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MindMap Gallery Chapter 4 Distribution Channel Management
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Chapter 4 Distribution Channel Management
2023 Intermediate Economist Examination - Business Administration - Chapter 4 Distribution channel management, distribution channel management goals: market share, profit, and sales growth. These three indicators reflect the economic strength and competitiveness of the enterprise.
Edited at 2023-10-16 19:23:46
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Chapter 4 Distribution Channel Management
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
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- Outline
Chapter 4 Distribution Channel Management
Section 1 Channel Operation Management
Channel management related content
Marketing channels: including all enterprises and individuals involved in the production and marketing process. Suppliers, producers, various middlemen (wholesalers, retailers, agents), auxiliaries, final consumers
Distribution channel: All businesses and individuals involved in the movement from producer to consumer. Producers, middlemen (wholesalers, retailers, agents), final consumers
Distribution channel management objectives: market share, profit, and sales growth. These three indicators reflect the economic strength and competitiveness of the enterprise.
Market share: reflects the company's marketing capabilities
Profit amount: reflects the operating status of the company
Sales growth: a basic indicator reflecting the development of an enterprise
Construction of distribution channels for different types of commodities
Construction of consumer goods distribution channels
Consumer goods and classification: According to different purchasing habits of consumers, they are divided into convenience goods, optional goods, special goods, and non-desired goods.
Convenience products: Frequent purchases, unwilling to spend time and energy to compare, such as daily necessities, salt, instant noodles; impulse purchases, toys, fruits; emergency items, emergency medicines, emergency umbrellas.
Shopping: Compare products or services on quality, price, style, durability, etc. Such as household appliances, clothing, beauty and hair products
Special products: products with unique characteristics and brand marks, such as special brands of clothing, cars, etc.
Non-desirable products: Generally not purchased actively, such as encyclopedias, life insurance, craft ceramics, new products that have just been launched and that consumers have never heard of.
Common consumer goods distribution channel models: direct supply from manufacturers, multiple agents, exclusive agents, platform sales
Direct supply from manufacturers: manufacturers directly supply goods to terminal channels. Information response is quick and channels are short; however, it is greatly affected by traffic factors and prone to sales blind spots.
Multiple distributors: The manufacturer chooses multiple distributors (agents). The distribution coverage is wide and the market penetration is strong; however, there are many channels and links, which makes it prone to cross-selling and price confusion.
Exclusive channel: Choose only one dealer (agent) in a certain area. It is easy for manufacturers to reach a consensus with middlemen, and market prices are relatively stable; however, there are risks in channel control, and sales rights are completely given to middlemen.
Platform sales: The manufacturer takes the sub-packaging factory of the goods as the core, and the sub-packaging factory establishes an operation department responsible for supplying goods to various retail terminals. The service radius is small, the delivery is timely, the network is stable, and it is less affected by cross-selling goods; however, it is highly restricted by regional market conditions and requires more management and cooperation.
Construction of distribution channels for industrial products
Characteristics of the industrial products market: Derivative demand, low demand elasticity, professional procurement, large one-time purchase volume, stable customer concentration
Construction of distribution channels for service products
Features of service products: intangibility, inseparability, difference, non-storability, non-transferability of ownership
Classification of service products: services for “people”, services for “things”
service to people
Services for human body treatment (people must be present), such as aviation, hairdressing, surgery, fitness, travel, etc.
For brain stimulation processing (human consciousness must be present), such as broadcasting, teaching, television services, advertising, management consulting, concerts, etc.
services in kind
Services for object handling (physical objects must be present), such as freight, dry cleaning, appliance repair
Information processing services (which do not necessarily require direct participation of customers), such as property insurance, financial services, data transmission, judicial services, accounting and auditing, etc.
Commonly used distribution channels for service products
Direct distribution model. The fundamental reason for adopting this model is the inseparability of service products
There are four distribution channels established by intermediaries.
Agents: tourism, hotels, transportation, credit, industrial and commercial services, etc.
Broker: insurance broker
Wholesaler: A middleman who provides services in large quantities
Retailers: Commercial retailers, photo studios, dry cleaners, etc.
Channel member management
Incentives for channel members: communication incentives, business incentives, support incentives
Support and incentives: Implement preferential promotions, train sales staff, provide financing support, and provide advertising subsidies
Communication and incentives: Provide product and technical updates, public relations banquets, exchange market information, and allow dealers to vent their dissatisfaction
Business incentives: dynamic management of total commissions, flexible determination of commission ratios, cooperation in formulating business plans, and arranging dealer meetings
Channel power management
Sources of channel power
Types of sources of channel power: reward power, coercive power, legal power, recognition power, expertise power, information power
Reward rights: Commitment and ability to reward other channel members who comply with their requirements
Coercive power: the ability of an influencer to impose punishment on those affected
Legal rights: formed by transaction contracts or contractual vertical distribution systems. The contracts signed between channel members can be called legal rights; the channel's standards of conduct and the norms, values and beliefs in transactions are called traditional legal rights.
Right of recognition: the impact on another channel member when using another channel member’s brand or engaging in activities beneficial to the other party.
