Distribution Channel Structure Research Articles

Candy Confectioneries Pvt Limited (CCL)

Subject area Rural Marketing, Sales and Distribution Management, Salesperson Motivation, Channel Management. Study level/applicability The case can be used in sales management, channel management and rural marketing courses offered to graduate students of MBA degrees. In the sales management courses, the emphasis is on understanding the typical tasks that the rural salesperson is required to conduct. The case can be used to design a suitable motivation-mix for a rural salesperson after analysing their approach towards work. In a rural marketing course, the case can be used to understand the sales and distribution management of fast-moving consumer good products in rural India. The case can be used in channel management courses to design an appropriate channel structure in the rural market in India and utilized for managing the distributors’ salesforce for effective and improved market coverage in rural areas. Case overview Candy Confectioneries Private Limited started its operations in 1995, and was one of the largest confectionery players in India with a market share of 20 per cent. The company had achieved sales of Rs 20bn in 2014 and had 15 confectionery brands in the market. The company was also trying hard to establish itself in the snacks category. The company had nationwide operations, and it was important for the company to expand into the rural market. It served its markets through a comprehensive urban and rural distribution setup. In the rural distribution network, the rural sales representatives (RSRs) played a key role and perhaps were one of the most critical factors in covering the rural market. The RSR system was typical to suit the requirement of product-market coverage with its limitations. The case broadly profiles eight RSRs who were engaged to cover a specific territory in the State of Bihar in India. It also describes their approaches to work and complexities emerging thereof in achieving the best results for the organization. Expected learning outcomes The case has the following learning objectives: Understanding the design of sales and distribution channel structure followed for distribution and selling of confectionery products in rural India. Examining whether the existing system is adequate to achieve the goals of the firm. Evaluating the performance of each salesperson and identifying common factors to formulate the salesforce policies. Arriving at a suitable motivation-mix for the rural salesperson. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes. Subject code CSS 8: Marketing.

Analiza promena u hotelskim kanalima prodaje - studija slučaja gradskog i planinskog hotela u Srbiji

The development of information and communication technology (ICT) has led to the revolution in the tourism industry. Hotels have felt the need to adapt to market demands, so consequently their business recorded drastic changes in recent decades. Changes in the field of sale imply modifications in terms of introduction of new and neglect of existing sales channels. New intermediaries whose work is based on the use of the Internet and advanced technology enabled the hotel to meet the increased and changed market requirements. Since that from introduction of Internet hotel sales channels suffer continuous changes, it is important to understand the extent of which hotels sale rely on traditional versus modern sales channels. In recent years, Serbian hotel market is spreading, and how its development could have multiple positive effects on the domestic economy, it is necessary to consider how progress in technology have influenced the alteration of the structure of distribution channels in the domestic hotel market. Accordingly, analysis of sales channels in the case of two local hotels in the period from 2008 to 2013 ,was carried out, so it could be determined whether and to what extent the hotels rely on modern sales channels. The analysis was conducted with the aim to detect possible changes in the structure of the channels during the five year period, to determine whether these hotels monitor market changes and increase sales through modern, ie. online channels. Since as the objects of the study were taken city and mountain resort hotel, the analysis is directed towards the possible differences in their sales channels.

Product variety and distribution channel structure

We consider how a manufacturer’s product variety decision is affected by its distribution strategy. While offering product variety will generally lead to higher demand, it also has negative implications on production costs and demand uncertainty. We investigate how the manufacturer’s optimal product variety decision differs when selling directly to customers (centralised scenario) as compared to selling through a retailer (decentralised scenario). We find that the retailer’s power and the impact of product variety on demand significantly affect the attractiveness of product variety and determine under which distribution strategy the manufacturer should provide a higher level of variety.

QUAL DEVE SER O TAMANHO DO TUBARÃO PARA O TANQUE DE PEIXES? UM CASO DE ENSINO ENVOLVENDO CONFLITOS EM CANAIS DE DISTRIBUIÇÃO

