Chapter 11 - Distribution
What is Distribution?
Activities that make profits available to customers when, where, and how they wani to purchase them
Marketing Intermediary
A middleman linking producers and buyers
What is a Distribution Channel
series of firms or individuals that facilitates the movement of a product from the producer to the final customer . Direct . Indirect
Major Types of Channels of Distribution
Producer
Producer
Retailer
Producer
Wholesaler
Retailer
Dustomer
Producer
holesaler
Mtholesaler
Retailer
Consumer channels
The Bagal Shop
Consumer
Wonder Bread
Publx Grocery Skre
Consumer
Wigley's Gum
Candy and Tobacco Wholasaber
Mom&Pops Country Corenienc Sre
Consumer
LIZ Clalbome Fashions
Clothing Sales Agent
Macy's
Consumer
Business-to-business channels
Xerox Coplers
IBM
Caterpilar Tractors
Caterpllar Dealer
Tom's Earth Mowing Company
White Uniform Company
Restaurant supply
Slster Rachel's Diner
Sales Agent
Delco Batterles
Buck's Garage and Aub Repalr
Aubmolive Whoesaler
AubParts Distritutor
Dual Distribution Systems
Multiple channel usage E.g. pharmaceutical industry sells to hospitals, clinics, and organisational customers directly and to consumers indirectly through drug retailers
Functions of Distribution Channels
Creates Utilities (Time, place, possession, form) Creates Efficiencies (Reduce transaction costs) : Breaking bulk: channel members purchase large quantities from manufacturers and sell smaller quantities to many different customers - Creating assortments: channel members provide a variety of products on one location Physical Distribution Breaking & creating bulk & assortments : Transportation & storage Communication Functions - Provide link b/t customers & producers Facilitating Functions . Installation, maintenance, & repair - Provide retail location, staffing, & training support - Credit support
Steps in Distribution Planning
1. Develop Distribution Objectives 2. Evaluate Internal and External Environmental Influences 3. Choose a Distribution Strategy - Number of channel levels - Conventional, vertical, or horizontal system
o Intensive, exclusive or selective distribution 4. Develop Distribution Tactics - Select channel members o Manage the channel . Develop logistics strategies : Order processing : warehousing - Materials handling : Transportation : Inventory control
Distribution Intensity
Decision Factors: company, customers, channels, constraints, and competition : Intensive, exclusive, or selective distribution
Intensive vs. Exclusive Distribution Decisian Factor Intensive Distribution Company Oriented toward mass markets Customers High customer density Price and convenience are priorities Channels Overlapping market coverage Constraints Cost of serving individual customers is low Competition Based on a strong market presence,often through advertising and promotion
Exclusive Distribution Oriented toward specialized markets Low customer density Service and cooperation are priorities Nonoverlapping market coverage Cost of serving individual customers is high Based on individualized attention to customers,ofter through relationship marketing
The Internet as a Direct Channel
Disintermediation - process by which traditional intermediaries are eliminated as companies question the value added by layers in the distribution channel
Types of Wholesaling Intermediaries
Wholesaling intermediaries are firms that handle the flow of products from the manufacturer to retailer or business user o Independent . Manufacturer-o