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Chapter Twelve

Chapter Twelve. The Nature of Distribution. Objectives. Explain general purpose of distribution Show distribution system’s contributions Understand pervasive nature of distribution Describe channel intermediary functions Identify different channel of distribution configurations

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Chapter Twelve

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  1. Chapter Twelve The Nature of Distribution

  2. Objectives • Explain general purpose of distribution • Show distribution system’s contributions • Understand pervasive nature of distribution • Describe channel intermediary functions • Identify different channel of distribution configurations • Introduce vertical marketing systems • Describe aspects of channel relations • Explore legal and ethical aspects of distribution channels

  3. Distribution’s Function • The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost. • The “when and where” is the function of Distribution

  4. PRODUCER CONSUMER DISTRIBUTION Distribution

  5. INTERMEDIARIES CONSUMER Channel of Distribution • All intermediaries involved in the exchange process • Excludes pre-manufacturing (raw materials or component parts) • Facilitate movement of physical goods and title PRODUCER

  6. Physical distribution Communication & transaction Facilitating Channel Functions

  7. Physical Distribution Functions Accumulating bulk Creating assortments Breaking bulk Reducing transactions Transporting & storing

  8. Gather & Disseminate Information 9 3 1 2 1 37 57 24 Buying & Selling Transfer of Ownership Communication & Transaction Functions Personal Selling Advertising Sales Promotion

  9. Extra Services Credit Services Risk Taking Facilitating Functions

  10. ANUFACTURER ONSUMER GENT ETAILER HOLESALER Typical Channels of Distribution

  11. Direct Wholesaler Agent Business-to-Business Channels

  12. Disintermediation Infomediaries & Vertical Exchange Business-to-Business Channel Trends

  13. Vertical Marketing Systems • Corporate systems - total ownership • Contractual - legal relationships • Administered - strong leadership

  14. Planning the Channel of Distribution • Determining the structure • Marketing mix strategy • Organizational resources • External environmental factors • Market characteristics • Consumer preferences and behavior • The nature and availability of Intermediaries • Other environmental factors

  15. Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Intensive Distribution Producer Seeks to obtain maximum product exposure at the retail level

  16. Retailer Retailer Retailer Retailer Retailer Retailer Selective Distribution Producer Product is sold in a limited number of outlets

  17. Retailer Exclusive Distribution Producer Product is sold in only one outlet in a given area

  18. Conflict • Power • Coercive • Expert • Legitimate Channel Relationships • Cooperation

  19. Reverse distribution One Coca Cola Distributor Difficult • Ethical, Political, & Legal OK One thousand retailers Other Distribution Management Issues

  20. Review • Explain general purpose of distribution • Show distribution system’s contributions • Understand pervasive nature of distribution • Describe channel intermediary functions • Identify different channel of distribution configurations • Introduce vertical marketing systems • Describe aspects of channel relations • Explore legal and ethical aspects of distribution channels

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