Marketing channels

Usually referred to as the ‘place’ in marketing mix, distribution is an essential part of marketing as this involves activities that make products available to customers where and when they want to purchase them. Consequently, choosing the right channels of distribution is a major decision in developing marketing strategies. (Dibb, Ferrell, Simkin, & Pride, 2012)

Distribution channels of Coca-Cola

Figure 1 Overview of the supply chain of Coca-Cola

 (Hu, 2016)

Ø  Manufacturer à Consumers

This characterizes the short direct movement of Coca-Cola product from the manufacture to end users, done through E-commerce – the use of the Internet for marketing communications, selling, and purchasing. (Dibb, Ferrell, Simkin, & Pride, 2012) This is evident in their ‘Share-A-Coke’ e-commerce operations wherein consumers were able to customize their own Coke bottles with their own names and order them via shareacoke.com; these bottles are then specifically delivered to the right shipping address of the consumers. (Moye, 2015) Through this channel, The Coca-Cola Company fulfills all the financial functions (buying and selling), logistical functions (sorting, accumulating, transporting, and allocating), and commercial functions (standardizing transactions, collecting information, assorting, promoting, and providing customer service).

Ø  Manufacturer à Retailers à Consumers

Coca-Cola is distributed through this short indirect channel. Retailers are independent parties that act as intermediaries buying large quantities of Coca-Cola from its manufacturers in order to sell them to end users in retail. The manufacturer are then responsible for the logistical functions while the retailers (e.g. supermarkets and convenience stores) focus on the financial functions such as buying and selling and commercial functions such as standardizing transactions, assorting, and perhaps promoting.

Ø  Manufacturer à Vending machines à Consumers

This is similar to the previous one, however, this channel cannot provide customer service nor collect information. The complexity is low as no negotiations with retailers concerning shelf-space or channel conflicts will arise. These vending machines can be also used for promotion.

Behaviour of channel members

Channel power is the ability to influence another channel member’s goal achievement therefore the product’s image can be influenced by the retail concept in which it is sold. (Dibb, Ferrell, Simkin, & Pride, 2012) There are times that some retailers (e.g. Albert Hein or Plus) over-emphasize their own products or other competing products (e.g. Pepsi) by allocating smaller shelf-spaces for Coca-Cola. Other times, the opposite happens which improves Coca-Cola’s image.

Distribution strategy of Coca-Cola

Coca-Cola uses both pull and push distribution strategies. The company promotes the product directly to end consumers through TV advertisements, social media and outdoor advertisements. Consumers then develop a strong demand for Coca-Cola, inducing them to order it from shopkeepers. The push policy is also used in which the Coca-Cola Company utilizes its sales force and trade promotion to encourage intermediaries – retailers and wholesalers – to carry, promote and sell Coca-Cola to end consumers. Lastly, Coca-Cola product is distributed intensively; this is effective to promote convenience to consumers, as they are able to purchase these in all available outlets.

References

Dibb, S., Ferrell, O., Simkin, L., & Pride, M. (2012). Marketing Concepts & Strategies (6th ed.). Cengage Learning EMEA.

Hu, J. (Director). (2016). Coca-Cola Supply Chain [Motion Picture]. Retrieved December 7, 2016, from https://www.youtube.com/watch?v=UBSOiHUctrY

Moye, J. (2015, August 10). Special Delivery: Inside the ‘Share a Coke’ e-Commerce Operation. Retrieved December 7, 2016, from The Coca-Cola Company website: http://www.coca-colacompany.com/stories/special-delivery-inside-the-share-a-coke-e-commerce-operation