2. • Distribution
Physically moving products and establishing intermediary relationships to
support such movement.
• Physical Distribution (Logistics)
The activities of distribution involved in the physical relocation of products.
• Channel of Distribution
The system of intermediaries (business relationships) established to guide the
movement of a product.
Distribution Terms
3. The Role of Distribution Activities in Marketing
• Functions of Intermediaries
Perform the marketing function better.
Provide efficient distribution of the product.
Breaking bulk – sell to customers in smaller quantities.
Assorting – bringing together similar lines of goods.
Shifting risks.
Merchant middlemen - take title to the goods distributed.
Agents/brokers - distribute goods only.
6. Direct Marketing
Direct marketing is a channel-agnostic form of advertising which
allows businesses and nonprofit organizations to communicate
straight to the customer
7. Structuring a Distribution Channel
• Important Factors in Building a Distribution Channel
Costs associated with establishing a direct channel distribution
Coverage is increased through the use of indirect channels of
distribution.
Control is enhanced using a direct distribution channel.
8. Strategy Options for Global Firms
• Foreign Licensing
Allowing a company in another country to purchase the right to manufacture
and sell a company’s products in international markets
Licensee
• The company buying the licensing rights
Licensor
• The company selling the licensing rights
Royalties
• Fees paid by the licensee to the licensor
for each unit produced under a licensing contract
9. Challenges to Global Business
• Political Risk
The potential for political forces in a country to negatively affect the
performance of businesses operating within
• Economic Risk
The probability that a government will mismanage its economy and
thereby change the business environment in ways that hinder the
performance of firms operating there.
• Exchange rates—the value of one country’s currency relative to that
of another country.