The Distribution Channel

Extract

[...] (production cost, providers, marge )  What kind of target / What kind of product ?  Brand image / notoriety ? 7 1.3/ Promotion  All the tools linked to the communication marketing. [...]

[...] Leclerc 34,7Md d'€ (2009) Carrefour 96,2Md d'€ (2009) Intermarché 39,7Md d'€ (2009) Auchan 22Md d'€ (2008) Source: LSA 4.2/ The Hard Discount  Definition : A hard-discount store is a free food service with a reduced staff, a brief presentation, a limited assortment of basic products, low prices, few or no national brands, but products under brands or unbranded products.  The hard discount : – 15,7 millions of customers in  A kind of Hard- discount (no food) is appeared in 1917 in the United-States.  The hard-discount with food is actually created in Germany in 1947 by the brothers Albrecht founders of Aldi. [...]

[...] • Transactions by credit card • Transactions realized by online stores en 2009 is estimated at 277,8 millions €. • 78% of users consult the internet before buying • More than 81% of 18-34 years buy on Internet 48 Who are the mains leaders of the market : RANK Brands or Channels Visiters 1 EBay Priceminister Amazon Cdiscount La Redoute Fnac Voyages-sncf.com suisses Vente-privée.com Pixmania 5.1.1/ Benefits – Direct Circuits • very good knowledge of customer needs • Control of supply (quantity/quality of products/services) • minimal risk during investments • Higher gain in intermediates' absence 50 5.1.2/ Disadvantages – Direct Circuits • Limited storage • Low investment/financial capacity • Narrow range • Importance of personal involvement of employees (substantial risk) 51 5.2.1/ Benefits – Short Circuits • Better geographic coverage • single intermediate allows a good knowledge of market (good after-sales and customized products) • take various forms (franchised shop, dealer/licence-holder, classic shop ) • good control of the promotional offers 52 5.2.2/ Disadvantages – Short Circuits • Risk of conflict between producers and distributors (facility to replace a retailer or to change the supplier) • Large storage space needed • Questionable Profitability of retailers • Increase in intermediate / higher risks (covers all elements of sale) 53 5.3.1/ Benefits – Long Circuits • Sales team of B to B • Good geographical diffusion • Lower cost of storage and transportation • Regulation of sales by storing intermediate 54 5.3.2/ Disadvantages – Long circuits • Total loss of contact between producer and consumer • High Distribution Costs and sale price (many intermediate's margins) • Potential conflicts between intermediaries • Dependence on wholesalers / risk of wholesalers' infidelity 55 About the distribution channels even longer  BENEFITS : • Same benefits as long circuits • Huge range of products • Lot of retaillers  higher benefits 56 About the distribution channels even longer  DISADVANTAGES : • Same disadvantages as the long circuit • The distribution channel is no longer focused on the customer's needs • Their economic power put foward the problem the free play of competition 57 5.4.1/ Benefits – E-commerce • Reduction of all costs • No Limit Geographic area • Reduction of intermediate's number/more substantial margin/reduction of final price • E-shop open 24h/24h 7d/7d • time savings and simplicity of purchase for the consumer 58 5.4.2/ Disadvantages – E-commerce • Lack of customer trust in the payment and purchase method • Significant competition and strong competitiveness • Cost of positioning on a search engine • Virtual barrier between the consumer and the product 59 « Unconventional distribution channel » • appearance and disappearance of usual actors (corresponding to new functions: ordering and delivery at home, production to demand and tailor ) • Distribution channel of the Future : it comes into direct competition with other channels. [...]

[...] The Distribution Channel Problematic How the distribution channel is organized and operates ? 2 Introduction • A distribution channel is a way of delivering goods and services between the manufacturers and the customers. • The distribution channel is chosen to cover the widest possible target market The Marketing Mix Definition : 4 P's -Product - Price - Promotion - Place Presentation MARKETING MIX Product Price Place Promotion name brand features packaging quality image rules competition strategy cost channel sales network place advertising promotion relationship public 5 1.1/ Product • Choices of the decisions about the product (definition, caracteristics, packaging ) • What is the best way to make people crazy about the product ? [...]

[...] So, we can identify different actors who are :  Manufacturers  Retailers  Wholesalers  Central purchasing department  Sales agent 18 3.2.1/ Manufacturers  A supplier/manufacturer is a person or a company that either manufactured, processed, packaged, or installs products checked either engages in import or sale of these products 3.2.2/ Retailers  A retailer is a person or a company that makes only the storage and marketing of a product, for the benefit of another. This Actor is shipping the product to the final consumer (individual or company) 3.2.3/ Wholesalers  A wholesaler is a person or company serving as an intermediary between the supplier and many retailers that distribute its products. It buys goods in large quantities and then resells them. [...]