Pastel Abstract Illustration Group Project Education Presentation 43.pdf

SISTER MARKETING CHANNEL MANAGEMENT OVERVIEW OF DISTRIBUTION CHANNEL DESIGN Lecturer: LE THANH HAI Class: MKT1127E A05E  Meet the Group Phan Thị Ngọc Hân Lê Thị Thu Thủy  CONTENT I. CONCEPT OF BUILDING DISTRIBUTION CHANNELS II. WH...

SISTER MARKETING CHANNEL MANAGEMENT OVERVIEW OF DISTRIBUTION CHANNEL DESIGN Lecturer: LE THANH HAI Class: MKT1127E A05E  Meet the Group Phan Thị Ngọc Hân Lê Thị Thu Thủy  CONTENT I. CONCEPT OF BUILDING DISTRIBUTION CHANNELS II. WHO IS INVOLVED IN THE DISTRIBUTION CHANNEL ORGANIZATION III. BASIC CONTENT OF CHANNEL DESIGN  CONCEPT OF DISTRIBUTION CHANNEL Distribution channel includes a chain of businesses, manufacturers or intermediaries that provide products/services to customers (final consumers) I. CONCEPT OF BUILDING DISTRIBUTION CHANNELS Building distribution channels is the process of designing a system that efficiently moves products or services from the producer to the end customer II. WHO IS INVOLVED IN THE DISTRIBUTION CHANNEL ORGANIZATION? PRODUCER WHOLESALER A producer is responsible All businesses, organizations, for creating a product and individuals buy goods in through manufacturing, large quantities and sell them processing or assembly to resellers or for business For example: For example: Samsung produces Costco is a wholesale electronic devices such model for both as phones and TVs businesses and Toyota produces cars consumers II. WHO IS INVOLVED IN THE DISTRIBUTION CHANNEL ORGANIZATION? RETAILER END CONSUMER The retailer is the The final consumer unit that has direct is the person who contact with the buys and uses the final consumer product For example: For example: People who buy mobile phones Go, Co.op mart sells goods for personal use: A person who directly to the final consumer, buys a phone from a store to use rather than selling in bulk to for personal purposes such as other retailers or businesses communication, entertainment, such as wholesalers and work  III. BASIC CONTENT OF CHANNEL DESIGN 1. Objectives of Channel Design 2. Factors to Consider in Channel Design 3. Types of Distribution Channels 4. Distribution Channel Structures 5. Steps in Designing a Distribution Channel 6. Distribution Channel Conflicts 7. Multichannel and Omnichannel Distribution 8. Technology in Channel Design  OBJECTIVES OF CHANNEL DESIGN What is distribution channel design? The process of combining location decisions based on geographic and customer factors to determine and build a business's distribution channel plan When launching a new product or service: Need to establish or adjust appropriate distribution channels to ensure products reach target customers When expanding new markets: Distribution channels need to be redesigned to suit local conditions, purchasing habits, and legal regulations  OBJECTIVES OF CHANNEL DESIGN When businesses want to reduce costs and optimize processes: Optimize logistics, transportation, and handling costs while maintaining service quality When the current distribution channel's performance is not satisfactory: such as high costs, slow speeds, or not reaching the right customers When competition in the market increases FACTORS TO CONSIDER IN CHANNEL DESIGN Market segmentation: Market segmentation has a great influence on the design of a business's distribution channels because each customer segment will have different needs, shopping behavior, and product approaches different Differences in needs and shopping habits: Individual customer groups Business customer (B2B)  Product characteristics: Perishable, breakable, bulky, FACTORS or highly specialized products may require unique distribution methods TO Perishable products High-end and exclusive products CONSIDER Fast-moving consumer products (FMCG) IN CHANNEL Competitor analysis: Assess how competitors approach the market DESIGN Competitors have strong distribution systems Competitors use multi-channel strategies  FACTORS TO CONSIDER IN CHANNEL DESIGN Geographic scope: Determine the geographical distribution scope. Local, regional, national, or global markets may require different channel strategies Large area Local or small areas Customer purchasing behavior: Some customers prefer to shop online, while others prefer traditional retail stores Customers prefer to shop online Customers like direct experience Dependence on traditional sales models  FACTORS TO CONSIDER IN CHANNEL DESIGN Sales volume and profit margins: High-volume, low-margin products may require more streamlined and cost-effective channels than low-volume, high-margin products Technology integration: Incorporating technology can improve efficiency and visibility in distribution E-commerce Supply chain management technology TYPES OF DISTRIBUTION CHANNELS Indirect Channels Direct