Channel of Distribution Alright kids! I got the orange juice! Let’s go home! Channel of Distribution Attention Employees! Juice has arrived…lets carton! A PATH A PRODUCT TAKES FROM PRODUCER OR MANUFACTURER TO FINAL USER Let’s plant some seeds Ok Acme Employees….Cartoned Orange Juice is being deliviered! Ok Gang! Lets change these oranges to juice!

CHANNEL OF DISTRIBUTION ANSWERS THE “P” = PLACE

INDIRECT DISTRIBUTION PRODUCER TO CONSUMER NO INTERMEDIARIES INDIRECT DISTRIBUTION PRODUCER TO MANUFACTURER TO RETAILER TO CONSUMER INTERMEDIARIES ARE INVOLVED

CHANNEL MEMBERS INCLUDES PRODUCERS, MANUFACTURERS AND FINAL USERS ALWAYS BEGINS WITH THE MANUFACTURER OR PRODUCER CHANNEL ENDS WHEN THE PRODUCT CHANGES FORM

INDUSTRIAL USER CONSUMER USER WHEN PURCHASED FOR BUSINESS PURPOSES WHEN PURCHASED FOR CONSUMER PURPOSES

MEMBERS OF CHANNEL INTERMEDIARIES CHANNEL MEMBERS THAT HELP MOVE PRODUCTS FROM PRODUCER /MANUFACURER TO FINAL USER

2 MAJOR MERCHANT INTERMEDIARIES WHOLESALER BUYS LARGE QUANTITIES, STORES THEM AND RESELLS THEM TO OTHER BUSINESSES RETAILER TRADITIONAL RETAILERS SELL GOODS TO THE ULTIMATE CONSUMER THROUGH THEIR OWN STORES CAN BE WHOLESALER TOO

AGENT INTERMEDIARY PART OF THE CHANNEL OF DISTRIBUTION BECAUSE THEY NEGOTIATE THE TITLE OF GOODS WORK ON COMMISSION

2 MAJOR TYPES OF AGENTS INDEPENDENT MANUFACTURER AGENT BROKERS REPRESENT SEVERAL RELATED (BUT NOT COMPETITIVE) MANUFACTURERS IN A SPECIFIC INDUSTRY BROKERS AGENT FOR DIFFERENT MANUFACTURERS MORE INVOLVED

NON CHANNEL MEMBERS INCLUDE TRANSPORTATION COMPANIES AND INDEPENDENT STORAGE WAREHOUSES NEVER TAKE OWNERSHIP

PHYSICAL DISTRIBUTION/TRANSPORT COMPANIES PROCESS OF TRANSPORTING, STORING, HANDLING GOODS TO MAKE THEM AVAILABLE TO CUSTOMER

DISTRIBUTION INTENSITY INTENSIVE DISTRIBUTION Use of all suitable outlets Objective = complete marketing coverage Example: Motor Oil

DISTRIBUTION INTENSITY SELECTIVE DISTRIBUTION Limited # of outlets in a given geographical area

DISTRIBUTION INTENSITY EXCLUSIVE DISTRIBUTION Involves protected territory for distribution of a product in a given geographical area Example: Big Mac= only sold at McDonald’s

TYPES OF STORAGE PRIVATE PUBLIC DISTRIBUTION BONDED

PRIVATE OWNED BY A BUSINESS COSTLY TO BUILD & MAINTAIN MEETS SPECIFIC NEEDS OF OWNER COSTLY TO BUILD & MAINTAIN TOTAL DISTRIBUTION COSTS STORAGE 51 % 48% = TRANSPORTATION

PUBLIC TYPES COMMODITY – tobacco - agricultural BULK – oil - chemicals AVAILABLE TO ANY BUSINESS MUST PAY FOR USE TYPES COMMODITY – tobacco - agricultural BULK – oil - chemicals COLD – fruits - vegies HOUSEHOLD GOODS - personal GENERAL MERCHANDISE – no special handling

DISTRIBUTION VARIATION OF PRIVATE/PUBLIC SPEEDS DELIVERY OF GOODS & MINIMIZES STORAGE COSTS MAIN FOCUS = MOVE PRODUCTS!!

BONDED STORE PRODUCTS THAT REQUIRE THE PAYMENT OF FEDERAL TAX IMPORTED GOODS DO NOT HAVE TO PAY TAX UNTIL GOODS ARE TAKEN FROM WAREHOUSE CAN BE PUBLIC/PRIVATE