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Distribution Strategy

Distribution Strategy. Pertemuan Ke-17. Channel of Distribution Strategy. The steps in the channel of distribution strategy include: Determining the type of channel arrangement Deciding the intensity of distribution Selecting the channel configuration. Channel Objectives.

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Distribution Strategy

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  1. Distribution Strategy Pertemuan Ke-17

  2. Channel of Distribution Strategy • The steps in the channel of distribution strategy include: • Determining the type of channel arrangement • Deciding the intensity of distribution • Selecting the channel configuration

  3. Channel Objectives • Product availability: • Coverage of relevant retailers • In-store positioning • Coverage of geographic markets • Promotional effort: • Effective point of purchase promotion • Effective personal selling support • Customer service: • Installation, training, repair • Market information: • Monitoring sales trends, inventory levels, competitor’s actions • Cost-effectiveness: • Cost of channel functions relative to sales volume

  4. Type of Channel • Vertical marketing systems (VMS); • Ownership, a single firm in the channel may own all of the participating organizations in the channel. • Contractual, establishing formal operating arrangements between channel participants. • Administered, one firm manages the channel by exerting power and influence rather than by ownership or contractual ties. The administrator may be a producer, and its product line.

  5. Distribution Intensity • Choosing the right distribution intensity depends on management’s targeting and positioning strategies and product and market characteristics. The major issues are: • Identifying which distribution intensities are feasible, taking into account the size and characteristics of the market target, the product and the requirements likely to be imposed by prospective intermediaries.

  6. Distribution Intensity • Selecting the alternatives that are compatible with the proposed market target and marketing program positioning strategy. • Choosing the alternative that offers the best strategic fit, meets management’s financial performance expectations and is attractive enough to intermediaries so that they will be motivated to perform their assigned functions.

  7. Channel Configurations • Criteria to be considered: • End-user considerations • Product characteristics • Manufacturer’s capabilities and resources • Required functions • Availability and skills of intermediaries

  8. Selecting the Channel Strategy • Factors to be considered: • Market access • Financial considerations • Flexibility and control considerations

  9. Managing The Channel • Issues to be discussed: • Channel leadership • Management structure and systems • Physical distribution management • Channel relationships • Channel performance • Conflict resolution • Legal and ethical considerations

  10. Conclusions • The channel of distribution connects the producer with the end users of goods and services • Manufacturers select the type of channel to be used, determine distribution intensity, design the channel configuration and manage various aspects of channel operations. • The choice of a channel strategy begins when management decides whether to manage the channel or to assume a participant role. Strategic analysis identifies and evaluates the channel alternatives.

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