DISTRIBUTION MANAGEMENT Introduction and Basic Concepts.pptx

Introduction to Distribution Management including levels and types of distribution channels.

1. INTRODUCTION TO DISTRIBUTION MANAGEMENT

2. Successful business is all about creating, communicating, and delivering superior value to the customers ( Still, et. al., 2017) INTRODUCTION TO DISTRIBUTION MANAGEMENT

3. The traditional marketing mix is based on product-oriented thinking, which revolves around  Product, Price, Promotion, and Place . In a changing market and environment, where the wishes and needs of consumers are becoming increasingly important, the SIVA model offers a useful tool for companies. The model’s emphasis is on a customer-oriented approach . Acquiring a customer is the first step, after which retaining that customer is an important second. INTRODUCTION TO DISTRIBUTION MANAGEMENT

4. INTRODUCTION TO DISTRIBUTION MANAGEMENT

5. INTRODUCTION TO DISTRIBUTION MANAGEMENT SIVA a Customer Centric Marketing Mix Solution Compared to the Product from the marketing mix, this refers to the specific solution a product offers. Consumers want solutions for possible problems. If a computer crashes for whatever reason, the consumer does not want a new computer, but high-quality anti-virus software instead. When a new car breaks down along the motorway, the consumer requires fast service and a car mechanic who can repair the car within fifteen minutes. Before selling their products, companies must determine what solutions they want to offer their customers. It is also important to realise what the actual added  value of a product or service for the customer  is, and what services the customer expects when the product fails.

6. INTRODUCTION TO DISTRIBUTION MANAGEMENT SIVA a Customer Centric Marketing Mix Information Compared to Promotion from the marketing mix, Information is all about  clear communication  with consumers. The Internet, websites, and  social media  play an important role in this. These days, information and reviews about products and services can be easily found online. This means most consumers are well-informed before buying a product.

7. INTRODUCTION TO DISTRIBUTION MANAGEMENT SIVA a Customer Centric Marketing Mix Information Companies should therefore share clear, correct, and honest information via any media they use. Even terms and conditions should no longer be in ‘fine print’, but should be offered in a transparent way. Here too, companies should ask themselves in advance what information customers want to receive and what information ensures that they can make a decision in the sales process. Is this information easily available? What do customers want to know and why?

8. INTRODUCTION TO DISTRIBUTION MANAGEMENT SIVA a Customer Centric Marketing Mix Value Compared to Price in the  marketing mix , this is about the actual value that the product or service offers the consumer. This does not necessary have to relate to a monetary value. In many cases, it is about abstract values, such as convenience, prestige, and speed. What is the added value of the product or service for the customer? How does it help the customer? All these questions provide insight into the value of the product. Companies must therefore ask themselves what the added value of their products and services is and what this means for customers.

9. INTRODUCTION TO DISTRIBUTION MANAGEMENT SIVA a Customer Centric Marketing Mix Access Compared to Place in the marketing mix, this is about accessibility. Of course, the accessibility of a company’s store is still important, but thanks to the Internet is has become easier to purchase products online. With Access, it is about functional accessibility. Think of short waiting times, fast procedures, and adequate service. Accessibility is also about the ease with which consumers can gather information or be helped quickly. Companies must ask themselves how they can be reached by customers and how customers can and want to place orders. How can customers contact the company’s complaints service, for example?

10. INTRODUCTION TO DISTRIBUTION MANAGEMENT What is Distribution Management? Distribution Management refers to the process of overseeing the movement of goods from supplier or manufacturer to point of sale. It is an overarching term that refers to numerous activities and processing such as packaging, inventory, warehousing, supply chain, and logistics.

11. INTRODUCTION TO DISTRIBUTION MANAGEMENT Why is Distribution Management Important? For the Wholesalers and Distributors This is to ensure maximum profitability by delivery of goods as fast and efficient as possible to the clients. For the Manufacturers It helps facilitate the transfer of goods towards the desired target market For the Consumers and Customers Fast transaction, outright want or need satisfcation

12. INTRODUCTION TO DISTRIBUTION MANAGEMENT What is a Distribution Channel? A distribution channel is a chain of businesses of intermediaries through which a good or service passes until it reaches the final buyer or the end consumer. Distribution channels can include distributors, wholesalers, retailers, and even the internet. It is simply a path by which goods and services must travel in order to reach the target customer.

13. INTRODUCTION TO DISTRIBUTION MANAGEMENT Direct and Indirect Channels A direct channel allows the consumer to make purchases from the manufacturer while an indirect channel allows the consumer to buy the goods from a wholesaler or retailer. Indirect channels are typical for goods that are sold in traditional brick-and-mortar stores.

14. Wholesaler vs Distributor: What’s the Difference?  The difference between a wholesaler and a distributor comes down to the following: wholesalers and distributors both work directly with manufacturers, but have a different role and relationship.

15. A distributor is generally more of a ‘sales partner’ to a manufacturer, contracted to help them expand into new markets, or new channels. A wholesaler, on the other hand, buys directly from a manufacturer, and sells products on to a retailer; their relationship is generally purely transactional, and simpler to define. Wholesaler vs Distributor: What’s the Difference? 

16. Manufacturers/suppliers:  Manufacturers make the goods. They may in turn be supplied raw materials from one or several other manufacturers.  Distributors:  Work directly with manufacturers to get their products into new territories via wholesalers.   Wholesalers:  Buy stock directly from the distributor to sell on to retailers. Retailers:  Sell the goods directly to the end customer.  The traditional supply chain Wholesaler vs Distributor: What’s the Difference? 

