distribution
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Distribution. Objectives. Define distribution Explain the concept of a channel of distribution Identify channel members Distinguish between direct and indirect channels Explain distribution channels for consumer products and services Describe distribution intensities. Distribution. - PowerPoint PPT PresentationTRANSCRIPT
Distribution
Objectives
Define distribution Explain the concept of a channel of
distribution Identify channel members Distinguish between direct and indirect
channels Explain distribution channels for consumer
products and services Describe distribution intensities
Distribution
The process of deciding how to get goods in customer’s hands
One of the 4 P’s of marketing - Place
Importance of Distribution
To earn a profit, companies have to distribute their products and services
Reach the target market Manage costs
Video on Distribution
http://videos.howstuffworks.com/hsw/23138-economics-distribution-channels-video.htm
Distribution
Channels of Distribution - the path a product takes from its producer or manufacturer to the final user.
Industrial: when a product purchased for business use
Consumer: when a product purchased for personal use
Direct and Indirect Channels
Direct distribution: When the producer sells goods or services
directly to the customer
Indirect distribution: Involving one or more intermediaries (middlemen)
Which of these channels is a direct channel?
Channel Members
Intermediaries - (middlemen); businesses involved in sales transactions that move products from the manufacturer to the final user
Manufacturer Final User
Efficiency
With no intermediaries 25 transactions needed
MFG MFG MFG MFG MFG
Consumer Consumer Consumer Consumer Consumer
Contact Efficiency
With 1 intermediary 10 transactions needed
MFG MFG MFG MFG MFG
Consumer Consumer Consumer Consumer Consumer
Intermediary
Channel Members: Intermediaries
Wholesalers Businesses that buy large quantities of goods
from manufacturers, store the goods, and then resell them to other businesses.
Take title to goods they buy for resale.
Channel Members: Intermediaries
Wholesalers - specific types Rack jobbers - wholesalers who manage
inventory and merchandising for retailers by counting stock, filling it in when needed and maintaining store displays.
Drop shippers - own the goods they sell but do not physically handle the actual products.
Rack Jobber
Drop Shipper
Channel Members: Intermediaries
Retailers Buy products from manufacturers or wholesalers Sell goods to final consumer for personal use Takes title for goods “Brick and Mortar”
Channel Members: Intermediaries
E-Retailers Non-store retailers Buy products from manufacturers or wholesalers Sell goods to final consumer for personal use Online purchase and mail delivery
Channel Members
Agents Intermediaries that bring buyers and sellers together
Independent Manufacturer’s Representative Work with several related, but noncompeting
manufacturer’s in a specific industry Paid commission on what they sell
Brokers Negotiate a sell, paid a commission, and look for new
customers
Channel Path
Manufacturer directly to Consumer Selling products at the production site (factory) Having a sales force call on consumers Catalogs Online sales
ManufacturerManufacturer ConsumerConsumer
Channel Path
Manufacturer to Retailer to Consumer Used for merchandise that dates quickly or needs
servicing
ManufacturerManufacturer ConsumerConsumerRetailerRetailer
Channel Path
Manufacturer to Wholesaler to Retailer to Consumer Most commonly used for staple goods, which are
items that are always carried in stock and whose styles do not change frequently
ManufacturerManufacturer ConsumerConsumerRetailerRetailerWholesalerWholesaler
Channel Path
Manufacturer to Agents to Wholesaler to Retailer to Consumer For manufacturers who wish to concentrate on
production and leave sales and distribution to others
ManufacturerManufacturer ConsumerConsumerRetailerRetailerWholesalerWholesalerAgentsAgents
Channel Path
Manufacturer to Agents to Retailer to Consumer Used by manufacturers who do not want to
handle their own sales.
ManufacturerManufacturer ConsumerConsumerRetailerRetailerAgentsAgents
Distribution Intensity
Intensity - how widely a product will be distributed
Exclusive Distribution: Protected territories for distribution of a product in
a given geographic area Characteristics: prestige, image, channel control,
and high profit margins
Distribution Intensity
Selective Distribution: A limited number of outlets in a given geographic
area are used to sell the product Select channel members that maintain the image
of the product and are good credit risks, aggressive marketers, and good inventory planners.
Distribution Intensity
Intensive Distribution The use of all suitable outlets to sell a product Objective/Goal: complete market coverage and to
sell to as many customers as possible
What’s the Intensity?(exclusive, selective, or intensive)
Kraft Macaroni & Cheese Seven for all Mankind Jeans Apple Macbook Pepsi Toyota Porsche Nike Running Shoes
Selecting a Distribution Channel
Factors to consider: Type of product Structure and geography of the Market Complexity of the product Quantity and price of a product
Activity
Diagram 5 scenarios of channels of distribution
Draw, use clipart on computer, or art supplies from closet and magazine pictures