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Distribution channels provide efficiencies in a number of areas: product form, time, place,

and exchange. Remember the example of the Coca-Cola bottlers: The bottlers purchase
a concentrate that is condensed and easy to distribute all around the world. Once the
concentrate is mixed with carbonated water and bottled or canned, it’s larger and
heavier—and more difficult to distribute. For that reason, this process happens in the local
markets, where final distribution to customers is easier. The bottlers provide efficiency in
product form. Likewise, grocery retailers provide efficiency in time and place by offering
many different products in a single shopping experience. Similarly, the groceries are
purchased in a single cash or credit card transaction, even though they are coming from
many different producers.
These efficiencies benefit both consumers and businesses. Early in this course we looked
at the success of the Chobani yogurt company, which has grown through a national and
now global distribution network. An effective distribution network enables the company to
get its product in front of consumers far from its headquarters in Norwich, New York, and
it means that a consumer in Norwalk, California, can buy Chobani’s greek yogurt in a
local supermarket without ever thinking about the time and effort it required to get it there.
The primary purpose of any channel of distribution is to efficiently bridge the gap
between the producer of a product and the user of it, whether the parties are located
in the same community or in different countries thousands of miles apart.

Channel Partners That Support Objectives

The channel is composed of different institutions that facilitate the transaction and the
physical exchange. Institutions in channels fall into one of the following three categories:

1. The producer of the product: a craftsman, manufacturer, farmer, or other producer


2. The user of the product: an individual, household, business buyer, institution, or
government
3. Middlemen at the wholesale and/or retail level

Not all channel members perform the same function. Channel partners perform the
following three important functions:

1. Transactional functions: buying, selling, and risk assumption


2. Logistical functions: assembly, storage, sorting, and transportation
3. Facilitating functions: post-purchase service and maintenance, financing,
information dissemination, and channel coordination or leadership
Examples of the direct channel include:

 Etsy.com online marketplace


 Farmer’s markets
 Oracle personal sales team
 A bake sale

Examples of retailers include:

 Walmart discount stores


 Amazon online store
 Nordstrom department store
 Dairy Queen restaurant
Examples of wholesalers include:

 Christmas-tree wholesalers who buy from growers and sell to retail outlets
 Restaurant food suppliers
 Clothing wholesalers who sell to retailers

Examples of brokers include:

 An insurance broker, who sells insurance products from many companies to


businesses and individuals
 A literary agent, who represents writers and their written works to publishers,
theatrical producers, and film producers
 An export broker, who negotiates and manages transportation requirements,
shipping, and customs clearance on behalf of a purchaser or producer
INTRODUCTION OF THE REPORT

Before I begin, I would like to define first and also as a sort of review what is
channel and what is channel management because these are some of the basic
terms to be dealt with in my report since the chapter that I will discuss is all about
PRODUCT ISSUES IN CHANNEL MANAGEMENT.

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NEW PRODUCT PLANNING IN CHANNEL MANAGEMENT SLIDE


Introduction:
New products are vital parts of a company’s competitive growth strategy.

The eight stages or process or steps involved in the development of a new


product are:
 Idea generation.
 Idea screening.
 Concept testing.
 Business analysis.
 Product development.
 Test marketing.
 Commercialization.
 Review of market performance.

1. What input can channel members provide into new product planning?

One way of promoting increased enthusiasm and acceptance for new


products by channel members is by obtaining some input from them into new
product planning. This input may range from soliciting ideas during the idea-
generating stage, all the way to getting feedback from selected channel members
during the test marketing or commercialization stage.

Example: Input about the size and/or packaging of the new product from the channel
members.
The bottom line is that channel members are much more likely to enthusiastically
support new products that they have played a part in developing.