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DISTRIBUTION UNIT

DISTRIBUTION UNIT. Diagnostic - pre-test 3/10 – Explain the concept of Distribution Understand basic distribution concepts and channels Identify multiple types of distribution and the channel members. Distribution. Marketing Co-Op. What is Distribution?. Making the “place” decision

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DISTRIBUTION UNIT

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  1. DISTRIBUTION UNIT • Diagnostic - pre-test • 3/10 – Explain the concept of Distribution • Understand basic distribution concepts and channels • Identify multiple types of distribution and the channel members

  2. Distribution Marketing Co-Op

  3. What is Distribution? • Making the “place” decision • Getting the product into the customers hands Concepts 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

  4. What is Channel Distribution? Channels of distribution: • The path a product takes from its producer (manufacturer to the final user (the customer)

  5. Intermediaries • Move products from the manufacturer to the final user • Also known as middlemen • Classified based on whether or not they takeownershipof the product • Merchant Intermediaries – take ownership • Agents – do not take ownership

  6. Channel Members Wholesalers – business that buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses

  7. Channel Members • 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

  8. Channel Members • Drop Shippers – own the goods they sell but do not physically handle the actual products • EX: coal, lumber, chemicals

  9. Channel Members Retailers – sell goods to the final consumer for personal use

  10. Channel Members Brick-and-Mortar – traditional retailers that sell goods to the customer from their own physical store

  11. Channel Members Non-store Retailing • Automatic Retailing (vending machines) • Direct Mail • Catalog Retailing • E-tailing (online retail) • TV home shopping

  12. Agents • Agents – do not own the goods they sell. They bring buyers and sellers together

  13. Channels in the Consumer Market

  14. Channel A Manufacturer/Producer Directly 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 on consumers telemarketing 3. Using catalogs Victoria’s Secret 4. Using the internet

  15. Indirect Distribution- using one or more intermediaries Channel B Manufacturer to Retailer to Consumer Most commonly used channel for merchandise that dates quickly or needs servicing Ex: clothing, automobiles, produce

  16. Channel C • 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

  17. Industrial Market 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

  18. Assignment Read 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

  19. Distribution Review • In your own words what is distribution? • What’s the difference between rack jobbers and drop shippers? • What are three different channels a product could take to get to the consumer? • Explain the difference between merchant intermediaries and agents. • Provide an example of a brick and mortar retailer and what makes it a brick and mortar store?

  20. Distribution Test Review • Explain the difference between direct and indirect distribution. • Provide an example of a product that one would buy in an industrial market vs. a consumer market. • Define: • FOB Destination • FOB Factory Freight Prepaid • FOB Shipping Point • FOB Destination Charges Reverse23 • What is the key difference between a rack jobber and drop shipper?

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