Tag: Channel

Distributive Trade I – Processes and Channel of Distribution

This also known as chain of distribution. It refers to the various stages or channels through which finished goods are moved from the manufacturers or producers to the final consumers. The channel of distribution is the path through which goods move from the producer or manufacturer to the final consumers. The channel is the path through which the owner from the producer to the final consumers. The chain of distribution can be demonstrated by the following scheme.

Manufacturer/producer- Wholesaler- Retailer- Final consumers.

Process of Distribution

The process of distribution of goods involves all human and physical means from the manufacturer to the final consumers. The process of distribution involves the following:

1. Middlemen: The middlemen or agents are human elements from the manufacturers to the final consumers. The middlemen are the wholesalers and retailers. Imagine a rice company which refines tens of thousands of tons of Rice per week (more than 1000 bags of rice per week) and yet individuals come personally to buy Rice from them. They will not only run at a loss, they would not be able to reach out to consumers living afar of. This is where the middlemen come in. Middle men from nearby and far places can come and purchase these goods in bulk and then distribute it in their various channels. Now how can the middle men take these goods to the consumers? This is where the next point comes in.

2. Transportation: This is the medium through which the finished goods are moved by air, land or by water from the manufacturer to the final consumers. The means or mediums of transportation are by Plane, ship, cars, lorries train etc. The type and quantity of goods greatly determines the kind of transportation which would be used to carry these goods. An international wholesaler who imports goods from another continent and in bulk such that he meets the needs of his whole country with such goods will use ships and cargo as a mean of transportation. A middleman who transports some 1000kg of biscuits as his business may use large vehicles and lorries. Also, what do you think about a Car company and a designer company? When transporting a large number of car products to another state, an Aeroplane is needed to do such, but that may not be necessary when transporting designer products unless you are transporting them to another country or continent. SO transportation is very essential in distributive trade.

3. Advertisement: Advertising is the process of creating awareness in the minds of the public about the existence of a product. Advertising may be used to stimulate demand so as to increase sales. Goods can be advertised by radio, television, newspaper, magazine etc. Also the quantity and quality and also demands of goods greatly influences it advertisements. Do not expect a simple shop keeper to advertise his goods on CNN and/or BBC. Its just s small shop and all he needs it to create awareness in his neighborhood. This can be achieve by simple manual ‘conversation’ and ‘verbal-awareness’. And of course The company manufacturing the BMW Car should use the cable networks to advertise to world consumers.

4. Warehousing: Warehousing is a process which ensures that goods produce are stored until they are needed. Warehousing is an important aspect of trade aimed at seeing that there is a regular and steady supply of goods to consumers.

These factors may be very simple and plain and marketers may not even need tor read a book or an article to know what to do. Nevertheless, they are very essential in any form of marketing and hence should be adhered to.

The Three Essential Strategies of Partner and Channel Stewardship

Channel stewardship is the most effective way of realizing success in channel-dependent businesses, especially if amalgamated with other management solutions. Nowadays, majority of hi-tech companies are keen on investing substantial amounts of money to promote and sell products and services via partner portals and channels. However, such a multi-channel strategy is difficult to keep track of, hence the vital role of channel stewards in the distribution chain.

A steward is usually the dominant company in the channel value chain and has the responsibility of participating proactively in the design and execution of a company’s go-to-market strategy. They extend the intra-enterprise framework which allows the various partners and end consumers to conduct business easier and more efficiently. This move increases brand equity, market share and profitability. The role of stewards rests on critical elements like coordination and influence; the different roles in the channel distribution network; excellent response to end consumer demands and needs; and return of investment and margins to all channel partners. But what are the specific strategies that stewards employ to guarantee effective channel management?

Channel stewardship makes use of three strategies which are Partner Portals, eMarketplace and Volume Channel.

• Storefront or eBusiness Partner Portal – This strategy grants companies the ability to create portals that are especially dedicated, customized or personalized for the members of the channel and their customers. These portals enable partners by offering self-service tools that can be utilized to browse catalogs, research product information and details, configure solutions, view change orders, track shipments and receive pay invoices. Additionally, they offer a certain set of product catalog and pricing information that are based on the needs of partners and customers. It is deeply integrated into the channel procurement system. Usually, larger customers and affiliates prefer this approach.

• eMarketplace – The reality is that it is expensive and practically unmanageable to propose partner portals for each every channel partner. This makes it critically important to bring down the number of product segments through standardization of platforms and functional modularization. These would then be offered through an eMarketplace, which is most suitable for organizations that are ahead in their value chains. Usually beneficial to mid-sized companies that serve small and medium businesses, this strategy is a single platform for order fulfillment and it provides flexible means for partners to enable brokering to bundle products with various accessories, services and the like.

• Volume Channel – This approach focuses on the efficiency of operations in the distribution of product knowledge and the seamless process of quote orders and returns. To ensure the successful execution of the model, it is important to bear in mind the key elements which are lower complexity and range of offered products, high partner and customer self-service and close monitoring of Key Performance Indicators and Distributors, and ODM/CM Service level Agreements. This is most useful during scenarios where the complexity of products is low.

The real challenge, however, is choosing the appropriate strategy or approach. This calls for the need to conduct a thorough assessment of individual businesses before making a decision. The choice should be grounded on a framework that is dependent on factors like relative size and dominance of partners and customers, existing business relationships and product complexity.

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