Distribution Channel Management (4.3)

Sep 14, 2024

Distribution Channel Management - Lesson 4.3

Introduction

  • Focus on why certain products like regular water bottles are widely available while premium products like Hydro Flasks are not.
  • Unit 4 covers Channel Management, relevant for exams.

Key Topics

  1. Supply Chain Management (SCM)

    • Definition: Managing the supply chain for optimal efficiency.
    • Benefits:
      • Improved inventory tracking.
      • Lower operating costs, maximizing profit.
      • Availability of products, leading to customer satisfaction.

  2. Factors Affecting SCM

    • Target Market
    • Product Characteristics
    • Price

  3. Distribution Channels

    • Impact on cost and pricing.
    • Direct vs. Indirect channels previously discussed.

Levels of Distribution

  1. Intensive Distribution

    • Products placed in as many outlets as possible (e.g., gum).

  2. Selective Distribution

    • Products sold at selected locations (e.g., Nike).

  3. Exclusive Distribution

    • Single distributor in a market (e.g., BMW dealership).

Global Distribution

  • Use of intermediaries like export trading companies.
  • Cultural considerations in international markets:
    • Cultural norms and communication differences (e.g., business card etiquette).
    • Language barriers and need for interpreters.
  1. Labor Issues
    • Different labor laws internationally.
    • Importance of compliance with US import laws.

Channel Members

  • Direct vs. Indirect Channels
    • Direct: Manufacturer to consumer.
    • Indirect: Includes intermediaries.

Choosing Channel Members

  • Criteria include business history, product types, reputation, financial stability, sales, and customer service quality.

Maintaining Channel Relationships

  • Use of premiums, special deals, and contests to motivate.
  • Evaluation of success criteria: delivery promptness, service quality, sales quotas.
  • Annual review of channel member performance.

Conclusion

  • Recap of key points.
  • Test your knowledge with provided questions.
  • Sources for further reading.

Note: This lesson emphasizes understanding distribution channels and managing supply chains effectively, especially in international contexts.