Mrs. Brink Marketing Principles Unit 7: Distribution Mrs. Brink Marketing Principles

What is distribution? What do you think distribution is all about?

Reading Activity http://www.saylor.org/site/wp-content/uploads/2013/02/BUS203-PoM-Ch8.pdf Pages 1-9 STOP AFTER BROKERS SECTION 1. Why are marketing channel decisions as important as pricing and product feature decisions? 2. Why do channel partners rely on each other to sell their products and services? 3. How do companies add value to products via their marketing channels? When you are done…. Twitter Vocabulary Activity Chapter 13

The 4 P’s Product Price Promotion The Seven Functions Place Promotion The Seven Functions Product Service Management Market Information Management Financing Distribution Pricing Promotions Selling

The Importance of Distribution Activities Distribution as an economic concept Important for free enterprise Influences supply and demand PLACE UTILITY Distribution is also an element of our Marketing Mix which is implemented throughout all marketing decisions!

What is a Channel of Distribution? The path a product takes from the producer to the final user. All products have a channel!

Channels of Distribution Producer Wholesaler Agent Retailer Consumer/Industrial User Channel Members: help to move products through the path

The Need for Distribution Channels Adjusting differences between producers and consumers Differences in quantity: must be able to adjust for large and small quantities Differences in assortment: must get products from a number of sources Differences in location: must get products to convenient locations Differences in timing of production and consumption: different times of year require different distribution

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

Consumers Those who buy and actually use the product.

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

Types of Intermediaries Merchant Intermediaries Wholesalers Retailers Agent Intermediaries Independent Manufacturer’s Agents Brokers

Planning and Managing Channels of Distribution Channel participants Channel members Direct channel Indirect channel Chapter 13

Distribution Strategies 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.

Distribution Intensity Intensive Complete market coverage All suitable outlets Selective Limited number of outlets More control Exclusive Protected Territories Franchises

5 Channels for Consumer Products 1 : Direct sales from manufacturer to consumer – Avon 2: Manufacturer to Retailer to Consumer 3: Manufacturer to Wholesaler to Retailer to Consumer 4: Manufacturer to Agent to Wholesaler to Retailer to Consumer – Small retailers, “Mom and Pop” type stores 5: Manufacturer to Agent to Retailer to Consumer – Cookware, Meat, Cosmetics, Supermarkets

Multiple Channels of Distribution Sometimes businesses opt to use a mixture of distribution channels Direct + Indirect=Multiple Channels Chapter 13

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.

Who Needs Wholesaling? Benefits of wholesaling Wholesaling activities Specialize in storage Cheaper Purchases in efficient quantities Wholesaling activities Buying, selling, transporting, storing and financing Wholesale clubs—SAM’S Club

Types of Retailers Product mix Limited-line retailers Mixed merchandise retailers Superstores Service retailers Location Brick and Mortar Convenience stores Shopping centers Stand-alone stores Non-store retailing Online