Lecture 4 Flashcards
(9 cards)
Manufacturer’s Channel Decision
The typical distribution channel decision problem is that of a producer trying to reach the consumers in a market in the sense of making its products available in different geographical locations.
Main Channel Decisions
- Existing vs. New Channels
- Number of Channels
- Channel Length
- Channel Composition
- Channel Relationship
Channel Decision Analysis
Multiple factors to consider
Decision the outcome of the evaluation of factors for vs. factors against
No right or wrong answer
Factors Favouring Existing Channels
Intermediaries will take the product
Existing channel provides adequate coverage
Existing channel provides adequate competitive representation
Existing channels can meet profit goal
Too much time to build new channel
Cost developing new channel unacceptable
Factors Favouring New Channels
Intermediaries will not take product
Existing channel cannot provide adequate coverage
Existing channel cannot provide adequate competitive representation
Existing channels cannot meet profit goal
Cost of development unavoidable
No suitable channel exist for the product.
Factors Favouring One Channel
Specialized products
High-unit value
Regulated products
High channel control
Factors Favouring Several Channels
Large market size
High level of segmentation
Product Type
Competitive representation
Different product lines
Composition Decision
The channel composition decision deals primarily with the type of intermediaries to use.
Channel Control Decision
The channel relationship decision deals with the degree of control required.
