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Logistics
Management (3)
Wholesalers

Duties?
-   Take ownership of goods where agents do not
-   Storage
-   Reduce physical contact cost between producer and consumer i.e.
    customer service costs
-   Could take on marketing responsibilities
Retailers

NB role in distribution of products
-   Strong personal relationship with customer
-   Hold several brands and products
-   Offer credit to consumers
-   P&S promoted & merchandised
-   Sets final price … well, not always
-   Brand name
Agents

Secure order for producer and takes
  commission.

No title of goods.

“Stockist agent” could hold consignment
   stock.

Difficult to keep control due to
    distances.
Traditional distribution chain




  Importer


  Producer
                      Wholesaler   Retailer   Consumer
Manufacturer


  Supplier
Only one retailer




  Importer


  Producer
                  Wholesaler   Retailer   Consumer
Manufacturer


  Supplier
Two retailers




Manufacturer     Retailer      Retailer   Consumer
International distribution channel

  Overseas
 franchisor        Local
(Coke USA)      manufacturer
                 (Amalgamated
                     Bottling
                   Industries)     Local
                                 wholesaler
                                  (Makro)

                                              Local retailer
                                              (corner café)




                                                               Consumer
Planning an international distribution system
                                   SA producer/ manufacturer/ supplier



                      SA intermediary:
                  -International trading
                          company
                     -Export merchant
                           -Agent
                     - Resident buyers
                  - Allied manufacturers
                  - Export management
                          company
                   - Export commission
                           house


                     Indirect exporting                              D        Direct exporting

Foreign intermediary:                                      Direct investment:
      -Merchants
                                    Transfer of             -Sales subsidiary
         - Agents               expertise or ideas:         - Manufacturing
      - Importers                   -Licensing                  subsidiary                Strategic alliances
     - Wholesaler                                            - Joint ventures
                                  - Franchising             - Foreign branch
        - Retailer
- Industrial distributor          - Contracting                 subsidiary


                                          Foreign markets and customers
The distribution channel for industrial
                         materials
               Trading company                 User



                 Wholesaler                    User



Manufacturer     Wholesaler                    User



                Sales company      Dealer      User



                 Wholesaler      Distributor   User
Intermediaries involved in the industrial
                distribution of food products




                Consumables
 Agricultural                   Food service
                   goods
commodities     manufacturers    providers
                                                Restaurants
                                                Retail food   Consumer
                                                  chains
                                               Supermarkets
   Food                         Wholesale/
                 Processors
 producers                      Distributors
The flow of industrial products in the
         distribution of food products

                                             Chemicals/ Packaging
     Farmers
                                                  materials


                     Ingredient processers


                                               Food and packaged
Grocery wholesaler                              goods processers


                                             Food service distributor
   Supermarket

                                                             Take-away
                                             Restaurant
                                                               outlet
 Eat food at home
                                              Eat food @
                                                               Take-
                                             restaurant or
                                              food outlet      away
The typical distribution channel

Choice depends on
 target market,
 marketing
 objectives and
 the nature of the
 product
The distribution channel for services
Four distinguishing characteristics of services


  Intangibility



Inseparability of
 production and
  consumption



  Perishability




Heterogeneity
The service act

Nature of the product   People                 Things

Tangible actions        Directed at the body   Goods and physical
                                               possessions




Intangible actions      Directed at the mind   Intangible assets
The service act

Nature of the product   People                 Things

Tangible actions        Directed at the body   Goods and physical
                                               possessions




Intangible actions      Directed at the mind   Intangible assets
The service act

Nature of the product   People                 Things

Tangible actions        Directed at the body   Goods and physical
                                               possessions




Intangible actions      Directed at the mind   Intangible assets
The service act

Nature of the product   People                 Things

Tangible actions        Directed at the body   Goods and physical
                                               possessions




Intangible actions      Directed at the mind   Intangible assets
The service act

Nature of the product   People                 Things

Tangible actions        Directed at the body   Goods and physical
                                               possessions




Intangible actions      Directed at the mind   Intangible assets
Method of service delivery


                                           Availability of service outlets
Nature of interaction        Single site                   Multiple set sites
between C and service
organisation
C goes to service
organisation


Service organisation goes
to c



C and service organisation
transact at arm’s length
i.e. mail or electornic
communication
Method of service delivery


                                           Availability of service outlets
Nature of interaction        Single site                   Multiple set sites
between C and service
organisation
C goes to service
organisation


