Distribution Channel Choice Research Articles

Dynamic evaluation of distribution channels in a fresh food supply chain from a sustainability and resilience approach

Research on agrifood supply chains has grown in recent years; however, little attention has been given to the effect of the choice of distribution channel on the sustainable and resilient performance of the network. This research proposes a system dynamics model to evaluate different distribution channels for a fresh food supply chain in a developing country. Among the main results is that the use of food hubs in a channel distribution produces long-term environmental, social and resilience benefits for the entire network, while short supply chains are the most economically viable alternative.

Consumers’ perception of distribution channel for the Malaysian microtakaful scheme: an exploratory study

Purpose This paper aims to investigate consumers’ preferences regarding the distribution channels for subscription, contribution payment and compensation claims of microtakaful scheme in Malaysia. Design/methodology/approach Consumers’ preferences were explored through questionnaires and focus group discussions (FGD) conducted among the bottom 40% income classification households (B40) in five zones: northern, central, eastern, southern and Sabah and Sarawak. Findings Empirical findings from cross-tabulation analysis revealed that takaful company is the preferred distribution channel for purchasing protection plans and making compensation claims. However, the online platform is the favoured channel to make contribution payments. Further investigation through FGD suggested that the selection of a channel for subscription, contribution payment and compensation claim is influenced by consumer trust, cost-effectiveness and simplicity of procedure. Research limitations/implications Limitation is pertaining to only cross-tabulation analysis used in explaining the choice of distribution channel for microtakaful among B40 group. Thus, advanced analysis is required to strengthen the findings. Practical implications Findings of this study would help marketers and practitioners to formulate strategies to promote their microtakaful protection to enhance subscription among the low-income population. Originality/value Empirical findings offer academic contributions to the existing body of knowledge on microtakaful area as the primary data collected will eventually allow future researchers to explicate the contribution of the current study to understand the important of distribution channel for microtakaful from the perspective of subscribers and potential subscribers.

Agricultural distribution channels under pressure and stress for farmers to access markets

ABSTRACT While long supply chains remain the dominant model, other forms of distribution are being (re)constructed or reaffirmed, namely short channels and hybrid channels. The aim of this article is to understand whether a farmer’s choice of distribution channel has an impact on tensions at work. More specifically, the aim is to analyse whether various stresses differ according to the type of distribution, whether one distribution channel seems preferable to another in terms of limiting the stresses experienced and/or perceived by farmers, and whether it is possible to limit work-related stresses a priori, when constructing the channel. This analysis was carried out on an exploratory and qualitative basis, using individual and group interviews with a sample of farmers in a mountainous area. Our results identify sources of work-related tension for each type of distribution. This original work focuses on the upstream side of the channel. It explains the various tensions at work and identifies ways of managing them during the construction of a channel.

Implications of Refurbishing Authorization Strategy and Distribution Channel Choice in a Closed-Loop Supply Chain

This study examines the optimal authorization strategy for an original equipment manufacturer (OEM), the optimal distribution channel choice for a platform, and their interactions. We developed four models based on the OEM’s two strategy choices — authorization and non-authorization strategies, and the platform having two distribution channels for refurbished products: reselling and agency selling channels. Our results indicate that the authorization strategy is optimal for the OEM when consumer’s preference for refurbished products is not sufficiently high. Unlike conventional research, an increase in the production cost of a new product leads to different choices for the OEM. Specifically, the OEM prefers a non-authorization strategy in the reselling channel and an authorization strategy in the agency selling channel. Moreover, under the OEM’s authorization strategy, the platform always adopts a reselling channel for refurbished products. However, under the OEM’s non-authorization strategy, the platform’s choice is determined by the commission fee and the production cost of the new product.

The link between advanced servitization, global distribution channels and the longitudinal performance of sales in international markets

PurposeThe research presented in this paper has been conducted to understand the impact of advanced-servitized-products on the longitudinal sales performance of manufacturing companies across international markets. The research strives to understand how the onsite presence leverages this impact.Design/methodology/approachTo reach this objective, an empirical sample of more than 4,000 sales transactions covering the period 2010–2019 in 74 foreign markets was collected from a single high-tech manufacturer producing and selling servitized solutions. The authors use a time fixed-effects model to test the authors' theoretically deduced hypotheses.FindingsThe authors' find the proportion of advanced-servitized products to positively impact sales performance over time and that this relation is moderated by the choice of international distribution channel. As compared to direct exports, onsite presence and intermediaries present a positive and negative moderating effect, respectively.Originality/valueThe paper offers a rare look into the international sales performance of advance-servitized-products. This paper does so using a service-dominant logic, which is still scarcely used within the servitization literature, despite the logic's adequacy for the study of the market behavior of service-augmented products.

