Distribution Channel Design 2024-2025 PDF

MARKETING Unit 6: DISTRIBUTION CHANNELS 2024-2025 [email protected] Ve más allá  MARKETING IN THE GLOBAL FIRM Process of planning and executing the...

MARKETING Unit 6: DISTRIBUTION CHANNELS 2024-2025 [email protected] Ve más allá  MARKETING IN THE GLOBAL FIRM Process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services across national borders to create exchanges that satisfy individual and organizational objectives. It involves understanding and adapting to different cultural, economic, and legal environments to successfully market products and services in multiple countries. © Copyright Universidad Europea. Todos los derechos reservados 2  DISTRIBUTION: DEFINITION A group of key actors or economic agents who interact to ensure that the product or service reaches the consumer from its point of origin. In other words, these are all those involved in facilitating the "contact" between the product or service and the consumer. Distribution channels emerge as a result of the increasing number of exchanges between producers and consumers. © Copyright Universidad Europea. Todos los derechos reservados 3  Imagine if you wanted to buy your favorite chocolate, but it wasn’t available in your local store. You’d either have to go out of your way to find it or choose another brand. A good distribution strategy ensures products are easily accessible to customers, enhancing satisfaction and driving sales. © Copyright Universidad Europea. Todos los derechos reservados 4  DISTRIBUTION: DEFINITION Effective distribution strategies can significantly enhance customer value and create a competitive advantage for the company. © Copyright Universidad Europea. Todos los derechos reservados 5  DISTRIBUTION Distribution channel decisions directly impact every marketing decision. The pricing strategy, for instance, depends on whether the company: -Partners with national discount chains. -Utilizes high-quality specialty stores. -Sells directly to consumers through its website. © Copyright Universidad Europea. Todos los derechos reservados 6  WHY DO PRODUCERS DELEGATE SOME SALES TASK? Why do producers delegate some sales tasks to their channel partners? Producers rely on intermediaries because they enhance efficiency in making goods available to target markets. Through their networks, expertise, specialization, and operational scale, intermediaries often provide greater value to the company than it could achieve independently. © Copyright Universidad Europea. Todos los derechos reservados 7  DISTRIBUTION POLICY The DISTRIBUTION POLICY focuses its attention on the issue of how to get the product to the customer. Internal order processing Physical distribution and logistics Distribution channels © Copyright Universidad Europea. Todos los derechos reservados 8  DISTRIBUTION CHANNEL The starting point of the distribution channel is the manufacturer or producer, and the endpoint or destination is the consumer or user. Between these two points are individuals or organizations that perform various functions and have different designations; all of them are intermediaries. © Copyright Universidad Europea. Todos los derechos reservados 9  LENGHT OF DISTRIBUTION CHANNEL The length of distribution channels is significant: Short distribution channels lead to lower prices for the consumer. Long distribution channels are associated with greater complexity and result in higher prices. Distribution channels also describe movement: Forward movement: From the manufacturer to the wholesaler to the retailer (e.g., traditional product distribution). Backward movement: Involving waste and recycling, known as reverse distribution. © Copyright Universidad Europea. Todos los derechos reservados 10  REVERSE DISTRIBUTION A growing channel focuses on developing an efficient distribution system to return consumer-used waste to the producer or manufacturer for the creation of new products. This process not only generates economic benefits but also contributes to social responsibility. In this channel, the consumer becomes the first link and effectively transitions into the role of a producer. However, this role has yet to be fully recognized and embraced with sufficient authority and seriousness. Types of Reverse Logistics Waste Reverse Logistics: Involves recycling waste materials after the product has been used, thereby reducing environmental impact. It also aims to reuse resources effectively. Return Logistics: Focused on commerce, this type manages the return of products that customers no longer want. © Copyright Universidad Europea. Todos los derechos reservados 11  KEY ELEMENTS OF DISTRIBUTION 1. Distribution Channels: These are the pathways or networks through which products travel from the producer to the consumer: Direct Channel: When the producer sells directly to the customer, such as through a website or a company- owned store. Example: Apple selling iPhones on its website. Indirect Channel: When intermediaries like wholesalers, retailers, or agents help in distributing the product. Example: A clothing brand selling through department stores like Macy's. © Copyright Universidad Europea. Todos los derechos reservados 12  DISTRIBUTION CHANNELS © Copyright Universidad Europea. Todos los derechos reservados 13  KEY ELEMENTS OF DISTRIBUTION 2.