Distribution Channel

Topics: Marketing, Retailing, Sales Pages: 21 (7284 words) Published: October 12, 2008
Airline Product Distribution
In business, the term “distribution” refers broadly to the process of delivering the product to the customer. For airlines, the product is the ticket or cargo waybill. Driven by rising costs and competitive pressures, and empowered by new technologies, carriers have continued to make headway in expanding their distribution offerings to business and non-business consumers. In doing so, the airlines have increased productivity and reduced expenses. Capturing costs associated with the distribution of an airline ticket is inherently subjective, requiring the analyst to decide what expenses (e.g., sales force, distribution planning staff, reservations agents, call center communications and rent, city ticket offices, mailing, printing, advertising, agency commissions, global distribution system [GDS] booking fees, hardware/software) should be included in that category. That is, distribution costs are functional rather than organizational, entailing a blend of organizational costs (i.e., labor, commissions, purchased services, communications, advertising, and promotion). An evaluation of a distribution channel that considered only costs would be flawed, of course. Improved channel profitability is the appropriate objective, requiring a thorough analysis of channel shift, revenue production, and dilution, as well as the full array of direct and indirect costs. Deriving this data at the industry level, however, is elusive. ATA does not collect any distribution-related data from its members. DOT’s Form 41 reports contain line items for agency commissions but not for GDS fees, which are lumped in with other professional and technical fees. No central, official source exists for volume, revenue, or cost of channel. One notable governmental source is GAO's July 2003 report entitled Airline Ticketing: Impact of Changes in the Airline Ticket Distribution Industry. Although private research on these topics exists, report metrics are not always comparable. Terms may be defined differently. Some private sources include: •comScore Networks

Forrester Research
Jupiter Research
SITA Airline IT Trends Survey
comScore, Inc. - a Global Internet Information Provider
comScore maintains massive proprietary databases that provide a continuous, real-time measurement of the myriad ways in which the Internet is used and the wide variety of activities that are occurring online. Mission-critical information relating to both offline and online activities is collected through comScore's innovative use of the Internet as a timely and powerful data collection medium. comScore's products and services are utilized by many of the world's leading corporations to better understand, leverage and profit from the rapidly evolving worldwide Web. distribution - channel strategy

The following table describes the factors that influence the choice of distribution channel by a business: InfluenceComments
Market factorsAn important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars. The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing). Another important factor is intermediary cost. Intermediaries typically charge a"mark-up" or "commission" for participating...
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