Marketing the New Venture 225Distribution. Distribution decisions and activities relate to the location of the business
and the choice and availability of distribution channels. These decisions are strongly
affected, if not completely constrained, by the type of venture. Certain businesses—
retailers, wholesalers, warehousers, catalogers, telemarketers, franchisers, and online
firms—are themselves distributors or channels. This reality limits the choices for entre-
preneurs unless they are willing to reconfigure their ventures in some subtle way. If they
are, the decision becomes more strategic and less tactical and is therefore not a distribu-
tion decision at all.
The major objective of a distribution or location decision is to get the venture’s prod-
uct or service to the target market. When the product or service is defined carefully and
the target market is identified, distribution and location decisions should be clear.
Effective distribution and channel activities match product to customer and complement
these previous decisions.
Consumer distribution channels can employ as many as three intermediaries
between producer and consumer. There are occasions, of course, when no intermediaries
are used, as in the “factory-direct sales” system. In this case the venture manufactures a
product and sells it to the customer right from the factory. Since most manufacturers
lack the resources to do this well, they generally employ intermediaries. Figure 6.2 illus-
trates a consumer distribution chain. Any segment of the chain can be eliminated if
industry practice, cost considerations, or venture resources dictate.
A few select entrepreneurs reach their customers through television. Television time
is expensive, but the infomercialformat puts products directly in front of the audience.
Infomercials, sometimes referred to as paid programming, are usually thirty-minute tel-Characteristics of Industry Structure
Fewer but more powerful buyers
Geographically concentrated buyers
Demand derived from consumer demand
More inelastic demand means less price-sensitive in the short run
Quantity orders likely to change quickly depending on inventory levels
Organizational Characteristics
More people involved in the buying decision
Professional standards and ethics for buying activities
Decisions and Processes
Complex decisions
Interdependent with other organization functions
Formal processes and established rules
Long-term relationships important
Supplier development programs for vendorsTABLE 6.5 Dimensions of Business (Industrial) Markets
SOURCE: Adapted from P. Kotler and G. Armstrong, Principles of Marketing (Upper Saddle River, NJ: Pearson Prentice-Hall,
2 006): 171.