<p>O presente caso de ensino objetiva contribuir para a compreensão do planejamento estratégico e do gerenciamento de canais de distribuição. O relato envolve uma indústria de fabricação de sucos naturais de atuação nacional e apresenta o início de sua estruturação e processo de produção, o seu lançamento, a sua elaboração da estratégia de marketing e os seus excelentes resultados iniciais. Os dados foram obtidos por meio de entrevistas semiestruturadas<br />com proprietários, executivos e parceiros da empresa e por meio de fontes secundárias documentais da empresa e de associações especializadas neste tipo de mercado. O caso foca o conflito envolvendo sua estrutura de canais de distribuição no âmbito nacional, formada por quatro níveis: o fabricante (a empresa), os atacadistas (formados pela estrutura própria de vendas da empresa, pelos distribuidores regionais e por um atacadista nacional de grande<br />porte), os varejistas (grandes redes de hipermercados e pequeno e médio varejo) e os consumidores. Assim, o caso de ensino incita o aluno a refletir sobre a situação, a analisar as causas dos conflitos, a repensar a estrutura de canais de distribuição e a buscar uma saída para tal problema. A nota de ensino contribui, inclusive com amparo conceitual, para que o professor explore melhor as perspectivas diversas possíveis à diretoria da empresa.<br /><br /></p>

The Sources, Distribution Channel and Market Structure of Fuel Wood in Enugu State

The study examined the sources, marketing channel and also determined the market structure of fuel wood in the study area. For the selection of the respondents, cluster random sampling technique was adopted. In the study, 90 fuelwood harvesters in the rural areas of the study were chosen and 90 fuelwood traders namely wholesalers and retailers were chosen from urban areas of the study. Data were obtained from the respondents through primary sources. These data were analyzed by using percentage and Gini-coefficient. The study revealed that fuelwood was sourced from open wood land/forests, privately owned land and plantations. The distribution channel of the wood product showed that when the fuelwood is harvested from its source, it is moved by the harvesters through wholesalers, retailers and finally to consumers. The findings on quality perception of fuel wood showed that majority of harvesters (98%), wholesalers (89%) and retailer (82%) assess the quality of wood through high burning capacity of the wood. The analysis of Gini coefficient showed that there was low degree of concentration at all levels-harvesting, wholesaling and retailing as it recorded 0.16, 0.24 and 0.11 respectively. It also depicts that there is equality in the distribution of income among the fuelwood sellers. This shows that no fuel wood harvester or seller has control over the price of his/her good. The study concluded that further improvement is needed on fuel wood business for more efficiency of the trade.

Distribution challenges and workable solutions

An effective distribution channel can be a source of strategic advantage for companies. However, little research exists about the distribution channel structure in India, which is largely traditional and quite unique. The first part of this round table article provides an overview of distribution channels, particularly their constituents and structure, with a special focus on distribution channels in India. The second part of the article reports on a panel discussion with eminent academic and industry experts on the challenges that companies in India face in designing, constructing, and managing distribution channels on the ground.

Consumer Heterogeneity, Product Quality, and Distribution Channels

This paper shows that the effect of different distribution channel structures on product quality depends on the type of consumer heterogeneity and its distribution in a market. When consumer heterogeneity is uniformly distributed either vertically on willingness to pay or horizontally on transaction costs, a manufacturer may provide the same or lower product quality in a decentralized channel than in a centralized channel. In contrast, when consumer heterogeneity follows a more general distribution on willingness to pay, under certain conditions, the manufacturer may provide higher product quality in a decentralized channel than in a centralized channel. Decentralization also may lead to a higher product quality if consumer heterogeneity is uniformly distributed both vertically and horizontally, but not if consumer heterogeneity is uniformly distributed vertically on each of two product-quality attributes. Additionally, competition at the retail level may amplify these findings. This paper was accepted by J. Miguel Villas-Boas, marketing.

Management Insights

Management Insights

Equilibrium analysis of distribution channel structures under power imbalance and asymmetric information

This paper investigates the problem of channel choice game in two power-imbalanced supply chains consisting of the leader supply chain and the follower supply chain. We assume that there exists symmetric and asymmetric cost information between the two supply chains, and that the two chains as well as the two members in each chain follow the Stackelberg game setting. We analyse four competition scenarios: both chains are decentralised, where individual members of both supply chains maximise their own profits by independently selecting their price policies; both chains are integrated, where manufacturers and retailers coordinate their decisions to maximise supply chain profits; the leader chain is decentralised and the follower integrated; the leader is integrated and the follower decentralised. The primary objective of this paper is to investigate the influence of power imbalance, information asymmetries, and the degree of product substitutability under channel choice equilibrium. We find that, in contrast to earlier literature where all manufacturers share equal or balanced decision-making power, an integrated distribution channel is the dominant strategy for the leader under symmetric and asymmetric information Stackelberg game. As the degree of product substitutability increases, the follower will gradually switch from integrated distribution channel to decentralised distribution channel; the follower can gain from constructing a decentralised distribution channel as the prediction accuracy of the leader increases.

