75%(16)12 out of 16 people found this document helpful
This preview shows page 15 - 16 out of 66 pages.
. If the manufacturer or producer chooses instead to assign or sell to companies who in turn sell to other companies or to businesses for their own use or consumers, the strategy is described asindirect channelorindirect distribution. The companies that take part in transactions but do not consume the products or services are calledintermediaries. Intermediaries perform the variety of functions described earlier, including transportation, warehousing and distribution, and financing.Let’s start with direct channel distribution and discuss why companies use it as well as some of the management issues. Direct distribution is characterized by short channels where the manufacturer or service provider is in contact with, sells to, and provides services to the end consumer. The end consumer may be a business that purchases for its own use or for an individual consumer.Direct distributors operate in diverse industries including food services, where restaurant owners prepare food and serve customers, and apparel, where companies create apparel designs, use contract manufacturers to cut and sew garments, and sell via catalogs and the Internet. Many local service businesses, such as heating and air conditioning repair; hairstylists; and home, carpet, or swimming pool cleaning are direct distributors. These direct channel distributors enjoy the following benefits:Control:Direct distributors build and maintain customer relationships and control transactions from start to finish.Low costs:Because there are no intermediaries, costs can also be controlled. Lower costs often result in higher profit margins for direct distributors.Ability to sell supplemental products and services:Direct distributors of products can also offer installation, maintenance, and repair services. Additional services offer direct distributors new revenue opportunitiesDirect customer feedback: Customer feedback is not filtered by intermediaries, giving direct distributors more information on customer needs and wants.Ability to change marketing mixes quickly:Customer feedback can be processed quickly and acted upon by changes in product features and pricing.Ability to go to market quickly:New products can be introduced by company experts without the need to train and support intermediaries.By contrast, indirect channel distributors use intermediaries to reach consumers. The intermediaries typically perform a variety of logistics and distribution functions. The functions include transportation,warehousing and distribution, financing, and specialized services. In addition, intermediaries perform
You've reached the end of your free preview.
Want to read all 66 pages?
Pricing, producer, distribution partners, distribution objectives