Channel stuffing

(noun)

The business practice where a company, or a sales force within a company, inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large.

Examples of Channel stuffing in the following topics:

  • Trade Allowances

    • Trade discounts are most frequent in industries where retailers hold the majority of the power in the distribution channel (referred to as channel captains).
    • It is important that these discounts are fair and offered to all channel members equally to avoid channel conflict.
    • Some challenges include channel stuffing, where manufacturers induce channel members to buy far more products than they can sell in a reasonable period.
    • Another challenge is diverting, which is when companies sell to channel members at a cheaper rate rather than pass on savings to consumers.
  • Product Labeling

    • For example, a law label is a legally required tag or label on new items describing the fabric and filling regulating the United States mattress, upholstery, and stuffed article industry.
    • Laws requiring these tags were passed in the United States to inform consumers as to whether the stuffed article they were buying contained new or recycled materials.
    • Laws were passed in the United States to inform consumers as to whether the stuffed articles they were buying contained new or recycled materials.
  • Channel Integration

    • The integration of marketing channels to varying degrees is known either as multi-channel or omni-channel retailing.
    • The integration of marketing channels involves a process known as multi-channel retailing.
    • Omni-channel retailing is very similar to, and an evolution of, multi-channel retailing.
    • The omni-channel consumer wants to use all channels simultaneously and retailers using an omni-channel approach will track customers across all channels, not just one or two.
    • Merchandise and promotions are not channel specific, but rather consistent across all retail channels.
  • Selecting Marketing Channels

    • Channels can range in levels from two to several (five being typical).
    • The type of product dictates the number of marketing channels to use.
    • Once the number of levels is decided, the channel manager must determine the actual number of channel components involved at each level.
    • Regardless of the channel framework selected, channels usually perform better if someone is in charge, providing some level of leadership.
    • Given the restrictions inherent in channel leadership, the final question is always "who should lead the channel?
  • The Significance of Marketing Channels

    • A channel performs three important functions.
    • Not all channel members perform the same function.
    • Second, all channel institutional members are part of many channel transactions at any given point in time.
    • A channel strategy is evident.
    • Identify the types of institutions that participate in marketing channels, and the three primary functions of these channels
  • Factors Affecting Channel Choice

    • Other channel members can be useful to the producer in designing the product, packaging it, pricing it, promoting it, and distributing it through the most effective channels.
    • The immediate and ultimate customers may be identical or quite separate, depending on the type of product, functions performed in the channel, and location in the channel.
    • Channel choice is also greatly influenced by channel objectives.
    • The following areas encompass the major categories of channel objectives:
    • Create an efficient channel - improve channel performance by modifying various flow mechanisms.
  • Channel Power, Control, and Leadership

    • In the channel mechanism, power refers to the capacity of a particular channel member to control or influence the behavior of another channel member.
    • Given the restrictions inherent in channel leadership, the final question is "who should lead the channel?
    • Consequently, during this period, the wholesaler led most channels.
    • The result has been some serious warfare to gain channel superiority.
    • Wholesalers and retailers undertake size competition in order to gain channel control.
  • Cross-Channel Customer Experience

    • A cross channel experience involves customers accessing multiple marketing channels to make purchases and to retrieve information and services.
    • The customer has accessed several different company channels during this experience.
    • A cross channel customer experience involves touch points where customers can access multiple channels within a business to make purchases and to access information and services.
    • The cross channel customer experience has changed the way that business is conducted.
    • The process must be customer friendly and each marketing channel must operate in conjunction with the other channels within the system to provide seamless and efficient service.
  • Channel Member Characteristics

    • Thus, the channel chosen by a marketer becomes an integral part of the marketing plan.
    • Marketers must carefully evaluate how their products fit into different distribution channels.
    • There are many types of channels, and the selected channel becomes a function of the overall marketing strategy.
    • Candy uses an intensive distribution channel, meaning it is widely available at a low cost.
    • Explain the importance of pairing a brand's products with the appropriate distribution channel
  • Competitive Priorities in Marketing Channels

    • A marketing channel is a set of practices necessary to transfer the ownership of goods from producer to consumer.
    • The Impact the attitudes of channel intermediaries have on the product
    • An alternative term is distribution channel or 'route-to-market'.
    • During the marketing planning stage, marketers must choose and incorporate the most suitable channels for the firm's products, as well as select appropriate channel members or intermediaries.
    • Monitoring the channel's performance over time and modifying the channel to enhance performance is also imperative for organizations looking to remain competitive in the market.
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