Distribution Channels
31
THE RETAIL
DISTRIBUTION
CHANNEL
C H A P T E R
2
Early in 2005, IBM Business Consulting Services released a survey that compiled in-depth interviews with more than 100 sales, marketing, and merchandising executives at over 20 consumer products and retail companies. Only 9 percent of the retailers felt their suppliers had “a good understanding” of their business objectives. The gist of the survey was that retailers felt the product manufacturers have focused their efforts on the end users of the products (the consumers), without giving as much priority to the needs of the other members of their distribution channels—namely, the retailers to whom they sell.1
COPYRIGHTED MATERIAL
There are several types of participants that make up a distribution channel, so let’s begin by listing them, as in Chapter 1 with supply chain participants. You will notice some overlap because, as also previously mentioned, retailers belong to several (or many) different supply chains, each group focused on making and marketing different products.
Retailers
The characteristic that sets a retailer apart from other members of its distribution channel is that the retailer is the party who ultimately sells the product to its end user or consumer. As you know if you’ve ever shopped for anything,
32 Chapter 2 The Retail Distribution Channel
In addition to a supply chain, manufacturers and retailers participate in another give-and-take relationship known as a distribution channel or marketing channel.
A distribution channel is similar to, but different than, a supply chain. The distribution channel is where the “deals” are made to buy and sell products. Sales, negotiations, and ordering are done by these companies, or departments within companies. Then the supply chain kicks in, to do the “physical” work of manufacturing, transporting, and storing the goods; and facilitating the sales with services like consumer research, extending credit, and providing other
THE RETAIL
DISTRIBUTION
CHANNEL
C H A P T E R
2
Early in 2005, IBM Business Consulting Services released a survey that compiled in-depth interviews with more than 100 sales, marketing, and merchandising executives at over 20 consumer products and retail companies. Only 9 percent of the retailers felt their suppliers had “a good understanding” of their business objectives. The gist of the survey was that retailers felt the product manufacturers have focused their efforts on the end users of the products (the consumers), without giving as much priority to the needs of the other members of their distribution channels—namely, the retailers to whom they sell.1
COPYRIGHTED MATERIAL
There are several types of participants that make up a distribution channel, so let’s begin by listing them, as in Chapter 1 with supply chain participants. You will notice some overlap because, as also previously mentioned, retailers belong to several (or many) different supply chains, each group focused on making and marketing different products.
Retailers
The characteristic that sets a retailer apart from other members of its distribution channel is that the retailer is the party who ultimately sells the product to its end user or consumer. As you know if you’ve ever shopped for anything,
32 Chapter 2 The Retail Distribution Channel
In addition to a supply chain, manufacturers and retailers participate in another give-and-take relationship known as a distribution channel or marketing channel.
A distribution channel is similar to, but different than, a supply chain. The distribution channel is where the “deals” are made to buy and sell products. Sales, negotiations, and ordering are done by these companies, or departments within companies. Then the supply chain kicks in, to do the “physical” work of manufacturing, transporting, and storing the goods; and facilitating the sales with services like consumer research, extending credit, and providing other