1. Channel Management Unit Objectives: Channels of Distribution #1
To understand the scope of the distribution function and how it affects the success of a marketing plan
Channels of Distribution #1
Today’s Objectives:
Explain the concept of a channel of distribution
Identify channel members

2. The Marketing Mix (The four P’s)
Write down where YOU are most likely to buy the following items:
Music
Shoes
Computer
Are all answers the same for each product?
How do companies know where to best distribute and sell?
Answer = Market Research
The Marketing Mix (The four P’s)
Product, Price, Place, Promotion
Distribution is a key element within place
Companies have to determine where and how their product is distributed and sold
This is the concept of distribution

3. Two categories of final user
Channel of Distribution – the path a product takes from its
producer to final user
Two categories of final user
Consumer
Industrial
Doritos Cool Ranch – which category?
Both!
Can Kentwood HS buy direct from Doritos? Why? Why not?

4. Let’s take a look at the wide variety of Merchants and Agents . . . .
To maximize profits, a wide variety of options (Channel Members) are available and need to be selected
Intermediaries – middlemen
Merchants – Take title of goods: buy at a
wholesale price then resell
Agents – earn commission when they sell
Let’s take a look at the wide variety of Merchants and Agents

5. Types of Merchants
Wholesalers – businesses that buy large quantities of goods from manufacturers, store the goods and then resell them to other businesses (retailers)
Rack Jobbers – wholesalers who manage inventory and merchandising for retailers. (Very common in grocery. Visit Safeway at 6AM some time and you may see them at work)
Drop Shippers – Buy goods, but don’t take physical control of them. Product shipped directly from manufacturer to customer
Retailers – sell goods to the end user (consumers)
Brick-and-Mortar – physical store
E-tailers – Internet store

6. Home & Garden stores in WA , OR, ID
Types of Agents
Independent Manufacturers Representatives – sell related, but non-competing products. Continuing relationship is a key element
Brokers – Bring buyers and sellers together, but typically no continuing relationship
Toro lawnmowers
Ortho pest control
Scott’s fertilizer
Home & Garden stores in WA , OR, ID
IMR
Broker
Individuals
Home Loans

7. What values to the distribution channel do Intermediaries bring
What values to the distribution channel do Intermediaries bring? Why would a manufacturer use them? +
Local Knowledge
Trust
Relationships
Efficiency
Assignment: Write down whether you think e-tailers will replace brick-and-mortar retailers. Explain your answer in detail; why or why not? Be ready to be called on randomly.