1. Copyright © 2004 South-Western. All rights reserved.13–1 Learning Goals Explain advantages and disadvantages of direct distribution channel. Identify factors that could determine optimal channel of distribution. Differentiate between types of market coverage.

2. Copyright © 2004 South-Western. All rights reserved.13–2 Channels of Distribution Determine how the firm’s products will be accessible to customers –“Place” Direct channel –Allows full control over price –Provides first-hand customer feedback –Requires more employees –Incurs more expenses to promote product

3. Copyright © 2004 South-Western. All rights reserved.13–3 Channels of Distribution One-Level Channel –One marketing intermediary is between the producer and the customer  Merchants  Agents Two-Level Channel –Two marketing intermediaries are between the producer and the customer

4. Copyright © 2004 South-Western. All rights reserved.13–4 Comparison of Common Distribution Systems Exhibit 13.3

5. Copyright © 2004 South-Western. All rights reserved.13–5 Optimal Distribution Channel Depends on product’s characteristics –Ease of transporting –Degree of standardization –Ability to fulfill Internet orders (direct)

6. Copyright © 2004 South-Western. All rights reserved.13–6 Alternative Degrees of Market Coverage Exhibit 13.4

7. Copyright © 2004 South-Western. All rights reserved.13–7 Selecting Transportation Mode Cost of transporting products can exceed production costs –Efficiency of transportation –Firm should estimate timing, cost, and availability ( Truck, rail, air, water, pipeline)