Marketing Distribution and Logistics Chapter 12 The Nature

Marketing Distribution and Logistics Chapter 12

The Nature of Distribution Channels n Distribution channel: a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user n The objective is to create place utility, the value of having the products where the customer wants them, when they want them n Distribution has two aspects: n Logistics: physical movement of goods n Strategy: who participates and what they do

Distribution Channel Functions *For specific functions of Retailers and Wholesalers see your text Why use marketing intermediaries? n n Contractual efficiency Specialization of labour Economies of scale in operations Match supply with demand Functions performed: n n n n Gathering and distributing market information Promotion of products Contact with customers Matching the offer with customer needs Negotiation with customers and producers Physical distribution of products Financing to cover costs of channel functions Risk taking from performing channel functions

What’s Happening? n http: //www. youtube. com/watch? v=I_j. Ij 4 UWu. Rg

Typical Channels of Distribution For B 2 B & B 2 C Examples visit Exhibit 12 -5 on page 335. ANUFACTURER ONSUMER GENT ETAILER HOLESALER

Hybrid Marketing Channel Producer Sales force Business segment 1 Catalogue telephone Internet Distributors Dealers Retailers Business segment 2 Consumer segment 1

Discussion Question – page 350, question 8

Types of Marketing Distribution Systems Conventional distribution channel: n n n Channel members are independently owned Pursue their own corporate objectives Conflict may occur when goals differ Vertical marketing system: n n Channel members act as a unified system May have common ownership May contract for this arrangement Franchise systems are the most popular Horizontal marketing systems n n Two or more companies on the same level join together for mutual gain Airline alliances http: //www. staralliance. com/en/travellers/index. html

Channel Behaviour Channel conflict: disagreement between channel members over goals and roles, who should do what and for what rewards n n Horizontal conflict: conflict between firms on the same level Vertical conflict: conflict between firms on different levels Disintermediation: displacement of a traditional member from the marketing channel n Selling direct via the Internet has caused much conflict between producers and their intermediaries

Distribution Alternatives n Intensive distribution: stocking the product in as many outlets as possible (per given market area) n Used for convenience goods n Exclusive distribution: giving a limited number of dealers the exclusive right to distribute the company’s products in their territories n Used for specialty or luxury goods n Selective distribution: the use of more than one, but fewer than all, of the intermediaries who are willing to carry the company’s products n Used for shopping goods

Discussion Question – page 350, question 11

General Packaging Case