MODULE 1: MARKETING CHANNELS 3.

Brick-and-click (hybrid) retailers

These combine both approaches, selling in physical stores and
Marketing Channel - is a set of interdependent organizations involved in
online. A prime example is SM, which runs large shopping malls
the process of delivering the marketing offer (products and services) to the
(the brick-and-mortar side) and also serves customers through its
end consumer. These interdependent organizations have the unified and
online platform or app (shopSM).
primary goal of bringing your product on the table of the end user at the
right place (where consumers desire to buy) at right time (when consumers Functions of the members
need your product) in its right condition. The promotion efforts of your
Exchange - involves the transaction of buy and sell. The members of the
company to your very attractive product become worthless if the
channel buy products from you, the producer or owner, and sell them your
marketing channel fails to do its job.
products and services in exchange of their payment.
Channel Members - are the marketers (you as the producer, manufacturer,
Logistics - includes, but not limited to, storage and transportation function
and owner of the goods and services), the intermediaries (distributors,
of the marketing channel. According to Oxford Languages, storage is a
wholesalers, retailers, and agents) and the end users.
space available for storing something, in particular allocated space in a
Intermediaries - can be termed as distributors, wholesalers, retailers, and warehouse.
agents depending on the role each play in the chain of your product
Facilitation - function covers, but not limited to, promotion, market
distribution. Wholesalers and distributors may perform the distribution
feedback, financing, risk bearing, and providing technical support.
functions such as storage, delivery, and credit and distribution functions to
Members of the channel do facilitate promotion function through creating
retailers.
sales campaign that may increase sales in their respective territories.
Retailers - are involved in selling your products to end consumers in a
Push theory/strategy - basis for strategy implementation in distribution. In
physical establishment which includes, but not limited to, your community
this practice, you can increase sales by extending incentives to wholesalers
sari-sari store, your neighborhood supermarkets, kiosks, and boutiques in
or retailers to sell more of your product. Includes in this method is offered
shopping malls.
discounts to wholesalers or retailers who buy product in bulk in a specific
1. Brick-and-mortar (store-based) retailers period. Another sales promotion extended by wholesalers to retailers is the
These operate in a physical space—such as sari-sari stores, increased PoP or Point-of-Purchase displays.
neighborhood supermarkets, kiosks, and boutiques in shopping
Pull theory/Strategy - you as the manufacturer, however, can promote
malls—where customers come in person to purchase goods.
directly to your end users so that consumers are being stimulated to
2. Online-only (non-store) retailers demand your product from retailers; and these retailers demand your
These sell exclusively over the internet through platforms like product from wholesalers; thus, wholesalers will buy more of your
Lazada, Shopee, and Amazon, or via other retailers who do not products! Included in this strategy is the traditional advertising via
have physical storefronts. television and radio.
Structures the channel partner’s objectives meet yours or what we call business goal
alignment.
Marketing Channel structure - the number of levels of intermediaries in the
channel used by your business for your product distribution. Experience - This is one of the critical factors you should include in
selecting your channel partner. Experience in the industry means the
zero-level structure - the consumer market, you directly sell your
potential partner’s experience in selling a product, the customers it handles
product to your end consumer for personal consumption. An
and handled in the past, the crises management the partner has. In this way,
example of this is selling online.
your potential channel partner may provide you the right tools for the
one-level structure - the products are sold to the consumer through distribution strategies needed by your product.
an authorized distributor or retailer. such as petroleum, Location - A look-out on the location plays a vital role in the selection
automobiles, and other electronic goods process in choosing your channel partner. The main purpose of this is to
two-level structure - engaged with production of fast-moving ensure the availability of your product to the retailers and to the end
consumer goods or FMCG such as milk, fruits and vegetables, consumer.
toilet paper, soda, soy sauce, and beer. Strength - Financial strength of a potential partner is also an important
three-level structure - presence of a distributor, agent, and retailer factor you may consider in selecting a channel partner. The term financial
is evident. example: agents collect orders of medicines from the strength is the capacity of the potential partner to extend financial credit to
hospitals and extends assistance on the delivery of medicines by retailers to assure the availability of your product to the market. Since,
mediating between the distributor and retailer. retailers do have some difficulties on providing timely payment of the
product. A financially strong channel partner may ensure the right supply
Selecting Channel Partners or inventory on market’s demand of your product.
Potential - it is important for you to measure or gauge the partner’s Focus - Evaluate the potential channel partner on the focus and attention it
capacity to SELL your product in terms of the number of outlets the can provide to your product. An established channel partner with high
partner has in specific territory, its sales team, delivery vehicles, and even sales turnover and wide range of products may be financially strong but
the partner’s sales turnover. Sales turnover is the total amount of revenue may not provide your product the desired focus you want. On the other
generated by your channel partner on a specific period. The purpose of hand, a potential partner with limited market coverage and limited number
reviewing the sales turnover of your potential partner is to track of outlets may provide your product the desired focus you want. Because a
meaningful sales levels in different periods to spot changes in activity channel partner may carry and sell wide range of products including yours.
levels. This is usually done in an intensive channel of distribution for channel
intensity.
