Distribution Flashcards
What is the main task of distribution?
To bridge the gap between production and consumption
What type of gaps can there be in the context of distribution?
Place gap: Place of production and consumption differs
Time gap: Time for production and consumption differ
Assortment gap: Assortment from production differs from the needs of the end users
Quantity gap: the volumes produced and consumed differs
Name some definitions for distribution
The overall mechanism for integrating all business processes that add value for end user
The coordination of activities that contribute to the forward and reverse flow of information, goods and services between the point of origin and point of consumption to satisfy customer needs
The link between manufacturers and customers is the marketing channel or the channel of distribution. The marketing channel is a set of interdependent organizations involved in the process of making a product or service available for use or consumptions
What are different types of channels? Indirect and direct
Direct sales
* Large and well defined groups of customers
* Customers require direct dealing
* Large amount of information on product use/features
* Process involves extensive negotiations with management
* Complex (often customized) offerings
* Quick response to market conditions
Indirect sales
* Fragmented and widely dispersed customers
* Standardized and commoditized product/offerings
* Assortment required by customer
* Low value transactions
What types of intermediaries are there?
Distributor
Takes title of goods
Responsible for customer contact, product availability, repair, and assembly and simple operations
Franchise
Obtains the right from company to conduct business in specified name
Agent
Avoids personal selling costs for principal
Earns commision for orders recieved
Does not take title to goods
Provides regional market knowledge
What are the benefits of intermediaries in distribution? Disadvantages?
Intermediaries often specialize in distribution tasks, bringing expertise and efficiency to the process. This allows producers to focus on their core competencies.
If the customer segment is dispersed intermediaries can play a role at tailoring solutions towards each customer.
Over-reliance on intermediaries can create dependency issues. If an intermediary fails or decides to discontinue the relationship, it can disrupt the distribution channel.
Reduced Direct Customer Feedback
Loss of Control
What is “omni-channels”?
Also called multi channels.
The reality is that most organizations are likely to operate a number of alternative channels. When the channels are treated as an integrated whole structure
What are the roles and functions of the intermediary?
For the producer:
Market coverage
Sales contact
Inventory
Order management
Market information
Customer support
Light assembly
For the customer
Availability
Assortment
Suitable order quantity
Technical support
Financial solutions
Service
What factors can affects the channel structure of distribution?
Availability of intermediaries
Established channel patterns
Product characteristics
Companies financial resources
Competitors strategies
Customer geographical locations
What are some criterias when selecting intermediaries?
Financial and company strenghts
Product factors
Marketing skills
Commitment
Facilitation factors
What are some criterias when selecting suppliers?
Economics
Product offering performance, delivery performance
Partnership
Opennes to criticism, quality of operational relationship. Frequency of informational exchange
Intermediary support
Reputation
What are some potential conflicts in the relationship between producers and intermediaries?
Economic aspects
Discounts, prices
The view of the distributor role
Independent actor or the producers extended arm
Reasonable inventory level, assortment
Fuzzy boundaries within and between channels
Who is doing what in the channel
Which channel should approach which customer, risk of competition between channels. Large accounts directly, smaller customers through middlemen
Degree of exclusivity
Complementing/competitive assortments
Geographial exclusiviness
