Post on 29-Nov-2014
description
Channels of Distribution
Saudi teem – group 6
Presented by
Agendaactivities time
Ice breaking – Introduction 10:00 – 10:10
Definition of distribution channels – Direct / Indirect distribution 10:10 – 10:30
The function of distribution channel 10:30 – 10:50
Break 10:50 – 11:00
channel members 11:00 – 11:15
transportations system – conclusion 11:15 – 11:30
ICE BREAKING
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
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.
What Is Distribution Channel?
“Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption”
Philip Kotler
26
Channels of Distribution
“Systems” of interdependent organizations
that direct the flow of product
(title/possession) from producers to buyers.
Producers Intermediaries Customer
Channel Structure
Dr. Rosenbloom
Mfg. A Mfg. B Mfg. C
1 2 3 4 5 6 7 8
Without intermediaries
Channel Structure
Dr. Rosenbloom
Mfg. A Mfg. B Mfg. C
Intermediary
1 2 3 4 5 6 7 8
With intermediaries
How a Distributor Reduces the
Number of Channel Transactions
= Customer= Manufacturer
A. Number of contacts without a distributor
M x C = 3 X 3 = 9
1
32
456
789
How a Distributor Reduces the
Number of Channel Transactions
= Distributor= Customer= Manufacturer
B. Number of contacts with a distributorM x C = 3 + 3 = 6
Store
1
2
3
4
5
6
Consumer Marketing Channels
Consumer Marketing Channels
WholesalerWholesaler RetailerRetailer ConsumerConsumer
ConsumerConsumer
RetailerRetailer ConsumerConsumer
ManufacturerManufacturer
0-level channel
WholesalerWholesaler RetailerRetailer ConsumerConsumer ManufacturerManufacturer2-level channel
ManufacturerManufacturer
3-level channel
1-level channel
ManufacturerManufacturer
Agents
15 - 33
BUSINESS USERS
PRODUCERS OF BUSINESS GOODS
Merchant wholesalers(industrial distributors)
Agents Agents
Merchant wholesalers(industrial distributors)
Business Channels
15 - 34
ULTIMATE CONSUMERS OR BUSINESS USERS
PRODUCERS OF SERVICES
Agents
Service Channels
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.
Distribution Channels
using Marketing
Intermediaries
Exhibit 8-1
Alternative Channels of Distribution
LO 1
videohttp://www.youtube.com/watch?v=rqXIwjD3Cso&feature=related
Distribution Channel FunctionsDistribution Channel Functions
MatchingMatching
CommunicationCommunicationTransferTransfer
NegotiationNegotiation
FinancingFinancing
Risk TakingRisk Taking
PhysicalDistribution
PhysicalDistribution
InformationInformation
InformationInformation
TransferTransfer
CommunicationCommunication
MatchingMatching
NegotiationNegotiation
PhysicalPhysical
Gathering and distributing marketing research about the environment
Gathering and distributing marketing research about the environment
all products must be moved by using several transportations
all products must be moved by using several transportations
Finding and communicating with prospective buyers and promotion
Finding and communicating with prospective buyers and promotion
Shaping and fitting the offer to the buyer’s needShaping and fitting the offer to the buyer’s need
Agreeing on price and terms of the offer so ownership or possession can be transferred
Agreeing on price and terms of the offer so ownership or possession can be transferred
Distribution: transporting and storing goodsDistribution: transporting and storing goods
FinancingFinancing Acquiring and using funds to cover the costs of channel work
Acquiring and using funds to cover the costs of channel work
Distribution Key Functions Channel
Risk TakingRisk Taking Assuming financial risks such as the inability to sell inventory at full margin or or stock holding
Assuming financial risks such as the inability to sell inventory at full margin or or stock holding
Distribution Channel Functions
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, dominance or control channel.Company Considerations: Desire for channel control, management, money and services seller can provide to support sales.
15 - 40
Products Direct Indirect Exercise
Products Direct Indirect
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Exercise
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
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.
Channel Members
Agents– Intermediaries that bring buyers and sellers together.
– Independent Manufacturer’s RepresentativeWork with several related, but noncompeting manufacturer’s in a specific industry.
Paid commission on what they sell.
– BrokersNegotiate a sell, paid a commission, and look for new customers
Channel Members
Exercise What the important services provideing by
Wholesales to producer ? 1
Wholesales to retailer ? 2
Retailer to final costumer? 3
Dr. Rosenbloom
Almost all products must be moved by using several transportations such as train, airplane, ship, truck and pipeline
Transportation
Transportation Mode Considerations
Security CostSpeed of DeliveryAvailability CapabilityProduct natureMarket place
©2003 Prentice Hall, Inc 17-49
Exercise Comparison of Transport ModesMode Speed security Frequency
of Shipments
Locations quantity Cost
train Average
ship Very high
Very low
Truck High
Pipe High Very limited
Airplane Very fast
Low
Comparison of Transport ModesMode Speed security Frequency
of Shipments
Locations quantity Cost
train Average Average Low Low High Average
ship Very slow
Low Very low Limited Very high
Very low
Truck Fast Average High Very extensive
Average High
Pipe Slow High High Very limited
Very low Low
Airplane Very fast
High Average Average Low Very high
Questions
Evaluation
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Thank you for you attention