Functions of Distribution Channel & The Common Good

Placement or distribution channel decisions are among the most complex and challenging decisions facing a firm.  Each channel system creates a different level of sales and costs.  Once a distribution channel has been chosen, the firm must usually stick with it for a long time.  The chosen channel strongly affects and is affected by, the other elements in the marketing mix.

In the marketing mix for the common good concept the common good values

  • Human dignity
  • Solidarity and social justice
  • Environmental sustainability
  • Transparency and co0determination

are integrated in the marketing process by adding a social and environmental element to it. Those elements are applied in the functions of the distribution channel:

  • Information – market research for planning purposes
  • Promotion – persuasive communications with distributors
  • Contact – communicating with potential customers
  • Matching – complying the offer with the needs of the buyer
  • Negotiation – reaching an agreement on terms and price
  • Physical distribution – transport, sort and storage
  • Financing – funding and costs of the process
  • Risk-taking – the function assumes the risk of carrying out the channel work

This approach entwines the common good values to the traditional functions of the distribution without interrupting the traditional process.

Information

Transparency and co-determination in the process that transfers the information about the company, brand, product’s features, and other important affairs.

Transparency and co-determination in the process that transfers the information about the company, brand, product’s features, and other important affairs.

Promotion

The promotional process while persuasive will also be transparent preventing it of being deceptive. It is no secret that some marketing practices tend to be deceptive in their promotional means in order to attract better or more distribution channels. This might work at the beginning but could end up as detrimental.

A promotional strategy that could appeal to a distributor might involve a social justice or environmental cause instead of being targeted to the distributor. Getting a local supermarket chain as a distributor of an FMCG product could be attracted by giving supplies to groups of need from the local community on the behalf of the supermarket.

“Buy four pallets of flour and get one free” will become “Buy four pallets of flour and we will deliver one free to the local shelter on your behalf”. The word of the good deed the local supermarket has done will spread and attract more customers, strengthen loyalty and elevate brand image.

“Buy four pallets of flour and get one free” will become “Buy four pallets of flour and we will deliver one free to the local shelter on your behalf”. The word of the good deed the local supermarket has done will spread and attract more customers, strengthen loyalty and elevate the brand image.

Contact

Here like most cases in life the rule “it’s who you know not what you know” applies. With modern CRM systems such as HubSpot and Salesforce keeping track of these contacts has become extremely important and also easy.

Here like most cases in life the rule “it’s who you know not what you know” applies. With modern CRM systems such as HubSpot and Salesforce keeping track of these contacts has become extremely important and also easy.

Collecting so much data has become a huge risk of how this data is used. Human dignity and privacy must be respected and gathered information must be compliant with GDPR, CCPA, Privacy Shield and/or any local or internal privacy policies that might apply.

Matching

Matching with the right distributor is probably one of the most important of the distribution functions of the marketing mix. Having the dream collaboration will deliver success to both sides involved. For this to be true transparency and co-determination between and within the involved organisations will guarantee optimal results.

Matching with the right distributor is probably one of the most important of the distribution functions of the marketing mix. Having the dream collaboration will deliver success to both sides involved. For this to be true transparency and co-determination between and within the involved organisations will guarantee optimal results.

Matching in the traditional way usually involves matching the channel by the price. Adding the common good values in the matching criteria will create an even stronger relationship with the chosen distributor. Having a common social or environmental mission will bring the two sides closer and create a bond on a different level.

Negotiation

Price and terms negotiations for reaching an agreement need to be transparent with open collaboration. Gaining trust is the key to success in a long-term business relationship. Transparency and co-determination are the best way to achieve such trust.

Price and terms negotiations for reaching an agreement need to be transparent with an open collaboration. Gaining trust is key to success in a long-term business relationship. Transparency and co-determination are the best way to achieve such trust.

Physical distribution

This is the function where the actual process of delivering and storing the product happens. A lot of resources are speared in this operation. Resources that are becoming scarce and/or are affecting the environment.

Lowering the footprint has become an important part of the distribution of goods in global trade. New more environmental technologies are emerging which should be supported by merchants so the transition process could be accelerated.

Lowering the footprint has become an important part of the distribution of goods in global trade. New more environmental technologies are emerging which should be supported by merchants so the transition process could be accelerated.

Financing

This function addresses the acquiring and using of funds to cover the costs of channel work. Careful planning of the available funds and sales projections will guarantee that the company won’t end up in detrimental dept and put at jobs at risk.

This function addresses the acquiring and using of funds to cover the costs of channel work. A careful planning of the available funds and sales projections will guarantee that the company won’t end up in detrimental dept and put at jobs at risk.

Risk taking

The distribution channel isn’t all about transporting. Sometimes, distributors have to take risk of buying a company’s product without knowing whether the product would sell or not. Again a careful planning and market research will go a long way and prevent the loss of finance and possibly jobs.

The distribution channel isn’t all about transporting. Sometimes, distributors have to take risk of buying a company’s product without knowing whether the product would sell or not. Again a careful planning and market research will go a long way and prevent the loss of finance and possibly jobs.

Adding the common good values to the functions of the distribution channels in a lot ways is also common sense. It adds ethical values without interrupting the traditional objective of the business.

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