1. Marketing Distribution and Logistics
Chapter 12

2. The Nature of Distribution Channels
Distribution channel: a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user
The objective is to create place utility, the value of having the products where the customer wants them, when they want them
Distribution has two aspects:
Logistics: physical movement of goods
Strategy: who participates and what they do

3. Distribution Channel Functions
Distribution Channel Functions *For specific functions of Retailers and Wholesalers see your text
Why use marketing intermediaries?
Contractual efficiency
Specialization of labour
Economies of scale in operations
Match supply with demand
Functions performed:
Gathering and distributing market information
Promotion of products
Contact with customers
Matching the offer with customer needs
Negotiation with customers and producers
Physical distribution of products
Financing to cover costs of channel functions
Risk taking from performing channel functions

4. What’s Happening?  

5. Typical Channels of Distribution
For B2B & B2C Examples visit Exhibit 12-5 on page 335.
ANUFACTURER
ONSUMER
GENT
ETAILER
HOLESALER 14

6. Hybrid Marketing Channel
Producer
Distributors
Catalogue
telephone
Internet
Sales
force
Dealers
Retailers
For further details about this topic see page
Business
segment 1
Business
segment 2
Consumer
segment 2
Consumer
segment 1 13

7. Discussion Question – page 350, question 8

8. Types of Marketing Distribution Systems
Conventional distribution channel:
Channel members are independently owned
Pursue their own corporate objectives
Conflict may occur when goals differ
Vertical marketing system:
Channel members act as a unified system
May have common ownership
May contract for this arrangement
Franchise systems are the most popular
Horizontal marketing systems
Two or more companies on the same level join together for mutual gain
Airline alliances

9. Channel Behaviour
Channel conflict: disagreement between channel members over goals and roles, who should do what and for what rewards
Horizontal conflict: conflict between firms on the same level
Vertical conflict: conflict between firms on different levels
Disintermediation: displacement of a traditional member from the marketing channel
Selling direct via the Internet has caused much conflict between producers and their intermediaries

10. Distribution Alternatives
Intensive distribution: stocking the product in as many outlets as possible (per given market area)
Used for convenience goods
Exclusive distribution: giving a limited number of dealers the exclusive right to distribute the company’s products in their territories
Used for specialty or luxury goods
Selective distribution: the use of more than one, but fewer than all, of the intermediaries who are willing to carry the company’s products
Used for shopping goods

11. Discussion Question – page 350, question 11

12. General Packaging Case