Distribution Strategy

Topics: Marketing, Retailing, Marketing management Pages: 19 (5364 words) Published: July 5, 2011
Pasig Catholic College
Bachelor of Science in Business Administration
Major in Marketing Management

Research Paper & Report

For Partial Completion of the Course
Marketing 25: Marketing Management

Submitted by:
Claudio, Patrick Angelo
De Belen, Pamela
Dosalla, Christian
Imperial, Graceshelle

Submitted to:
Mr. Abelito Quiwa, MBA
1. To understand the development and management of the channels in distribution and the process of goods distribution in complex, competitive, and specialized economies. 2. To distinguish the different marketing intermediaries and the functions they perform in the distribution process 3. To know how to select the proper channels of distribution depending on the circumstances of the market. 4. To discuss in-depth details on wholesaling, store and nonstore retailing

The Need for Marketing Intermediaries
Most producers use intermediaries to bring their products to market. They try to develop a distribution channel (marketing channel) to do this. A distribution channel is a set of interdependent organizations that help make a product available for use or consumption by the consumer or business user. Channel intermediaries are firms or individuals such as wholesalers, agents, brokers, or retailers who help move a product from the producer to the consumer or business user. A company’s channel decisions directly affect every other marketing decision. Place decisions, for example, affect pricing. Marketers that distribute products through mass merchandisers such as Wal-Mart will have different pricing objectives and strategies than will those that sell to specialty stores. Distribution decisions can sometimes give a product a distinct position in the market. The choice of retailers and other intermediaries is strongly tied to the product itself. Manufacturers select mass merchandisers to sell middle price ranged products while they distribute top-of-the-line products through high-end department and specialty stores. The firm’s sales force and communications decisions depend on how much persuasion, training, motivation, and support its channel partners need. Whether a company develops or acquires certain new products may depend on how well those products fit the capabilities of its channel members. Some companies pay too little attention to their distribution channels. Others, such as FedEx and Dell Inc., have used imaginative distribution systems to gain a competitive advantage. Case Samples

In 1973, Federal Express Corporation was founded by Frederick W. Smith. At that time, The US Postal Service and United Parcel Service were the only means of delivering letters and packages. Most of the time, those packages took several days or more to get to their destination. Based on Smith’s research proposal during his college days at Yale University, FedEx had a mission in delivering the customer’s packages to their destination overnight or within 24 hours. FedEx is both a company and a marketing intermediary in its own right. The company describes itself as a wide range of transportation, information, and supply chain services.

At the time of the establishment of Dell Incorporated, the PC industry sold through small, specialized, high-cost dealers. The high-cost channel was quickly obsolete and most PC suppliers switched to large retail chains. During the shift in those times, Dell took a different path in reaching to their market by changing their distribution strategy. They took advantage of other technological advancement in order to create a new channel option. By taking orders via telephone calls, Dell was able to deliver their products faster to their customers. After that, the company grew to a profitable $7.8 billion business at that time. Given their success, many PC providers tried to copy their strategy; however, simply copying a model which has worked once is not a guaranteed path to success. No other “mail order” computer...
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