Channel Management (Fach) / Take Aways (Lektion)

Vorderseite Topic #4: Channel Structures
  • Selective distribution is a strategic choice not to be confused with the inability to attract channel members to carry the brand
  • Manufacturers tend to think that more coverage is always better. Conflict is, therefore, inherent because channel members prefer the manufacturer to offer less coverage
  • A more effective (and often cheaper) way to influence the channel is to limit one's coverage. This raises the manufacturer's dependence upon it's resellers because each becomes more important. But in return, the manufacturer can reassure channel members that it will not be opportunistic
  • The decision to be selective is influenced by
    • The nature of the product category
    • The marketing strategy of the brand
    • The size of the target market
  • The manufacturer can use limited distribution to induce the channel member to make concession of its own, such as limiting brand assortment
  • Manufacturers can use the incentive of selecitve distribution to attract only the best resellers matching a particular customer profile.Manufaturers may also use this to exercise greater influence over how channel members market their brands and save costs by serving a smaller but more attracive amount base
  • The same arguments apply in reverse to a downstream channel member: Representing fewer brands can increase leverage over a manufacturer while reducing costs

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