Marketing and Distribution Channels
American Intercontinental University Unit 3 Individual Project MKTG 205 – Principles of Marketing June 29, 2011 Abstract This paper gives an overview of distribution channels; Channel Levels such as: Direct vs. Indirect Channel Organizations such as Conventional Vertical, Horizontal and Multichannel Marketing Systems. It also, explains my target market needs at the Hershey Company. There is also a brief description of how many channel members the company needs and why they need them. Hershey Company Introduction The Hershey Company is one of the largest manufacturers of chocolate products.
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Even though, the Hershey Company has done greatly over the past years there are different measures that this company have to take in order to be ran successfully. There are also distribution channels and target markets that has a major impact on the Hershey Company. Distribution Overview Channel Levels are very important when getting products to a market place so that business can continue successfully. So there are two distinctive channels that exist so this can happen. A direct channel and an indirect channel. Many companies can run well enough using only wholesalers and dealers.
They use three channel systems. When they use more than three this is indirect marketers. The Hershey chocolate bar requires more distribution channels. Distribution channels are needed to sell large quantities of Hershey’s chocolate bars. Channel Levels are very important when getting products to a market place so that businesses can continue successfully so there two distribution channels that exist so this can happen. A direct channel is where products and goods are sold directly to the customers and this makes a major cut of costs ecause there are no other companies and agencies involved. An indirect channel is used when business do not sale directly to consumers. Since technology is better these methods of distribution has made life a lot easier because with computers and digital systems direct and indirect distribution is way faster and easier. Analyze Target Market’s Needs in Distribution Channels Instead of sending an offer to a large generalized group of people it is much effective to tailor your services to a particular market segment and then promote your offer to that segment.
Once you identify your target market you can design your marketing company to achieve the best results at the best cost. Target Marketing makes better use of distribution dollars as well as enabling markets to concentrate on developing working relationship with department store chains or developing a business –to – business sales force but not both. (Kervin, 2011). Determine Channel Members with Explanation Intensive distribution is a method of distribution where products are given maximum exposure through positioning in as many outlets as possible. (business. com. 2011).
Exclusive distribution is a situation where suppliers and distribution enter into an exclusive agreement that allows the main distributor to sell a specific product. (business. com, 2011). Selective distribution is the distribution of products only to those wholesalers or retailers who agree to sell the product for no less than a certain price. (business. com) Discuss How Many Channel Members with Explanation I choose the intensive distribution for the Hershey Company because it is usually required where customers have all kind of chocolate bars to choose from. So, this way if one candy is not available then the will choose the next one.
Distribution Channels can be organized in different ways some are set rules and some are free flowing. A conventional distribution channel consists of one or more independent producers, wholesalers and retailers. These distribution channels are weak and probably not give its best quality to customers. (Channels of Distribution, 2011). Vertical marketing system (VMS) is a distribution channel structure in which producers, wholesalers and retailers act as a unified system. So, one members channel owns the other and has a contract with them or has so much power that they will all cooperate.
This is a much stronger distribution channel. (Channels of Distribution, 2011). A horizontal marketing system is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity. When these companies work together they combine their finances, production and resources to accomplish more than any one company. (Channels of Distribution, 2011). Multichannel Distribution Systems is a distribution system which a single firm sets up two or more marketing channels to reach one or more customers segments. Kervin, 2011). Conclusion As you can see marketing at Hershey Company requires many steps to be run successfully. You must be able to analyze target markets, and have proper knowledge of what distribution channels should be used while running this business. References Business Dictionary. com. Retrieved (2011 29, June) http://www. business. com. /definition/distribution-channel Marketing . Edition 10, (Hill, K. ), McGraw-Hill-2011 Unit 13: Channels of Distribution, Logics and wholesaling . Retrieved http://www2. nscc. edu/