1. PLACE

2. Place

3. Make the product convenient for the target customers to purchase Includes all company activities involved in making the product available to target consumers –Channels of distribution –Extent of market coverage –Managing quantity and assortment –Retail locations –Management of inventory –Transportation –Logistics

4. Effective Distribution Providing the product the customer wants Where they want it When they want it How they want it

5. Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Considerations in Building a Channel of Distribution Costs Coverage Control 15-5

6. Place Channels of Distribution –Is the path a product takes from producer (or manufacturer) to final user (or customer) Direct Channel of Distribution –Moves a product from producer to consumer with no in between Indirect Channel of Distribution –Are people of businesses that move products between producers and final users Dual Distribution –Combines more than one system

7. Channels of Distribution 7 Producer of product Consumer Direct Channel Manufacturer Indirect Channel WholesalerRetailer Consumer Manufacturer Multiple Channels Web Site Retailer Wholesaler Consumer

8. Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Alternative Channels of Distribution 15-4 DIRECT CHANNEL Producer Consumers or Industrial User Retailer Channel Producer Consumers or Industrial User INDIRECT CHANNELS Wholesaler Channel Agent/Broker Channel Producer Consumers or Industrial User Producer Consumers or Industrial User Wholesalers Retailers or Industrial Distributor Wholesalers Agents or Brokers Retailers or Industrial Distributor

9. Physical flow of productsPayment flow Flow of ownershipInformation flow Promotion flow

10. Building a Channel of Distribution Physical Distribution of Product –Common carriers Transportation modes available for hire to the general public –Contract carriers Transportation modes that contract with individual shippers –Private carriers Shipper that own their own means or transport Modes of Distribution –Airplanes, trucks, railroads, pipelines, waterways Choice of Transportation –Based upon cost, transit time, reliability, capability, accessibility, trace ability

11. Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Components of a Physical Distribution System 15-6 TRANSPORTATION Component A Airplanes Trucks Railroads Pipelines Waterways STORAGE Component B Warehouses MATERIALS HANDLING Component C Forklifts Special Packaging DELIVERY TERMS Component D F.O.B. Origin, Freight Collect INVENTORY MANAGEMENT Component E Continuous Maximum Protection Minimum Inventory Operations Sales of Assets Investment

12. A Typical Supply Chain

13. Place Decision Questions How will your product or service be distributed? How will your products be shipped to your business? Is your location appropriate for your target market? (explain) Will the physical layout (floor plan) of your business encourage or discourage sales? Will the hours of operation match the times that your target market prefers to do business?