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Channel Of Distribution Analysis Of Dell & Hp

3302 words - 14 pages

I. Executive Summary.Channels of distribution are critical to the success of a manufacturer. A well designed channel creates time, place and ownership utility for the consumer and can augment the manufacturer's product. Distribution channels may move product directly from the manufacturer to the consumer, or make use of intermediaries between the manufacturer and the consumer.This report consists of two parts: Part 1 explains some of the major concepts relating to distribution channels, and Part 2 relates the findings of a case study of the computer industry. The first section of the case study explores Dell's use of direct channels and Compaq's use of indirect channels in Canada. We will ...view middle of the document...

Lastly, the case study analyzes the differences in PC prices across countries and explains the variances in these prices.II. Introduction.Channels of distribution represent the "place" component of the marketing mix. Place is a critical element because it is the ultimate goal of a business transaction, the consumer receives the product and the manufacturer receives revenue. This report focuses on how the manufacturer delivers its product to the consumer.Part one of the report will give an explanation of the major concepts related to distribution channels. For the second part of the report we will conduct a case study which relates the concepts learned in the first part of the report to the computer industry. The computer industry case study will look at indirect and direct distribution channels in Canada using Compaq and Dell Computers. Secondly, the distribution channels for computers in emerging economies such as China and India will be examined to give the reader insight as to how foreign distribution channels differ from those used in Canada.III. Limitations and Methodology.As with most secondary research we had difficulty finding the specifics regarding what we were looking for. In our opinion, the best way to do a study like this would be to conduct primary research. However, without faculty clearance, research funding, and with a time constraint, conducting primary research was not an option. Although many websites did offer to sell us information regarding distribution channels we simply could not afford to purchase their offerings.We concluded that the lack of distribution information was due to organizations protecting their distributional competitive advantage. Finding general information regarding distribution channels for specific organizations was readily accessible but the specifics were hard to locate. Another reason for the lack of distribution information was due to the dynamic nature of distribution channels. They are continuously changing due to organizational cost reduction practices, evolving computer technology and the dynamics of the general business environment.IV. Part 1: Distribution Channel ConceptsDistribution is one of the elements of the marketing mix. The purpose of a distribution system is to create place utility for customers, which is the value of having the product where the customer wants it to be. While many manufacturers choose to sell their products directly to end-users, a direct channel, most choose to use channel intermediaries. Intermediaries are firms or individuals such as wholesalers, agents, brokers, or retailers that help move the product from the manufacturer to the consumer and also add value to the product. Manufacturers use intermediaries to help distribute their goods for three reasons: contractual efficiency, specialization and division of labor, and economies of scale.Functions performed by intermediaries include bulk breaking, creating assortments and facilitating functions. Bulk breaking...

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