microsoft powerpoint - session 5 - distribution

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  • DISTRIBUTIONDISTRIBUTION

    SESSIONFIVESESSIONFIVEMMMARKETINGARKETINGARKETINGMMMANAGEMENTANAGEMENTANAGEMENT

    Session Objectives

    Define what a channel of distribution is and understand its contribution to efficient and effective marketing effort.

    Differentiate between types of intermediary and their roles.

    Appreciate the factors influencing channel design, structure and strategy and the effect of conflict and cooperation within channels.

    Define logistics, appreciating the importance of customer service and its implementation within logistics.

    Identify the functions involved in logistics and the decisions contributing to their management.

    A marketing channel is the structure linking agroup of individuals or organisations through which

    a product or service is made available to theconsumer or industrial user.

    Marketing Channels Defined

  • Types of Intermediary

    Wholesalers

    RetailersFranchisees

    Agents and brokers

    Distributors and dealers

    Intermediary Definitions

    A wholesaler is an intermediary buysproducts in bulk,

    usually from manufacturers, and resells themto trade customers, usually small retailers.

    A retailer sells direct to the consumer andmay either purchase direct from the

    manufacturer or deal with a wholesaler, depending on purchasing power and volume.

    Intermediary Definitions

    A distributor or dealer is an intermediarywho adds value through special services

    associated with stocking or sellinginventory, credit and after-sales service.

    A franchisee holds a contract to supplyand market a product or service to the design

    or blue-print of the franchisor (the owner or originator of the product or service).

  • Intermediary Definitions

    An agent or broker is an intermediary whohas the legal authority to act on behalf of the manufacturer, although they do

    not take legal title to the goods or handlethe product directly in any way.

    Reconcilingthe needs ofproducers

    andconsumers Improving

    Efficiency

    Functions of Channel Intermediaries

    BetweenProducers

    &Consumers

    Breaking Bulk

    Number of transactionsCreating bulk

    P

    P

    P

    C

    C

    C

    1

    23

    45

    6

    78

    9

    Direct Distribution

  • Distribution Using a Channel Intermediary

    P = ProducerC= Customer

    I = Channel intermediary

    P

    P

    P

    C

    C

    C

    I

    1

    2

    3

    4

    5

    6

    Reconcilingthe needs ofproducers

    andconsumers Improving

    Efficiency

    Functions of Channel Intermediaries

    BetweenProducers

    &Consumers

    Breaking Bulk

    Number of transactionsCreating bulk

    ImprovingAccessibility Providing

    SpecialistServices

    LocationTime

    SellingServicing

    Installation

    DISTRIBUTION CHANNELS FOR

    CONSUMER GOODS

  • Producer Retailer Consumer

    Producer Wholesaler Retailer Consumer

    Producer Agent Wholesaler Retailer Consumer

    Producer Consumer

    DISTRIBUTION CHANNELS FOR CONSUMER GOODS

    DISTRIBUTION CHANNELS FOR

    INDUSTRIAL GOODS

    DISTRIBUTION CHANNELS FOR INDUSTRIAL GOODS

    Producer Distributor IndustrialConsumer

    Producer Agent Distributor IndustrialConsumer

    Producer IndustrialConsumer

    Producer Agent IndustrialConsumer

  • DISTRIBUTION CHANNELS FOR

    SERVICES

    ServiceProvider

    ServiceProvider

    Consumer or Industrial Customer

    Agent Consumer or Industrial Customer

    DISTRIBUTION CHANNELS FOR SERVICE GOODS

    Channel Strategy Defined

    Channel strategy refers to the approach taken about the allocation and performance of roles, the basis of

    remuneration within the system, and the effectivenessof alternative configurations in enabling market

    penetration to be achieved competitively and efficiently.

  • Channel Strategy

    Channel SelectionChannel Channel SelectionSelection

    Channel IntegrationChannel Channel

    IntegrationIntegrationChannelIntensityChannelChannelIntensityIntensity

    Channel Strategy

    Channel Channel StrategyStrategy

    Channel Selection

    Channel Integration

    DistributionIntensity

    Channel Strategy

    CompetitiveFactors

    ProductFactors

    MarketFactors

    ProducerFactors

    Buyer behaviourWillingness ofintermediaries

    Location

    Lack of abilityProduct mix

    Control

    Degree of close contactCost f productPerishability

    Bulkiness/complexity

    Recruit sales-forceProducer owned

    Channel Selection

    Channel Integration

    DistributionIntensity

    Channel Strategy Intensive

    DistributionIntensive

    Distribution

    ExclusiveDistributionExclusive

    Distribution

    SelectiveDistributionSelective

    Distribution

  • Competition in Channels

    Horizontal

    Intertype

    Vertical

    Channel System

    Competition in Channels

    Horizontal

    Retailer (supermarket)

