DISTRIBUTION UNIT Diagnostic - pre-test 3/10 – Explain the concept of Distribution Understand basic distribution concepts and channels Identify multiple types of distribution and the channel members

Marketing Co-Op Distribution

What is Distribution? Making the “place” decision Getting the product into the customers hands Concepts of Distribution: In order for distribution to occur, marketers must decide on their “channels of distribution” or how they will get the product to the customer

What is Channel Distribution? Channels of distribution: The path a product takes from its producer (manufacturer to the final user (the customer)

Intermediaries

Channel Members Wholesalers – business that buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses

Channel Members Rack Jobbers – wholesalers that manage inventory and merchandising for retailers by counting stock, filling it in when needed, and maintaining store displays Ex: potato chips, CDs, greeting cards

Channel Members Drop Shippers – own the goods they sell but do not physically handle the actual products EX: coal, lumber, chemicals

Channel Members Retailers – sell goods to the final consumer for personal use

Channel Members Brick-and-Mortar – traditional retailers that sell goods to the customer from their own physical store

Channel Members Non-store Retailing Automatic Retailing (vending machines) Direct Mail Catalog Retailing E-tailing (online retail) TV home shopping

Agents Agents – do not own the goods they sell. They bring buyers and sellers together

Channels in the Consumer Market

Channel A Manufacturer/Producer Directly to Consumer Direct distribution – sales of goods or services directly to the customer, with no intermediaries Ways to sell directly to customers 1. Selling products at the production site Luck Stone – sell stone directly from quarry 2. Having a sales force call on consumers telemarketing 3. Using catalogs Victoria’s Secret 4. Using the internet

Channel B Manufacturer to Retailer to Consumer Most commonly used channel for merchandise that dates quickly or needs servicing Ex: clothing, automobiles, produce Indirect Distribution- using one or more intermediaries

Channel C Manufacturer/Producer to Wholesaler to Retailer to Consumer Most common distribution method for staple goods, which are items that are always carried in stock and whose styles do not change frequently EX: flowers, non-perishable food items, candy

Industrial Market

Assignment

Distribution Review 1.In your own words what is distribution? 2.What’s the difference between rack jobbers and drop shippers? 3.What are three different channels a product could take to get to the consumer? 4.Explain the difference between merchant intermediaries and agents. 5.Provide an example of a brick and mortar retailer and what makes it a brick and mortar store?

Distribution Test Review 1.Explain the difference between direct and indirect distribution. 2.Provide an example of a product that one would buy in an industrial market vs. a consumer market. 3.Define: 1.FOB Destination 2.FOB Factory Freight Prepaid 3.FOB Shipping Point 4.FOB Destination Charges Reverse23 4.What is the key difference between a rack jobber and drop shipper?