The distribution channel system
The distribution channel system is a critical element for any company in order to succeed in its business. A distribution channel, therefore, refers to the path that goods of a firm take starting from the production point to the consumer. Since the company owns the brand, it is responsible for the brand marketing initiatives. Coca-Cola Company uses bottling partners as one of its indirect channels. The firm produces the ingredients, which comprise beverage bases, syrups, and concentrates, and sells these ingredients to their bottling partners. In turn, the bottling partners manufacture, package, distribute, as well as merchandise the company’s finished product and distribute the final product to wholesalers (Bian, Zhao, & Liu, 2019). Upon receiving the products, the wholesalers sell it to retailers who in turn sell it to consumers. I believe the system is more useful for the company as it reduces the amount of work done to collect revenue. Besides, the system enhances the company’s reachability as well as ensures the firm reduces the cost of transport and production.
The customer suffers the increased costs of the product. The price at which the Coca-Cola Company sells its product is different from the price at which the customer buys the product. For instance, suppose the company sells the ingredients at $0.2 to the bottling partner, the bottling partner would sell the finished product to the wholesalers at a higher price, probably in the region of $0.4. Consequently, the wholesalers would sell the product to retailers at a higher price than they bought, who would sell much higher to the customer. This method, therefore, might prove expensive to the consumers who would affect consumption. As a result, consumers would turn to other beverages such as alcohol or competitors such as Pepsi. The company should reduce the distribution channel to ensure its product reaches the customer at a considerable price.
Warehouse and Transportation
A channel leader refers to a company or an individual responsible for managing any activity carried in a firm for the purpose of delivery. Both physical and online delivery has captured a massive market share in the contemporary world. However, some products and services required urgently by consumers and offline or online delivery models are ineffective in solving such cases in the market. For example, some customers need goods regularly and cannot for long for the service or product to be delivered. In such a case, some firms have launched quick services delivered to customers in the shortest time possible. An excellent example of a company whose warehouse is a channel leader is Amazon. Amazon lacks physical stores and relies on various carriers to deliver its product to customers.
Amazon delivers its products from its warehouses to customers via various carriers. As a result, the company has a significant power to modify the channel of distribution (Benone, Esposito, Juen, Pompeu, & Montag, 2017). The company can dictate which carrier it uses as well as which products it can sell since it has considerable selling power. Amazon capitalizes on partnering with providers who have high volume business, which it can provide. The company leads distribution channels through both physical deliveries of goods purchased through its Amazon Prime and their online services that include Amazon Video. This aspect makes Amazon one of the most successful companies.