distribution overview

8/9/2019 Distribution Overview

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Distribution Channels A distribution channel - set ofindependent organizations involved in theprocess of making a product or serviceavailable to the consumer or business user

Used to move the customer towards the

product or the product to the customer

Organic development of an industry


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Place = Distribution

The 4PsProduct, Price, Place, Promotion

hat the !P" of Price is to #evenue$anagement, the !P" of Place is to%istribution


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Distribution also

describes&ocations for hotel brand distribution'ranchisingOwnership

$anagement contractsThe sales staff and system

(roup sales or volume accounts#eservations and transient sales)ational sales offices#epresentation firms, consortia


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DistributionToday distribution in the hospitality industry

generally references transient sales today

Revenue management and distribution mergingtogether

Internet marketing includes distribution issues


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Distribution Channel

FunctionsInformation: consumer behavior !search stage"Promotion: messagingNegotiation: price and other terms

*how is this done online+Physical distribution: thin e-tic ets+Prospecting: finding, communicating, andtrac ing prospective buyers


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Direct versus Indirect

Channels%irect .hannels0mployed sales staff )ational sales staff 1rand2com3oice .#5 $obile

6ndirect 7 6ntermediarieshy use them+hy so many of them+


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Getting the Customer to theProduct

#eservation services#epresentation firms.onsortia

6ncentive travelorganizations.orporate travelmanagement

(lobal distributionsystems *(%58Traditional off-linetravel agents.entral reservationsystems *.#58

6nternet channelsebsites


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Push vs. Pull strategies

Pushing the product !down" through thedistribution channel TO the customer

6ncentives to travel agents and intermediaries

Pulling the customer !up" through thedistribution to the channel

Traditional media private sales .#$


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Why Use Intermediaries?

9istory of travel

5elling through wholesalers and retailers usually ismuch more efficient and cost effective than directsales

'ragmentation of the travel purchase and travelinventory, transportation *idea of !lift"8, hotels,attractions, meeting facilities, restaurants, and so on2


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Travel Agents Tour Wholesalers

Concierges Specialists!rokers " #unket Reps

Internet $otel Representatives

Consortia " ReservationsSystems

%lobal &istribution Systems

'ational( State(and )ocal Tour Agencies

*arketing Intermediaries

2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, t! edition"pper #addle $i%er, &' 0( )* +otler, o-en, and Makens


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E-Commerce Domains1:. *business to consumer8

1randed websites1:1 *business to business8

Pass ey.:1 *consumer to business8

User groups

.:. *consumer to consumer81logs/ review sites are blends of above


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Internet Intermediaries

9istory of the internet as a discount channelPrice and convenience ey drivers still%ominance about inventory allocation.onsistency of all 4Ps by channel

9ow Product is described

Pricing parity.hannel profitability

.ommunication needs to vary by segment *channel8


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THE GDS: 1 !"s #oo$ and%eel


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Com!le"itieso#Distribution


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Channels

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&T' (usiness )odels

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+stimated Cost per channel e:cluding !randand S.itch fees per transient reservation

!rand-com $2 - $5

CRS01oice $2-4/inquiry plus $6-12/net booking

%&S $4.50-$69roperty &irect08ther =>2:? - =

8TA , *erchant $17-$35 or 20%

8TA , Retail $10

8TA , 8pa;ue =? 7 @

9ebs, :;


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)a*or Issues+Challenges.osts have risen as has competition(lobal differences in systems

Technology also flattening this

5ystem hard to change and comple to manage9istorical controls of (%5, OTA

%iversity of travel !parts" ma es all of the

distribution points part of the e perience and if anintermediary fails, so does the e perience


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Evaluation o, Channels

.ontrol and cost of each channelTrac ing of statistics to better negotiatecontracts in the futureUnderstand when and why to use a channel(ood channel management ensurescustomer satisfaction A)% revenueoptimization A)% profit ma imization


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Goal ,or hotels in distribution

ED hat is the definition of revenuemanagement+

AD 5elling the right product to the rightcustomer at the right time for the right *readDma imum8 priceCFby the right channelC


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$e#erences.ullen, Gathleen and .aryl 9elsel, %efining #evenue $anagement,Top &ine to 1ottom &ine, 95$A6 'oundation, 1ethesda, $%, :;;H(reen, .indy 0stis, %emystifying %istribution, 95$A6 'oundation,1ethesda, $%, :;;?29o, Alfred, 6mporting, 0 porting and 6nvesting in .hina, orld Trade,

$arch :;;I, pp :;-::2Gotler, 1owen, $a ens, $ar eting for 9ospitality and Tourism, 4 th 0dition, Pearson, Upper 5addle #iver, )J, :;;HPricewaterhouse.oopers, 9ospitality %irections 0urope 0dition,1riefing Paper, )ovember :;;I

0lectronic %esign, The .ell Phone 5imply 6rresistible, January

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