1. Distribution Decisions Jeremy Kees, Ph.D.

2. To get us thinking… 1.What different channels are available for you to purchase the following products? 2.Through which type of channel do you prefer to purchase the following products? Explain. –Automobile –Clothing –Computer –Music –LCD / Plasma TV

3. Some Terms…. Place Marketing Distribution Supply Chain Management Logistics Marketing Channels …..all deal with the most efficient means by which to get the product to the consumer

4. Marketing Channels (Terms) Marketing channels—sets of interdependent organizations involved in the process of making a product or service available for use or consumption. Value network—a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings.

5. Marketing Channels The “Middleman” Marketing Intermediaries Traditional Supply Chains

6. The Role of Marketing Channels First and foremost…ADDING VALUE! But more specifically… –Move products from producer to consumer (downstream) –Move payment from consumer to producer (upstream) There are lots of necessary distribution functions that are outside of our core competency (e.g., transport products, store products, order processing, etc.)

7. Managing Channel Conflict Horizontal Conflict Multichannel Conflict Vertical Conflict –Wal-Mart versus Vendors –VideoVideo

8. Points of Discussion Is Wal-Mart good for America?? –Try to be open-minded and unbiased –Make a case for each side of the debate What lies at the heart of the channel conflict between WM and it’s suppliers? –Are there any ethical issues to consider?

9. Supply Chain Management (terms) Supply chain management (SCM): Starts before physical distribution, covering procurement of inputs, conversion into finished products, and product movement to final destinations Logistics: Planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use to meet customer needs at a profit.

10. SCM/Logistics Decisions Order Processing Warehousing Inventory Transportation The key here is INTEGRATION (through information technology)!!

11. SCM/Logistics Costs

12. ModeSpeedDepend- ability in Meeting Schedules Frequency of Shipments Availabil- ity in Different Locations Flexibility in Handling Cost RailAverage Low HighAverage WaterVery slowAverageVery lowLimitedVery highVery low TruckFastHigh Very extensive AverageHigh PipelineSlowHigh Very limited Very lowLow AirVery fastHighAverage LowVery high Physical Distribution

13. Retailing All activities involved in selling goods or services directly to final consumers for personal, nonbusiness use.

14. A Brief History Lesson… General Stores (early 1900s) Supermarkets (1930s) Discount Stores (1950s) Convenience Stores (1960s) Off-Price Retails (1980s)

15. Types of Retailers Specialty store Department store Supermarket Convenience store Discount store Off-price retailer Superstore Catalog showroom

16. Retailing Concepts Retail Life-Cycle Wheel-of-Retailing High-end strategy High prices Excellent facilities and services Upscale consumers Low-end strategy Low prices Limited facilities and services Price-sensitive consumers Medium strategy Moderate prices Improved facilities Broader base of value- and service- conscious consumers

17. Retailing Decisions Target market Product assortment and procurement Price –High-markup, lower- volume –Low-markup, higher- volume Services and store atmosphere Store activities and experiences Communications Location ** POSITIONING!!