1. 14 Chapter Distribution Strategies Introduction to
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

2. Learning Objectives
Explain advantages and disadvantages of a direct channel of distribution, and identify factors that could determine the optimal channel of distribution.
Differentiate between types of market coverage.
Explain how the distribution process can be accelerated.
Explain how retailers can serve manufacturers.
Explain how wholesalers can serve manufacturers and retailers.
Explain strategy and potential benefits of vertical channel integration.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

3. Distribution and a Firm’s Value
Degree to which product is distributed across outlets, and types of outlets selected
Firm’s Revenue
Firm's Profits and Value
Distribution Decision
Cost of delivering a product to customers
Firm’s Expenses
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

4. Distribution: Direct Channel
Producer
Consumer
Consumer
Consumer
Advantages of direct channels:
Lower price to customer.
Producer has full control.
Producer obtains first-hand feedback.
Online ordering.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

5. Distribution: Direct Channel
Producer
Consumer
Consumer
Consumer
Disadvantages of direct channels:
Producer plays several roles.
Higher promotional expenses.
Producer needs more employees.
Producer may need to sell on credit.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

6. Distribution: One-Level Channel Retailers
Nike Brand Tennis Shoes
Foot Locker Stores
Sears
JC Penney
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

7. Distribution: One-Level Channel Wholesalers
Wholesaler A
Wholesaler B
Wholesaler C
Business Customers
Producer
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

8. Distribution: Two-Level Channel Two intermediaries participate.
Retailer
Wholesaler
Producer
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

9. Optimal Channel of Distribution
Dependent Upon:
Ease of transporting.
Degree of standardization.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

10. Intensive Distribution
Put products into as many retail outlets as possible.
Convenience goods utilize this kind of distribution.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

11. Selective Distribution
Use on a preferred group of retailers in an area.
Helps assures producers of quality sales and service.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

12. Exclusive Distribution
Use of only one or a few retail outlets in a given geographic area.
Retailer has exclusive rights to sell product.
More likely to carry more inventory and give better service.
Can create or maintain the prestige of the product.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

13. Flexibility Handling Products
Transportation Truck
On Time Dependability
Flexibility Handling Products
Cost
Speed
Moving from low to high
Fast
High
Medium
The above criteria represents the industry as a whole.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

14. Flexibility Handling Products
Transportation Air
On Time Dependability
Flexibility Handling Products
Cost
Speed
Highest
Fastest
Low
Low
B Specifications B
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

15. Flexibility Handling Products
Transportation Train
On Time Dependability
Flexibility Handling Products
Cost
Speed
Medium
Slow
Medium
High
The above criteria represents the industry as a whole not necessarily the Alaska Rail Road.
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

16. Flexibility Handling Products Business Online: Port of Seattle
Transportation Water
Moving cargo in a changing world closer to Asia than any other major U.S. port, Seattle is the premier gateway between North America and the Far East. Centered within the Pacific Northwest, they serve inland markets with unmatched efficiency.
On Time Dependability
Flexibility Handling Products
Cost
Speed
Lowest
Slowest
Lowest
Highest
The above criteria represents the industry as a whole.
Business Online: Port of Seattle
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

17. Transportation Pipeline
On Time Dependability
Flexibility Handling Products
Cost
Speed
Low
Medium
Highest
Lowest
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

18. Characteristics of Retailers
Number of outlets
Quality of service
Products offered
Store versus non-store
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

19. How Wholesalers Serve Manufacturers
Warehousing
Sales expertise
Delivery to retailers
Assume credit risk to retailers
Information
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing

20. Vertical Channel Integration
Vertical channel integration: Two or more levels of distribution are managed by a single firm.
Vertical channel integration can occur by:
Manufacturers
Retailers
MultiMedia by Stephen M. Peters
2001 South-Western College Publishing