The distribution system planning process involves the following steps:
Stage 1. Identification of alternative distribution systems
When making a decision regarding the marketing of its goods, the company can use a chain of independent intermediaries or choose a distribution system in which all the subjects of the channel - the manufacturing company, wholesale and retail trade - act as a single system, join forces with other companies of the same level, or use several distribution channels to cover different market segments. The named options express the content of alternative distribution systems that a company can choose:
> traditional system;
> vertical marketing system;
> horizontal marketing system;
> multi-channel (combined) marketing system.
Traditional distribution system
The traditional system is a collection independent companies, in which each level of the distribution channel operates independently of the others in order to maximize its own profit, leaving the efficiency of the channel as a whole unattended.
1. Producer-consumer is a zero-level channel. The manufacturer carries out direct marketing - he sells the goods. With this distribution option, the manufacturer avoids the cost of distributors, retains control over the sale of goods.
2. There are several options for direct marketing methods: selling goods at home; sale of goods through stores owned by the manufacturer; selling by phone (telemarketing); catalog sale; direct response advertising.
3. Manufacturer - retailer - consumer (single-level channel). This distribution channel involves the sale by manufacturers of goods retail tsam, who, in turn, sell them to final buyers (consumers). Direct deliveries retail, bypassing wholesalers, become cost-effective with its enlargement.
4. Manufacturer - wholesaler - retailer - consumer - a typical second-level channel in which the manufacturer sells his product to wholesalers who resell it to retailers. This type of distribution channel is especially cost-effective for small retail stores who buy goods in small batches.
5. Manufacturer - agent - retailer - consumer. This option is acceptable in a situation where a small enterprise, instead of maintaining its own sales staff, uses industrial agents who visit retail stores and present the product at a professional level.
6. Manufacturer - agent - wholesaler - retailer - consumer (three-level channel) - companies grant the right to sell goods to an agent who comes into contact with a wholesaler, who, in turn, with a retailer, while receiving commissions from the sale. Companies can also use the services of brokers to sell their products. Access to foreign markets can be carried out through agents and brokers.
Many companies use vertical and horizontal marketing systems as alternatives to the traditional distribution system.
Vertical Marketing Systems (VMS)
Unlike traditional distribution channels, where none of the channel participants has the authority to distribute functions and control others, vertically integrated distribution systems provide such an opportunity.
Vertical marketing systems provide for full or partial coordination of the functions of distribution channel participants in order to save on operations and increase market impact. In this case, one of the channel participants (manufacturer, wholesaler or retailer) takes the initiative to coordinate actions.
There are three forms of vertical coordination:
> corporate vertical marketing systems;
> administrative vertical marketing systems;
> contractual vertical marketing systems.
Corporate (integrated) vertical marketing systems (systems that are owned by companies) provide for the control of one owner of the distribution system, who owns retail stores, over all stages of production and distribution. At the same time, the manufacturer - the owner of the channel can both control the sale of their goods and coordinate the work of retailers.
Administrative (controlled) vertical marketing systems are a form of integration of distribution functions that does not provide for contractual obligations and exists due to the high reputation of one of the participants in the system. The role of leader in this case belongs to one of the most powerful participants in the systems. At the same time, the leader receives the support of sellers in the form of allocation retail space, organization of export of goods, sales promotion activities.
Contractual (contractual) vertical marketing systems - independent channel participants (manufacturers or intermediaries) sign contracts with other intermediaries, which define in detail the rights and obligations of participants in order to coordinate distribution functions. There are three types of contractual Navy:
> voluntarily established systems of retailers under the auspices of wholesalers - the wholesaler organizes a voluntary association of independent retailers, develops a program that provides for the provision of economical procurement, standardization of trading practices. The main goal of such associations is to create opportunities for effective competition with branched networks. large organizations;
> cooperatives of retailers-is the association of retailers in cooperatives. Members of the association purchase products through cooperatives, jointly organize advertising. The profit received is distributed among the members of the cooperative proportionally;
> franchising systems - provide for the transfer to franchisors (manufacturer or seller) of a franchise (license) for the right to sell their products under the name of the company to channel participants (franchisees, for example, retail stores), which are often granted exclusive rights in a certain territory ..
