Business in Action 6e Bovée/Thill Distribution and Marketing Logistics Chapter 15

Learning Objectives 1. Explain the role of marketing intermediaries in contemporary business and list the eight primary functions that intermediaries can perform 2. Identify the major types of wholesalers and summarize four trends shaping the future of wholesaling 3. Identify the major retailing formats and summarize six trends shaping the future of retailing Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-2

Learning Objectives (cont.) 4. Explain the strategic decisions that manufacturers must make when choosing distribution channels 5. Identify five key attributes of distribution channel design and management 6. Highlight the major components of physical distribution and logistics Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-3

The Role of Marketing Intermediaries  Distribution Strategy  A firm’s overall plan for moving products through intermediaries and on to final customers  Marketing Intermediaries  Businesspeople and organizations that assist in moving and marketing goods and services between producers and consumers Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-4

Wholesaling versus Retailing  Wholesalers  Intermediaries that sell products to other intermediaries for resale or to organizations for internal use  Retailers  Intermediaries that sell goods and services to individuals for their own personal use Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-5

Contributions of Marketing Intermediaries  Matching buyers and sellers  Providing market information  Providing promotional and sales support  Gathering assortments of goods  Transporting and storing products Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-6

Contributions of Marketing Intermediaries (cont.)  Assuming risks  Providing financing  Completing product solutions  Facilitating transactions and supporting customers Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-7

Wholesaling and Industrial Distribution  Merchant Wholesalers  Independent wholesalers that take legal title to goods they distribute  Distributors  Merchant wholesalers that sell products to organizational customers for internal operations or the production of other goods, rather than to retailers for resale Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-8

Wholesaling and Industrial Distribution (cont.)  Agents and Brokers  Independent wholesalers that do not take title to the goods they distribute but may or may not take possession of those goods Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-9

The Outlook for Wholesaling Integrated logistics management Threat of disintermediation Unbundling of services Industry consolidation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-10

The Outlook for Wholesaling  Disintermediation  The replacement of intermediaries by producers, customers, or other intermediaries when those other parties can perform channel functions more effectively or efficiently Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-11

Retailing Formats  Wheel of Retailing  An evolutionary process by which stores that feature low prices gradually upgrade until they no longer appeal to price-sensitive shoppers and are replaced by a new generation of leaner, low-price competitors Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-12

Retailing Formats  Department Stores  Large stores that carry a variety of products in multiple categories, such as clothing, house wares, gifts, bedding, and furniture  Specialty Stores  Stores that carry only a particular type of goods, often with deep selection in those specific categories Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-13

Retailing Formats (cont.)  Discount Stores  Retailers that sell a variety of everyday goods below the market price by keeping their overhead low  Off-price Retailers  Stores that sell designer labels and other fashionable products at steep discounts Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-14

Retailing Formats (cont.)  Online Retailers  Companies that use e-commerce technologies to sell over the Internet; includes Internet-only retailers and the online arm of store-based retailers  E-commerce  The application of Internet technologies to wholesaling and retailing Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-15

The Outlook for Retailing  Overcapacity  Continued growth in online retailing  Growth of multichannel retailing  Format innovations  Retail theater  Threat of disintermediation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-16

The Outlook for Retailing  Multichannel Retailing  Coordinated efforts to reach consumers through more than one retail channel  Retail Theater  The addition of entertainment or education aspects to the retail experience Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-17

Distribution Strategies  Distribution Mix  A combination of intermediaries and channels a producer uses to reach target customers Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-18

Distribution Strategies  Customer needs and expectations  Product support requirements  Segmentation, targeting, and positioning  Competitors’ distribution channels  Established industry patterns and requirements Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-19

Common Distribution Channel Models Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-20

Common Distribution Channel Models (cont.) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-21

Market Coverage  Intensive Distribution  A market coverage strategy that tries to place a product in as many outlets as possible  Selective Distribution  A market coverage strategy that uses a limited number of carefully chosen outlets to distribute products Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-22

Market Coverage (cont.)  Exclusive Distribution  A market coverage strategy that gives intermediaries exclusive rights to sell a product in a specific geographic area Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-23

Channel Conflict  Channel Conflict  Disagreement or tension between two or more members in a distribution channel, such as competition between channel partners trying to reach the same group of customers Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-24

Channel Organization and Control  Marketing Systems  Arrangements by which channel partners coordinate their activities under the leadership of one of the partners Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-25

Factors That Influence Distribution Channel Choices Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-26

Factors That Influence Distribution Channel Choices (cont.) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-27

Physical Distribution and Logistics  Physical Distribution  All the activities required to move finished products from the producer to the consumer  Logistics  The planning, movement, and flow of goods and related information throughout the supply chain Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-28

Steps in the Physical Distribution Process Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-29

Physical Distribution and Logistics  Order Processing  Functions involved in receiving and filling customer orders  Distribution Centers  Advanced warehouse facilities that specialize in collecting and shipping merchandise Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-30

Physical Distribution and Logistics (cont.)  Intermodal Transportation  The coordinated use of multiple modes of transportation, particularly with containers that can be shipped by truck, rail, and sea Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-31

Applying What You’ve Learned 1. Explain the role of marketing intermediaries in contemporary business and list the eight primary functions that intermediaries can perform 2. Identify the major types of wholesalers and summarize four trends shaping the future of wholesaling 3. Identify the major retailing formats and summarize six trends shaping the future of retailing Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-32

Applying What You’ve Learned (cont.) 4. Explain the strategic decisions that manufacturers must make when choosing distribution channels 5. Identify five key attributes of distribution channel design and management 6. Highlight the major components of physical distribution and logistics Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15-33

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall