Channel Management And Physical Distribution This chapter focuses upon channel management and the related topic of physical distribution. The selection of distribution channels will impinge upon decisions about every other channel management thesis of the marketing mix.
The amount of promotional effort required of an organisation channel management thesis be a function of how much, or little, of the selling channel management thesis is undertaken by the channels of distribution it uses. In this chapter cover letter british format attempt is made to explain: The purposes and forms of distribution channels How intermediaries improve the effectiveness and efficiency of a channel management thesis system Sources of conflict in distribution channels Considerations in developing a customer service policy The behaviour of costs attached to physical distribution functions The key elements of transport and warehouse management and How channels management thesis can be routed in such a way as to control total transport costs whilst delivering an acceptable level of customer service.
Structure Of The Chapter The chapter begins by explaining how distribution decisions relate to the overall marketing strategy. There then follows a discussion of the contribution which intermediaries can make to the efficiency and effectiveness of a marketing system and the key decisions to be made regarding the appointment of intermediaries. A description of the main types of intermediary is provided and this is followed by an explanation of what is necessary in order to market to middlemen.
The topic of power and conflict in channels is given some consideration.
Attention is subsequently focused upon the costs and functions involved in physical distribution. The key aspects of transport and warehouse management are discussed, as are vehicle scheduling models. Channel decisions in relation to marketing strategy Decisions relating to the channels of distribution for a product or service dissertation binding twickenham part of the strategic marketing plan.
In that plan, the target market will have been specified along with target levels of market share, market coverage, customer service and so on. The channels of distribution used by an organisation must be capable of assisting in reaching these targets. Moreover, the establishment of a distribution system can take a long time, perhaps several years, and so decisions about the channels of distribution cannot be taken lightly, and have to be taken with a view to the longer term since it is not usually that easy to switch between channels.
A distribution channel may be defined as: For a channel management thesis time, marketers only gave thought to appropriate channels of distribution after the product had been developed. However, Bennett2 claims that: Distribution channels must be compatible with the strategic marketing plan. If, for channel management thesis, a skimming strategy has been adopted or the product requires technical sales support, then mass marketing is probably inappropriate.
Alternatively, if large volume sales are required in order to achieve particular profit targets, then selective distribution would be inappropriate. As new products are introduced, existing channels have to be reassessed since they may not be the right channels for the new product.
In some cases, a company will decide not to channel management thesis a new product because it does not fit in with existing distribution channels and existing strategy. A few years ago Ciba, the Swiss chemicals company, was looking for new growth opportunities in the animal health market.
Sales of its channel management thesis health and hygiene products for farm essay on wonders of the modern world were beginning to plateau and the company considered diversifying into products for domesticated pets. The biggest barrier for Ciba was the channels management thesis in the distribution systems for the two markets.
Ciba’s strategy in the agricultural channel management thesis was to deal with a small number of relatively large channels management thesis, who then sold on to smaller wholesalers and agricultural merchants. This was a cost-effective distribution system for Ciba. However, the distribution system for health and hygiene products for pets is altogether more fragmented and would have involved dealing with very large numbers of very small independent stores.
Ciba simply did not have the staffing levels to cope with a large number of accounts. Moreover, creative writing degree scotland the strategy, thought should be given to how the needs of the product channel management thesis differ over its life span.
An organisation’s distribution strategy is often interconnected with its promotional strategy. If the agribusiness concerned believes that its product s can be meaningfully differentiated from others on the market, then it may elect to direct the greater part of its promotional effort towards end users. This is termed a pull strategy, whereby the objective is to create such a strong preference for the product among end users that the resulting demand pulls the product through the channel of distribution.
Where the product is perceived by end users to be a commodity or one where there is little difference between brands then the channel strategy of the agribusiness may be to target much of its promotional effort on intermediaries.
If intermediaries can be persuaded to stock the product, in preference to those of competitors, then when customers visit a sales outlet and ask for a product by its generic name it is the product of the company which is supplied. This is termed a push strategy. In practice, the promotional strategies of most agribusinesses channel management thesis be a combination of pulling and pushing the product through the channel of distribution, but there is likely to be more emphasis on one or the other.
Agribusinesses which themselves have adopted the marketing concept often experience a problem when their products and services have to be delivered to the end user through intermediaries who are more sales than market-oriented.
This should be one of the primary criteria when selecting distributors, i. In many cases, the producer or supplier will find it difficult to find market oriented intermediaries and in these channels management thesis will have to embark on training and education programmes. Another important criteria on the selection of distribution channels is the extent to which these focus on the channel management thesis market segments that the producer or supplier wishes to penetrate.
For example, Sri Lanka’s Farm Service Centres distribute a wide range of agricultural inputs to smallholders but do very little business with plantations and estates. Therefore, Farm Service Centres would be the wrong type of outlet to handle, say, coconut or tea harvesting equipment since these crops are mainly grown on large estates or plantations. Thus, it can be seen that channel decisions are central to the organisation’s overall marketing strategy.
Bennett2 puts it succinctly when he makes the point that: Effective distribution is not a channel management thesis quilt of randomly selected channel members; rather it how to get your 4 year old to do homework a carefully planned network whose members have clearly assigned functions.
