BUSINESS MARKETING Agents

-are individuals who represent a

Distribution Channel
A distribution channel or marketing channel
is the path that a product takes before it is sold to
the consumer. The distribution channel is an
important element of the marketing mix, as it
determines where and when the product will be
available to customers.
MARKETING INTERMEDIARIES IN
DISTRIBUTION CHANNELS
Distribution channels mainly involve
marketing intermediaries, which refer to individuals
or businesses that sell products to a firm or another
vendor, or to consumers themselves. Manufacturers
create these products or goods from raw materials
or components. Suppliers provide manufacturers
with the raw materials needed for producing these
goods.
The marketing intermediaries involved in
product distribution include wholesalers, retailer),
distributors, and agents.
Wholesalers
-are independently-owned firms that purchase
and sell goods in bulk quantities to vendors and
businesses. These goods are often owned by
the wholesalers themselves, and are sold under
their name. Suppliers of goods are an example
of wholesalers.
manufacturer or a company to convince buyers to
purchase their products. Agents, however, do not
own these products. Agents usually earn
commissions or other fees, but are also expected to
meet a quota in selling a certain product.
TYPES OF DISTRIBUTION CHANNELS
There are two main types of distribution
channels: the direct marketing channel and the
indirect marketing channel. These channels may be
implemented through various structures which are
defined by the number of levels or intermediaries
involved.
The structure of a direct marketing
channel is composed of two levels: the
manufacturer and the end consumer.
The indirect marketing channel, on the
other hand, is the traditional distribution channel
structure implemented by most firms. In this
structure, the manufacturer sells to the wholesaler,
who in turn sells to retailers. The retailers finally
sell the product to the consumers. This channel has
several types depending on the number of
intermediaries involved and the nature of their

Retailers
-are individuals or groups of people who sell
goods directly to consumers. They purchase
their goods from wholesalers or from other
marketing intermediaries. Examples of retail
businesses are the sari-sari stores found all over
the country, and stores that form large business
chains such as Mercury Drug.