How to Distribute Green Products in Competition with Brown Products? Direct Selling versus Agent Selling?

In order to respond to and take advantage of consumers’ growing interest in green products, an increasing number of firms are expanding their market share by introducing green versions of their brown products. However, firms are faced with the challenge of how to distribute green products to avoid mutual encroachment with brown products. To solve this problem, this paper constructs a Stackelberg game model consisting of a manufacturer (leader) and a retailer (follower), in which the manufacturer provides brown and green products, and then develops two channel structures for green products to be sold through the manufacturer (direct selling) and the retailer (agent selling). The results show that the manufacturer’s choice of green product distribution channels is affected by the direct selling costs and the market share of green consumers and their product preferences. When the direct selling cost is zero or consumers are green, the manufacturer always chooses direct selling. However, with an increase in the direct selling costs, if green consumers have a large difference in their preference for green and brown products, the manufacturer chooses agent selling, and vice versa. In particular, the impact of the market share of green consumers on the profits of the manufacturer is different in the two channel structures. The higher the market share of green consumers under agent selling, the more beneficial it is for the manufacturer. However, under direct selling, the profits of the manufacturer show an “inverted U” trend with the increase in the market share of green consumers. In addition, under certain conditions, the direct selling channels opened by the manufacturer are not necessarily to sell green products, but to maximize the market share of brown products. The strategy is to set high prices for green products in direct selling channels to stimulate consumers to buy brown products. These findings can provide insights for manufacturers to design appropriate green product distribution strategies.

The Impact of Diversity, Inclusion and Equity Product Offering and Forecast Bias on Supply Chain Decisions

U.S. demographic change brings new product offerings, production planning, and distribution challenges. While many companies embrace diversity, inclusion, and ethnicity product offering, their practice often renders mixed results, potentially negatively impacting their profitability. We offer an interdisciplinary marketing and supply chain perspective in addressing demand distribution change and its impact on inventory and distribution decisions. In addition, we demonstrate the importance of developing culturally adapted inventory and customer analytics models for manufacturing and supply chain distribution. We examine demand forecast bias in the apparel industry through the product demand distribution analysis at the product size level. We propose supply chain solutions to alleviate the situation by product size re-positioning, distribution channel choice, multistage execution plan, lead time and safety stock, and planning and revenue management approach. We also recognize the potential of addressing the problem by better understanding the consumer behavior change process and allowing a more extended period of marketing campaigns. In the apparel industry, the planning and supply chain decisions assume product demand follows a normal distribution. However, our research found that the demand distribution is highly skewed with significant kurtosis. Therefore, during the planning stage, inventory policy must be adjusted to count for the bias in the demand distribution. Moreover, managers can orchestrate other supply chain and marketing solutions such as centralized operation, leading time and safety stock trade-offs, and more extended marketing campaigns to match supply and demand better. Our work offers some analytical and practical approaches to increase a better supply and demand match.

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Objective. The purpose of the article is to study the essence and role of empirical models of consumer persuasion in the advertising activities of tourism enterprises. Achieving the goal involves solving the following tasks: to determine the most effective channels for attracting customers, analyze the models of the hierarchy of reactions to communication with consumers, characterize empirical models of consumer persuasion and prove the feasibility of their use in the advertising activities of tourism enterprises . Methods. Analytical, comparative and historical research methods were used to solve the main tasks. Results. The article considers the essence and role of empirical models of consumer persuasion in the advertising activities of a tourism enterprise. Attention is focused on the need for efforts of a tourism enterprise to understand the psychology of consumers in order to ensure targeted impact on them by advertising means. The theoretical foundations of traditional behavioral theories that study models of persuasion from a psychological perspective are analyzed and empirical models of persuasion are proposed, namely, logical, associative and innovative, since the use of digital technologies allows an integrated approach to the use of the proposed models, which facilitates the choice of channels for distributing advertising and processing information received from consumers.. Scientific novelty. The scientific novelty of the study lies in the development of empirical models of persuasion of consumers of tourism services. The proposed models reflect the stage at which the consumer makes a decision to purchase a tourism product, which will allow to identify heterogeneous features within each of the target groups and correlate accordingly with the content and format of the information message itself and the channel of its distribution. The use of digital technologies makes it possible to use them within a single message to different categories of consumers, which facilitates the choice of distribution channels and processing of the information received. Practical significance. The proposed models can be used in the advertising activities of tourism enterprises to increase their efficiency. Key words: tourism, advertising activity, tourism enterprise, traditional models of persuasion, empirical models of persuasion.

