You have recently been hired as a channel distribution expert (CDE) at a manufac

Question

You have recently been hired as a channel distribution expert (CDE) at a manufacturer of consumer products. The company is a start-up, and the owner has no experience in marketing or distribution channels. He has asked you to explain the structure of channel distribution to him in a presentation to him and his investors. Provide a detailed outline of what elements would be included in your presentation. Point out the more important aspects of distribution channel structure. Provide complete information on each. Use a real-life example to illustrate to the students your points. Be very specific and complete in your answer. Justify your answer.

Explanation / Answer

The distribution channels is used for providing the products to the consumers and end users (Lamb, Hair, & McDaniel, 2014). The company can distribute the products in two ways i.e. Business to Business (B2B) and Business to Consumer (B2C). In the B2B way, the product will reach to the dealer from manufacturer. The dealer will supply to the wholesaler and agent. The wholesaler and agent will distribute the products to the retailers. In the B2C channel, the product will reach to the dealer from manufacturer. The dealer will supply to the wholesaler and agent. The wholesaler and agent will distribute the products to the retailers. The retailers will sell the products to the customers (Ferrell, & Hartline, 2011). It will try to supply the products to the customers via online.

Disintermediation

It can be defined as the elimination or removal of middlemen in between conducting any business segment or unit. In includes several different processes such as time, people, procedures channel that helps in maintaining the channel of distribution. It can also be said as the transfer of goods and service without the help of middleman

Benefit to Customer and Business

Benefits towards customer and business have similar and common approach in building up the effective customer base in order to maintain the run in long term of business. In today’s scenario where market capture is hard to setup, undertaking customer approach helps in building up the overall objectivity of the firm (Lamb, 2012).

Example

If there is an employee who inputs certain order in their system, then the online store web hosting company will eliminate the use of middlemen and intermediaries. If there is a manufacturer who doesn’t dealing directly to the customer, then in that case, distribution channel may incur middlemen approach.

Growing scenario of disintermediation within recent years

Within past few years, there was certain level of middleman concept where manufacturer where involved in order to deliver the product directly to the customer. Till now, the concept is very much similar as the name has being changed. For a manufacturer it is important to maintain the good effective channel of output and input in order to maximize the customer positive response. The middle plays a vital role in fulfilling that goal.

Reason being common for disintermediation can be like; profit maximization, growth of business plan, and large scale of business market. In today’s scenario, where the competitive market is so tough, middleman approach is the only deal for any business organization to implement. The use of effective middleman approach is helpful for new errant to capture the well established market in a competitive scenario.

Reference:

Lamb, C. W., Hair, J. F., & McDaniel, C. (2014). MKTG7. Mason, OH: Cengage Learning.

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