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Fundamentals of Marketing

Chris Banman Fall 2010 471.21 Providence College. Fundamentals of Marketing. chapter 11. Distribution Management. Place Objectives. type of channel direct indirect goals market exposure intermediaries facilitators “middlemen” means channel relationships. desired

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Fundamentals of Marketing

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  1. Chris Banman Fall 2010 471.21 Providence College Fundamentals of Marketing

  2. chapter 11 Distribution Management

  3. Place Objectives • type of channel • direct • indirect • goals • market exposure • intermediaries • facilitators • “middlemen” • means • channel relationships • desired • customer service level • required • inventory levels • transportation • facilities • information systems

  4. Deciding on Goals • long-term effects of decisions • product classes • distribution channel management • core expertise

  5. Why Choose Direct? • more control • lower cost • profit pool • contact with customers • quicker response to change • suitable intermediaries not available

  6. B2B Often Direct

  7. B2C Often Indirect

  8. Intermediaries • may invest in inventory

  9. Intermediaries • channel specialists • may reduce discrepancies & separations • accumulating • assorting • bulk-breaking • sorting

  10. Channel Relationships • must be managed • choosing • the type of relationship • handling • conflict • finding • common objectives “channel captain”

  11. characteristics type of channel traditional vertical marketing systems administered contractual corporate amount of cooperation little some good complete control maintained by none economic power and leadership contracts one company ownership e.g. independents General Electric McDonald’s Florsheim Vertical Marketing Systems

  12. Limiting Market Exposure Producer Wholesaler legal Retailer Retailer Retailer illegal

  13. Channel System Complexity

  14. Physical Distribution Issues • “logistics” • intermodal • processing time • backordering • customs • storage • inspection • protection & insurance • in storage • in transit • information • accuracy • availability • product availability • shipping progress • delays • customer relationships • defects on delivery • returns • repairs

  15. Physical Distribution Issues • “logistics” • intermodal

  16. Physical Distribution Issues • “logistics” • intermodal

  17. Physical Distribution Issues • “logistics” • intermodal http://www.containerhandbuch.de/chb_e/stra/index.html?/chb_e/stra/stra_01_01_00.html

  18. Transportation as Value cost of transport / selling price gravel 55% coal 42% cabbage 38% iron ore 20% processed food 8% plastic 6% factory machinery 4% electronics 3% drugs 1%

  19. Transport Modes

  20. Storage • desired when • economics of scale in production • flexibility • time • place • models • needed when • production  consumption

  21. Specialized Storage

  22. What’s a wholesaler? • used to be • standard link in the chain • now • much more variable • may • buy • transport • store • process • sell

  23. Wholesaler Classification Does wholesaler own the products? • yes • merchant wholesalers • How many functions does wholesaler do? • some • limited-function merchant wholesalers • cash-and-carry wholesaler • drop-shipper • truck wholesaler • rack jobber • catalog wholesaler • all • service merchant wholesaler • general merchandise wholesaler • mill supply house • single-line wholesaler • general-line wholesaler • specialty wholesaler • no • agent middlemen • auction companies • brokers • manufacturer’s agents • selling agents

  24. Wholesaling • think of wholesaling as a cluster of functions • firms carve out niches • some do other things too • shake-out • adaption • ethics?

  25. Information Helps Coordination • continuously updated • Electronic Data Interchange • Internet

  26. Key Terms • place • channel of distribution • direct marketing • discrepancy of • quantity • assortment • regrouping activities • accumulating • assorting • sorting • bulk-breaking • vertical integration • channel systems • traditional • vertical • corporate • administered • contractual • channel captain

  27. Key Terms • ideal market exposure • intensive distribution • selective distribution • exclusive distribution • multichannel distribution • reverse channels • logistics • physical distribution • chain of supply • electronic data interchange • transporting • containerizing • piggyback service • storing inventory • warehouses • private • public • distribution centre

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