5.8

• A distribution channel is a way of getting the product to its customer. This

  process usually involves a number of intermediaries or ‘go betweens’, such as

  the wholesaler, broker, agent or retailer. Apart from the retailer, the other

  intermediaries are often invisible; that is, the customer knows little about their

  role and operation. There are four traditional types of distribution channel:
• Producer to customer: simplest channel and

  involves no intermediaries. Most services (e.g. tax

  advice, car repairs) use this method.
• Producer to retailer to customer: A retailer is an

  intermediary who buys from producers and resells to

  customers. E.g. Bulky or perishable products.
• Producer to wholesaler to retailer to customer: A

  wholesaler is an intermediary who buys in bulk from the

  producer, then resells in smaller quantities to retailers. Most

  common method.
• Producer to agent to wholesaler to retailer to

  customer: An agent distributes products to wholesalers but

  never owns the product. Agents are paid a commission by the

  producer. Non-store retailing (e.g. door-to-door selling). E-

  marketing: some retailers and wholesalers are bypassed as

  customers deal directly with manufacturers.
• Channel Choice – Market Coverage

   How a business chooses the distribution channel best suited

  to its product depends largely on the location of the business’s

  market or market coverage. A business can cover a market in

  one of these three ways:
• Intensive Distribution: occurs when the business wishes to

  saturate the market with its product.

  ▪ Customers can shop at local outlets to purchase the product.

  ▪ Many convenience goods, such as milk and newspapers, are

  distributed in this way.
• Selective Distribution: Involves using only a

  moderate proportion of all possible outlets.

  ▪ The customer is prepared to travel and seek out a specific

  retail outlet that stocks a certain brand.

  ▪ Examples: clothing, furniture, electrical appliances
• Exclusive Distribution: is the use of only one

  retail outlet for a product in a large geographic area.

  ▪ This method is commonly used for exclusive,

  expensive products.
• The ‘promotion’ element of the marketing

  mix

   To achieve the objectives of informing, persuading

  and reminding, a promotion campaign attempts to:

   attract new customers by raising awareness of a

  particular product

   increase brand loyalty by reinforcing the image of the

  product

   encourage existing customers to purchase more of the

  product

   provide information so customers can make informed

  decisions

   encourage new and existing customers to purchase new

  products

   change individuals’ behaviour through information or

  persuasion.
• Personal selling is the main promotional strategy for

  some businesses(E.g. expensive, complex or highly

  individual products)
• Marketing managers will use opinion leaders as

  information outlets for new products or to endorse

  existing ones.
• Publicity differs from advertising in that it is free and its timing is

  not controlled by the business.

  ▪ The main aim of publicity is to enhance the image of the product.

  ▪ A business will use publicity to raise awareness of a

  product, highlight the business’s favourable features and

  help reduce any negative image that might have been

  created.
• ▪ Advertising is an essential tool for successful marketing.

  ▪ The main advantage of advertising is that it provides businesses

  with the flexibility to reach an extremely large audience or focus

  on a small, distinct target market.

  ▪ Advertising may take many forms, from buying time on national

  television or radio to internet banner advertisements and

  inexpensive leaflets.
• Place is an important part of the

  marketing mix, as it refers to the

  ability of the business to deliver the

  product to the customer wherever

  they choose to purchase it.
• Promotion is the means by which the

  business communicates with both

  existing and potential customers and

  can include both advertising and public

  relations.