Key functions in commercial distribution
- Information
- Promotion
- Contact
- Matching
- Negotiating
- Physical distribution
- Financing
- Risk taking
Key functions in commercial distribution: Information
Gathering and distributing marketing research information
Key functions in commercial distribution: Promotion
Developing and spreading persuasive communications about an offer
Key functions in commercial distribution: Contact
Finding and communicating with prospective buyers
Key functions in commercial distribution: Matching
Shaping and fitting the offers to the buyers needs
Key functions in commercial distribution: Negotiating
Reaching an agreement on price and other terms
Key functions in commercial distribution: Physical distribution
Transporting and storing goods
Key functions in commercial distribution: Financing
Acquiring and using funds to cover costs of channel work
Key functions in commercial distribution: Risk taking
Assuming the risks of carrying on the channel work
Function of intermediaries in distribution
Reduction of number of contacts between the manufacturers and the consumers
Classification of intermediaries in distribution
Commercial: They assume ownership of the goods
- Wholesalers
- Retailers
Non-commercial: They connect sellers with buyers in exchange for a commission
- Brokers
Distribution channel concept
Route by which products go from the producer to the final consumer
Direct distribution channel
Manufacturer —> consumer
Indirect distribution channels
- Manufacturer —> retailer —> consumer
- Manufacturer —> wholesaler —> retailer —> consumer
- Manufacturer —> agent —> wholesaler —> retailer —> consumer
Consumer journey distribution ways
- Pure online: search and buy online
- Ropo: search online and buy offline
- Pure offline: search and buy offline
- Showrooming: search offline and buy online
Coverage strategies for positioning in an area
Evaluating the various segments of the marketplace and decide which ones to cover
- Intensive
- Selective
- Exclusive
Coverage strategies: Intensive
- Largest number of points of sale
- More sales potential
- Low involvement products and frequent purchase
Coverage strategies: Selective
- Selects best points of sale
- Requires minimum commercial services
- Reflective, differentiated, branded and mid priced product for purchase
Coverage strategies: Exclusive
- A single point of sale in each area
- Limited number of intermediaries
- Highly differentiated speciality products
Ways of distribution channel organization
- Vertical integration
- Horizontal integration
- Multi-channel system
Distribution channel organization: vertical integration
Manufacturers, wholesalers and retailers unite so they have more power
Two options:
- Corporate
- Contractual
Distribution channel organization: vertical integration (advantages)
- Easy control
- Less conflicts
- More efficient
- Economies of scale
Distribution channel organization: horizontal integration
- Two or plus companies which are at the same level
- Companies may share: means, financial, production capabilities…
Distribution channel organization: multi-channel system
- One company establishes several channels to attend different public objectives
Advantages: - Less dependence on a single channel
- Markets with different needs change coverage
