Case Study with Marketing – Sample Management Essay
Distribution is one of the four key marketing mix elements. It has been defined as the process of availing a product at a place where the consumer can readily access it for consumption. According to Needham (1996), effective distribution ensures that customers are afforded utmost convenience (they are able to get the product at the right place and time), access (they are aware of the availability of the product) and support (information on the products before sale, promotion and post-sale services) In order for a firm to make informed decisions of their channels and mode of distribution, they must take into consideration both logistical and strategic factors. The strategic factors include the selection of a distribution network that involves important decisions such as where to avail which product and the selection of partners to work with in the distribution process. The logistical factors or the supply chain management factors are geared towards efficiency in the realization of the strategic objectives. Important decisions in the same include the information dissemination, goods movement, and storage.
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Multinational companies have a bigger task in creating an effective and efficient marketing chain to distribute its products. The task becomes even bigger when the manufacturing factories are located in different countries as is the case with Michael Jordan sneakers brand manufactured by Nike Inc. which has factories in many South East Asian countries, several European countries and the United States. Nike produces at least 180 different types of sneakers under the Michael Jordan brand. The corporation has to put measures in place to ensure that no country in which it has operations experiences shortage of their products.
Distribution channels, strategies, and mechanisms.
Nike, like many multinational corporations uses a blend of different channels in different markets. The company uses intensive distribution in some countries in Asia especially Malaysia, Taiwan, Indonesia, South Korea and The Philippines. This means that Michael Jordan sneakers are stocked indiscriminately in apparel outlets in these markets. Like most luxury retailers, the corporation also distributes its products through exclusive distribution channels where it operates over 700 retail outlets in different parts of the world. These retails exclusively sell only Nike products or in some cases only Michael Jordan sneakers. Nike also avails its products to its customers through selective distribution especially in areas where it has smaller market dominance such as in Africa Eastern European countries. In these countries, the corporation relies on several intermediaries to retail their products. Nike has been very hesitant to disclose their distribution partners even under extensive pressure from consumer watch organizations such as CorpWatch. Recently Nike has put disintermediation measures such as e-commerce or online retailing. Continued Smartphone retailing and m-commerce that the corporation has aggressively is set to increase sales of Michael Jordan sneakers significantly and reduce the number of intermediaries.
While Nike has been criticized in some of its other activities, it has maintained quite a high degree of professionalism in its distribution process. The corporation has synchronized its supply chain in that all of the partners involved in the same, operate in a mutually supportive manner that exhibits flexibility and cooperation and that is seamless smooth with customers barely noticing any interruption in the flow. McCarthy (1975) observes that the corporation has also embraced the ideal of fair compensation for its distributors that recognizes supply chain partners that exhibit outstanding performance and rewards them appropriately. Nike also shows great commitment to the partnerships in its supply chain through establishing mutually beneficial objectives, openness with its partners and forthright communication with its various partners on any arising issues. It is interesting to note that since inception of the Jordan brands in 1984 which marked the globalization of Nike, the corporation has not faced a single litigation from a disgruntled distribution partner.
Effective distribution is paramount to any multination company. When such a company ensures ease in the access of its products and information on its products to its consumers, its sales are bound to rise. The Michael Jordan brand of sneakers is one of the most popular in the world, a fact which is partly attributable to the numerous
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