Presentation on theme: "Channel Management Unit Objectives: To understand the scope of the distribution function and how it affects the success of a marketing plan Channels of."— Presentation transcript:
Channel Management Unit Objectives: To understand the scope of the distribution function and how it affects the success of a marketing plan Channels of Distribution #1 Today’s Objectives: 1)Explain the concept of a channel of distribution 2)Identify channel members
The Marketing Mix (The four P’s) Product, Price, Place, Promotion Distribution is a key element within place Companies have to determine where and how their product is distributed and sold.... This is the concept of distribution Write down where YOU are most likely to buy the following items: Music Shoes Computer Are all answers the same for each product? How do companies know where to best distribute and sell? Answer = Market Research
Channel of Distribution – the path a product takes from its producer to final user Two categories of final user Consumer Industrial Doritos Cool Ranch – which category? Both! Can Kentwood HS buy direct from Doritos? Why? Why not?
To maximize profits, a wide variety of options (Channel Members) are available and need to be selected Intermediaries – middlemen Merchants – Take title of goods: buy at a wholesale price then resell Agents – earn commission when they sell Let’s take a look at the wide variety of Merchants and Agents....
Types of Merchants Wholesalers – businesses that buy large quantities of goods from manufacturers, store the goods and then resell them to other businesses (retailers) Rack Jobbers – wholesalers who manage inventory and merchandising for retailers. (Very common in grocery. Visit Safeway at 6AM some time and you may see them at work) Drop Shippers – Buy goods, but don’t take physical control of them. Product shipped directly from manufacturer to customer Retailers – sell goods to the end user (consumers) Brick-and-Mortar – physical store E-tailers – Internet store
Types of Agents Independent Manufacturers Representatives – sell related, but non-competing products. Continuing relationship is a key element Brokers – Bring buyers and sellers together, but typically no continuing relationship IMR Home & Garden stores in WA, OR, ID Toro lawnmowers Ortho pest control Scott’s fertilizer Broker Individuals Home Loans
What values to the distribution channel do Intermediaries bring? Why would a manufacturer use them? Relationships Local Knowledge Trust Efficiency Assignment: Write down whether you think e-tailers will replace brick-and-mortar retailers. Explain your answer in detail; why or why not? Be ready to be called on randomly. +