Essay Distribution Channel

7280 Words Oct 19th, 2008 30 Pages
Airline Product Distribution
In business, the term “distribution” refers broadly to the process of delivering the product to the customer. For airlines, the product is the ticket or cargo waybill. Driven by rising costs and competitive pressures, and empowered by new technologies, carriers have continued to make headway in expanding their distribution offerings to business and non-business consumers. In doing so, the airlines have increased productivity and reduced expenses.
Capturing costs associated with the distribution of an airline ticket is inherently subjective, requiring the analyst to decide what expenses (e.g., sales force, distribution planning staff, reservations agents, call center communications and rent, city ticket
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For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors.
Producers may also feel that they do not possess the customer-based skills to distribute their products. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers.
Another factor is the extent to which producers want to maintain control over how, to whom and at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control over the final consumer price, since the retailer sets the price and any relevant discounts or promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. Direct distribution gives a producer much more control over these issues. Product factors Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers.
Distribution Intensity
There are three broad options - intensive, selective and exclusive distribution:

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