OBJECTIVE 1

DISTRIBUTION CHANNEL STRATEGY

DEFINITION
- Channel strategy is the broad principles by which the firm expects to achieve its
distribution objectives for its target market(s).
- The definition similar with Philip Kotler’s marketing strategy
- “the broad principles by which the business unit expects to achieve its marketing
objectives in a target market”

DECISIONS
- The role of distribution in the firm’s overall objectives and strategies
- The role of distribution should play in the marketing mix
- The design of the firm’s marketing channels
- The selection of channel members
- The management of the marketing channel in order to implement the firm’s channel
design effectively and efficiently on a continuing basis
- The evaluation of channel member performance

THE ROLE OF DISTRIBUTION IN CORPORATE OBJECTIVES AND STRATEGY

- Distribution is expected to play central role in a company’s long-term overall
objectives and strategies
- The higher the priority given to distribution, the higher the level at which it should
be considered in formulating the organization’s overall objectives and strategies

DETERMINING THE PRIORITY GIVEN TO DISTRIBUTION

- Distribution does increasingly warrant the attention of top management, because
competition has made the issue of distribution too important for top management
to ignore

CHANNEL STRATEGY AND THE MARKETING MIX

- The essence of modern marketing management:
- To develop a marketing mix of product, price, promotion and distribution (place)

EMPHASIS ON DISTRIBUTION STRATEGY

- If distribution is the most relevant variable for satisfying target market demands
- Or parity exists among competitors in the other three variables of the marketing mix
- Or high degree of vulnerability exists because of competitors neglect of distribution
- Or dstribution can enhance the firm by creating synergy from marketing channels
Then = firm should choose distribution strategy for strategic emphasis

TARGET MARKET DEMAND

- Firms should stress distribution when it serves customers’ needs in the target market
- Marketing channels are so closely linked to customer need satisfaction because it is
through distribution that firms can provide the kinds and levels of service that make
for satisfied customers
COMPETITIVE PARITY
- Distribution advantages are not easily copied by competitors
- Distribution advantages are based on a combination of superior strategy,
organization and human capabilities

DISTRIBUTION NEGLECT
- Competitors’ neglect of distribution strategies provides excellent opportunities
- The channel manager must analyze target markets to determine whether
competitors have neglected distribution and whether vulnerabilities exist that can be
exploited

DISTRIBUTION AND SYNERGY

- Hooking up – with a mix of cooperative channel members will strengthen the
channel
- Because each channel member is an independent entity, rewarding opportunities
exist for channel managers to cultivate cooperation among members

CHANNEL STRATEGY AND DESIGNING DISTRIBUTION CHANNELS

- Differential advantage and channel design

also called sustainable competitive advantage occurs when a firm attains a long-term
advantageous position in the market relative to competitors

- Channel design

Though just one component of this attempt to gain a differential advantage, can be a
very important part

- Positioning the channel

A firm that plans the channel and makes decisions by viewing the relationship with
channel members as a partnership or strategic alliance that offers recognizable
benefits to the manufacturer and channel members on a long term basis