-Intermediaries: These are the "middlemen" who help distribute the product. They include: Wholesalers: Buy products in bulk and sell them to retailers. Example: A wholesaler buying drinks from Coca-Cola and supplying them to small grocery stores. Retailers: Sell products directly to consumers.. Example: Supermarkets like Walmart or Tesco. © Copyright Universidad Europea. Todos los derechos reservados 14  KEY ELEMENTS OF DISTRIBUTION 3. Multichannel distribution: Using multiple channels to distribute products, such as selling through physical stores, online platforms, and direct mail. Example: Sony sells its electronics through exclusive retailers, online stores, and catalogs. © Copyright Universidad Europea. Todos los derechos reservados 15  MULTICHANNEL DISTRIBUTION Multichannel systems distribution offer numerous advantages to companies operating in large and complex markets. With each new channel, the company increases its sales and market coverage. However, these systems can be challenging to manage, as conflicts may arise when different channels compete with each other for customers and higher sales volumes. The key to effectively managing multichannel systems lies in minimizing conflicts among participants while maximizing demand through superior product design and quality, coupled with effective communication strategies. © Copyright Universidad Europea. Todos los derechos reservados 16  MULTICHANNEL DISTRIBUTION Sony maintains extensive distribution coverage through a multichannel distribution system. In the United Kingdom, Sony sells its consumer products through: Exclusive retailers (the "Sony Centres") Mass marketers (chains of appliance stores) Direct distribution © Copyright channels Universidad Europea. (mail-order Todos los derechos reservados catalogs managed by 17 direct marketing companies).  BENEFITS OF EFFECTIVE DISTRIBUTION -- Wider market reach: A well-designed distribution strategy ensures your product reaches more customers in different locations. -- Increased efficiency: Intermediaries like wholesalers and retailers reduce the burden on producers by managing inventory and distribution logistics. -- Customer convenience: Products are available where and when customers want them, enhancing satisfaction. © Copyright Universidad Europea. Todos los derechos reservados 18  CHALLENGES IN DISTRIBUTION --Channel conflicts: If two or more channels compete for the same customers, conflicts may arise. Example: A producer sells directly online at lower prices, angering retailers. --Costs of multichannel systems: Managing multiple distribution channels can be expensive and complex. --Control issues: Relying on intermediaries means producers might have less control over how their product is sold or marketed. © Copyright Universidad Europea. Todos los derechos reservados 19  EXERCISE 6.1: DISCUSSION AT CLASS Activity: Analyze a Product's Distribution Strategy Choose a product you frequently use (e.g., a smartphone, snack, or pair of shoes). Identify the distribution channels it uses (e.g., online, stores). Discuss how the product’s availability impacts your decision to buy it. © Copyright Universidad Europea. Todos los derechos reservados 20  DISTRIBUTION: EXAMPLE Coca-Cola is a global leader in distribution. It uses a three-tier system: Coca-Cola sells syrup to bottlers. Bottlers produce and package drinks and distribute them to retailers. Retailers sell the final product to consumers in stores, vending machines, or restaurants. This system allows Coca-Cola to distribute its products efficiently across the globe, ensuring its drinks are available almost anywhere. © Copyright Universidad Europea. Todos los derechos reservados 21  OUTSOURCING Outsourcing refers to the delegation of the partial or complete management of specific activities—either temporarily or indefinitely—to a specialized company. These activities were traditionally performed within the organization itself. Outsourcing represents a method of externalizing the provision of services for a company, extending beyond the scope of subcontracting. While subcontracting is typically a circumstantial arrangement designed to address specific or isolated tasks, outsourcing is aimed at optimizing the company’s resources. It involves transferring internal work to external entities. This approach is particularly common for services that are not central to the company's core business operations, such as: Administrative services Warehousing Security Information systems. © Copyright Universidad Europea. Todos los derechos reservados 22  OUTSOURCING: EXAMPLE AC Hotels outsources activities such as laundry services and information systems, allowing the company to focus on its core business operations: the reservation center, which is directly tied to the marketing and sales of hotel rooms. © Copyright Universidad Europea. Todos los derechos reservados 23  INTERNATIONAL DISTRIBUTION STRATEGY -A distribution strategy decision is an attempt to define the optimal channel for delivering a product to the consumer. -Significant country differences exist in distribution systems: in some countries, the retail system is concentrated; in others, it is fragmented; sometimes is short or long. -Access to distribution channels is difficult to achieve in some countries and the quality of the channel may be por, especially in les developed countries. © Copyright Universidad Europea. Todos los derechos reservados 24  INTERNATIONAL SUPPLY CHAIN Customs Transport/ Customs Customers Factory Inland cost Inland cost clearance freight Clearance warehouse © Copyright Universidad Europea. Todos los derechos reservados 25  EXERCISE 6.2: DISCUSSION AT CLASS Activity: Analyze a distribution strategy from a Spanish company Choose a Company from the list and try to discover the disitrbution channels they use in different countries. Are the channels different in Spain? If yes, why could be their reasons? How will your organize your DISTRIBUTION in your Company? Why did you choose that system? © Copyright Universidad Europea. Todos los derechos reservados 26  SPANISH COMPANIES Javier Andreu World Panapop Gambea Green Area Seal & Clean Akampao Argyor Archela Vera and the birds Dario Beltran © Copyright Universidad Europea. Todos los derechos reservados 27  Thanks ! 2024-2025 [email protected] Ve más allá © Copyright Universidad Europea. Todos los derechos reservados