Marketing channel decision-making and management

Author: Ly Yilin
Publisher:
Publish Date: 2005-05-01
Features: The decision-making and management of marketing channels are one of the important aspects of marketing mix decisions. In China's past disciplinary system, channel issues were primarily the focus of scholars studying commercial economics and business management in circulation. Under the planned economy system, production enterprises were only responsible for production, while distribution and sales destinations were arranged by the plan. Today, in the market economy environment established after reforms, enterprises have become independent operators in the market, each pursuing the maximization of their own interests. For production enterprises, how to get as close to the end market as possible and provide services that satisfy end customers to the greatest extent possible has become a major issue affecting competitive success, and channel decision-making and management are precisely the core to achieve these goals.
Channel decision-making and management address two key issues for enterprise marketing: distribution efficiency and customer service. Efficiency concerns permeate all aspects of a company's product production, sales, and R&D. However, today, the proportion of distribution costs (including logistics costs) in total costs tends to rise, while competition in the distribution sector is becoming increasingly fierce. All this prompts enterprises to place greater emphasis on channel decision-making and management.
On the other hand, customer service and ensuring customer satisfaction are the core of modern marketing concepts. Distribution provides customers with convenience in terms of time and space to obtain products or services, which is even more critical today as the value of time continues to rise and customer expectations for service grow. Although some enterprises now provide products and services directly to end customers, the vast majority still rely on intermediaries to face customers. Even Dell, known for its direct sales model, cannot do without distributors and after-sales service providers. Moreover, direct sales are also a distribution model, requiring decisions on which media to use for direct sales, how to layout sales outlets, how to manage them, whether adjustments are needed, and how logistics should be arranged, and so on. In other words, these enterprises are merely establishing distribution channels that they directly invest in, manage, and control. They still need to make decisions regarding distribution strategies and management.
Today, another significant challenge for the channel decision-making and management of production enterprises is the growing power of channel intermediaries. The fact that Walmart has ranked as the world's number one company in the Fortune 500 for three consecutive years is a clear example. The countermeasures of large domestic specialty stores like Gome and Suning against home appliance companies, as well as the pressure exerted by large chain supermarkets on small suppliers, are also strong evidence. This shift gives us the insight that in the future, the leaders in distribution channels may not necessarily be manufacturers, but could very well be intermediaries. In other words, in the future market, manufacturers will need to consider not only competitors in manufacturing but also how to gain control over distribution channels and adapt to changes in channel structures.
Today, channel organizations change frequently and endlessly; consumer demands are equally dynamic and unpredictable. Adding to these changes in environmental factors that affect corporate marketing decisions, the difficulty of channel decision-making and management for enterprises is self-evident.
Of course, from another perspective, enterprises today have more available channel models, channel members, and management tools. In reality, channels are not only tools or means of marketing competition but also a competitive resource. As a resource, they also have limitations, such as the irreplaceability of store locations. Additionally, many times, the cost of adjusting channels can be extremely high, involving complex factors, which also requires enterprises to exercise extra caution when formulating channel decision-making and management policies.
As a textbook in the series of undergraduate marketing courses at Renmin University of China, this book is primarily aimed at undergraduate teaching while also catering to the training of marketing professionals by social and corporate bodies or self-study by marketing professionals. Chapters 1 to 4 were written by Professor Ly Yilin, Chapter 5 by Associate Professor Zhang Yuan from Beijing Jianong College, Chapter 6 by Associate Professor Yue Junfang from the Adult Education College of Renmin University of China, Chapter 7 by Teacher Ding Wenhui from Xiamen Jimei University, and Chapters 8 to 10 by Dr. Deng Zengyong from the School of Business at Renmin University of China.
Furthermore, the publication of this book is also thanks to the editors at Renmin University of China Press. Given that the course of "Marketing Channel Decision-Making and Management" is still relatively immature in both structure and content, and that the contributing authors have limited practical experience and accumulated knowledge in this field, it is inevitable that there are shortcomings in various aspects. We sincerely hope to receive corrections and suggestions from relevant teachers, experts, and corporate marketing managers to help us improve this book in its revision.