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Distribution

Distribution. What is distribution channel. A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user

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Distribution

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  1. Distribution

  2. What is distribution channel • A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user • Channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision

  3. Six basic channel decisions • Direct or indirect channels • Single or multiple channels • Length of channel • Types of intermediaries • Number of intermediaries at each level • Which intermediaries? Avoidintrachannel conflict

  4. Why are MarketingIntermediariesUsed? • Greater efficiency in making goods available to target markets • Offer the firm more than it can achieve on it’s own through the intermediaries • Contacts • Experience • Specialization • Scale of operation • Match supply and demand

  5. Channel intermediaries - Wholesalers • Break down ‘bulk’ • buys from producers and sell small quantities to retailers • Provides storage facilities • reduces contact cost between producer and consumer • Wholesaler takes some of the marketing responsibility e.g sales force, promotions

  6. Channel intermediaries - Agents • Mainly used in international markets • Commission agent - does not take title of the goods. Secures orders. • Stockist agent - hold ‘consignment’ stock • Control is difficult due to cultural differences • Training, motivation, etc are expensive

  7. Channel intermediaries - Retailer • Much stronger personal relationship with the consumer • Hold a variety of products • Offer consumers credit • Promote and merchandise products • Price the final product • Build retailer ‘brand’ in the high street

  8. Channel intermediaries - Internet • Sell to a geographically disperse market • Able to target and focus on specific segments • Relatively low set-up costs • Use of e-commerce technology (for payment, shopping software, etc) • Paradigm shift in commerce and consumption

  9. Customer Profiles Consumer or Industrial Customer Size of Market MARKET FACTORS Market FactorsThat Affect ChannelChoices Geographic Location

  10. Product Complexity Product Price Product Life Cycle Product Delicacy PRODUCT FACTORS Product FactorsThat Affect ChannelChoices

  11. PRODUCER FACTORS Producer FactorsThat Affect ChannelChoices Producer Resources Number of Product Lines Desire for Channel Control

  12. IntensityLevel Objective Number of Intermediaries Intensive Achieve mass marketselling. Convenience goods. Many Work with selected intermediaries. Shopping and some specialty goods. Several Selective Exclusive Work with singleintermediary. Specialty goods and industrial equipment. One LEVELS OF DISTRIBUTION INTENSITY

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