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The article researches the process of forming an international marketing strategy of an enterprise, taking into account the globalization of enterprise activities. The theoretical aspects of globalization are considered, namely: the essence of globalization and the international global market, market conditions for the functioning of business structures. It is noted that the global market as a component of the global economy balances global supply and demand in the market, and the company's success in the global market is achieved only through the development and adherence to a long-term development plan, which is its international strategy. It is proved that the formation of an international marketing strategy should be performed according to a certain algorithm, based on market research, which consists of gathering information about the potential of the market to which it is planned to enter, studying its features, and the features of international business in general. It is noted that the necessary stage of formation is the segmentation of the market of goods and services in order to find groups of consumers or buyers with the same characteristics for one type of goods, which in the future provides the opportunity to form a trade policy precisely for the globalization of the enterprise. The article substantiates the levels according to which an international strategy should be formed – corporate, functional and instrumental. Also, the article considers the ways of entering the market, which depend on the scale of the enterprise's activities, the purpose in general, and the product to be sold on the international market. The importance of determining before the enterprise enters the international market marketing communications that must be implemented and used at the enterprise and the presence of a distribution system at the enterprise, which includes the choice of distribution channels, sales conditions, training of sales personnel, tasks of sales personnel, is indicated. It is emphasized that when entering international markets, enterprises should use international marketing tools, the content of which is important in modern realities, and its principles are vital.

Determinants of selection behavior in online distribution channels for fresh food

AbstractThis study examines the core factors that determine consumer choices of distribution channels for fresh food during the COVID‐19 pandemic, focusing on online distribution channels and the substitution patterns between online and offline distribution channels. Using 1436 responses to a survey conducted by Gallup Korea, a specialized survey agency in Korea, we adopted a multivariate probit model for the empirical analysis. The results show that consumers who pursued ease of use or had high awareness of online food delivery tended to choose online distribution channels for fresh food, unlike consumers who were sensitive to high quality or low prices. Consumers with high consumer spending, who are living in Seoul or a metropolitan area, have children of 10 years old or younger, and have a high educational level had positive relationships with the choice of an online distribution channel. Additionally, the estimates of the variance‐covariance matrix showed a complementary relationship between large markets and small and medium‐sized markets, with the possibility of a weak substitution effect between small and medium‐sized markets and online distribution channels.

Distribution channels of banking services: Attitudes and preferences of clients

The purpose of this paper is to investigate how the development of information and communication technology affects the choice of distribution channels for individuals, users of banking services. The research aims to show and determine which factors influence natural users when choosing a bank, how technology development affects the distribution channels of banking services, which distribution channels are most represented in the banking sector and why, and whether banks invest enough effort in research its users as active participants in the process of distribution of financial services. The results of the research show that users of banking services are increasingly using digital distribution channels of banking services, of which mobile banking is the most represented, to become clients of a bank based on positive experience or previously opened an account by family. These are more complex services, but they prefer to go to the branch, and that banks do not conduct sufficient research on customer satisfaction, requirements and needs in terms of product or service development. The conclusions based on the conducted research represent valuable knowledge in this part, and only the research can be the basis for further research as well as the development of strategies for the management of distribution channels.

Distribution channels and growth strategies in Spanish insurance: from networks of agents to branch offices (1870–1940)

This article analyses the factors that determined the choice of distribution channel within the Spanish insurance industry and its relation with growth strategies performed by firms. To achieve this goal, we have gone through documentary sources from the main companies to examine the relationships between companies and agents and their costs, namely: the design of agency contracts, the different procedures on the selection of agents, and the guidelines for inspection, supervision and control of agent networks. Using the framework of agency theory, this study aims to enhance our understanding of the conflicts and dynamics that determined the distribution of such a complex financial product as insurance in a late development economy. We show how insurance companies began the transition to the branch system in the 1920s to reduce the costs arising from the control and monitoring of agents and to mitigate agency conflicts.

