Marketing Distribution and Logistics

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Marketing Distribution and Logistics

• Chapter 12

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The Nature of Distribution Channels

• Distribution channel a set of interdependent
  organizations involved in the process of making a
  product or service available for use or
  consumption by the consumer or business user

• The objective is to create place utility, the
  value of having the products where the customer
  wants them, when they want them
• Distribution has two aspects
• Logistics physical movement of goods
• Strategy who participates and what they do

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Distribution Channel FunctionsFor specific
functions of Retailers and Wholesalers see your
text

• Why use marketing intermediaries?
• Contractual efficiency
• Specialization of labour
• Economies of scale in operations
• Match supply with demand

• Functions performed
• Gathering and distributing market information
• Promotion of products
• Contact with customers
• Matching the offer with customer needs
• Negotiation with customers and producers
• Physical distribution of products
• Financing to cover costs of channel functions
• Risk taking from performing channel functions

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Typical Channels of Distribution
For B2B B2C Examples visit Exhibit 12-5 on page
335.
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Hybrid Marketing Channel
Producer
Distributors
Catalogue telephone Internet
Sales force
Retailers
Dealers
Consumer segment 1
Business segment 1
Consumer segment 2
Business segment 2
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Discussion Question page 350, question 8
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Types of Marketing Distribution Systems

• Conventional distribution channel
• Channel members are independently owned
• Pursue their own corporate objectives
• Conflict may occur when goals differ
• Vertical marketing system
• Channel members act as a unified system
• May have common ownership
• May contract for this arrangement
• Franchise systems are the most popular
• Horizontal marketing systems
• Two or more companies on the same level join
  together for mutual gain
• Airline alliances http//www.staralliance.com/en/t
  ravellers/index.html

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Channel Behaviour

• Channel conflict disagreement between channel
  members over goals and roles, who should do what
  and for what rewards
• Horizontal conflict conflict between firms on
  the same level
• Vertical conflict conflict between firms on
  different levels

• Disintermediation displacement of a traditional
  member from the marketing channel
• Selling direct via the Internet has caused much
  conflict between producers and their
  intermediaries

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Distribution Alternatives

• Intensive distribution stocking the product in
  as many outlets as possible (per given market
  area)
• Used for convenience goods
• Exclusive distribution giving a limited number
  of dealers the exclusive right to distribute the
  companys products in their territories
• Used for specialty or luxury goods

• Selective distribution the use of more than one,
  but fewer than all, of the intermediaries who are
  willing to carry the companys products
• Used for shopping goods

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Discussion Question page 350, question 11
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General Packaging Case