© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 1

Distribution Distribution StrategiesStrategies

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 2

Marketing Marketing IntermediariesIntermediaries

RetailersRetailers WholesalersWholesalers

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 3

Wholesalers and Wholesalers and RetailersRetailers

Utility Value

PlacePlace

TimeTime

PossessionPossession

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 4

Seven Roles Seven Roles of Marketing of Marketing

IntermediariesIntermediaries

Transport and Store ProductsTransport and Store Products

Gather Assortmentof Goods

Gather Assortmentof Goods Assume RisksAssume Risks Provide FinancingProvide Financing

Provide MarketInformation

Provide MarketInformation

Match Buyersand Sellers

Match Buyersand Sellers

Provide Promotionand Sales SupportProvide Promotionand Sales Support

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 5

How Intermediaries Simplify CommerceHow Intermediaries Simplify Commerce

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 6

Types of WholesalersTypes of Wholesalers

MerchantsMerchants Agents or BrokersAgents or Brokers

Rack JobbersRack JobbersRack JobbersRack Jobbers

Limited-ServiceLimited-ServiceLimited-ServiceLimited-Service

Full-ServiceFull-ServiceFull-ServiceFull-Service

Drop ShippersDrop ShippersDrop ShippersDrop Shippers

Securities BrokersSecurities BrokersSecurities BrokersSecurities Brokers

Insurance BrokersInsurance BrokersInsurance BrokersInsurance Brokers

Real Estate AgentsReal Estate AgentsReal Estate AgentsReal Estate Agents

Manufacturer’s RepsManufacturer’s RepsManufacturer’s RepsManufacturer’s Reps

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 7

Benefits of RetailersBenefits of Retailers

Save Time

Save Money

Build Traffic

Add Convenience

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 8

Types of Retail StoresTypes of Retail Stores

LimitedProducts

LimitedProducts

ExtensiveSelection

ExtensiveSelection

SpecialtyStore

CustomerServices

CustomerServices

WideVariety

WideVariety

DepartmentStore

CategoryDominance

CategoryDominance

WideVariety

WideVariety

CategoryKiller

LowerPrices

LowerPrices

WideVariety

WideVariety

DiscountStore

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 9

Retail Industry Retail Industry

ChallengesChallenges

Oversupply ofOversupply ofStore SpaceStore Space

ConsumerConsumerDemographicsDemographics

WeakenedWeakenedEconomyEconomy

Nonstore RetailingNonstore Retailingand E-Commerceand E-Commerce

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 10

E-Commerce E-Commerce and Non-Store Formatsand Non-Store Formats

Clicks-Only InternetClicks-Only Internet

Clicks-and-BricksClicks-and-Bricks

Mail-Order FirmsMail-Order Firms

Automatic VendingAutomatic Vending

Interactive KiosksInteractive Kiosks

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 11

Retailing InnovationsRetailing Innovations

Retail TheaterRetail TheaterRetail TheaterRetail Theater

MultichannelMultichannelRetailingRetailing

MultichannelMultichannelRetailingRetailing

Pop-Up StoresPop-Up StoresPop-Up StoresPop-Up Stores

Hybrid FormatsHybrid FormatsHybrid FormatsHybrid Formats

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 12

Setting Distribution Setting Distribution

StrategiesStrategies

Distribution MixDistribution Mix

Marketing PracticesMarketing Practices

CustomerCustomerNeeds andNeeds and

ExpectationsExpectations

ProductProductSupportSupport

RequirementsRequirements

Segmentation,Segmentation,Targeting,Targeting,PositioningPositioning

Competitor’sCompetitor’sDistributionDistributionChannelsChannels

EstablishedEstablishedIndustryIndustryPatternsPatterns

Type of ProductType of Product

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 13

Distribution Channel Distribution Channel LengthLength

ConsumerConsumer

ConsumerConsumer

ConsumerConsumer

ConsumerConsumer

Business User

Business User

BusinessUser

BusinessUser

Consumer Goods and Services

Business Goods and Services

ProducerProducer

ProducerProducer

ProducerProducer

ProducerProducer

ProducerProducer

Agent/BrokerAgent/Broker

WholesalerWholesaler

WholesalerWholesaler

RetailerRetailer

RetailerRetailer

RetailerRetailer

ProducerProducer WholesalerWholesaler

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 14

Channel SelectionChannel Selection

MarketMarketCoverageCoverage

MarketMarketCoverageCoverage

CostCostCostCost

ControlControlControlControl

ChannelChannelConflictConflictChannelChannelConflictConflict

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 15

Market CoverageMarket Coverage

Distribution

Convenience Goodsand Organizational Supplies

Expensive Technicalor Specialty Products

Intensive Selective Exclusive

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 16

Cost FactorsCost Factors

Selling

Storage

Distribution

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 17

Control IssuesControl Issues

How Goods AreHow Goods AreSold in the MarketplaceSold in the Marketplace

How Goods AreHow Goods AreSold in the MarketplaceSold in the Marketplace

ChannelChannelLengthLength

OverallOverallControlControl

LongerLongerShorterShorter

LessLessMoreMore

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 18

Channel ConflictChannel Conflict

Inadequate Product SupportInadequate Product SupportInadequate Product SupportInadequate Product Support

Too Many IntermediariesToo Many IntermediariesToo Many IntermediariesToo Many Intermediaries

Multiple Sales ChannelsMultiple Sales ChannelsMultiple Sales ChannelsMultiple Sales Channels

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 19

Managing Managing Physical DistributionPhysical Distribution

In-House OperationsIn-House Operations Outbound TransportationOutbound Transportation

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 20

In-House OperationsIn-House Operations

• Forecasting

• Order processing

• Inventory control

• Warehousing

• Materials handling

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 14 - 21

Outbound TransportationOutbound Transportation

Rail

Truck

Water

Air

Pipeline

Mode

Average

Average

Lower

Higher

Average

Cost

Lower

Average

Average

Higher

Lower

Higher

Lower

Higher

Lower

Average

Higher

Higher

Average

Average

Higher

Average

Average

Lower

Higher

Lower

Flexibility Capacity Reliability Speed