Tema 5 Distribution-channel PDF

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Tema 5: DISTRIBUTION AND RETAILING IN TOURISM INDUSTRY The 4 Ps of Marketing Mix Product – Place – Price – Promotion Coca cola adapted its distribution system in a very efficient way. That’s why nowadays we can find it in most places. The tourism industry comprises many sectors. Under the umbrella of tourism we can find: restaurants, hospitality, transports… companies.  It’s very important to define very well the distribution strategy. INTRODUCTION: Goods are produced, services are performed. Features: Services are: - Inseparability bc the act of providing the service must be simultaneous with the consumption - Intangibility they cannot be evaluated, targeted or measured before they’re bought. - Variable The provision of services can be different anytime. Instead of products, where the quality is always the same. - Services are perishable services cannot be stored, so it’s important for companies trying to sell them. This features creates the following needs:  Need to sell in advance.  Need to involve other people and organisation in the provision of their services. This could be problematic  If the other org fails this could (repercutir) in our company. SUPPLY CHAIN Set of upstream and downstream partners. 

Upstream partners are firms that supply what is needed to create a product or service  considers all distributors.

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Downstream partners connect the firm with its customers

We can see the supply chain as a make and sell view Demand chain sense and respond view Value Delivery Network: where all parties partner with each other to improve the performance of the entire system. In order to improve the performance of the chain and obtain at all a good performance. DISTRIBUTION CHANNEL: System is the particular SET(in order to have a channel distribution you need at least two) of Interdependent organizations (these depends one each other’s) involved in the process of making a product or service available for use or consumption by the consumers. MARKET CHANNEL STRATEGY: The set of activities focused on designing and managing a distribution channel to enhance a firm’s sustainable competitive advantage and financial performance. Once a company decides to have a distribution, its necessary to have a market channel strategy. 2 strategies in order to take advantage of the competitors: Cost reductionMinimization de costs Service improvement Differentiation.  Cia needs to find different ways to deliver the product to the costumer. MARKETING CONCEPT: consists of three components:  Creating Value: perceived benefits known as customer value.  Communicating value: the costumer has to know this value.  Distribution: delivering of this value to the costumers. Set of activities and processes that are useful to create value, to communicate the value and to distribute this value.

The distribution process within the marketing exchange The distribution process has the responsibility to transfer ??? And add a value to the product that is delivered. Place utility: special transformations that made the products available in the convenient place for the customers Time utility: all the temporal transformations that enable costumers to buy the products when they want (in every moment of the day). Information utility: when distributors deliver products they give info about this product, its features… If companies involve other distributors, can add these kind of utilities and benefits.  Members of the distribution channel perform many key functions.  Transform the assortment of products into assortments wanted by costumers.  Bridge the major time, place and possession gaps that separate goods and services for users. Distribution channel flows All the members in the channel are connected by several types of flows.  Physical flow of products: physical movements that the product follows in the distribution channels (manufacture…)  Flow of ownership: transmission of this title: ProducersDistributionConsumer  Payment flow: money exchanged in order to acquire the product.  Info flow: Info and communication that are delivered inside the channel  Promotion flow: distributors will be pushed and will try to communicate the most important features of products to the final consumer.  Matching: distributors fit the offers to the need of costumers.  Negotiation: when distributors promote, they also negociate on price, service, the delivery, the storing…  Physical distribution: Company need to decide which is the best way of transport for the physical distribution (due to it’s very expensive).  Financing: there is the payment flow, company need the help of financial institutions  Risk taking: when costumers buy products they usually buy it from the last seller. This seller will be the owner of the products. From producers points of view this is good but they could assume an additional risk. The rationale for distribution channels Selling through intermediaries usually is more efficient and cost effective than direct sales. 1. Reduction of functional discrepancies: 2. Better assortment: You can see big assortment of products in a short space. 3. Better service: 4. Contractual efficiency:

Levels of distribution channel Each layer of distribution intermediaries that performs some work in bringing the product and its ownership closer to the final buyer is a channel level. The number of intermediary levels indicates the length of the channel. Cuntos mas intermediaries, más largo sera el proceso de distribución. Configuration of a distribution cannel

From the producer’s point of view, a greater number of levels means:  Less control and greater channel complexity -

Direct distribution system Without the outside assistance of any independent intermediaries. Indirect distribution system With the assistance of independent intermediaries. Long channel Typical of consumer goods Short channel Typical of industrial goods.

