1 Distribution, con’t

2  Dual Distribution: The use of two or more channels of distribution. Some manufacturers use direct channel with large customers, but use an indirect channel (e.g., distributors) to reach small and medium customers. Some manufacturers use direct channel with large customers, but use an indirect channel (e.g., distributors) to reach small and medium customers.  Example: Lane Furniture: company reps sell to larger furniture retailers. Lane also sells to distributors, who sell to smaller “Mom and Pops” furniture stores.

3  Dual Distribution, con’t Example: Some manufacturers sell through a network of retail stores, while at the same time maintaining a web site. Example: Some manufacturers sell through a network of retail stores, while at the same time maintaining a web site.  Hewlett Packard: sells to Wal-Mart, Circuit City, plus sells direct to consumers on its own web site.  Kodak: does the same Example: Some La-Z-Boy has its own showrooms, stores that sell only La-Z-Boy furniture. But La-Z-Boy also sells to other furniture stores. Example: Some La-Z-Boy has its own showrooms, stores that sell only La-Z-Boy furniture. But La-Z-Boy also sells to other furniture stores.

4  Dual distribution offers: More control over marketing mix, as compared to using only an indirect channel. More control over marketing mix, as compared to using only an indirect channel. Full market coverage: reach bigger and smaller customers alike. Hence, potential for higher profits Full market coverage: reach bigger and smaller customers alike. Hence, potential for higher profits Why dual distribution?

5 But, conflict can arise: Different types of channels compete. Different types of channels compete. Example: Independent retailers oftentimes compete against manufacturer’s internet site.Example: Independent retailers oftentimes compete against manufacturer’s internet site. Kodak, Hewlett Packard Kodak, Hewlett Packard Example: Independent furniture stores that sell La_Z-Boy (along with other brands) compete against the La-Z-Boy showrooms.Example: Independent furniture stores that sell La_Z-Boy (along with other brands) compete against the La-Z-Boy showrooms.

6  Wrap-Up  Distribution is the most difficult marketing variable to change once implemented!  Should give it a lot of thought up-front.  Should assess the financial impact of different options. Which one is most profitable?