© Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 14 - 1 Distribution Strategies.

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 1

Distribution StrategiesDistribution Strategies

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 2

Distributing ProductsDistributing Products

• Wholesalers

• Retailers

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 3

Customers of RetailersCustomers of Retailers

• Other retailers

• Wholesalers

• Organizations

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 4

Types of Retail OutletsTypes of Retail Outlets

• Physical facilities

• Vending machines

• Virtual stores

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 5

Distribution Function of Distribution Function of Wholesalers and Wholesalers and

RetailersRetailers• Match buyers and sellers

• Provide market information

• Offer promotional and sales support

• Gather an assortment of goods

• Transport and store products

• Assume risks

• Provide financing

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 6

How Intermediaries How Intermediaries Simplify CommerceSimplify Commerce

• Reduce prices

• Reduce contacts

• Create utility

–Time

–Place

–Possession

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 7

Types of WholesalersTypes of Wholesalers

• Merchants

• Agents

• Brokers

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 8

The Changing Role of The Changing Role of

WholesalersWholesalers• The Internet

–Distribution system

–Market reach

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 9

Types of Retail StoresTypes of Retail Stores

• Specialty store

• Category killer

• Discount store

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 10

Nonstore RetailersNonstore Retailers

• Mail-order firmsMail-order firms

• Automatic vendingAutomatic vending

• TelemarketingTelemarketing

• Door-to-door salesDoor-to-door sales

• Electronic cataloguesElectronic catalogues

• CybermallsCybermalls

• Interactive kiosksInteractive kiosks

• E-Commerce websitesE-Commerce websites

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 11

Retail Industry Retail Industry

ChallengesChallenges• Excess store space

• Weakened economy

• Consumer preferences

• Nonstore retailing

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 12

Internet Retail Internet Retail

StrategiesStrategies• Pure-play

• Clicks-and-bricks

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 13

Setting Distribution Setting Distribution

StrategiesStrategies

• Distribution mix

–Kind of product being sold

–Marketing practices of the industry

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 14

Length of Distribution Length of Distribution

ChannelsChannels

• Producer to consumer

• Producer to retailer to consumer

• Producer to wholesaler to retailer to

consumer

• Producer to agent/broker to wholesaler to

retailer to consumer

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 15

Market CoverageMarket Coverage

• Distribution

– Intensive

–Selective

–Exclusive

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 16

Cost FactorsCost Factors

• Selling

• Storage

• Distribution

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 17

Control IssuesControl Issues

• Distribution channels

–Shorter

–Longer

• Overall control

–More

–Less

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 18

Channel ConflictChannel Conflict

• Inadequate product support

• Too many intermediaries

• Multiple sales channels

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 19

Distribution Strategies:Distribution Strategies:

Additional FactorsAdditional Factors• Nature and price of product

• Growth rate of market

• Location of customer base

• Customer’s need for service

• Importance of rapid delivery

• Strengths and weaknesses of intermediaries

• Global laws and customs

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 20

Managing Physical Managing Physical

DistributionDistribution• In-house operations

• Outbound transportation

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 21

In-House OperationsIn-House Operations

• Forecasting

• Order processing

• Inventory control

• Warehousing

• Materials handling

© Prentice Hall, 2005 Excellence in Business, Revised Edition

Chapter 14 - 22

Outbound TransportationOutbound Transportation

• Rail

• Truck

• Water

• Air

• Pipeline