Distribution

1. Distribution Defined: (or place) is one of the four elements of marketing mix. An organization or set of organizations (middle men) involved in the process of making a product or service available for use or consumption by a consumer or business user.

2. Channels of Distribution

3. Integrated Distribution • A company that owns both the distribution outlets (stores) and the manufacturing facilities (distributor, manufacturer, or retailer or all parts for a product or line of products) • Example? • IKEA! • In the big picture, IKEA's Distribution Services division controls the movement of product, allowing IKEA to plan, manage and maintains high levels of inventory globally. Six distribution centers serve the 37 retail locations in the United States and 11 stores in Canada. Distribution Services functions as a wholesaler for IKEA, securing local storage capacity for stores and transporting inventory to retail locations. Products generally follow the typical path from suppliers to distribution centers, where they are held until they are ordered by a store

4. Exclusive Distribution • A deal made by a manufacturer with a retailer to sell only that specific product. • This gives a limited number of sellers the exclusive right to distribute the company’s products in their region. • Establishes a prestigious image and allows the manufacturer the advantage of dictating some of the retail strategies • Examples? • New cars – Bentley, Mercedes, Ferrari, etc.. • Prestigious Couture – Women’s clothing

5. Selective Distribution • Companies that control the distribution of their products by selling it only to certain stores • Uses more than one intermediary, but is very specific • Do not spread their products over many outlets • Can develop better working relationships with outlets and thus increases better than average selling efforts • Provides good market coverage – not excellent • Companies do this when they feel they have an image to uphold • Examples? • Most televisions, furniture and small appliances • KitchenAid, Maytag, Whirlpool, etc…

6. Specialty Channels • Indirect channels of distribution that do not require a retail store • Reach a consumer through: • Vending Machines • Internet • Catalogues • Telemarketing • Online shopping!

7. Vending Machines • Operate unattended, dispensing products in exchange for money and operate 24 hours a day • Requires only occasional attention and refilling • Examples can include an array of products from pop, ice cream, hot meals to perfume! • Can be owned by the manufacturer thereby eliminating competition (ie: vending machines in schools)… what company owns ours??

8. The Internet • E-Commerce – using the internet to sell products, using web as the retail outlet • Select items to purchase – shopping from the comfort of your own home at any time • Eliminate intermediaries therefore your products are often cheaper • Cannot taste, touch or feel the product before purchasing – no sensory connection • Loss of social experience • Is social networking making us less social??

9. Catalogues • Use catalogues to increase size of their markets (ie: Canadian Tire, IKEA, Sears) • Most expensive channel – expensive to prepare, to product and mail • Manufacturers, importers and wholesalers use catalogues to sell directly to both industrial and non industrial customers • Eliminates intermediaries • E-commerce is believed to eventually replace catalogues – less costly, environmentally friendly, customer friendly, etc.

10. Telemarketing • To sell products or services over the phone • Sales campaign will only last a few days • Marketers compose a list for research based on internet searches/interests, etc.. • Ie: Moving company calls people with For Sale signs or through filling out response cards, surveys, etc