Mktg 205 - Principles of Marketing

Linda Savage

American Intercontinental University

Unit 3 Individual Project

MKTG 205 - Principles of Marketing

August 07, 2016

ABSTRAT

The purpose of this paper is to examine the Channel Levels, the difference and the effectiveness between direct and indirect distribution.  Then apply the direct and indirect methods in the promotion of a business.

Marketing of a Full Care Dog Service

Introduction

There are two types of channel levels – direct and indirect distribution.  Both types distribution have benefits and short comings that need to be studied before implementing a marketing strategy that would best suit the type of business or service to bring it to the attention of perspective customers.

Channel Levels

With the direct channel method, also known as B2C, it is just the Producer and the Customer involving no middle man to complicate the transaction.  This type of direct channel can be face to face, via the internet or by mail order.   With the internet transaction the greatest perk is that your market can be global instead of just local.  Typically with this method the price of the product or service is lower since there are no middle men to add to the price.  Also with this type of direct communication with the customer you can build a better line of open dialect where you can better judge your customer’s reactions to the products and a better insight into what they are looking for. (Banks, Linda, 2016)

With the indirect channel method, also known as B2B, involves the Producer and anywhere from one to many intermediators or middle men on the way to the customer.  With this type of channel rarely will the customer buy directly from the producer of the product to be purchased.   With this type of channel the price of the object will increase every time it is transferred until it reaches the place where the customer will purchase it.   The benefit with this is that the customer can obtain the item right then instead of waiting for the item be delivered from the direct channel.  The negative aspect of this is that the price will probably be higher and may not have all the features you wanted.  The other benefit of going to the brick and mortar store is that you see, handle and try the item out before buying it to see if it really what you were looking for. (Bransom, 2003)

A good example of this would be in the purchasing of a computer it does not matter about the brand.  You can go directly to their website and customize a computer and attachments that you want usually for a better price and just get what you want but will probably have to pay for shipping which can be expensive.  If you have never used that brand from the website you can find where that brand is being sold and go there to see and try it out.  A lot of times if you bring a print out from the website showing the prices you may be able to swing a lower price that would be closer to the website price and not have to pay for shipping but may not have all the features you want unless you purchase them separately.

Channel Organizations

The Conventional Distribution Channel is the most common type of channel that comprises of a producer, wholesaler and or retailer that are usually independent of each other.   Since each are independent there often conflicts that arise due to conflicts of interest or lack of communication or scheduling errors.

The Vertical Distribution Channel the producer, wholesaler and or retailer owns a share of the others or there is a formal agreement between all stages to maximize effectiveness and to work together even though they are separate companies.

The Horizontal Distribution Channel is when two or more companies that may have different products but a similar target market.  By combining there different products can increase their customers’ base. An example would be Starbucks inside Books A Million bookstore. (Books A Million)  Where you could go buy a book and then go to Starbucks to purchase a coffee and Danish while you sit and read your new book.

The Multichannel Distribution Channel is more than one type of channel distribution is used to acquire a larger customer base.  An example of this would be Cabels' they have a great catalog, website and their retail stores can keep you there for hours between the demonstration of products and the sheer size of the store. (Cabelas')