Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

11. Place and Development
    of Channel Systems

Text © The McGraw−Hill

Companies, 2002

Place and Development of Channel Systems 307

set up special “nutrition centers” on the pet food aisle. P&G bought Iams and pushed

for distribution in pet superstores, at mass-merchandisers, and online. Perhaps the

competition among channels was inevitable. But Science Diet is still doing well in

its own channel. It’s also using the same approach to expand into other countries.

In pet stores in Japan and Italy, for example, Science Diet attracts new customers

with special displays, samples, and free literature.^2

In the U.S. and many other developed nations, Unilever relies primarily on indirect distribution through a variety of wholesalers and

retailers. However, in Spain it delivers frozen foods directly to consumer homes, and in Vietnam a mobile store brings products to local

consumers. And now some products are sold direct to consumers from an Internet website.

Channel System May Be Direct or Indirect

One of the most basic Place decisions producers must make is whether to han-

dle the whole distribution themselves—perhaps by relying on direct-to-customer

e-commerce selling—or use wholesalers, retailers, and other specialists (see Exhibit

11-1). Middlemen, in turn, must select the producers they’ll work with.

Many firms prefer to distribute directly to the final customer or consumer. One

reason is that they want complete control over the marketing job. They may think

that they can serve target customers at a lower cost or do the work more effectively

than middlemen. Further, working with independent middlemen with different

objectives can be troublesome.

Website-based e-commerce systems give many firms direct access to prospects and

customers whom it would have been difficult or impossible to reach in the past.

Even very small, specialized firms may be able to establish a web page and draw cus-

tomers from all over the world. Of course, there are limitations. If a customer wants

a salesperson to demonstrate a product, then a “virtual store” may not be adequate.

However, the concept of distribution over the Internet is still evolving. Some firms

now use live camera “feeds” while talking with the customer over an Internet video

phone. Other innovations are being tested. Regardless, if it’s with the help of tech-

nology or by other more traditional means, there often aregreat advantages in

selling directly to the final user or consumer.

If a firm is in direct contact with its customers, it is more aware of changes in

customer attitudes. It is in a better position to adjust its marketing mix quickly

because there is no need to convince other channel members to help. If a product

needs an aggressive selling effort or special technical service, the marketing manager

can ensure that salespeople receive the necessary training and motivation. In

contrast, middlemen often carry products of several competing producers. So they

might not give any one item the special emphasis its producer wants.

Why a firm might want

to use direct

distribution

The Internet makes

direct distribution

easier

Direct contact with

customers