Marketing: Nutrition Bar - Research Paper Example

To stay ahead of the competition and identify opportunities, marketing managers need to devise an effective channel distribution system. This paper provides an overview of the distribution systems, particularly their structure and constituents. It differentiates between direct versus indirect channel distribution levels and differentiates between the different channel organization marketing systems namely; Conventional, vertical, horizontal, and multi-channel marketing systems. By choosing the nutrition bar as a product sample, the report demonstrates factors that a marketing manager would use to select the type of distribution channel. The marketing manager considers the target market needs to implement an effective channel distribution. It is hence established that the most effective way to distribute a nutrition bar is through the use of intensive distribution implemented by the use of indirect retailers in a vertical channel organization system. Marketing: Nutrition Bar Distribution channels refer to a set of interdependent organizations that is responsible for availing a product or service to the consumer or a business user (Kotler &Keller 2006). The distribution channels help in hold inventory to lower transport costs, marketplace contacts, match the requirements of individual consumers to the output of various producers, and improve the efficiency of the marketing system. A smart and well-developed distribution strategy makes it convenient for the consumers to access the product. The choice of the intermediary organization is strongly tied to the type of product. This report considers ways in which marketing managers can devise the proper marketing channels for the distribution of a nutrition bar (Stern 1996). Direct versus Indirect Distribution A direct channel of distribution describes a process where producers sell their products directly to the consumers. Direct distribution may involve computer sales, face-to-face sales, telephone sales, retail craft shows and many others. It does not involve the use of intermediaries (Kotler &Keller 2006). Although direct distribution allows the producer to have control of planning the distribution system for their products and maintain direct interaction with the consumers, it presents a variety of challenges. Direct distribution offers a limited geographical reach and presents a more expensive option as compared to indirect distribution. Producers are forced to invest heavily in logistics resources such as transportation and storage. Direct distribution is thus a more viable option for large companies that have a well-established logistical network or a large capital base. Indirect channel relies on entrusting a third party such as wholesalers and retailers to avail the product to the consumer. Although this method presents the risk of entrusting a third party with your product and sharing the profits with the intermediaries, it the most widely used method of distribution. Indirect distribution makes producers’ work easier by eliminating the burden of understanding consumer demand, dealing with customers and providing storage for the goods. It also enhances the geographical reach of the product. Although the indirect method offers a lower profit margin for producers and higher cost for the consumer, it is a more efficient and yields a higher value than the direct channel (Kotler & Keller 2006). Channel Organization Methods Channel marketing systems comprise of different organizations coming together to perform activities aimed at linking producers with consumers. Marketing managers need to devise the most effective and cost efficient marketing channel that gives their products a competitive advantage. Marketing channels serve the purpose of reducing marketing expenditure and time, informing producers of consumers requirements, promoting manufacturers products and provide consumers with a wide range of products for their selection. A conventional distribution channel is a system where the different producers, wholesalers, and retailers work independently. The above system results in various channel conflict since each organization set out to maximize its profits (Stern 1996. A vertical marketing channel is a system where the producers, wholesalers, and retailers work in a unified structure. In this system, one channel member is in charge and sets the contracts and terms of services for the others to follow. The above helps minimize the conflicts associated with selfish interests (Stern 1996. The horizontal marketing channel allows two or more companies at the same level to work together so at to maximize their profits. This partnership could involve either competitors or non-competitors pooling their resources to achieve more effective distribution and marketing power. In a multichannel distribution system, one firm establishes two or more marketing channels to reach a variety of consumers. The above increases the opportunity for a company to expand its marketing coverage and fit its products to meet specific consumer needs (Stern 1996). Target Market Needs It is essential for marketing managers to understanding the target market for their products or services to devise the most effective distribution channel. The marketing managers need to keep their channel partners informed of the target market information to ensure that the distribution is effectively handled. By conducting market research and analyzing target market demand, the distributors can focus on getting the products to the specific consumers. The nutrition bar targets low-income class Americans who are looking for a health food snack option. The above targets market varies across all ages; from mothers and their children to healthy Americans who are looking for a quick nutrition bar to eat at work. The target market also includes people on diets who are looking to supplement their regular eating habits. The target market normally purchases these type of products from their selected grocery stores, supermarkets, drug stores, vending machines, the gym, online sites or convenience stores. The Selected Distribution Channel The marketing manager should use the indirect retailers’ distribution channel since it is the most cost effective and provides a wider geographical reach for the consumer market. The above retailers have already established themselves thus have access to a load of consumers who frequent these stores to get the different type of products. The above retailers would thus offer the perfect channel for distributing the nutrition bar. By using the indirect distribution method, the marketing manager will also avoid the great cost incurred from transportation and storage of the lunch bar. The distribution of a lunch bar also presents the idea of a more small scale company hence it would be unwise to use the costly direct sales method. Indirect sales method will also present the opportunity of having the intermediary organizations display the lunch bar across various locations of their store thus reaching more consumers. By displaying the products in the store, the retailers provide a competitive edge for the nutrition bar by providing a platform for the product to compete with other similar products. The above also provides a platform for the marketing manager to promote the nutrition bar. The above minimizes the great advertising and promotion costs that the marketing manager would have incurred if they use direct sales method. The marketing managers should not use wholesalers, brokers or dealers for distributing the nutrition bar since it is a low-value product hence it will cut into the profit margins. Intensive Distribution The marketing manager should use intensive distribution. The above will involve the selection of many retailers to stock the nutrition bars in the majority of their outlets. The intensive distribution system will guarantee that the nutrition bar is fully accessible to all the target markets. The marketing manager will thus ensure the nutrition bar is available in different types of retail stores such as supermarkets, gyms, grocery stores, and convenience stores. This distribution system will ensure the nutrition bar achieved wider consumer recognition and increased sales volume. Vertical Channel The marketing manager should choose to use the vertical marketing channel where the company will work in a unified structure with the retailers. The marketing manager exercises control over the retailers by coming up with a contract that sets the term of the partnership. The above channel organization provides the simplest method of distributing the nutrition bar and also helps in reducing conflicts. References Beaman, J., & Johnson, A. (2006). Food Distribution Channel Overview. A Guide for New Manufacturers, 1-16. Fitzgerald, R. (2008). Marketing and Distribution. Oxford Handbooks Online. Kotler, P., & Keller, K. (2006). Marketing management (12th Ed.). Upper Saddle River, N.J.: Pearson Prentice Hall. Stern, L., & Ansary, A. (1996). Marketing channels (5th Ed.). Upper Saddle River, NJ: Prentice Hall. Read More