Intro to Business Chapter 15

Business in Business in Action 8e Action 8e Bovée/ThillBovée/Thill

Developing a Business Mindset

Chapter 15Chapter 15Distribution and Distribution and

Marketing LogisticsMarketing Logistics

Production Systems

Copyright © 2017 Pearson Education, Inc.

Learning Objectives

1. Explain the role of marketing intermediaries in contemporary business, and list the eight primary functions that intermediaries can perform.

2. Identify the major types of wholesalers, and summarize four trends shaping the future of wholesaling.

3. Identify the major retailing formats, and summarize six trends shaping the future of retailing.

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Learning Objectives (cont.)

4. Explain the strategic decisions that manufacturers must make when choosing distribution channels.

5. Identify five key attributes of distribution channel design and management.

6. Highlight the major components of physical distribution and logistics.

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The Role of Marketing Intermediaries


• Distribution strategy A firm’s overall plan for moving products

through intermediaries and on to final customers

• Marketing intermediaries Businesspeople and organizations that assist

in moving and marketing goods and services between producers and consumers

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Wholesaling versus Retailing


• Wholesalers Intermediaries that

sell products to other intermediaries for resale or to organizations for internal use

• Retailers Intermediaries that

sell goods and services to individuals for their own personal use

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Contributions of Marketing Intermediaries


• Matching buyers and sellers• Providing market information• Providing promotional and sales support• Gathering assortments of goods• Transporting and storing products

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Contributions of Marketing Intermediaries (cont.)


• Assuming risks• Providing financing• Completing product solutions• Facilitating transactions and supporting

customers

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Exhibit 15.1 How Intermediaries Simplify Commerce

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Wholesaling and Industrial Distribution


• Merchant wholesalers Independent wholesalers that take legal title

to the goods they distribute

• Distributors Merchant wholesalers that sell products to

organizational customers for internal operations or the production of other goods, rather than to retailers for resale

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Wholesaling and Industrial Distribution (cont.)


• Agents and brokers Independent wholesalers that do not take title

to the goods they distribute but may or may not take possession of those goods

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The Outlook for Wholesaling

Copyright © 2017 Pearson Education, Inc. 15-11

Threat of disintermediationThreat of disintermediation

The Outlook for Wholesaling (cont.)


• Disintermediation The replacement of intermediaries by

producers, customers, or other intermediaries when those other parties can perform channel functions more effectively or efficiently

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Retailing Formats


• Wheel of retailing An evolutionary process by which stores that

feature low prices gradually upgrade until they no longer appeal to price-sensitive shoppers and are replaced by a new generation of leaner, low-price competitors

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Retailing Formats (cont.)


• Department stores Large stores that carry a variety of products

in multiple categories, such as clothing, house wares, gifts, bedding, and furniture

• Specialty stores Stores that carry only a particular type of

goods, often with deep selection in those specific categories

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• Discount stores Retailers that sell a variety of everyday goods

below the market price by keeping their overhead low

• Off-price retailers Stores that sell designer labels and other

fashionable products at steep discounts

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• Online retailers Companies that use e-commerce

technologies to sell over the Internet Includes Internet-only retailers and the online

arm of store-based retailers

• E-commerce The application of Internet technologies to

wholesaling and retailing

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Exhibit 15.2 Retail Store Formats

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The Outlook for Retailing


• Physical overcapacity • Continued growth in online retailing• Growth of multichannel retailing• Format innovations• Retail theater• Threat of disintermediation

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The Outlook for Retailing (cont.)


• Multichannel retailing Coordinated efforts

to reach consumers through more than one retail channel

• Retail theater The addition of

entertainment or education aspects to the retail experience

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Distribution Strategies


• Distribution mix A combination of intermediaries and channels

a producer uses to reach target customers

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Distribution Strategies (cont.)


• Customer needs and expectations• Product support requirements• Segmentation, targeting, and positioning• Competitors’ distribution channels• Established industry patterns and

requirements

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Exhibit 15.3

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Common DistributionChannel Models


Exhibit 15.3 Common DistributionChannel Models (cont.)

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Market Coverage


• Intensive distribution A market coverage strategy that tries to place

a product in as many outlets as possible

• Selective distribution A market coverage strategy that uses a

limited number of carefully chosen outlets to distribute products

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Market Coverage (cont.)


• Exclusive distribution A market coverage strategy that gives

intermediaries exclusive rights to sell a product in a specific geographic area

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Channel Conflict


• Channel conflict Disagreement or tension between two or

more members in a distribution channel, such as competition between channel partners trying to reach the same group of customers

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Channel Organization and Control


• Marketing systems Arrangements by which channel partners

coordinate their activities under the leadership of one of the partners

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Exhibit 15.4 Factors That Influence Distribution Channel Choices

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Physical Distribution and Logistics

• Physical distribution All the activities

required to move finished products from the producer to the consumer

• Logistics The planning,

movement, and flow of goods and related information throughout the supply chain

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Exhibit 15.5 Steps in the Physical Distribution Process

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• Order processing Functions involved in receiving and filling

customer orders

• Distribution centers Advanced warehouse facilities that specialize

in collecting and shipping merchandise

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Physical Distribution and Logistics (cont.)

Physical Distribution and Logistics (cont.)


• Intermodal transportation The coordinated use of multiple modes of

transportation, particularly with containers that can be shipped by truck, rail, and sea

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Applying What You’ve Learned


1. Explain the role of marketing intermediaries in contemporary business, and list the eight primary functions that intermediaries can perform.

2. Identify the major types of wholesalers, and summarize four trends shaping the future of wholesaling.

3. Identify the major retailing formats, and summarize six trends shaping the future of retailing.

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Applying What You’ve Learned (cont.)

4. Explain the strategic decisions that manufacturers must make when choosing distribution channels.

5. Identify five key attributes of distribution channel design and management.

6. Highlight the major components of physical distribution and logistics.

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Copyright © 2017 Pearson Education, Inc. 15-35

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