Expert answer:Distribution Channel Article Review (1050 Word)
Solved by verified expert:Purpose of Assignment A well planned distribution channel system is a key component of the marketing mix that helps meet customer demands and achieve company goals. This assignment will analyze the role channels of distribution have in meeting the needs of consumers in both a brick and mortar and online retail setting. Scenario: You work for a newly formed sports apparel company and your manager has requested you help the company decide on the best distribution strategy to use for its products. You have begun research on the strategies and methods available by reviewing relevant articles on the topic. Based on your article review, you will decide what strategy(ies) is/are best and explain the reasoning behind your conclusion. Select an article from the University Library that is less than five years old on the role of distribution channels in marketing. Compose a 1,050-word article review covering the following:Define what a distribution channel is and discuss why it is important to the marketing process. Discuss the differences between direct and indirect distribution channels.Introduce the article and its author(s) and give a brief summary of its core message(s).Analyze the relationship distribution channels have to maintaining a satisfied target market.Compare and contrast similarities and differences in distribution strategies for online versus brick and mortar businesses. Use examples from a company you admire or your own work life examples to illustrate your points.Recommend distribution strategy(ies) for the company and what reasoning led you to conclude this was the best solution. Cite a minimum of two peer-reviewed sources with one being the article from the University Library. Format your paper consistent with APA guidelines. I have attached an article from the Library in which will be used. https://search-proquest-com.contentproxy.phoenix.e…THE OPERATION OF DISTRIBUTION CHANNELS FOR THE MARKETING OF PETROLEUM PRODUCTSVlad, Florea; Pavel, Ciprian. Quaestus; Timisoara Iss. 11, (Jun 2017): 25-30.
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QUAESTUS MULTIDISCIPLINARY RESEARCH JOURNAL
THE OPERATION OF DISTRIBUTION CHANNELS
FOR THE MARKETING OF PETROLEUM PRODUCTS
Florea VLAD
Ciprian PAVEL
Abstract: The existence of vertical, horizontal and multiple distribution channels
highlights the dynamics that characterize the structure of distribution channels.
This enables logistics service providers to design and operate their own
distribution network. The supplier of logistics, distribution and marketing
services of the petroleum products must define the function of each member of
this network regardless of their object of activity.
Keywords: price policy, mix of commercial relationships, franchise, channels
and distribution strategies.
Introduction
A distribution channel (also referred to as a marketing channel) is a
structure of interdependent business organizations ranging from the point of
production of the product to the consumer, through which channel members
motivate and communicate with the customers, sell and transport, stores,
distributes and secures product service.
Functions of the members of the oil and gas distribution network it is
represented as follows:
Tab.1
NR.
NETWORK
MEMBERS
1
Initiatives
2
Candidates
3
Supporters
4
Passengers
5
Innovators
FUNCTIONS OF NETWORK MEMBERS
have full access to sources of supply and special respect within the
agent for the marketing of petroleum products
aim to expand existing distribution relationships
trying to take the place of initiates
their access to sources of supply is limited
limited access is a disadvantage for them in periods of poor supply
are not part of the main network
performs operations that other members of the recipe do not normally run
serve smaller market segments or distribute smaller quantities of products
are not and will not become members of the main network
enter and exit the market depending on how business opportunities
emerge
are real competitors that disturb the network
Apply new distribution systems to attract customers to the network
can force the network to deeply revise its structure
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QUAESTUS MULTIDISCIPLINARY RESEARCH JOURNAL
No matter how well is designed the own distribution network and succeeds
to sell petroleum products, some conflicts at this level are inevitable, simply
because the business interests of different members do not always coincide.
The mix of trade relations in the distribution of petroleum products
The supplier of distribution and sale of petroleum products must establish
the rights and obligations of the participants in the distribution network of
petroleum products.
The main components of the mix of trade relations (price policy, trading
conditions, territorial rights and services and mutual obligations) are presented
in table 2 in parallel with the rights and obligations of the members of the
distribution and marketing network:
Components of the commercial mix mix
Tab. 2
NR.
