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Coverage Upstream member consider (Degree of selectivity) Downstream member (Category selectivity)
Combining different Channel Types by going to market in multiple ways Decision of market entry mode Direct vs. Indirect
Prefer exclusive distribution More coverage is negative Erosion of uniqueness Unable to differentiate on brands offered Prefer Exclusivity Clash of interest with upstream member Intrabrand price competition Free-riding
Expensive Requires documentation Alienate other channel members Legal or muscular routes cause negative publicity
Brand equity Advertising and promotion Expensive Channel stuffing
Pull strategy
Category Exclusivity
Downstream channel members decision How many brands to carry in a product category Length of product assortment Very broad (all brands) Narrower Exclusive Manufacturers want exclusive dealing Reseller wants assortment of brands Meet assortment demands of customers Benefit from inter-brand competition Importance of assortment
Conflicts Manufacturer wants to Blanket a trading area but outlets prefer the reverse Downstream member prefer multiple brand but upstream members prefer the reverse Manufacturer wants downstream members to support their brands and take low margins, but the channel members prefer lower costs and higher margins
Desired Coordination
Upstream Member requirement Merchandising Prices Stock level Selling effort Customer choice Downstream Member concerns: Interference Resistance Solution Use of selectivity as reward power
Upstream Member requirement Product display with right assortments Downstream Member concerns: Selective availability in market Conclusion For differentiated categories only low cost, low price resellers can do well with intensively distributed brands For reseller support manufacturer has to limit coverage
Price of Concession
Opportunity cost Manufacturers costs are greater when: Important market area Competitive product category Downstream channel members costs are greater when: Major product category in their assortment Competitive product category
Multiple Channels
Different channels for the same goods Intended to serve different target markets Watch out for Conflict Cannibalization Free-riding
Dual Distribution
Manufacturer sells direct, competes with its resellers Conflict is common Value for demonstration
Carrier-Rider Relationships
One manufacturer (carrier) handles sales and distribution for another (rider) Piggybacking Works better between complementary products Reciprocal piggybacking