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Transcript of Chapter 15 THE FUTURE OF BUSINESS Gitman & McDaniel 5 th Edition THE FUTURE OF BUSINESS Gitman &...
Ch
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THE FUTURE OF BUSINESSGitman & McDaniel
5th Edition
THE FUTURE OF BUSINESSGitman & McDaniel
5th Edition
Chapter
Distributing Products in aTimely and Efficient MannerDistributing Products in a
Timely and Efficient Manner
Prepared byDeborah Baker
Texas Christian University
Prepared byDeborah Baker
Texas Christian University
15
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 2Ch
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1 What is physical distribution?
2 What are distribution channels and their functions?
3 How are channels organized?
4 When would a marketer use exclusive, selective, or intensive distribution?
5 What is wholesaling, and what are the types of wholesalers?
6 What are the different kinds of retail operations and the components of a successful retailing strategy?
7 How can supply chain management increase efficiency and customer satisfaction?
8 What are the trends in distribution?
Learning Goals
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Learning Goal 1
What is physical distribution?
1
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Physical Distribution1
Management of the acquisition of raw materials to the factory
Management of the movement of products from the producer to industrial users and consumers
The RoleThe Roleofof
DistributioDistributionn
The RoleThe Roleofof
DistributioDistributionn
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Supply Chain1
Suppliers ofRaw Materials
Suppliers ofRaw Materials
CD Factory
CD Factory
Wholesaleor
DistributionCenter
Wholesaleor
DistributionCenter
Retailers,Wholesalers,Distribution
Centers
Retailers,Wholesalers,Distribution
Centers
CustomersCustomers
Finished CDs
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2 Learning Goal 2
What are distribution channelsand their functions?
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2 Distribution Channels
IndustrialDistributorsIndustrial
Distributors
Independent wholesalers that buy related product lines from
manufacturers and sell them to industrial users.
Independent wholesalers that buy related product lines from
manufacturers and sell them to industrial users.
WholesalersWholesalersFirms that sell finished goods to
retailers, manufacturers, and institutions.
Firms that sell finished goods to retailers, manufacturers, and
institutions.
Agents andBrokers
Agents andBrokers
Agents are sales representatives of manufacturers and wholesalers, and brokers are entities that bring
buyers and sellers together.
Agents are sales representatives of manufacturers and wholesalers, and brokers are entities that bring
buyers and sellers together.
RetailersRetailersFirms that sell goods to consumers
and to industrial users for their own consumption.
Firms that sell goods to consumers and to industrial users for their
own consumption.
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2 Channels of Distribution
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2Functions of Distribution
Channels
Ease the flow of goodsEase the flow of goods
Perform needed functionsPerform needed functions
Reduce the number of transactionsReduce the number of transactions
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2Functions of Distribution
ChannelsWithout a marketing
intermediaryPublishers
Students
With a marketing intermediary
Publishers
Students
Bookstore
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2Functions of Distribution
Channels
ChannelsChannelsease theease the
flow of goodsflow of goods
ChannelsChannelsease theease the
flow of goodsflow of goodsAccumulatingAccumulating
Sorting outSorting out
AllocatingAllocating
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3 Learning Goal 3
How are channels organized?
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3 Vertical Marketing Systems
Basic Types Basic Types ofof
VerticalVerticalMarketingMarketingSystemsSystems
Basic Types Basic Types ofof
VerticalVerticalMarketingMarketingSystemsSystems
CorporateCorporate
AdministrativeAdministrative
ContractualContractual
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3 Corporate Distribution Systems
Backward IntegrationBackward Integration
Occurs when a wholesaler or retailer gains control over the
production process
Occurs when a wholesaler or retailer gains control over the
production process
ForwardIntegrationForward
Integration Occurs when a manufacturer
acquires a marketing intermediary closer to the customer
Occurs when a manufacturer acquires a marketing intermediary
closer to the customer
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4
When would a marketer useexclusive, selective, or intensive distribution?
Learning Goal 4
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4 The Intensity of Market Coverage
SelectiveDistributionSelective
Distribution
A manufacturer selected a limited number of dealers in an area (but more than one or two) to market
its products.
