distribution decisions 20 April.pptxcccc

economics

1. Distribution Decisions Prescribed reading is: Erasmus, Strydom & Rudansky -Kloppers. (2016). Introduction to Business Management. 10 th ed. Cape Town: Oxford University Press. Pages 452 - 456

2. Description of distribution Activities that have to be carried out to direct the flow of products and services from the business to the consumer in such a way as to satisfy the primary objective of the business and meet the needs of the consumer Entails decision-making about the type of distribution channel to be utilised and the degree of market coverage required

3. Distribution Decisions Description Movement ( Goods moving from business to consumers – flow) Achieve the needs of the consumer Transfer ( Transfer process – distribution channels to- consumer) Link: marketers have to locate the various distribution Make decisions Type of channels Performance

4. The choice of the distribution channel

5. 5 DISTRIBUTION CHANNELS Channel 1 – Manufacturer – consumer selling directly to the industry or door-to-door marketing Channel 2 – Manufacturer – Retailer – Consumer E.g. big retailers checkers, Pick n Pay Channel 3 - Manufacturer – wholesaler – consumer E.g. Makro selling to consumers Channel 4 - Manufacturer - wholesaler–informal retailer – consumer Classic is the best distribution Channel 5 - Manufacturer – wholesaler 1 – wholesaler 2- consumer Foreign wholesalers, to SA wholesalers and then consumers

6. Channel leadership Typically a business that controls or dominates the channel – a channel captain Channel captain is either: Manufacturer or Retailer Strong retailers tend to be the channel captains eg shoprite

7. Channel Leadership The manufacturer, as channel captain Push when the shop pushes the product for a high-profit margin to consumers and pull demand pull intermediary to stock the goods e.g. Coffe , soft drink Retailer as channel captain General dealers Department stores Speciality stores Chain stores Supermarkets Convenience stores Hypermarkets Shopping centres Mail-order stores Internet stores Informal retailers

8. In this case, the retailer advertised the product and gave the manufacturer’s terms and conditions to either push or pull the consumers to a product by using special shelves and discounts. Usually, the manufacturer is not happy, but if they happen to get brand recognition, then the retailers are no longer channel leaders.

9. Market coverage A number of intermediaries in the channel: Intensive market coverage: many intermediaries eg soft drink Exclusive market coverage: limited intermediaries eg cars, or clothe Selective market coverage: selected only those who distribute the product like a chemist

10. Physical distribution Activities that take place to ensure the product is available to the final consumer at the lowest possible cost for the products to be at the right place at the right time: Transportation in the best mode Storage. Aim at eliminating storage Inventory holding Receipt and dispatch Packaging:careful handling of good Administration Ordering