Channels of Distribution and Logistics

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Chapter 6

Channels of distribution and logistics

LEARNING OBJECTIVES
By the end of this chapter you will: n n n n

comprehend key elements and decisions in distribution channel design be able to evaluate different configurations of channel structure be familiar with recent trends and developments in channels of distribution appreciate the importance of managing the physical flows of products, services and information into, through, and out of the organization to its customers n grasp the meaning and scope of physical distribution and logistics management n be aware of developments and trends in production and manufacturing, particularly the growth of ‘lean manufacturing’ and implications for logistics n recognize the role of
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Perishable goods, for example, need to be turned over quickly so direct methods are often applied. Non-perishable, non-bulky goods can be handled via indirect channels. Some products are more suited to indirect channels because of environmental characteristics. For example, in some countries shopping is seen very much as being a leisure activity especially for items like clothing and furniture, so much so that companies such as the Swedish company IKEA have made this a central part of their business model. Some organizations have limited discretion over marketing channel choice owing to economic conditions and legal restrictions. In certain of the Eastern European and Baltic countries such as Estonia, Latvia and Uzbekistan there is still restricted choice in terms of the range and scope of retail outlets for marketers.

Any channel decision will have long-term implications for the company, e.g. price will be affected depending on the number of levels between the manufacturer and the end user. A decision to change channels is likely be long term so it is important that existing channel structures are constantly reviewed to exploit opportunities.

STRATEGIC CHANNEL CHOICES
An important consideration when formulating channel policy is the degree of market exposure sought by the company. Choices available include:

Channels of distribution and logistics

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