1. Marketing Channels
2.Physical Distribution & Logistics
A marketing channel -
Comprises individuals and organisations that together ensure the flow of products and services from producer to customers.
Zero level (direct supply): For example, mailorder books / records, direct flight bookings, internet sales and bookings. One stage channel: Many FMCGs fall into this category, for example, branded food stuffs, clothing, DIY products and cars. Two or mult-stage channels: Many smaller companies use two or more stage channels as their size means they have to deal through, for example, wholesalers and retailers.
The longer the channel:
- Less control for the producer
- Possible increase in price for the customer as each stage needs a profit
Why Intermediaries at all?
Storage and movement of products
Transfer of ownership / title
Types of intermediaries:
Agents and brokers - Act on behalf of the manufacturer to bring buyer and seller together Distributors and Dealers - Found in B2B and in product areas such as computers and cars. Add value through knowledge or extra services such as after sales. May be granted exclusive dealerships to certain areas. Retailers - sell directly to customers. If small, purchase from wholesalers. Large retailers control the channel a lot more and can influence price and promotional decisions. Franchise - for a license to produce and market the product/service, together with advice and help on aspects such as production and delivery (e.g. KFC)
Channels and Market Coverage:
1.Intensive distribution: Max coverage, maybe national (e.g. bread, newspapers, milk)
2.Selective distribution: Less coverage, less intermediaries. Used often for products such as electrical goods where customer might need help in selection.
3.Exclusive distribution: Small number of intermediaries, and cover only certain market areas. Either...