l8 distribution
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Distribution
March 03, 2010
Chapter1414
McGraw-Hill/Irwin ©2007 by the McGraw-Hill Companies, Inc. All rights reserved.
Channels of Distribution
Marketing channelsMarketing channels
Marketing Channels are sets of interdependent organizations involved in the process of making a product available for use or consumption.
MiddlemenMiddlemen
MiddlemenMiddlemen A business firm thatrenders services directly
related to the sale/purchaseof a product as it flows through
from producer to consumer
A business firm thatrenders services directly
related to the sale/purchaseof a product as it flows through
from producer to consumer
You can eliminate middlemen, but not the essential distribution activities they
perform
You can eliminate middlemen, but not the essential distribution activities they
perform
Middleman ActivitiesMiddleman Activities
Middleman ActivitiesMiddleman Activities
Distribution ChannelsDistribution Channels
DISTRIBUTION CHANNELS
People and firms involvedin the transfer of title to a product
as the product moves from producer to ultimate consumer or business user
DISTRIBUTION CHANNELS
People and firms involvedin the transfer of title to a product
as the product moves from producer to ultimate consumer or business user
Producers Middlemen
Final Consumer
OrBusiness
User
Major Channels of DistributionMajor Channels of Distribution
Vertical Marketing SystemsVertical Marketing Systems
Choice of Channels: MarketChoice of Channels: Market
Type of
Market
Geographic concentration
Number ofpotential
customers
Ordersize
Choice of Channels: MiddlemanChoice of Channels: Middleman
Services provided by middlemen
Services provided by middlemen
Availability of desired middlemen
Availability of desired middlemen
Producer’s and middlemen’s policies
Producer’s and middlemen’s policies
Choice of Channels: CompanyChoice of Channels: Company
Desire for channel control
Services provided by seller
Ability of management
Financial resources
Intensity of DistributionIntensity of Distribution
Conflict in ChannelsConflict in Channels
HorizontalHorizontal
Middlemen of the same type
Middlemen of the same type
Different types of middlemen
on the same level
Different types of middlemen
on the same level
RetailerRetailer Retailer Retailer
Conflict in ChannelsConflict in Channels
VerticalVertical
Producervs.
Wholesaler
Producervs.
Retailers
Who Controls the Channels?Who Controls the Channels?
Expertise
Sanctions
Rewards
Channel as PartnershipChannel as Partnership
Cooperation Collaboration
RelationshipMarketing
Coordination
Legal ConsiderationsLegal Considerations
Exclusivedealing
Tyingcontracts
Refusalto deal
Exclusiveterritory