1. Chris Banman Fall 2010 471.21 Providence College

2. chapter 11

3. Place Objectives  type of channel  direct  indirect  goals  market exposure  intermediaries  facilitators  “middlemen”  means  channel relationships  desired  customer service level  required  inventory levels  transportation  facilities  information systems

4. Deciding on Goals  long-term effects of decisions  product classes  distribution channel management  core expertise

5. Why Choose Direct?  more control  lower cost  profit pool  contact with customers  quicker response to change  suitable intermediaries not available

6. B2B Often Direct

7. B2C Often Indirect

8. Intermediaries  may invest in inventory

9. Intermediaries  channel specialists  may reduce discrepancies & separations  accumulating  assorting  bulk-breaking  sorting

10. Channel Relationships  must be managed  choosing  the type of relationship  handling  conflict  finding  common objectives “channel captain”

11. Vertical Marketing Systems good contracts McDonald’s complete one company ownership Florsheim some economic power and leadership General Electric characteristics type of channel little none independents amount of cooperation traditional vertical marketing systems administeredcontractualcorporate control maintained by e.g.

12. Retailer illegal Limiting Market Exposure Retailer Producer legal Wholesaler

13. Channel System Complexity

14. Physical Distribution Issues  “logistics”  intermodal  processing time  backordering  customs  storage  inspection  protection & insurance  in storage  in transit  information  accuracy  availability  product availability  shipping progress  delays  customer relationships  defects on delivery  returns  repairs

15. Physical Distribution Issues  “logistics”  intermodal

16. Physical Distribution Issues  “logistics”  intermodal

17. Physical Distribution Issues  “logistics”  intermodal http://www.containerhandbuch.de/chb_e/stra/index.html?/chb_e/stra/stra_01_01_00.html

18. Transportation as Value cost of transport / selling price 55% gravel 42%coal 38%cabbage 20%iron ore 8%processed food 6%plastic 3%electronics 1%drugs 4%factory machinery

19. Transport Modes truckrailwaterairpipe costhimedv lov hilo speedfastmedv slowv fastslow # locations servedv hihilohiv lo ability to handle variety of goodshi v hilov lo frequencyhilov lohimed time dependabilityhimed hi

20. Storage  desired when  economics of scale in production  flexibility  time  place  models  needed when  production  consumption

21. Specialized Storage warehouse type privatepublic investmenthinone unit cost variable (hi if volume lo; lo if volume hi) lo - med controlhivariable product fithivariable flexibilitylohi

22. What’s a wholesaler?  used to be  standard link in the chain  now  much more variable  may  buy  transport  store  process  sell

23. Wholesaler Classification  yes  merchant wholesalers  How many functions does wholesaler do?  some  limited-function merchant wholesalers  cash-and-carry wholesaler  drop-shipper  truck wholesaler  rack jobber  catalog wholesaler  all  service merchant wholesaler  general merchandise wholesaler  mill supply house  single-line wholesaler  general-line wholesaler  specialty wholesaler  no  agent middlemen  auction companies  brokers  manufacturer’s agents  selling agents Does wholesaler own the products?

24. Wholesaling  think of wholesaling as a cluster of functions  firms carve out niches  some do other things too  shake-out  adaption  ethics?

25. Information Helps Coordination  continuously updated  Electronic Data Interchange  Internet

26. Key Terms  place  channel of distribution  direct marketing  discrepancy of  quantity  assortment  regrouping activities  accumulating  assorting  sorting  bulk-breaking  vertical integration  channel systems  traditional  vertical  corporate  administered  contractual  channel captain

27. Key Terms  ideal market exposure  intensive distribution  selective distribution  exclusive distribution  multichannel distribution  reverse channels  logistics  physical distribution  chain of supply  electronic data interchange  transporting  containerizing  piggyback service  storing inventory  warehouses  private  public  distribution centre