15-1 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 1515 Distributing Products Quickly and Efficiently 15-1

15-2 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Channel of Distribution Marketing IntermediariesMarketing Intermediaries –Wholesaler –Retailer –Agents/Brokers Role of IntermediariesRole of Intermediaries –Create Efficiency –Value vs. Cost

15-3 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Wholesale Intermediaries Merchant WholesalersMerchant Wholesalers –Full-Service –Limited-Function –Rack Jobbers –Cash-and-Carry –Drop Shippers Business to Business (B2B)Business to Business (B2B)

15-4 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. The Wheel of Retailing PassageofTime 2. Retail Outlet 1. Retail Outlet Starts 3. Retail Outlet 4. New Outlet Enters  Adds Service  Raises Prices  Better Location  Adds Service  Raises Prices  Better Location  Low Price  Limited Service  Out-of-way Location  Low Price  Limited Service  Out-of-way Location  Higher Prices  Higher Status  Higher Prices  Higher Status  Low Price  Limited Service  Low Price  Limited Service

15-5 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Retail Store Distribution IntensiveIntensive  Selective  Exclusive

15-6 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Non-Store Distribution E-tailingE-tailing TelemarketingTelemarketing Vending Machines, Kiosks, CartsVending Machines, Kiosks, Carts Direct SellingDirect Selling Multilevel MarketingMultilevel Marketing Direct MarketingDirect Marketing

15-7 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Why People Don’t Shop Online 1.It isn’t secure 2.It will jeopardize my privacy 3.Usually must pay shipping charges 4.Not enough selection 5.Can’t touch/try things first 6.No satisfaction guarantee 7.Returns are a hassle 8.Won’t arrive on time 9.Hard to find things online 10.Enjoy getting out of house to shop Source: blink,

15-8 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Necessary Website Features Source: “Dreaming of a Green Christmas”, Newsweek, November 11, 2002, p. E24

15-9 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Channel Cooperation Corporate DistributionCorporate Distribution Contractual DistributionContractual Distribution Administered DistributionAdministered Distribution Supply Chain ManagementSupply Chain Management

15-10 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. The Supply Chain

15-11 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Logistics  Physical Distribution  Inbound  Materials  Outbound  Reverse  Information

15-12 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Transportation & Storage Modes RailroadRailroad Motor VehiclesMotor Vehicles WaterWater PipelinePipeline AirAir IntermodalIntermodal WarehousingWarehousing –Storage –Distribution