distribution strategy.pdf

8/10/2019 distribution strategy.pdf

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DISTRIBUTIONSTRATEGY

Presented by:

SHIRLEY POLIQUIT

M 5:30-8:30 MBAADM5


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CHANNEL OF DISTRIBUTIONA distribution channel (marketing channel

set of independent organizations involved in t

process of making a product or service availa

to the consumer or business user

Used to move the customer towards the prod


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Distribution Channel

Con

Retailer

Distributor

Manufacturer

Business

Structure


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MARKETING INTERMEDIARIEThe organizations that the product flows thro

on its way to the consumer.


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FUNCTIONS PERFORMED BY MARKETIN

INTERMEDIARIES


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Why are there Marketing

Intermediaries?Marketing intermediaries allow for the smooth flow of

products and product information from the manufactu

the consumer.

Intermediaries help manufactures distribute their prodand help consumers easily find and obtain the produc

they need to buy.

Intermediaries reduce the number of contacts necess

order to make a sale thereby facilitating the marketing

process.


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Importance of Marketing Channels

Producers

Consumers

Without intermed

16 transactio


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Producers

Consumers

With intermediaries

8 transactionsIntermediariesSupermarket

Channels reduce number of transactions

Importance of Marketing Channels


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DISTRIBUTION CHANNEL

FUNCTIONSInformation:gathering and distributing marketing

research and intelligence information about themarketing environment

Promotion:developing and spreading persuasivcommunications about an offer

Contact:finding and communicating with prospebuyers


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Matching:shaping and fitting the offer to the buyers including such activities as manufacturing, grading,assembling, and packaging

Negotiation: agreeing on price and other terms of the

that ownership or possession can be transferred

Physical distribution:transporting and storing goods

Financing:acquiring and using funds to cover the cochannel work

Risk taking:assuming financial risks such as the ina

sell inventory at full margin


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Direct Channelsvs. Indirect

ChannelsMarketing channel where there is no intermedia

levels between manufacturer and consumer-- Thare known as Direct Channels

Some marketing channels are relatively long witmany intermediaries -- These are known as IndiChannels


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RetailerChannel

WholesalerChannel

AgenCh

Direct Channel Indirect Channels

Producer Producer Producer Pr

Retailers orDistributor

Retailers orDistributor

Re

Dis

Wholesalers Wh

A

B

Consumersor User

Consumers ConConsumers

or User or User o

Alternative

Channels

of

Distributio

n


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ExclusiveDistribution

Selective

Distribution

Intensive

Distribution

CHANNEL LEVELS


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RETAILINGRetailingincludes all the activities in selling products

services directly to final consumers for their perso

non-business use

Retailersare businesses whose sales come primarilyretailing

*Retailing can be done in stores (store retailing) or ou

store (non-store)


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Non-store retailing includes selling to final consu

through: Direct mail Catalogs Telephone Internet

TV shopping Home and office parties Door-to-door sales Vending machines


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TYPES OF RETAILERSAmount of service

Self-service

Limited serviceFull service


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Types of Retailers

Product Line

Specialty stores

Narrow product line with deep assortment

Department stores

Wide variety of product lines

Convenience stores

Limited line of high-turnover goods

Superstores

Non-food goods

Category killers

Deep in category with sales staff


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Types of Retailers

Relative Prices

Discountstores

Off-priceretailers

Factoryoutlets

Warehouseclubs


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Types of Retailers

Organizational Approach

Corporate

chains

Voluntary

chains

Retailer

cooperatives

Franchise

organizations

Merchandising

conglomerates


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Corporate chainsare two or more outlets that are comowned and controlled

Size allows them to buy in large quantities at lower pri

gain promotional economies

Voluntary chainsare wholesale-sponsored groups ofindependent retailers that engage in group buying and c

merchandising

Types of Retailers



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Retailer cooperativesis a group of independent retailers thtogether to set up a joint-owned, central wholesale operaconduct joint merchandising and promotion effort

Ace Hardware

Franchise organizationsare based on some unique produc

service; on a method of doing business; or on the trade nam

will, or patent that the franchisor has developed

Types of Retailers



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Merchandisingconglomerates are corporations

combine several retailing forms under central ow

Types of Retailers



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Segmentation, targeting, differentiation, and

positioninginvolves the definition and profi

the market so the other retail marketing dec

can be made

Retailer Marketing Decisions


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Product assortment and service decisions

include:

Product assortment

Services mix

Store atmosphere


Product Assortment and Service


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Price policymust fit the target market and

positioning, product and service assortment,

and competition

High markup on lower volumeLow markup on higher volume


Price Decision


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High-low pricinginvolves charging higher prices on an everyd

basis, coupled with frequent sales and other price promotio

Everyday low price (EDLP)involves charging constant, ever

low prices with few sales or discounts


Price Decision


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Promotion Decision

AdvertisingPersonalselling

Salespromotion

Publicrelations

Directmarketing


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Central business districtsare located in cities an

include department and specialty stores, banksand movie theaters

Shopping centeris a group of retail businessesplanned, developed, owned, and managed as aunit

Regional shopping centers

Community shopping centers

Neighborhood shopping centers

Power center

Lifestyle centers


Place Decision


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WHOLESALINGWholesalingincludes all activities involved

selling goods and services to those buying

for resale or business use


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Selling and promoting

Buying assortment building

Bulk breaking

Warehousing

Transportation

Financing

Risk bearing

Market information

Management services and advice

Wholesalers are used because they are often better a

performing the following channel functions than other

channel:


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Selling and promotinginvolves the wholesalers saleforce helping the manufacturer reach many smallecustomers at lower cost

Buying assortmentbuilding involves the selection of and building of assortments needed by their customsaving the customers work

Wholesaling


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WholesalingBulk breakinginvolves the wholesaler buying in larger

quantity and breaking into smaller lots for its custom

Warehousinginvolves the wholesaler holding inventor

reducing its customers inventory cost and risk


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WholesalingRisk bearinginvolves the wholesaler absorbing risk

taking title and bearing the cost of theft, damage,spoilage, and obsolescence

Market informationinvolves the wholesaler providininformation to suppliers and customers aboutcompetitors, new products, and price developmen


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Wholesaling

Management services and adviceinvolves

wholesalers helping retailers train their sales

clerks, improve store layouts, and set up

accounting and inventory control systems


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TYPESOF WHOLESALERS

Merchant

wholesalers

Agent

brok

Manufacturers

sales branches

and offices


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Merchant wholesalersis the largest group of

wholesalers and include:

Full-service wholesalers who provide a full set

services

Limited service wholesalers who provide fewservices and specialized functions

Types of

Wholesalers


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Brokers and agents do not take title, perform a few

functions, and specialize by product line or customertype

Brokers bring buyers and sellers together and assist in

negotiations

Agents represent buyers or sellers

Manufacturers sales branches and offices is a form o

wholesaling by sellers or buyers themselves rather th

through independent wholesalers

Types of Wholesalers


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WHOLESALER MARKETING

DECISIONSTarget market and positioning decisions

Size of customer

Type of customer

Need for service


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Wholesaler Marketing Decisions

Marketing mix decisions

Product

Price

Promotion

Place


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