Business Copyright 2005 Prentice- Hall, Inc. 12-1

12-2 Chapter 12 Distributing Products

Business Copyright 2005 Prentice- Hall, Inc Chapter Outline The Distribution Mix The Distribution Mix Wholesaling Wholesaling Retailing Retailing Physical Distribution Physical Distribution

Business Copyright 2005 Prentice- Hall, Inc Intermediaries Wholesaler- Sells Products To Retailers For Re-SaleWholesaler- Sells Products To Retailers For Re-Sale Retailer- Sells Products Directly To ConsumerRetailer- Sells Products Directly To Consumer

Business Copyright 2005 Prentice- Hall, Inc Channels Distribution- Network Through Which Product Passes On Its Way To The End UserDistribution- Network Through Which Product Passes On Its Way To The End User DirectDirect

Business Copyright 2005 Prentice- Hall, Inc Channels Of Distribution

Business Copyright 2005 Prentice- Hall, Inc Direct Distribution No IntermediariesNo Intermediaries Producer Uses Own Sales ForceProducer Uses Own Sales Force Used By Many Internet CompaniesUsed By Many Internet Companies

Business Copyright 2005 Prentice- Hall, Inc Retail Distribution Producer Sells To RetailerProducer Sells To Retailer Growing Area In Internet SalesGrowing Area In Internet Sales

Business Copyright 2005 Prentice- Hall, Inc Wholesale To Consumer Once Most Prevalent Nondirect MethodOnce Most Prevalent Nondirect Method Requires Large Amount Of Floor SpaceRequires Large Amount Of Floor Space Space Is Too ExpensiveSpace Is Too Expensive

Business Copyright 2005 Prentice- Hall, Inc Sales Agents/Brokers Agents/Brokers Represent ProducerAgents/Brokers Represent Producer Agents/Brokers Paid On CommissionAgents/Brokers Paid On Commission Agents May Represent Several Similar Producers/Product LinesAgents May Represent Several Similar Producers/Product Lines

Business Copyright 2005 Prentice- Hall, Inc Nondirect Distribution Pros Intermediaries Provide Added ValueIntermediaries Provide Added Value Value Grows With Each LinkValue Grows With Each Link Cons Markup At Each Link In Chain Higher Consumer Prices

Business Copyright 2005 Prentice- Hall, Inc Value-Adding

Business Copyright 2005 Prentice- Hall, Inc Agent Distribution Agent Is Sole IntermediaryAgent Is Sole Intermediary Agent Distributes To Consumer & BusinessAgent Distributes To Consumer & Business

Business Copyright 2005 Prentice- Hall, Inc Industrial Distribution Usually Direct From Producer To Industrial BuyerUsually Direct From Producer To Industrial Buyer Goods Usually Purchased In Large QuantitiesGoods Usually Purchased In Large Quantities

Business Copyright 2005 Prentice- Hall, Inc Wholesale Distribution Of Industrial Products Used Mostly For Accessory EquipmentUsed Mostly For Accessory Equipment Intermediaries Breakdown Large Quantities To Manageable SizeIntermediaries Breakdown Large Quantities To Manageable Size

Business Copyright 2005 Prentice- Hall, Inc Wholesale Distribution To Business Retailers Intermediaries Similar To Traditional WholesalersIntermediaries Similar To Traditional Wholesalers Consumers Use Discount Stores That Buy In Volume And Sell In Small Quantities With Small MarkupConsumers Use Discount Stores That Buy In Volume And Sell In Small Quantities With Small Markup

Business Copyright 2005 Prentice- Hall, Inc Distribution Strategies Intensive Selective Exclusive

Business Copyright 2005 Prentice- Hall, Inc Channels Conflict- Channel Members Disagree About Roles/RewardsConflict- Channel Members Disagree About Roles/Rewards Leadership/Captain- Most Powerful Member of Distribution ChannelLeadership/Captain- Most Powerful Member of Distribution Channel

Business Copyright 2005 Prentice- Hall, Inc Merchant Wholesalers Full-ServiceFull-Service Limited-FunctionLimited-Function Drop ShippersDrop Shippers Rack JobbersRack Jobbers

Business Copyright 2005 Prentice- Hall, Inc Agents/Brokers Independent RepresentativesIndependent Representatives Work On CommissionWork On Commission Do Not Take Ownership Or PossessionDo Not Take Ownership Or Possession Have Extensive Knowledge Of MarketHave Extensive Knowledge Of Market

Business Copyright 2005 Prentice- Hall, Inc E-Intermediary FunctionsFunctions –Collect Information About Sellers For Consumers –Deliver Internet Products To Buyers Syndicated SellersSyndicated Sellers Shopping AgentsShopping Agents Business-to-Business BrokersBusiness-to-Business Brokers

Business Copyright 2005 Prentice- Hall, Inc Product Line Retailers Department StoresDepartment Stores SupermarketsSupermarkets Specialty StoresSpecialty Stores

Business Copyright 2005 Prentice- Hall, Inc Bargain Retailers Discount HousesDiscount Houses Catalog ShowroomsCatalog Showrooms Factory OutletsFactory Outlets Warehouse/Wholesale ClubWarehouse/Wholesale Club Convenience StoresConvenience Stores

Business Copyright 2005 Prentice- Hall, Inc Nonstore/Electronic Retailing Direct-Response RetailingDirect-Response Retailing Mail Order- CatalogMail Order- Catalog TelemarketingTelemarketing Direct Selling- Door To DoorDirect Selling- Door To Door Multilevel MarketingMultilevel Marketing

Business Copyright 2005 Prentice- Hall, Inc Small Business & The Web

Business Copyright 2005 Prentice- Hall, Inc Electronic Retailing E-CatalogsE-Catalogs Electronic StorefrontElectronic Storefront CybermallsCybermalls Interactive MarketingInteractive Marketing Video MarketingVideo Marketing

Business Copyright 2005 Prentice- Hall, Inc Types Of Warehouses Private- Owned By Single Manufacturer, Wholesaler, RetailerPrivate- Owned By Single Manufacturer, Wholesaler, Retailer Public- Independently Owned & OperatedPublic- Independently Owned & Operated Storage- Used For Extended PeriodsStorage- Used For Extended Periods Distribution CentersDistribution Centers

Business Copyright 2005 Prentice- Hall, Inc Warehousing Costs Inventory ControlInventory Control Materials HandlingMaterials Handling

Business Copyright 2005 Prentice- Hall, Inc Factors In Selecting Transportation Mode CostCost Nature Of ProductNature Of Product DistanceDistance SpeedSpeed Customer Wants/NeedsCustomer Wants/Needs

Business Copyright 2005 Prentice- Hall, Inc Transportation Modes TrucksTrucks RailroadsRailroads PlanesPlanes WaterWater PipelinesPipelines

Business Copyright 2005 Prentice- Hall, Inc Transportation Modes Changes Intermodal- BirdybackIntermodal- Birdyback ContainerizationContainerization Distribution & E-Customer Satisfaction- Order FulfillmentDistribution & E-Customer Satisfaction- Order Fulfillment

Business Copyright 2005 Prentice- Hall, Inc Transportation- Hubs Supply-SideSupply-Side PrestagingPrestaging DistributionDistribution