In an ideal business world, most marketers would prefer to handle all their distribution activities by way of the corporate channel arrangement we discussed in the Distribution Decisions Tutorial. Such an arrangement provides the marketer with two important benefits. First, being responsible for all distribution means the marketing organization need only worry about making decisions concerning their product. When others, such as resellers, are involved in distribution attention is not given to a single supplier but is stretched across all products the reseller carries. Second, having control on all distribution means the marketer is always in direct contact with buyers of their products, which can make it easier to build strong, long-term relationships with customers.
Unfortunately, as we saw in the Distribution Decisions Tutorial, for many marketing organizations a corporate channel arrangement is not feasible. Whether due to high cost or lack of experience needed to run a channel efficiently, the majority of marketing organizations rely on third parties to get their products into the hands of customers.
In the next two sections of the Principles of Marketing Tutorials, we examine the key parties through which marketers seek distribution assistance. Choosing which parties to aid in product distribution is important since a distributor’s actions can affect how customers view the marketer and the products they offer. As we discussed in the Targeting Markets Tutorial, a customer’s perception of a product affects how they mentally position the product in relation to competitive products. How a product is distributed, including where it is located (e.g., reputation of resellers selling the product) and customer experience when purchasing (e.g., condition of product when received from a reseller), may impact a customer’s feelings about the product which in turn affects how a customer positions the product in their mind.
In this tutorial, we examine retailers as resellers of a marketer’s products. In terms of sales volume and number of employees, retailing is one of the largest sectors of most economies. We will see that retailing is quite diverse and marketers, who want to distribute through retailers, must be familiar with the differences that exist among different retail options.