Insurable interest: A factor has invaluable interest in the goods in which he deals. Distributors Similar to wholesalers, distributors differ in one regard. Customer expectations like desire for one-stop shopping, need for personal attention, preference for self-service and desire for credit also influence the choice of trade channel. Channel Segmentation Just as a customer base is segmented and addressed according to their specific needs and requirements, distribution channels can also be segmented. For example, a logging company needs a distribution system to connect it with the lumber manufacturer who makes wood for buildings and furniture.
Large scale producers of consumer goods for example, need to stock items of basic necessity such as soap, toilet paper and toothpaste in as many small and large stores in as many locations as possible. Culture influences communication modes Culture influences dress and behavior Culture influences usage of a product Language is very important in international business to communicate effectively. Pushing marketing activities ahead of orders is a strategic distribution channel strategy used to test demand, while preventing mismanagement of orders. This is especially so because the internet allows sellers and buyers to interact in real time. Un-standardised articles take lesser time and pass through shorter channels of distribution. Your end-users get the information and service they need before and after the sale.
They help in the transfer of ownership and delivery of goods and charge commission for their services. This may be business-to-business B2B or business-to-customer B2C distribution. Distribution of goods is as important as production. For example, distributors of Coca Cola will not distribute Pepsi products, and vice versa. For small retailers with limited order quantities, the use of wholesalers makes economic sense. This is suitable in case of perishable goods and is helpful in establishing direct link between the manufacturer and the consumer.
In order to minimise these costs a short and direct distribution channel is suitable. For example, in a depressed economy, generally shorter channels are selected for distribution. While increasing the number of ways a consumer can find a good can increase sales, it can also create a complex system that sometimes makes difficult. Can only work with small and not so serious conflicts. If the organization does the work of production, brandingand distribution, it is said to be vertically integrated. In finalising the channel of distribution, services provided by the intermediaries must be kept in mind.
The dealers focus on consumer sales. Dealers in industrial products may have better defined roles. This arrangement tends to work best where the retail channel is fragmented - i. But when they set up distribution channels through contracts with franchisees, independent dealers, or large retailers, they cannot readily replace these channels with company-owned stores or Web sites if conditions change. A distribution channel is the path by which all goods and services must travel to arrive at the intended consumer. Retailers, Wholesalers are the common channels of distribution.
Authority: A factor has the authority to receive payments and to issue receipts for them. A multiple distribution channel strategy works for retailers with diverse product lines. Indirect In this channel, a company will use an intermediary to sell a product to the consumer. Following factors relating to the market are particularly significant. Creation of Supply Chain Network This element optimizes the use of the necessary means in the current logistic network that includes suppliers, production locations, locations of distribution means, and end users. After the internet became more mainstream, an online sales platform was established. Provided by: Global Text Project.
Used often in the earlier two stages. These locations may be as close together as two on the same street. A distribution channel can be defined as the activities and processes required to move a product from the producer to the consumer. The purchasers of industrial goods directly contact the sellers and thus there does not arise the need of the agent. Regularity: A factor carries on the business of his principal regularly. Therefore, management must design its channels carefully, with an eye on tomorrow's likely selling environment as well as today's.
In indirect channel of distribution, the functions of buying, selling, transporting, storing, are undertaken by the middlemen. Customer needs could include: Lot size convenience Minimum waiting time Variety and assortment Place utilityThe product characteristics and the market profilealso impact the objectives. What is the best distribution channel for a product? High-ticket items are often divided into sales regions or territories, where dealers are guaranteed access to their markets without same-brand competition. Moreover, all of the institutions in the channel are connected by several types of flows. The manufacturer in this stage of performs all the marketing functions himself. On the other hand, expensive consumer goods and industrial products are sold directly by the producers. In the wood example, the intermediaries would be the lumber manufacturer, the furniture maker, and the retailer.