Marketing Channels & Distribution

• BY- RAVIRANJAN KUMAR

• PGDM-1ST YEAR• KCCITM

• Distribution is one of the classic “4 Ps” of marketing (product, promotion, price, placement a.k.a. “distribution”). It’s a key element in your entire marketing strategy — it helps you expand your reach and grow revenue.

• B2B and B2C companies can sell through a single channel or through multiple channels that may include:

•

• Wholesaler/Distributor• Direct/Internet• Direct/Catalogue• Direct/Sales Team• Value-Added Reseller (VAR)• Consultant• Dealer• Retail• Sales Agent/Manufacturer’s Rep•

Marketing Intermediaries

• Travel Agents• Tour Wholesalers• Specialists• Hotel Reps• Concierges

• National, State, and Local Agencies

• Consortia and Reservation Systems

• Global Distribution Systems

• Internet

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Travel AgentsTravel Agents Tour WholesalersTour Wholesalers

ConciergesConcierges Specialists: Brokers & Junket Reps

Specialists: Brokers & Junket Reps

InternetInternet Hotel RepresentativesHotel Representatives

Consortia & Reservations Systems

Consortia & Reservations Systems

Global Distribution Systems

Global Distribution Systems

National, State, and Local Tour Agencies

National, State, and Local Tour Agencies

Marketing Intermediaries

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens

• Intermediaries make distribution and selling processes more efficient.

• Intermediaries offers supply chain partners more than they could achieve on their own.– Market Exposure– Technical Knowledge/Information Sharing– Operational Specialization– Scale of operation

The Importance of Marketing Channels

Channel Efficiency: How Intermediaries Reduce the Number of Channel Transactions

• Matching Needs with Products• Physical distribution & Logistics• Financing• Risk taking

Other Key Channel Functions

Customer Marketing ChannelsCustomer Marketing Channels

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Conventional vs. Vertical Marketing Channels

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Franchising• Granting the right to engage in offering, selling, or

distributing goods or services under a marketing format which is designed by the franchisor

• The franchisor permits the franchisee to use its trademark, name, and advertising

• Higher survival rates

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Franchisee – Advantages

Brand NameMarketing Support

Plans and Systems

Reservation systems-Customers

Contracts

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Franchisee – Disadvantages

• Value of brand name determined by franchiser

• Introduction of new products determined by franchiser

• Your reliability tied to the rest of the system

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens

A Franchise is Only as Strong as –

Brand Name

Competitive Advantage system

Market demand forthe product

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th editionUpper Saddle River, NJ 07458 Kotler, Bowen, and Makens

• How many intermediaries?– Intensive distribution

• Stock product in as many outlets as possible.– Exclusive distribution

• Granting a limited number of outlets the exclusive right to sell product.

– Selective distribution• Somewhere in between Intensive and Exclusive

Distribution.

Does the company always get to choose?

Distribution Strategy Alternatives

FACTORS INFLUENCE

• The following factors influence the choice of distribution channels by a business.

Market factorsAn important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet?

• Producer factors:A key question is whether the producer have the resources to perform the functions of the channel? For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors.Producers may also feel that they do not possess the customer-based skills to distribute their products.

• Product factors:Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers

THANK YOU