In parallel with the development of vertical marketing systems, horizontal marketing systems are developing.
Horizontal marketing systems - provide for the unification of the efforts of companies of the same level. This makes sense if the pooling of capital, marketing resources and production capacity strengthens the position of firms. At the same time, competing firms and firms that do not compete with each other can also merge.
Combined (multi-channel) marketing system involves the use of multiple distribution channels to cover different market segments. For example, telemarketing (direct marketing) - to serve one market segment, a two-level channel - manufacturer - retail - for another segment, and the like.
Stage 2. Determining the goals and objectives of distribution
Distribution goals are the criteria for choosing distribution channels and are subordinated to global firms and marketing goals. After setting goals, specific distribution tasks are determined, that is, functions that must be implemented in a specific market situation.
Stage 3. Selecting the channel structure
The main decision regarding the channel structure is the market coverage strategy, i.e. to limit the services to one or more intermediaries or to sell through the maximum possible number of intermediaries, for example, retail outlets. There are three options here:
> intensive distribution;
> selective (selective) distribution;
> exclusive distribution on the basis of exclusivity.
Intensive distribution involves the placement and sale of goods through the maximum possible number of outlets. Virtually any retailer that is willing to sell a particular product is eligible to do so. These are consumer goods (toothpaste, detergents), some auxiliary industrial goods, paper, raw materials. At the same time, the company benefits due to economies of scale, producing products available to many consumers in large batches. However, intensive distribution also has its drawbacks - in fact, the enterprise must independently advertise its products on the market.
Selective distribution involves the conclusion by the supplier of an agreement with several, but not all, intermediaries who are interested in selling the goods. Among the goods, in the sale of which selective distribution has become most widespread, - Appliances, electrical goods, fashionable clothes, etc.
Exclusive distribution (on the basis of exclusivity) is that manufacturers provide intermediaries exclusive right sales of goods in a certain regional market.
When distributed on the basis of exclusivity, a manufacturing enterprise can count on the support of resellers in promoting their products. Having received from the manufacturer the exclusive right to sell its products, the reseller himself makes efforts to increase the effectiveness of advertising, trying to draw the attention of consumers to the product.
When choosing the optimal distribution channel, there are the following approaches:
> cost approach (the costs of each alternative are compared);
> scientific and managerial, which uses decision theory and operational research;
> subjective-objective approach, in which alternative channels are evaluated by the most important factors (required investments, expected profit, company's experience in the market) and others.
Stage 4. Development of a communication strategy in the distribution channel
The organization of effective cooperation with intermediaries requires the manufacturer to decide which communication strategy to influence the intermediary should be chosen:
> pushing;
> attraction;
> combined communication strategy.
The push strategy involves directing the company's efforts to intermediaries in order to encourage them to include the company's products in the assortment, create the necessary inventory, highlight in trading floors retailers best places and encourage consumers to buy the firm's products. It provides:
> granting the right of exclusive marketing in a certain territory;
> wholesale discounts;
> payment of warranty service costs;
> allocation of funds for sales promotion;
> delivery of goods at the expense of the company;
> personnel training, sales contests.
The attraction strategy involves focusing the main communication efforts on end consumers in order to create their positive attitude towards the product and the brand so that the consumer himself demands this product from the intermediary, thus encouraging him to trade this brand:
> providing free goods;
> coupons that provide the right to return part of the money.
The combined strategy involves the use of both strategies, while the important question arises of how exactly to allocate resources for the implementation of the attraction strategy and the push strategy.
First, it depends on the goals: the push strategy, as noted, aims to encourage intermediaries to engage in a particular brand and is effective if it is not realistic for the firm to allocate significant funds for advertising in the media at this stage.
When bringing a well-known brand to the market, on the contrary, it is the attraction strategy that may turn out to be optimal.
