Indirect Distribution Channels Research Articles

Conceptual Model for Retail Distribution in Nanostores: The case of the Southwest of Barranquilla, Colombia

This article designs a conceptual model for the procurement and distribution processes in nanostores in the southwest of Barran-quilla, Colombia considering 256 nanostores. The data collection involved identifying the nanostores through a visit to the area and creating a data collection instrument with specific questions covering various variables. As a result of the model, the procurement process comprises stages such as ordering, order processing, preparation and dispatch, distribution, payment, return, and after-sales. The findings show that nanostores primarily use indirect distribution channels, establishing relationships with suppliers and placing orders directly or through sales agents. Based on the research findings, the article suggests implementing digital marketing platforms to facilitate order placement and delivery for nanostore owners, reducing their transportation costs and improving the condition of products received. This study contributes to understanding procurement and distribution dynamics in nanostores, providing valuable insights for nanostore owners, policymakers, and researchers, improving the operations and competitiveness of nanostores, benefiting both the local economy and the broader retail sector.

STRATEGI PENERAPAN SALURAN DISTRIBUSI UMKM DI TANGERANG DALAM MENGHADAPI PERSAINGAN

This research was conducted to find out how the selection of distribution channels used in one of SMEs in the Tangerang area in marketing their products so that the product quickly reaches the hands of consumers, and to know how the functions in the distribution channels carried out by MSMEs through the application of Multi-Channel Marketing channels. The number of informants of this study is as many as 3 people consisting of Owner, Marketing, SPG, to 3. The method used is qualitative which is descriptive. The research sample used is purposive sampling. Based on the results of the study, that the selection of distribution channels used is a direct-distribution channel and indirect distribution channels where SMEs not only market their products directly to consumers and but also market their products through intermediaries, such intermediaries are resellers located in all regions that already have cooperation with SMEs, and for the functions of distribution channels carried out by SMEs are carried out well and in accordance with the procedure.

ANALYSIS OF MARKETING STRATEGY IN AN EFFORT TO ATTRACT CONSUMER BUYING INTEREST ON MSME PEYEK SARI MENIR GUNUNG KIDUL

Marketing strategy has an important role for Micro, Small and Medium Enterprises (MSMEs). The important role of the right marketing strategy will be able to attract consumers to buy the products. Currently, MSMEs in Indonesia are experiencing very rapid development, especially in the culinary field. "Sari Menir" is a MSME that produces peyek snack which is located at RT005/RW002, Plembon Lor, Logandeng, Playen, Gunungkidul, Yogyakarta. The purpose of this study is to analyze the implementation of marketing strategies in an effort to attract consumer buying interest in Sari Menir MSME. This study uses a descriptive approach with qualitative methods. The technique of determining the place using purposive area method. The research source was selected by purposive sampling method. The resource person in this study were Mrs Ratna Anjarwati as the manager and the daughter of MSME Sari Menir founder. Data collection techniques using interview and documentation methods. The data analysis technique was carried out through stages of data reduction, data display, and drawing conclusions. The results showed that Sari Menir MSME using the marketing mix strategy in an effort to attract consumers buying interest. The marketing mix strategy carried out by Sari Menir MSME as follows: Maintaining product quality by using good quality raw materials; Set the right and appropriate price; Using direct and indirect distribution channels to reach strategic locations; Take part in exhibitions and apply word of mouth as promotional advice.

When prohibiting wholesale price-parity agreements may harm consumers

We study the competitive and welfare effects of wholesale price-parity agreements. These contracts prevent a monopolist, who sells its product to final consumers both directly and indirectly through alternative distribution channels, to charge different input (wholesale) prices to competing intermediaries (e.g., platforms). In a multi-channel and multi-layered industry, organized as an agency business model, we find that the monopolist and the intermediaries do not necessarily have aligned incentives concerning the introduction of wholesale price-parity. While these agreements always hurt the monopolist, they may benefit the intermediaries when competition between the direct and the indirect distribution channels is sufficiently intense. Moreover, when this is the case, in contrast to retail price-parity agreements that typically reduce consumer welfare, wholesale price-parity may also benefit consumers.

