Question

Choose an existing product or service and answer the following four questions.

What is the company's market penetration strategy (intensive, selective, etc.), and how do the channels being used reflect that strategy?

Do the channels being used reflect a push or pull distribution strategy?

Which of the channels being used do you believe are most profitable, given their relative costs? Which of the channels being used do you believe are not as profitable as others but are still necessary to maintain market coverage?

How much control does the company need over its channels (0-level, 1-level, 2-level, 3-level, multichannel, etc.)? How is this need for control reflected in the channels being used?

Answer 1

The product being used is Coca Cola.

1. The company uses an INTENSIVE market penetration strategy. This means that the product is distributed in a manner to gain the maximum market share, thus, reaching the last of the customers. This strategy is clearly reflected in its channel of distribution. The channel is basically comprised of manufacturer, wholesalers, retailers and small shops. These small shops are found at every nook and corner of the market thus, making the drink visible to all. It is even said, you may not find water in dessert but you may always find a coke!

2. The channel reflects a push strategy as coca cola focuses on increased market share to fight competition. It strives to get maximum reach and maximum sales and thus, uses a push in products by its marketing and distribution. Also the demand is always on a stable side therefore no need to pull out the products from the market.

3. In my opinion, sales through one roof stores like D-Mart, Big Bazaars, Reliance Fresh, etc. is manageable and more profitable due to lesser channel members. However, the traditional stores offering the product at user convinience is also very much needed, though less profitable, to maintain product visibility.

4. Coca-Cola has been long established and a big fat giant. So, it has a huge channel and lots of channels for distribution at various stages, like national, state wise, regional, even local. Management is intact at all levels. Control is most importantly required in regional and local sales, however, the 0-level management cannot be ignored altogether.