Channels of DistributionGetting goods to the consumer

The 4 PsProductPricePlacePromotionAlso known as the Marketing Mix

What is a Channel of Distribution?The path a product takes from the producer to the final user.

Channels of DistributionProducer WholesalerAgentRetailerIndustrial DistributionConsumer/Industrial User

Industrial UsersMarket consisting of all customers who make purchases for business purposes; also called the business-to-business market

ConsumersThose who buy and actually use the product.

IntermediariesIntermediaries are channel members that help move products from the producer or manufacturer to the final user.Middlemen

Types of IntermediariesMerchant IntermediariesWholesalersRetailersElectronic Retail OutletsVending Service Companies

Agent IntermediariesIndependent Manufacturers AgentsBrokers

Wholesalers & RetailersWholesalersBuy large quantities of goods from manufacturers, store the goods, and resell them to other businesses.RetailersSell goods to the ultimate consumer through their own stores.

Electronic ShoppingInternet ShoppingHome Shopping Networks

Vending Service CompaniesBuy manufacturers products and sell them through machines that dispense goods to consumers.Vending Machines

AgentsIndependent Manufacturers Agent Represent several non-competing manufacturers in a specific industryBrokerSales Agent for different manufacturersMay merchandise products as well as sell.

Transportation Companies & Storage WarehousesNot part of the channel of distribution because they do not take title to the goods nor are they involved in negotiating that title.

Direct vs. Indirect DistributionDirect - Goods or services are sold from the producer directly to the final user no intermediaries are involved.Indirect - Goods or services are sold through the use of intermediaries.

5 Channels for Consumer ProductsA Direct sales from manufacturer to consumer AvonB Manufacturer to Retailer to Consumer MansoursC Manufacturer to Wholesaler to Retailer to Consumer SuperValuD Manufacturer to Agent to Wholesaler to Retailer to Consumer Small RetailersE Manufacturer to Agent to Retailer to Consumer Cookware, Meat, Cosmetics, Supermarkets

4 Channels for Industrial ProductsA Manufacturer to Industrial User Office Machine CompaniesB Manufacturer to Industrial Distributor to Industrial User Loys Office SuppliesC Manufacturer to Agent to Industrial Distributor to Industrial User Building SuppliesD Manufacturer to Agent to Industrial User Construction Equipment

Computer Companies Go Direct A Case StudyDell: manufacturer to consumer or manufacturer to industrial user (both direct). Big three: catalog sales (same as Dell); retail sales manufacturer to retailer to consumer or manufacturer to industrial distributor to industrial user (indirect).The big three feared the competition from Dell, Gateway and similar companies who are able to create custom-built computers at competitive prices.Could be either way Is it a good idea?

Rack JobbersManage inventory and merchandising by counting stock, filling it in when needed and maintaining store displays. Grocery Store

Considerations in Distribution PlanningDecisions involving a products physical movement and transfer of ownership from producer to consumerDistribution decisions affect a firms marketing programNontraditional and multiple channels, control vs. costs, intensity of distribution

Nontraditional and Multiple ChannelsSelling in various types of outletsLeggsSelling both retail and industrial Loys Office Supplies, SAMs

Control vs. CostsWho Does the Selling?In-house sales forceAgentsWho Dictates the Terms?Mass MerchandisersSmall Retailers

Distribution IntensityIntensiveComplete market coverageAll suitable outletsSelectiveLimited number of outletsMore controlExclusiveProtected TerritoriesFranchisesRetail serviced lineIntegrated Distribution

Distribution Planning in Foreign MarketsForeign Markets Deliver Additional ProblemsJapan Intensive personal relationships, saving face, distribution networksLatin America Bribes, Lack of Skills, Lack of Financing