i.Channel and Distribution Tactics 9

Channel and Distribution Tactics:

Channel and Distribution Tactics Bucklin’s definition of distribution Today’s system of exchange Channel intermediaries Six basic channel decisions Selection consideration Potential Influence Strategies - Frazier and Sheth (1989) Frequencies of use of influence strategies - Frazier and Summers (1984)

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A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption Bucklin - Theory of Distribution Channel Structure (1966)

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Negotiation Promotion Contact Transporting and storing Financing Packaging Money Goods Today’s system of exchange Producers Users

Channel intermediaries - Wholesalers:

Channel intermediaries - Wholesalers Break down ‘bulk’ buys from producers and sell small quantities to retailers Provides storage facilities reduces contact cost between producer and consumer Wholesaler takes some of the marketing responsibility e.g sales force, promotions

Channel intermediaries - Agents:

Channel intermediaries - Agents Mainly used in international markets Commission agent - does not take title of the goods. Secures orders. Stockist agent - hold ‘consignment’ stock Control is difficult due to cultural differences Training, motivation, etc are expensive

Channel intermediaries - Retailer:

Channel intermediaries - Retailer Much stronger personal relationship with the consumer Hold a variety of products Offer consumers credit Promote and merchandise products Price the final product Build retailer ‘brand’ in the high street

Channel intermediaries - Internet:

Channel intermediaries - Internet Sell to a geographically disperse market Able to target and focus on specific segments Relatively low set-up costs Use of e-commerce technology (for payment, shopping software, etc) Paradigm shift in commerce and consumption

Six basic channel decisions:

Six basic channel decisions Direct or indirect channels Single or multiple channels Length of channel Types of intermediaries Number of intermediaries at each level Which intermediaries? Avoid intrachannel conflict

Selection consideration:

Selection consideration Market segment - must know the specific segment and target customer Changes during plc - different channels are exploited at various stages of plc Producer-distributor fit - their policies, strategies and image Qualification assessment - experience and track record must be established Distributor training and support

Potential Influence Strategies- Frazier and Sheth (1989):

Potential Influence Strategies- Frazier and Sheth (1989) Indirect influence strategies - information is merely exchanged with channel member personnel Direct unmediated strategies - consequences of a poor response from the market are stressed Reward and punishment strategies - given to channel members and their firms

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Direct unweighted strategy or request - producer’s wishes are communicated . No consequences are applied or mentioned Direct mediated strategies - specific action is requested and consequences of rejection are stressed e.g.1 control of retail pricing e.g.2 minimum order size e.g.3 salesperson training e.g.4 physical layout of store e.g. 5 territorial and customer restrictions

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Frazier and Summers (1984) Frequencies of use of Influence Strategies