1. Distribution and Marketing Logistics
Chapter 15
Chapter 15: Distribution and Marketing Logistics

2. Chapter 15 Objectives
After studying this chapter, you will be able to:
Explain the role of marketing intermediaries business and list the nine primary functions that intermediaries can perform.
Identify the major types of wholesalers and summarize four trends shaping the future of wholesaling.
Identify the major retailing formats and summarize six trends shaping the future of retailing.

3. Chapter 15 Objectives Cont.
Explain the strategic decisions that manufacturers must make when choosing distribution channels.
Identify five key attributes of distribution channel design and management.
Highlight the major components of physical distribution and logistics.

4. The Role of Marketing Intermediaries
Distribution Strategy:
A firm’s overall plan for moving products through intermediaries and on to final customers
Marketing Intermediaries:
Businesspeople and organizations that assist in moving and marketing goods and services between producers and consumers

5. Wholesaling versus Retailing
Wholesalers
Retailers

6. Contributions of Intermediaries
Match buyers and sellers.
Provide market information.
Provide promotional and sales support.
Gathering assortments of goods.
Transport and store products.
Assume risks.
Provide financing.
Complete product solutions.
Facilitate transactions and support customers.

7. How Intermediaries Simplify Commerce

8. Major Types of Wholesalers
Merchant Wholesalers:
Independent wholesalers that take legal title to goods they distribute.
Distributors:
Merchant wholesalers that sell products to organizational customers for internal operations or the production of other goods, rather than to retailers for resale.
Agents and Brokers:
Independent wholesalers that do not take title to the goods they distribute but may or may not take possession of those goods.

9. The Outlook for Wholesalers
Integrated logistics management
Threat of disintermediation
Unbundling of services
Industry consolidation

10. The Outlook for Wholesalers
Integrated logistics management. The outsourcing trend is definitely having an impact in the wholesaling sector as third-party logistics firms continue to take over a wide range of tasks in supply chain management.
Threat of disintermediation. Intermediaries role would be taken over by manufacturers on the upstream end or by customers (retailers and other organizational buyers) on the downstream end.
15-10
©2007 Prentice Hall 10

11. The Outlook for Wholesalers
Unbundling of services. A growing number of wholesaling customers would like to see these services “unbundled” so they can pay for specific distribution services individually.
Industry consolidation. With all the forces at play in the marketplace, consolidation seems likely as large firms with economies of scale buy up or drive out smaller, less-competitive firms.
15-11
©2007 Prentice Hall 11

12. Retailing Formats Wheel of Retailing:
An evolutionary process by which stores that feature low prices gradually upgrade until they no longer appeal to price-sensitive shoppers and are replaced by a new generation of leaner, low-price competitors.

13. Retailing Formats Department Stores Specialty Stores Discount Stores
Off-price Stores
Online retailers
E-commerce

14. Retailing Formats
Department stores: Large stores that carry a variety of products in multiple categories, such as clothing, house wares, gifts, bedding, and furniture.
Specialty stores: Stores that carry only a particular type of goods, often with deep selection in those specific categories.
Discount stores: Retailers that sell a variety of everyday goods below the market price by keeping their overhead low.
15-14
©2007 Prentice Hall 14

15. Retailing Formats
Off-price stores: Stores that sell designer labels and other fashionable products at steep discounts.
Online retailers: Companies that use e- commerce technologies to sell over the Internet; includes Internet-only retailers and the online arm of store-based retailers.
E-commerce: The application of Internet technologies to wholesaling and retailing.
15-15
©2007 Prentice Hall 15

16. The Outlook for Retailers
Overcapacity
Continued growth in online retailing
Growth of multichannel retailing
Format innovations
Retail theatre
Threat of disintermediation

17. The Outlook for Retailers
Overcapacity. In too many categories, there are simply too many stores to support current levels of business activity.
Continued growth in online retailing. The growth rate of online retailing has outpaced store-based retailing in recent years, and that trend is likely to continue.
Growth of multichannel retailing. The growth in online retailing also reflects the fact that today’s consumers increasingly combine online and offline shopping.
15-17
©2007 Prentice Hall 17

18. The Outlook for Retailers
Format innovations. As companies endlessly search for that magic formula to attract customers and generate profitable sales.
Retail theater. Increasingly, retail stores aren’t just places to buy things; they’re becoming places to research new technologies, learn about cooking, socialize, or simply be entertained for a few minutes.
Threat of disintermediation. Like wholesalers, retailers face the threat of disintermediation if suppliers or customers don’t think they add sufficient value or if other types of retailers can do the job better.
15-18
©2007 Prentice Hall 18

19. Distribution Strategies
Distribution Mix:
A combination of intermediaries and channels a producer uses to reach target customers.
Customer needs and expectations
Product support requirements
Segmentation, targeting, and positioning
Competitors’ distribution channels
Established industry patterns and requirements

20. Consideration in Channel Design
Channel Length
Market Coverage
Distribution Cost
Channel Conflict
Channel Organization
And Control

21. Common Distribution Channel Models

22. Common Distribution Channel Models

23. and Organizational Supplies
Market Coverage
Distribution
Intensive
Selective
Exclusive
Convenience Goods
and Organizational Supplies
Expensive Technical
or Specialty Products

24. Cost Factors
Selling
Storage
Distribution

25. Channel Conflict Inadequate Product Support Too Many Intermediaries
Multiple Sales Channels

26. Sold in the Marketplace
Control Issues
How Goods Are
Sold in the Marketplace
Channel
Length
Overall
Control
Longer
Shorter
Less
More

27. Factors That Influence Distribution Channel Choices

28. Factors That Influence Distribution Channel Choices

29. Physical Distribution and Logistics
All the activities required to move finished products from the producer to the consumer
Logistics
The planning, movement, and flow of goods and related information throughout the supply chain

30. Physical Distribution and Logistics

31. Steps in the Physical Distribution Process

32. Physical Distribution and Logistics
Forecasting. To control the flow of products through the distribution system, a firm must have an accurate estimate of demand. To some degree, historical data can be used to project future sales, but despite heavy investments in information technology, forecasting remains a major logistical challenge for many companies.
11-32
©2007 Prentice Hall 32

33. Physical Distribution and Logistics
Order processing involves preparing orders for shipment and receiving orders when shipments arrive.
It includes;
Checking the customer’s credit
Recording the sale
Making the appropriate accounting entries
Arranging for the item to be shipped
Adjusting the inventory records
Billing the customer
11-33
©2007 Prentice Hall 33

34. Physical Distribution and Logistics
Inventory control decides how much product to keep on hand and when to replenish the supply of goods in inventory.
Products held in inventory are physically stored in a warehouse. Some are almost purely holding facilities in which goods are stored for relatively long periods.
11-34
©2007 Prentice Hall 34

35. Physical Distribution and Logistics
An important part of warehousing activities is materials handling, the movement of goods within and between physical distribution facilities.
For any business, outbound transportation is normally the largest single item in the overall cost of physical distribution. Five common types of outbound transportation are rail, truck, water (ships and barges), air (planes), pipeline, and digital networks.
11-35
©2007 Prentice Hall 35

36. Physical Distribution and Logistics
Intermodal Transportation:
The coordinated use of multiple modes of transportation, particularly with containers that can be shipped by truck, rail, and sea.
11-36
©2007 Prentice Hall 36