Presentation on theme: "Channel Management Unit Objectives: Channels of Distribution #1"— Presentation transcript:
1 Channel Management Unit Objectives: Channels of Distribution #1 To understand the scope of the distribution function and how it affects the success of a marketing planChannels of Distribution #1Today’s Objectives:Explain the concept of a channel of distributionIdentify channel members
2 The Marketing Mix (The four P’s) Write down where YOU are most likely to buy the following items:MusicShoesComputerAre all answers the same for each product?How do companies know where to best distribute and sell?Answer = Market ResearchThe Marketing Mix (The four P’s)Product, Price, Place, PromotionDistribution is a key element within placeCompanies have to determine where and how their product is distributed and soldThis is the concept of distribution
3 Two categories of final user Channel of Distribution – the path a product takes from itsproducer to final userTwo categories of final userConsumerIndustrialDoritos Cool Ranch – which category?Both!Can Kentwood HS buy direct from Doritos? Why? Why not?
4 Let’s take a look at the wide variety of Merchants and Agents . . . . To maximize profits, a wide variety of options (Channel Members) are available and need to be selectedIntermediaries – middlemenMerchants – Take title of goods: buy at awholesale price then resellAgents – earn commission when they sellLet’s take a look at the wide variety of Merchants and Agents
5 Types of MerchantsWholesalers – 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 customerRetailers – sell goods to the end user (consumers)Brick-and-Mortar – physical storeE-tailers – Internet store
6 Home & Garden stores in WA , OR, ID Types of AgentsIndependent Manufacturers Representatives – sell related, but non-competing products. Continuing relationship is a key elementBrokers – Bring buyers and sellers together, but typically no continuing relationshipToro lawnmowersOrtho pest controlScott’s fertilizerHome & Garden stores in WA , OR, IDIMRBrokerIndividualsHome Loans
7 What values to the distribution channel do Intermediaries bring What values to the distribution channel do Intermediaries bring? Why would a manufacturer use them?+Local KnowledgeTrustRelationshipsEfficiencyAssignment: 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.