Distribution Channel Management (4.3)

Have you ever wondered why you can buy a regular old water bottle from pretty much any store, but you can only find hydro flasks in fancy places like REI? Someone made that decision on purpose, and today you'll find out why. This is the third video in Unit 4, Channel Management. Take a look at this breakdown, which shows you how often this unit comes up on district, state, and international exams for each of the different clusters. Hello and welcome. This is Lesson 4.3, Distribution Channel Management. Now let's get to work team. In this video we'll learn even more about the supply chain including supply chain management and the three levels of distribution. We'll also talk about distribution on the global level and the different channel members in the supply chain. Supply chain management is exactly what it sounds like. It's how supply chain is managed and the best supply chain management has all kinds of benefits. You'll be able to keep track of your inventory better which you need to know so you can keep up with production. It also keeps operating costs low which lets you maximize profit. Plus you'll have products available to sell which leads to increased customer satisfaction. Supply chain managers need to think about three factors to make sure things run smoothly. Target market, product, and price. When supply chain managers know their target market well, they can decide what kind of distribution channel to use, like direct or indirect channels. We talked about those in lesson 8, linked here. A supply chain manager also needs to evaluate the product so they can decide which type of distribution channel is best. Like if the product is fragile and needs a different channel than, say, jeans. Lastly, the channel of distribution will affect the price. If they choose a more expensive channel of distribution, the final cost of the product will be greater. Now, at this point in the unit, we've talked about distribution for quite a bit. You know the different models of distribution for B2C and B2B markets. You know how distribution happens in the real world and how supply chain management is handled. There are three levels of distribution, intensive, selective, and exclusive. Intensive distribution refers to when a business places a product wherever they can in order to maximize exposure. Think about gum. You'll find it anywhere and everywhere. The 7-Eleven near your school, the grocery store down the street, and even at the SFO airport. Next, there's selective distribution, which is when a business only sells their products in specific locations. To do this, only select channel members can be part of the business's supply chain. In general, selective market coverage means that there will be just enough locations to serve the target market. Think about Nike. Nike products are only sold at Nike stores and some other select retailers. The last one is, you guessed it, exclusive distribution. This is when only one distributor is used to carry a certain product. This typically occurs with expensive or luxury products. In general, exclusive coverage means that there will only be one location to serve a market area. For example, there is only one place to buy a new BMW in the South Bay area, a BMW dealership in Mountain View. Now, oftentimes businesses target international markets or obtain materials from other countries. In an earlier video, we discussed why this might be the case. The video is linked right here. But distribution can get a little trickier when you're an international business. So a lot of companies use intermediaries called export trading companies to help with foreign distribution. These intermediaries provide services like warehousing, shipping, insuring, billing, documenting, and the list goes on. Yes, it's another intermediary you'll have to pay. But in the end, they end up being really useful for international business. Now, when doing business outside your home country, it's important to keep in mind that culture varies around the globe. Beliefs, customs, and social behaviors might surprise you in different parts of the world. So it's important to remain mindful and considerate of those differences, especially in a business setting. For example, in some Asian countries, it's typically considered rude to put someone's business card in your pants pocket. Instead, you should receive it with both hands, look at it for a few seconds, and put it in a shirt pocket or a business card holder. When you do business in a new country, take time to research cultural differences. The next thing to keep in mind when doing international business is communication. Not everyone speaks English, so you should either learn the language of that country or hire an interpreter. Be considerate of what you say at all times, and... And be patient. Non-verbal communication can also be very different from what you're used to. For example, in the United States, shaking your head from side to side means no. But in other countries, that same motion means yes. Last thing to keep in mind about international business, labor issues. The laws surrounding labor are different from place to place, and it's crucial that you understand the rules in the country you do business in. For example, some countries allow businesses to use child labor or pay extremely low wages to employees. And in the US, it's illegal to import products from businesses that do either of those. Now let's talk about the channel members. all the people in the supply chain. In a direct channel, the only members are the manufacturer and the consumer. But in an indirect channel, the members are the manufacturer, the consumers, and all the intermediaries. So how do you pick the right channel members? Well, it's kind of like hiring someone for a job. The business should consider how long that channel has been in business, what kind of products they carry, their reputation, financial stability, and the quality of their sales and customer service. If they have previous experience with the manufacturer, they'll consider that as well. But choosing a channel member is only the beginning. you still need to keep them happy. Producers can offer premiums, special deals, and sales contests to make sure their intermediaries are motivated. In addition, supply chain managers need to make sure that all their intermediaries get along. Okay, now that the channel member is in place and motivated, it's time for the business to evaluate its success. Supply chain managers set their own standards for measuring success. Maybe that's consistently prompt deliveries, high quality service, sales quotas, and overall satisfaction. At the end of the year, producers look at evaluations and think about replacing intermediaries who are underperforming. Now that we've gone over all the content, it's time to test your knowledge with a real deck of questions. Pause the video and try to answer. The answer is D, language barriers. Remember we talked about how communication can be a struggle when it comes to international trade? In this case, language is the main conflict between the two parties. And here are the sources we used for this video. Feel free to check them out if you still have questions. All right, that pretty much sums up lesson 4.3, distribution channel management. Great work team, and we'll see you in the next video.