Secondly, the choice of communication strategy depends on the product: manufacturers of industrial goods prefer a push strategy, and manufacturers of well-known brands of consumer goods prefer a pull strategy. At the same time, insufficient attention to the formation of the loyalty of intermediaries can have unfortunate consequences for the company (for example, a decrease in advertising efforts by the intermediary).
Having chosen the optimal distribution channel and a strategy for influencing intermediaries, it is necessary to decide which of them the company will specifically work with, how to motivate and evaluate them.
Stage 5. Decision on the management of distribution channels
The selection of specific intermediaries is essentially the first component of the distribution channel management process, which requires:
> selection of intermediaries;
> motivation of participants in the distribution channel;
> evaluation and control of the activities of channel participants;
> conflict resolution.
Choice of intermediaries
Within the optimal channel, the selection of direct distribution participants should be carried out taking into account the following criteria:
o financial position- wide financial opportunities, stable financial position, experience in doing business in a certain area of business testify in favor of a potential agent;
o organization and main indicators of sales - the presence of an extensive sales network, high rates of turnover is a certain guarantee of effective sales of the company's products;
o products sold by an intermediary - Preference should be given to intermediaries who are already involved in the marketing of your company's products. Another plus in favor of the intermediary - high quality the products it sells;
o the total number of goods and products of different firms that the intermediary sells - if there are many such goods, then before choosing this intermediary, you should make sure that sufficient attention will be paid to the products of your enterprise;
o reputation among clients;
o market coverage:
Geographically, you should avoid duplication in your distribution network and conflicts between dealers;
In the sectoral context, the sales network of dealers should cover the main segments of consumers;
The frequency of receiving orders - the less often orders are received, the less likely it is to maintain your presence in the business;
o stocks and storage facilities - the willingness of the intermediary to maintain stocks at a level necessary for the regular supply of consumers. In addition, storage facilities must be equipped with everything necessary for handling cargo;
o management - confident leadership in your field is always a guarantee of success. So, one of the ways to study a dealer is to assess its aggressiveness in the market.
Motivation of distribution channel participants
The second component of the distribution channel management process is associated with the choice of motives that are adequate to the expectations of intermediaries and effective, taking into account the goals determined by the manufacturer. Among such motives: monetary reward; the right to the exclusive sale of goods in a certain territory; resource support; close partnerships.
The basic principle of building relationships in the chain "manufacturer-intermediary" is long-term relationships, supported by appropriate forms of maintaining cooperation, and financial interest.
Evaluation and control of the activities of channel participants
The decision to continue or terminate cooperation with an intermediary is based on the results of its activities, the main criteria of which are:
> sales volumes in value and physical terms;
> profitability;
> value of commodity stocks;
> time of delivery of goods to consumers;
> the number of new customers;
> market information that distributors provide to the manufacturer;
> participation in sales promotion programs;
> level of customer service;
> the quality of displaying goods in shop windows and on store shelves. If the evaluation shows that the performance of a particular intermediary or the efficiency of the distribution channel system leaves much to be desired, a decision will need to be made to change, search for new intermediaries or modify the entire distribution system.
Conflict management
None of the distribution systems presented above is ideal and inevitably leads to conflicts between channel participants, the causes of which may be various purposes; competition between different distribution channels, which may be caused by the fact that, by selling goods through different channels, the manufacturer "provokes" conflicts between intermediaries who sell the same product in the same territory; inconsistency in the work of channel participants.
Recall that the choice of distribution channel is a strategic task. Let's name the main elements of the distribution strategy:
> direct (or indirect) sales;
> optimal distribution channel;
> integration in the channel;
> communication strategy;
> determining the best ways to sell goods, locating warehouses.
Depending on the structuring of the distribution channel (at one or several levels)
vertical and horizontal marketing systems can be distinguished:
In vertical marketing systems, the activities of the channel are managed by one of its participants - the manufacturer, intermediary or retailer. Compared to conventional marketing channels, vertical marketing systems offer three advantages. Firstly, channel costs are reduced, since duplication of functions is eliminated. Secondly, the number of conflicts between channel members with clear tasks and programs is minimized.
