Unit 7

Place  THE THIRD “P” DEALS WITH ALL THE QUESTIONS ARISING FROM GETTING YOUR PRODUCT (SERVICE) TO YOUR INTENDED MARKET.  ITS A MATTER OF “LOGISTICS”.

THERE ARE TWO COMPONENTS TO DISTRIBUTING GOODS:  IDENTIFYING THE MOST APPROPRIATE “CHANNEL”;  PHYSICALLY MOVING THE GOODS.

CHANNELS OF DISTRIBUTION:  DIRECT: PRODUCER TO THE CUSTOMER.  WITH SERVICES, IT IS OFTEN FACE-TO-FACE.  E.G.,  -DOOR-TO-DOOR SALES;  -AVON PRODUCTS;  -FARMER’S MARKET;  -DENTIST, LAWYER.

CHANNELS OF DISTRIBUTION:  PRODUCER TO OWN STORE TO CONSUMER.  THIS IS AN INTEGRATED CHANNEL WHERE THE MANUFACTURER OWNS A STORE(S). REFERRED TO AS VERTICAL INTEGRATION.  E.G., LEVI, SONY, BLACK AND DECKER AT COOKSTOWN.  FACTORIES OFTEN HAD A SMALL SALES OFFICE AT THE FRONT.

CHANNELS OF DISTRIBUTION:  3) PRODUCER TO INDEPENDENT RETAIL STORES TO CONSUMERS.  4) PRODUCER TO WHOLESALER OR DISTRIBUTOR TO RETAIL STORES TO CONSUMER. THIS IS THE USE OF INTERMEDIARIES (MIDDLEMEN) WHO MAY BUY THE PRODUCT AND THEN SELL TO RETAIL OPERATIONS. OR... STORE IT ON YOUR BEHALF UNTIL A LARGER SHIPMENT CAN BE MADE.

CHANNELS OF DISTRIBUTION:  5) PRODUCER TO SPECIALITY CHANNEL TO CONSUMER:  E.G.,  VENDING MACHINES, INTERNET, CATALOGUES, TELEMARKETING, TELEPHONE SALES.

GLOBAL INTERMEDARIES:  1) EXPORT MANAGEMENT COMPANIES;  2) FREIGHT FORWARDERS. SUCH COMPANIES PROVIDE COMPLETE DISTRIBUTION SERVICES (LOGISTICS). MOST ARE SMALL COMPANIES THAT MAY SPECIALIZE IN SPECIFIC PRODUCTS FOR CERTAIN FORIEGN COUNTRIES.  3) CUSTOM BROKERS: THESE ARE SERVICES THAT SPECIALIZE IN MOVING GOODS THROUGH THE CUSTOMS PROCESS (E.G., INSPECTIONS, PAYMENT OF DUTIES).

Push VS. Pull  PULLING VERSUS PUSHING A PRODUCT THROUGH A CHANNEL OF DISTRIBUTION.  PUSHING: PLEADING WITH A RETAILER FOR SHELF SPACE FOR YOUR PRODUCT.  PULLING: HAVING RETAILERS COME TO YOU ASKING IF THEY CAN CARRY AND SELL YOUR PRODUCT.  E.G., “DR. PEPPER” AND A MASSIVE ADVERTISING CAMPAIGN.