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The Nature of Distribution

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Presentation on theme: "The Nature of Distribution"— Presentation transcript:

1 The Nature of Distribution
Chapter Twelve The Nature of Distribution 1

2 Objectives Explain general purpose of distribution
Show distribution system’s contributions Understand pervasive nature of distribution Describe channel intermediary functions Identify different channel of distribution configurations Introduce vertical marketing systems Describe aspects of channel relations Explore legal and ethical aspects of distribution channels

3 Distribution’s Function
The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost. The “when and where” is the function of Distribution 2

4 Distribution PRODUCER CONSUMER DISTRIBUTION 3

5 Channel of Distribution
All intermediaries involved in the exchange process Excludes pre-manufacturing (raw materials or component parts) Facilitate movement of physical goods and title PRODUCER INTERMEDIARIES CONSUMER 4

6 Channel Functions Physical distribution Communication & transaction
Facilitating 6

7 Physical Distribution Functions
Accumulating bulk Creating assortments Breaking bulk Reducing transactions Transporting & storing 7

8 Communication & Transaction Functions
Gather & Disseminate Information 1 9 24 37 2 3 57 Buying & Selling Personal Selling Advertising Sales Promotion Transfer of Ownership 12

9 Facilitating Functions
Extra Services Credit Services Risk Taking 13

10 Typical Channels of Distribution
ANUFACTURER ONSUMER GENT ETAILER HOLESALER 14

11 Business-to-Business Channels
Direct Wholesaler Agent 21

12 Business-to-Business Channel Trends
Disintermediation Infomediaries & Vertical Exchange 21

13 Vertical Marketing Systems
Corporate systems - total ownership Contractual - legal relationships Administered - strong leadership 23

14 Planning the Channel of Distribution
Determining the structure Marketing mix strategy Organizational resources External environmental factors Market characteristics Consumer preferences and behavior The nature and availability of Intermediaries Other environmental factors 26

15 Intensive Distribution
Producer Retailer Seeks to obtain maximum product exposure at the retail level

16 Selective Distribution Product is sold in a limited number of outlets
Producer Product is sold in a limited number of outlets Retailer

17 Exclusive Distribution
Producer Product is sold in only one outlet in a given area Retailer

18 Channel Relationships
Cooperation Conflict Power Coercive Expert Legitimate 28

19 Other Distribution Management Issues
One Coca Cola Distributor One thousand retailers OK Reverse distribution Difficult Ethical, Political, & Legal 29

20 Review Explain general purpose of distribution
Show distribution system’s contributions Understand pervasive nature of distribution Describe channel intermediary functions Identify different channel of distribution configurations Introduce vertical marketing systems Describe aspects of channel relations Explore legal and ethical aspects of distribution channels

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