Thirdly, the experience and competencies of channel members are used to the maximum.
There are three types of vertical marketing systems - corporate, managed and contract.
A corporate vertical marketing system is created where effective sections of the channel belong to one owner. For example, when one company has own production and wholesale company serving its stores. However, not every firm is able or willing to invest in permanent assets or skills development, i.e.
in areas where it does not have obvious distinctive advantages.
Such providers build manageable vertical systems whose members have legal and financial independence, but operate under the effective control of the most powerful member of the channel.
Contract vertical marketing systems are formed on the basis of contractual relations between companies, when the rights and obligations of channel members are determined by legal agreements. The two most common types contract systems are a cooperation agreement and an agreement on privileges. A cooperation agreement means pooling resources and making joint purchases by individual companies. AT
As a result, companies form a cooperative uniting producers (for example, farmers),
wholesalers or independent retailers. The agreement on privileges implies that the seller (owner of the privilege) provides the intermediary (its holder) with certain services, granting him the right to sell the goods or services of the manufacturer. The intermediary, in turn, agrees to comply with the requirements of the seller, prohibiting the purchase of goods of other companies or the sale of competitors' products. Powerful integration processes have turned franchising into a new, rapidly evolving form marketing channel in Europe, and in the US it accounts for a third of all retail trade.
A horizontal marketing system is formed by two or more autonomous companies that are at the same channel level and join forces to sharing market opportunities. The prospects for such cooperation attract even competing companies. The development of horizontal marketing systems is influenced by the following factors. First, individual companies get the opportunity to reduce costs; secondly, access to the marketing channel of another company increases the speed of market penetration and allows you to bypass competitors on the "turn"; thirdly, the company gets access to new information and technologies. Horizontal cooperation allows partners to gain access to additional distribution channels and outlets, use the services of additional sales staff.
The choice of the structure of the distribution channel, and then the distribution chain, is one of the main strategic decisions that has a decisive impact on the cost of goods. In addition, the channel is the most important determinant of the effectiveness of a company's marketing, as it largely depends on the activities of intermediaries. The effectiveness of intermediaries determines the level of service and, accordingly, the company's ability to retain customers.
It is not uncommon for intermediaries to distribute merchandise and perform other marketing tasks much more efficiently than suppliers who lack expertise in these areas. However, the responsibility for developing a marketing channel strategy lies primarily with the manufacturer.
Channels of commodity circulation (distribution, sales), its concept, main types. Levels of distribution channels. direct and indirect channels. The problem of efficiency and optimality of channels of different levels. Advantages and disadvantages direct connections. Channel length and width. Buyer and seller horizons. Features of the formation of distribution channels for industrial products. Criterias of choice distribution channel. The problem of integration management of the distribution channel. Conventional channel and vertical marketing system(corporate, administrative and contractual). Competition within and between channels. Horizontal marketing systems. Multi-channel marketing systems.
Horizontal Marketing Systems
Another direction in the development of distribution channels has become horizontal marketing systems, in which two or more independent companies combine their resources and efforts to implement emerging market opportunities. One by one, each of these companies cannot do this, because they lack financial resources marketing opportunities or the company is simply afraid to take risks. Companies can work with each other both on a temporary and permanent basis or create a new firm.
Distribution channels are characterized by constant and sometimes significant changes. Three main directions development are vertical marketing systems(cooperative, managed and contractual forms), horizontal marketing systems and multi-channel marketing systems.
A horizontal marketing system is an agreement between several organizations of the same level. distribution channel about joint actions in order to use the new marketing opportunities. Under such an agreement, organizations can pool their capital, production and marketing resources. The parties to the agreement can be both non-competing and competing organizations.
