Place development of channel systems

Place & Development of Channel
Systems
Place: making goods & services available in the right quantities and
locations, when customers want them


Selecting the channel of distribution

 Depending on:
 DISTANCE
 PERISHABILITY
 SPECIAL HANDLING
 NUMBER OF CUSTOMERS
 TRANSPORTATION
 STORAGE


Channel of distribution: any firms or individuals who participate in the flow
of goods from producer to final consumer

 Direct Channel system :
Firms distribute directly to the final consumers , they perform all activities
without intermediaries because :


 They want to control the whole marketing job.(products, price, service)
 They can serve target customers at a lower cost or do the work more
effectively than intermediaries.


 Direct channel is common with business customers & services.

 In direct contact with customers, firms are more aware of changes in
customer attitudes.

 A firm may have to go direct if suitable intermediaries are not available
or will not cooperate.


 In Direct Channel:
Producer sells & distributes its products to customers; therefore the firm is
responsible for : warehouse
equipment
transport
personnel
needed to complete distribution activities.


Indirect channel: use intermediaries to distribute
goods& services

 As consumers are spread throughout many geographic areas & They shop
for certain products at specific places.

 As direct distribution requires a big investment in facilities, people, IT.


 Firms have to rely on the indirect channel

-Intermediaries may reduce a producer’s output & carrying it in inventory
until it’s sold.
-Intermediaries can help producers serve customer’s needs better at

lower costs.


Types of Channel Intermediaries
 Wholesalers buy goods from producers & resell them, wholesalers
receive , take title to goods, store them in their own warehouses, and
ships them.


 Agents & brokers facilitate the sale of a product from producer to end
user. They get a fee or commission based on sales volume.
 Retailer sells goods mainly to consumers.


Channel Structures
 A product can take many routes to reach its consumer. Marketers search for
the most efficient channel from many alternatives available.

 CHANNELS FOR CONSUMER PRODUCTS
&

 CHANNELS FOR B2B &INDUSTRIAL PRODUCTS


CHANNELS FOR CONSUMER PRODUCTS


CHANNELS FOR B2B & INDUSTRIAL PRODUCTS

Channel Strategy Decisions

Factors affecting channel choice
 Market Factors
-Target customer considerations
( who? What? Where/when? How?)
- Geographic location& Size of the market
- Industrial customers vs Individual consumers
 Product factors
 What products sell better through direct sales force.
 PLC in choosing a marketing channel.
 Producer factors
- Big – Medium – small


Levels of Distribution Intensity:
intensive distribution/selective distribution/ exclusive
distribution

 Intensive distribution strategy : form of distribution aimed at having a
product available in every outlet at which target customers might want to
buy it.


 Selective distribution strategy: form of distribution achieved by
screening dealers to eliminate all but a few in any single area.

 Exclusive distribution strategy : form of distribution that establishes one
or a few dealers within a given area.