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.
The dual functions of channels
Just as with the other elements of the firm's marketing program, distribution activities are undertaken to facilitate the exchange between marketers and consumers. There are two basic functions performed between the manufacturer and the ultimate consumer.1 The first called the exchange function, involves sales of the product to the various members of the channel of distribution. The second, the physical distribution function, moves products through the exchange channel, simultaneously with title and ownership. Decisions concerning both of these sets of activities are made in conjunction with the firm's overall marketing plan and are designed so that the firm can best serve its customers in the market place. In actuality, without a channel of distribution the exchange process would be far more difficult and ineffective.
The key role that distribution plays is satisfying a firm's customer and achieving a profit for the firm. From a distribution perspective, customer satisfaction involves maximizing time and place utility to: the organization's suppliers, intermediate customers, and final customers. In short, organizations attempt to get their products to their customers in the most effective ways. Further, as households find their needs satisfied by an increased quantity and variety of goods, the mechanism of exchange – i.e. the channel – increases in importance.
Figure 10.1: Dual-flow system in marketing channels.