Take a look at this breakdown, which shows you how often this unit comes up on district, state, and international exams for each of the different clusters. Hello and welcome. This is Lesson 4.3, Distribution Channel Management.

Now let's get to work team. In this video we'll learn even more about the supply chain including supply chain management and the three levels of distribution. We'll also talk about distribution on the global level and the different channel members in the supply chain. Supply chain management is exactly what it sounds like.

It's how supply chain is managed and the best supply chain management has all kinds of benefits. You'll be able to keep track of your inventory better which you need to know so you can keep up with production. It also keeps operating costs low which lets you maximize profit. Plus you'll have products available to sell which leads to increased customer satisfaction.

Supply chain managers need to think about three factors to make sure things run smoothly. Target market, product, and price. When supply chain managers know their target market well, they can decide what kind of distribution channel to use, like direct or indirect channels.

We talked about those in lesson 8, linked here. A supply chain manager also needs to evaluate the product so they can decide which type of distribution channel is best. Like if the product is fragile and needs a different channel than, say, jeans.

Lastly, the channel of distribution will affect the price. If they choose a more expensive channel of distribution, the final cost of the product will be greater. Now, at this point in the unit, we've talked about distribution for quite a bit. You know the different models of distribution for B2C and B2B markets. You know how distribution happens in the real world and how supply chain management is handled.

There are three levels of distribution, intensive, selective, and exclusive. Intensive distribution refers to when a business places a product wherever they can in order to maximize exposure. Think about gum. You'll find it anywhere and everywhere. The 7-Eleven near your school, the grocery store down the street, and even at the SFO airport.

Next, there's selective distribution, which is when a business only sells their products in specific locations. To do this, only select channel members can be part of the business's supply chain. In general, selective market coverage means that there will be just enough locations to serve the target market. Think about Nike. Nike products are only sold at Nike stores and some other select retailers.

The last one is, you guessed it, exclusive distribution. This is when only one distributor is used to carry a certain product. This typically occurs with expensive or luxury products.

In general, exclusive coverage means that there will only be one location to serve a market area. For example, there is only one place to buy a new BMW in the South Bay area, a BMW dealership in Mountain View. Now, oftentimes businesses target international markets or obtain materials from other countries. In an earlier video, we discussed why this might be the case.

The video is linked right here. But distribution can get a little trickier when you're an international business. So a lot of companies use intermediaries called export trading companies to help with foreign distribution. These intermediaries provide services like warehousing, shipping, insuring, billing, documenting, and the list goes on. Yes, it's another intermediary you'll have to pay.

But in the end, they end up being really useful for international business. Now, when doing business outside your home country, it's important to keep in mind that culture varies around the globe. Beliefs, customs, and social behaviors might surprise you in different parts of the world.

So it's important to remain mindful and considerate of those differences, especially in a business setting. For example, in some Asian countries, it's typically considered rude to put someone's business card in your pants pocket. Instead, you should receive it with both hands, look at it for a few seconds, and put it in a shirt pocket or a business card holder.

When you do business in a new country, take time to research cultural differences. The next thing to keep in mind when doing international business is communication. Not everyone speaks English, so you should either learn the language of that country or hire an interpreter.

Be considerate of what you say at all times, and... And be patient. Non-verbal communication can also be very different from what you're used to.

For example, in the United States, shaking your head from side to side means no. But in other countries, that same motion means yes. Last thing to keep in mind about international business, labor issues.

The laws surrounding labor are different from place to place, and it's crucial that you understand the rules in the country you do business in. For example, some countries allow businesses to use child labor or pay extremely low wages to employees. And in the US, it's illegal to import products from businesses that do either of those. Now let's talk about the channel members.

all the people in the supply chain. In a direct channel, the only members are the manufacturer and the consumer. But in an indirect channel, the members are the manufacturer, the consumers, and all the intermediaries. So how do you pick the right channel members?

Well, it's kind of like hiring someone for a job. The business should consider how long that channel has been in business, what kind of products they carry, their reputation, financial stability, and the quality of their sales and customer service. If they have previous experience with the manufacturer, they'll consider that as well. But choosing a channel member is only the beginning.

you still need to keep them happy. Producers can offer premiums, special deals, and sales contests to make sure their intermediaries are motivated. In addition, supply chain managers need to make sure that all their intermediaries get along. Okay, now that the channel member is in place and motivated, it's time for the business to evaluate its success. Supply chain managers set their own standards for measuring success.

Maybe that's consistently prompt deliveries, high quality service, sales quotas, and overall satisfaction. At the end of the year, producers look at evaluations and think about replacing intermediaries who are underperforming. Now that we've gone over all the content, it's time to test your knowledge with a real deck of questions.

Pause the video and try to answer. The answer is D, language barriers. Remember we talked about how communication can be a struggle when it comes to international trade? In this case, language is the main conflict between the two parties. And here are the sources we used for this video.

Feel free to check them out if you still have questions. All right, that pretty much sums up lesson 4.3, distribution channel management. Great work team, and we'll see you in the next video.

Transcript for:Distribution Channel Management (4.3)

Transcript for:
Distribution Channel Management (4.3)