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DISTRIBUTION

Chapter 21.1. DISTRIBUTION. Making the “ place ” decision or getting the product into the customers hands Concept of Distribution: In order for distribution to occur, marketers must decide on their “channels of distribution” or how they will get the product to the customer.

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DISTRIBUTION

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  1. Chapter 21.1 DISTRIBUTION

  2. Making the “place” decision orgetting the product into the customers hands Concept of Distribution: In order for distribution to occur, marketers must decide on their “channels of distribution”or how they will get the product to the customer What is Distribution?

  3. The path a product takes from its producer (manufacturer) to the final user (the customer) Channels of Distribution

  4. Move products from the manufacturer to the final user • Also known as middlemen • Classified based on whether or not they take ownership of the product Intermediaries

  5. Merchant Intermediaries – take ownership Agents – do not take ownership Intermediaries

  6. Wholesalers–buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses Types of Wholesalers Rack Jobbers – wholesalers that manage inventory and merchandising for retailers by counting stock, filling it in when needed, and maintaining store displays Ex: potato chips, CDs, greeting cards Drop Shippers – own the goods they sell but do not physically handle the actual products EX: coal, lumber, chemicals Channel Members

  7. Retailers –sell goods to the final consumer for personal use • Brick-and-Mortar– traditional retailers that sell goods to the customer from their own physical store Channel Members

  8. Non-store Retailing Automatic Retailing (vending machines) Independent Sales Catalog Retailing E-tailing (online retail) TV home shopping Channel Members

  9. Agents- do not own the goods they sell. They bring buyers and sellers together • They are usually paid commission • a fee or percentage of the sale paid for services rendered Channel Members

  10. Channels in the Consumer Market

  11. Channel A Manufacturer/Producer to Consumer Direct distribution – sales of goods or services directly to the customer, with no intermediaries Ways to sell directly to customers 1. Selling products at the production site Luck Stone – sell stone directly from quarry 2. Having a sales force call consumers Telemarketing 3. Using catalogs Victoria’s Secret 4. Using the Internet

  12. Manufacturer/Producer to Retailer to Consumer Most commonly used channel for merchandise that dates quickly or needs servicing Ex:clothing, automobiles, produce Channel B

  13. Manufacturer/Producer to Wholesaler to Retailer to Consumer Most common distribution method for staple goods, which are items that are always carried in stock and whose styles do not change frequently EX:flowers, non-perishable food items, candy Channel C

  14. Industrial Market–buy products to use in their operations; also called the business-to-business market Industrial users have different needs than retail users • Direct distribution (the least common channel in the consumer market) is the most common in the industrial market The Industrial Market

  15. Skim through Chapter 21.1 in the textbook and complete the following questions Page 453 – questions 1-3 Page 459 – questions 3, 4, 5 Use each of these words in a sentence that illustrates your understanding of its definition Channel of Distribution Wholesalers Rack Jobbers Direct Distribution Drop Shippers Indirect Distribution Brick and Mortar retailers Industrial market e-tailing Intermediaries Assignment

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