1. Channels of Distribution
Getting goods to the consumer

2. The 4 P’s Place Product Price Promotion
Also known as the Marketing Mix

3. What is a Channel of Distribution?
The path a product takes from the producer to the final user.

4. Channels of Distribution
Producer
Wholesaler
Agent
Retailer
Industrial Distribution
Consumer/Industrial User

5. Industrial Users
Market consisting of all customers who make purchases for business purposes; also called the business-to-business market

6. Consumers
Those who buy and actually use the product.

7. Intermediaries
Intermediaries are channel members that help move products from the producer or manufacturer to the final user.
“Middlemen”

8. Types of Intermediaries
Merchant Intermediaries
Wholesalers
Retailers
Electronic Retail Outlets
Vending Service Companies
Agent Intermediaries
Independent Manufacturer’s Agents
Brokers

9. Wholesalers & Retailers
Buy large quantities of goods from manufacturers, store the goods, and resell them to other businesses.
Retailers
Sell goods to the ultimate consumer through their own stores.

10. Electronic Shopping
Internet Shopping
Home Shopping Networks

11. Vending Service Companies
Buy manufacturers’ products and sell them through machines that dispense goods to consumers.
Vending Machines

12. Agents Independent Manufacturers’ Agent – Broker
Represent several non-competing manufacturers in a specific industry
Broker
Sales Agent for different manufacturers
May merchandise products as well as sell.

13. Transportation Companies & Storage Warehouses
Not part of the channel of distribution because they do not take title to the goods nor are they involved in negotiating that title.

14. Direct vs. Indirect Distribution
Direct - Goods or services are sold from the producer directly to the final user – no intermediaries are involved.
Indirect - Goods or services are sold through the use of intermediaries.

15. 5 Channels for Consumer Products
A – Direct sales from manufacturer to consumer – Avon
B – Manufacturer to Retailer to Consumer – Mansour’s
C – Manufacturer to Wholesaler to Retailer to Consumer – SuperValu
D – Manufacturer to Agent to Wholesaler to Retailer to Consumer – Small Retailers
E – Manufacturer to Agent to Retailer to Consumer – Cookware, Meat, Cosmetics, Supermarkets

16. 4 Channels for Industrial Products
A – Manufacturer to Industrial User – Office Machine Companies
B – Manufacturer to Industrial Distributor to Industrial User – Loy’s Office Supplies
C – Manufacturer to Agent to Industrial Distributor to Industrial User – Building Supplies
D – Manufacturer to Agent to Industrial User – Construction Equipment

17. Computer Companies Go Direct – A Case Study
Dell: manufacturer to consumer or manufacturer to industrial user (both direct). Big three: catalog sales – (same as Dell); retail sales – manufacturer to retailer to consumer or manufacturer to industrial distributor to industrial user (indirect).
The big three feared the competition from Dell, Gateway and similar companies who are able to create custom-built computers at competitive prices.
Could be either way – Is it a good idea?

18. Rack Jobbers
Manage inventory and merchandising by counting stock, filling it in when needed and maintaining store displays. – Grocery Store

19. Considerations in Distribution Planning
Decisions involving a product’s physical movement and transfer of ownership from producer to consumer
Distribution decisions affect a firm’s marketing program
Nontraditional and multiple channels, control vs. costs, intensity of distribution

20. Nontraditional and Multiple Channels
Selling in various types of outlets
L’eggs
Selling both retail and industrial – Loy’s Office Supplies, SAM’s

21. Control vs. Costs Who Does the Selling? Who Dictates the Terms?
In-house sales force
Agents
Who Dictates the Terms?
Mass Merchandisers
Small Retailers

22. Distribution Intensity
Intensive
Complete market coverage
All suitable outlets
Selective
Limited number of outlets
More control
Exclusive
Protected Territories
Franchises
Retail serviced line
Integrated Distribution

23. Distribution Planning in Foreign Markets
Foreign Markets Deliver Additional Problems
Japan – Intensive personal relationships, saving face, distribution networks
Latin America – Bribes, Lack of Skills, Lack of Financing