DistributionDistribution

Place Place

Considerations in Considerations in DistributionDistribution

ReviewReview

• What are channels of distribution?What are channels of distribution?

• What are intermediaries?What are intermediaries?

• What are two types of What are two types of intermediaries?intermediaries?

• Name two agent intermediaries?Name two agent intermediaries?

Considerations in Considerations in Distribution Distribution

PlanningPlanning

ObjectivesObjectives

• Identify and discuss levels of Identify and discuss levels of intensity of distributionintensity of distribution

• Identify advantages and companies Identify advantages and companies sales force vs. agents.sales force vs. agents.

Key questions manufacturers Key questions manufacturers or producers must make or producers must make concerning distributionconcerning distribution

• How widely can we distribute our How widely can we distribute our products?products?– What outlets will be used?What outlets will be used?

• How will we sell our products to these How will we sell our products to these outlets?outlets?– Will we use a sales force or intermediaries?Will we use a sales force or intermediaries?

• How much control will we want over our How much control will we want over our products in store?products in store?

• How much are we willing to spend on How much are we willing to spend on getting our products to market?getting our products to market?

How widely can we How widely can we distribute our products?distribute our products?

Distribution intensity:Distribution intensity: How widely a How widely a product will be distributed.product will be distributed.

Levels of distribution intensity:Levels of distribution intensity:

• Intensive DistributionIntensive Distribution

• Selective DistributionSelective Distribution

• Exclusive Distribution Exclusive Distribution

• Integrated DistributionIntegrated Distribution

Intensive Intensive DistributionDistribution

• Use all suitable outlets Use all suitable outlets (complete (complete market coverage)market coverage)

• Sell to as many customers as possibleSell to as many customers as possible– Wherever they shopWherever they shop

Products include:Products include:

Convenience or everyday goodsConvenience or everyday goods

Frequently purchased goodsFrequently purchased goods

Selective Selective DistributionDistribution

• Use of limited outlets within a given Use of limited outlets within a given geographic areageographic area

• Select retailers that maintain the image of Select retailers that maintain the image of the productthe product and are willing to promote itand are willing to promote it

• Examples include: Malls, Department Examples include: Malls, Department Stores, Specialty StoresStores, Specialty Stores

Products include:Products include:ClothingClothingAppliancesAppliancesFurnitureFurniture

Exclusive Exclusive DistributionDistribution

• Use of only one dealer within a geographic Use of only one dealer within a geographic areaarea– Dealer is usually granted exclusivity rights and Dealer is usually granted exclusivity rights and

only carries that one brand of a particular productonly carries that one brand of a particular product

• Retailer and producer retain prestige, image, Retailer and producer retain prestige, image, channel control, and high profit marginchannel control, and high profit margin

Products include:Products include:FranchisesFranchisesCar DealersCar DealersNAPA Auto Parts DealersNAPA Auto Parts Dealers

Integrated Integrated DistributionDistribution

• Manufacturer owns and runs the Manufacturer owns and runs the retail storeretail store

• Offers complete control of the Offers complete control of the products and consumer shopping products and consumer shopping experienceexperience

• Includes outlet storesIncludes outlet stores

Key questions manufacturers Key questions manufacturers or producers must make or producers must make concerning distributionconcerning distribution

• How widely can we distribute our How widely can we distribute our products?products?– What outlets will be used?What outlets will be used?

• How will we sell our products to these How will we sell our products to these outlets?outlets?– Will we use a sales force or intermediaries?Will we use a sales force or intermediaries?

• How much control will we want over our How much control will we want over our products in store?products in store?

• How much are we willing to spend on How much are we willing to spend on getting our products to market?getting our products to market?

Company/Direct Sales Company/Direct Sales ForceForce

AdvantagesAdvantages• More controlMore control

– Set sales quotasSet sales quotas– Maintain Maintain

inventoriesinventories– Execute sales Execute sales

promotionspromotions

• Act as Act as ambassadors ambassadors

DisadvantagesDisadvantages• Costs more to Costs more to

maintainmaintain– SalariesSalaries– BenefitsBenefits

Outside Agents/BrokersOutside Agents/Brokers

AdvantagesAdvantages• Not on payrollNot on payroll• Handle simple in-Handle simple in-

store executionstore execution• Established a Established a

relation ship with relation ship with retailerretailer

DisadvantagesDisadvantages• Not on your payrollNot on your payroll• Less controlLess control

– Little control of Little control of schedulingscheduling

– Limited executionLimited execution

• Not an ambassador Not an ambassador for your productsfor your products

ReviewReview

• What is distribution intensity?What is distribution intensity?

• What is the difference between What is the difference between exclusive distribution and selective exclusive distribution and selective distribution? distribution?

• What are some of the advantages of What are some of the advantages of having an in house sales dept?having an in house sales dept?

• What are some of the advantages of What are some of the advantages of using brokers?using brokers?