Horizontal Marketing System 370
Horizontal marketing systems are built according to a scheme in which two or more organizations (companies) of the same level combine their efforts to share common marketing opportunities. By working together, channel member organizations can pool their capital, production capacity and marketing resources to do more than one organization can do when it works alone. At the same time, even competing organizations can merge on a short-term or long-term basis, or by creating a separate enterprise. These can be cooperatives made up of independent retailers who together own wholesale organizations or jointly procure and/or promotion of goods(services). Horizontal cooperation allows partners to gain access to additional distribution channels, retail outlets, take advantage of additional sales staff.
HORIZONTAL MARKETING SYSTEMS
Another direction in the development of distribution channels is horizontal marketing systems, in which two or more independent companies combine their resources and efforts to implement market opportunities, since individually none of them is able to use them (lack of sufficient financial resources, know-how, production or marketing opportunities, unwillingness to take risks). Companies can cooperate both on a temporary and permanent basis or create a new firm. For example, many supermarket chains have agreements with local credit institutions about the offer banking services in shops. L. Adler calls this practice symbiotic marketing.10 Here are a few examples.
HORIZONTAL MARKETING SYSTEM (HMS) - their essence is that two or more enterprises combine their efforts in order to develop the market and marketing opportunities. As a rule, G.m.s. common among those enterprises that do not have enough capital, marketing resources, technical knowledge, production capacity. At the same time, enterprises can cooperate both permanently and temporarily.
Horizontal marketing systems are formed when two or more manufacturing companies are ready to combine their efforts in distribution process on a temporary or permanent basis, sometimes even in the form of a separate joint marketing firm. Creation of such marketing system, usually caused by the fact that either an individual company has a shortage equity, technical knowledge, production capacity, or it does not intend to risk large investments to create an individual marketing system.
Horizontal marketing system. Firms are ready to join forces in the joint development of emerging marketing opportunities if there is not enough capital, technical knowledge, production capacity or other resources to act alone, or the firm is afraid to take risks, or sees considerable benefits for itself in joining forces with another firm.
Horizontal marketing systems Vertical Combined marketing systems
Horizontal marketing systems. In their implementation, the distribution channel includes two or more organizations of the same level, which combine their efforts to jointly develop the opening marketing opportunities. This is because each participant in such a system sees considerable benefits for himself in joining forces with others. For example, in some cases, individual producers may lack capital or technical knowledge and production capacity, or other resources for acting alone. Distribution channel in accordance with this system can function both on a temporary and permanent basis. In recent years, there has been an increase in the use of horizontal marketing systems abroad.
Along with traditional distribution channels, other forms of product distribution are also developing - vertical horizontal and multi-channel marketing systems.
Along with traditional distribution channels, other forms of product distribution are also developing - vertical (Navy), horizontal (HMS) and multi-channel marketing systems(MMS). The formation of a channel requires the study of the main variants of its possible structure with points of view type and number of intermediaries. Channel management requires the selection and motivation of qualified intermediaries.
Development of distribution channels. Internal distribution channel structure traditionally has one or more independent manufacturers, wholesale and retail trade organizations. Historically, the channel is an arbitrary collection of independent organizations that primarily pursue their goals to a lesser extent problems distribution channel. Such channels are called traditional. Traditional distribution channels, due to the independence of their participants, have weak leadership and, as a result, low productivity. When there is inside them conflicts such channels are almost destroyed. In the 1990s along with traditional channels, new forms of channel structures have emerged. Traditional channels have been replaced by vertical, horizontal and mixed marketing systems.
Firms use traditional, vertical, horizontal and combined sales marketing systems.
Distribution channels are in in constant motion. New organizations of wholesale and retail, develop themselves product distribution systems. In this section, we will talk about modern features development of vertical, horizontal and multi-channel marketing systems, we will consider cases of their cooperation, conflicts and competition with each other.
