Research Papers Distribution Channel

A distribution channel can also be very complicated, with several levels.Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer is a "channel level".For example, food distribution channels in Japan have up to six levels (intermediaries).

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A wholesaler typically buys and stores large quantities of several producers' goods and then breaks into the bulk deliveries to supply retailers with smaller quantities.

For small retailers with limited order quantities, the use of wholesalers makes economic sense.

Later there were vertical marketing systems with vertical distribution channels, where channels from the producer and one or several intermediaries act as a single system.

The owner of the channel can be either a producer or a wholesale (retail) intermediary.

The owner can give some members of the channel some privileges or has the opportunity to exert economic pressure on them to coerce them. At the first manufacturer is the owner of both wholesale and retail businesses.

In the second case, the retailer has its suppliers.Here is a summary: Nature of the product Perishable/fragile? Complex products are often sold by specialist distributors or agents Customised?A direct distribution approach often works best for a product that the end consumer wants providing to a distinct specification Type of product – e.g. Marketing objectives – revenue or profit maximisation?Similar distribution channels are called horizontal .We list the levels of the distribution channels (see Figure 10.1). Zero (that is, without intermediaries), or a direct marketing channel.convenience, shopping, speciality Desired image for the product – if intermediaries are to be used, then it is essential that those chosen are suitable and relevant for the product. Does it involve selling overseas (see further below)The extent and nature of the competition – which distribution channels and intermediaries do competitors use? Does it have established distribution network or does it need to extend its distribution option How much control does it want over distribution?The longer the channel, the less control is available Legal issues Are there limitations on sale?In terms of the length, several types of such channels are singled out, the producer company independently sells the product to end-users (presentation and sale of goods at home by commercial agents, peddling, sending by mail, selling by phone, via the Internet, using television, selling in the manufacturer's stores ). channel with the participation of a single intermediary will be beneficial: • If the market is poorly understood, if the manufacturer does not have the financial means to study it and organize sales activities • Insignificant volumes of pre-sales and after-sales service; • a small number of segments of the consumer market; • a fairly wide range of products; • a small multiplicity of one-time purchases dictated by the characteristics of the product. Two-level, ie channel with the participation of two intermediaries. channel with the participation of three intermediaries.Zero marketing is beneficial in the following cases: • The manufacturer produces a highly specialized product that requires direct contact between the manufacturer and the buyer; • frequent fluctuations in the price of goods; • the sales volume is so significant that all the costs of direct marketing overlap at least twice; • Customers are located close to their sales locations; • All outlets have warehouses; • the number of consumers is large; • The scope of supply is a multiple of the container that is used. The use of both wholesale and retail (second-level channel) trading is beneficial if: • The market is located on a large territory; • the delivery of products is carried out by urgent, albeit in small batches; • the difference between the selling price and the cost of goods allows you to cover the costs of organizing an extensive network; • The supply of large quantities to a small number of customers provides significant savings. Thus, in the processing industry between wholesalers and retailers, small wholesalers are traditionally located, buying goods from large wholesalers, reselling it in small lots to retail companies. Distribution channels and longer distances are known.This arrangement tends to work best where the retail channel is fragmented - i.e.not dominated by a small number of large, powerful retailers who have an incentive to cut out the wholesaler. The consumer electrical goods market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc.

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