Strategies within Japanese Apparel Manufacturers

Abstract Based upon a questionnaire survey, this research study focuses on the Japanese apparel manufacturers. The aim is to understand the characteristics that make up the marketing strategys of Japanese small to medium sized apparel manufacturers. The authors generate exploratory hypotheses, which are tested via statistical analysis of data obtained from a questionnaire survey. The hypotheses tested include, the relationships between “High Value Added” strategys and factors involved with manufacturing and marketing channels. High Value Added strategys relate to the manufacturers’ competitive behaviors that create high and new value for their products. The results indicate that High Value Added strategys have positive relationships for domestic outsources, the number of outsources, use of directly operated shops and the orientation for sales in overseas markets. Keywords: apparel manufacturer, strategy, Japan, high value added strategy, questionnaire survey Ⅰ. Introduction The Japanese business climate of apparel products is changing with China becoming a major player and other countries like Bangladesh and Vietnam booming. It is apparent that a major shift has occurred in the business environment relating to apparel products manufactured in China or other low-wage countries, which have invaded import markets throughout the world economies. Such a drastic change in the busi-ness environment of competing economies impacts distribution channel structures, affecting both whole-salers and manufactures. Therefore, the need to under-stand and research existing apparel companies is re-quired in order to comprehend existing strategies and determine the future survival of these apparel com-panies.The authors conducted quantitative research on the business strategies of small to medium sized apparel companies, especially in relation to the Japanese wholesaler in apparel manufacture markets (Komiya, Inoguchi, Kim & Urakami, 2009; Urakami, Komiya & Inoguchi 2009; Urakami et al., 2010; Urakami & Wu 2010). One similar study highlighted the strategies of small to medium sized apparel manufacturers in developed countries in East Asia (Komiya et al., 2009). Other studies revealed the factors affecting the recent trend of self-planning functions within Japanese apparel wholesalers (Urakami, Komiya &

Development Trends of Air Passenger Transport Services and Service Distribution Channels

Development Trends of Air Passenger Transport Services and Service Distribution Channels Alongside their core service, i.e., passenger transportation, air carriers are nowadays providing numerous extra services, which are not directly related to transport. On the one hand, airlines are enlarging the scope of paid services provided on board an aircraft by, among other ways, splitting the air ticket fee and singling out the costs of such services as catering on board, checked-in luggage, airport check-in, etc. On the other hand, airline companies tend to provide mass services to their sales partners - ground transportation, car rental, insurance, hotel booking, etc. Provision of both the core and the extra services is closely connected with computerized reservation systems and the corresponding agent and customer access networks. These systems and networks form the basis of IT channels of service distribution. The present paper analyses the indicators and development trends of air transport services in combination with the development of service distribution channels and the information technologies lying at the basis of such channels. The paper also describes the structure and IT support of distribution channels. The authors have paid attention to the potential qualitative changes in the structure and possibilities of distribution of air passenger transportation services in view of the Next Generation Network (NGN) concept whose implementation has been started in the world.

Attributes of Transport Service in Retail-Industry Relationship

In distribution segment, logistics activities are more easily perceived as value generating. Among them, the transportation it is highlighted. This study evaluated the shippers’ transportation management in retail service. The motivation of the study is the evidence from the literature that there are differences in management of transport, in terms of attributes of service, according to the client, as well as the format of the demand for transport services and to meet their segments of the supply chains. In the universe of 400 manufacturing companies located in the state of Minas Gerais, 101 were selected as they had a retail account for more than 60% of their sales, which was analyzed as to the desired constructs and attributed evaluation. In general, industrial shippers seem to minimize the importance of logistics in the retail service, giving the transport merely operational functions and not strategic ones. They fail to aggregate the value of logistics to their products and services. The results forwarded to specific management issues relevant such as the relationship between orders fulfillment and problems of internal processes, structure of distribution channels, logistics networks and decisions about to internalizing/outsourcing logistics services. Key words: Service level. Transportation management. Industry-retail relationship.

