Type of Channel Members

Channel activities may be carried out by the marketer or the marketer may seek specialist organizations to assist with certain functions. We can classify specialist organizations into two broad categories: resellers and specialty service firms.

Resellers

These organizations, also known within some industries as intermediaries, distributors or dealers, generally purchase or take ownership of products from a marketer with the intention of selling to others. If a marketer utilizes multiple resellers within its distribution channel strategy the collection of resellers is termed a reseller network. These organizations can be classified into several sub-categories including:

  • Retailers – Organizations that sell products directly to final consumers (see Retailing Tutorial).
  • Wholesalers – Organizations that purchase products from suppliers, such as manufacturers or other wholesalers, and in turn sell these to other resellers, such as retailers or other wholesalers (see Wholesaling Tutorial).
  • Industrial Distributors – Firms that work mainly in the business-to-business market selling products obtained from industrial suppliers.

Specialty Service Firms

These are organizations that provide additional services to help with the exchange of products but generally do not purchase the product (i.e., do not take ownership of the product):

  • Agents and Brokers – Organizations that mainly work to bring suppliers and buyers together in exchange for a fee.
  • Distribution Service Firms – Offer services aiding in the movement of products, such as assistance with transportation, storage, and order processing.
  • Others – This category includes firms that provide additional services to aid in the distribution process, such as insurance companies and firms offering transportation routing assistance.

Tactical Decisions: Distribution

This marketing tactics section lays out the distribution plan for the product or service. Distribution is a broad concept that includes all activities and entities (e.g., value chain partners) responsible for getting the product or service to the customer. Distribution costs can represent a high portion of the overall cost of the product so an efficient distribution system may be critical for marketing success. (Length: 1-3 pages)

  1. Brief Summary of Current Distribution Network/Value Chain Decisions
    • Types of channels used:
      • direct – e.g., direct via sales force, internet, etc.
      • indirect – e.g., retailers, wholesalers, agents
      • combination
    • Level of market coverage:
      • intensive – e.g., mass availability
      • selective – e.g., wide availability
      • exclusive – e.g., restricted availability
    • Outlets handling product:
      • types
      • number/level of penetration
      • geographic location
    • Perceived product positioning:
      • in relation to competitors
    • Distribution costs
  2. Identify Planned Changes
    • Summarize changes
    • Justify changes:
      • Due to results
      • Due to research
      • Due to competition
      • Others
  3. Describe Planned Changes
    • Objectives:
      • e.g., account development, gain distributor support, account maintenance, account penetration
    • Types of channels employed
    • Level of market coverage
    • Outlets handling product
    • Product positioning
    • Distribution costs