1. Place - Channels of Distribution/ International Marketing
AS3 Marketing
MODULE 3.03
Place - Channels of Distribution/ International Marketing

2. General Introduction
Getting goods from producers in the right quantities at the right time.

3. General Introduction
Approximately 20% of unit costs.
Just as essential to success as product, price, promotion.
Concerns: Physical distribution; Channels of Distribution.

4. Channels of Distribution
The different ways the goods and services produced by business organisations are made available to the end customer / user.

5. Size and complexity of firm The product The target market
Choice of Channel of Distribution
Factors influencing choice of channel:
The firm’s objectives
Size and complexity of firm
The product
The target market

6. Availability of wholesalers and retailers
Factors influencing choice:
competitors
Availability of wholesalers and retailers

7. Channels of Distribution
Some producers sell: direct to customer / end user, others use: Retailers (R) Wholesalers (W) Agents (A)

8. End Customer / User (Consumer)
Channels of Distribution
Producer
End Customer / User (Consumer) R W A
Direct

9. End Customer / User (Consumer)
Channels of Distribution
Producer
End Customer / User (Consumer)
Direct

10. Intermediaries Explained
Wholesalers
Businesses who buy large quantities of goods from producers or Agents acting on behalf of producers, for resale in smaller quantities to retailers or other businesses.

11. Known as ‘breaking bulk’.
Intermediaries Explained
Wholesalers
Known as ‘breaking bulk’.
Store goods until needed, will regularly deliver to retailer.
May pack and brand goods for producer or large retailer.
Add on a profit margin before selling the good on.

12. Allows producer to concentrate on production rather than marketing.
Intermediaries Explained
Wholesalers
Advantages
Disadvantages
Can be highly cost-effective method for producers to reach large and dispersed market.
Allows producer to concentrate on production rather than marketing.

13. Reduces the need for producer and / retailer to carry large stocks.
Intermediaries Explained
Wholesalers
Advantages
Reduces the need for producer and / retailer to carry large stocks.

14. Intermediaries Explained
Wholesalers
Disadvantages
Wholesaler may not put as much effort into promoting the product - may put most effort into profitable lines(s).

15. Intermediaries Explained
Wholesalers
Disadvantages
Price the end customer pays increases as wholesaler adds their own margin.

16. Intermediaries Explained
Retailers
Business organisations who buy from wholesalers or direct from the manufacturers for resale in smaller quantities to the general public in shops or other retail outlets.

17. Usually situated near to where people live.
Intermediaries Explained
Retailers
Usually situated near to where people live.
Often advertise the goods they sell.
Provide feedback to wholesalers and manufacturers on customer demand / reaction to products.

18. Add on profit margin before selling the good on.
Intermediaries Explained
Retailers
Provide advice and after sales services to public and may also provide credit.
Add on profit margin before selling the good on.

19. Types of retail outlets
Intermediaries Explained
Retailers
Types of retail outlets
Independents
Multiple specialist shops
Multiple variety stores

20. Types of retails outlet
Intermediaries Explained
Retailers
Types of retails outlet
Department stores
Supermarkets
Superstores or hypermarkets

21. Allows producer to concentrate on production rather than marketing.
Intermediaries Explained
Retailers
Advantages
Disadvantages
Can be highly cost-effective method for producers and / or wholesalers to reach large, dispersed market.
Allows producer to concentrate on production rather than marketing.

22. Intermediaries Explained
Retailers
Advantages
Provides storage facilities - reduces the need for producer to carry large stocks.

23. Intermediaries Explained
Retailers
Disadvantages
May require considerable marketing effort as competition for shelf space in major outlets is high.
Major retailers have considerable power - push margins down, pay on credit which can effect cash flow.

24. Intermediaries Explained
Retailers
Disadvantages
Price the end customer pays increases as wholesaler adds their own margin.

25. Intermediaries Explained
Agents
An independent person or business contracted to negotiate sales and handle the distribution of a product on behalf of the seller.

26. Usually adds mark-up or earns commission on each sale.
Intermediaries Explained
Agents
Usually adds mark-up or earns commission on each sale.
Widely used in importing and exporting.

27. Reduced distribution costs.
Intermediaries Explained
Agents
Advantages
Disadvantages
Reduced distribution costs.
May work harder than salaried sales-force as the more they sell, the more money they make.

28. Intermediaries Explained
Agents
Disadvantages
Agents of several products may not give sufficient attention to one particular product if others are more profitable.

29. Create Barriers. It is argued that intermediaries: Add to Costs
Intermediaries Explained
Summary of the use of Intermediaries
It is argued that intermediaries:
Add to Costs
Create Barriers.

30. May be specialists, have contacts and know-how.
Intermediaries Explained
Summary of the use of Intermediaries
On the other hand..
Reduce marketing effort & risk, allowing producer to concentrate on production.
May be specialists, have contacts and know-how.

31. Intermediaries Explained
Summary of the use of Intermediaries
On the other hand:
Manufacturers may lack finance & resources required eg know-how, contacts.

32. E-Commerce
This involves the use of the internet to advertise and sell goods and services and much emphasis is being given to this type of distribution method/advertising recently.

33. Relatively cheap, easy to set up. Easily updated.
Types of Advertising Media - Internet
Company Web Site
Advantages
Disadvantages
Relatively cheap, easy to set up.
Easily updated.
Number of ‘hits’ can be monitored - useful to measure effectiveness.

34. Possible technical problems of connecting, viewing and maintaining.
Types of Advertising Media
Company Web Site
Disadvantages
Limited audience.
Possible technical problems of connecting, viewing and maintaining.

35. Exposure to larger audience. Costs based on results.
Types of Advertising Media - Internet
Banner Ads
Advantages
Disadvantages
Exposure to larger audience.
Costs based on results.

36. Statistics show not very effective.
Types of Advertising Media - Internet
Banner Ads
Disadvantages
Statistics show not very effective.
May not produce ‘quality’ leads.

37. Free and simple to set up. Greater exposure to new audience.
Types of Advertising Media - Internet
Link Exchanges
Advantages
Disadvantages
Free and simple to set up.
Greater exposure to new audience.
Increases ranking with some search engines.

38. May not produce ‘quality’ leads.
Types of Advertising Media
Link Exchanges
Disadvantages
May not produce ‘quality’ leads.
Visitors may leave web site via an exchange link.

39. Vastly increases web presence.
Types of Advertising Media - Internet
Search Engine / Directory Listing
Advantages
Disadvantages
Mainly free.
Vastly increases web presence.
Most web traffic comes from search engines.

40. Can be costly. Needs monitoring. Disadvantages
Types of Advertising Media - Internet
Search Engine / Directory Listing
Disadvantages
Can be costly.
Needs monitoring.

41. Targeted / receptive audience.
Types of Advertising Media - Internet
Ezine Sponsorship
Advantages
Disadvantages
Targeted / receptive audience.
Greater exposure.

42. Reliance on Ezine producers for targeted audience.
Types of Advertising Media - Internet
Ezine Sponsorship
Disadvantages
Reliance on Ezine producers for targeted audience.

43. To spread risk into other countries/economies
International Marketing
Reasons for a business wanting to market its products internationally:
Home market too small
Home Market saturated
To spread risk into other countries/economies
To grow/benefit from economies of scale/increase sales/profits

44. 3.04 Problems with International Marketing
Exchange rate differences
Language/communication problems
Time zone differences
Cultural differences/protocol
Different laws in different countries
Trade barriers
Political instability in some countries

45. Place - Channels of Distribution
AS3 Marketing
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Place - Channels of Distribution