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Distribution channel-decisions ppt
Distribution channels are an important part of the supply chain that focuses on making products available to customers. Channel decisions can significantly impact what consumers pay, with distribution costs sometimes accounting for over 60% of the retail price. While more efficient channels like supermarkets have lower margins, distribution still makes up around 30% of the consumer price. Producers have various channel options to sell directly to consumers or through retailers, agents, wholesalers or a hybrid system. The objectives are to make the right products available to customers at the right time and place cost effectively while meeting service requirements.
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Distribution channel-decisions ppt
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- 2. Supply Chain • Thevalue 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. 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. Channels of distribution •The part of the supply chain that focuses on making the product available to the customer.
- 5. Are channel decisionsimportant? 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. Are costs differentin 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. Types of Channelmembers • Merchant wholesalers – Industrial products distributors • Agent middlemen – Manufacturer’s agents or manufacturer’s reps – Sales agents – Brokers – E-Hubs
- 8. Types of Channel Members(cont’d) • Retailers • Facilitating agencies – Logistics companies – Trucking companies – Advertising agencies – Custom marketing research firms – Etc.
- 9. Channel Design Options fora 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. Exhibit 13.6 Channel optionsfor 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. 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. Distribution Intensity • Intensivedistribution • Exclusive distribution • Selective distribution
- 13. Exhibit 13. 8 Exampleof 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. Push vs. PullStrategies • Push Manufacturer Wholesaler Retailer Consumer
- 15. Push vs. PullStrategies • Pull Manufacturer Wholesaler Retailer Consumer