Within a different type of organization marketing information systems- horizontal - its targeted distribution is provided as it becomes available. Yes, on industrial enterprise agents and sellers address information to departments for which it is of interest, and not exclusively sales department. This results in a more complete use of information and reduces the time decision making. Particularly productive the system works when agents and sellers do not act arbitrarily, but according to the appropriate instructions. Because the transmission of information interested service is an additional burden, it should be adequately rewarded. The disadvantage of this type of system is the lack of centralized accumulation of incoming data.
Other factors affect current and potential strengths companies in service target market. Current market position determined relative market share, trend change market share, existing assets and availability unique goods and services. Economic and technological positions relate to the cost structure relative to competitors, the degree capacity utilization and technological level. Wider potential profile includes benefits
The distribution system planning process involves the following steps:
When deciding on the marketing of its goods, the company can use a chain of independent intermediaries or choose such a distribution system in which all the subjects of the channel - the manufacturing company, wholesalers and retailers - act as a single system, join forces with other companies of the same level or use multiple distribution channels to reach different market segments. Named options express in the content of alternative distribution systems, the company can choose:
traditional system;
vertical marketing system;
horizontal marketing system;
multi-channel (combined) marketing system
Traditional distribution system
The traditional system is a collection of independent companies in which each level of the distribution channel operates independently of the others in order to maximize its own profits, leaving the overall efficiency of the channel unaddressed.
1. Producer-consumer is a zero-level channel. The manufacturer carries out direct marketing - he sells the goods. With this distribution option, the manufacturer avoids the cost of distributors, retains control over the sale of goods.
2. There are several options for direct marketing methods: selling goods at home; sale of goods through stores owned by the manufacturer; selling by phone (telemarketing); catalog sale; advertising, u providing a direct vidguk.
3. Manufacturer - retailer - consumer (single-level channel). This distribution channel involves manufacturers selling goods to retailers, who in turn sell them to end-users (consumers). Direct deliveries of retail trade, bypassing wholesalers, become economically profitable with its enlargement.
4. Manufacturer - wholesaler - retailer - consumer - a typical second-level channel, in which the manufacturer sells his product to wholesalers who resell it to retailers. This type of distribution channel is especially cost-effective for small retailers who buy in small quantities.
5. Manufacturer - agent - retailer - consumer. This option is acceptable in a situation where a small enterprise, instead of maintaining its own sales staff, uses industrial AG. Ghent visiting retail stores and presenting the product at a professional level.
6 manufacturers - agent - wholesaler - retailer - consumer (three-level channel) - companies grant the right to sell goods to an agent who comes into contact with a wholesaler, who, in turn, with a retailer, while receiving commissions from the sale. Companies can use the services of brokers to sell their products. Access to foreign markets can be carried out through agents and brokers.
Many companies use vertical and horizontal marketing systems as alternatives to the traditional distribution system.
Vertical Marketing Systems (VMS)
Unlike traditional distribution channels, where none of the channel participants has the authority to distribute functions and control others, vertically integrated distribution systems provide such an opportunity
Vertical marketing systems provide for full or partial coordination of the functions of distribution channel participants in order to save on operations and increase market impact. In this case, one of the channel participants (manufacturer, wholesaler or retailer) takes the lead in coordinating the diy.
There are three forms of vertical coordination:
corporate vertical marketing systems;
administrative vertical marketing systems;
contractual vertical marketing systems
Corporate (integrated) vertical marketing systems (systems that are owned by companies) provide for the control of one distribution system owner, who owns retail stores, over the entire stage of production and distribution. At the same time, the manufacturer - the owner of the channel can both control the sale of their goods and coordinate the work of retailers.
Administrative (controlled) vertical marketing systems are a form of integration of distribution functions that does not provide for contractual obligations and exists due to the high reputation of one of the participants in the system. The role of the leader in this case belongs to one of the most powerful participants in the systems. At the same time, the leader receives support from sellers in the form of allocating retail space, organizing the export of goods, and promoting sales in the west.
