[MUSIC] Welcome to this new module on the distribution channel's evolving landscape. We will learn how we manage from simple to complex distribution channel, as well as the conflicts that may arise. We will later discover what trade marketing is. A collaboration solution between manufacturers and channels. Companies can design their distribution channels to make products and services available to customers in different ways. A channel level is each layer of marketing intermediaries that perform some work, bringing the products and the ownership closer to the final buyer. And the number of intermediary labels indicates the length of a channel. Depending on the length, channels can be short or long, and direct or indirect. For example, a zero level channel, that we call also short or direct, is a channel where the manufacturer is selling directly to the final customer. For example, the internet, manufacturers own shops, the mail orders, a home party, TV, selling door-to-door, and specialized sale force. Very complex products like, for example, airplanes and weapons. They are sold by specialized sales forces. The rest of the channels, they are indirect or longer channels. For example, a one-level channel contains only one selling intermediary. A typical example is a retailer. In a two level channel, it contains two. The wholesaler for example, and the retailer. And, for example, we talk about Japan, their food distribution may include as many channels as, for example, six. However, most companies use a mix of both channels simultaneously. And the length depends on different factors. For example, the nature of the product. The more complex the product, the shorter the channel is. For example, selling main frames, versus PC's, no? Or for example big ships versus small boats. There is another factor. The nature of the client, the more complex the client, the shorter the channel is. For example, private banking would be a short, verses retail banking, that is much longer. And also with Coca-Cola for example, it's not the same having as a consumer Carrefour the than an individual drinking coke. There is a third factor that would be the complexity of the purchasing process. The more complex, again, the shorter the channel. No? We'll use for example, sales forces in these cases. As we said, it's not the same as selling. For example, PCs to a large governmental agency with complex bureaucratic procedures versus selling pieces to individual consumers. The fourth factor would be the maturity of the consumer. The more mature the consumer is, the stronger the channels are. The quintessential sure channel to serve mature consumers is the online channel. Where a company connects directly with the consumer. And if we talk, for example, about traditions, habits, legislation, physical concentration of dispersion of the population, education level, weather. All these elements also influence the length of the distribution channel. For example, the population density and habits sells through catalogs in the US, versus Europe. In the US, the big geographic areas, with dispersed population, force the American consumers, to buy from catalogs, facilitating also the immigration to Internet. Or we talk about weather. Sales over the Internet are favored in these countries with bad weather. People prefer the convenience of buying online instead of going on. So these would be for example, the example of Nordic countries, versus the Mediterranean. Or legislation. In Europe there are many long, traditional channels that are protected by law. This is to protect the small and medium enterprises. There could be another factor, for example, that is education. The higher the educational level, the consumer is going to have a higher penetration, also the direct or short online channel. And we can see that in this Scandinavian countries the penetration of internet is much bigger than in the Mediterranean ones. I look forward to seeing you in the next class. Where we will evaluate the multi channel strategies and how we can succeed in the omni channel marketing. [MUSIC]