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Chapter

Distributing Products Quickly and Efficiently. Chapter. 15. 15- 1. Channel of Distribution from raw materials to distribution. Marketing Intermediaries Wholesaler – sells to retailers Retailer – sells to public Brokers – brings buyers to seller Role of Intermediaries Create Efficiency

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  1. Distributing Products Quickly and Efficiently Chapter 15 15-1

  2. Channel of Distribution from raw materials to distribution • Marketing Intermediaries • Wholesaler – sells to retailers • Retailer – sells to public • Brokers – brings buyers to seller • Role of Intermediaries • Create Efficiency • Value vs. Cost

  3. using raw materials transfer ownership Form Types of Utility Possession Time when needed Service where wanted before during & after sale Place OPEN 24 HRS Information two-way communication

  4. Wholesale Intermediaries take ownership to goods they handle • Merchant Wholesalers • Rack Jobbers • Cash-and-Carry • Drop Shippers • Business to Business (B2B) furnish racks full of merchandise to retailers wide assortment to small businesses goods shipped from producer to buyer XYZ Warehouse

  5. Percent of B2B Commerce from Internet *Excludes Service Industries Source: Forrester Research Inc.

  6. How Retailers Compete • Price • Service • Location • Selection • Entertainment

  7. Is it Becoming aWal-Mart World? *There are 2,985 stores in the U.S. Source: Wal-Mart Annual Report 2000

  8. Retail Store Distribution • Intensive • Selective • Exclusive

  9. Non-Store Distribution • E-tailing/ Internet • Telemarketing • Vending Machines, Kiosks, Carts • Direct Selling (Avon) • Multilevel Marketing (Amway) • Direct Marketing (mail, catalogues)

  10. E-Business Expectations Share of company revenues CEOs say come from e-business Now vs. In 5 years Source:USA Today

  11. It isn’t secure It will jeopardize my privacy Usually must pay shipping charges Not enough selection Can’t touch/try things first No satisfaction guarantee Returns are a hassle Won’t arrive on time Hard to find things online Enjoy getting out of house to shop Why People Don’t Shop Online Source: blink, www.earthlink.net/blink

  12. Has The Internet Changed Your Shopping Habits? Survey of Americans who have high* Internet use vs. those with low use * high use = 15+ hours per week Source: USA Today

  13. What Online Shoppers Bought* Per Month in 2000 *In thousands of dollars Source: Forrester Research

  14. What does it take to persuade consumers to buy online? *Survey of 1,944 Web users that had notmade an online purchase Source: CIO Web Business, 10/1/1999

  15. Channel Cooperation to compete with online retailers 1. Corporate Distribution 2. Administered Distribution all distribution orgs. are owned by same firm (Sherwin-Williams) producers manage all marketing functions at retail level. Beer?

  16. 3. Contractual Distribution members bound to cooperate through contracts • Franchise Systems • Wholesaler-Sponsored Chains • Retail Cooperatives McDonald’s, KFC Ace Hardware, IGA Foods

  17. 4. Supply Chain Management all organizations from raw materials to final customer The Supply Chain

  18. Railroad Motor Vehicles Water Pipeline Air Intermodal Storage Materials Handling Distribution/Storage Mode

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