1. Distribution Policies
Intensive
Selective
Exclusive
Integrated

2. Intensive Distribution
Used if the product is sold everywhere
Ex: Coca-cola is found in schools, bus stations, parks, malls, arenas, cafeterias, grocery stores, drugstores, retail outlets, planes, trains, movie theatres, restaurants, etc.

3. Selective Distribution
Try to control the distribution of their product
May seek to avoid conflicts in positioning/brand image
If a retailer orders a manufacturer’s product, by law the manufacturer cannot refuse to sell the product to the store without a valid reason

4. Exclusive Distribution
The manufacturer has made a deal with one or two retailers in a particular area to sell the manufacturer’s product exclusively
This allows the product to have a prestige image and allows the manufacturer to dictate some of the retail strategies.
Ex: High fashion clothing, famous-name watches, luxury giftware

5. Integrated Distribution
In this case a manufacturer, distributor, or retailer owns both distribution outlets and manufacturing facilities for a product
Ex: IKEA, Lee Valley tools – own and operate their own manufacturing & retail stores

6. Distribution Channels

7. Channels of Distribution
All businesses need to distribute their product either
to a place where a consumer can find it OR
directly to the consumer
IF the consumer has the product, the marketer has been SUCCESSFUL

8. Direct Channel
Producer
Consumer

9. Indirect Channel #1
Producer
Retailer
Consumer

10. Indirect Channel #2
Producer
Specialty Channel
Consumer

11. PAUSE FOR THOUGHT
Think of one item you recently purchased at a store. Where was it made? In detail, how do you think it got to the store?
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12. Distribution and Logistics

13. What to Consider When...
Is the channel directed at an industrial and/or institutional consumer?
What is the income level of the target market?
How large is the local market?
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14. What to Consider When... What are the buying habits of the consumers?
Will the selected channel reach a sufficient number of consumers?
Is it a seasonal or high-fashion item?
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15. What to Consider When...
Can the channel become a competitive advantage?
Is the product custom made?
Will the product spoil?
What is the unit value of the product?
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16. What to Consider When... How large or how heavy is the product?
Does the product come with a manufacturer’s warranty?
Is the product price sensitive?
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17. Logistics

18. Logistics
Logistics is the process of designing and managing a supply chain. A supply chain consists of all the activities involved in getting the product from the original source to the ultimate consumer.
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19. Logistics MANUFACTURER raw material equipment supplies processed goods
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importer
wholesaler
retailer

20. Logistics
A supply chain involves purchasing, manufacturing, storage, and an emphasis on transportation.
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21. Logistics There are four major factors:
destination (distance): local transportation costs less than cross country, crossing oceans is more expensive and complex than crossing land
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22. Logistics There are four major factors:
weight: heavy/bulky shipments cost more to transport than light/compact ones
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23. Logistics There are four major factors:
volume: large shipments can use containerization (put all products in a container), small shipments cannot
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24. Logistics There are four major factors:
type of goods: some require special handling: fruit, frozen foods, toxic chemicals, etc.
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25. Logistics
At a certain point, it has to be decided when the seller’s responsibility for the product ends, and the buyer’s responsibility begins. This is called the Free on Board (FOB) point.
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26. List two advantages and disadvantages for each.
Logistics
There are five main ways to transport a product:
trucks
trains
planes
ships
pipelines
Assignment
List two advantages and disadvantages for each.
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27. Inventory Management

28. Inventory Management
Inventory management controls the goods within the business. It helps business determine:
what they need
how much they need
when they need it
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29. Inventory Management Overstocks
A company never wants to have more inventory than it can sell in a reasonable period of time because inventory costs money.
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30. Inventory Management Overstocks
investing money in inventory ties up that money; it cannot be used for anything else
inventory needs storage space, which uses up valuable production or sales space
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31. Inventory Management Overstocks
many companies borrow money to purchase inventory, interest grows.
effective inventory control means low inventory, less storage space, and less financial assistance.
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32. Inventory Management Out-of-Stocks
Inventory must be managed to avoid running out of an item.
What are all the things that would happen to the Cambridge Toyota plant if they couldn’t get spark plugs?
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33. Inventory Management Shrinkage
A loss of inventory due to breakage, damage, or theft.
Managed in two ways:
(a) prevent it from happening
(b) record it when it happens
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34. Inventory Management Shrinkage
Businesses must count inventory yearly; if count is off, record new value, take a loss.
Lost inventory can be counted as a loss on a company’s income tax (to a limit).
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35. Inventory Management Turnover
the number of times a company sells its inventory in a year
indicates how quickly a product sells
standard turnover rates posted on StatsCan website
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36. Inventory Management Turnover
high turnover means more sales; watch for out-of-stock issues
low turnover means overstock, strategy is needed to sell more product
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37. Distributing to International Markets

38. Distributing to Int’l Mkts
Problems for Canadian businesses internationally:
logistics, distances, tariffs, currency rates, foreign laws and regulations, foreign banks, foreign transportation companies, languages, cultures, politics, crime
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39. Distribution to Int’l Mkts
Possible options:
Build plant in foreign market and distribute the same way
Build a warehouse in foreign market, hire local sales reps
Create a joint venture with a foreign company so they make your product
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40. Distribution to Int’l Mkts
Possible options:
Licence the brand to a foreign manufacturer
Sell to an importer
Send a Canadian sales rep to sell directly to foreign retailers
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