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Presentation transcript:

Nickels Cover Nickels McHugh

Distributing Products Quickly and Efficiently Chapter Distributing Products Quickly and Efficiently 15 15-2

Channel of Distribution Marketing Intermediaries Wholesaler Retailer Agents/Brokers Role of Intermediaries Create Efficiency Value vs. Cost

Utility Form Possession Time Information Service Place

Wholesale Intermediaries Merchant Wholesalers Full-Service Limited-Function Rack Jobbers Cash-and-Carry Drop Shippers Business to Business (B2B)

Percent of B2B Commerce from Internet *Excludes Service Industries Source: Forrester Research Inc.

They All Started in 1962 Company 1st Store Objective Wal-Mart Target Rogers, Ark. July 1962 Slash prices. Makeup difference in volume Target Roseville, MN May 1962 Discount retailer with strong sense of value Kmart Garden City, MI March 1962 Bring discount store concept to suburban malls Source: Business 2.0, June 2003, p. 38.

Over 100 Million Customers Weekly Wal-Mart 2003 – 4,773 Stores 962,000 associates U.S. 282,000 international #1 Retailer over $250 Billion in sales Over 100 Million Customers Weekly Source: Business 2.0, June 2003, p. 38.

Wal-Mart’s Top Selling Products Sales in Millions Source: Owen Thomas “Lord of the Things”, Business 2.0, March 2002, p. 32.

Target 2002 Revenues > $43 Billion Profits = 1.7 Billion 1,107 Stores in 47 State Employs > 192,000 Source: Business 2.0, June 2003, p. 38.

Kmart 1,115 Kmarts in 49 states 170,000 associates Average Kmart stocks > 100,000 SKUs (stock keeping units) Successfully emerged from bankruptcy in 2003 Source: Business 2.0, June 2003, p. 38.

Top Convenience Stores Top Five Supermarkets Top Convenience Stores Wal-Mart Kroger Ahold Abertson’s Costco Quik Trip 7-Eleven

Home Depot 2002 Sales $58.2 Billion Lowe’s 2002 Sales $26 Billion Shopping Centers Category Killers Home Depot 2002 Sales $58.2 Billion Lowe’s 2002 Sales $26 Billion 46,336 Shopping Centers in U.S. 2002 -- 201 Million Adults visited shopping centers

Is It Becoming a Wal-Mart World? *There are 3,400 stores in the U.S. Source: Wal-Mart Annual Report 2003

The Wheel of Retailing 2. Retail Outlet 3. Retail Outlet Passage of Adds Service Raises Prices Better Location Higher Prices Higher Status Passage of Time 4. New Outlet Enters 1. Retail Outlet Starts Low Price Limited Service Low Price Limited Service Out-of-way Location

Retail Store Distribution Intensive Selective Exclusive

Non-Store Distribution E-tailing Telemarketing Vending Machines, Kiosks, Carts Direct Selling Multilevel Marketing Direct Marketing

Top Internet Shopping Sites Site Hits in Millions Week Ending 12/1/02 Source: USA Today, “Snapshots”

Why Buy Gifts Online? Source: “Dreaming of a Green Christmas”, Newsweek, November 11, 2002, p. E24

Why People Don’t Shop Online It isn’t secure It will jeopardize my privacy Usually must pay shipping charges Not enough selection Can’t touch/try things first No satisfaction guarantee Returns are a hassle Won’t arrive on time Hard to find things online Enjoy getting out of house to shop Source: blink, www.earthlink.net/blink

Necessary Website Features Source: “Dreaming of a Green Christmas”, Newsweek, November 11, 2002, p. E24

Channel Cooperation Corporate Distribution Contractual Distribution Administered Distribution Supply Chain Management

The Supply Chain

Logistics Physical Distribution Inbound Materials Outbound Reverse Information

Transportation & Storage Modes Railroad Motor Vehicles Water Pipeline Air Intermodal Warehousing Storage Distribution