Portfolio - the range of products or the product portfolio your potential
partner offers or sells to the market must be considered. The importance of Channel Intensity - intensity refers to the number of intermediaries in the
considering the product portfolio of your potential partner is to evaluate if distribution channel.
Exclusive - A selective distribution strategy in which the manufacturer - Salespeople serve as the bridge between companies and their
grants sole rights to a single distributor or dealer in a defined geographic distribution partners, influencing how products are presented,
region. The appointed partner is often restricted from handling competing perceived, and sold, making their behavior and communication
brands crucial to business success.
- Distributors value sales representatives who demonstrate
Example : Automobile Industry
respect, reliability, and transparency, avoiding behaviors such
Selective - From the word itself, selective type of channel intensity has a as boasting about other clients, spreading gossip, or making
selective number or few dealers and retailers. If your company produces promises that cannot be kept, as these can damage trust and
premium products such as perfumes, computer, electronic equipment, cooperation.
furniture, household appliances, and jewelry, this type of distribution - Training sales teams in interpersonal skills—including
intensity is applicable. In this type of intensity, your channel partners will emotional intelligence, conflict resolution, and adaptability—can
assist on the enhancement on the brand image of your product since it significantly enhance their effectiveness and contribute to higher
provides your channel partners more revenue and profit which is in sales performance and stronger channel partnerships.
contrast with intensive distribution where channel partners must compete - Effective communication and empathy enable sales
on price. professionals to understand and address the unique needs and
challenges of their partners, leading to more successful
Intensive - If you give importance to time and place and you want your
collaborations and mutually beneficial outcomes.
product to be stocked in as many outlets and stores as possible. And you
adopt such distribution intensity because of your objective to generate Manufacturer-Channel Partner’s Cooperative Programs
maximum market coverage and sales.
(1) build loyalty amongst channel partners to the manufacturer, activities,
Example: Consumer goods such as, but not limited to, laundry detergents, or programs the manufacturer can give the channel partner or partners are:
cooking oil, shampoo, cold drinks, and other convenience goods and also
telecommunication companies 1.1 appraisal of the manufacturer’s policies and their
implementation; and,
MODULE 2: MANAGING THE CHANNEL PARTNERS
1.2 analysis of communication system.
Creating Cooperation: The Role of Sales Force
(2) stimulate greater sales effort, activities, or programs are:
- Interpersonal skills are vital in sales, encompassing empathy,
2.1 changing policies;
active listening, and effective communication, which are essential
for building trust and fostering long-term relationships with 2.2 sharing promotional risks with dealers;
customers and partners.
2.3 use of promotional methods; and,
 2.4 provision of incentives to channel partners and/or channel - This includes setting clear guidelines on product distribution,
partner’s sales personnel, and/or end consumers. ensuring fairness, and fostering transparent communication to
balance expansion with the protection of existing channel
(3) develop managerial efficiency in managing the distribution channel or
relationships.
chain, activities, or programs are:
- By adapting policies and fostering transparent communication,
3.1 distributor training program; manufacturers can navigate the evolving distribution landscape
effectively, promoting mutual growth and minimizing conflicts.
3.2 sales force management assistance;
Managing the Channel Conflict
3.3 assistance on management problems;
- The rise of e-commerce and the adoption of omnichannel
3.4 shelf-allocation programs; and,
strategies have transformed retailing, leading to more dynamic and
3.5 provision or use of missionary sales personnel. complex distribution channels. Retailers now engage with
consumers through various platforms, including websites, social
(4) identify source of supply to end consumer, activities, or programs are: media, kiosks, call centers, and apps. This evolution has
4.1 active participation in local advertising; and, introduced new challenges in managing marketing and distribution
flows.
4.2 identification of point- of-purchase. - Channel conflict, often viewed negatively, can be constructive if it
leads to innovation, improved services, and rational competition.
Distributive Network Changes and Maintaining Relations
Managing these conflicts effectively requires clear
- The retail landscape is rapidly evolving with the emergence of communication, fair policies, and active participation from all
new marketing institutions such as online retailers, convenience channel members. Without cooperation, conflicts can escalate,
stores, corporate chains, discount stores, and factory outlets, resulting in a lose-lose situation for all parties involved.
alongside traditional outlets like pop-up stores, grocery stores, and - The transition from multichannel to omnichannel retailing
shopping malls. integrates various consumer touchpoints for a seamless
- This dynamic environment has led to concerns among established experience.
channel partners about unfair competition from these new entrants. - Channel conflict, when managed properly, can drive
- Manufacturers, aiming to expand their market reach, recognize the positive changes and enhance overall performance.
importance of ensuring their products are available in both new - Active and fair participation from all channel members is
and traditional outlets. essential to prevent conflicts from becoming detrimental.
