Lecture 10

Question 1

What is a distribution intermediary?

Answer 1

• any individual or company that can sell a brand’s product to its end user
• Middleman or a third-party that facilitates the movement of goods and services from the producer to the end consumer.
• Entity that plays a crucial role in the distribution channel by acting as a link between the producer and the customer.

Question 2

What are the different types of intermediaries?

Answer 2

1. Wholesalers: buy goods in bulk from producers and sell them to retailers, who then sell the products to end customers
2. Distributors: anybody in the chain
3. Retailers: business or individual that sells goods directly to consumers for personal use or consumption (physical stores, online storefronts, or a combination of both)
   - High-level service stores: lower volume, narrow range, high selection, $$$
   - Discount store: higher volume, broader ranges, $
4. Agents/brokers: intermediaries between buyers and sellers, facilitating transactions without actually owning the products, only negotiators
5. Traders: Buy the product to resell it to retailers/wholesalers

Question 3

What is a distribution channel? What are the different types on distribution channel?

Answer 3

• Distribution Channels : A network of interdependent organizations engaged in a process aimed at making a product or service available for use or for consumption

Direct: producer -> consumer
- niche or high-end positioning

Short: producer -> retailers -> consumers

Long: producer -> wholesalers -> retailers -> consumers

Ultralong: producer -> agents -> wholesalers -> retailers -> consumers
- Everyday products that need to be easily accessible (ex.: toothpaste

Question 4

What are the different intensity of distribution?

Answer 4

• Intensive distribution: coverage of all appropriate retailers/wholesalers. Making the product as easily available as possible to the largest target possible (ex.: metro, corner store, IGA, Super C, Provigo, etc.)
• Selective distribution: coverage of only the retailer/wholesalers that meet critical criteria (& perhaps are willing to give the product special attention) (ex.: metro, iga)
• Exclusive distribution: A product is only available at one point-of-sale in a geographic area. Often used for high-end products.

Question 5

On which criteria should you base your decision for the type of channel and intermediary?

Answer 5

1. Cost and Profitability
   - How much do you have to pay them? How much can they sell for us?
2. Control of the Network
   - Can we make them comply with our marketing policy? Can we make sure our product is priced similarly across retailers?
3. Image of the Intermediaries
   - Do consumer perceive this intermediary as competent? Trusted/liked by customers?
4. Sharing of functions
   - Who plays what role in distribution? Do their competence make up for our weaknesses?
5. Compatibility with the existing network
   - Will adopting this new channel/intermediary upset our existing distribution network, weather reputationally or legally?
6. Flexibility of the Network
   - We prefer if intermediaries (especially ones we haven’t worked with before) do not lock us into long or exclusive contracts.

Question 6

Describe what is multi-channel marketing and what are the 3 major sources of channel conflict.

Answer 6

Multi-channel

• different types of distribution that are separate, not coordinated, you can use different promotions depending on the distribution place
• Ex: you can buy airpods from Apple Store, Best buy or Amazon and you will get a different experience depending on the buying place.

What is channel conflict? What are the 3 major sources of channel conflict?

• A situation in which channel members perceive that other member’s behavior is detrimental to them

1. Incompability of objectives: When one channel members objectives are incompatible with another (ex.: a manufacturer wanting rapid growth, so lower pricing and a retailer who wants larger profit margins)
2. Poorly defines roles and rights: If several channels compete for the same customers (ex.: Apple selling direct-to-consumer and through channel partners)
3. Differences in perception: When channel partners perceive the same situation differently (ex.: a retailer who consistently sees the problems consumers face with the product and a manufacturer who sees nothing wrong)

Question 7

What is the omnichannel marketing strategy? How does it avoid potential conflicts?

Answer 7

• Making sure that the consumers’ experience of your brand is consistent across all touchpoints (ex.: direct distribution, retailers, your website, your socials)
  How does this help resolve conflict?
• In an omni-channel strategy, the focus is on the customer experience. Partners are often paid to make sure that the customer experience is consistent.
• Data on customer experience and needs is shared across all channel partners
• A focus on avoiding cannibalization, perhaps by making certain products only available through certain channel partners.