Channels Hybrid Channels  DIRECT CHANNELS Producer sells directly to the consumer Example: Apple Advantages: Greater control over the customer experience, higher profit margins, and direct customer feedback. Challenges: Higher initial costs for setup, limited market reach without significant investment INDIRECT CHANNELS Producer uses intermediaries to reach customers Example: Unilever Advantages: Wider market coverage, shared operational costs, established relationships with customers Challenges: Less control over branding and customer experience, lower profit margins due to middlemen  HYBRID CHANNELS A mix of direct and indirect methods, online and offline Example: Nike Advantages: Reach more customers: By using multiple channels, businesses can reach customers who prefer to shop online and customers who like to shop in person Enhance customer experience: Combined channels help customers have more choices in shopping Challenges Difficulties in synchronous management: Managing inventory, pricing, and customer service across different channels can be complex and requires synchronization High operating costs: Combined channels require businesses to invest in many different systems  CONCEPT DISTRIBUTION CHANNEL Distribution channel structure is a description of the set of channel members who have relationships and how distribution work is STRUCTURE divided among them DETERMINING THE DISTRIBUTION CHANNEL STRUCTURE There are three variables that determine the distribution channel structure: Length, width, and type of intermediaries LENGTH OF DISTRIBUTION CHANNEL Direct channel (zero-level channel): Producer Consumers Applicable cases: For Perishable products such as agricultural products, and fresh products such as meat, fish, and vegetables, the buyer must come directly Disadvantages: Advantages: This type of distribution will increase the workload, costs, and Simple, ensuring a direct human resources for relationship between manufacturers. This type of production and consumption distribution channel is only suitable for small market size One-level channel Producer Retailers Consumers Applicable cases: Low-value products, no special features For example: food, rice, instant noodles, eggs, regular vegetables, and fruits Advantages: effective when retailers increase their initiative, and want to approach consumers directly Disadvantages: Not suitable for high- value products; Short consumption time. Retailers must take on other tasks, leading to possible inefficiencies  Two-level channel Producer Wholesaler Retailers Consumers Applicable cases: This type of distribution channel is often applied to new products, new needs, or products produced in one place or several places but supplied to consumers in many places Disadvantages: requires higher costs Advantages: and longer circulation time of goods, Tightly organized, enterprises find it difficult to control capable of ensuring the movement cycle and price of large sales products or services, requiring enterprises to have the capacity  Long channel: Producer Agency Wholesaler Retailers Consumers Long channel is a channel that uses 3 or more levels of distribution intermediaries Applicable cases: This channel is used when there are many small producers and many small retailers  INDUSTRIAL DISTRIBUTION CHANNELS Direct channel (Manufacturer → Industrial user). The manufacturer uses its sales force to sell directly or ship directly to industrial customers One-level channel (Manufacturer → Dealer (or Industrial Distributor) → Industrial user) Two-level channel (Manufacturer → Dealer → Industrial distributor → Industrial user)  Extensive distribution Enterprises use many intermediary channels to consume products and use as many retail agents and retail intermediaries as possible DISTRIBUTION CHANNEL BREADTH Selective distribution Enterprises choose several intermediaries in certain places to consume products Exclusive distribution The company uses a very limited number of intermediaries in a customer market area to consume products. STEPS IN DESIGNING A DISTRIBUTION CHANNEL The First The Second The Third Determine goals Know Your Target Choosing a Distribution Audience Channel The Fourth The Fifth Finding a Partner Minimize Conflict 1. DETERMINE GOALS First, managers need to focus on what the business is trying to achieve. The SMART model will be very effective for managers when used to determine goals Step in designing a distribution channel The SMART model is an effective goal-setting model that helps businesses or marketing experts set and evaluate the specificity, feasibility, relevance, and reasonableness of goals in the plan based on 5 criteria:  1. DETERMINE GOALS SMART Goal: "Increase sales of product A by 20% in the third quarter of this year compared to the same period last year by implementing