Choice of Modern Food Distribution Channels and Its Welfare Effects: Empirical Evidence from Taiwan

The determinants and/or economic effects of modern food distribution channels have attracted much attention in previous research. Studies on the welfare consequences of modern channel options, however, have been sparse. Based on a broader definition of modern food distribution channels including midstream processors and downstream retailers (supermarkets, hypermarkets, brand-named retailers), this study contributes to the existing body of knowledge by exploring the distributional implications of farm households’ choice of modern food distribution channels using a large and unique farm household dataset in Taiwan. Making use of the two-step control function approach, we identify the effect of modern food distribution options on farm households’ profitability. The results reveal selling farm produce to modern food distributors does not produce a positive differential compared to the traditional outlets. Another dimension of farm household welfare affected by the choice of modern food distribution channel is income inequality. We apply the Lerman and Yitzhaki decomposition approach to gain a better understanding of the effect of the marketing channel option on the overall distribution of farm household income. The Gini decomposition of different income sources indicates that the choice of modern food distribution channels results in an inequality-equalizing effect among the farm households in Taiwan, suggesting the inclusion of smallholder farmers in the modern food distribution channels improves the overall welfare of the rural society.

Simulation of the Impacts of a Zero-Emission Zone on Freight Delivery Patterns in Rotterdam

As part of a broader vision for emission-free city logistics, the city of Rotterdam plans to introduce a zero-emission zone in combination with urban consolidation centers (UCCs) on the outskirts of the city to generate a shift to zero-emission vehicles. For the design of this zero-emission zone, several research questions arise that require a systematic analysis of the impacts of the transition scenarios on freight demand patterns, the use and market shares of new (zero-emission) vehicles, and the impacts of truck flow and emissions. As a case study, we implemented heterogenous transition scenarios for each logistic segment into the Tactical Freight Simulator from the HARMONY project and analyzed the systemwide impacts. This model is multiagent, empirical, and shipment based and simulates long-term tactical choices (distribution channel choice, shipment size and vehicle type choice, sourcing) and short-term tactical choices (tour formation, delivery times). Results showed that the impact of UCCs is not trivial: we observed a small increase in vehicle kilometers traveled overall of +0.25%, which can be attributed to the rerouting of shipments through the UCCs. Calculations confirmed that emissions reduced dramatically, by 90%, inside the zero-emission zone. At the city scale this corresponds to a reduction of almost 10%, as most freight-related traffic is generated by the port and involves long-haul heavy goods vehicle transport that does not enter the city center. At a regional level, impact reduction was very small. More measures are needed if more ambitious reductions in emissions are to be achieved.

Agency or Self-Run: the effect of consumer green education on recyclers’ distribution channel choice under platform economy

ABSTRACT Consumer green education has significantly affected the green supply chain and recyclers have started to distribute remanufactured products via online platforms. Through a two-period game model, this study examines the effects of consumer green education on the recycler’s channel choice. The recyclers sell remanufactured products through either the E-retailer’s platform (Agency channel), or their own online platform (Self-Run channel). Surprisingly, our research indicates that a new product seller (E-retailer) can benefit from the remanufactured goods’ cannibalisation in the Agency channel, provided the consumer green education is under-developed. This finding challenges the traditional opinion that the cannibalisation causes loss of profit for new-product sellers. Besides, as the consumer green education effect increases, the recycler prefers the Self-Run channel even with high operational costs. This study provides new insights into the recyclers’ channel choice by considering the consumer green effect, thereby extending the research on the remanufactured products’ distribution channel strategy.

The challenge of remanufactured products: the role of returns policy and channel structure to reduce consumers' perceived risk

PurposeWhile remanufactured products represent an increasingly researched phenomenon in the literature, not much is known about consumers' understanding and acceptance of such products. This study explores this issue in the context of the theory of perceived risk (TPR), investigating return policy leniency and distribution channel choice as potential factors to foster remanufactured products' sales.Design/methodology/approachThis research utilizes an experimental design composed of a pre-test and a scenario-based main experiment to explore how return policy leniency might mitigate consumers' perceived risk and how their related purchase intention differs across two types of retail distribution channel structures (i.e. brick-and-mortar vs. online).FindingsThe investigation into the efficacy of return policy leniency within two retail distribution channel settings (i.e. brick-and-mortar vs. online) illustrates that providing a lenient return policy is an effective “cue” in increasing consumer purchase intention for remanufactured products. While prior literature has established that consumers value return policy leniency for new products, the authors provide empirical evidence that this preference also applies to remanufactured products. Notably, that return policy preference holds true in both channel settings (i.e. brick-and-mortar vs. online) under consideration. Additionally, and contrary to the authors’ predictions, consumers perceived remanufactured products sold via both channel settings as equally risky, thus highlighting that both are appropriate distribution channels for remanufactured products. Finally, while research on new products provides some initial guidance on consumer perceptions of quality and risk, the study provides empirical evidence into the difference of perceived risk with regard to new versus remanufactured products.Originality/valueBy employing the TPR, this research explored the role played by two supply chain management related factors (returns policy and channel structure) in reducing consumer's perceived risk and increasing purchase intention. In doing so, this study answers the call for more consumer-based supply chain management research in a controlled experimental research setting.

