures. For example, if a fast food company has pointed one food supplier and made an agreement for a long-term, then this intermediary will be one of
Answer:
Definition of Distribution Channel
One of the company goals is to deliver their value within the network through supplier, distributor, and also customer. In delivering the value, organization must have and build a distribution channel because most producers do not sell their product or service directly to the consumers. Distribution channel (also called marketing channel or trade channel) is sets of intermediaries that participating in the process of making a product or service available for use or consumption. In other words, distribution channel performs the work of moving goods from producers to final consumers. The activities can be illustrated in the form of a flow. Channel members are connected via a variety of flows. Five flows are illustrated in Figure 1 for the distribution or marketing of forklift truck. The more member that and organization has in their flow, the higher complexity of their distribution channel.
Figure 1 Five Marketing Flows in the Distribution Channel for Forklift Trucks
Importance of Distribution Channel
Distribution channel take part as an important function in an organization. It will affect all marketing decision and can be the key of the success of an organization. Example of marketing decision that comes from distribution channel is to decide the selling price of goods. If the distribution channel is long enough, then the price of goods will be higher compare to the one direct channel from producer to consumer. Distribution channel also represents an opportunity cost. It answers how to convert potential buyers into profitable consumers. In addition, distribution channel contribute to a decision of long-term commitments with other firm as a set of policies and procedures. For example, if a fast food company has pointed one food supplier and made an agreement for a long-term, then this intermediary will be one of
References: Chapter 12: Distribution Channels and Logistics Management. (n.d.). Retrieved from http://gmx.xmu.edu.cn/ews/business/pmarketing/chapter12.htm#distribution Identifying Major Alternatives. (n.d.). Retrieved from Marketing Notes: http://www.scribd.com/doc/55342177/27/Identifying-major-alternatives Kotler, & Keller. (2012). Marketing Management. Pearson. Marketing Channel and Supply Chain Management. Chapter 13. (n.d.). Retrieved from rainerapple.cn: www.rainerappel.cn/Pre-MBA/Marketing-Management/chapter_13.ppt