75. COMMODITY CHANNELS

There are two basic types of traffic channels:

1) direct - associated with the movement of products from the manufacturer to the consumer without the use of independent intermediaries. They are most commonly used by companies that want to control the entire marketing program, seek close contact with consumers, and have limited target markets;

2) indirect channels - associated with the movement of goods from the manufacturer to an independent participant in the movement of goods, and then to the consumer. They usually attract companies that, in order to increase their markets and sales, give up many sales functions and expenses and, accordingly, a certain amount of control over distribution channels and contacts with consumers. When manufacturers sell through company-owned outlets, a direct distribution channel is used (for example, oil company gas stations). If the distribution process involves multiple levels of wholesale (eg regional, local) and different types of retail stores (eg discount, general and specialty), then indirect channels are used.

Functions of distribution channels:

1) a decisive role in marketing research. Due to their proximity to the market, they have a good understanding of the characteristics and needs of consumers;

2) influence on the time of payment for the purchase of products - payment upon receipt, after sale, after a certain period or immediately;

3) wholesalers - stimulate and train retail staff, coordinate the promotion of goods in the field among retailers.

Retailers - local advertising, personal selling and special events, performance of consumer services;

4) participation in product planning, advice on existing and new products;

5) influence pricing, set the markups they require.

When choosing distribution channels, there are a number of key factors to consider:

1) consumers (number, concentration, average purchase size, location and opening hours of the store, assortment, sales staff assistance, credit conditions);

2) company (goals, control, sales, time);

3) resources (level, flexibility, need for service);

4) knowledge (functions, specialization, efficiency);

5) experience (methods of promotion, relations in the sales system);

6) product or service (price, technical complexity, storage period, frequency of shipments, unit weight);

7) competition (number, methods of promotion).

Firms producing consumer goods must not only choose distribution channels, but also determine the intensity of its use:

1) with exclusive distribution and marketing, the firm sharply limits the number of wholesalers and retailers in the region, one or two retail stores in a particular shopping area can be used. It strives for prestige and control over distribution channels;

2) in selective distribution and marketing, the company uses an average number of wholesalers and retail stores, tries to combine control over the channel, a prestigious image with a good volume of sales and profits;

3) with intensive sales, the company uses a large number of wholesalers and retailers. Its goal is a wide market.

Author: Shepeleva A.Yu.

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