During my radio program today we discussed the marketing mix [many people know this as the 4 P’s] as this was requested by one of the listeners. For those of you who are not familiar with the Marketing Mix, the 4 P’s stand for :-
- Product
- Price
- Promotion
- Place
… now when we talk about distribution channels in marketing, this topic falls under that P of Place. That is to say, where will the end user customer actually end up purchasing the product and/or service that is produced by the company in question.
If you consider a company like coca cola and how you can go almost anywhere in the world and purchase this soft drink, you can begin to get an idea of how important channels of distribution in marketing are for businesses of all sizes. Of course none of us ever purchase Coca Cola from the company itself – instead we purchase from a retailer who would have in turn purchased from one of many possible distribution channels. There can be many intermediaries in the supply chain which of course all adds to the final price paid by the end user.
In my consulting and training work – this topic of distribution channel management is continuing to be an ever important one. How is your company doing in terms of actively managing your distribution partners ?
- Are you working in partnership ?
- Do you know their margins ?
- Do you know their fixed costs ?
- Do you know how much your products are contributing to their fixed costs ??
As the price that the end user pays for a product continues to be tied to the costs incurred in getting that product to the end user, training and consulting requirements on this subject matter will rise and those companies that make the incremental necessary changes in this respect will be those that take more market share and ultimately be the ones that excel.
As always, any thoughts, comments or consulting requirements ? don’t hesitate to get in touch.
-Stephen C Campbell
