Distribution Channels and Supply Chain

• Distribution channels are chains of businesses that move a product, or service to the final customer
• Distribution channels can include wholesalers, retailers, distributors, and the internet.

Supply Chain and the Value Delivery Network

• Supply Chain consists of upstream and downstream partners.
• Upstream firms supply raw materials, components, parts, information, finances, and expertise to create a product.
• Downstream entities such as wholesalers and retailers form a vital connection between the firm and customers.

Nature and Importance of Distribution Channels

• The use of marketing intermediaries depends on their efficiency in marketing goods to target markets.
• Distribution channel functions include information, promotion, contact, matching, negotiation, physical distribution, financing, and risk-taking.
• A direct marketing channel is a marketing channel with no intermediary level.
• Wholesalers are firms primarily engaged in wholesaling activities.
• Retailers are businesses whose sales come primarily from retailing.

Hospitality Distribution Channels

• Major hospitality distribution channels include direct booking and online travel agencies [OTAs].
• Global Distribution Systems [GDSs], travel Agents, and tour wholesalers are major distribution channels.
• Specialists include tour brokers, motivational houses, and junket reps.
• Other channels include hotel representatives, national, state, and local tourist agencies, consortia and reservation systems, concierges, and restaurant distribution systems.

Channel Behavior

• Channel conflict arises from disagreement over goals and roles of channel members.
• Horizontal conflict happens between firms at the same level.
• Vertical conflict occurs between different levels of the same channel.

Channel Organization

• A conventional marketing system includes one or more independent producers, wholesalers, and retailers.
• A vertical marketing system consists of producers, wholesalers, and retailers acting as a unified system.
• Corporate VMS combines successive stages of production and distribution under single ownership.
• Administered VMS coordinates successive stages through size and power, not common ownership/contractual ties.
• Contractual VMS consists of independent firms at different production/distribution levels who join through contracts.
• Franchising is a business method where a franchisee is granted the right to engage in offering, selling, or distributing goods/services under a format designed by the franchisor.
• Alliances develop to allow organizations to benefit from each other's strengths.
• A horizontal marketing system is when two or more companies at one level join to pursue new marketing opportunities.
• A single firm sets up multiple marketing channels to reach diverse customer segments in a multichannel marketing system.

Selecting Channel Members

• Selecting channel members involves considering customer needs.
• Attracting channel members is important.
• Evaluating major channel alternatives, including economic feasibility and control criteria, is important.

Responsibilities of Channel Members and Suppliers

• Companies and intermediaries must agree on terms and responsibilities for each channel member.
• These responsibilities are formulated after careful consideration of the services and clientele.

Business Location

• Business location considerations should include marketing strategy.
• Regional analysis is important.
• Choosing the area within the region and the individual site.

Final Thoughts

• A well-planned distribution strategy ensures that businesses efficiently deliver products and services to customers, boosting sales and satisfaction.