THE MARKETING MIX

The Marketing Mix: Distribution Channels (Place)

The Marketing Mix: Distribution Channels (Place)

Introduction

Many producers do not sell their products directly to the end users. There are many intermediaries are involved between the manufacturer and the customer. These intermediaries constitute a marketing channel or a distribution channel.

In this paper, the various forms of distribution channels are discussed. In addition to that, the channels intensity is also explained and that what industry uses which intensity channel. Moreover, the factors are also discussed, which are considered by the managers to remain competitive in the market.

Discussion

Alternative Forms of Integration of Channels

A marketing channel system is the mix of marketing channels that a company employs, and decisions about it are among the most critical ones that management faces. There are four types of consumer marketing channels that a firm can adopt to reach its customers, which are discussed below (Chen 2009):

Level 0: a channel in which the manufacturer directly sells the product to customers without any intermediary.

Level 1: a channel that contains one selling intermediary, such as a retailer.

Level 2: a channel that contains two intermediaries. In the consumer market, there is typically a wholesaler and a retailer.

Level 3: this channel contains four intermediaries, such as in the meatpacking industry, the wholesaler sell to jobbers, who sell to small retailers.

For instance, in the automobile industry, companies typically use level 0 channel, such as Toyota has its own franchise through which it sells cars to its customers without any intermediary. Similarly, in the jewelers industry, organizations like D'damas, which is a joint venture between Gitanjali Gems and the Dubai based Damas Group; D'damas is a sub-brand that distributes its jewelers to its customers through its own retail shops worldwide.

Channels Intensity

For any channel formation, the provider of a product or service must first decide how intensive the distribution should be. There are three forms of distribution intensity, which includes intensive, selective, and exclusive (Carpenter 2001).

In intensive distribution, the product provided by the manufacturer is available in various outlets, requiring less control over sales. This strategy is generally adopted by companies of FMCGs (Fast Moving Consumer Goods). In selective distribution, there is less distribution of goods on outlets than intensive distribution. It is specifically adopted by manufacturers of shopping goods. In exclusive distribution, there is only one wholesaler, retailer or distributor in a certain geographic area. This strategy is adopted by companies manufacturing specialty goods in order to have more control over their sales and to record each transaction carefully as these products are expensive and any wrong calculation can result in enormous losses (Weitz 2007).

A major consideration for the selection of intensity is the consumer and how much effort customers will expend searching for a product or service. If the customer is expending more effort, then the company can be selective or exclusive in its intensity. If the company wants more control over its retailers, then the company will choose exclusivity (Coughlan ...