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Chapter 15a Place.ppt

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  • 1. Chapter Distributing Products Quickly and Efficiently 15-115-1 15-1 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 2. Intermediaries and the Channel of Distribution • Marketing Intermediaries – Wholesaler – Retailer – Agents/Brokers • Channel of Distribution 15-2 15-2 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 3. The Channel of Distribution 15-3 15-3 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 4. Intermediaries and the Channel of Distribution • Role of Intermediaries – Create Efficiency – Value vs. Cost 15-4 15-4 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 5. Marketing Intermediaries THREE BASIC FACTS ABOUT INTERMEDIARIES 15-5 15-5 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 6. Marketing Intermediaries 1. Marketing Intermediaries can be eliminated, but their activities cannot be eliminated 15-6 15-6 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 7. Marketing Intermediaries 2. Intermediary organizations have survived because they have performed marketing functions faster and cheaper than others could 15-7 15-7 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 8. Marketing Intermediaries 3. Intermediaries add cost to products, but these costs are usually offset by the values they create 15-8 15-8 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 9. Utility The want-satisfying power of a good or service 15-9 15-9 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 10. Utility Want-satisfying ability or value that organizations add to goods or services when the products are made more useful or accessible to consumers 15-10 15-10 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 11. Four Major Types of Utility TYPE DESCRIPTION EXAMPLES ORGANIZAITONAL FUNCTION RESPONSIBLE Form Conversion of raw materials and Skippy Peanut Butter; State Farm Production* components into finished goods and automobile insurance policy; Boeing 767 services aircraft Time Availability of goods and services when One-hour dry cleaning; LensCrafters Marketing consumers want them eyeglass guarantee; Federal Express’ guarantee of package delivery by 10:30 a.m. the next day Place Availability of goods and services at Soda machines in school lobbies; coffee Marketing convenient locations and snacks in Barnes & Noble bookstores; day cares in office complexes; ATM machines in gas stations; mailboxes outside convenience stores Ownership Ability to transfer title to goods or Retail sales (in exchange for currency or Marketing (possession) services from marketer to buyer credit-card payment); swap meets *Marketing provides inputs related to consumer preferences, but the actual creation of form utility is the responsibility of the production function. 15-11 15-11 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 12. Form Utility (production) Possession Time Information Service Place 15-12 15-12 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 13. Marketing Intermediaries • Wholesalers • Agent / Brokers • Retailers 15-13 15-13 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 14. Wholesale Intermediaries • Merchant Wholesalers (a) Full-Service (b) Limited-Function 15-14 15-14 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 15. Wholesale Intermediaries, cont. Merchant Wholesalers - Take Title Full-Service – 8 Distribution functions - transportation, storage, risk bearing, credit, market information, standardizing, grading, bu ying, and selling Limited-Function – Selected functions 15-15 15-15 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 16. Wholesale Intermediaries • Limited Function Merchant Wholesalers – Rack Jobbers – Cash-and-Carry – Drop Shippers – Freight Forwarders 15-16 15-16 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 17. Wholesale Intermediaries cont… • Brokers / Agents • provide services in exchange for commissions – Do not take title – Agents maintain long-term relationship – Brokers are usually hired on temporary basis 15-17 15-17 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 18. Wholesale Intermediaries • Manufacturers’ Agents / Sales Agents - Manufacturers’ Agents – may represent several manufacturers in a specific territory - Sales Agents – represent a single manufacturer in a larger territory 15-18 15-18 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 19. Retail Intermediaries • Sell to Consumers 15-19 15-19 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 20. Retail Competition • Price • Service • Location • Selection – Category Killers 15-20 15-20 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 21. They All Started in 1962 Company 1st Store Objective Rogers, Ark. Slash prices. Makeup Wal-Mart difference in volume July 1962 Roseville, MN Discount retailer with Target strong sense of value May 1962 Bring discount store Garden City, MI Kmart concept to suburban Source: Business 2.0, June 2003, p. 38. March 1962 malls 15-21 15-21 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 22. Retail Store Distribution • Intensive -many outlets as possible -Convenience Goods • Selective -Preferred group of in an area -Shopping Goods • Exclusive -One retail outlet per area -Specialty Goods 15-22 15-22 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 23. Largest Mall in USA • THE MALL OF AMERICA in Bloomington, Minnesota – Large enough to hold Thirty-two 747’s – Four Gap stores – Aquarium – Full-size amusement park – More than 40 million visitors a year • (more than Disney World, Graceland and the Grand Canyon combined) 15-23 15-23 McGraw-Hill/Irwin McGraw-Hill/Irwin Source: The Week magazine, April 2004 © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 24. RETAILING STRATEGY • Off-Price Retailing • Club Warehouse • Outlet Store • Single/One-Price Policy Store 15-24 15-24 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 17-24 Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 25. Non-Store Retailing • E-tailing • Telemarketing • Vending Machines, Kiosks, Carts • Direct Selling – Sell in homes or at work • Multilevel Marketing • Direct Marketing – Direct mail, catalog 15-25 15-25 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 26. Intermediaries and the Channel of Distribution • Channel of Distribution – Transport and Store 15-26 15-26 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 27. The Channel of Distribution 15-27 15-27 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 28. Vertical Marketing Systems 15-28 15-28 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 29. Corporate Distribution • All of the organizations in the channel of distribution are owned by the same firm – Sherwin-Williams 15-29 15-29 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 30. Contractual Distribution Members are bound to cooperate through contractual agreements • Franchise Systems – McDonald’s, KFC, AAMCO • Wholesaler-Sponsored Chains – ACE Hardware, IGA food stores • Retail Cooperatives – Associated Grocers 15-30 15-30 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 31. Administered Distribution • Producers manage all the marketing functions at the retail level. • Retailers cooperate because they get so much free help. 15-31 15-31 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 32. Three types of vertical marketing systems: corporate, contractual (most popular), and administered 15-32 15-32 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 15-32 Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 33. The Supply Chain vs. The Channel of Distribution 15-33 15-33 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 34. The Supply Chain 15-34 15-34 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 35. Logistics Marketing activity that involves planning, implementing, an d controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption McGraw-Hill/Irwin McGraw-Hill/Irwin 15-35 15-35 © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 36. Logistics You are here 15-36 15-36 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 37. Logistics Inbound Logistics Materials Handling Outbound Logistics Reverse Logistics Third-Party Logistics Information 15-37 15-37 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 38. Transportation & Storage Modes 15-38 15-38 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 39. Transportation • Transportation: mode by which products move among channel members • Modes differ in their-- • Dependability (safety and punctuality) • Cost • Speed of delivery • Accessibility (different locations served) • Capability (variety of products handled) • Traceability (ability to locate goods in shipment) 15-39 15-39 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 40. Transportation • Railroad • Pipeline – 35-40 % – 20% • Motor Vehicles • Air – 25% – Small fraction • Water • Intermodal – 15-17% 15-40 15-40 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 41. Storage Modes • Warehousing – 25-30% of cost of logistics – Storage – Distribution 15-41 15-41 McGraw-Hill/Irwin McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Understanding Business, 7/e Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.