17. Wholesalers tend to sit further along the supply chain, but there are increasing amounts of flexibility in the modern world of retail; a wholesaler may be dealing with a distributor, or directly with the manufacturer. A distributor may bypass a wholesaler, and create retailer relationships directly. In some cases, they’ll even sell directly to the end consumer. The traditional supply chain Wholesaler vs Distributor: What’s the Difference? 

18. At this point you may be wondering why there’s a need for wholesalers and distributors at all — can’t a retailer just buy straight from the manufacturer?  The short answer is yes, they could (and in the case of smaller brands and retailers, this may be exactly what’s happening).  But when it comes to stocking bigger brands, retailers generally don’t want to buy from manufacturers because:  They’d have to purchase a large amount at once, and order a very long time in advance The manufacturer is likely to be abroad, so they’d have to deal with cross-border processes and complications  Why don’t retailers buy directly from manufacturers? Wholesaler vs Distributor: What’s the Difference? 

19. Similarly, manufacturers don’t put energy into making connections with retailers because:  It’s too much work for relatively small orders  They may be selling into multiple countries, and the cost of having people on the ground in all of those countries is expensive  Why manufacturers don’t put energy into making connections with retailers: Wholesaler vs Distributor: What’s the Difference? 

20. Simply put, distributors and wholesalers are both there to simplify the journey from manufacturer to consumer, and make some money while they’re at it. They exist to reduce risk for retailers, and handle the logistics of buying in big quantities across borders. They help solve a problem, and allow every part of the supply chain to specialise and play to its strengths.  Wholesaler vs Distributor: What’s the Difference? 

21. Wholesalers buy products in large quantities from manufacturers or distributors, and resell these to retailers in smaller quantities. They may be actively putting work into building relationships with retailers, but many of the orders they receive are likely to be passive via their own website, the website of the brand they are stocking, or even a wholesale marketplace. They don’t enter into contracts with distributors or manufacturers; they simply place orders to buy in bulk as they wish, and then sell this stock on in smaller quantities, and for a greater price per unit. A wholesaler will often specialize in a particular niche, such as outdoor goods or kids wear. What wholesalers do

22. A distributor always works directly with manufacturers. They’re usually brought in on a contract, and become a more integral and embedded part of the manufacturer’s business — a partner, rather than just a B2B customer. Distributors are helpful for manufacturers who want to expand into new territories. What distributors do

23. How wholesale works Wholesaling is the process of buying goods in large quantities from manufacturers or distributors, storing them in warehouses, and then reselling them to retailers for a profit. Wholesalers purchase enormous amounts of inventory at a time for a low price and then sell the products in smaller quantities at a higher price. For example, a wholesaler might buy 1,000 water bottles from a for $2 per bottle. This would cost them $2,000.

24. How wholesale works Then the wholesaler could sell 50 water bottles to 20 different retailers for $6 per bottle—three times the price they originally bought each bottle for. Once they deduct their expenses, such as warehousing and delivery, they’d be left with a profit. All in all, wholesalers: Buy products from manufacturers and distributors in bulk at a low cost Don’t sell directly to the end user of the product Resell these products to other businesses in smaller quantities and at a higher cost than they bought them for

25. Anyone can buy wholesale! While wholesale products are typically aimed at retailers due to its bulk quantity nature, there are no prerequisites or limitations on who can buy wholesale products. However, some wholesale marketplaces do require users to be a registered retailer to make a purchase. Can anyone shop at a wholesaler?

26. What distributors do

27. Let’s say you’re a French ski glove manufacturer and you’re looking to crack the UK market. Working with a trusted UK distributor with an outdoor gear niche not only gets your brand that all important facetime with big outdoor retailers, it also solves the logistical issue of where to keep this stock in the UK. That’s because it’s your distributor who will have to order and hold as much stock as they predict their UK retailers will want for winter (and they’ll probably have to place this order in the summer, when a lot of the winter conditions and demand are unknown). When a retailer or wholesaler places an order with them, it’s up to them to be responsive and get this shipped out ASAP from their own warehouse. If they overestimate how much stock will sell, they’re stuck with it, and are likely to lose money on it. What distributors do

28. Like wholesalers, distributors are taking on much of the risk of overstocking, and simplifying logistics. They earn money by selling products at a higher price than they buy them. The role of a distributor is particularly fluid and tailored to each brand. What distributors do

29. Both options have advantages. Wholesalers are responsible for storing goods they buy from you, allowing for potential savings on storage costs. Distributors assist with marketing your products and are partly responsible for creating relationships with the consumer. What direction you choose depends on your business and niche. Is it better to be a distributor or a wholesaler?

30. Depending on the industry, a distributor markup could be as low as 5% or as high as 40%. Generally though, distributor markup is 20%. What percentage does a distributor take?

31. https://www.slideshare.net/slideshow/distribution-management-17101695/17101695 https://blog.creoate.com/wholesaler-vs-distributor#:~:text=A%20distributor%20is%20generally%20more,transactional%2C%20and%20simpler%20to%20define . https://www.shopify.com/ph/retail/wholesale-vs-retail https://www.geeksforgeeks.org/types-of-distribution-channels/ https://courses.lumenlearning.com/wm-retailmanagement/chapter/defining-retailing/