    Retailer (supermarket)

    AgentAgent

    Retailer (supermarket)

    Retailer (supermarket)

    AgentAgent

    Competition in Channels

    Intertype

    Retailer (supermarket)

    Retailer (supermarket)

    Distributor (limited line)Distributor

    (limited line)

    Retailer (independent)

    Retailer (independent)

    Distributor (full line)

    Distributor (full line)

  • Competition in Channels

    Vertical

    ManufacturerManufacturer

    WholesalerWholesaler

    RetailerRetailer

    Competition in Channels

    Channel System

    Retailer (supermarket)

    Distributor (limited line)

    Retailer (independent)

    Distributor (full line)

    Retailer (independent)

    Retailer (independent)

    Horizontal ChannelIntegration

    Co

    ns

    um

    er

    Retailer

    Wh

    olesaler

    Prod

    uc

    er

    Co

    ns

    um

    er

    Retailer

    Wh

    olesaler

    Prod

    uc

    er

    Co

    ns

    um

    er

    Retailer

    Wh

    olesaler

    Prod

    uc

    er

    Co

    ns

    um

    er

    Retailer

    Wh

    olesaler

    Prod

    uc

    er

    Ver

    tica

    l Cha

    nn

    el In

    tegr

    atio

    n

    Co

    ns

    um

    er

    Retailer

    Wh

    olesaler

    Prod

    uc

    er

    Channel Selection

    Channel Integration

    DistributionIntensity

    Channel Strategy

  • Vertical Marketing System Defined

    A vertical marketing system refers to a channel ofdistribution which is viewed as a coordinated whole and is

    Effectively managed or led by one channel member.The leadership might be contractual, or derived from

    the power or dominance of one member, or arise from the ownership of other channel members by one organisation.

    Types of Vertical Marketing Systems

    Corporate Contractual Administered

    Conflict Defined

    Channel conflict refers to tensions between twochannel members which arise from incompatibility

    of actual or desired responses.

    Types of Conflict

    Manifest conflict

    Underlyingconflict

  • Power Defined

    The power of a buyer or seller is his ability tocontrol the decision variables in the marketing or purchasing strategy of another member in the

    supply chain.

    Source of Power

    Power

    ReferentCoercive

    Reward Legitimate

    Expert

    Physical Distribution Management Defined

    Physical distribution management (PDM)is concerned with the organisation and

    management of the storage and movement of goods from the end of the production

    line to the end customer.

  • Logistics Defined

    Logistics is the process of strategicallymanaging the movement and storage of

    materials, parts, and finished inventory fromsuppliers, through the firm and on

    to customers.

    Influences on the Logistic Process

    Outbound logistics processor

    InformationInventory

    Transport Warehousing

    Customer service

    Session 5: Key Terms

    _____ are intermediaries who have legal authority to act on behalf of a seller in negotiating sales, but who do not take title to goods themselves.

    The buying of large quantities of goods and then reselling them in smaller lots is referred to as _____.

  • _____ refers to decisions taken about the allocation of roles within a channel of distribution, and the way in which the channel is formally or informally managed and administered.

    _____ is a channel in which the producer deals directly with the end customer without the involvement of intermediaries.

    Session 5: Key Terms

    _____ are intermediaries who add value through the provision of special services associated with the selling of a product and the after- sales care of the customer.

    An intermediary who holds a contract to supply and market a product or service to operating standards and criteria set by a franchisor is called a _____.

    Session 5: Key Terms

    What term refers to an organisation or individual through whom products pass on their way from the manufacturer to the end buyer?

    _____ involves controlling stock levels within the physical distribution function to balance product availability against the need for minimising stock holding costs.

    Session 5: Key Terms

  • _____ is the handling and movement of inbound raw materials and other supplies as well as outbound physical distribution.

    _____ ensures that the product is easily accessible to customers and properly supported by the channel of distribution.

    Session 5: Key Terms

    The structure linking a group of organisations or individuals through which a product or service is made available to potential buyers is the _____.

    _____ is the handling and movement of outbound goods from an organisation to its customers.

    Session 5: Key Terms

    _____ buy products either from manufacturers or from wholesalers and resell them to consumers.

    In a _____, the channel of distribution is viewed as a coordinated whole and is effectively managed or led by one channel member.

    Session 5: Key Terms

  • A _____ buys products in bulk, usually from manufacturers, and resells them to trade customers, usually small retailers.

    Session 5: Key Terms