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Marketing Channels and Distribution Network

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What is a marketing channel? What decisions do companies face in designing, managing, evaluating and modifying their channels?

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Marketing Channel

Marketing channel refers to the fourth 'P' in the marketing mix - Place; this is where a company has to decide how it will distribute its product or service to the target market or what route a company should follow to make its product or service available to potential customers.

Direct versus Indirect Channel

The first important decision in this regard is whether to distribute product or service directly to the ultimate consumer or whether it should be channeled through a network of wholesalers and retailers. This decision is influenced by a number of factors. For example, the nature of product or industry will dominate the choice of distribution channel. Mostly fast moving consumer goods (FMCG) are distributed through a channel of wholesalers and retailers. Due to the nature of the product it needs to be distributed in a mass market which may include a huge number of customers spread over a vast geographic area. For instance, companies such as Procter and Gamble and Uniliver market their toiletries and cleaning products to a huge domestic and international market. It is neither practically possible nor financially feasible to distribute such small value items directly to end users. Therefore, such companies use a network of ...

Solution Summary

This solution provides a basic description about marketing channels and distribution systems used in different industries according to a company's nature of product, target market and marketing strategy

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Alternative Channel Distribution

I am needing assistance with the below task. I understand the basic concept alternative channels as there are agents, wholesalers, basically channel intermediaries which are between you (the business) and your customer which assist in product/service delivery. However, where I am having difficulty/struggling is this is primarily a service oriented company thus I am unsure which alternative distribution channel would be best suited or even fit into the situation. I would think it would be the internet as it would increase opportunity to reach a wider target market, initial setup would be low and availability to track delivery (or schedules/transactions/sales in this case I would think) would be increased due to the technology. But as with anything in business or personal alike increased dependency on technology (internet) could also have its drawbacks/disadvantages. There could increased dependency which could hinder I would think possibly creativity and customer orientation. But I am unsure what form of what is referred to as channel conflict other than these there could be which could be aided by a channel captain or if one is even needed. As per my course information "channel members can be independent entities with individual goals and profit objectives, it is not unusual for channel conflict to arise. Channel conflict can be resolved with the right incentives and motivations. Channel members have to meet the overall channel goals and objectives, and their performance is reviewed periodically." However, with utilization of the internet - where does this conflict fit in - how does this fall in place - what goals/profit objectives - possibly agents which are assisting in selling the service or taking the order for services in other locations?? Sorry I am just confused and in need of assistance.
And how does this knowledge help in applied marketing management decisions? Is it because it allows you to make more strategic decisions based upon the customer and organization needs, deliver a quicker and more customer focused product and decrease budgetary spending for the organization?

Scenario:

You have just been hired as the new Marketing Manager at ITO Company. ITO(or Information Technology Outsourcing)is a five year old, US$10 million company, with 100 employees. The company outsources its full-time information technology professionals who may work at clients' sites, from regional offices or from the company's Chicago headquarters.

You are excited about this new job since this is your first management position, having come from a large marketing department in an architectural/engineering/construction professional services company. While you performed a wide variety of marketing functions in your old position, you never set marketing strategy nor were you in a position of management there. You feel challenged to meet ITO's corporate goals.

While you are comfortable marketing services, you recognize the difficulty in marketing in a sluggish economy, considering how heavy the competition is, particularly from Canada and India, which offers well-educated and well-trained information technology professionals at prices well below ITO's costs.

Details:

Besides selling directly to the end user, how could ITO use distribution channels to sell its services and grow its business? How long do you think it would take to set up these distribution channels and when could ITO expect to see revenue from these distribution channels? Why did you feel it would take this long and why would it be worth the effort? Use the Internet to research how similar companies sell their services. In addition, how do overseas firms who provide IT outsourcing services sell their services to U.S. companies, especially when they are located so far away? What distribution channels do they use and do these distribution channels differ from U.S. IT outsourcing companies and why? Be sure to prioritize your recommendations.

This can be an interesting and creative task. I trust your insight and creativity and believe you will deliver an exemplary product in the provided timeframe. I just ask that the information that is pulled from outside sources not be excessive and be quoted according to APA guidelines both in text and end of paper. It should be a task compiled from inner creativity, knowledge and backed up with references and facts. Please avoid paraphrasing too much throughout the paper. It should be one that showcases your own knowledge, creativity and writing skills coupled with references and facts. You should showcase your knowledge and skill but support it with proper research and facts. Please also refrain from utilizing Wikipedia as it is not an accepted source by the institution and check spelling, grammar, content, flow as well as verify all information is property cited both in text and end of paper according to APA format.

Thank you for your assistance on this task.

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