This is the last of the four P's of the marketing mix.
Logistics
is a planning approach that treats moving goods into and
out of an organisation
as a complete system; from the stage of
goods and services coming into the
organisation as manufacturing
inputs, through to delivery of the organisation’s
own goods and
services to the end user.
Factors
that should be considered before a distribution channel is
chosen
1.Adequate and appropriate
distribution. A choice of
distribution
channels allows the organisation to consider the
various options and choose one
or more that are best
positioned to
achieve results.
2.Access to market and the level of
coverage required.
3.Cost effectiveness in both access to
market and physical
distribution
4.Reseller effort and competitive
representation and
motivation
5.Maximisation of revenue returns from
resellers
6.Provision of customer service
Distribution
channel functions
•A
distribution channel moves goods from producers to consumers. Members of the marketing channel perform many
key functions such as:
•Information
•
Promotion
•Contact
•Matching
- Negotiation
•Physical
distribution
•
Financing
•Risk
taking
•Communication
role
•Service
role
- Cost reduction
•Control
•For
overseas sellers, channel members often make contact
with buyers and potential
buyers and may be involved in
matching supply with demand.
Number
of channel levels
The
number of intermediary levels indicates the length of a
channel.
•Channel
1-this
is called direct marketing channel.
•This
has no intermediary level
•It
consists of the manufacturer selling directly to consumers.
•E.g.
dell computer sells personal computers by mail order rather than through
dealers or retailers.
•The
remaining channels are called indirect marketing channels
• Channel
2
•This
contains one intermediary level.
•In
consumer markets this is usually the retailer
•For
example the markers of televisions and cameras sell their
goods directly to
large retailers which then sell the goods to
final consumers.
Channel 3
This
channel contains two intermediaries usually a wholesaler
and a retailer. This channel is often used by manufacturers
of
food, drugs etc.
•Channel 4
•This
contains three intermediaries.
Channel
behaviour and organisation
•A
channel comprises of a group of companies that
distribute products from
manufacturers to the final
consumers.
•Channel
design decisions
Customer
service needs:
1.Do customers want blanket
distribution(convenience goods) or specialist distribution (luxury goods)
2.How important is speed of delivery
3.Do customers expect a wide range of
products
4.How important are add on services
5.The channel designer must weigh up the
cost of
delivering the optimal service level against potential
extra sales and
then set that against the cost of
providing the service
Channel
management decisions
Selection
of channel members-companies with
successful products and strong brand names
can
easily attract quality distribution.
Lesser known
companies have difficulty in getting listings with good
distributors or retailers and sometimes have to make
deal that give high
margins to the channel members.
