Direct Marketing as a Channel of Distributions
Direct marketing is the direct selling of products to the consumer. Examples: telesales, e-commerce, vending machines and direct mail Advantages * Because there is no intermediaries, the businesses does not have to share so much of its profit * Firms can have direct control over their marketing * Developments in e-commerce, which means that this channel of distribution is growing in popularity among customers * Direct marketing can also reach those potential customers who do not have easy access to retail outlets. * Usually cheaper than above the line techniques Telesales or telemarketing
The use of the telephone systems to sell products directly to potential customers. * Usually they use automated voice or text messages. * Commonly used by firms that have a database of existing clients, such as satellite television and insurance companies Disadvantage The use of mass telephone calls can be very costly E-commerce Trading via internet. Now, business use dedicated websites to provide product information and payment facilities to entice customers from around the world to buy their products. E commerce is also an effective way to reduce the costs and risks of international marketing
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Not suitable for personalized service, such as cars or jewelry, * retailers, such as supermarkets or motor vehicle dealers Online trading will become an increasingly important channel of distribution as more and more people have access to the internet Direct mail The business sending promotional material via the mail system to entice customers to by a firm’s products. Business that have customers database usually use this channel of distribution. Local run fast-food restaurant usually distribute their menus to nearby residents and offer a home delivery service to the customers. Advantage
It can provide a personalized communication service since correspondence is directly addressed to the potential customers Disadvantage * People tend to regard much of the correspondence as junk mail and therefore and so there is a low response. * The information in a database used to contact customers often goes out of date. Vending machines This is specialist machines that stock products such as cigarettes, drinks and snacks. With the compact size, they can be replaced almost anywhere. This allows customers to pay by a range of methods such as cash, credit cards and debit cards. The running and maintenance cost are minimal.
The disadvantage is that the vending machines are prone to vandalism. Choosing an Appropriate Distribution Strategy Factors that can affect the distribution decision of a business * Cost and benefits * Without the use of intermediaries, will help to reduce the costs of distribution * Retailers and distributions may have better access to customers, then the business will need to weigh up the cost and benefits of using intermediaries * Product * Some perishables, cannot be distributed through ling chains of distributions * Fast moving consumer goods need to be sold in large volumes, so the use of wholesalers and retailers would be appropriate. Market * Small local niche markets can be catered for by the supplier without the use of intermediaries. * Time * Whilst e-commerce can be a convenient channel of distribution; there is a time lag between paying for the product and receiving it. So this method may not be desirable for purchasing items that require urgent delivery * Legal constrains * Government rules and regulations can prohibit the use of certain distribution channels. Examples: Macau, renowned for its gambling business, is a casino magnet since many neighboring countries such as Hong Kong, Singapore and Malaysia have strict gambling laws.