Distribution (11) MAR 331. Distribution (11) When should intermediaries be used? –The most common reason to employ market intermediaries is that they.

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Presentation transcript:

Distribution (11) MAR 331

Distribution (11) When should intermediaries be used? –The most common reason to employ market intermediaries is that they can reduce costs and improve distribution efficiency. –Too many channel members can raise the cost of moving goods to customers.

Distribution (11) Marketing Channel Jobs –Communication –Bargaining –Reordering –Financing –Maintain inventories –Cash Settlements

Distribution (11) Distribution Alternatives –Hundreds of ways –No one distribution system can satisfy the needs of every firm. –Distribution systems not only vary across firms but also change over time.

Distribution (11) Wholesalers vs. Retailers –Size of order. –Wholesalers are dealers who buy in large volume and resell to retailers in case lots. –Provide retailers with assortments of merchandise, backup stocks, credit, delivery and promotional assistance.

Distribution (11) Wholesalers are a standard component of many distribution systems. Currently losing share to factory outlets, mail-order catalogs, warehouse clubs and mass merchandisers.

Distribution (11) Distribution channels are designed to give customers ready access to goods and services at a minimum cost. Must balance the costs of employing different types of channels against the revenues generated.

Distribution (11) Using a wholesaler, reduces the manufacturrer’s sales and communication costs; may increase profits. Channel control is lost

Distribution (11) Manufacturers want retailers to advertise and promote their products through price and display. If wholesaler is involved, manufacturer relinquishes control over in-store activities.

Managing the channel (11) Dealer incentives –Discounts –Lending/Dating –Price/Inventory/Territorial protection

Organizing Distribution (11) Customer Service Levels Using scanner data Warehouses Transportation