Distribution strategy ppt


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  • Distribution channel enhances a company’s operations by dealing with customers more efficiently. The channel is not only a market supplier but also a partner of the company that works as a team to achieve higher quality performances.
    -Network of organizations that create time, place, and possession utilities for consumers.
  • Transaction functions – these functions involve the buying of products from manufacturers/ producers; the risk taken on by the intermediary in buying on speculation that some consumer will want to eventually buy these products from the intermediary; and eventual selling of products to consumers.
    Logistical function – involve mixing up the various products from diff manufacturers (assorting) ; moving and keeping the product safe from loss (shipping and storing)
    Facilitating – involve making it easy for the retailers/consumers to buy the products.
  • The use of intermediaries results from their greater efficiency in making goods available to target markets.
    Through their contacts, experience, specialization and scale of operation, intermediaries usually offer the firm more than It can achieve on its own.
  • Classic picture of the value of intermediaries: If four of you want to go to the store and make pizza and need dough, canned tomatoes, cheese, and anchovies. . .
  • Works even better with 16 consumers, etc. bc geometric.
    Same model applies to 16 pharmaceutical firms and 16 drugstore: Wholesalers make the “pick” (assortment) and break bulk.
    When you hear: “We cut out the middleman,” don’t think it’s necessarily a good idea. Most intermediaries add value
    Consider shopping for T-shirts and jeans without The Gap. = Soviet Union under communism.
  • Indirect channel- numerous and a variety of intermediaries involved in bringing the good or service from manufacturer to the consumer or business customer.
  • Exclusive – when a manufacturer restricts product distribution to a single retailer in particular market or just a relatively few reatilers.
    Selective - selectively distributed bands are available in multiple markets. For example sony TVs can be purchased at a number of outlets.
    Intensive – used when convenience products are available retail outlet in a particular market. Ex. Softdrinks, candy, newspaper, gum, cigarettes.
  • *manufacturer and the wholesaler may, at times, also perform retailing activities, like sell directly to the final user.
  • Retail stores come in all shapes and sizes.
  • Distribution strategy ppt

    2. 2. CHANNEL OF DISTRIBUTION A distribution channel (marketing channel) is a set of independent organizations involved in the process of making a product or service available to the consumer or business user Used to move the customer towards the product
    3. 3. Distribution Channel (PLACE) Manufacturer Retailer Business Structure Distributor Consumers
    4. 4. MARKETING INTERMEDIARIES The organizations that the product flows through on its way to the consumer.
    6. 6. Why are there Marketing Intermediaries? Marketing intermediaries allow for the smooth flow of products and product information from the manufacturer to the consumer. Intermediaries help manufactures distribute their products, and help consumers easily find and obtain the products that they need to buy. Intermediaries reduce the number of contacts necessary in order to make a sale thereby facilitating the marketing process.
    7. 7. Importance of Marketing Channels Producers Without intermediaries 16 transactions Consumers
    8. 8. Channels reduce number of transactions Producers Intermediaries Supermarket Consumers Importance of Marketing Channels With intermediaries 8 transactions
    9. 9. DISTRIBUTION CHANNEL FUNCTIONS Information: gathering and distributing marketing research and intelligence information about the marketing environment Promotion: developing and spreading persuasive communications about an offer Contact: finding and communicating with prospective buyers
    10. 10. Matching: shaping and fitting the offer to the buyer’s needs, including such activities as manufacturing, grading, assembling, and packaging Negotiation: agreeing on price and other terms of the offer so that ownership or possession can be transferred Physical distribution: transporting and storing goods  Financing: acquiring and using funds to cover the costs of channel work Risk taking: assuming financial risks such as the inability to sell inventory at full margin
    11. 11. Direct Channels vs. Indirect Channels Marketing channel where there is no intermediary levels between manufacturer and consumer-- These are known as Direct Channels Some marketing channels are relatively long with many intermediaries -- These are known as Indirect Channels
    12. 12. Direct Channel Retailer Channel Producer Alternative Channels of Distributio n Indirect Channels Wholesaler Channel Agent/Broker Channel Producer Producer Producer Agents or Brokers Wholesalers Retailers or Distributor Consumers or User Wholesalers Retailers or Distributor Retailers or Distributor Consumers or User Consumers or User Consumers or User
    13. 13. CHANNEL LEVELS Exclusive Distribution Selective Distribution Intensive Distribution
