Distribution Channel Decisions.ppt

Distribution Channel Decisions Why Do Multifirm Marketing Channels Exist? Middlemen often perform the needed functions at a lower cost than either the customer or the manufacturer could by themselves. The first step in designing a distribution channel for a given product is to determine what objectives the channel must accomplish and their relative importance. Designing Distribution Channels: What are the Objectives to be Accomplished? Objectives of distribution channels: Increase the availability of the good or service to potential customers. Satisfy customer requirements by providing high levels of service. Ensure promotional effort. Obtain timely and detailed market information. Increase cost- effectiveness. Maintain flexibility. Designing Distribution Channels: What are the Objectives to be Accomplished? Product availability The most important objective for a channel. For consumer goods, two aspects of availability must be considered. Attain the desired level of coverage in terms of appropriate retail outlets. The item’s positioning within the store Designing Distribution Channels: What are the Objectives to be Accomplished? Meeting customers’ service requirements Crucial objective for analyzer and defender businesses attempting to differentiate themselves on service dimensions. Some the service requirements include: Order cycle time Dependability Communication between buyer and seller Convenience Postsale services Designing Distribution Channels: What are the Objectives to be Accomplished? Promotional effort Obtain promotional support from channel members for the firm’s product. Market information Middlemen are often relied on for fast and accurate feedback. A high level of channel feedback is particularly important for firms in highly competitive industries. Feedback is crucial for prospectors. Designing Distribution Channels: What are the Objectives to be Accomplished? Cost-effectiveness Important to businesses pursuing low-cost analyzer or defender strate