Essays on Marketing Channels - Amazon.com Case Study

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The paper "Marketing Channels - Amazon. com" is a great example of a marketing case study.   The retail selling price, in this case, should be controlled by the Amazon. com. In a marketing channel, there is a transfer of goods from the point of production to the end seller and finally consumer in order to breakbulk. Depending on the marketing mix, the pricing of a product starts from the manufacturer who sets the wholesale price in which the retailers are able to purchase the product. Disagreements in pricing lead to price wars which destabilise distribution channel (Coughlan et al, 2006). By Amazon sticking with $ 9.99, publishers like Macmillan who are not contented with the price will move to Apple.

This may lead to the creation of a two-tier system where the many customers not willing to spend more will remain aligned to Amazon. com while the quality publishers may move to Apple and attract the buyers willing to purchase the quality at a higher price. This may not be desirable for Amazon. com as it may lose its market share to Apple, but the established market and other inherent factors are the main determinants of the choice of distributor.

Therefore, it is not dictated that there will be a two-tier rift system that will substantially affect Amazon. com. Even though value and quality of a product are factors to consider in pricing, other market forces determined by both internal and external environment of the company such as competition, structural organisation, demand, supply and the amount the consumer is willing to spend on a product are main considerations which should be aligned with the overall objectives and strategies of Amazon in the pricing.

Amazon. com distribution to the final consumer is over the internet and targets many customers across the globe; hence can employ the economy pricing in which there is no product considered of more value, hence all the prices are kept at par in order to attract and ensure that that market segments that are price sensitive are catered for. However, it is worth noting that the Macmillan have a stake in pricing but this is depended on the marketing channel and in this case, I believe Amazon. com is right in the pricing of the e-books as it is the final seller of the books. Question 2 The dealers are true to their accusations.

The channel partnership in marketing is normally depended on the final consumer purchasing power and frequency that ensures that the product reaches the end-user and reduces the waiting time. Therefore, the producer/supplier is supposed to supply amounts that satisfy the customer in order to ensure smooth mobility in the marketing channel. This implies that the partnership between the producer and dealer is not a fair-weather friendship but based on the market forces that are inherent in the distribution channel (Coughlan et al, 2006). The effect of the channel stuffing is that the dealers end up incurring a lot of costs which reduces their profits.

Some of the costs incurred include storage costs, maintenance costs and costs incurred in the advent of returning the unsold goods to the supplying company. In addition, this will lead to a surplus in supply as the demand is low. The result will be price declines of the product as the market forces in which high supply and low demand will lead to low prices.

Bearing in mind the effect of market forces such as competition, economic changes, and changes in customer preferences which consequently affect the demand, implies that marketing channel should be supplied with goods which satisfy the demand. This means that the supply should be conscious of the impending marketing forces. Oversupply leads to overloading the system and results in hurting the whole market channel. Therefore, Harley Davidson should take to consider such factors in order to avoid the channel stuffing that will have a negative ripple effect on the whole system due to reduced bulk breaking, Harley Davidson should allow sufficient waiting time that is depended on the market forces.

Reference

Coughlan, A., Erin, A., Louis, W. and Adel, E. Marketing Channels. Prentice Hall, 2006.
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