Explore BrainMass

Channels of distribution for sustained competitive advantage

It has been said that "Channels of Distribution may be the best opportunity for a sustained competitive advantage." Based on your Kotler text, would you agree or disagree? Why?

1,105 words plus references

Solution Preview

First of all I would review the text mentioned on channels of distribution.

I would agree with the statement that channels of distribution might be the best opportunity for a sustained competitive advantage. Wal-Mart and Costco are both experts at managing their channels of distribution and as a result have been able to sell unique products at great prices. By buying directly from manufacturers, at the best quantity they are able to eliminate costs incurred through distributors and other in between layers. Benefits of buying direct (using the purest channel of distribution) include:

-Working deals and promotions, having interaction regarding customer needs, and also about changes occurring in the industry. Products and packaging can be customized for retailer giving them a competitive advantage. The closer the purchaser is to the source the more aware they are likely to be of action in the industry as well as costs ensued with the product. In addition, closeouts might be available that would only be made assessable to direct purchasers. Signage and product support could be more attainable since the manufacturer is intently interested in seeing their products do well.

-Stocking own warehouse/stores: Wal-Mart has distribution centers strategically placed in trade areas around the country, primarily within a day's drive of stores. Their warehouses replenish "almost 85% of the inventory, compared to only about 50 to 65% for our competition."(Sam Walton, Made in America). As a result store managers can place orders and receive replenishments in about two days compared to five days for their competitors. This makes orders more accurate and ...

Solution Summary

This detailed solution details the importance of channels of distribution for a sustained competitive advantage. Includes helpful links.