Contractual (contractual) vertical marketing systems - independent channel participants (manufacturers or intermediaries) sign contracts with other intermediaries, which detail the rights and obligations of "binding participants in order to coordinate distribution functions. There are three types of contractual. Navy:
voluntarily created systems of retailers under the auspices of wholesalers - the wholesaler organizes a voluntary association of independent retailers, develops a program in which it is necessary to ensure the cost-effectiveness of purchases, standardize trading practices. The main goal of such associations is to create opportunities for effective competition with extensive networks of large organizations;
retailers' cooperatives are the association of retailers into cooperatives. Members of the association purchase products through cooperatives, jointly organize advertising. The resulting profit is distributed among the members of the cooperative proportionally;
franchising systems - provide for the transfer by the franchisor (manufacturer or seller) of a franchise (license) for the right to sell their products under the name of the company to channel participants (franchisees, for example, retail stores), which are often granted exclusive rights in a certain territory.
In parallel with the development of vertical marketing systems, horizontal marketing systems are developing.
Horizontal marketing systems - provide for the unification of the efforts of companies of the same level. This makes sense if the pooling of capital, marketing resources, and manufacturing capacity strengthens firms. P. At the same time, both competing firms and firms that do not compete with each other can merge.
Combined (multi-channel) marketing system involves the use of multiple distribution channels to cover different market segments. For example, telemarketing (direct marketing) - to serve one segment of the market, a two-level channel - manufacturer - retail - for another segment too.
Distribution goals are criteria for choosing distribution channels and are subordinate to corporate and marketing goals. After setting goals, specific distribution tasks are determined, that is, functions that have to be implemented in a specific market situation.
Stage 3. Selecting the channel structure
The main decision regarding the channel structure is the market coverage strategy, i.e. be limited to the services of one or more intermediaries or sell through the maximum possible number of intermediaries, for example, retail outlets. There are three options here:
intensive distribution;
selective (selective) distribution;
exclusive distribution on the rights of exclusivity
Intensive distribution involves the placement and sale of goods through the maximum possible number of outlets. Virtually any retailer that is willing to sell a certain product gets the right to do so. These are consumer goods (toothpaste, detergents), some auxiliary goods of industrial importance, paper, raw materials. At the same time, the company benefits due to economies of scale, producing products available to many consumers in large batches. However, intensive division also has its drawbacks - in fact, the enterprise must independently advertise its products on the market.
Selective distribution involves the conclusion of an agreement by the supplier with several, but not all, intermediaries who are interested in selling the goods. Of the goods, in the sale of which selective distribution has become most widespread, are household appliances, electrical goods, fashionable clothes, etc.
Exclusive distribution (on the basis of exclusivity) is that manufacturers provide intermediaries with the exclusive right to sell goods in a certain regional market
When distributed on the basis of exclusivity, a manufacturing enterprise can count on the support of resellers in promoting their products. Having received from the manufacturer the exclusive right to sell its products, the reseller himself, in his efforts to increase the effectiveness of advertising, is trying to attract the attention of consumers to the product.
When choosing the optimal distribution channel, there are the following approaches:
cost approach (the costs of each alternative are compared);
scientific and managerial, which uses decision theory and operational research;
subjective-objective approach, in which alternative channels are evaluated by the most important factors (required investments, expected profit, company experience in the market) and others
Stage 4. Development of a communication strategy in the distribution channel
The organization of effective cooperation with intermediaries requires the manufacturer to decide which communication strategy to influence the intermediary should be chosen:
downloads;
attraction;
combined communication strategy
The push strategy involves directing the firm's efforts to intermediaries to encourage them to include the firm's products in the range, create the necessary inventory, allocate the best places in the salesrooms and retailers, and encourage consumers to buy the firm's products. It provides:
granting the right of exclusive marketing in a certain territory;
wholesale discounts;
payment of warranty service costs;
allocation of funds for sales promotion;
delivery of goods at the expense of the company;
staff training, sales competitions
The attraction strategy involves focusing the main communication efforts on end consumers in order to create their positive attitude towards the product and the brand so that the consumer himself demands this product from the intermediary, thus encouraging him to trade this brand
providing free goods;
coupons that give the right to return part of the money
The combined strategy involves the use of both strategies, while the important question arises of how exactly to allocate resources for the implementation of the attraction strategy and the push strategy.
