This report is initiated to discuss the various marketing channel strategies for consumer goods. The generic term goods refers to products as well as services. The paper is divided into part A and part B. Part A explains and discusses the general meaning of key concepts of marketing channel selection, and thus builds the foundation for part B. Part B applies the theoretical concepts to a real life company, Omkafe, and its international marketing channel selection process. The reason for choosing Omkafe, a small sized company based in Italy known for its outstanding coffee, is to demonstrate the differences in distribution patterns among countries and how the rise of the Internet and eBusiness has influenced even small companies like Omkafe. Part A concludes that a company can gain a competitive edge in deciding on an effective distributor or agent. Since there is no one right answer on how to effectively manage the flow from the manufacturer through the distribution channel to the ultimate customer, each company has to make its own decision based on its unique market, producer and product factors. Part B then enforces this conclusion, and also emphasizes the fact that even within a company, different marketing channel selections for different market targets are appropriate and necessary.
Table of Contents
1 Introduction
2 Definition and importance of selecting a marketing channel strategy
3 Direct versus indirect distribution channels
4 Steps in channel strategy selection
4.1 Conventional versus vertical marketing channel
4.1.1 Agency theory or conventional channel
4.1.2 Relationship management or vertical coordination of channels
4.2 Distribution intensity
4.2.1 Intensive distribution
4.2.2 Selective distribution
4.2.3 Exclusive distribution
4.3 Factors influencing the channel decision
4.3.1 Market factor
4.3.2 Producer factor
4.3.3 Product factor
5 Conclusion
6 Company background
7 Omkafe’s distribution channel
7.1 Direct sales and marketing channel
7.2 Indirect sales and marketing channel
7.3 Distribution and marketing through bars and restaurants
8 Relationship marketing
9 International channels
9.1 Channel power and conflict
9.2 German agents and the Internet
10 Conclusion
Objectives and Topics
This report examines marketing channel strategies for consumer goods, exploring theoretical frameworks and their practical application through a real-world case study. The primary objective is to demonstrate how companies select and manage distribution channels based on specific market, producer, and product variables, and how these choices impact competitive advantage.
- Theoretical concepts of channel selection and distribution intensity.
- Evaluation of direct versus indirect distribution methods.
- Case study of Omkafe's international expansion and channel strategies.
- The role of relationship management in small business success.
- Impact of the Internet and eBusiness on traditional distribution models.
Excerpt from the Book
3.3 Distribution and marketing through bars and restaurants
Bars and restaurants are one of Omkafe’s biggest buyers. A bar or restaurant can only become one of Omkafe’s buyers, if no other bar/restaurant within a certain destrict has bought the right to be Omkafe’s exclusive territory representative before (Burgemeister, F 2003, pers.comm., 10 January). Once a contractual relationship with Omkafe has been formed, the bar/restaurant is allowed to market and advertise with Omkafe’s brand. By limiting the number of bars or restaurants that can become potential distributors and buyers, Omkafe chose a selective distribution intensity. Distribution on a selective basis helps Omkafe to build a strong brand and to generate enough sales, while still serving the middle to upper price-quality segment. Another advantage of this approach is that Omkafe can choose the most appropriate or best-performing bars and restaurants and focus effort on them. Selective distribution works for Omkafe, because many Italians and Germans have a preference for a particular coffee brand and will search out for the bars that offer ‘their’ brand (Burgemeister, F 2003, pers.comm., 10 January). In Italy, bars and restaurants not only represent Omkafe’s largest buyer group, but they also serve as distributors by actually selling Omkafe’s packaged coffee beans to the end-consumer.
Summary of Chapters
Introduction: This chapter introduces the core concepts of marketing channel strategy and the necessity of aligning distribution paths with overall marketing objectives.
Definition and importance of selecting a marketing channel strategy: It explains the role of value chains and the systematic evaluation required when selecting new distribution strategies for products or market entry.
Direct versus indirect distribution channels: The chapter distinguishes between direct interaction with consumers and the use of intermediaries to manage specialized functions.
Steps in channel strategy selection: It outlines the three essential decision phases: arrangement type, distribution intensity, and configuration.
Conclusion: This section summarizes that there is no singular correct channel strategy, emphasizing the need for firm-specific analysis.
Company background: This part introduces the Italian roastery Omkafe, highlighting its heritage, quality focus, and relationship-based business model.
Omkafe’s distribution channel: The chapter details the firm's localized distribution strategies in Italy prior to its international expansion attempts.
Relationship marketing: It discusses how Omkafe differentiates itself from larger competitors through personal customer attention and high retention rates.
International channels: This chapter analyzes the complexities and strategic adjustments involved in entering the German market through agents and online platforms.
Conclusion: This final chapter reflects on the application of theory to the Omkafe case, underscoring the potential for leveraging the Internet to achieve global branding.
Keywords
Marketing Channel, Distribution Strategy, Consumer Goods, Selective Distribution, Value Chain, Agency Theory, Relationship Marketing, Omkafe, International Marketing, eBusiness, Market Entry, Competitive Advantage, Intermediaries, Distribution Intensity, Customer Service
Frequently Asked Questions
What is the primary focus of this report?
The report discusses various marketing channel strategies for consumer goods, analyzing how businesses select their distribution paths to effectively reach end-consumers.
What are the key themes addressed?
The main themes include distribution intensity, the trade-off between direct and indirect channels, relationship management, and the influence of international market factors.
What is the research goal?
The goal is to provide a basic framework for evaluating marketing channels and to demonstrate through a real-life case study how these theories are applied.
Which methodology is applied?
The author uses a literature-based theoretical review of marketing channel concepts combined with a qualitative case study analysis of the Italian company, Omkafe.
What does the main body cover?
The main body covers theoretical definitions, steps for channel selection, factors influencing decisions (market, producer, product), and a detailed look at Omkafe’s domestic and international distribution practices.
Which keywords best describe this study?
Key terms include marketing channel, distribution intensity, value chain, international marketing, and relationship marketing.
Why was Omkafe chosen for the case study?
Omkafe was selected because it is a small, specialized company whose international expansion illustrates the challenges of maintaining control while adapting to different national markets.
How has the Internet affected Omkafe's distribution?
The Internet has provided Omkafe with new opportunities to reach German consumers through online agents, reducing the need for costly proprietary distribution networks while maintaining brand presence.
- Quote paper
- Dipl. Betriebswirtin, MBA Sandra Burgemeister (Author), 2003, Marketing channel strategy for consumer goods, Munich, GRIN Verlag, https://www.grin.com/document/10571