Service organisation goes
to c



C and service organisation
transact at arm’s length
i.e. mail or electornic
communication
Method of service delivery


                                           Availability of service outlets
Nature of interaction        Single site                   Multiple set sites
between C and service
organisation
C goes to service
organisation


Service organisation goes
to c



C and service organisation
transact at arm’s length
i.e. mail or electornic
communication
Method of service delivery


                                           Availability of service outlets
Nature of interaction        Single site                   Multiple set sites
between C and service
organisation
C goes to service
organisation


Service organisation goes
to c



C and service organisation
transact at arm’s length
i.e. mail or electornic
communication
Method of service delivery


                                           Availability of service outlets
Nature of interaction        Single site                   Multiple set sites
between C and service
organisation
C goes to service
organisation


Service organisation goes
to C



C and service organisation
transact at arm’s length
i.e. mail or electornic
communication
Method of service delivery


                                           Availability of service outlets
Nature of interaction        Single site                   Multiple set sites
between C and service
organisation
C goes to service
organisation


Service organisation goes
to c



C and service organisation
transact at arm’s length
i.e. mail or electornic
communication
Method of service delivery


                                           Availability of service outlets
Nature of interaction        Single site                   Multiple set sites
between C and service
organisation
C goes to service
organisation


Service organisation goes
to c



C and service organisation
transact at arm’s length
i.e. mail or electornic
communication
Method of service delivery


                                           Availability of service outlets
Nature of interaction        Single site                   Multiple set sites
between C and service
organisation
C goes to service
organisation


Service organisation goes
to c



C and service organisation
transact at arm’s length
i.e. mail or electornic
communication
Guidelines for designing service channels
                                 Distribution alternatives and strategies


                                      - At airline’s own outlet
                                      - Telephone directly from airline
                                      - Telephone from travel agent
                   Airline tickets
                                      - Internet
                                      - Delivery to C

 Seek physical
manifestation of
   services
                                      - Direct classroom contact
                                      - Televised lecturers
                                      - Web-based training
                     Education
                                      - Combining contact with a distance-learning
                                      approach
                                      - CDR/ course website
Guidelines for designing service channels
                            Distribution alternatives and strategies


                                 - Travelling bus
                                 - Mail-order books
              Library services   - Interlibrary loans
                                 - Web-based access to periodicals and journals

 Develop
alternative
 contacts

                                 - Personal banker coming to your office
                   Bank          - Internet banking
                                 - Purchase cell phone air time @ ATM
Guidelines for designing service channels
                                 Distribution alternatives and strategies




                                      - Repair my fridge at my home
                       Repairs        - Handyman services at my home


Develop logistics
channels where
 none existed
    before
                                      - Collect clothing to be dry-cleaned
                                      - Inthebag.co.za
                    Collection and
                                      - Buying executive wardrobe and personal items
                       delivery
                                      from office via telephone, catalogue or selecting
                                      from samples brought to office

