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Vertical Marketing Systems involve suppliers and intermediaries working closely together instead of against each other. The retailer recommends and offers your pen as superior.
They plan production and delivery schedules, quality levels,promotions and sometimes prices. A retailer actively solicits business for you by asking customers buying other products to come and have a look at the exquisite ‘Grand Pen’. ‘Mindshare’, as it is called in the USA, has to do with how important your product is in the distributor’s mind relative to the other lines they carry.
Distribution Channels is important because: Firstly, it affects sales – if it’s not available it can’t be sold. Secondly, distribution affects profits and competitiveness since it can contribute up to 50 percent of the final selling price of some goods.This can speed up the time taken to penetrate the market. See Southwestern Bell’s alliance with Granada TV Shops in the Hall Of Fame. Who can handle outbound logistics, marketing and sales, and servicing? Most of these apply to agents as much as distributors and retailers. Positive motivators, like sales contests are preferred to negative motivators like sanctions such as reduced discounts and the threat of terminating the relationship.Can the supplier afford to deliver small quantities, can it provide more trucks, can its sales force ‘push’ products into national retail chains? A positive reward works better than a negative punishment.The first strategic decision is whether the distribution is to be: Intensive (with mass distribution into all outlets as in the case of confectionery); Selective (with carefully chosen distributors e.g.speciality goods such as car repair kits); or Exclusive (with distribution restricted to upmarket outlets, as in the case of Gucci clothes).