Marketing Strategy – Distribution
The third major marketing mix tool is distribution. The distribution channel is “path through which goods and services travel from the vendor to the consumer or payments for those products travel from the consumer to the vendor” (Investopedia.com, n.d., para.1). Thus, the distribution channel can work in multiple ways, it can work as direct transaction from the vendor to the consumer or it may include several interconnected intermediaries along the way, which can include wholesalers, distributors, agents and retailers. These intermediaries receive the product or service at one pricing point and continually move to the next pricing point, until it reaches the final buyer.
Providing home-monitoring services to consumers who have vehicles with OnStar capability is important to the company. However, to offer this service to customers, OnStar will partner with vendors that include General Motors (GM), Buick, and Chevrolet. These vendors will assist OnStar with getting the home-monitoring services to the customer at the right place and time (Southern New Hampshire University – Week Seven Overview, 2015), specifically when the customer purchases a vehicle from one of the vendors. Therefore, these vendors will also help OnStar achieve high customer satisfaction, by fulfilling the customers’ specific need at the correct time (Southern New Hampshire University – Week Seven Overview, 2015). According to Armstrong and Kotler (2015), “channel members add value by bridging the major time, place, and possession of gaps that separate goods and services from those who use them” (p. 306). Thus, members of the marketing channel perform many key functions. Key functions that GM, Buick, and Chevrolet will help OnStar complete includes promotion, contact, and matching. Through the promotion function, these vendors will communicate the benefits that OnStar offers, such as a free three-month trial with the purchase of a new or used vehicle. Through the contact function, the vendors will find and communicate with prospective buyers, who use the Internet to find deals on GM, Buick, and Chevrolet vehicles. By communicating the benefits of OnStar through the contact function, vendors can communicate the emergency, security, navigation, connectivity, diagnostics, and home-monitoring service features. Consequently, through the matching functions, the vendors can better shape the customers’ vehicle needs and explain how their needs will measure up to the benefits that OnStar offers. For instance, the customer may be looking for a vehicle that is more suitable for a family that has an exceptional reviews on safety. In this instance, the vendor could easily match the customer with the vehicle that suits their needs, while …show more content…
Therefore, using a web-based channel to sell home-monitoring services is advantageous for OnStar because web-based selling lowers overhead and gives OnStar’s home-monitoring services the potential to reach global markets (n.d,). Because most direct distribution channels tend to have higher rates of profit than indirect distribution channels, as a direct-marketing channel service provider, OnStar will not have to share profits, which is an advantage for OnStar. Additionally, using the Internet as a direct channel of distribution is convenient for OnStar customers because they are available 24 hours a day, and customers will appreciate the opportunity to give profits directly to OnStar, which are both advantageous for OnStar. Thus, using direct sales, OnStar takes full responsibility for direct consumer communications and marketing (Burris,
The third major marketing mix tool is distribution. The distribution channel is “path through which goods and services travel from the vendor to the consumer or payments for those products travel from the consumer to the vendor” (Investopedia.com, n.d., para.1). Thus, the distribution channel can work in multiple ways, it can work as direct transaction from the vendor to the consumer or it may include several interconnected intermediaries along the way, which can include wholesalers, distributors, agents and retailers. These intermediaries receive the product or service at one pricing point and continually move to the next pricing point, until it reaches the final buyer.
Providing home-monitoring services to consumers who have vehicles with OnStar capability is important to the company. However, to offer this service to customers, OnStar will partner with vendors that include General Motors (GM), Buick, and Chevrolet. These vendors will assist OnStar with getting the home-monitoring services to the customer at the right place and time (Southern New Hampshire University – Week Seven Overview, 2015), specifically when the customer purchases a vehicle from one of the vendors. Therefore, these vendors will also help OnStar achieve high customer satisfaction, by fulfilling the customers’ specific need at the correct time (Southern New Hampshire University – Week Seven Overview, 2015). According to Armstrong and Kotler (2015), “channel members add value by bridging the major time, place, and possession of gaps that separate goods and services from those who use them” (p. 306). Thus, members of the marketing channel perform many key functions. Key functions that GM, Buick, and Chevrolet will help OnStar complete includes promotion, contact, and matching. Through the promotion function, these vendors will communicate the benefits that OnStar offers, such as a free three-month trial with the purchase of a new or used vehicle. Through the contact function, the vendors will find and communicate with prospective buyers, who use the Internet to find deals on GM, Buick, and Chevrolet vehicles. By communicating the benefits of OnStar through the contact function, vendors can communicate the emergency, security, navigation, connectivity, diagnostics, and home-monitoring service features. Consequently, through the matching functions, the vendors can better shape the customers’ vehicle needs and explain how their needs will measure up to the benefits that OnStar offers. For instance, the customer may be looking for a vehicle that is more suitable for a family that has an exceptional reviews on safety. In this instance, the vendor could easily match the customer with the vehicle that suits their needs, while …show more content…
Therefore, using a web-based channel to sell home-monitoring services is advantageous for OnStar because web-based selling lowers overhead and gives OnStar’s home-monitoring services the potential to reach global markets (n.d,). Because most direct distribution channels tend to have higher rates of profit than indirect distribution channels, as a direct-marketing channel service provider, OnStar will not have to share profits, which is an advantage for OnStar. Additionally, using the Internet as a direct channel of distribution is convenient for OnStar customers because they are available 24 hours a day, and customers will appreciate the opportunity to give profits directly to OnStar, which are both advantageous for OnStar. Thus, using direct sales, OnStar takes full responsibility for direct consumer communications and marketing (Burris,