How to Ease Operational Challenges Faced by Distributional Channels - Literature review Example

Surname: Presented to Institution Name, Location Date How to ease operational challenges faced by distributional channels Introduction Distribution channels are intermediaries or business channels through which services and goods undergoes till they reach the consumer. Channels of distribution may incorporate retailers, distributors, internet and wholesalers. The channels classified as either indirect or direct. Direct channels allow the consumer purchase products direct from the manufacturer while indirect channel allows the consumer purchase the wholesaler’s good. Therefore, channels which are indirect are considered longer than the direct Cross, R., Higbie,J. and Cross, D. (2009). Distributions channels tend to undergo various operational challenges. In this research paper, the managing cost of distribution channels and the regulation of services or goods of different markets as operational challenges facing distributional channels, and how to improve these challenges will be elaborated. Background and literature review Management cost of distributional channels In regards to Porteous, D. (2009). Most crucial challenges faced by managers within channels of distribution include, relying on wholesalers, retailers and independent agents. This may arise when achieving levels of efforts of promotional type that are high within this particular channel, servicing customers following the sale and collecting of market information that is timely. In most case, firms are able to gain better jurisdiction of these activities through the use of more vertically integrated and direct distribution channels O'gunn, T. (2008). It’s easier to gain control of the sales force of a company and warehouses of companies that are owned, Web sites and retail outlets, and somehow difficult to keep on check many independent middlemen’s self conduct in order to find replacements that are acceptable for the ones who do poor work. Issues" and "challenges The problem of replacement may not be easy especially in cases where an intermediary is obligated to invest in assets that are known to be specialized in nature such for instance training which is extensive or capital equipments specialized in order to enable for the effective selling of service or goods of the manufacturer. In relation to transaction analysis cost theory, when the specific assets for the substantial transaction are involved, the use and administration of channel members that are independent’s costs are likely to go higher as compared to the company management of distribution centers and sales force’s cost (Kotler, Keller and Burton, 2009). Regulations in services/products of different markets In regards to Cross, R., Higbie,J. and Cross, D. (2009). BRE, (“Better Regulation Executive”) of the Business Department and BIS, (“Innovation and Skills”) has the responsibility for the Whitehall framework which it’s aims to control of burdens which are regulatory on business. This aim drives from a belief which argues the idea that if resources of business are left free, they have a possibility to be utilized for means that are productive, which should enhance growth. Regulations can impact negatively on growth through the creation of costs of substantial compliance, unintended consequences, or market distortions that are undesirable Cross, R., Higbie, J. and Cross, Z. (2010). Regulation of product market broadly covers rules which affect operations of business at the time of the cycle of firm life including operation, exit, expansion and start up. These regulations can impact negatively and therefore cause a challenge in the economic sector since they create barriers to market entry, thus reducing market’s competition level (Eister, C., Higbie, J.,Koushik, D., 2012). Regulation planning can impact to relative change of price of input of factor such as space, office and land, thus in turn impacting negatively on the productivity in sectors that are specific. Mode of complexity of these regulations and the regulatory structure in overall raises, in general, the compliance costs. For instance concerning micro firms in Mexico, the average owner of microfirm suffers costs of regulation that consume seventeen percent of revenues. Hence distributional channels face a great challenge on the basis of regulation in services or products of different markets (Cross, R., Higbie,J. and Cross, D., 2009). Discussion and Analysis How to ease the management cost as an operational challenge facing distributional channels Intermediary membership is the major issue for the determination of a structure of channel that is available and effective in cost. This therefore makes it possible for the whole distributional channel to contain a flow of performance at such a lowered and favorable cost that the moment the manufacturer makes a decision to directly sell it to customers, even in the case of distributional channels that are zero, there will still be an availability of some intermediary to perform cheaper costs flow, as compared to the case where the products are sold directly by the manufacturer Kotler, Keller and Burton. (2009). hence intermediaries possesses a great responsibility to improve flow performance of individuals in payment function, negotiations, promotions and payment functions aspects. According to Kotler, Keller and Burton, (2009) new alliances and technologies can also impact positively on managing the cost of distributional channel. Developments that are recent may be impacting to change on the trade-offs of history between levels of customer service and distribution costs. New collection of data, Materials Handling, transportation and communication