Place development of channel systems

Place & Development of Channel Systems Place: making goods & services available in the right quantities and locations, when customers want them Selecting the channel of distribution  Depending on:  DISTANCE  PERISHABILITY  SPECIAL HANDLING  NUMBER OF CUSTOMERS  TRANSPORTATION  STORAGE Channel of distribution: any firms or individuals who participate in the flow of goods from producer to final consumer  Direct Channel system : Firms distribute directly to the final consumers , they perform all activities without intermediaries because :  They want to control the whole marketing job.(products, price, service)  They can serve target customers at a lower cost or the work more effectively than intermediaries  Direct channel is common with business customers & services  In direct contact with customers, firms are more aware of changes in customer attitudes  A firm may have to go direct if suitable intermediaries are not available or will not cooperate  In Direct Channel: Producer sells & distributes its products to customers; therefore the firm is responsible for : warehouse equipment transport personnel needed to complete distribution activities Indirect channel: use intermediaries to distribute goods& services  As consumers are spread throughout many geographic areas & They shop for certain products at specific places  As direct distribution requires a big investment in facilities, people, IT  Firms have to rely on the indirect channel -Intermediaries may reduce a producer’s output & carrying it in inventory until it’s sold -Intermediaries can help producers serve customer’s needs better at lower costs Types of Channel Intermediaries  Wholesalers buy goods from producers & resell them, wholesalers receive , take title to goods, store them in their own warehouses, and ships them  Agents & brokers facilitate the sale of a product from producer to end user They get a fee or commission based on sales volume  Retailer sells goods mainly to consumers Channel Structures  A product can take many routes to reach its consumer Marketers search for the most efficient channel from many alternatives available  CHANNELS FOR CONSUMER PRODUCTS &  CHANNELS FOR B2B &INDUSTRIAL PRODUCTS CHANNELS FOR CONSUMER PRODUCTS CHANNELS FOR B2B & INDUSTRIAL PRODUCTS Channel Strategy Decisions Factors affecting channel choice  Market Factors -Target customer considerations ( who? What? Where/when? How?) - Geographic location& Size of the market - Industrial customers vs Individual consumers  Product factors  What products sell better through direct sales force  PLC in choosing a marketing channel  Producer factors - Big – Medium – small Levels of Distribution Intensity: intensive distribution/selective distribution/ exclusive distribution  Intensive distribution strategy : form of distribution aimed at having a product available in every outlet at which target customers might want to buy it  Selective distribution strategy: form of distribution achieved by screening dealers to eliminate all but a few in any single area  Exclusive distribution strategy : form of distribution that establishes one or a few dealers within a given area  ... efficient channel from many alternatives available  CHANNELS FOR CONSUMER PRODUCTS &  CHANNELS FOR B2B &INDUSTRIAL PRODUCTS CHANNELS FOR CONSUMER PRODUCTS CHANNELS FOR B2B & INDUSTRIAL PRODUCTS Channel. ..Selecting the channel of distribution  Depending on:  DISTANCE  PERISHABILITY  SPECIAL HANDLING  NUMBER OF CUSTOMERS  TRANSPORTATION  STORAGE Channel of distribution: any firms... indirect channel -Intermediaries may reduce a producer’s output & carrying it in inventory until it’s sold -Intermediaries can help producers serve customer’s needs better at lower costs Types of Channel