World Library  
Flag as Inappropriate
Email this Article

Distribution (business)

Article Id: WHEBN0000239863
Reproduction Date:

Title: Distribution (business)  
Author: World Heritage Encyclopedia
Language: English
Subject: Marketing, Marketing mix, Mondo TV, West Monroe Partners, Hagemeyer
Collection: Business, Marketing
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Distribution (business)

Product distribution (or place) is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.

The other three parts of the marketing mix are product, pricing, and promotion.

Contents

  • Channels and intermediaries 1
  • Channel design 2
  • Channel mix 3
  • Managing channels 4
    • Channel motivation 4.1
    • Channel conflict 4.2
  • See also 5
  • References 6
  • External links 7

Channels and intermediaries

Distribution of products takes place by means of channels. Channels are sets of interdependent organizations (called intermediaries) involved in making the product available for consumption to end-user.[1] Merchants are intermediaries that buy and resell products. Agents and brokers are intermediaries that act on behalf of the producer but do not take title to the products.

Channel design

A firm can design any number of channels they require . Channels are classified by the number of intermediaries between producer and consumer.[1] A level zero channel has no intermediaries. This is typical of direct marketing. A level one channel has a single intermediary. This flow is typically from manufacturer to retailer to consumer.

Types
Category Definition
Intensive distribution The producer's products are stocked in the majority of outlets.[1] This strategy is common for basic supplies, snack foods, magazines and soft drink beverages.
Selective distribution Means that the producer relies on a few intermediaries to carry their product.[1] This strategy is commonly observed for more specialised goods that are carried through specialist dealers, for example, brands of craft tools, or large appliances.
Exclusive distribution Means that the producer selects only very few intermediaries.[1] Exclusive distribution is often characterised by exclusive dealing where the reseller carries only that producer's products to the exclusion of all others. This strategy is typical of luxury goods retailers such as Gucci.

Channel mix

In practice, many organizations use a mix of different channels; in particular, they may complement a direct sales-force who typically call on larger customers with agents who cover the smaller customers and prospects. In addition, online retailing or e-commerce is leading to disintermediation. Retailing via smartphone or m-commerce is also a growing area.

Managing channels

The firm's marketing department needs to design the most suitable channels for the firm's products, then select appropriate channel members or intermediaries. The firm needs to train staff of intermediaries and motivate the intermediary to sell the firm's products. The firm should monitor the channel's performance over time and modify the channel to enhance performance.

Channel motivation

To motivate intermediaries the firm can use positive actions, such as offering higher margins to the intermediary, special deals, premiums and allowances for advertising or display.[1] On the other hand, negative actions may be necessary, such as threatening to cut back on margin, or hold back delivery of product.

Channel conflict

Channel conflict can arise when one intermediary's actions prevent another intermediary from achieving their objectives.[1] Vertical channel conflict occurs between the levels within a channel and horizontal channel conflict occurs between intermediaries at the same level within a channel.

See also

References

  1. ^ a b c d e f g Kotler, Keller and Burton, 2009. Marketing Management, Pearson Education Australia: Frenchs Forest

External links

  • pierce college.edu PDF, Product Distribution
  • entrepreneur.com Distribution Models
  • averetek.com Channel Marketing Primer
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 


Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.