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Logistics management 3

  • 2. Wholesalers Duties? - Take ownership of goods where agents do not - Storage - Reduce physical contact cost between producer and consumer i.e. customer service costs - Could take on marketing responsibilities
  • 3. Retailers NB role in distribution of products - Strong personal relationship with customer - Hold several brands and products - Offer credit to consumers - P&S promoted & merchandised - Sets final price … well, not always - Brand name
  • 4. Agents Secure order for producer and takes commission. No title of goods. “Stockist agent” could hold consignment stock. Difficult to keep control due to distances.
  • 5. Traditional distribution chain Importer Producer Wholesaler Retailer Consumer Manufacturer Supplier
  • 6. Only one retailer Importer Producer Wholesaler Retailer Consumer Manufacturer Supplier
  • 7. Two retailers Manufacturer Retailer Retailer Consumer
  • 8. International distribution channel Overseas franchisor Local (Coke USA) manufacturer (Amalgamated Bottling Industries) Local wholesaler (Makro) Local retailer (corner café) Consumer
  • 9. Planning an international distribution system SA producer/ manufacturer/ supplier SA intermediary: -International trading company -Export merchant -Agent - Resident buyers - Allied manufacturers - Export management company - Export commission house Indirect exporting D Direct exporting Foreign intermediary: Direct investment: -Merchants Transfer of -Sales subsidiary - Agents expertise or ideas: - Manufacturing - Importers -Licensing subsidiary Strategic alliances - Wholesaler - Joint ventures - Franchising - Foreign branch - Retailer - Industrial distributor - Contracting subsidiary Foreign markets and customers
  • 10. The distribution channel for industrial materials Trading company User Wholesaler User Manufacturer Wholesaler User Sales company Dealer User Wholesaler Distributor User
  • 11. Intermediaries involved in the industrial distribution of food products Consumables Agricultural Food service goods commodities manufacturers providers Restaurants Retail food Consumer chains Supermarkets Food Wholesale/ Processors producers Distributors
  • 12. The flow of industrial products in the distribution of food products Chemicals/ Packaging Farmers materials Ingredient processers Food and packaged Grocery wholesaler goods processers Food service distributor Supermarket Take-away Restaurant outlet Eat food at home Eat food @ Take- restaurant or food outlet away
  • 13. The typical distribution channel Choice depends on target market, marketing objectives and the nature of the product
  • 14. The distribution channel for services
  • 15. Four distinguishing characteristics of services Intangibility Inseparability of production and consumption Perishability Heterogeneity
  • 16. The service act Nature of the product People Things Tangible actions Directed at the body Goods and physical possessions Intangible actions Directed at the mind Intangible assets
  • 17. The service act Nature of the product People Things Tangible actions Directed at the body Goods and physical possessions Intangible actions Directed at the mind Intangible assets
  • 18. The service act Nature of the product People Things Tangible actions Directed at the body Goods and physical possessions Intangible actions Directed at the mind Intangible assets
  • 19. The service act Nature of the product People Things Tangible actions Directed at the body Goods and physical possessions Intangible actions Directed at the mind Intangible assets
  • 20. The service act Nature of the product People Things Tangible actions Directed at the body Goods and physical possessions Intangible actions Directed at the mind Intangible assets
  • 21. Method of service delivery Availability of service outlets Nature of interaction Single site Multiple set sites between C and service organisation C goes to service organisation Service organisation goes to c C and service organisation transact at arm’s length i.e. mail or electornic communication
  • 22. Method of service delivery Availability of service outlets Nature of interaction Single site Multiple set sites between C and service organisation C goes to service organisation Service organisation goes to c C and service organisation transact at arm’s length i.e. mail or electornic communication
  • 23. Method of service delivery Availability of service outlets Nature of interaction Single site Multiple set sites between C and service organisation C goes to service organisation Service organisation goes to c C and service organisation transact at arm’s length i.e. mail or electornic communication
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  • 29. Method of service delivery Availability of service outlets Nature of interaction Single site Multiple set sites between C and service organisation C goes to service organisation Service organisation goes to c C and service organisation transact at arm’s length i.e. mail or electornic communication
  • 30. Method of service delivery Availability of service outlets Nature of interaction Single site Multiple set sites between C and service organisation C goes to service organisation Service organisation goes to C C and service organisation transact at arm’s length i.e. mail or electornic communication
  • 31. Method of service delivery Availability of service outlets Nature of interaction Single site Multiple set sites between C and service organisation C goes to service organisation Service organisation goes to c C and service organisation transact at arm’s length i.e. mail or electornic communication
  • 32. Method of service delivery Availability of service outlets Nature of interaction Single site Multiple set sites between C and service organisation C goes to service organisation Service organisation goes to c C and service organisation transact at arm’s length i.e. mail or electornic communication
  • 33. Method of service delivery Availability of service outlets Nature of interaction Single site Multiple set sites between C and service organisation C goes to service organisation Service organisation goes to c C and service organisation transact at arm’s length i.e. mail or electornic communication
  • 34. Guidelines for designing service channels Distribution alternatives and strategies - At airline’s own outlet - Telephone directly from airline - Telephone from travel agent Airline tickets - Internet - Delivery to C Seek physical manifestation of services - Direct classroom contact - Televised lecturers - Web-based training Education - Combining contact with a distance-learning approach - CDR/ course website
  • 35. Guidelines for designing service channels Distribution alternatives and strategies - Travelling bus - Mail-order books Library services - Interlibrary loans - Web-based access to periodicals and journals Develop alternative contacts - Personal banker coming to your office Bank - Internet banking - Purchase cell phone air time @ ATM
  • 36. Guidelines for designing service channels Distribution alternatives and strategies - Repair my fridge at my home Repairs - Handyman services at my home Develop logistics channels where none existed before - Collect clothing to be dry-cleaned - Inthebag.co.za Collection and - Buying executive wardrobe and personal items delivery from office via telephone, catalogue or selecting from samples brought to office