- To address these challenges and maintain harmonious
relationships with all partners, manufacturers should consider
implementing changes in marketing channels and sales policies.
MODULE 2: SELECTING AND MANAGING DISTRIBUTION values, growth ambitions, and a commitment to customer
CHANNEL MEMBERS satisfaction.
C. TYPES OF DISTRIBUTION CHANNEL PARTNERS IN
I. SELECTING DISTRIBUTION PARTNERS
THE PH CONTEXT
A. UNDERSTANDING DISTRIBUTION CHANNELS
1. Wholesalers - Large-scale buyers who purchase in bulk and
- Distribution channels refer to the pathways through which distribute to smaller retailers. Example: Puregold Price Club
products or services flow from the manufacturer to the final Inc., which operates a vast network of wholesale and retail
consumer. These channels can be direct (manufacturer to stores across the Philippines.
consumer) or indirect (involving intermediaries such as 2. Distributors - Independent entities that manage the
wholesalers, distributors, and retailers). distribution of products on behalf of the manufacturer.
B. CRITERIA FOR SELECTING DISTRIBUTION CHANNEL Example: Fly Ace Corporation, which distributes food and
PARTNERS beverage products nationwide.
1. Market Coverage - Partners should have the ability to reach 3. Retailers - Direct sellers to the end consumer. Example: SM
your target market effectively. In the Philippines, where the Supermalls, a leading retail chain with branches nationwide,
market is spread across urban and rural areas, a partner with providing significant market coverage.
extensive geographic coverage is essential. 4. E-commerce Platforms - Online marketplaces that allow
2. Financial Stability - Assess the financial health of potential businesses to sell directly to consumers. Example: Lazada
partners to ensure they can support your business, manage Philippines, a major e-commerce platform with a broad
inventory, and handle credit terms. customer base.
3. Reputation and Credibility - A partner’s reputation in the II. Managing Distribution Channel Partners
market can influence your brand image. Choose partners with A. BUILDING STRONG RELATIONSHIPS
a track record of reliability and integrity. 1. Communication - Maintain open and transparent
4. Expertise and Experience - Consider partners with experience communication with your partners. Regular updates,
in your industry. In the Philippines, this might mean selecting meetings, and feedback sessions help in aligning strategies
a partner who understands the local market dynamics, such as and addressing issues promptly.
regional consumer preferences or logistical challenges. 2. Training and Support - Provide training programs to
5. Technology and Infrastructure - The ability to leverage ensure partners are well-versed in your products and
technology for inventory management, order processing, and services. In the Philippines, where product knowledge can
customer relationship management (CRM) is crucial. In the vary across regions, this is particularly important for
Philippines, where e-commerce is growing, partners with maintaining consistency in customer experience.
robust digital capabilities are increasingly important.
6. Alignment with Business Goals - Ensure that the partner’s 3. Incentives and Motivation - Offer incentives such as
business objectives align with your own. This includes shared discounts, bonuses, or exclusive deals to motivate partners. In
the Philippine market, where competition is intense, providing retailers shifted to online sales channels, requiring
financial and non-financial incentives can help maintain manufacturers to support this transition.
loyalty.
3. Regular Feedback Mechanisms - Implement feedback loops
4. Performance Monitoring - Regularly assess the to gather insights from partners about market trends, customer
performance of your partners against agreed-upon metrics preferences, and operational challenges. This information can
such as sales targets, market coverage, and customer be invaluable for strategic decision-making.
satisfaction. This can be done through periodic reviews and
audits.
B. Conflict Resolution
1. Establish Clear Contracts - Define roles, responsibilities,
and expectations in a legally binding agreement. This
minimizes the potential for disputes.
2. Proactive Problem-Solving - Address issues before they
escalate. Encourage open dialogue and find mutually
beneficial solutions.
3. Mediation and Arbitration - In cases where conflicts cannot
be resolved internally, consider third-party mediation or
arbitration as a more amicable solution compared to legal
proceedings.
C. Adapting to Market Changes
1. Flexibility - The ability to adapt to changing market
conditions is essential. In the Philippines, factors such as
economic fluctuations, natural disasters, and changing
consumer behavior require a dynamic approach to managing
distribution channels.
2. Innovation - Encourage partners to innovate in terms of
product offerings, marketing strategies, and customer
engagement. For instance, during the pandemic, many Filipino