The Simple Economics of Wholesale Price-Parity Agreements: The Case of the Airline Tickets Distribution Industry*

Abstract This paper clarifies the differences between retail and wholesale price-parity agreements in vertical industries. In contrast to traditional wide and narrow retail price-parity arrangements, the competitive effects of wholesale price-parity depend on the complexity of the vertical supply chain, the business model operated by sellers and distributors, and the strength of competition between direct and indirect distribution channels. While retail price-parity agreements are almost always anticompetitive, wholesale price-parity agreements may positively affect consumer welfare when direct and indirect distribution channels are close substitutes. To demonstrate the relevance of our analysis for competition policy, we illustrate our findings by referring to an industry that has recently attracted policy and regulatory interest on both sides of the Atlantic: the airline ticket distribution industry. We find that, in this industry, while wholesale price-parity agreements always harm airlines, Global Distribution Systems (GDSs) have preferences more aligned with consumers: when consumers benefit from these provisions, GDSs benefit too. JEL: K21, L13, L40

Analysis of Risk Factors in an Indirect Distribution Channel

Purpose: The article aims to present an analysis of risk factors in an indirect distribution channel. Design/Methodology/Approach: The research methodology used are indicators that enable the analysis of risk factors in the distribution channel. The results obtained by the FMEA method enabled the use of the preventive mechanisms method in the enterprise. The purpose of using the FMEA method is to characterize the most dangerous risk factors in the surveyed entities, which will be most felt by the organization in enterprises. Findings: Numerous risk factors can arise in a network of indirect distribution channels. The applied FMEA method identified which risk factors are the most dangerous for the organization regarding probability, detectability, and significance of the risk factor. The results obtained from the FMEA method made it possible to develop preventive mechanisms for the examined company and thus reduce the possibility of risk factors. Practical Implications: Over time, new risk factors may appear, so you should constantly monitor and analyze disturbances using the FMEA method that allows you to manage risk factors. Enterprises that are part of an indirect distribution channel should develop preventive mechanisms to ensure an efficiently functioning organization. Originality/value: The studies showed that the magnitude of the effect and the probability of risk factors depend on the first activity performed in the distribution network up to the last link of the supply chain. It is also influenced by the continuity of the consequences of a given occurrence of a risk factor. The obtained data is the basis for risk management for distribution entities.

When Prohibiting Wholesale Price-Parity Agreements Harms Consumers

We study the competitive and welfare effects of wholesale price-parity agreements. These contracts prevent a monopolist, who sells its product to final consumers both directly and indirectly through alternative distribution channels, to charge different input (wholesale) prices to competing intermediaries (e.g., platforms). In a multi-channel and multi-layered industry, organized as an agency business model, we find that the monopolist and the intermediaries do not necessarily have aligned incentives concerning the introduction of wholesale price-parity. While these agreements always hurt the monopolist, they may benefit the intermediaries when competition between the direct and the indirect distribution channels is sufficiently intense. Moreover, when this is the case, in contrast to retail price-parity agreements that typically reduce consumer welfare, wholesale price-parity benefits consumers.

Class waivers to the non-manufacturer rule: Effects on small business utilization in public procurement

ABSTRACT Public procurement officials frequently purchase through indirect marketing and distribution channels, separating buyers from manufacturers. Normally to fulfill small business set-aside requirements, product manufacturers must also be a small business. When no small business manufacturers exist for a product, class waivers to the non-manufacturer rule (NMR) allow small business distributors and wholesalers to provide products that are not made by small businesses. This study models the effectiveness of class NMR waivers for increasing small business utilization. A time series panel found that NMR waivers increased small business utilization in industries characterized by low levels of firm concentration and price inflation.

