Channel Structure and strategic choice in distribution channels

Topics: Porter generic strategies, Strategic management, Marketing Pages: 3 (842 words) Published: May 10, 2014

CHANNEL STRUCTURE AND STRATEGIC CHOICE IN DISTRIBUTION CHANNELS

This article mainly talks about the importance of marketing channel of marketing channel strategy decisions, they are highlighted by: 1) term consequences and 2) the constraints andopportunities that they represent..The present paper incorporates strategic management theory into marketingchannels literatures to examine the impact of different channel structures onthe choice of a generic channels strategy. Specifically, the contingent effects of channel power/control and the degree ofvertical integration are examined as they affect the choice between thegeneric strategies of overall costleadership, differentiation, focus, andcombination strategies. Besides research on the manipulation of power and influence attempts, littleattention has been given to the study of channel strategies. The intent of the present paper is to examine how one strategy concept,choice of a generic strategy, can be applied in a channel context. The basis of the discussion of strategy will be Porter's strategy typology,though supporting literature wiU also be used. Overall LowCost Leader, The OLC strategy stresses economies of scale,proprietary knowledge, preferendal access to raw materials, aggressive pricingpolicies, cost minimizadon, stable product lines and other factors which leadthe firm to become "The" low-cost producer or supplier in its industry.

Specifically, I will be concerned with how varying levels of vertical integrationand power/control within the channel affect the choice of a generic strategy. I first need to provide a brief review of the strategy framework to be utilized. The Strategic Framework The work by Porter defines three generic strategieswhich firms might choose to pursue in order to establish a competidveadvantage: overall low-cost leader, differentiation and focus. According to Porter, a firm's compeddve advantage combines with its scope ofacdvides to determine which of the three generic...
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