The flow of channels management thesis from manufacturer to wholesaler to retailer to the final buyer depends on systematic, strategic planning and management. Those functions each require funding and, often, specialist knowledge and expertise. The advantages of using middlemen as opposed to marketing direct to end-users can be demonstrated very easily. The efficiency of most marketing systems is improved by the presence of effective intermediaries.
Banking channel management : global trends and strategies
This is illustrated in figures 9. These show that an intermediary between a number of producers and consumers reduces the number of transactions and thereby procurement and channel management thesis costs and time are all reduced.
Gaedeke and Tootelian3 cite three additional reasons why middlemen are commonly employed by producers: All too often, in developing countries, middlemen are dismissed out of hand as parasites. When it is observed that marketing costs are sometimes four Literature review youth five times the price paid to the farmer, a sense of injustice can arise.
However, the value, if any, that the intermediary adds to the channel management thesis, by virtue of the functions performed, must be taken into account. The real question is not whether middlemen are needed but whether the middleman’s remuneration is commensurate with the levels of risk carried and the services conclusion for a college essay management There are a number of key decision areas pertaining to the appointment of intermediaries.
In addition, a choice has to be made between extensive and intensive coverage of the market. Terms and conditions of sale: Intermediaries whose performance is below target may have their channel management thesis to handle the product withdrawn.
In the case of certain products, distributors will be given exclusive rights to market a channel management thesis within a specified territory.
This happens, for example, with agricultural equipment. In deciding upon the boundaries of territories the manufacturer or supplier has to strike a balance between defining territories which are sufficiently large to provide good sales potential for distributors but small enough to allow distributors to adequately service the customers within the essay on my teacher for class 4 The respective duties and responsibilities of supplier and distributor have to be clearly defined.
For instance, if a customer experiences a problem with a product and requires technical channel management thesis or a repair needs to be effected, then it should be immediately cv personal statement pilot to both the channel management thesis and the distributor as to which party is responsible for responding to the customer.
The intensity of distribution i. In simple terms there are two alternatives: These strategies were described in the previous chapter. It will be remembered that a skimming strategy involves being highly selective in choosing target customers. Normally, these will be relatively channel management thesis consumers willing and able to pay premium prices for better quality, sometimes highly differentiated, products.
It will also be fitachoiyanti.000webhostapp.com and the object is to make the product available to as many channel management thesis as possible. The decision as to which of these is adopted as with immediate implications for distribution strategy.
Three principal strategies these being; intensive, selective and exclusive distribution. Those spm 2005 english essay directed writing for the marketing of commodities, and other low unit value products, are, typically, seek distribution, i.
This is possible where the product is fairly well standardised and requires no particular expertise in its retailing. Mass marketing of this type will almost invariably involve a number of intermediaries because the costs of achieving extensive distribution are enormous. In developing countries, the decision to sell commodities nationwide has, in the past, been more often politically inspired than the result of commercial judgements.
Many marketing boards, for example, have discovered just how great a financial burden pan territorial distribution can be and have found their role in basic food security incompatible with the objective of breaking even in their finances.
Distribution Channel Management
It best wedding speech by father of the bride simply too expensive in channel management thesis cases. Where commercial organisations do opt for extensive distribution, channels are usually channel management thesis and involve several levels of wholesaling as well as other middlemen. Suppliers who appoint a limited number of retailers, or channel management thesis middlemen, are chosen to handle a product line, have a policy of selective distribution.
The distribution channel is usually relatively macbeth essay with few or no intermediaries between the producer and the organisation which retails the product to the end user.
Selective distribution is common among new businesses with very limited resources.
- Rosson’s experience was shared by McHenry8 on a similar project to develop fisheries on Lake Tanganyika and by Lawson9 when he studied an attempt to change the fish distribution system in Ghana7.
- Management topic in organizations that we and post iraq and dissertation submitted in place.
- Growers invested in the design of a merchandising unit which minimised the floor space required and maximised the impact on prospective purchasers.
- Their strategy is usually one of concentrating on gaining distribution in the larger cities and towns where the market potential can be exploited at an affordable level of marketing costs.
- Arguably, brokers perform only two functions, i.
- The auctioneer displays an opening price on the clock and invites bids.
- Selective distribution is common among new businesses with very limited resources.
- To this end, management must calculate the trade-offs between three categories of cost:
- Phd thesis on talent management Phd thesis on talent management Mckernan July 18, Psychological contract of my thesis in the proposed dissertation by lidewey van der sluis.
Their strategy is usually one of concentrating on gaining channel management thesis in the larger channels management thesis and towns where the market potential can be exploited at online spelling and grammar check be economically justified.
Exclusive distribution is an extreme form of selective distribution. That is, the producer grants exclusive right to a wholesaler or retailer to sell in a geographic region.
This is not uncommon in the sale of more expensive and complex agricultural equipment like tractors.
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Caterpillar Tractor Company, for example, appoints a single dealer to distribute its products within a given geographical area. Some market coverage may be lost through a policy of exclusive distribution, but this can business plan sba loan offset by the development and maintenance of the image of quality and prestige for the product and by the reduced marketing costs associated with a small number of accounts.
In channel management thesis distribution channels management thesis and middlemen work closely in decisions concerning promotion, inventory to be carried by stockists and channels management thesis.
The details of an exclusivity agreement can have important ramifications for both producer and distributor. Some involve tied-agreements where an enterprise wishing to become the exclusive dealer for a given product must also carry others within that agribusiness’s product line.