Distribution Strategy

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Channel Distribution The combination of institutions through which a seller market products to the user or ultimate customer

Middleman: an independent business concern that operates as a link between producers and ultimate consumers or organizational buyers. Merchant Middleman: a middleman who buys the goods outright and takes title to them. Agent: a business unit that negotiates purchase, sales, or both but doesn’t take title to the goods in which it deals. Wholesaler: a merchant establishment operated by a concern that is primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods to retailers or organizational buyers. Major Types of Marketing Intermediaries

Middleman: an independent business concern that operates as a link between producers and ultimate consumers or organizational buyers.

Merchant Middleman: a middleman who buys the goods outright and takes title to them.

Agent: a business unit that negotiates purchase, sales, or both but doesn’t take title to the goods in which it deals.

Wholesaler: a merchant establishment operated by a concern that is primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods to retailers or organizational buyers.

Retailer: a merchant middleman who is engaged primarily in selling to ultimate consumers. Manufacturers’ Agent: an agent who generally operates on an extended contractual basis, often sells within an exclusive territory, handles non competing but related lines of goods, and possesses limited authority with regard to prices and terms of sales. Distributor: a wholesale middleman especially in lines where selective or exclusive distribution is common at the wholesaler level in which the manufactures expects strong promotional support; often a synonym for wholesaler. Major Types of Marketing Intermediaries

Retailer: a merchant middleman who is engaged primarily in selling to ultimate consumers.

Manufacturers’ Agent: an agent who generally operates on an extended contractual basis, often sells within an exclusive territory, handles non competing but related lines of goods, and possesses limited authority with regard to prices and terms of sales.

Distributor: a wholesale middleman especially in lines where selective or exclusive distribution is common at the wholesaler level in which the manufactures expects strong promotional support; often a synonym for wholesaler.

Distribution Channel Consumer Goods Manufacture Manufacture Manufacture Consumers Retailers Consumers Wholesale Retailers Consumers Manufacture Agent Retailers Consumers Manufacture Agent Wholesale Retailers Consumers

Customer Characteristic Number, geographic dispersion, preferred channel and outlets for purchase, purchasing pattern, use of new channel (e.g., online purchasing). Product Characteristic Unit value, perish ability, bulkiness, degree of standardization, installation and services required. Intermediary Characteristic Availability, willingness to accept product or product line, geographic market served, marketing functions performed, potential for conflict, potential for long term relationship, competitive product sold, financial condition, other strengths and weakness. General Consideration in Channel Planning

Customer Characteristic

Number, geographic dispersion, preferred channel and outlets for purchase, purchasing pattern, use of new channel (e.g., online purchasing).

Product Characteristic

Unit value, perish ability, bulkiness, degree of standardization, installation and services required.

Intermediary Characteristic

Availability, willingness to accept product or product line, geographic market served, marketing functions performed, potential for conflict, potential for long term relationship, competitive product sold, financial condition, other strengths and weakness.

Competitor Characteristics Number, relative size and market share, distribution channel and strategy, financial condition and estimated marketing budget, size of product mix and product line, overall marketing strategy employed. Company Characteristic Relative size and market share, financial condition and marketing budget, size of product mix and product line, overall marketing strategy employed, marketing objectives, past channel experience. Environmental Characteristic Economic outlook, legal regulations and restrictions, political issues, global and domestic cultural differences and changes, technological changes and other opportunities and threats. General Consideration in Channel Planning

Competitor Characteristics

Number, relative size and market share, distribution channel and strategy, financial condition and estimated marketing budget, size of product mix and product line, overall marketing strategy employed.

Company Characteristic

Relative size and market share, financial condition and marketing budget, size of product mix and product line, overall marketing strategy employed, marketing objectives, past channel experience.

Environmental Characteristic

Economic outlook, legal regulations and restrictions, political issues, global and domestic cultural differences and changes, technological changes and other opportunities and threats.

Benefit for manufactures Provide the ability to reach diverse geographic markets cost effectively Provide information about retailers and end users in various markets. Reduce cost through greater efficiency and effectiveness in distribution functions performed. Reduce potential losses by assuming risks and offering expertise. Benefits for retailers Provides information about industries, manufactures, and other retailers. Reduces cost by providing an assortment of goods from different manufactures. Reduce cost through greater efficiency in distribution functions performed. Benefit for end users Increase the products alternative available in local markets. Reduce retail price by the efficiency and effectiveness contributed to the channel. Improves product selection by providing information to retailers about the best products to offer end users. Wholesaling

Benefit for manufactures

Provide the ability to reach diverse geographic markets cost effectively

Provide information about retailers and end users in various markets.

Reduce cost through greater efficiency and effectiveness in distribution functions performed.

Reduce potential losses by assuming risks and offering expertise.

Benefits for retailers

Provides information about industries, manufactures, and other retailers.

Reduces cost by providing an assortment of goods from different manufactures.

Reduce cost through greater efficiency in distribution functions performed.

Benefit for end users

Increase the products alternative available in local markets.

Reduce retail price by the efficiency and effectiveness contributed to the channel.

Improves product selection by providing information to retailers about the best products to offer end users.

Direct Sales: made by salespeople to consumers in their homes or offices or by telephone. Vending Machines: relatively limited method of retail merchandising and most vending machines sales are for beverages, food, and candy. Television Home Shopping: includes cable channels dedicated to shopping, infomercials, and direct response advertising shown on cable and broadcast network. Non Store Retailing

Direct Sales: made by salespeople to consumers in their homes or offices or by telephone.

Vending Machines: relatively limited method of retail merchandising and most vending machines sales are for beverages, food, and candy.

Television Home Shopping: includes cable channels dedicated to shopping, infomercials, and direct response advertising shown on cable and broadcast network.

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