Price and Content Platform Parity: A Tale of Two Industries

This paper surveys the most recent contributions on the competitive effects of parity provisions in vertical industries. We explain that those effects depend on the scope of parity, the complexity of the vertical supply chain, the business model operated by sellers and distributors, and the strength of competition between direct and indirect distribution channels. We explain why ‘price’ parity agreements (contractual provisions mandating equal end-prices across distribution channels) are almost always anti-competitive. Yet, in complex supply chains, ‘content’ parity agreements (contractual provisions preventing upstream suppliers from offering different products through different platforms) may have positive effects on consumer welfare. This is more likely when distributors act as resellers and when direct and indirect distribution channels are close substitutes. To demonstrate the relevance of our analysis of the literature for competition policy, we apply our findings to two seemingly similar but, it turns out, very different distribution industries: hotels and airlines.

Transaction costs and capability factors in dual or indirect distribution channel selection: An empirical analysis of Japanese manufacturers

This study focuses on manufacturers' selection of dual or indirect channels. Although several previous studies based on transaction cost theory investigate transaction cost factors in choosing dual or indirect channels mainly in the United States, this study examines transaction costs and capability factors for such a choice in Japan. The relationships are tested with survey data from Japanese industrial goods manufacturers (n = 429). Compared to previous studies, this study presents three important findings. First, unlike previous studies, two transaction cost factors—asset specificity and behavioral uncertainty—do not exhibit the relationships predicted by transaction cost theory. Interestingly, asset specificity is negatively related to the use of dual channels. Second, two capability factors not assessed in prior studies—market orientation capabilities and differences in channel members' capabilities—exhibit significant positive relationships with the selection of dual channels. Third, capability factors are found to be more important than transaction cost factors in explaining dual or indirect channels in Japan. This study also discusses the influence of the Japanese channel context on the results.

La Teoría de la comunicación de marketing en Dove Dermo Aclarant

La motivación como factor psicológico en Dove Dermo Aclarant ha permitido impulsar al consumidor a la compra del producto, Dove ha utilizado la teoría de Maslow enfocándose principalmente en la necesidad de reconocimiento o estima, logrando que se sienta bien con el producto y generando una imagen positiva en el consumidor. Siendo estos factores importantes que han permitido motivar a su compra. Por consiguiente, el producto ha tenido que estar a disposición del consumidor, y Dove al ser reconocida como una empresa multinacional que lidera el mercado de consumo masivo, ha utilizado la intervención de un canal de distribución indirecto que le ha permitido satisfacer la demanda del producto y llegar al consumidor final en menor tiempo. Al lograr motivar al consumidor y al hacer que el producto llegue de manera rápida y oportuna, Dove se ha posicionado en la mente del consumidor como una marca de belleza, autoestima y cuidado personal, su principal segmento mujeres de entre 20 y 50 años. Para complementar y lograr la aceptación total en el mercado, Dove ha utilizado herramientas de comunicación muy importantes: la publicidad que le ha permitido llegar al público objetivo a través de los distintos medios de comunicación, y su vez, mediante la utilización de recursos emocionales, logrando difundir un mensaje positivo y permitiendo establecer un lazo emocional entre el cliente y la marca. También ha utilizado el ATL como estrategia de comunicación para dar a conocer el producto, a través de medios de comunicación masivos logrando mayor impacto en el público. A la vez es importante mencionar que los medios de comunicación utilizados para el desarrollo del estudio fue la TV.

REQUIREMENTS FOR INTERMEDIARIES AND ADVISORS IN THE AREA OF MORTGAGES RESULTING FROM MORTGAGE CREDIT DIRECTIVE- IMPLICATIONS FOR POLAND

The dynamic development of the mortgage market, especially in the period before the current financial crisis, revealed that within the EU there are local mortgage credit markets and that it is necessary to harmonize the rules of the system and consumer protection within the Community. The intention of the creators of the Mortgage Credit Directive was to organize the mortgage lending market for residential purposes and make it transparent, as well as increase the safety of the consumer credit market, along the lines of what took place earlier in the consumer credit market regulations (The Consumer Credit Directives no. 2008/48/EC and earlier no. 87/102/EEC). The Mortgage Credit Directive implies for lenders - credit institutions to act at every stage of the lending process with respect to the consumer’s interest and to provide them with adequate services for their needs. Due to the large role of indirect distribution channels of mortgages by banks there are certain requirements for intermediaries, brokers and credit advisors. The implementation term of the Directive, appointed for March 2016, implies action to be taken in order to implement the provisions of this Directive into Polish law. The legislative process is being conducted by the Ministry of Finance and supported by the Group on implementation of the Mortgage Credit Directive operating with the Council of Financial Market Development.

