The Theoretical Framework of Distribution System and Distribution Channel Management
It’s a movement of goods and services from source through a distribution channel, right up to the final customer, consumer, or user, and the movement of payment in the opposite direction, right up to the orginial producer or supplier. (Business dictionary) Source: * William D. Perreault, Jr, PhD, University of North Caroline. Essentials of Marketing – A marketing Strategy Planning Approad, 12 edition, pp 248. * http://www. businessdictionary. com/definition/distribution. html 1. 2. 2. Roles’s distribution Globalization of markets is a phenomenon that has received much attention and been extensively debated both at the general societal/ institutional / cultural levels and at market and business levels. In any globalization process, distribution of goods and services between and within local industrial and consumer markets is of great importance. Globalization of markets and reoganiztion of distribution are mutually dependent processes that involve changes in market strutures.
As national market expand and as new opportunities arise for satisfying consumer demand, greater specialisation in distribution is evident both in level of distribution and in goods and service handled (Mallen, 1996). Distribution excellence has become a powerful source of competitive differentiation. In the 1980’s and 1990’s at USA, companies began to view distribution channles as more than simply a source of cost savings and recognize it as a source of enhancing product or serve offerings as part of he broader supply chain process to create competitie advantage. Distribution builds stable competitive advantages. (Mentzer et al, 2004). Source: * Mallen, B. ,(1996). Selecting channels of distribution: a multistage process. International Journal of Physical Distribution & Logistics Management, Vol. 26, pp. 5-21. * Mentzer, J. T. , Min, S. , and Bobbitt, M. L. ,(2004). Toward a unified theory of logistics. International Journal of Physical Distribution & Logistics Management, Vol. 34, pp 606-627. 1. 2. 2. 3 Purpose of distribution
The Theoretical Framework of Distribution System and Distribution Channel Management Essay Example
All marketing managers want to be sure that their goods and sevices are available in the right quantities, to the right locations and at the right time, as well as to minimize systemwide cost while satisfying the service levels their customers require. But customers may have a different needs in these areas as they make different purchases. 1. 2. 2 The distribution channel 1. 2. 3. 4 The distribution channel concept A distribution channel is the path through which goods and services travel from the vendor to ther consumer or payments for those products travel from the consumer to the vendor.
With this kind of channel, it ensures close interaction of producers, strengthening accountability in the market, ensuring the leading manufacturers of distribution. The information obtained will manufacturers make more and more useful, manufacturers are in direct contact with customers, capture their needs easily than through the intermediary distribution. Besides the above advantages, the direct distribution channel is limited low level of expertise, organization and management of more complex channels, the company’s capital flows slow, dispersed workforce.
In general, in the present conditions, when economy development Quick, scale expand then structure this channel very rare, it accounting for proportion small in entire system distribution channels by it only match the background production export have scale small, market relations narrow. * Channel shortened: Manufacturer – Retailer – Consumer Use as a large-scale retail, bulk purchases from manufacturers Cosume storage costs are too expensive if you use a wholesaler. The advantage of the shortened channel is free for manufacturers to functional specialization circulation and develop the productive resources.
The downside of the channel is shortened manufacturers or retailers to function doubles the wholesale trade, difficulty balancing and ensuring continuous along the entire distribution. Shortened channel should be applied with some type of certain retail establishments, some items simply to serve some sort of stable demand regular consumer. * Full Channel: Manufacturer – Wholesaler – Retailer – Consumer This type of channel 2. In the channel, in addition to the distribution of an additional wholesaler, this structure is often used for the common goods of low value, frequently purchased.
The advantage of this channel is to promote the advantages of focused specialization in each field, increasing labor productivity and working capital round. The downside is that there are too many channels full and intermediate management clue as to control the whole system becomes more complex channels, large cost and long working time, prone to the volatility and risk risk. Full channel normally used for goods of low value, low cost frequently purchased by consumers. Mixed Channel: Manufacturer – Agent – Wholesaler – Retailer – Consumer The advantage of the mixed channel is required to best meet social division of labor between the production, circulation and internal circulation and shape allows to maximize commercial activity in all market position selling retail and residential location distribution. The downside is the increased number of channels will be difficulties in the acquisition of customer information, the control and supervision of intermediaries also impeded It is used when there are many small manufacturers and retailers.
An agent is used to help coordinate supply bulk products to the target market. Type of channel 3 level and channel 4 level is long and most complete. This is a common channel for distribution of goods. It solves conflicts: production focus, extensive consumer. However, with the use of long channels, the cost for the channel is set large, the administration and management of distribution channels difficult. So managers need to invest and manage an appropriate way to avoid duplication and reduce costs down. Source: Jobber, D. , (2001). Principles and Practice of Marketing. (3rd ed. ). London: McGraw-Hill. Organization of distribution channels There are many forms of organization of distribution channels, some of distribution channels systems just only have an unofficial impacrs relationships, loosely connected between the department business, and some of channels systems have an official contacts between organization is highly specialized. For example: * Traditional Marketing Channels: As a random subset of manufacturers, wholesalers, retailers. In each separate business entity seeks the way that maximum their profit despite decreased profit of whole system. No member of channel can entirely control or substantially to other members.