Channels of Distribution Is That They Cause

¶ … channels of distribution is that they cause the firm to be partnered with other firms in pursuit of their customers. For example, a manufacturer often has to be in a multi-party partnership with wholesalers and retailers in order to get things done. The problem is that the manufacturer loses some control over what happens and really has to compete more directly with other manufacturers because of the way wholesalers and retailers do things. Show how this affects costs and prices and how manufacturers are able to overcome the fact that their channels of distribution actually make competition more difficult. Also, discuss the impact of these phenomena on the Promotional objectives and plans of the firm. In order to answer this question, you will need to consider "push" and "pull" ideas as they relate to distribution and communication (the P's which we are highlighting here). Consider the customers and competitors in your answer.

In a traditional push system of channels of distribution, production and distribution are based on forecasts, made by the firm, regarding prospective consumer demand. The problem is that such forecasts are often in error -- it is difficult to predict demand and therefore difficult for manufacturers to perfectly match supply with the consumer demand over the course of the chain of distribution. Also, wholesalers often sell at a discount, while retailers have their own interests, in terms of how they promote and market particular products.

For instance, a car company may wish to market a car as an ideal family off-road vehicle for camping overall, but an urban local retailer may wish to adopt a completely different image, based on local clientele. A wholesaler may wish to 'get rid' of a large amount of spring clothing en masse and offer a large discount, while the manufacturer fears that consumers will cease to buy at full price, because they know the clothing will soon be on sale.

All forms of marketing traditionally used by the manufacturers, wholesalers, and retailers delineated above usually make use of push technology, where advertising, discounts, and low prices 'push' the product to local consumers and national consumers.