Channel Concepts: Distributing the Product
Read this chapter. Push and pull strategies are based on how the customer perceives a product. For example, if the company wants to sell a product, it may aggressively push it through the distribution channel and into stores with pricing incentives. This is often seen with products the customer does not have a perceived need or desire for. A pull strategy is based on satisfying a customer's wants or needs. It is almost as if the customer is pulling the product through the distribution channel. Channel membership is a distribution strategy based on the type of product in question. If quality and reliability are important, marketers will use exclusive distributions or "authorized resellers". Intensive distribution is the opposite; a marketer will allow just about anyone to carry a product. Convenience foods are a good example. Just about every check-out line in a store now has snacks and sodas.
Introduction
This scenario highlights the importance of identifying the most efficient and effective manner in which to place a product into the hands of the customer. This mechanism of connecting the producer with the customer is referred to as the channel of distribution. Earlier we referred to the creation of time and place utility. This is the primary purpose of the channel. It is an extremely complex process, and in the case of many companies, it is the only element of marketing where cost savings are still possible
In this chapter, we will look at the evolution of the channel of distribution. We shall see that several basic functions have emerged that are typically the responsibility of a channel member. Also, it will become clear that channel selection is not a static, once-and-for-all choice, but that it is a dynamic part of marketing planning. As was true for the product, the channel must be managed in order to work. Unlike the product, the channel is composed of individuals and groups that exhibit unique traits that might be in conflict, and that have a constant need to be motivated. These issues will also be addressed. Finally, the institutions or members of the channel will be introduced and discussed.