1. Distribution (Place) Strategy

2. Distribution Strategy  Involves how you will deliver your goods and services to your customers. o It includes movement of your product to both your location and to you customers  Where and how the product will be distributed and sold in the marketplace  How will your products and customers “meet” or come together through sales and distribution?

3. Channel of Distribution  Channel of Distribution: the path a product takes from producer (or manufacturer) to final user (or consumer) o Channels are paths o Channel members are those involved in the path  When the product is purchased for use in a business o The final user is classified as a business user  When the product is purchased for personal use o The final user is classified as a consumer

5. Typical Model Manufacturer (Producer) Wholesaler Retailer Final User

6. Channel of Distribution  Wholesalers : businesses that buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses  Intermediaries : businesses involved in sales transactions that move products from the manufacturer to the final user o Also known as middlemen  Retailers : sell goods to the final consumer for personal use

7. Channel of Distribution  Agents : unlike wholesalers and retailers, agents do not own the goods they sell. o They act as intermediaries by bringing buyers and sellers together  Two different types of agents: o Independent Manufacturers’ Representatives : work with several related (but non-competing) manufacturers in a specific industry Not employed by the manufacturer; paid on commission based on what they sell o Brokers : principal function is to bring buyers and sellers together in order for a sale to take place Usually do not have a continued relationship with either party They negotiate the sale, are paid on commission, and then look for other customers

8. Channel of Distribution  Channels of distribution are classified as direct or indirect o Direct : the producer (manufacturer) sells goods/services directly to the customer With no intermediaries o Indirect : involves one or more intermediaries  Both consumer markets and business markets use direct and indirect channels of distribution

9. Different Markets  Consumer Market o Direct: factory outlet stores, farmers’ roadside stands, using catalogs to generate sales, Internet online sales o Indirect: retail clothing stores, buy a John Deere tractor from Home Depot, automobiles, most supermarket items o Fewer consumer products are marketed using direct distribution Consumers are used to shopping in retail stores

10. Different Markets  Business Market o Direct: sales representatives call directly to commercial businesses Xerox sells a copier machine to ATHS; Caterpillar sells a forklift to XYZ Lumber o Indirect: wholesaler takes ownership and buys restaurant supplies (pots, pans, utensils) from manufacturer and sells to restaurant owners o Business users shop differently and have different needs from consumers, so they use different channels of distribution o Direct Distribution is the most used channel

11. Distribution Planning  Major considerations include: o the use of multiple channels, intensity of distribution and involvement in e-commerce  Multiple channels: producer must identify the best channel for each market  Distribution intensity: o Exclusive, Integrated, Selective, Intensive  E-commerce: products are sold to customers and business buyers through the Internet

12. Distribution Intensity  Selective o Limited number of outlets in a given geographic area is used to sell the product o Example: Armani sells its clothing only through top department stores that appeal to the affluent customers who buy its merchandise  Intensive o Involves the use of all suitable outlets to sell a product o Objective is complete market coverage; sell to as many customers as possible, wherever they choose to shop  Exclusive o Protected territories of a product in a given geographic area o Dealers are given exclusive rights to protected areas  Integrated o Manufacturer acts as wholesaler and retailer for its own products o Example: GAP sells clothing in company- owned store

13. Physical Distribution  Comprises all the activities that help to ensure that the right amount of product is delivered to the right place at the right time o It involves order processing, transporting, storing, stock handling, and inventory control of materials and products  To succeed in today’s business environment, a company must deliver its products to customers around the country and throughout the world in the most efficient and effective way

14. Location, Layout, and Availability  Important part of the distribution strategy o Especially important to retail and service businesses that rely on customers to customers to come to them  Important questions: o Is the exchange of the product made in a store? Through the mail? Through a direct sales representative? o What are your production and inventory capacities? How quickly can you make products and how many can you store? o Where will your product be placed so customers have access to it? o Are there cyclical fluctuations or seasonal demands for your products?

16. Follow a Product— Promotion Strategy  For your product, list: o What your channel of distribution is? Is it direct or indirect o Who are your retailers (if any)? o What type of distribution does your product have? Exclusive, integrated, selected, or intensive o What is the location, layout, and availability of your product?