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Understanding Distribution Planning: Balancing Control and Cost in Marketing Strategies

In this lesson, we explore the essentials of distribution planning in marketing, focusing on the physical movement of products and the critical transfer of ownership from producers to consumers. Key decisions involve selecting multiple distribution channels to optimize both availability and profitability while satisfying various market needs. We examine the concept of "control vs. cost," assessing how these factors influence business decisions. Additionally, we discuss the role of internal versus external sales forces and the impact of larger retailers on distribution strategies.

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Understanding Distribution Planning: Balancing Control and Cost in Marketing Strategies

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  1. Do Now Exercise

  2. Marketing I Mr. Gallucci Lesson 43

  3. Distribution Planning • Distribution Planning • Physical movement of product • Transfer of ownership from producer to consumer • Decisions: Multiple Channels? Control vs. Cost, Distribution Intensity, and e-commerce.

  4. Multiple Channels • Satisfying both industrial and consumer markets. (industrial customer: An entity that buys a product with the intent to use it for operating a business) • Using multiple distribution channels to maximize availability of product (and profit) Obj. Introduce distribution planning and “control vs. cost” – Case Study Assessment

  5. Cost vs. Control • Control: The amount of control a business keeps over the distribution of it’s products • Cost: How much it will cost to distribute the product… effects profitability • Control up, Cost up… vice versa. Obj. Introduce distribution planning and “control vs. cost” – Case Study Assessment

  6. Cost vs. Control • Sales Force • Internal (direct) sales force • Company has control over sales force. • Associates on payroll, benefits, expenses. • Agent (external) sales force • Company loses control over sales force • Cost significantly less than hiring sales force • Cost of sale consistent to sales generated Obj. Introduce distribution planning and “control vs. cost” – Case Study Assessment

  7. Cost vs. Control • On who’s terms? • Manufacturer must determine who to do business with • Larger retail stores (Walmart, Home Depot) are dictating terms of distribution to manufacturers • Could drive up price of distribution • Could drive manufacturer away from “giants” Obj. Introduce distribution planning and “control vs. cost” – Case Study Assessment

  8. Activity Obj. Introduce distribution planning and “control vs. cost” – Case Study Assessment

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