Expertise rights: Possessing some special knowledge or useful expertise that they do not possess, such as franchising
Information rights: the ability of channel members to provide certain types of information
The distinction between the sources of channel power: mandatory power and non-coercive power; intermediary power and non-intermediary power
Mandatory and non-mandatory powers
coercive power
Other powers are classified as non-mandatory powers
mediated power and non-mediated power
Intermediary power includes legal power, reward power, coercive power,
Non-intermediary rights include expertise rights, information rights, identity rights, and traditional legal rights
Use of channel power
Strategy types: promise strategy, threat strategy, legal strategy, request strategy, information exchange strategy, suggestion strategy
Promise strategy: If you do what I say, I will reward you; reward right
Threat strategy: If you don’t do what I say, I will punish you; coercion
Legal strategy: You must do what I say because, in a sense, you have agreed to do so; legal authority
Strategy for requesting instructions: Please do what I want; right of recognition, right of reward, right of coercion
Information exchange strategy: No need to say what I want, let’s discuss what is more beneficial to my partner; right to expertise, right to information, right to reward
Suggested strategy: If you do what I say, you will be more profitable; right to expertise, right to information, right to rewards
Channel conflict management
Channel conflict classification. The essence is the conflict between the interests, behavior and psychology of the channel subjects.
According to "the level of channel members is related" (traditional classification method), it is divided into horizontal conflict, vertical conflict and multi-channel conflict.
According to the "relationship between conflict of interest and antagonistic behavior" (Dutz model), it is divided into conflict, latent conflict -, false conflict -, no conflict -
According to the classification of "channel conflict degree" (proposed by Vargoris and Handy), it is divided into low conflict area, medium conflict area and high conflict area.
According to the classification of "the direction of influence of channel conflicts on enterprise development", they are divided into functional conflicts (such as rebate rewards and promotional rewards given by manufacturers to dealers with outstanding performance), destructive conflicts (such as channeling goods, defaulting on accounts, manufacturing and selling counterfeit goods). wait)
Causes of channel conflict: misaligned roles, differences in goals, differences in perspectives, communication difficulties, differences in decision-making authority, differences in expectations, and scarcity of resources.
Section 2 Distribution Channel System Assessment
Channel Gap Assessment
The generation of channel gaps: quality perception gap (Gap 1), quality standards gap (Gap 2), service delivery gap (Gap 3), market communication gap (Gap 4), perceived service gap (Gap 5)
Quality perception gap: Enterprises cannot accurately perceive customers' service expectations
Quality standards gap: Service standards set by service providers are inconsistent with customer expectations as perceived by managers
Service delivery gap: a gap caused by the service production and delivery process not being carried out in accordance with the standards set by the enterprise
Market communication gap: The services promised in corporate propaganda are different from the services actually provided by the company
Perceived service gap: There is a discrepancy between the service that customers expect and the service that customers perceive or actually experience. This is the most important gap and is the core of the service quality gap model.
Distribution channel operation performance evaluation
Channel coverage assessment: market coverage (absolute indicator), market coverage (relative indicator)
Channel smoothness assessment: measured by product transmission time. Product transmission time = product inventory time and transportation time of each link. The shorter the product transmission time, the better the smoothness of the channel.
Product turnover speed
Payment recovery speed
Sales recovery rate
Channel financial performance evaluation: distribution channel cost indicators, channel market share indicators, channel profitability indicators
Distribution channel expense indicators: distribution channel expense amount, distribution channel expense rate, distribution channel expense rate increase or decrease rate
Channel profitability indicators: channel sales growth rate, channel sales profit rate, channel expense profit rate, asset profit rate
Channel market share index: calculated according to the overall market, calculated according to the target market, calculated according to the three major competitors, calculated according to the largest competitor
Section 3 Development Trends of Distribution Channels
Internet distribution channels
Characteristics of online distribution channels: virtuality, economy, convenience
Comparison between online distribution channels and traditional distribution channels:
Network distribution system: ordering system, settlement system, distribution system
Types of online distribution channels: direct online sales channels, indirect online distribution channels
Online direct sales channels refer to producers selling goods directly to customers and consumers through the Internet.
Indirect network distribution channels refer to producers selling goods to end users through intermediaries after integrating into the Internet.
Directory service providers, including comprehensive directory service providers, commercial and professional directory service providers; source of income, Internet advertising services provided to customers
Search service provider. Baidu search, 360 search
Virtual Commercial Street, Sina’s virtual commercial street provides specialty store rental services
Internet content providers, including search engines, email, etc.
Online retailers, including pure online retailers (Dangdang); traditional retail companies going online (such as Wal-Mart)
Virtual evaluation agency, a third-party rating agency that evaluates online merchants based on a pre-established standard system
Network statistics agency, providing users with Internet statistical data
Intelligent agents automatically conduct initial searches for users in advance based on user preferences and requirements
In the virtual market, you can choose and buy what you need on the site.
Online financial institutions, providing professional financial services for online transactions
Channel flattening
The reason for channel flattening refers to the need to minimize the intermediate links between products and customers in channel design.
Forms of channel flattening: direct channels, flat channels with one layer of middlemen, flat channels with two layers of middlemen
Direct channel (absolutely flat channel), manufacturer-customer
There is a flat channel with one layer of middlemen, manufacturer - middleman - customer
A flat channel with two layers of middlemen, manufacturer--dealer (agent)--retailer--customer
Channel strategic alliance
Strategic alliances between dealers compete with suppliers through the monopoly and scale advantages formed by the alliance to obtain greater profit margins
Strategic connections between suppliers. Most of these alliances are short-term behaviors driven by certain interests.
Strategic alliances between suppliers and dealers improve the efficiency and effectiveness of the entire supply chain through cooperation and alliances in the upstream and downstream of the supply chain.