Using the resources on multichannel distribution, summarize the benefits and challenges of using more than one channel, specifically direct, indirect, and multichannel. What is channel conflict? How can marketers use two or more channels and minimize the potential of channel conflict?
What are the various types and functions of marketing intermediaries? Which are more important for large business and why? Which are more important for the small business and why? How could additional marketing channel options in the simulation help you better serve your target market?
Good evening Dr. Dickinson and Class,
Most products starts in a one-distribution channel like a local store or online and as the business grows larger, firms are able to distribute their products using multichannel distribution system. According to Hu et. al (2021) multichannel distribution channel is when vendors chooses to distribute their products to consumers via multiple channels like physical store, online marketplaces like Amazon or another retail chain. An advantage of multichannel distribution channel includes reaching the same customer in other channels, expanding customer reach and growing sales. Direct channel distribution as defined Cai & Qing (2020) is type of distribution in which vendors gets its products straight to the consumer without using any intermediaries. One disadvantage using direct channel distribution are limitations. Indirect channel distributions are when vendors distribute their products to wholesale or retailers. Channel conflict happens when there are two or more channel partners are having dispute. (Cai & Qing, 2020) Channel conflict can be avoided by adjusting price, compensation or by avoiding direct sales.
Cai, H., & Qing, S. (2020). Pricing Strategies in a Two-Echelon Supply Chain With Sales Efforts and Channel Conflicts. IEEE Access, Access, IEEE, 8, 83238–83247. https://doi-org.lopes.idm.oclc.org/10.1109/ACCESS.2020.2991673
Hu, B., Yang, B., Jiang, W., Yang, Z., & Kemal, M. A. (2021). Location and Layout of Common Storage and Multichannel Common Distribution considering Time Windows. Wireless Communications & Mobile Computing, 1–9. https://doi-org.lopes.idm.oclc.org/10.1155/2021/2150293
Multichannel distribution is definitely something that businesses can utilize to enhance their business. As with other strategies in business, multichannel distribution has benefits and challenges associated with the utilization of this strategy. For example, benefits include maximizing profits and improving company knowledge of its customers (Giannoni et al., 2021). Getting to know the company’s customers on a deeper level could be a game changer because the more information known about a customer, the better the company can tailor their products and services to its customers. However, some challenges with multichannel distribution include having to acquire the skills necessary in order to properly gather the data and the potential costs (Giannoni et al., 2021). These are real hurdles that organizations have to try to overcome or adapt in order to remain successful. Channel conflict is when an organization establishes two or more channels that sell to the same market (Kotler & Keller, 2016). In order to properly combat channel conflict, marketers must recognize the causes of channel conflict and then be prepared. Some causes of channel conflict are goal incompatibility, unclear roles and rights, differences in perception, and dependence on the manufacturer (Kotler & Keller, 2016). Therefore I think in order for marketers to use two or more channels and minimize the potential of channel conflict, they will need to ensure that they are avoiding the causes of channel conflict or establishing a plan to overcome the potential challenges.
Thank you for reading,
Kotler, P., & Keller, K. L. (2016). A framework for marketing management (6th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall. ISBN-13: 9780133871319
Sauveur Giannoni, Daniel Brunstein, Florian Guéniot, & Johan Jouve. (2021). Multichannel distribution strategy of Airbnb hosts. Annals of Tourism Research Empirical Insights, 2(1). https://doi-org.lopes.idm.oclc.org/10.1016/j.annale.2021.100017
What are the various types and functions of marketing intermediaries?
Marketing intermediaries are the various types of partners or facilitators in which sell a product/service. There are four main types of marketing intermediaries: agents, wholesalers, distributors and retailers (Bhasin, 2020). There are subcategories of these four types, but each serves their own purpose.
Which are more important for large businesses and why? Which are more important for the small business and why?
It is complicated to say which of the four marketing intermediaries are more important for large businesses versus small business without defining what qualifies as each. With that, research from Bhasin (2020) goes over the importance of each one and how their functions can be used for a firm’s best interest.
For agents or brokers, these types of intermediaries are really there to facilitate the transaction. They act more as the middle-man but are not truly part of the actual purchase. Whether it is an agent in real-estate, or a broker for international trade, relationship, promotion, and negotiation skills are what can make or break current and future sales of the product or product type (Rosenbloom, 2013).
Wholesalers typically purchase from the manufacturer in bulk. They then sell to smaller businesses at a marked up price and make up for their margin that way. Depending how they are defined, mainly smaller businesses benefit from this segment.
Distributors are also known as functional wholesalers. Similar to an agent, their main job is to facilitate the transaction between manufacturers and retailers. Both large and small businesses benefit from distribution. They work on specific designs and typically have a limited timeline for when and how to produce the work. Textile companies are a good example of a distributor, as they can be utilized in many facets of production and delivery.
Retailers are some of the most common intermediaries that we as consumers interact with. Again, both large and small businesses benefit from this type. Products and services go through some if not all of the other intermediaries mentioned above before they enter retail markets. This is where the final good is in the hands of the consumer and can be purchased for final marginal profit.
How could additional marketing channel options in the simulation help you better serve your target market?
Adding marketing channel options in the simulation will better serve our target market. Expanding our brand from just our own brick and mortar sales front will make our carbon fiber bike company an international name and will carry on for a longer lifespan if we can continue to reach various audiences through these different channel types. Our products are for all types of individuals so we should be expanding our reach and potential by tapping into these alternative opportunities.
Bhasin, H. (2020, August 1). Marketing Intermediaries – Meaning & Different Types Explained With Examples. Marketing91. https://www.marketing91.com/marketing-intermediaries/
Rosenbloom, B. (2013). Functions and Institutions: The Roots and the Future of Marketing Channels. Journal of Marketing Channels, 20(¾), 191-203. https://doi-org.lopes.idm.oclc.org/10.1080/1046669X.2013.803423