Give an example of a producer that uses two or more different channels of distri
ID: 386027 • Letter: G
Question
Give an example of a producer that uses two or more different channels of distribution. Briefly dis- cuss what problems this might cause. (William)William, Perreault, J., Cannon, Joseph, McCarthy, Jerome. BASIC MARKETING, 19th Edition. McGraw-Hill Higher Education, 01/2014. VitalBook file.
Give an example of a producer that uses two or more different channels of distribution. Briefly dis- cuss what problems this might cause. (William)
William, Perreault, J., Cannon, Joseph, McCarthy, Jerome. BASIC MARKETING, 19th Edition. McGraw-Hill Higher Education, 01/2014. VitalBook file.
Give an example of a producer that uses two or more different channels of distribution. Briefly dis- cuss what problems this might cause. (William)
William, Perreault, J., Cannon, Joseph, McCarthy, Jerome. BASIC MARKETING, 19th Edition. McGraw-Hill Higher Education, 01/2014. VitalBook file.
Explanation / Answer
Consider the case of a company like L’Oreal that sells beauty products. The different channels include the beauty product wholesalers, retailers, other wholesaler like supermarkets and online selling. The company sells the product through the wholesalers who in turn sells to the retail outlets and online portals like Amazon. The company also sells the product to customers directly through its company website. Another channel used by the company includes the general supermarkets which may sell the beauty products to the customers at a discounted rate.
The use of different channels may cause problems as different wholesalers and retailers want different markups. The involvement of different types of channels may lead to competition in the distribution network. There are chances of price competition to sell more products. When the supermarkets sell the beauty products at a discounted rate, most of the retail outlets are selling at a higher price and the products are sold at a lesser price through the ecommerce websites. There are chances of conflict between the middlemen and the product company due to the competition because middleman may cause problems when their products are less sold due to the price difference.
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