Intro to Marketing

Mr. Bernstein

Distribution and the Movie Industry

December 3-4, 2014

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Intro to MarketingMr. Bernstein

Distribution ChannelsConsumer Product Channel Types (Glencoe p 450)

Producer directly to ConsumerProducer to Retailer to ConsumerProducer to Wholesaler to Retailer to ConsumerProducer to Agents to Wholesaler to Retailer to ConsumerProducer to Agents to Retailer to Consumer

Q: Provide examples of each Distribution ChannelIndustrial Product Channel Types – see p 451

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Intro to MarketingMr. Bernstein

Distribution IntensityExclusive distributionSelective distributionIntensive distributionBased on control of selling, costs, brand image,

accessibility, locations

Q: Provide examples of levels of IntensityLegal and Ethical Issues in Distribution

Clayton Act of 1914 prevents exclusivity which lessens competition

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Intro to MarketingMr. Bernstein

The Distribution EnvironmentManaging distribution is a strategic decision. Example: ST Microelectronics. Read http://electronicspurchasingstrategies.com/2013/08/20/st-aims-for-higher-distribution-sales/Life in the distribution channel: In all industries, distributors face pressure from both customers and vendors Relationships with partners in the channel can be criticalUnderstand the entire channel from producer to consumerUnderstand who has the leverage – who is adding most value? Are there competitive alternatives?

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Intro to MarketingMr. Bernstein

Movie Studio ProfitsIt is generally believed that as few as 2 of the 7 major Hollywood studios is “profitable”See Wikipedia (“Hollywood Accounting) for review of

legal cases where those who contracted to be paid a % of profits received a surprisingly small payout:

Forrest GumpSpider ManLord of the RingsHarry Potter

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Intro to MarketingMr. Bernstein

Movie Studio Profits: Why so Low?Production and distribution costs are highPredicting moviegoer preferences is difficultA major contribution to revenues are licensing of

the intellectual properties – cable TV, DVDs, video games, theme parks, etc.

Sequels and prequels reduce risk

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Intro to MarketingMr. Bernstein

Distribution of EntertainmentWhich have you used recently?

CableSatellite TVInternetOn Demand

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Intro to MarketingMr. Bernstein

Distribution of Entertainment: questionsWhat companies are in the value chain between

the film producer and the paying customer?(See How Movie Distribution Works, Introduction

only)What value does each add, in terms of the 4 P’s?Complete reading How Movie Distribution WorksWho has leverage in the distribution channel?

Explain.