microsoft powerpoint - session 5 - distribution

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.


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).


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


INDUSTRIAL GOODS

DISTRIBUTION CHANNELS FOR INDUSTRIAL GOODS

Producer Distributor IndustrialConsumer

Producer Agent Distributor IndustrialConsumer

Producer IndustrialConsumer

Producer Agent IndustrialConsumer


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


Channel Strategy Intensive

DistributionIntensive

Distribution

ExclusiveDistributionExclusive

Distribution

SelectiveDistributionSelective

Distribution

Competition in Channels

Horizontal

Intertype

Vertical

Channel System


Horizontal

Retailer (supermarket)


AgentAgent



AgentAgent


Intertype



Distributor (limited line)Distributor

(limited line)

Retailer (independent)


Distributor (full line)



Vertical

ManufacturerManufacturer

WholesalerWholesaler

RetailerRetailer


Channel System


Distributor (limited line)





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


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.


_____ 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 _____.


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.


_____ 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.


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.


_____ 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.


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


microsoft powerpoint - session 5 - distribution

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