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Consumer Product Channels

A. One-Level Channel
B. Two-Level Channel
C. Three-Level Channel
D. Strategic Channel Alliance
 Marketing Channels for Industrial Products
A. Credit and financial condition of the
distributor
B. Sales strength
C. Product lines
D. Reputation
E. Market Coverage
F. Sales performance
G. Management succession
H. Management ability
I. Attitude
J. Size
Major Coverage Strategies:

 Intensive Distribution: A company uses all available


distribution outlets for making its product available to
customers.

Selective Distribution: Companies use selective distribution,


which means using more than a few and less than all available
outlets in a market area to distribute products.

Exclusive Distribution: One where the producer grants


exclusive selling rights to a middleman in a certain area.
Intensive Many

Selective Few

Exclusive One
Types of Conflicts:
 Vertical Channel Conflict
 Horizontal Channel Conflict
 Multichannel Conflict

Major Causes of Conflict:


 Goal incompatibility
 Roles and rights ambiguity
 Differing perceptions
- is that marketing function which facilitates
the movement of goods from the
manufacturer to the location of ultimate
users.
Supplies Warehouses

Parts THE Wholesales


FIRM
Raw Materials Retailers

CONSUMERS
Supply Chain
Management

Marketing Channels Physical Distribution

Order Inventory Warehou- Materials Transporta-


Processing Control sing Handling tion
1. Improve Customer Service
2. Reduce Distribution Costs
3. Create Time and Place Utilities
4. Stabilize Prices
5. Influence Channel Decisions
6. Control Shipping Costs
 Inventory Planning and Control
Economic Order Quantity (EDQ) mode:
Q= square root of 2TS/CI
Where: Q= EDQ, T= total units disposed per year, S=
restocking (or ordering) cost, C= cost per unit, I= annual
carrying cost
 Transportation
Forms of Transportation:
a. railroads
b. trucks
c. water vessels
d. pipelines
e. airplanes
Special Transport Agencies:
a. Post Office
b. Parcel Service
c. Freight Forwarders
 Warehousing
Types of Warehousing:
1. Private Warehouses
2. Public Warehouses
Number and Location of Warehousing Facilities
 Typical Means of Transporting Various
Products
It refers to receiving, recording, filling and
assembling orders for shipment.

Order Cycle - the steps undertaken from the time the


customer makes an order up to the time the ordered
goods are delivered.
The Major Components of the Order Cycle:
o Order Placement: refers to the time that elapses
from the time the customer develops the order is
received by the seller.
o Internal Order Processing: refers to the time
required to the process the customer’s order until it is
ready for shipment.
o Order Preparation: refers to all activities relating to
the picking and packaging of individual customer
orders.
o Order Shipment: refers to the time the order is
placed upon a transport facility until the goods ordered
are unloaded and received by the customer.
Order
Placement

Order
Processing

Order
Preparation

Order Shipment
It refers to the activities involved in moving goods over
short distances into, within, and out of warehouses and
manufacturing plants.
The objectives of a materials handling subsystem are as follows:
1. to increase the usable capacity of the warehouse
facility;
2. to reduce the number of times goods are handled;
3. to minimize the possibility of danger to people who
are working around the warehouse;
4. to respond quickly and efficiently to customers’
orders.
Understand the roles of retailers and wholesalers in the
marketing channel.

 Know the major types of retailers.

 Know the major types of wholesalers.

Understand the marketing decisions facing retailers and


wholesalers.
All activities involved in selling goods or
services directly to final consumers for
their personal, nonbusiness use.
is one whose business firm sells mainly to
the final consmer.
o Convenience
o Guarantee and Service
o Financing
o Promotion
o Storage
o Intelligence
o Buying agents
 Sales Volume
According to sales volume, retail stores may be classified as: (1)
small; (2) medium);or (3) large. This classification does not include
the micro enterprises operating all over the Philippines.

 Product Mix Offered


Retailers may also be classified based on product lines they carry.
They may be categorized into: (1) general merchandise stores;
and specialty stores.
General Merchandise Stores are those that carry a large variety
of product lines.
• Department stores
• Variety stores
Specialty Stores are those which carry only a specific line of
products.
• Single-line specialty store
• Limited-line specialty store

 Form of Ownership
Retail stores operate under any of the various forms of ownership.
They may either be: (1) corporate chain stores; (2) independent
stores; or franchise stores.

 Method of Operation
Retailers also vary according to their method of operation. They
may either be: (1) full service retailers, (2) supermarkets; (3)
nonstore retailers.
Full Service Retailers are stores where assistance in a very
variety of ways is extended to the customers.
Supermarkets are large department stores which offers a variety
of goods including apparel, groceries, bread, dairy, and candies.
Discount Stores are self-service retailers that sells a wide variety
of goods at less than traditional retail prices.
Nonstore Retailers refer to those who sell outside of the store.
• Telephone retailers
• Vending machine retailers
• Mail-order retailer
All activities involved in selling goods
and services to those buying for resale or
business use.
1. the sale of a computer unit for office use;
2. the sale of sugar as raw material for candies;
3. the sale of electric guitar to a professional
guitarist;
4. the sale of janitorial services to an office;
5. the sale of a bus to a transportation company;
6. the sale of books to a university; and
7. the sale of vegetables to a retailer.
 Anticipating Customer Needs
 Selling and Promotion
 Financing
 Storage
 Breaking Bulk
 Transportation
 Risk-Taking
A

D
B

E
G

H
F

J
I
A

D
B

E
wholesaler
G

H
F

J
I
 Full Function Wholesalers
 Merchant Wholesalers: are independently-owned
establishments which take title to the merchandise they carry.
a. General line
b. Specialty line
 Sales Offices and Branches: are manufacturer owned
and controlled wholesale outlets. The sales branch carries
inventory, while the sales office does not.
 Agents: act as representatives of manufacturers in the selling
process.
a. Manufacturer’s agents
b. Selling agents
 Brokers: are “neutral” middlemen until he is called to serve
either the seller or the buyer.
 Commission Houses: or merchants take physical possession
of merchandise but not the title.

 Limited Function Wholesalers


 Drop Shippers: wholesalers who take title to the products
but do not physically handle them.
 Truck Distributors: wholesalers who operate warehouses
and trucks.
 Mail-Order Wholesalers: who sell through mails send
catalogs to retail, industrial, and institutional
customers.
 Cash-and-Carry Wholesalers: who sell to customers in their
warehouses on cash basis.
 Cooperatives: some retailers wish to obtain the economic
benefits of running a wholesaling cooperative.
 Rack Jobbers: these are those that maintain their own racks
within a retail establishment.

 Industrial Wholesalers
 those also serving the retailers:
 sales branches
 brokers
 manufacturers’ agents
 combination houses
 industrial distributors serving only the industrial market:
 general line wholesalers
 specialty line wholesalers

 Industrial distributors: are also full function wholesalers


performing all or most of the marketing functions.
 General line: carry a complete assortment of goods in a
single line.
 Combination house: is involved in selling to both the
industrial user and the retailers.