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Apple Inc and Distribution Channels In this learning activity, we will develop skills related to explaining what is meant by a marketing channel and the value created by intermediaries
Apple Inc and Distribution Channels In this learning activity, we will develop skills related to explaining what is meant by a marketing channel and the value created by intermediaries. A product can take many routes on its journey from a producer to buyers and there are important differences between these marketing channels for consumer goods and those for industrial goods. The members of a marketing channel can contribute value in the form of utilities: place, time, form or possession utilities. Consider what you know about distribution channels to answer the following questions. 1. Within the last year, have any of you purchased a product (computer, iPod, software, etc.) manufactured or sold by Apple? If yes, where did you purchase it? Describe the distribution channel: was it a marketing channel for consumer goods and services? What type? A marketing channel for business goods and services? What type? Or was it an electronic marketing channel? What type? 2. Who were the intermediaries in this marketing channel. What purpose did they serve? What value did they add? 3. Since the late 1990s, Apple has allowed consumers to purchase its products online via its Apple Store. If you were to purchase an Apple product from the online Apple Store, (a) identify the channels members as a producer, wholesaler, and/or retailer and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. 4. As of 2012, there are over 300 Apple stores worldwide. Apple also has opened several "mini" stores in strip malls. If you were to purchase an Apple product from an Apple Retail Store, (a) identify the channels members as a producer, wholesaler, and/or retailer; and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. 5. Under its Authorized Apple Reseller program, Apple has established relationships with independent retailers to sell Apple products. These retailers are located in major metropolitan markets. If you were to purchase an Apple product from this kind of store, (a) identify the channels members as a producer, wholesaler, and/or retailer; and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. 6. Under its Authorized Apple Reseller program, Apple has also established a relationship with Best Buy, the #1 retail electronics chain in the U.S. and Canada, with over 780 stores across the North America. Each store's layout is organized into departments. The computer department contains Apple computers and software products and is staffed by Best Buy employees. Assume that Best Buy obtains its entire inventory from Ingram Micro, the nation's largest technology product distributor. If you were to purchase an Apple product from Best Buy, (a) identify the channels members as a producer, wholesaler, and/or retailer; and (b) classify the channel strategy used by Apple and its channel members as direct or indirect.
Expert Solution
A distribution channel is defined as the chain of business or intermediaries a firm uses to ensure that the final product reaches its designated consumer. These include wholesalers, retailers or even using B2C internet websites.
Here, we take the example of Apple to explain the concept.
1) Yes, I have purchased an iPhone manufactured by Apple, from an official reseller that sells Apple products. The business I purchased from was a retailer, and they sold many other brands of electronics other than Apple. So, one may say it marketed other brands as well, mainly focusing upon electronic goods.
2) The intermediaries in the business's channel, from which I purchased the iPhone was as follows -
Manufacturer (Apple) -> Distributor(Shifts to different locations) -> Retailer(final point of purchase for consumers)
These intermediaries are essential since without this chain it would be impossible for a consumer to obtain the final product. The value that they added stemmed from their ability to create margins at each step of this chain, selling and reselling the products at designated prices such that each POC may obtain profit.
3) If I were to purchase it online
a) Producer (Apple) - Wholesaler (website handles or warehouse but under Apple's control) -> final shipping to the consumer
b) This would be a direct strategy for communicating with the consumer.
4) If I were to purchase it from an Apple Retail store-
a) Manufacturer (Apple) -> Retailer(final point of purchase for consumers, in this case, the store)
b) This would be an indirect strategy since Apple itself does not sell the product to the consumer
5) As mentioned earlier, I purchased my product from an Authorised Apple reseller, so please refer above.
a) Manufacturer (Apple) -> Distributor(Shifts to different locations) -> Retailer(final point of purchase for consumers)
b) This would also be an indirect strategy since the responsibility of selling the product lies on the store owner, not on Apple.
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