2. Agenda
time activities
10:00 – 10:10 Ice breaking – Introduction
10:10 – 10:30 Definition of distribution channels – Direct / Indirect distribution
10:30 – 10:50 The function of distribution channel
10:50 – 11:00 Break
11:00 – 11:15 channel members
11:15 – 11:30 transportations system – conclusion
24. Learning Objectives
Describe the distribution channels
Direct/Indirect distribution
The function of distribution channel
The kinds of channel members & Identify
factors to consider when choosing a
business location.
Determine a transportations system
25. What Is Distribution
Channel?
Distribution or marketing channel
comprises a set of interdependent
institutions and agencies involved in
the process of making a product or
service available for consumption or
use.
26. Philip Kotler
“Marketing channels are sets of
interdependent organizations
involved in the process of making a
product or service available for use
or consumption”
26
27. Channels of Distribution
“Systems” of interdependent organizations
that direct the flow of product
(title/possession) from producers to buyers.
Producers Intermediaries Customer
28. Channel Structure
Mfg. A Mfg. B Mfg. C
Without
intermediaries
1 2 3 4 5 6 7 8
Dr. Rosenbloom
29. Channel Structure
Mfg. A Mfg. B Mfg. C
With
intermediaries
Intermediary
1 2 3 4 5 6 7 8
Dr. Rosenbloom
30. the
Number of Channel
Transactions
1
2
3
4 A. Number of contacts
5 without a distributor
6 MxC=3X3=9
7
8
9
= Manufacturer = Customer
31. the
Number of Channel
Transactions
1
4 B. Number of contacts
with a distributor
MxC=3+3=6
Store
2 5
6
3
= Manufacturer = Customer = Distributor
33. Business Channels
PRODUCERS OF BUSINESS GOODS
Agents Agents
Merchant wholesalers Merchant wholesalers
(industrial distributors) (industrial distributors)
BUSINESS USERS
15 - 33
34. Service Channels
PRODUCERS OF SERVICES
Agents
ULTIMATE CONSUMERS OR BUSINESS USERS
15 - 34
35. Direct Distribution
• Direct contact between producer and customer.
• Most common in B2B markets.
• Often found in the marketing of relatively expensive,
complex products that may require demonstrations.
• Internet is helping companies distribute directly to
consumer market.
Distribution Channels Using Marketing Intermediaries
• Producers distribute products through wholesalers and
retailers.
• Inexpensive products sold to thousands of consumers in
widely scattered locations.
• Lowers costs of goods to consumers by creating market
utility.
38. Information
Transfer
Communication
Physical
Distribution Negotiation
Risk Taking
Matching
Financing
39. Distribution Channel Functions
Distribution Key Functions
Channel
Information Gathering and distributing marketing research
about the environment
Finding and communicating with prospective
Communication buyers and promotion
Matching Shaping and fitting the offer to the buyer’s need
Agreeing on price and terms of the offer so
Negotiation 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 or or stock holding
Transfer all products must be moved by using several
transportations
40. Considerations in
Channel Choice
Market Considerations: Type of
market, concentration, potential
customers, order size.
Product Considerations: Consider
unit value, perishability, technical
nature of product.
Intermediaries Considerations:
Services
offered, availability, attitude, dominan
ce or control channel.
Company Considerations: Desire for
channel control, management, money 15 - 40
and services seller can provide to
44. Channel Members
Retailers
– Sell goods to final consumer for personal use.
– Brick-and-mortar retailers-sell goods to the
customer from their own physical stores.
– Buy products from manufacturers or
wholesalers.
– Non-store retailers
– Takes title for goods.
– E-tailing-online retailing; selling products over
the Internet
45. Channel Members
Wholesalers
– Businesses that buy large quantities of goods
from manufacturers, store the goods, and
then resell them to other businesses.
– Take title to goods they buy for resale.
– Rack jobbers-wholesalers who manage
inventory and merchandising for retailers by
counting stock, filling it in when needed and
maintaining store displays.
– Drop shippers-own the goods they sell but do
not physically handle the actual products.
46. Channel Members
Agents
– Intermediaries that bring buyers and sellers together.
– Independent Manufacturer’s Representative
Work with several related, but noncompeting
manufacturer’s in a specific industry.
Paid commission on what they sell.
– Brokers
Negotiate a sell, paid a commission, and look for new
customers
47. Exercise
What the important services provideing by
1 Wholesales to producer ?
2 Wholesales to retailer ?
3 Retailer to final costumer?
48. Transportation
Almost all products must be moved by
using several transportations such as
train, airplane, ship, truck and pipeline
Dr. Rosenbloom
55. Exercise Comparison of Transport Modes
Mode Speed security Frequency Locations quantity Cost
of
Shipments
train Average
ship Very Very low
high
Truck High
Pipe High Very
limited
Airplane Very Low
fast
56. Comparison of Transport Modes
Mode Speed security Frequency Locations quantity Cost
of
Shipments
train Average Average Low Low High Average
ship Very Low Very low Limited Very Very low
slow high
Truck Fast Average High Very Average High
extensive
Pipe Slow High High Very Very low Low
limited
Airplane Very High Average Average Low Very
fast high