First, it depends on the goals: the push strategy, as noted, aims to induce intermediaries to engage in a particular brand and is effective if it is unrealistic for the firm to allocate significant funds for advertising in the media at this stage.
When bringing a well-known brand to the market, on the contrary, it is the attraction strategy that may turn out to be optimal.
Secondly, the choice of communication strategy depends on the product: manufacturers of industrial goods prefer a push strategy, and manufacturers of well-known brands of consumer goods prefer an acquisition strategy. At the same time, insufficient attention to the formation of the loyalty of intermediaries can have unfortunate consequences for the company (for example, a decrease in advertising efforts by the intermediary).
Having chosen the optimal distribution channel and strategy for influencing intermediaries, it is necessary to decide which of them the company specifically works with, how to motivate them, evaluate
The choice of specific intermediaries is, in fact, the first component of the distribution channel management process, which requires:
choice of intermediaries;
motivation of participants in the distribution channel;
evaluation and control of the activities of channel participants;
conflict resolution
Choice of intermediaries
Within the framework of the optimal channel, the selection of direct distribution participants should be carried out taking into account the following criteria:
o financial position - wide financial opportunities, stable financial position, experience in doing business in a certain area of business testify in favor of a potential agent;
o organization and main indicators of sales - the presence of an extensive sales network, high rates of turnover is a certain guarantee of effective sales of the company's products;
o products sold by an intermediary - Preference should be given to intermediaries who are already involved in the marketing of your company's products. Another plus in favor of the intermediary is the high quality of the products that he sells;
o the total number of goods and products of different firms that the intermediary sells - if there are many such goods, then before choosing this intermediary, you should make sure that sufficient attention will be paid to the products of your enterprise
o reputation among clients;
o market coverage:
Geographically, you should avoid duplication of your sales network and conflicts between dealers;
In the sectoral context, the sales network of dealers should cover the main segments of consumers;
The frequency of receiving orders - the less often orders are received, the less likely it is to maintain your presence in the business;
o stocks and storage facilities - the willingness of the intermediary to maintain stocks at a level necessary for the regular supply of consumers. In addition, storage facilities must be equipped with all the necessary for handling cargo;
o management - confident leadership in your field is always a guarantee of success. So, one of the ways to study a dealer is to assess its aggressiveness in the market.
The second component of the distribution channel management process is associated with the choice of motives that are adequate to the expectations of intermediaries and effective, taking into account the goals determined by the manufacturer. Among such motives: monetary reward, the right to exclusive sale of goods in a certain territory; resource support; close partnerships.
The main principle of building relationships in the chain "manufacturer - intermediary" is long-term relationships, supported by appropriate forms of support for cooperation, and financial interest
The decision to continue or terminate cooperation with an intermediary is based on the results of its activities, the main criteria of which are:
sales volumes in value and physical terms;
profitability;
the amount of commodity stocks;
the time of delivery of goods to consumers;
the number of new customers;
market information that distributors provide to the manufacturer;
participation in sales promotion programs;
level of customer service;
the quality of displaying goods in shop windows and on store shelves. If, according to the results of the assessment, it turns out that the effectiveness of the activity of a particular intermediary or the efficiency of the system of distribution channels leaves much to be desired, a decision will have to be made on changes, the search for new intermediaries or the modification of the entire distribution system.
None of the above distribution systems is ideal and inevitably leads to conflicts between channel participants, the causes of which may be different goals; competition between different distribution channels, which can be caused by the fact that, by selling goods through different channels, the manufacturer "provokes" conflicts between intermediaries who sell the same product in the same territory; inconsistency in the work of channel participants.
Recall that the choice of distribution channel is a strategic task. Let's name the main elements of the distribution strategy:
direct (or indirect) sales;
optimal distribution channel;
channel integration;
communication strategy;
determining the best ways to sell goods, locating warehouses