Bringing Products To Market: Supply Chains Vs. Value Webs

<p class="MsoBodyText" style="text-align: justify; margin: 0in 34.2pt 0pt 0.5in;"><span style="font-family: Times New Roman;"><span style="font-size: 10pt; font-weight: normal;">Companies scramble to satisfy ever-increasing customer demands for customized products, on-time delivery, and complete order fulfillment.<span style="mso-spacerun: yes;">  </span>Simultaneously, competition intensifies accompanied by revolutionary changes in the structure of distribution channels. Traditional supply chains are increasingly replaced by integrated supply chains, which, in turn, are challenged by leading-edge value webs.<span style="mso-spacerun: yes;">  </span>Managers are now faced with a strategic choice: supply chain or value web?<span style="mso-spacerun: yes;">  </span>Several situational factors – object of organizational focus (i.e., product or customer), type of product offered, target market strategy, organizational competencies, and resource constraints govern the decision.<span style="mso-spacerun: yes;">  </span></span><span style="font-size: 10pt;"><span style="mso-spacerun: yes;"><strong> </strong></span></span></span></p>

Examining the tourism distribution channel: evolution and transformation

PurposeThe purpose of this paper is to examine the evolution and transformation of tourism distribution channels, focusing on the role the internet has played in such a process. It attempts to graphically illustrate, in a temporal manner, the evolving complexity of the tourism distribution systems.Design/methodology/approachThis paper provides insights into the change of the structure of tourism distribution that has not been extensively explored. Indeed, the complexity of the tourism distribution structure has been diagrammatically depicted multiple times by previous researchers and each depiction has contributed to a fuller understanding of the body of knowledge by focusing on different aspects of that structure. This paper builds upon those valuable knowledge contributions by focusing on the evolution of the structure over time, systematically and diagrammatically revealing the progressively larger number of intermediation layers, in spite of concurrent disintermediation and reintermediation activity. This paper does not focus on every action of every participant in detail, but rather focuses on categories of intermediaries, looking at pioneering examples of each. Likewise, the comparative rates of technology adoption in different regions of the world are not investigated.FindingsThe complex network proposed in this paper indicates that the advance of information and communication technology has not reduced the number of intermediaries in the distribution channel, but rather resulted in an increasingly complex array of intermediaries. The structure of the tourism industry has taken the form of a complex global network. In the struggle to prosper in this environment, participants at various levels will continue to compete, cooperate, merge, form partnerships, and change relationships on a regular basis.Originality/valueThe extant literature has covered many aspects of intermediation, disintermediation, and reintermediation, albeit with differing terminologies. Most of these studies have adopted a static and cross‐sectional approach in examining the structure and use of tourism distribution channels. This paper examines the historical evolution and progression of tourism distribution channels which is not only important in understanding where we are now as an industry, but also where we came from and where we are heading to.

The changing structure of distribution channels in Pakistan

PurposeThe purpose of this paper is to consider the impact of the entry of international wholesalers upon existing fast moving consumer goods (FMCG) channel structures and the relationships between channel members in Pakistan.Design/methodology/approachThe paper draws on primary and secondary data. Industrial and published sources are used to describe the retail industry and traditional channel structures in Pakistan. Semi‐structured interviews with industry experts and channel participants (manufacturers, distributors, local and organised wholesalers and retailers) over the period illustrate the perspectives of different channel members.FindingsAlthough currently holding small market share, the entry and growth of international, consolidated wholesale has opened alternative channel structures. This poses a threat to some channel members and creates relationships that alter the distribution of power in the channel. In this fluid situation, there is the possibility of substantial change in Pakistan's FMCG retail.Research limitations/implicationsThe nature of the Pakistan retail market creates difficulties in compiling statistics or generalising from observations. The paper uses published statistics, industry reports and interviews to nevertheless be able to comment on this important market.Originality/valueThe paper looks at an under‐researched market and comments upon the first steps in that market towards consolidation and internationalisation. In looking at the reactions of extant market players to this recent development, the paper provides useful insight and guidance to those (manufacturers, retailers and analysts) interested in retail in Pakistan.

