Distribution channel-decisions ppt

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Distribution channel-decisions ppt

  1. 1. Distribution Channel Decisions
  2. 2. Supply Chain • The value delivery system that begins at the point of supply and ends at the point of consumption – Raw materials – Component parts – Finished product – Middlemen – wholesalers/distributors & retailers – Final consumer
  3. 3. Supply Chain Management • Supply chain management – Viewing the supply chain as a single entity – Managing the supply chain in a way that maximizes the total value delivered
  4. 4. Channels of distribution • The part of the supply chain that focuses on making the product available to the customer.
  5. 5. Are channel decisions important? Consider what consumers pay. Specialty store price: food item 10.00 Retailer gross margin (50%) 5.00 Price to retailer 5.00 Wholesaler gross margin (25%) 1.25 Selling price to wholesaler (revenue to manufacturer) 3.75 Note what the consumer pays for distribution: 62.5% of price paid!
  6. 6. Are costs different in lower cost channels like supermarkets? Supermarket price: similar item 5.00 Retailer gross margin (25%) 1.25 Price to retailer 3.75 Food broker commission (3%-5%) .19 Revenue to manufacturer 3.56 More efficient, lower price, but the consumer still pays 29% for distribution!
  7. 7. Types of Channel members • Merchant wholesalers – Industrial products distributors • Agent middlemen – Manufacturer’s agents or manufacturer’s reps – Sales agents – Brokers – E-Hubs
  8. 8. Types of Channel Members (cont’d) • Retailers • Facilitating agencies – Logistics companies – Trucking companies – Advertising agencies – Custom marketing research firms – Etc.
  9. 9. Channel Design Options for a Consumer Product Producer Consumer Retailer B Producer Consumer Retailer Wholesaler C Producer Agents Wholesaler Retailer Consumer D Consumer A Producer E Producer Agents Retailer Consumer Exhibit 13.5
  10. 10. Exhibit 13.6 Channel options for industrial goods and services Producer Industrial Buyer Wholesaler B Producer Industrial Buyer Agent C Producer Agent Wholesaler Industrial Buyer D Industrial Buyer A Producer
  11. 11. Major Channel Objectives • Making the right product available to the right buyer at the right place and time • Meeting the buyers’ customer service requirements • Cost effectiveness
  12. 12. Distribution Intensity • Intensive distribution • Exclusive distribution • Selective distribution
  13. 13. Exhibit 13. 8 Example of a Hybrid Marketing Channel Supplier Company Website & Sales Force Wholesale Distributor Company Help Line & Outside Service Centers Customer Demand Generation Physical Distribution Post-Sale Service
  14. 14. Push vs. Pull Strategies • Push Manufacturer Wholesaler Retailer Consumer
  15. 15. Push vs. Pull Strategies • Pull Manufacturer Wholesaler Retailer Consumer
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