Marketing Management - session 9-Distribution.pptx

marketing distribution

1. Marketing Management Prepared by Shahin Rasoulian 1 Session 9: chapter 8 Distribution

2. Objectives Distribution: Understand the role of distribution Describe the various types of distribution channels Explain the steps in selecting a distribution channel Recognize the importance of managing a distribution channel Session 9 2

3. Supply chain Session 9 3 Plastic Aluminum Copper Silicon Intel Chips Sony CD-ROM Microsoft Software Seagate Hard Drives CompUSA Best Buy CDW Office Depot 1 2 3 4 HP Raw Materials Parts Suppliers Manufacturer Resellers Consumers Supply network Distribution channel

4. Definitions All players in a distribution network, except for the producer and consumer, are intermediaries . The combination of all the businesses that perform the various distribution functions and help transfer the product, service or title from a producer to a consumer is called a distribution network . A distribution channel is a network of interdependent organizations engaged in a process aimed at making a product or service available for use or consumption. Session 9 4

5. The rationale for distribution intermediaries Make available to customers: The right product The right place The right timing The right quantities and assortments 5 Session 9

6. The rationale for distribution intermediaries 6 Session 9

7. Types of distribution intermediaries The combination of all the businesses that perform the various distribution functions and help transfer the product, service or title from a producer to a consumer is called a distribution network . Traders Agents Facilitators 7 Session 9

8. Types of distribution intermediaries Traders: wholesalers and retailers that buy products that they offer to their own customers. Retailer: makes direct sales to final customers . 8 Session 9

9. Types of distribution intermediaries Traders: wholesalers and retailers that buy products that they offer to their own customers. Wholesaler: is a merchant who buys large quantities of products from producers and importers, and reseller them, in varying quantities to retailers and industrial or institutional users. 9 Session 9

10. Types of distribution intermediaries Agents: are intermediaries who do not buy the products that they sell for producers. (Similar to manufacturer’s sales team. Also, are called as manufacturer’s representatives or brokers.) Facilitators: are businesses that facilitate the movement and flow of product through distribution network without controlling or directing it. Such as, public warehouses, transportation companies, banks and insurance companies. 10 Session 9

11. Distribution channels Distribution channel is a network of interdependent organizations engaged in a process aimed at making a product or service available for use or consumption. 11 Session 9 Consumer Producer Retailers Sales Force Catalogues, Fax, internet wholesalers Retailers Agents wholesalers Retailers

12. Distribution channel length 12 Session 9 Producer Consumers Producer Agents Wholesalers Retailers Consumers Producer Wholesalers Retailers Consumers Producer Retailers Consumers 1. Direct channel 4. Ultralong channel 3. Long channel 2. Short channel

13. Distribution channels length 1. Direct channel 13 Session 9 +: Producers are better informed by the market They can react quickly to the changed in the market They can modify their marketing mix easily They do not pay commission to intermediaries -: Needs more financial and human recourse Needs different expertness and skills Producer Consumers

14. Distribution channels length 2. Short channel Session 9 14 Producer Retailers Consumers +: Producers have more control on the market and direct cooperation with retailers They cut out paying commission to wholesalers -: Producers have to promote both retailers and customers They have Physical distribution problem

15. Distribution channels length 3. Long channel Session 9 15 Producer Wholesalers Retailers Consumers Jean coutu group Wal-Mart Stores, Inc. +: Producers reduce their cash flow needs They can better plan their production line and inventory The cost of salesforce is minimized -: Producers do not have too much power over the channel, market and marketing mix They loss their direct contact with customers They have to promote the product both among intermediaries and customers which is costly

16. Distribution channels length 4. Ultralong channel Session 9 16 Producer Agents Wholesalers Retailers Consumers +: and -: Similar to long channel but to a higher degree. Wal-Mart Stores, Inc.

17. Vertical marketing system (VMS) 17 Session 9 Corporate VMS Voluntary chain Franchises

18. Selecting a distribution network 18 Session 9 Intensity of the network Profitability Control Image of network Compatibility with existing network

19. Intensity of the network Session 9 19 Intensive distribution: Extensive coverage of all points of sale. Useful for every day regular products, convenience products, common raw materials. Selective distribution: Availability of product in certain points of sale where retailers pay special attention to it. Useful for specialized goods, home appliance, furniture. Exclusive distribution: Limited availability of a product at a limited number of dealers. Useful for luxuries and prestigious products.

20. Intensive distribution Session 9 20

21. Selective Distribution Session 9 21 Maytag uses selective distribution like many furniture and appliance manufacturers. The “Where to Buy” page on their Web site assists buyers in finding stores that carry the Maytag brand.

22. Exclusive distribution Rolex sells its watches exclusively through only a handful of authorized dealers in any given market. Such limited distribution enhances the brand’s image and generated stronger retailer support. Session 9 22

23. Multi channel distribution Session 9 23

24. Multi channel distribution 24 Specialized stores Department stores and newsstands Consumers Consumers Consumers Distributors Session 9

25. Multi channel distribution Advantages: Broader market coverage Reduces the risk of losing sources of revenue Sets entry barrier against newcomers Increased point of contact with customers Increases customer satisfaction Session 9 25 Disadvantages: Makes the organizational structure more complex The integration of channels is costly Possibility of conflict among channels

26. Channel Conflict For more than 60 years Goodyear sold tires through its premier network of dealers. In 1990s, Goodyear decided to sell its brands through Sears, Wal-Mart, and Sam’s Clubs. Session 9 10- 26

27. Channel conflict solution Session 9 27

28. O ne point Session 9 28

29. O ne point Session 9 29 http://www.iga.net/en/at_your_service!/online_services/online_grocery/