IATA's new distribution capability and its impact on traditional forms of cooperation in the airline industry

Intensified competition, stagnating ticket sales and increasing operational costs cause airlines to seek for new sources of revenue. Ancillary services and complementing offers are therefore becoming crucial in the airline industry. Particularly in indirect distribution channels, the presentation of products and services, generating extra revenue, depends on the capabilities of the GDS. 'new distribution capability' (NDC) is a technology which will fundamentally change traditional GDS-based distribution processes used for decades. The quintessence of the NDC concept is to position the airline in the centre of an interactive offer-generation process. This impacts commercial cooperations with partner airlines. Nevertheless established forms of cooperations (Interlining/Code Sharing) will basically be maintained. Dynamic interaction between the partners enables more flexible collaboration which will significantly influence forms of cooperation. This affects cooperations within the framework of 'Global Airline Alliances'. Specific consequences and actual implications of NDC cannot yet be defined in detail.

Requirements for Intermediaries and Advisors in the Area of Mortgages Resulting from Mortgage Credit Directive– Implications for Poland

Abstract The dynamic development of the mortgage market, especially in the period before the current financial crisis, revealed that within the EU there are local mortgage credit markets and that it is necessary to harmonize the rules of the system and consumer protection within the Community. The intention of the creators of the Mortgage Credit Directive was to organize the mortgage lending market for residential purposes and make it transparent, as well as increase the safety of the consumer credit market, along the lines of what took place earlier in the consumer credit market regulations (The Consumer Credit Directives no. 2008/48/EC and earlier no. 87/102/EEC). The Mortgage Credit Directive implies for lenders - credit institutions to act at every stage of the lending process with respect to the consumer’s interest and to provide them with adequate services for their needs. Due to the large role of indirect distribution channels of mortgages by banks there are certain requirements for intermediaries, brokers and credit advisors. The implementation term of the Directive, appointed for March 2016, implies action to be taken in order to implement the provisions of this Directive into Polish law. The legislative process is being conducted by the Ministry of Finance and supported by the Group on implementation of the Mortgage Credit Directive operating with the Council of Financial Market Development.

Direct or indirect channel structures. Evaluating the impact of channel governance structure on export performance

The purpose of the study is to examine the impact of channel governance structure on export performance ex post. The study surveyed 105 foreign buyers of crane services from five countries and used MANOVA to test the effects of channel governance structure on export short term and long term performance outcomes. The study found that short term profitability was higher for indirect distribution channel arrangements while longer term outcomes of buyer economic satisfaction and loyalty were higher for direct. The results suggest that exporters are more likely to achieve immediate financial objectives with the support from indirect channels; however, long term objectives are more effectively achieved through direct channels.

Development of a New Direct Marketing Channel in the Chinese Rural Market

Distribution channel decisions involve long-term commitments with other firms that are very difficult to change or replace. In particular, marketing channel decisions in emerging markets are much more complicated due to unfamiliar conditions and problems such as lack of market data and distribution systems. Therefore, when a company considers changing or introducing a marketing channel in an area, it is much more difficult to judge its effectiveness in an emerging market than in a developed market. In this study, we investigate the development process of a new direct marketing channel of Hongfu Fertilizer Company (hereafter Hongfu), a medium-sized Chinese fertilizer manufacturer, and propose an approach to test the feasibility of this new marketing channel in the Chinese rural market. We measure the effectiveness of Hongfu`s new marketing channel from two perspectives: i) from customers` perspective through direct responses of farmers, which showed that a new channel can increase the convenience and lower the purchasing costs for the farmers, and ii) from the company`s perspective, by calculating the incremental profit of the company using the expansion factor (T/Q) method, which suggested that the execution of Hongfu`s strategy to expand a new marketing channel will result in an increase in profits. The results of this study contribute to the development of a methodology to test the feasibility of a new direct marketing channel in the emerging markets such as the Chinese rural market. Traditional and indirect distribution channels in emerging markets are generally not very efficient and difficult to change. Especially, in emerging markets, like the Chinese rural market, the methods of testing channel feasibility must be different from that of developed markets. Considering market situations, market experiments can be more effective then systematic market surveys in testing channel feasibility in emerging markets. This study implies that managers must learn to cope with a transition from the traditional marketing channels in emerging markets. With the development in farmers` understanding of marketing concept, the transition from traditional marketing channel is unavoidable for all firms. Farmers in China are generally very conservative, however, their buying behaviors are changing. Therefore, fertilizer companies should try to adjust in accordance with farmers` demand characteristics that the efforts to meet the economic needs of farmers with new marketing channels as well as trust building are critical in the near future.

