1. Distribution
BMI 3C Marketing

2. Distribution
Businesses need to distribute their product so that consumers can find it and buy it
Once the product has been delivered to the consumer the marketing process is done

3. Distribution There are two components to distribution:
Setting the Distribution Channels selecting, developing and managing how the product is going to get the product
Using the Distribution Channels actually shipping the product through

4. Distribution Channels
Channels of distribution are the paths that goods follow from producer to consumer
Marketers have to decide which path or paths a product should take

5. Questions to Consider Is the consumer industrial or institutional?
How large is the local market?
What is the income of the target market?
What are the buying habits of the consumers?
Will the selected channel reach a sufficient number of consumers?

6. Questions to Consider Is the item seasonal or high fashion?
Can the channel become a competitive advantage?
Is the product custom made?
Will the product spoil over time?
How large or heavy is the item?

7. Questions to Consider
Does the product come with a manufacturer’s warrant?
Is the product price sensitive?

8. Logistics
Logistics are the process of designing and managing a supply chain
It consists of all the activities involved in getting goods and services to the consumer, including: getting raw materials and equipment to the manufacturer, producing the product, and then shipping to the wholesalers, importers and retailers
Logistics can often dictate the path

9. Distribution Policy
Distribution policy in the ultimate commander of what channel is selected
There are four policies possible: intensive, selective, exclusive and integrated

10. Intensive Distribution
Intensive distribution happens when the product is sold everywhere
Products can be modified to fit the distribution channels wanted
EXAMPLE: soda comes in plastic bottles, glass bottles, aluminum cans, and fountain mixes

11. Selective Distribution
Selective distribution happens when manufacturers limit the availability of its products
They may think having it available everywhere will cause the product to lose some appeal
Limiting the outlets makes the product harder to get and therefore more valuable to the consumers that buy them

12. Exclusive Distribution
Exclusive distribution occurs when the manufacturer has made deals with one or two retailers
This provides further prestige to the product because often the retailers that seek out exclusive distribution have an added value in the target consumer’s mind about products in that price range

13. Integrated Distribution
Integrated distribution happens when the manufacturer also owns the outlets at which they are sold
This ensures the price remains at the level the company wants

14. Channel Captains Channel captains control the distribution channels
There are four channel captains: manufacturers, importers, wholesalers and retailers

15. Manufacturers Manufacturers are the makers of a product
Manufacturers with prominent brand names or top selling products command the best shelf and display space
The rest of the competition fights for the rest

16. Importers
Importers are the companies that bring manufactured goods into the country
They have negotiated for exclusive distribution rights for the product
As a result, they are the ones in charge of the product in this country
Being exclusive means you can dictate sales terms and conditions

17. Wholesalers
Wholesalers buy large quantities of goods from various manufacturers and resell them to retailers
They are the “middle men” of the sales process
For retailers, they are the primary sources of the goods
The larger and more important they are, the more they can control these markets

18. Retailers Retailers are the outlets consumers buy the products at
The more powerful the retailer in the market, the more they can dictate sales terms from the suppliers, such as packaging requirements, discounts and additional promotional material

19. Transportation Factors
There are four major factors:
Destination the distance between shipping and arrival as well as terrain determines costs
Weight heavy or bulky items will cost more than lighter shipments because more fuel is needed to make the vehicles go
Volume larger shipments can fill containers, smaller shipments need to find others to share with
Types Of Goods some goods need special transportation considerations, such as reinforced containers for dangerous materials or temperature control for frozen/refrigerated items

20. Free On Board
Also called “freight on board,” shipments change many hands and so ownership of the goods go with it. There are two types of control as to who is responsible during the process:
F.O.B. Destination the shipper/seller has full responsibility until it reaches the buyer
F.O.B. Source the buyer is responsible once the deal has been made
Who is responsible is important because it determines who pays for transportation — and who is responsible for things like insurance, damaged goods and items lost in shipping

21. Transportation Modes
What do you think the advantages and disadvantages are of shipping by the following methods?