Short Essay: Dual-Channel Distribution Strategy
JIANG Chunyu 1155080917
Ø What is “Dual-Channel Distribution Strategy”?
Dual distribution describes a wide variety of marketing
arrangements by which the manufacturer or wholesalers uses more than one
channel simultaneously to reach the end user. They may sell directly to the end
users as well as sell to other companies for resale. It is now becoming very
common for businesses to engage a dual distribution strategy.
Ø Why is it important?
In today’s global
economy, many products reach the maturity stage in their product lifecycle very
quickly, which means that sales often reach the point at which growth stops and
sales begin to decline. In response to this, many businesses begin to extend
their product lifecycle, increase sales volume, and increase market share,
simply by using a dual distribution strategy.
Ø Potential Risks
There are risks
associated with a dual channel distribution strategy. It can result in ill-feelings
between channel members – usually at a vertical level. This is known as
vertical channel conflict.
Therefore, an analysis of risks versus benefits should be conducted. Besides,
it is wise to consider the possibility that a dual
distribution strategy sometimes reduces sales from
one’s reseller channels. In other words, the company’s sales volume may
not increase, although its effort and cost to achieve existing levels of sales
volume may drastically spike.
Ø Example: Apple.Inc
When Apple products are manufactured, they
are sent off to wholesalers and, from there, to retailers for direct sale to
customers. Apple products go to physical stores of certified retailers, online
retailers, and to Apple’s own physical stores. The tech giant sells
its extensive product range directly to ultimate consumers from its own retail
stores and online store. In addition, it also supplies its products using an
indirect distribution strategy. Using this channel, Apple sells its products to
selected retailers, such as Telstra Shops, Optus, Myer, Officeworks and Harvey
Norman. These retailers then on-sell their products to ultimate
consumers.
(Apple’s Distribution
Structure)
(1) Apple’s B2C Channel
Apple Company offers two main
channels for B2C selling.
The first is a psychical store /
stand-alone store – a physical location for consumers to visit. Stand-alone or
shopping malls, usually offers consumers the chance to touch, see or even try
the products. The major disadvantages of the stand-alone or retail store is the
cost of a rent, build, occupy and train the employees, and other liabilities
related to that.
The other one is the Internet/online
store. This channel rapidly increased Apple’s selling. Selling through the internet
reduces costs of the company and increases the consumer’s access to information
and allowing them to find the most competitive price for a product or service.
(2) Apple’s B2B Channel
A sales and distribution channel
comes about when a company chooses to replace or supplement its direct sales
force with indirect organizations. These organizations with whom Apple
collaborates can be value-added resellers, distributors or partners, and
together those companies with Apple Company “create a channel”.
Apple builds more and more
different channels with businesses. Apple collaborates with small and medium
enterprises because of added value reseller. Not to sell through direct sales
forces due to small volume of sales. Another advantage of this alliance is a
high level of service, and the important benefit for Apple is the channel with
a high level of control from Apple. Enterprises and government build channel
with Apple as well. Apple has special departments which are responsible for
government and federal clients. Moreover, Apple offers special programs that
provide solutions for employees of the U.S federal government as well as for a
military personal and their families who want to purchase Apple products for
personal use.
Distribution strategies are a
major key to success, which are maximizing sales and profits. Apple is benefited
from its dual-channel distribution strategy. It is utilizing from distribution
strategies by using multiple channels, especially including direct or
semi-direct sales and different distribution channels for different products.
By pursuing this strategy, Apple increases its market coverage, lowers channel
cost and provides more customized selling.
Reference
Using a dual distribution strategy
to grow your business
How the Apple Sales to You: Taking
a Look Inside Apple's Marketing Strategies
https://www.linkedin.com/pulse/how-apple-sales-you-taking-look-inside-apples-marketing-wilfred-brown
Apple’s Sales and channel strategy
– key to its success
No comments:
Post a Comment