Distribution Channel Article Essay.
Distribution Channel Article Review
Distribution Channel Article Review
A distribution channel or a marketing channel is a process in which population and companies process the making of tangibles and intangibles accessible for serviceability or depletion by the end buyers which is a consumer or industrial user. Moreover, this process can include retailers, the internet, wholesalers, and distributors. The channels can be direct or indirect, straightforward meaning the consumer can buy directly from the manufacturer, many products are purchased this way. Indirect is when a consumer can buy from a wholesaler or retailer. Intermediaries are involved in indirect channels, and this is when there is someone between the producer and consumer. According to Kerin & Hartley (2017). “Marketing channels not only link a producer to its buyers but also provide the means through which a firm implements various elements of its marketing strategy. Therefore, choosing a marketing channel is a critical decision” (Ch. 15, pp. 408-410). Marketing managers have three central questions to ask when choosing the right approach and agents; which will arrange for the outstanding handling of the target market? Which one will accomplish the consumer’s petitions of the target market the best? And whichever will be the biggest cost-effective? To get the best target market coverage, it is paramount pay attention to density, meaning the most number of stores in a geographical area (Tang & Xie, 2017).
Direct channels mean precisely how it sounds, the producer is dealing with the consumers directly, and there is no go-between involved. Consequently, this way producers perform all channel functions themselves. Buyers who are large and well-established use this channel, mainly because the products being sold are of high value (Tang & Xie, 2017). Extensive negotiations go into the sales of these products, along with experts needed for installation or use.
Indirect channel is when middlemen or intermediaries are placed between the producer of a product and the consumer, there can be one or more intermediaries (Tang & Xie, 2017). The most common example is when a large retailer can purchase in mass quantities from a producer or when it’s too expensive to inventory products from a wholesaler.
The article I choose is called Channel Choice in the 21st Century: The Hidden Role of Distribution Services by Betancourt, Chocarro, Cortiñas, Elorz, & Mugica, (2016). With the e-commerce rate growing consistently every year retail sales are being overshadowed by internet sales compared to in-store sales. Consequently, this is cutting down on channels needed to bring the products to the brick and mortar stores and just shipping directly to the customer. Marketing is taking a new turn that wasn’t being addressed in previous literature because internet sales proliferated. Channel mix strategies are being enhanced for most retail firms.
The primary purpose of this article was to figure out a distinctive aspect of approach linked with the internet as a technological improvement that grants separability around compass and time. “Broadly speaking these distribution services can be described as accessibility of location, information, assortment (breadth and depth), assurance of product delivery (in time and form) and ambiance. An analysis of how these distribution services affect the demand and supply of retail products, in general, is available (e.g., Betancourt, et al. 2016, Ch. 3 and 4, respectively). These distribution services can be viewed as channel outputs (e.g., Betancourt, et al. 2016, Ch. 8; cited by Keh 1997). From a marketing perspective, it has been shown that distribution services increase the demand for retail products by enhancing customer satisfaction (e.g., Weitz & Wang, 2004; cited by Betancourt et al. 2016).” In a brick and mortar store, the price of distribution is bundled with the actual product or service offered. Whereas online retail buying allows pricing to be separated and shift directly onto the consumer.
Satisfied Target Market
To satisfy our target consumers, it is essential to concentrate on density. That is where the most significant amount of warehouses in the same physical field can find; this is going to make sure we get the most coverage. There are three degrees of allocation density they are; intensive, exclusive and selective. Intensive distribution is when a business wants to accommodate their tangibles and intangibles in as many outlets as possible (Weitz & Wang, 2004). Which is more used for quick products like candy bars, fast food, etc. Exclusive allocation is the exact adverse of intensive, only one specific retailer in a particular area will carry that specific product. Consequently, this is a preferred method of distribution with retailers because it eliminates competition in that area, and it makes that retailer stand out to sell that product exclusively. Selective allocation is a mix of both; a company will usually select only a few merchants as a specific physical field to bring its tangibles and intangibles. Therefore, this form of distribution is most common of distribution intensity.
Online VS. Brick and Mortar Stores
Online buying has become the preferred way to shop for many people; online sales are expected to reach $500 billion by 2018. Besides the actual sale, many people use online shopping to compare prices and brands. In addition, this can all be done twenty-four hours, seven days a week in the comfort of your own home. Now with the brick and mortar stores, you must leave your home physically, hope you find what you’re looking for and pay the price that the store is asking without knowing if there is a better product for less at another store. They both have the challenge of bringing a customer in and wanting them to make a purchase. Moreover, most of the people will shop online, adding the goods or service to their cart then leave, and most of them do not come back. Not many people will go to a store and not buy anything, but it does happen. In my case, as a very busy person. I do my shopping online around the 90% of the time; it is just faster, and I can shop around for good deals.
I am one of those people that will add items to their cart then leave to see if I can find a better deal. Bath and specific is a retailer that I will do both shops online and in store. There are a lot of online sales that get sent to me that are better than going to the store for. There is a better selection online as well. “In this research, consumer’s were questioned to indicate even if they were more inclined to perform clothing purchases online or in a store. Pearse (2009) reported that over two-thirds of consumers believed online shopping to be both cheaper and offer better value than a brick and mortar store.” Arnaudovska, E., Bankston, K., Simurkova, J., & Budden, M. C. (2010).
There is nothing worse than going to the store for a specific item, and they are out of stock or do not sell it in the store anymore. Reason this is where they need to have a better distribution strategy, and certain products need to be stocked more in the brick and mortar stores. If they do not sell, then they can go back into inventory to sell online, but this is an issue with them that they should look at.
Arnaudovska, E., Bankston, K., Simurkova, J., & Budden, M. C. (2010). University student shopping patterns: Internet vs. brick and mortar. Journal of Applied Business Research, 26(1), 31.
Betancourt, R. R., Chocarro, R., Cortiñas, M., Elorz, M., & Mugica, J. M. (2016). Channel choice in the 21st century: The hidden role of distribution services. Journal of Interactive Marketing, 33, 1-12. doi:10.1016/j.intmar.2015.09.002
Kerin, R. A., & Hartley, S. W. (2017). MARKETING (13th ed.). New York, New York: Mc Graw Hill Education.
Paul Bucchioni, Xijian Liu, and Deanna Weidenhamer, “Quarterly Retail E-Commerce Sales,” U.S. Census Bureau News, May 15, 2015; “Record Cyber Monday Might Be the Last One,” WWD, December 3, 2014, p. 1; Thad Rueter, “Global e-Commerce Will Increase 22% This Year,” internetretailer.com, December 23, 2014; and “Picking Up Orders with Site to Store,” Walmart website, http://help.walmart.com/app/answers/detail/a_id/281, accessed June 12, 2015.
Tang, T. P., Fu, X., & Xie, Q. (2017). Influence of functional conflicts on marketing capability in channel relationships. Journal of Business Research, doi:10.1016/j.jbusres.2016.12.020
Weitz, B., & Wang, Q. (2004). Vertical relationships in distribution channels: A marketing perspective. Antitrust Bulletin, 49(4), 859-876. Retrieved from https://search-proquest-com.contentproxy.phoenix.edu/docview/201027831?accountid=134061