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.
Flows in marketing channels
One traditional framework that has been used to express the channel mechanism is the concept of flow. These flows, touched upon in Exhibit 32, reflect the many linkages that tie channel members and other agencies together in the distribution of goods and services. From the perspective of the channel manager, there are five important flows.
- Product flow
- Negotiation flow
- Ownership flow
- Information flow
- Promotion flow
These flows are illustrated for Perrier Water in Figure 10.2.
The product flow refers to the movement of the physical product from the manufacturer through all the parties who take physical possession of the product until it reaches the ultimate consumer. The negotiation flow encompasses the institutions that are associated with the actual exchange processes. The ownership flow shows the movement of title through the channel. Information flow identifies the individuals who participate in the flow of information either up or down the channel. Finally, the promotion flow refers to the flow of persuasive communication in the form of advertising, personal selling, sales promotion, and public relations.
Figure 10.2: Five flows in the marketing channel for Perrier Water.