The aim is to streamline communication between a business and the customer. The steps can be seen in Figure 5. Grivei Onela. Most stores are small and have weekly sales of only a few hundred dollars. Being highly rated and promoted on Amazon will greatly increase the efficacy of that particular channel. And, who are our ultimate users and buyers? Spatial convenience: The extent to which the marketing channel facilitate for customers to obtain the product. Whole seller checks the credit option and terms of payment when assessing the profit option for business when dealing with particular supplier. Wholesale volume is greater than that of retail because it includes sales to industrial users as well as merchandise sold to retailers for resale. distribution management: what service levels to offer the customer (delivery, inventory support, etc.). Distribution intensity plays a significant role in marketing channel strategy. Achieve a pattern of distribution – structure the channel in order to achieve certain time, place, and form utilities. The wholesaler breaks down bulk packages for resale to the consumer. Here explain Closeness of Channel Relationships, here focus on which Factors to consider; Distribution intensity, Targeted markets, Products, Company policies, Middlemen, Environment and Behavioral dimensions. Ltd. Salient Features of the Indian Constitution, Monthly Civil Service India is a website dedicated to the Civil Services Exam. Retailers are mainly concerned with maintenance of product supply and availability. To Mange marketing channel, firms must adopt motivational strategies such as paying higher slotting allowances, offering higher trade discount, providing strong promotional and advertising support, training channel member sales people, giving high level logistic support. All goods go through channels of distribution, and marketing will depend on the way goods are distributed. Lot size: The number of units the channel allows a particular customer to buy at one time. Channel choice begins with two questions: to whom shall we sell this merchandise immediately? Goods come from the manufacturer to the user without an intermediary. Amazon, for example, sells a huge number of brands on their website. Other channel members can be useful to the producer in designing the product, packaging it, pricing it, promoting it, and distributing it through the most effective channels. Wholesaling includes all activities required to market goods and services to businesses, institutions, or industrial users who are motivated to buy for resale or to produce and market other products and services. Channel level: The producer and the final customer are part of every channel. In marketing channel two different activities occur. Core Concepts of Marketing by John Burnett. An intensive distribution approach will take advantage of as many sales outlets, distributors, and direct selling opportunities the organization can identify and justify (at a given volume). Consumer may select the channels that they prefer based on price, product assortment, and convenience, as well as their own shopping goals (economic, experiential, or social). Other decisive factor in developing market channel is to recognize alternatives. Price policy assists the producer to ascertain a price list and schedule of discounts and allowances that intermediaries see as equitable and sufficient. Evaluate electronic and franchise marketing channels and the special characteristics of services in channel management . Uploaded by. While the firm may not necessarily follow the competitors in the channel design, it should analyze the plus and minus of the channel patterns adopted by each of its major design. From the buyer’s perspective, the wholesaler typically brings together a wide assortment of products and lessens the need to deal directly with a large number or producers. This document is highly rated by B Com students and has been viewed 4177 times. It is observed in market that when customers cannot get product in one retail shop, they immediately search for it in another retailers. * Step 1: Analyzing customer needs and wants . What is channel management? Modifying Channel Arrangements: Channel arrangements must be reassessed regularly and altered when distribution does not work as planned, consumer buying patterns change, the market develops, new competition occurs, inventive distribution channels appear, and the product moves into later stages in the product life cycle. Selling – personal contact with buyers to sell products and service. Companies should recognize pioneering marketing channels. Unit information in detail - Teaching methods, assessment, general skills outcomes and content. In short, many channels and high volume. Even the decision about a particular channel may be reviewed at a later time. Further, channel decisions involve comparatively long-term commitments to other firms. Distribution Channel Design & Decision Making Distribution Channels Defined as: A group of organisations* and individuals that direct the flow of products from manufacturers to customers * including intermediaries such as agents, wholesalers, retailers and distributors. Facilitators, including transportation companies, independent warehouses, banks, and advertising agencies, help in the distribution process but neither take title to goods nor negotiate purchases or sales. Of particular importance is the question, “from whom do my retail outlets prefer to buy? Product variety: The variety provided by the channel. Channel choice is also greatly influenced by channel objectives. The company must also continually strengthen that its intermediaries are to jointly gratify the needs of end users. This chapter focuses upon channel management and the related topic of physical distribution. Influential digital storefronts are key strategic partners in the modern economy. This creates an interesting relationship, similar to the retail relationship in traditional channel marketing, whereas certain digital storefronts are highly valuable strategic partners. A level two channel . Evaluation of the competitor's channel designs: the firm should also study the competitor's channel patterns before deciding its channel design. Uploaded by. Finally, some firms opt for a low volume approach with very few channels selected. Terms and Responsibilities of Channel Members signify that each channel member must be treated courteously and given the opportunity to be lucrative. The Company must assess each alternative against suitable economic, control, and adaptive criteria. Will India benefit from Joe Biden as President of US? Channel management involves careful design of channels to avoid such conflicts such as a fashion brand that allows retail locations to have new items weeks before they are available on ecommerce to compensate for their higher cost base. In many instances, it is the expertise and availability of other channel institutions that make it possible for a producer/manufacturer to even participate in a particular market. Manufacturer to Agent to Wholesaler to Retailer to Customer: This type of distribution involves more than one intermediary involves an agent called in to be the middleman and help with the sale of the goods. Marketing channels represent one avenue among many in the field of marketing and sales. Channels are classified by the number of intermediaries between producer and consumer. The wholesaler reduces some of the cost to the consumer such as service cost or sales force cost, which makes the purchase price cheaper for the consumer. This is suitable where there is low brand loyalty in a category, brand choice is made in the store, the product is desired item, and product benefits are well understood. In some cases, a channel manager had 20 small channel partners assigned to them. Evaluate Channel Members: To successfully manage market channel, producers must assess intermediariesâ performance at regular intervals against such standards as sales-quota attainment, average inventory levels, customer delivery time, treatment of damaged and lost goods, and cooperation in promotional and training programs. 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. Difï¬culty in Gaining Sustainable Competitive Advantage A sustainable competitive advantageis a competitive edge that cannot be quickly or easily copied by competitors. Selective distribution depends on more than a few but less than all of the intermediaries willing to carry a particular product. Some intermediary merchants such as wholesalers and retailers buy, take title to, and resell the products. Merchandise assortments are generally broad, including both hard and soft goods, but assortments are typically limited to the most popular items, colors, and sizes. People who are not performing must be given extra training or counselling. Thus, marketing channel strategy, design, and management must now deal with E-commerce technology as an integral part of marketing channels and distribution systems. Usually, consumers prefer a greater collection, which enhances the chance of finding what they need.