FEATURES OF THE FORMATION OF CHANNELS IN THE LOGISTICS AND DISTRIBUTION SYSTEM

The processes of globalization in the global economy are increasing their presence in all spheres of the social production, including the sphere of circulation. Practice shows that the organization of the distribution system is characterized by the presence of many participants in supply chains, a variety of conditions and forms of goods movement. In turn, this requires the integration and consolidation of the participants in the supply chain based on the concept of logistics. Characteristic of the formation of logistics channels is connected, first of all, with the difference in the essence of the context of:channels of distribution and logistics channel. The fundamental difference is that the logistics channel includes all participants in the process of goods movement, from the extraction of raw materials to distribution of finished products , while the distribution channel , applies only to the final stage of the process of product distribution. Now replace the traditional channels of distribution are coming modern sale channels, using different forms of remote commerce and vertical marketing systems . When designing the system of distribution of goods in the first place put forward a decision on the structure of the system, ie the number of channels and their level is further defined the specific composition of the channels. At the design stage of the distribution system it is rather about the choice of distribution channels . In turn, the logistics channel directly affects the speed , time, traffic efficiency of movement and safety of the material flow as well as its information and financial support. In designing the distribution system than indirect distribution channels should be used straight channels with the use of various forms of remote commerce. DOI: http://dx.doi.org/10.12731/2227-930X-2013-1-1

Who Owns the Customer? Disentangling Customer Loyalty in Indirect Distribution Channels

Increasing levels of vertical competition make the possession of end customers' loyalty an issue of major concern for brand manufacturers and distributors alike. While we can rely on a solid body of knowledge on the drivers and outcomes of customer loyalty, empirical insights into the interplay between different forms of customer loyalty in channels of distribution remain limited, ambiguous and void of theoretical explanations. Based on a nationwide survey of customers in a detail‐intensive industry in the Netherlands and drawing on information integration theory and balance theory, this research identifies a positive and unidirectional spillover effect from customers' brand loyalty to distributor loyalty. Hence, distributors can “free ride” on a brand manufacturer's investments in customer loyalty. From the brand manufacturer's perspective, the loyalty spillover can have positive or negative consequences, depending on the level of vertical competition among channel members. While the spillover increases end customers' loyalty toward the channel, it decreases the brand manufacturer's odds of keeping end customers when it comes to the contest between a brand manufacturer and its distributor.

À la carte pricing and price elasticity of demand in air travel

Global distribution systems (GDSs) and online travel agencies (OTAs) have been providing critical intermediation services for the air travel services industry. Their systems services have eroded the airlines' revenue by encouraging consumers to do price comparison-based purchases though, which has caused the commoditization of air travel services. The airlines have begun to adopt à la carte pricing mechanisms in their direct distribution channel, especially through their Web sites. This way, they can provide travelers with an array of information for different airline product bundles and the flexibility to customize different bundles. This mechanism design may allow airlines to decommoditize their services in the minds of consumers. We analyze two years of data from a large international airline that sold airline tickets via several different direct and indirect distribution channels. Our results suggest that demand in the à la carte channel as a whole is less price-elastic. The results for price elasticity for different market segments and bundle types across channels were not altogether consistent with our predictions though. We find that, for some branded bundles of services, price elasticity is lower in the à la carte channel, and for others it is higher. We discuss the implications for managers and the design of à la carte selling mechanisms.

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