Place development of channel systems

Place & Development of Channel Systems Place: making goods & services available in the right quantities and locations, when customers want them...  Direct Channel system :Firms distrib

Place & Development of Channel

Systems Place: making goods & services available in the right quantities and

locations, when customers want them

 Depending on:

 DISTANCE

 PERISHABILITY

 SPECIAL HANDLING

 NUMBER OF CUSTOMERS

 TRANSPORTATION

 STORAGE

Selecting the channel of distribution

 Direct Channel system :

Firms distribute directly to the final consumers , they perform all activities without intermediaries because :

Channel of distribution: any firms or individuals who participate in the flow

of goods from producer to final consumer

 They want to control the whole marketing job.(products, price, service)

 They can serve target customers at a lower cost or do the work more

effectively than intermediaries

 Direct channel is common with business customers & services.

 In direct contact with customers, firms are more aware of changes in

customer attitudes

 A firm may have to go direct if suitable intermediaries are not available

or will not cooperate.

 In Direct Channel:

Producer sells & distributes its products to customers; therefore the firm is

responsible for : warehouse

equipment

transport

personnel

needed to complete distribution activities

 As consumers are spread throughout many geographic areas & They shop for certain products at specific places

 As direct distribution requires a big investment in facilities, people, IT

Indirect channel: use intermediaries to distribute goods& services

 Firms have to rely on the indirect channel

-Intermediaries may reduce a producer’s output & carrying it in inventory

until it’s sold

-Intermediaries can help producers serve customer’s needs better at

lower costs

 Wholesalers buy goods from producers & resell them, wholesalers

receive , take title to goods, store them in their own warehouses, and ships them

Types of Channel Intermediaries

 Agents & brokers facilitate the sale of a product from producer to end

user They get a fee or commission based on sales volume

 Retailer sells goods mainly to consumers.

 A product can take many routes to reach its consumer Marketers search for the most efficient channel from many alternatives available

 CHANNELS FOR CONSUMER PRODUCTS

&

 CHANNELS FOR B2B &INDUSTRIAL PRODUCTS

Channel Structures

CHANNELS FOR CONSUMER PRODUCTS

CHANNELS FOR B2B & INDUSTRIAL PRODUCTS

Factors affecting channel choice

Market Factors

-Target customer considerations

( who? What? Where/when? How?)

- Geographic location& Size of the market

- Industrial customers vs Individual consumers

Product factors

 What products sell better through direct sales force

 PLC in choosing a marketing channel

Producer factors

- Big – Medium – small

Channel Strategy Decisions

 Intensive distribution strategy : form of distribution aimed at having a product available in every outlet at which target customers might want to buy it

Levels of Distribution Intensity:

intensive distribution/selective distribution/ exclusive

distribution

 Selective distribution strategy: form of distribution achieved by

screening dealers to eliminate all but a few in any single area

 Exclusive distribution strategy : form of distribution that establishes one

or a few dealers within a given area