COMPONENTS
OF THE MIX OF
COMMERCIAL
RELATIONS
RIGHTS AND OBLIGATIONS OF NETWORK
MEMBERS
1
Pricing policy
obliges the trader to draw up the price list and facility
allocation scheme
refers to the terms of payment, delivery and guarantees
provided by the trader
the distributor may grant facilities for cash payment of
products at a time as close as possible to the moment of purchase
can guarantee the delivery of the appropriate products in
terms of quality and price control
distributors from the intermediary’s own network want to
know where other distributors work
they want exclusivity for the territory in which they operate,
regardless of their capacity
must be carefully determined in the case of exclusive
distribution and franchise distribution
the intermediary can conclude franchise agreements for
stations, support in promotional activities, recording and storing
information, training staff
The beneficiaries of the contracts must comply with the
intermediary’s standards of serviceability, cooperation in new
promotional programs, provision of required information and
purchase of products.
2
Terms of trade
3
Territorial rights
4
Services and
reciprocal
obligations
Problems in the operation of distribution networks
The agent for the marketing of petroleum products can set up his own
distribution network for petroleum products, g.p.l loads and complementary
products. He hopes to gain the cooperation of members of the network, relying
on the fact that it usually contributes to overall profits higher than those
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QUAESTUS MULTIDISCIPLINARY RESEARCH JOURNAL
obtained as a result of the independent action of each member in accordance
with his or her own interests. By cooperating, they will understand, serve and
better meet the targeted consumer category.
Some conflicts at the dealer’s own distribution network for the marketing
of petroleum products can play a constructive role, leading to faster adaptation
to the changing market situation at the same time, their multiplication has a
negative effect on the functioning of the network. There is no question of
eliminating conflicts, but keeping them under effective control, through a series
of methods and techniques, some of which we will present below:
Problems in the operation of distribution networks
Tab.3
NR.
1
2
3
4
TYPE OF
CONFLICT
Objectives
incompatibility
Recognition of the
rights and
obligations of
network members
Different perception
of economic
relations
The high degree of
dependency of
network members
EXAMPLE OF CONFLICT
by proposing to rapidly conquer an
important position on the market, the main
distribution and marketing service provider
applies the low pricing policy for g.p.l.
its distributors can opt for a high
profits policy that will deliver appropriate
short-term results
the main service provider of
distribution sells large oil products to
customers directly from the warehouse
through their own sales force
the same thing tries to do with the
members of its network – resellers.
the main distribution and distribution
service provider may be optimistic about
short-term economic prospects, requiring
network members to operate with large
stocks
network members may be pessimistic
about the same perspectives
product and pricing policies of your
primary distribution and marketing service
provider may seriously affect the profits of
exclusive distributors, such as resellers of
cargo g.p.l. from other counties
CONFLICT
CONTROL
AND
CONFLICT
METHODS
Harmonization
of objectives
Cooperation
Diplomacy
Mediation
Arbitration
We consider that it is up to the suppliers of distribution and sale of
petroleum products to determine the rights and obligations of the participants
in the distribution network of petroleum products, The main components being
price policy, trading conditions, territorial rights as well as the reciprocal
services and obligations these networks have. On the other hand, it is also worth
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QUAESTUS MULTIDISCIPLINARY RESEARCH JOURNAL
mentioning that at the level of the distribution networks some problems can
arise, some with constructive effects on the functioning of the network and
others with negative effects, characteristic being in this sense: the
incompatibility of objectives, the recognition of the rights and obligations of
network members, the different perception of economic relations and the high
degree of dependency of network members.
Designing the distribution network for petroleum products
The distribution system of a producer of petroleum products is therefore
only the result of the possibilities and conditions existing at the local level.
Designing a distribution system requires:
• Consumer needs analysis,
• Establish distribution objectives,
• Identification of the main distribution strategies,
• Evaluation of distribution strategies.
Producers face a few problems when making the decision to create a
distribution channel, different issues when the refinery or the manufacturer are
new firms and other issues when they are already on the market.
In the first case, the main issue is not the choice of the best channels but,
by resorting to existing intermediaries on the petroleum products market, it is
necessary to convince one or more intermediaries to make available their own
capacities. This call is made, of course, when the company does not have
enough capital to build its own distribution network. Then, if the refinery is
successful, the manufacturer will try to expand into new markets where it will
once again try to work with existing intermediaries, even if this will mean using
different distribution channels from one area to another.