Chocolates and ‘Legrias’: Dilemma of the Best Sales Channel

ABSTRACT This teaching case aims to understand the challenges between opening distribution channels and new products. The report involves a small Brazilian chocolate factory. It presents the structuring, production processes, brand concept, formation of sales prices, and the choice of distribution channels in COVID-19 times. The company faced challenges in the market for presenting products with low adherence to distribution channels, high costs and price, and an inadequate brand positioning, resulting in low sales. After repositioning itself with a new brand and price concept, the case raises the dilemma: What is the best distribution channel during the crisis period caused by COVID-19 for the newly restructured company? The pedagogical objectives are focused on the analysis of alternatives in the choice of distribution channels, considering the implementation challenges, the transaction costs for products at an early stage, and the scenario of uncertainties resulting from the pandemic, as well as the application of sales channel concepts and distribution. The case can be applied in undergraduate and MBA courses in the management area and is recommended to encourage students to reflect on the structure and challenges of implementing small entrepreneurs’ distribution channels.

Chocolates and ‘Legrias’: Dilemma of the Best Sales Channel

ABSTRACT This teaching case aims to understand the challenges between opening distribution channels and new products. The report involves a small Brazilian chocolate factory. It presents the structuring, production processes, brand concept, formation of sales prices, and the choice of distribution channels in COVID-19 times. The company faced challenges in the market for presenting products with low adherence to distribution channels, high costs and price, and an inadequate brand positioning, resulting in low sales. After repositioning itself with a new brand and price concept, the case raises the dilemma: What is the best distribution channel during the crisis period caused by COVID-19 for the newly restructured company? The pedagogical objectives are focused on the analysis of alternatives in the choice of distribution channels, considering the implementation challenges, the transaction costs for products at an early stage, and the scenario of uncertainties resulting from the pandemic, as well as the application of sales channel concepts and distribution. The case can be applied in undergraduate and MBA courses in the management area and is recommended to encourage students to reflect on the structure and challenges of implementing small entrepreneurs’ distribution channels.

Derivative financial instruments in the activity of enterprises of the agrarian sphere of economy

The article presents the ways of strengthening the financial state, solvency, investment attractiveness and financial stability of agricultural organizations by expanding existing and finding new markets for products, additional sources of funding, wide use of derivative financial instruments and hedging in the practice of management. The subject of the research is the consideration of modern ways of bringing agricultural products from the producer to the end consumer. The purpose of the study is to reflect the possibilities of using derivative financial instruments in settlements of agricultural organizations with counterparties. In the course of the study, the concept of derivative financial instruments, which are widely used in the world stock exchange practice, but at present in Russia have not yet found wide application, is given. The economic efficiency of agricultural organizations is largely determined by the organization of sales of agricultural products, the choice of distribution channels in order to reduce the delivery time of products to consumers, improve its quality and reduce the cost of its implementation. It is concluded that in the current economic situation successful sales of agricultural products can be held through the exchange market through forward (futures) contracts for the immediate transfer of rights and obligations to perform the real delivery of agricultural products in the future on a certain date.

Application of an empirical multi-agent model for urban goods transport to analyze impacts of zero emission zones in The Netherlands

Reducing emissions caused by urban freight transportation is an increasingly important policy objective for transportation planners around the world. New and innovative ways of data collection provide new possibilities to analyze these issues. In this paper we present MASS-GT, a new multi-agent simulation system for urban goods transport. The empirical basis is provided by an exceptionally large dataset of truck trip travel diaries for The Netherlands that was collected from transportation management systems using an automated data collection interface. The dataset is very dense and includes information on vehicles, routes, and shipments carried.The strategic part of the model simulates the formation of individual shipments based on logistic processes at a strategic level, such as sourcing, distribution channel choice and shipment size choice. At tactical level disaggregate choices are simulated for tour formation, vehicle type- and time of day choice, based on observed distributions. The multi-agent approach allows to implement heterogeneous preferences and thus differentiated responses to new policies.We present an application of the model to study the impacts of urban consolidation centers (UCC) and zero emission zones. The freight transportation volumes transported to these UCC and their impact on logistic indicators are analyzed. Simulation results show that vehicle kilometers travelled within the wider region increase with the introduction of UCC, and at the same time the efficiency of deliveries increases as well. Thus the model allows to study trade-offs between regional and local systems that emerge from different behavioural responses to policies.