The sign-board of a soft drink may be a cue for the person driven by thirst. 3. Intermediaries need to have technically sound sales force to explain and sell these complex products effectively. Channel selection should be such that the search time gets reduced. Everything you need to know about marketing channels. This is also known as a direct marketing channel. In order to do this, these firms must be assured that their products are distributed to their intended markets. For example, the buying characteristics of the purchaser of a high-end electronics device might be as follows: Knowing the buying specifications of consumers, the channel planner can decide on the type or types of wholesaler and/or retailer through which a product should be sold. 5. During the marketing strategy section of the marketing plan, goals and budgets are spelled out for each month or quarter so management can review each period’s results and take corrective action as needed. The government has restrictions on the distribution of a num­ber of products, like coal, paper, fertilizer and sugar. Vending machines are used in the developed countries to sell a number of products. Is that the responsibility of you, or of your channel partner? It involves a careful study and consideration of many factors stated below. 3.1 shows one major source of cost savings affected by using intermediaries/ distributors. The chosen channel will significantly affect and be affected by the rest of the marketing mix. The choice of the channel to use is a fundamental decision for the manufacturer where a number of factors and objectives have to be considered as a basis for such decision. A distribution channel, also known as placement, is part of a company's marketing strategy, which also includes the product, promotion, and price. Marketing channels are the ways that goods and services are made available for use by the consumers. Technology has had a significant impact on marketing channel strategy. Because of the features like intangibility, perishability, inseparability, distribution of services becomes critical. In addition channel decisions include relatively long-term commitments with other firms as well as a set of policies and procedures. How to Turn Marketing Strategy into Marketing Execution in 8 Steps. He’s got a knack for writing actionable content (no fluff here) and knows the secrets to growing your traffic. On the other hand, there are small companies which cater to small regions, like Ponvandu Soap, and prefer to have direct distribution to retail outlets for two reasons – (i) their overheads will be less, and (ii) they can use direct distribution as a strategic tool to get competitive advan­tage. Economic Criteria – Each alternative channel design will result in different levels of sales and cost as shown in Figure 10.3. Create an efficient channel – improve channel performance by modifying various flow mechanisms. Selective distribution focuses on utilizing fewer channels to maintain a higher level of strategic control, but still pursues high volume within those select channels. 2. Goods that have a high unit price and a high margin are delivered directly by the manufac­turers. Stores vary in size, in the kinds of services that are provided, in the assortment of merchandise they carry, and in many other respects. Also, what is promised by the cue must be present in the product, or else it will lead to dissatisfaction in the consumer. Product variety – When the product variety sought by customers is high, selling through indirect channels is advisable. f. Physical possession – The channel members also take the responsibility of storage of goods during the successive stages to the final consumers. c. Franchise Organisations – Franchisers might also link the successive stages in the manufacturing and distribution process. Account Disable 12. A channel of distribution is an organized network or system of institutions or agencies, which, in combination, perform all the activities required to link the producers and final users. For Example Javed Habib give franchise of his flagship brand HABIB on contractual basis. Marketers in the present dynamic market should adopt the holistic perspective and ensure that marketing decisions in all these different areas are made to collectively maximize value. Channel choice begins with two questions: to whom shall we sell this merchandise immediately? Channel objectives are based on the requirements of the purchasers and users, the overall marketing strategy, and the … Direct selling or salesmanship. Marketing Channel Design 8. Transportation – arranging the physical movement of merchandise. They include: Break Even Analysis . Many manufacturers find it necessary to use more than one kind of channel for the same market. Here, independent channel components integrate on contractual lines to attain economies of scale and maximize the market impact. Intermediaries, because of their specialisation, experience, and scale of operations, are able to achieve more than what the organisation can in terms of reaching to the target markets. Growth in sales – by reaching new markets and/or increasing sales in existing markets. (a) Manufacturers – Agents or Brokers – Retailer – Consumer – 2 Levels. The silos that exist in your sales and marketing departments need to be merged. Consequently, the literature offers many different defin Common channels in these circumstances are channels where the firm can maintain strategic control of how the products are sold, at what price, and in which regions. Although some retailers prefer to buy directly from the manufacturer, others would rather buy from local distributors who have lenient credit terms and offer a wide array of merchandise. An example of differences in perception is when the manufacturer is hoping for higher sales and expects the channel member to carry higher inventory, while the channel member perceives the market conditions to be otherwise. Some manufacturers have different products that require separate distribution channels. In carrying out their specialised roles and functions, channel members may cooperate, conflict and compete with one another. Many environmental factors such as technol­ogy, economy conditions and government regulations affect the choice of distribution channels. The Fig. The choice between push or pull strategy depends on the marketing communications budget inasmuch as push promotion strategies tend to be cheaper than pull promotion strategies. As organizations develop their marketing channel strategies, an important question arises regarding distribution intensity. Whether a firm be a one person operation or one that employs thousands of people and generates billions in sales, all are in business to serve the needs of markets. The channel system of an organisation evolves in response to local opportunities and conditions. While, in the ‘pull’ strategy the manufacturer uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries, thereby, induce the intermediaries to order it. Title – The channel members facilitate actual transfer of ownership from one organisation or person to the other. This requires that a manufacturer contemplating distribution through particular types of retailers become intimately familiar with the precise location and performance characteristics of those being considered. It has to further periodically evaluate the perfor­mance of individual channel members against their own past sales, the sales of other channel members, and, possibly, sales targets. It is short and simple. Written By Nathan Ellering @njellering. Save Question 5 (1 point) This method of retailing is an efficient way to provide continuous service. A channel’s horizontal dimension (width) is determined by the number of participants of any one type on the same level in the channel. All goods go through channels of distribution, and marketing depends on the way goods are distributed. For example, when automobile manufacturers try to enforce policies on their dealers, it leads to a conflict. Information – supplying information about markets to producers and information about products and suppliers to buyers. However, they are not concerned about transportation, warehousing, inventory, etc. This may be achieved by themselves or by creating an independent unit, for example, Sugar Syndicate of India, Associated Cement Company, etc. Mostly direct channel, i.e. They bring suppliers and buyers together. Most services are sold directly from provider to the consumer or industrial buyer. If satisfied, the consumer starts behaving like the proverbial Povlov’s dog and reaches the stage of automatic response behavior. 3.1 (b) three producers contacting three consumers through one distributor. Push promotes a product to the middlemen who ‘push’ the offering to the consumers, and pull promotion strategy promotes the product to the end user directly. (c) Manufacturer – Manufacturers’ Agents – Consumers – 1 Level, (d) Manufacturer – Large retailer/consumer cooperatives – Consumer – 1 Level. (a) Manufacturer – C&F Agent – Redistribution Stockist – Retailer – Consumer – 4 Levels. 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