Distribution Programming

Distribution programming, according to Kotler & Keller (2012), is to build a planned, professionally managed, vertical marketing system (also known as VSM) that meets the needs of both manufacturers and distributors. In which, VSM includes the producer, wholesalers, and retailers acting as a unified system. With VSM, one channel member owns or franchises the others of has so much power that they all cooperate. The channel member in this case is also called channel captain. (Kotler & Keller, 2012, pp. 453, 454) The manufacturers and distributors through marketing channel need to jointly plan merchandising goals, sales and promotion plans, etc. The function of the channel is to perform the work of moving goods from manufactures or producers to consumers, of which, the members of the channel are connected and perform some below key functions.

First is gathering information about potential and current customers, competitors, actors, and other forces in the marketing environment.

Second is developing and disseminating persuasive communication to stimulate purchasing.

Third is negotiating and reaching agreements on price and other terms so that transfer of ownership or possession can be affected.

Fourth is placing order with manufacturers.

Fifth is acquiring the funds to finance inventories at different levels in the marketing channel.

Sixth is assuming the risks that connected with carrying out channel work.

Seventh is providing for the successive storage and movement of physical products.

Eight is providing for the buyers' payment of their bills through banks and other financial institutions.

Final is overseeing actual transfer of ownership from one organization or person to another.

The above nine key functions are conducted by channel members through five marketing flows, which include physical flow, title flow, payment flow, information flow, and promotion flow. Shifting some functions to intermediaries can lower the producer's costs hereby lower the prices, however, intermediaries must add a change to cover its work. Therefore, if intermediaries are more efficient than the producer is, the prices to consumers should be lower.

References:

Kotler, P., & Keller, K. L. (2012). Marketing Management (14th ed.). Pearson.