a new marketing campaign and expanding distribution to two new cities." Analysis: This goal is specific, measurable, achievable, and related to the company's overall goals 2. KNOW YOUR TARGET AUDIENCE Answering the following customer characteristics will help you craft the appropriate distribution channels to consider Age Gender Target location region Target Where do they shop most often? How often do they shop? 3. CHOOSING A DISTRIBUTION CHANNEL Not all distribution channels are appropriate for all products Companies will need to consider their options carefully to determine which channel best serves a particular product Beverage products Traditional distribution channels: Distributors Agents Supermarkets Modern distribution channels: In addition, these companies are constantly expanding their distribution channels through e-commerce platforms, online sales, and ordering applications  4. FINDING A PARTNER Targeting in channel design is the process of identifying and analyzing individuals, organizations, or entities that may be potential customers of a product or service, and determining the most appropriate distribution channels to reach these audiences. High efficiency: Helps businesses focus on target customers, minimizing wasted resources Why is audience search important? Personalization: Create messages and marketing strategies suitable for each customer group Building long-term relationships: Understanding customers helps businesses build sustainable relationships and create loyalty 5. MINIMIZE CONFLICT Clearly define roles and responsibilities: Build a close cooperative Clear contracts relationship: Specific job description Organize regular Evaluate work meetings performance Share transparent Training and support information: programs Provide market Provide support tools information Share business plans Timely notification of Build an incentive changes Resolve conflicts fairly: system: Listen to all partie Promotion Find win-win solutions programs Neutrality. Incentive policies Rewards DISTRIBUTION CHANNEL CONFLICTS 1. What is conflict in the distribution channel? 2. Types of conflict in distribution channels 3. Causes of distribution channel conflicts 4. Some solutions below to prevent conflicts in distribution channels 1. WHAT IS CONFLICT IN DISTRIBUTION CHANNEL? Channel conflict is a situation of disagreement between two or more channel partners. Conflict can occur when partners have different goals, interests, or directions, or when there is competition and conflict over resources, sales, or profits. This can lead to discord, distrust, and negatively affect the performance and efficiency of the channel.  2. TYPES OF CONFLICT IN DISTRIBUTION CHANNELS Types of conflicts in the distribution channel can include conflicts of goals, conflicts of interests, conflicts of resources, conflicts of information or conflicts of power  a Vertical conflict Vertical conflict in a distribution channel is a type of conflict that occurs between different levels in the distribution channel structure For example: conflicts can occur between a manufacturer and a distributor, between a distributor and a dealer, or between a dealer and the end customer  b Horizontal conflict Horizontal conflict in a distribution channel is a type of conflict that occurs between members at the same level in the distribution channel For example: conflicts can occur when dealers compete with each other to obtain c Multichannel conflict distribution rights from manufacturers, or Multi-channel conflict in distribution channels is a when retailers fight with each other to type of conflict that occurs attract customers For example: in the distribution channel, conflict can occur when there is competition between traditional stores and e-commerce, online retailers and traditional retailers, dealers, etc 3. CAUSES OF DISTRIBUTION CHANNEL CONFLICTS Different goals Role confusion Conflict in product promotion and marketing Competition for resources Lack of information and communication Ineffective management Price Inconsistency Different policies on warranty and customer care 4. SOME SOLUTIONS BELOW TO PREVENT CONFLICTS IN DISTRIBUTION CHANNELS Establish clear and fair rules Building a Collaborative Environment Clearly define common goals Strengthen management and supervision Develop clear contracts and agreements MULTICHANNEL AND OMNICHANNEL DISTRIBUTION 1. What is Omnichannel? Omnichannel retail is a commercial model that can reach customers on multiple channels at the same time For example: A customer shopped at the store before and already had a membership card. Then the customer has a need to shop online and register to receive new marketing notifications via email  Advantages Limitations Increase customer reach Businesses will have difficulty building a Enhance brand recognition standard Omni channel Reduce costs, personnel and save model themselves time Help simplify sales processes 2. What is Multichannel? Multichannel is also a commercial model that allows businesses to reach customers on many different channels, but Multichannel does not have the ability to synchronize data between platforms  Advantages Limitations Businesses have to spend more money on managing too many Enhance brand independent channels awareness Reach customers in Information is difficult to update multiple sales channels on channels Inventory management processes are not consistent between platforms  WHAT IS THE DIFFERENCE BETWEEN OMNICHANNEL AND MULTICHANNEL? 