1. Distribution Strategy
Lectures 16-17

2. CHANNEL OF DISTRIBUTION
The set of independent institutions & agencies that, by an exchange of outputs, are involved in making the product or service available from the point of production to the point of consumption

3. THE NEED FOR DISTRIBUTION STRATEGY
ECONOMICS
EFFICIENCY REQUIREMENT
TO MAINTAIN LEVELS OF EXPERTISE
TO MAXIMISE GROWTH

4. Place objectives Type of channel Customer service level desired Direct
Indirect
Type of physical
Degree of market
distribution
exposure
Intermediaries
How to
facilities needed
(intensive,
/facilitators
manage
selective, or
needed
channels
exclusive)

5. DIRECT & INDIRECT IMPLICATIONS
DIRECT - the producer deals with consumers/ end-users
complete control
closer to the consumer
strategy adjustment
lack of availability of intermediaries
services/business-to-business
INDIRECT - uses intermediaries to reach the consumer/end-user
buying patterns
geographic dispersement
economics
efficiency
maintain expertise

6. Factors Related to the Use of Direct Distribution
Manufacturer
Consumer
Agent
Eg. Tupperware
Consumer
Hospital
Patient
Location
ISP
User
Direct (producer to customer) distribution is common when:
the customer is a business or organisation (rather than a final consumer)
aggressive personal selling is required and/or when customers need special technical service
the product is primarily a service rather than a physical good
working with intermediaries would be difficult to maintain control of the marketing mix
the producer can perform marketing functions more efficiently (economically) by itself

7. Indirect Channels of Distribution
Traditional channel system—a channel in which the various channel members make little or no effort to cooperate with each other
Channel Captain—A manager who helps direct the activities of the whole channel
Tries to avoid—or resolve—conflicts
May be either a producer or an intermediary
Guides the whole channel to compete better with other channels
Effective allocation of functions
Develops a common product-market commitment

8. TYPES OF INTERMEDIARIES
FACILITATORS - assisting (facilitating) in the process of making the product or service available to the consumer/end-user
RETAILERS - dealing with the ultimate consumer for personal use
WHOLESALERS - dealing with purchasers buying for re-sale or business use

9. FACILITATORS assisting (facilitating) in the process of making
the product or service available
to the consumer/end-user
for example: transport companies;
warehousing operations;
finance companies

10. Distribution Centre
Special kind of warehouse designed to speed the flow of goods to avoid unnecessary storing costs
Speeds bulk breaking to reduce inventory carrying costs
Helps to centralise control of physical distribution activities

11. Level of Market Exposure
Exclusive
Selective
Intensive
Selling through
Selling through
Selling through
all responsible
only those
only one
and suitable
intermediaries
intermediary in
wholesalers
who will give
a particular
and retailers
the product
geographic
who will stock
special
region
and/or sell the
attention
product
Few
Many
Number of intermediaries