EMBA 550 MArketing initial post week 6 - Essay Example

Dual Distribution Distribution, an element in the marketing mix, includes both the physical movement of products as well as the establishment of intermediary, i.e. middleman, relationships in order to achieve product movement. The system of relationships that are established in order to guide the movement of a product from the supplier to the end consumer is called the distribution channel. Direct channels move the product directly from producer to user, while indirect channels have one or more intermediaries between them (Longenecker, et al., 2010, p. 410).

To reach various markets that current or traditional channels do not fully explore, supply chain strategy often necessitates the establishment of new and multiple channels. “The use of multiple channels may arise out of necessity in order to meet customer needs or by design. Multiple channels enable a manufacturer to offer two or more lines of the same merchandise through two or more means.” (Ferrel & Hartline, 2010, p. 283). The use of two or more distribution channels for essentially the same product is what constitutes dual distribution.

There are some disadvantages that are attendant to dual or multiple distribution. One is that extra time, effort and money are required in running two or more distribution channels. Another is the risk of disintermediation, meaning that when the corporation deals directly with the customer, they compete against their traditional intermediaries who are members of its supply chain, thereby creating a potential source of conflict (Ferrel & Hartline, 2011). Sometimes, customers who go to brick-and-mortar distributors to view the products and ask questions, but end up purchasing the product online.

This is unfair for the distributors.Dual distribution is not new. The U.S. Congress cited the New York Times (2/16/92, Section F, p. 5) which reported that 20% of McDonald’s stores are company operated, and for Taco Bell it is 60% (US Congress, 1992, p. 273). Hallmark uses dual distribution extensively. Hallmark cards primarily sell greeting cards through Hallmark stores, using selective distribution. At the same time, they also sell their Ambassador and Greetings card lines widely through supermarkets, drugstores, and discount retailers.

Aside from these, Hallmark offers both cards and e-cards online, which constitutes a third channel (Ferrel & Hartline, 2011)Small businesses benefit immensely from dual distribution. Chagrin Shoe Leather & Luggage Repair, a family business located in Woodmere, Ohio, experienced a 20% increase in sales in 2008 when the economy was slowing, because people decided it was cheaper to have their shoes fixed than to buy new ones. The growth in sales occurred when Chagrin launched American Heelers, an online business (run by the Ilya Romanov, son of Chagrin owner Alex Romanov) that receives about 100 pairs of repair-needy shoes by mail.

The shoes are repaired by Chagrin, then sent back. In effect, Chagrin generates local business from its physical operation, while its e-commerce operation generates revenues from the remote customers (Longenecker, 2010, p. 411). In this example, the promotional medium, the online channel established by American Heelers, is also a channel for closing a transaction because the customer places his order and sends his payment. The customer is convenience by the fact that he could send his shoes out and receive the results after without having to leave his house, and he gets to save instead of buying new shoes.

Overall, one might say that dual distribution is much like a double-bladed sword. It is an effective strategic method to reach new markets; like Chagrin and American Heelers, customers formerly inaccessible were reached without significant additional investment in a new store and equipment, and without spending much on publicity. Customers benefit from a new supplier of a vital good or service, costing less than the alternative which is to buy new shoes, and having the choice of going online or going to the nearest repair shop.

If dual distribution is not properly applied, however, this could crowd out intermediaries and compromise the other channels.References Ferrel, O C & Hartline, M D (2011) Marketing Strategy, 5th edition. Mason, OH: South-western Cengage LearningLongenecker, J D; Petty, J W II; Palich, L E; & Moore, C W (2010) Small Business Management: Launching & Growing Entrepreneurial Ventures. Mason, OH: South-Western Cengage LearningUnited States Congress (1992) Anticompetitive practices in the retail gasoline market: hearing before the Subcommittee on Antitrust, Monopolies, and Business Rights of the Committee on the Judiciary, United States Senate, One Hundred Second Congress, second session, on S. 790, S. 2041, and S. 204., May 6, 1992, Volume 4