    14. 14. RETAILING Retailing includes all the activities in selling products or services directly to final consumers for their personal, non-business use Retailers are businesses whose sales come primarily from retailing *Retailing can be done in stores (store retailing) or out of a store (non-store)
    15. 15. Non-store retailing includes selling to final consumers through:  Direct mail  Catalogs  Telephone  Internet  TV shopping  Home and office parties  Door-to-door sales  Vending machines
    16. 16. TYPES OF RETAILERS Amount of service Self-service Limited service Full service
    17. 17. Types of Retailers Product Line
    18. 18. Types of Retailers Relative Prices
    19. 19. Types of Retailers Organizational Approach
    20. 20. Types of Retailers Organizational Approach Corporate chains are two or more outlets that are commonly owned and controlled  Size allows them to buy in large quantities at lower prices and gain promotional economies Voluntary chains are wholesale-sponsored groups of independent retailers that engage in group buying and common merchandising
    21. 21. Types of Retailers Organizational Approach Retailer cooperatives is a group of independent retailers that band together to set up a joint-owned, central wholesale operation and conduct joint merchandising and promotion effort  Ace Hardware Franchise organizations are based on some unique product or service; on a method of doing business; or on the trade name, good will, or patent that the franchisor has developed
    22. 22. Types of Retailers Organizational Approach Merchandising conglomerates are corporations that combine several retailing forms under central ownership
    23. 23. Retailer Marketing Decisions Segmentation, targeting, differentiation, and positioning involves the definition and profile of the market so the other retail marketing decisions can be made
    24. 24. Retailer Marketing Decisions Product Assortment and Service Product assortment and service decisions include:  Product assortment  Services mix  Store atmosphere
    25. 25. Retailer Marketing Decisions Price Decision Price policy must fit the target market and positioning, product and service assortment, and competition  High markup on lower volume  Low markup on higher volume
    26. 26. Retailer Marketing Decisions Price Decision High-low pricing involves charging higher prices on an everyday basis, coupled with frequent sales and other price promotions Everyday low price (EDLP) involves charging constant, everyday low prices with few sales or discounts
    27. 27. Retailer Marketing Decisions Promotion Decision
    28. 28. Retailer Marketing Decisions Place Decision Central business districts are located in cities and include department and specialty stores, banks, and movie theaters Shopping center is a group of retail businesses planned, developed, owned, and managed as a unit  Regional shopping centers  Community shopping centers  Neighborhood shopping centers  Power center  Lifestyle centers
    29. 29. WHOLESALING Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use
    30. 30.  Wholesalers are used because they are often better at performing the following channel functions than other channel:
    31. 31. Wholesaling Selling and promoting involves the wholesaler’s sales force helping the manufacturer reach many smaller customers at lower cost Buying assortment building involves the selection of items and building of assortments needed by their customers, saving the customers work
    32. 32. Wholesaling Bulk breaking involves the wholesaler buying in larger quantity and breaking into smaller lots for its customers Warehousing involves the wholesaler holding inventory, reducing its customers’ inventory cost and risk
    33. 33. Wholesaling Transportation involves the wholesaler providing quick delivery due to its proximity to the buyer Financing involves the wholesaler providing credit and financing suppliers by ordering earlier and paying on time
    34. 34. Wholesaling Risk bearing involves the wholesaler absorbing risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence Market information involves the wholesaler providing information to suppliers and customers about competitors, new products, and price developments
    35. 35. Wholesaling Management services and advice involves wholesalers helping retailers train their sales clerks, improve store layouts, and set up accounting and inventory control systems
    37. 37. Types of Wholesalers largest group of Merchant wholesalers is the wholesalers and include: Full-service wholesalers who provide a full set of services Limited service wholesalers who provide few services and specialized functions
    38. 38. Types of Wholesalers Brokers and agents do not take title, perform a few functions, and specialize by product line or customer type  Brokers bring buyers and sellers together and assist in negotiations  Agents represent buyers or sellers Manufacturers’ sales branches and offices is a form of wholesaling by sellers or buyers themselves rather than through independent wholesalers
    39. 39. WHOLESALER MARKETING DECISIONS Target market and positioning decisions  Size of customer  Type of customer  Need for service
    40. 40. Wholesaler Marketing Decisions Marketing mix decisions  Product  Price  Promotion  Place