Distribution Channel

A Best Prac+ce Guide For Your Marke+ng Strategy Process

By: Wayne E. Chen

2011 Wayne Chen

Learning Objective
Distribu+on Channels Deciding on distribu+on channels How to reach customers Players and prot margins Channel rela+onships Internet distribu+on

2011 Wayne Chen

Distribution Analysis
What are the avenues to the

consumer?

Have mul+ple ways to reach

your customers
Importance of distribu+on

channels
The price charged The prot margins

2011 Wayne Chen

Distribution Questions

Three ques+ons
How can my product reach

the consumer? How much do the players in each distribu+on channel gain in prot? Who holds the power in each of the distribu+on channel?

2011 Wayne Chen

Reaching Customers

ID Channel Intermediaries Cereal > Wholesaler > Retailer > Customer Outline all paths Develop plan Loca+on Time Costs Margin Shopping

2011 Wayne Chen

Channel Intermediaries

Most common
Wholesalers Distributors Sales Representa+ves Sales Forces Retailers

2011 Wayne Chen

Distribution Players + Prot

Design your channel for

pricing and prot manufacturer

Players take a cut from the Channel par+cipants in most

industries calculate their cut as a markup on selling price

2011 Wayne Chen

Selling Price + Prot

The selling price is not the

ul+mate retail price, but the price at which one intermediary sells goods to the next intermediary in the chain.
The retail price is what a

Percent Markup on Selling Price (SP)

$ Markup $ Selling Price

X 100

Selling Price X ( 1 - Markup %)

consumer pays

=
The Preceding DistribuFon Levels Selling Price

2011 Wayne Chen

Distribution Mock up

Channel ParFcipant
Mr. Hui Fox Con Merino LLC Apple Inc. Eric Smith

Channel FuncFon
Laborer Manufacturer Transporter Retailer Consumer

Next Level Margin Selling Price Selling Price

$2.00 $30.00 $35.00 $550.00 $550.00 +Tax 93% 14% 93% -

2011 Wayne Chen

Channel Power

Selec+ng where to sell

Unique products ,

Packaged-goods companies,

large and small

manufacturer dictates the terms Not unique, channel dictates margin terms
Example: Grocery Trade
Shelf space and SKU Planograms

Cost of slogng fees to

reserve space

2011 Wayne Chen

Internet Distribution
Great way to sell with lihle or

no costs

Excellent reach Commerce

(24 hour sale)

Internet Marke+ng Four Cs

Content
(Informa+on and research)

Customer care
( Access to account)

Convert Leads
( From TV or PR)

2011 Wayne Chen