Like wholesalers, distributors also sell bulk

products to other businesses and vendors. However, relationships within the distribution channel.
unlike wholesalers, distributors only sell non-
competing products and product lines. For example,
McKenzie Distribution Incorporated sells Dole and
Gatorade products. These products do not
necessarily compete with one another, as Gatorade
is a brand of energy drinks, while Dole is a brand of
preserved fruit products.
OTHER EXAMPLES OF DISTRIBUTION CHANNELS
 Over time, distribution channels have
evolved into other different types and variations.
Through these extended variations of direct and
indirect marketing channels, customers are able to
access products and services at their convenience.
In some cases, these extended variations also allow
customers to purchase products and services at a
cheaper price.
Vending machines have automated
mechanisms which dispense products to customers
upon inserting the correct amount of money into the
machine. These machines are commonly found in
schools, transport terminals, comfort rooms, and
other public places. Products commonly sold in
vending machines include snacks, beverages, and
toiletries. Vending t ing machines are said to be
much rarer nowadays; in Davao City, for instance,
vending machines tend to be found only in
hospitals, airports, and in some schools.
Sidewalk kiosks and stores allow
customers to purchase products on the streets.
Vegetables, fruits, meat and fish products, and street
food are often sold in sidewalk kiosks and stores at
cheaper prices than in malls and other high-end
retail stores. Clothes are sometimes sold in
makeshift sidewalk stores as well as in ukay-ukay
stalls. Two problems associated with sidewalk
stores are the possible restriction of traffic flow and
sanitation. The second concern especially applies to
street food stalls.
Home services involve personal visits from
company personnel to provide services at the
customer's home. Examples include manicure and
pedicure, hair and make-up, and cleaning services.
More people are starting to patronize home services
for the convenience they provide. However,
companies that offer home services are faced with
problems such as minimal and seasonal demand.
For example, hair and make-up services are in
demand only for special occasions such as
graduation ceremonies and prom nights. Employees
who deliver home services also face the potentially
abusive customers.
Gray marketing channels, meanwhile,
refer to the unauthorized distribution of genuine
products. Gray marketing offers products at cheaper
prices but customers have less assurance that the
manufacturing company will address problems with
the product or service. In Davao for example, the
electronics store DataBlitz engaged in gray
marketing by being an unauthorized seller of the
Sony PlayStation 4. DataBlitz sold the PlayStation 4
at a price cheaper by about 3,000 PHP than in Solid
Industries, the authorized distributor of Sony
products in the city. However, customers had issues
with the absence of a service warranty on parts and
labor because Sony service centers do not recognize
DataBlitz as an authorized seller of their products.
INTENSITY OF DISTRIBUTION
The intensity of distribution refers to the
degree with which marketing intermediaries are
involved in the distribution and selling of products.
These intermediaries are mostly retailers. Based on
intensity, distribution may be classified as
exclusive, selective, and intensive.
Exclusive distribution employs only one
intermediary in a specific area. Companies use this
type of distribution when they want to maintain
control over the production and the selling of their
products. Thus, it often involves exclusive dealing
arrangements, where a retailer is granted exclusive
rights to sell the supplier's products, but only in a
specific area. The automobile industry often uses
exclusive distribution; in some instances, an
automobile company may have only one retail
outlet in a particular city in the country.
Selective distribution utilizes several
intermediaries in specific areas. Products sold
through sold selective distribution are often in high-
end malls and retail stores. These include prestige
goods such as electronic appliances and designer
clothes.
Lastly, intensive distribution involves
selling products in as many outlets as possible.
Food, toiletries and other consumer products are
often sold through intensive distribution. These
products are of lower value compared to electronic
appliances and luxury cars. Thus, intensive
distribution ensures that customers can easily access
them and helps companies earn profit easily.
VERTICAL AND HORIZONTAL MARKETING
SYSTEMS
Vertical and horizontal marketing systems help
companies manage their distribution channels, ensure
efficiency in the distribution of products, and avoid
conflict among the people involved.
A vertical marketing system (VMS) involves all
the intermediaries in selling a product or delivering
services under the same manufacturer. A vertical
marketing system gives the manufacturer greater
control over the costs and logistical aspects of product
sales and distribution. connected to the offices and
service centers of the company as well as the
manufacturer itself.
 In a horizontal marketing system (HMS),
two or more separate companies work together to
improve their sales performance. Even though these
companies are separate, they all belong to the same
channel level. They may all be retail companies, for
example. They may also be highly unrelated
companies but working on the same level. This is
seen in the alliance between Cebu Pacific and
Tigerair, a well-known airline company in
Singapore. Their respective websites can be used to
purchase flights from either airline.
MEANS OF SUPPORT FOR DISTRIBUTION
CHANNELS
Customer experience and satisfaction can be
further ensured through various means of support
for distribution channels. These means of support
help customers purchase products and services at
their own convenience while giving companies
another means of selling their offerings and learn
about the concerns of their customers.
Online banking can be used to pay for
products and services at the customer's
convenience. Examples of online banking are
GCash and the BPI Globe Banko services. These
services allow customers to pay and other mobile
bills and shop online using their desktop computers,
Iaptops, smartphones. devices. Users of online
banking, however, often face the risk of identity
theft and other fraudulent practices.
Customers can also use debit and credit
cards when making purchases. Debit cards allow
transactions wherein a certain amount is deducted
from the customer's balance. Credit cards, on the
other hand, can serve as a temporary replacement
for cash. However, spending using a credit card is
subject to a certain limit imposed by the credit card
company. Debit and credit cards are used in malls
and other high-end stores. They allow customers to
pay for services and even without cash on hand.
However, there are some problems in the use of
these cards. For example, the amount spent using a
credit card must be paid within 30 days of the
purchase to prevent penalties. Also, customers
cannot use their debit cards if their account balance
is insufficient for the purchase.
Telemarketing, involves the direct contact
with potential customers through telephone or the
Internet. Telemarketing is done in call centers,
where agents make outbound calls to sell products
or services. Companies can also be contacted
through customer support hotlines, where customers
can voice out their concerns about the products and
services they purchased.
CONCERNS IN UTILIZING DISTRIBUTION
CHANNELS
Several concerns in the use of distribution
channels involve the delivery of products and the
relationships between businesses. Examples are
logistical concerns, failure to meet demand,
pressure from channel leaders, and the presence of
franchised chain stores.
Logistical concerns involve the movement
and storage of the products or services being sold
and the management of the people taking part in
selling the product. Some problems related to
logistics management are slow delivery of products
or services and the cost of shipping the products.
These problems can be addressed through effective
management and coordination among the different
intermediaries who sell the products.
Failure to meet demand arises when stores
have insufficient supply of the product being sold,
or when there is an insufficient number of
employees to deliver a service. When these
situations arise, the store and the manufacturer fail
to meet the needs of customers, which may result in
the loss of patronage to the store and to the
company's products or services. This concern can be
solved by studying the demand for the product in a
specific area, and increasing production in order to
meet this demand.
Pressure from channel leaders. Channel
leaders are large-scale organizations or companies
that have greater control over the marketing actions
of small businesses. The smaller businesses are
referred to as channel members. Large-scale malls
are examples of channel leaders, \011ie the tenants
or specialty stores inside the malls are examples of
channel members. A channel leader may demand
channel members to contribute to its financial
growth. For instance, mall administrators may ask
their tenants to financially invest or spend money
for the mall's expansion. As a result, this small
business can no longer spend money for the
development of their own stores.
The presence of franchised chain stores
pertains to the proliferation of well-known
convenience stores) in certain areas which can
greatly affect similar franchised stores (e.g., 7 /1 1
local stores. The well-known stores offer stiff
competition to local stores, since the former already
established in the market. Thus, local convenience
stores need to come up with strategies.