Cost Structure, Customer Profitability, and Retention Implications of Self-Service Distribution Channels: Evidence from Customer Behavior in an Online Banking Channel

This paper uses the context of online banking to investigate the consequences of using self-service distribution channels to alter customer interactions with the firm. Using a sample of retail banking customers observed over a 30-month period at a large U.S. bank, we test whether changes in service consumption, cost to serve, and customer profitability are associated with the adoption of online banking. We find that customer adoption of online banking is associated with (1) substitution, primarily from incrementally more costly self-service delivery channels (automated teller machine and voice response unit); (2) augmentation of service consumption in more costly service delivery channels (branch and call center); (3) a substantial increase in total transaction volume; (4) an increase in estimated average cost to serve resulting from the combination of points (1)–(3); and (5) a reduction in short-term customer profitability. However, we find that use of the online banking channel is associated with higher customer retention rates over one-, two-, and three-year horizons. The documented relationship between the use of online banking and customer retention remains positive even after controlling for self-selection into the online channel. We also find evidence that future market shares for our sample firm are systematically higher in markets with high contemporaneous utilization rates for the online banking channel. This finding holds even after controlling for contemporaneous market share, suggesting it is not simply the result of increased market power leading to the acquisition of online banking customers.

Food products distribution systems redesign in the food corporation acquisition and fusion conditions

The distribution channel structure significantly affects the distribution costs, and in the food industry the distribution costs have very often an important share on the total products cost. In the food industry, merger & acquisition conditions in the Czech Republic are the expected synergic effects. One of them is the cost saving following up from the redesign of the distribution system. On the case of a real project of the new mineral waters distribution system, the authors demonstrate their methodology and methods for the distribution system redesign, which integrates together the problem of the distribution object location with the distribution strategy choice and transport system design.

Effects of distribution channel structure in markets with vertically differentiated products

This study examines how the structure of distribution channels may influence firms’ quality and price strategies and how they may in turn affect consumer welfare. It treats product quality as a decision variable so that the degree of product substitution becomes endogenous rather than exogenous as in previous studies. We find that, with vertically differentiated firms, the changes in channel structure have asymmetric effects depending on whether they occur in the high-quality channel or in the low-quality channel. The product quality of the high-quality channel decreases when it decentralizes unilaterally. However, product quality of the low-quality channel would increase when it decentralizes. The high-quality manufacturer and its channel suffer more from decentralization in comparison with their low-quality counterparts, and the low-quality manufacturer actually receives greater profits when both channels are decentralized. An important driver behind these asymmetries is the interaction between firms’ pricing incentives in integrated versus decentralized channels and what consumer segments they serve. Our analysis indicates that decentralization may reduce consumer welfare, but decentralization in the high-quality channel hurts consumers more than that in the low-quality channel. Therefore in a competitive environment where firms make both quality and price decisions, channel integration would have significant welfare enhancement effects through the elimination of double marginalization, especially if it happens in the high-quality channel. Moreover, we demonstrate that once quality is endogenized, integration is the only equilibrium of channel structure choices. This suggests that the private incentives of firms may actually benefit consumers but do not have to be in line with the general preference of industry regulation for decentralization.

Optimal Price and Product Quality Decisions in a Distribution Channel

This paper studies a joint pricing and product quality decision problem in a distribution channel, in which a manufacturer sells a product through a retailer. The manufacturer jointly determines the wholesale price and quality of the product, and the retailer determines the retail price. We find that if the marginal revenue function is strictly concave, then the manufacturer chooses a lower product quality level than if selling the product directly to customers. If the marginal revenue function is affine, then the manufacturer's optimal product quality decision is independent of the distribution channel structure. If the marginal revenue function is strictly convex, then the manufacturer chooses a higher product quality level than if selling the product directly to customers.

Vertical Integration with Price‐Setting Competitive Newsvendors*

ABSTRACTThis article addresses the problem of distribution channel design under demand uncertainty. We consider two manufacturers, each producing a substitutable product and selling it through either a decentralized or an integrated retail store, which is modeled as a price‐setting newsvendor. A multiplicative demand function incorporating a random shock term is assumed. Of primary interest is how demand uncertainty and production cost affect the equilibrium distribution channel structure. Results indicate the following: On the one hand, if the random shock term is uniformly distributed on [0, x], then the equilibrium design does not depend on the variance of the shock. On the other hand, if the random shock term is uniformly distributed on [1 −r, 1 +r], then the equilibrium design does depend on the variance of the shock. In particular, an increase in r favors the integrated structure where both channels are integrated and hurts the decentralized configuration where both channels are decentralized. Additionally, we explain the qualitative similarities and differences between the structural properties of the equilibrium distribution channel structure when demand is, and is not, uncertain. We also establish that production cost always favors the decentralized structure, while it hurts the integrated one. One important managerial implication of our study is that, by reducing the number of decisions made in supply chains, the impact of demand uncertainty can be controlled to a certain extent.