Managing Marketing Channels and Supply Chains in Business

Dual Distribution Systems

A firm reaches different buyers with two or more different types of distribution system for the same basic product.

Omnichannel marketing

A marketing strategy that integrates multiple channels to enhance customer experience.

Agent/Broker Channel

Agents/brokers do not buy or sell; they bring buyers and sellers together and negotiate the terms of transaction.

Examples of Wholesaler Channel

Agricultural products.

Channel Conflict

Arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goal.

Customer Focused

As customers have increasing power in the marketplace, most firms will benefit by creating a supply chain that enhances customer value.

Advantages of Direct Channel

Avoid sharing profits with distributors, higher cost efficiency, greater control over pricing, promotion, etc., closer contact with end-customers, easier to differentiate from competitors and build brand image, no channel conflicts.

Disintermediation

Channel member bypasses another member and sells/buys products directly.

Time Utility

Channel members help to provide products when customers are ready to buy them.

Place Utility

Channel members help to provide products where customers want to purchase them.

Vertical Conflict

Conflict between different levels in a channel.

Horizontal Conflict

Conflict between intermediaries at the same level in the channel.

Intensive Distribution

Designed to place products in as many outlets as possible.

Warby Parker's channel structure

Direct, retailer, wholesaler, or agent.

Possession Utility

Efforts by intermediaries to help buyers take possession of a good or service.

Form Utility

Enhancing the good or service to make it more appealing to buyers.

Channel Functions by Intermediaries

Functions performed by intermediaries to facilitate the distribution of products.

Distribution Intensity

How many distributors should be used to achieve the best coverage of the target market.

Advantages of Indirect Channel

Implemented instantly, no large upfront costs, increase distribution breadth and intensity, economy of scale, let firm focus on core business.

Physical stores vs. traditional stores

In an omnichannel model, Warby Parker's physical stores are different from traditional stores such as Target or Whole Foods.

Examples of Agent/Broker Channel

Insurance broker, real-estate agent, Uber/Airbnb.

Supply Chain Management

Integrates and coordinates all activities across firms in a supply chain for the purpose of creating and delivering products that provide value to consumers.

Exclusive Distribution

Only one retailer in a specific geographic area carries the firm's products.

Marketing Channel/Channel of Distribution

Part of the supply chain from producer to business user or consumer; path that enables products to flow from producers to end consumers.

Potential solutions to Horizontal Conflict

Producers often create differentiation among retailers.

Selective Distribution

Relies on a few retailers in a territory to sell products.

Multichannel/Omnichannel

Retailers blend physical and digital channels that mutually reinforce each other, to build relationships with consumers who shop in both traditional and online distribution channels.

Examples of Direct Channel

Tesla, H&M, Tiffany's, Starbucks.

Contact Efficiency

The ability of intermediaries to reduce the number of transactions needed to connect buyers and sellers.

Distribution Density

The number of stores in a geographic area.

Online business influence

The online business influences decisions about physical store locations.

Direct Channel

The producer sells directly to consumers through its own stores, e-commerce site, or salespeople.

Retailer Channel

The producer sells through retailers, and retailers sell directly to consumers.

Supply Chain

The various firms involved in activities required to create and deliver the product to customers.

Coca-Cola's retail distribution objective

To place its products 'within an arm's reach of desire'.

Aligning Supply Chain with Marketing Strategy

Understand the customer, understand the supply chain, ensure that what the supply chain functions in a way that is consistent with the target market's needs and the intended marketing strategy.

Examples of Retailer Channel

Walmart, Target, Nordstrom, Car dealership.

Wholesaler Channel

Wholesalers buy from producer (in large quantities) and sell to retailers.