A manufacturer selected a limited number of dealers in an area (but more than one or two) to market
its products.
IntensiveDistributionIntensive
DistributionA manufacturer tries to sell its products wherever there are
potential customers.
A manufacturer tries to sell its products wherever there are
potential customers.
ExclusiveDistributionExclusive
DistributionA manufacturer selects only one
or two dealers in an area to market its products.
A manufacturer selects only one or two dealers in an area to market
its products.
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4 The Intensity of Market Coverage
Exclusive Selective Intensive
Jaguarautomobiles
Sharp TV
Sharp TV Sharp
TV
Wrigley’s gumWrigley’s gum
Wrigley’s gumWrigley’s gum
Wrigley’s gumWrigley’s gum
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What is wholesaling, and what What is wholesaling, and what are the types of wholesalers?are the types of wholesalers?
What is wholesaling, and what What is wholesaling, and what are the types of wholesalers?are the types of wholesalers?
Learning Goal 55
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5
ManufacturerManufacturer Wholesalingintermediaries
Wholesalingintermediaries
Agents andbrokers
Agents andbrokers
Merchantwholesalers
Merchantwholesalers
Retailers orindustrial users
Retailers orindustrial users
Customers
Full-service
Limited-service
Oftenselective
orexclusive
distribution
Oftenintensivedistribution
The Two Categories of Wholesalers
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Learning Goal 66
What are the different kinds ofWhat are the different kinds ofretail operations and the components retail operations and the components
of a successful retailing strategy?of a successful retailing strategy?
What are the different kinds ofWhat are the different kinds ofretail operations and the components retail operations and the components
of a successful retailing strategy?of a successful retailing strategy?
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Types of Retail Operations6
In-Store RetailingIn-Store Retailing Nonstore RetailingNonstore Retailing
Department store
Specialty store
Convenience store
Supermarket
Discount store
Off-price retailer
Factory outlet
Catalog store
Hypermart
Vending machine
Direct selling
Direct-response marketing
Home shopping networks
Internet retailing
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Components of a Successful Retailing Strategy6
Define a target marketDefine a target market
Develop a product offering
Create an image and a promotional strategy
Choose a location
Set prices
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Creating a Store’s Atmosphere6
Fixture type and densityFixture type and density
Merchandise type and densityMerchandise type and density
Employee type and densityEmployee type and density
SoundSound
OdorsOdors
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Learning Goal 77
How can supply chain managementHow can supply chain managementincrease efficiency and customerincrease efficiency and customer
satisfaction?satisfaction?
How can supply chain managementHow can supply chain managementincrease efficiency and customerincrease efficiency and customer
satisfaction?satisfaction?
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Responsibilities of Supply Chain Managers
7
Make channel strategy decisions
Coordinate the sourcing and procurement of raw materials
Schedule production
Process orders
Manage inventory
Transport and store supplies and finished goods
Coordinate customer service activities
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Major Modes of Transportation7
Railroads
Motor carriers
Pipelines
Water transportation
Airways
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Transportation Decisions7
Criteria Criteria for for
Mode ofMode ofTransportationTransportation
Criteria Criteria for for
Mode ofMode ofTransportationTransportation
ReliabilityReliability
Transit TimeTransit Time
CostCost
CapabilityCapability
AccessibilityAccessibility
TraceabilityTraceability
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7
Highest LowestHighest Lowest
Relative costRelative cost
Transit timeTransit time
ReliabilityReliability
CapabilityCapability
AccessibilityAccessibility
TraceabilityTraceability
AirAir
WaterWater
PipePipe
WaterWater
TruckTruck
AirAir
TruckTruck
RailRail
TruckTruck
RailRail
RailRail
TruckTruck
RailRail
PipePipe
RailRail
TruckTruck
AirAir
RailRail
PipePipe
TruckTruck
AirAir
AirAir
WaterWater
WaterWater
WaterWater
AirAir
WaterWater
PipePipe
PipePipe
PipePipe
Ranking Modes of Transportation
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Learning Goal 88
What are the trends in distribution?What are the trends in distribution?What are the trends in distribution?What are the trends in distribution?