1 Objectives and Approaches of Omnichannel and Multichannel Multichannel Omnichannel The main goal of this The main goal of this marketing marketing strategy is to strategy is to enhance the maximize the number of customer experience in a sales channels to reach consistent and seamless more customers who know manner, or in other words, to about the product/service, focus more on the customer or in other words, to focus on the product 2. System integration and synchronization capability Omnichannel Multichannel High system integration and No system integration and synchronization capability, synchronization capability, so it easy to manage and control often takes a lot of time and cost to all sales activities deploy operations as well as effective management for each sales channel  3.Customer behavior Multichannel Omnichannel Customer behavior Customer behavior can be started on can only be started one channel and and completed on a ended on another single sales channel 4. Support quality, customer service Omnichannel Multichannel customer service quality will be the quality of support as well emphasized, customers will as customer service in each receive consistent support from the general sales system. sales channel will be different.  5. Measuring, analyzing and evaluating data Omnichannel Multichannel analysis and measurement will measurement, analysis and evaluation be based on customer touch will have to be measured on each points on the system. separate sales channel. That makes it Accordingly, data such as user difficult for you to synthesize data if profiles, customer behavior and you want to have an overview before CRM,... from channels will be building or implementing the next collected, stored and arranged. marketing campaigns. When would you choose Omnichannel and Multichannel? 1.When should you choose Omnichannel? If the business's goal is to focus on improving the customer experience, or when the company wants to expand its reach to buyers, Omnichannel will be the most suitable choice Omni channel helps improve customer retention and expand the brand's loyal customer market share Omnichannel helps businesses standardize operations and multi- channel sales processes  2. When should you choose Multichannel? If you want to increase the contact points to bring your brand's products to as many shoppers as possible This solution will be suitable for businesses that already have a strong enough technology platform to develop multi-channel but have limited resources to approach the complete Omni channel model Multichannel is the right solution to effectively manage each sales channel Example for Ominichannel and Multichannel 1.Example for Omnichannel Starbucks has created an ecosystem that connects different channels such as mobile apps, websites, traditional stores, and drive-thru Benefits: This not only helps Starbucks increase revenue but also creates a seamless and personalized customer experience  2.Example for Multichannel H&M: Channels: Retail stores, website, H&M app, magazine ads, social media ads. How it works: H&M uses different channels to showcase new collections and promotions. For example, magazine ads are used to reach a high-end audience, while social media ads are used to reach a younger audience.  TECHNOLOGY IN CHANNEL DESIGN: A DIGITAL REVOLUTION 1. E-commerce and Online Channels 2. Mobile Commerce 3. Artificial Intelligence (AI) and Machine Learning: 4. Internet of Things (IoT) 5. Blockchain 6. Augmented Reality (AR) and Virtual Reality (VR) 7. Big Data Analytics  For example Netflix: The streaming giant has revolutionized the entertainment industry by offering a direct-to-consumer model and leveraging technology for personalized recommendations and seamless user experiences  CONCLUSION Distribution channel design includes strategic analysis of products, markets, customer behavior, and operational capabilities. By carefully selecting the right mix of direct, indirect, or combined channels and continuously optimizing them for cost, efficiency and customer satisfaction, businesses can create distribution systems that drive growth and profits.