technologies are making it possible for firms to organize their processes of distribution in ways which increase levels of customer service while reducing costs simultaneously. These processes, commonly, are called the management of supply chain, or ECR programs “(Efficient Consumer Response)” (Ayyadurai, 2013). How to ease regulation in service or product as an operational challenge to distributional channels According to Cross, R., Higbie, J. and Cross, Z. (2010).one assumption which is common when regulatory rules are formed is that the group that is targeted will automatically understands the published rules’ compliance and be aware of those particular rules. However, the fast way of increase of these rules’ volume and complexity can render this assumption unrealistic. Therefore, policy makers’ responsibility should not terminate with these rules publication. New rules therefore should be followed by campaigns of information in order for the assurance that these rules are notified and made understandable to these targeted groups (Eister, C., Higbie, J.,Koushik, D., 2012). There is also need to focus basically on the compliance’s feasibility. For small business enterprises the assimilating and compliance with several technical and complex rules burden bears a possibility of unreasonability thus undermining the confidence in regulatory structures and regulators themselves. (Eister, C., Higbie, J.,Koushik, D. 2012). Governments should therefore have a long-term interest that is clear in maintaining attitudes which are positive towards the systems of regulations among businesses and citizens, since these particular attitudes strongly affect the determination of voluntary compliance’s level. Therefore, governments should increase their efforts for the examination of how they are able to achieve objectives of policy in a more cost effective way by better regulating variety of policy tools mixes. the degree of the knowledge and understanding of these rules by the group in target, the degree of the willingness of compliance by this target group and the degree of possibility of compliance by these target groups. Hence, all these three categories should be put into consideration by the government when forming different regulation (Cross, R., Higbie,J. and Cross, D., 2009). Recommendations Following the observation and the keen study of the managing costs of distributional channels and regulations in services or products of different markets as operational challenges that impact negatively to distributional channels, the following are recommended: In order to manage the management cost of operational, Intermediary membership is recommended more than technology since it’s a more convenient and cheap method of reducing management costs as compared to technology since not every channel of distribution is able to afford the technology equipments needed to reduce this particular cost Eister, C., Higbie, J.,Koushik, D. (2012). Intermediary membership is also recommended since the basic costs of management of channels are lowered in the case where there exists correct intermediary channel’s addition is correct. Also, the manufacturer will benefit from the net profit in the case where intermediaries of the channel perform greatly and efficiently. This same efficiency is able to increase volume of sales because of demanded services provision (Hormby, S., Morrison, T. etal,.2010). On the other hand, new technology equipments such as equipments for data collection that is new, for transportation and communication are expensive and not easily affordable and accessible by each operational channel. In order to ensure that the regulations in services and goods of different markets are done conveniently to yield more fruit, catering for the compliance of the targeted group is more recommended as compared to informing this particular targeted group since, by them having sufficient knowledge of these regulations won’t change the fact that they are not willing o comply to these rules. Therefore, the question of compliance should be tackled and examined effectively by the government through working effort fully to change the attitudes of the targeted group. The three categories of possibilities of non-compliance should be fully tackled in that the government should make sure and also increase the degree of knowledge and understanding of these regulations through informing the targeted group, convincing and increasing the degree of understanding of targeted group through explaining to them and educating them about the regulations to increase their degree of compliance and finally, keeping on checking on the degree of the of their understanding in order to increase the degree of possibility of compliance of these targeted groups. Bibliography Ayyadurai, V. S. (2013). The Email Revolution. Unleashing the poer to connect, 30-54. Cross, R., Higbie, J. and Cross, Z. (2010). Milestones in the Application of Analytical Pricing and Revenue Management. Journal of Revenue and Pricing Management, 30-58. Cross, R., Higbie,J. and Cross, D. (2009). Revenue Management's Renaissance. A rebirth of the Art and Scienceof Profitable Revenue Generation, 56-81. Eister, C., Higbie, J.,Koushik, D. (2012). Reatail Price Optimization at InterContinental Hotels Group. Informs, 45-47. Hormby, S., Morrison, J., Prashant, D, Meyers, M. and Tensa, T. (2010). Marriot Imternational increases revenue by a group pricing optimizer. Interfaces, 47-57. Kotler, Keller and Burton. (2009). Marketing Management, Pearson Education Australia. Frenchs Forest, 80-91. O'gunn, T. (2008). Advertising and Integrated Brand Promotion . Oxford Oxfordshire: Oxford University Press. Porteous, D. (2009). Mobile Money. THe World and PNG, 78-85. Read More