Distribution Channels

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DISTRIBUTION CHANNELS
BIBLIOGRAPHIC REVIEW
António Abílio da Silva Couto, nº 5195 Cidália Martins Domingues, nº 5115 Joaquim Luís Sousa Pereira, nº 5194 Paula Marisa da Silva Lima Ferreira, nº 5100 Paulo José Branco, nº 5198

This work was oriented by Dr. Francisco Coelho
ABSTRACT: Deciding for a distribution channel is probably one of the most important actions a marketer has to take in his career. In this work we identified the main distribution channels, the external factors that should be taken in consideration when choosing the channel, a brief overview of their evolution and some of the problems that may arise.

SCHOOL OF PORTO, NOVEMBER 2012

CONTENTS
CONTENTS .............................................................................................. 2 1. 2. INTRODUCTION .............................................................................. 3 DISTRIBUTION CHANNELS ........................................................... 4 2.1. KINDS OF MARKETING CHANNELS ........................................... 4 2.2. MAIN DISTRIBUTION CHANNELS ............................................... 5 3. DECIDING FOR THE RIGHT CHANNEL ......................................... 6 3.1. CUSTOMER CHARACTERISTICS ............................................... 6 3.2. NATURE OF PRODUCT ............................................................... 6 3.3. NATURE OF DEMAND/LOCATION .............................................. 7 3.4. COMPETITION ............................................................................. 7 3.5. LEGAL REGULATIONS/LOCAL BUSINESS PRACTICES ........... 8 4. 5. CHANNELS ARE IN CONSTANT EVOLUTION .............................. 9 SOME PROBLEMS MAY ARISE ................................................... 10 5.1. THE INTERNET CONFLICT ....................................................... 10 5.2. GREY MARKETING .................................................................... 10 5.3. LOSS OF BARGAINING POWER ............................................... 12 6. 7. CONCLUSION ............................................................................... 13 BIBLIOGRAFY ............................................................................... 14

António Couto  Cidália Domingues  Luis Pereira  Marisa Lima  Paulo Branco

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1. INTRODUCTION
No wonder Peter Drucker said: “The greatest change will be in distribution channels, not in new methods of production or consumption.” (Kotler, 2003). In traditional marketing, distribution channel refers to any specific way in which a product or service can be delivered, or communicated, to a market (Rein, Kotler, Hamlin, & Stoller, 2006). Choosing the most adequate channel for a product should not be done lightly. The place where the product will be put at the disposal of, or communicated to the consumer assumes a major task in the success it will obtain in the market or may determine its failure. Distributors have a main role in this process. Actions should be taken to promote healthy relationships between the intervenient promoting trust between the parts involved. Many variables affect the distribution channels causing some conflicts that may assume proportions that may damage the good functioning of the whole channel: Internet sales, grey marketing, too many distributors or too close competing with each other with the same products and many other factors need a careful management of the channels.

António Couto  Cidália Domingues  Luis Pereira  Marisa Lima  Paulo Branco

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2. DISTRIBUTION CHANNELS

Most producers do not sell their goods directly to the final users; between them stands a set of intermediaries performing a variety of functions. These intermediaries constitute a marketing channel (also called a trade channel or distribution channel). Formally, marketing channels are sets of interdependent organizations participating in the process of making a product or service available for use or consumption. They...
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