In smaller markets, the refinery can sell directly to stations (private
distribution stations), and in large markets they will call on logistics service
providers to distribute and sell. In certain parts of the market, the refinery can
only operate in franchising, because it operates in that area of the market. In
another part of the market, the refinery will be able to sell its products through
all the trading points that will be willing to cooperate.
The designer of the distribution channel or of his own distribution
network must know the desires of the intended consumers, or the benefits they
expect from them. The higher the benefits, the higher the distribution costs and
the buyer’s prices. The success of low-priced petroleum products distribution
stations is evidence that many consumers are willing to accept lower benefits,
then they are at lower prices.
Conclusions
The objectives of the distribution will be defined in relation to the benefits
expected of the buyers concerned. Under competitive conditions, the logistics
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QUAESTUS MULTIDISCIPLINARY RESEARCH JOURNAL
service provider distributing and marketing petroleum products as a member of
a distribution channel alongside the refiner or manufacturer and its own
distribution network must perform its functional tasks in such a way as to
contribute minimizing total channel or network costs, taking into account the
benefits expected from buyers.
There are also consumers who differ in the level of benefits expected
from a distribution system or from the agent’s own distribution network for the
marketing of petroleum products.
Creating an efficient distribution channel by the refinery or an efficient
distribution network implies:
Determining the market segments to be served,
Selection of channels or network for each segment
Characteristics of petroleum product, liquefied petroleum gas (g.p.),
complementary products, etc.
Determining batch size
Determining the transport distance
Determining the number of product manipulations
Characteristics of complementary products.
So, complementary products of the perishable nature of food require a
direct distribution due to the negative effects that their delays and repeated
manipulation may cause.
Non-standard complementary products in the category of automotive
parts and accessories, automotive cosmetics, human cosmetics, additives and
oils, the petroleum product marketing agent should make additional efforts to
have all the necessary information about them in order to sell them.
Bibliography
1.BĂCANU, B. – Management strategic, Ed. Teora, 1997
2.BĂILEŞTEANU, Gh. – Diagnostic, Risc şi Eficienţă în Afaceri, Ed. Mirton, Timişoara, 1998
3.BĂILEŞTEANU, Gh., IŞFĂNESCU, G., NEGRILĂ, A. – Diagnosticul financiar al
întreprinderiI, Vol.I, Ed. Dacia Europa Nova, Lugoj, 1999
4.BĂILEŞTEANU, Gh., IŞFĂNESCU, G., NEGRILĂ, A. – Economia întreprinderii,
Vol.I, Ed. Dacia Europa Nova, Lugoj, 1999
5.BAKER, M.J.- Marketing strategy and Management, 2-nd Edition, The MacMillan Press
Ltd. London, 1980
6.PAVEL C., NEGRUT C. – Bazele marketingului, Editura Eurobit, Timisoara, 2011.
7. www.petroleumonline.com
8. www.ihrdc.com
NOTES ON THE AUTHORS
Florea VLAD is Associate prof. at the Faculty of Management in Tourism and
Commerce Timişoara, „Dimitrie Cantemir”Christian University. He holds a PhD. In
Management with the thesis Management in the Logistics and Distribution of Oil
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QUAESTUS MULTIDISCIPLINARY RESEARCH JOURNAL
Products. He is the author of numerous books and articles on management, the latest
one being Management strategic, metode de elaborare, Eurostampa, 2010.
Ciprian PAVEL is lecturer at the Faculty of Management in Tourism and Commerce,
Dimitrie Cantemir Christian University Timişoara. He holds a PhD. in Marketing since
2010, with a thesis entitled Contribuții cu privire la politica de comunicare în
marketingul produselor și serviciilor bancare. He is author or coauthor of various
books and articles: Politica de comunicare în marketingul produselor și serviciilor
bancare, Editura Universităţii de Vest, Timişoara, 2013, Bazele marketingului, Editura
Eurobit, Timişoara, 2011. He is a member in AGER and American Marketing
Association.
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