Types of intermediaries (Middle Channel Members)  Wholesalers: Sell to other channel intermediaries and hold the possession title of the inventory.  Retailers: Sell directly to individual consumers, take the ownership of the goods and their role is highly increased in today global economy.  Agents: A wholesaler who doesn’t take title to goods and performs only a few functions.

GDS(Global Distribution System) : are computerized reservation system that enable automated transactions between multiple vendors of services and travel agents in order to provide travel related services to the end consumers. Services are across all travel sectors: Airline or hotel reservations, car rentals…

Traditional Travel Agents Main tasks:  Reservations and ticketing, information provision, fares and charges’ calculation, client assistance on the design of itineraries  Advantages  Their number has been decreasing in recent years

OTAs (Online Travel Agencies) One way of dividing OTAs is into:  Non-opaque OTAs  Opaque OTAs: o do not disclose the specific service provider until the service is purchased in a nonrefundable transaction o Opaque inventory o Discounted prices Priceline.com  2014 Sales: $50.3 billion Employees: 12,700  The Priceline Group includes six major brands: Booking.com (online hotel reservation. service), Priceline.com (reservations for travel products), Kayak (reservations for travel products), Agoda.com (Asia-based online hotel reservation service), RentalCars.com (car rental reservations) and OpenTable.com (online real-time restaurant reservations). Conditions:  All rooms will accommodate up to 2 people. Special requests should be requested through your confirmed hotel and cannot be guaranteed by Priceline.  Priceline will immediately charge your credit card the total room charges upon booking.  Reservation is guaranteed for date of check-in only.  Rooms purchased through Priceline Express Deals cannot be cancelled, changed or transferred and refunds are not allowed.  Hotel Name will be revealed upon booking. Expedia Inc  Market Leader  2014 sales: $50.4 billion Employees: 18,210 (full and part-time)  90 % of sales from leisure, 10% business.  Owns brands: Expedia (Expedia.com), Hotels.com, Hotwire.com, Expedia Affiliate Network, Classic Vacations, Expedia Local Expert, Expedia CruiseShipCenters, Egencia, eLong, Venere, Net SpA, Trivago GmbH, Wotif Group, Travelocity and CarRentals.com

CHANNEL BEHAVIOR AND ORGANIZATION Distribution channels consist of firm that have partnered for their common good with each member playing a specialized role  Cooperating can sometimes mean giving up individual company goals Channel Conflict: Occurs when one member’s actions preclude another channel member from achieving its goal, roles or rewards.

CDSs (Convetional DistributionSystems): Consist of one or more independent producers, wholesales, and retailers, each separate business, that seek to maximize its own profits and behve independently as separate business.

VMSs (Co-Ordinated Vertical Marketing Systems): Consist of producers, wholesalers, and retailers acting as a unified system. These systems provide a channel leadership.

Types of VMS:  Corporate VMS: combine successive stages of production and distribution under single ownership. A particular firm achieves coordination and control through corporate ownership. Ex. Zara  Contractual VMS: consist of independent firms at different levels of distribution channel who join together through contracts Franchising Contractual VMS  Alliances. o Franchising: is a contractual vertical marketing system in which a channel member, called a franchisor confers the right to engage in offering, selling, or distributing goods or services under a specific marketing format. Ex. Burger, Marriott…  Features: Brand name / high quality, Universal need, Full transfer of know-how, Initial and continuing service, Reporting and information system, Fees and legal provisions. o Alliances:  formed when two or more organizations combine resources through a contractual agreement  Allows them to overcome each other’s weaknesses by benefiting from one another’s strengths.  Represents a quick way to enter an international market Ex. Alliance between Sheraton Hotel and Welcome Group for entering Indian Market.  Administered VMS: is a VMS that coordinates successive stages of distribution channel through the size and power (brand reputation) of one of the parties. Ex. P&G...