Beruflich Dokumente
Kultur Dokumente
Chapter 9
Distribution
Sellers prefer to produce large quantities of a limited number of goods Buyers prefer smaller quantities of a wider variety of goods Distribution deals with realigning the discrepancies between quantities and selections
Breaking bulk: making goods available in smaller batches
Intensive Distribution
Intensive: widely distributed
Drugstores, supermarkets, discount stores, convenience stores, etc.
Selective Distribution
Selective: less widely distributed Usually for complex and/or expensive products that require assistance
Cars, computers, appliances, etc.
Push strategy: promote to distribution partners to push goods to consumer Manufacturer has more control due to fewer relationships to manage
Exclusive Distribution
Exclusive: extreme case of selectivity Manufacturers have the most control May become monopolistic
Intensity Strategies
Intensive distribution usually goes with heavy promotion, lower prices and average or lower quality products
Exclusive distribution usually goes with exclusive promotional efforts, higher prices and higher quality products
Pull Strategy
Incentives offered to consumers to pull products through the channel
Advertise to consumers Distribute widely Offer price and/or quantity discounts Offer inexpensive trials or free samples Offer coupons and/or rebates Offer financing Offer loyalty programs/points
Push Strategy
Incentives offered to distribution partners to push products through the channel
Advertise to partners (and consumers) Distribute more selectively Employ a sales force Offer incentives to sales force Offer price and/or quantity discounts Offer financing Offer allowances for marketing activities
Types of Power
Coercive power: Ability to take away benefits or inflict punishment on other party
Information power: Having information other party seeks Legitimate power: Using size or expertise to encourage other party
Governance Costs
Costs involved with relational issues incurred coordinating the enterprise and controlling ones partners
Revenue Sharing
Channel conflict often comes down to revenue sharing Double Marginalization
The manufacturer wants a mark-up when it sells to a retailer The retailer wants a second markup when it sells to the consumer
Channel Integration
If a company is currently using a partner to do something, it might wish to bring that function back in-house
Forward Integration
e.g., manufacturer controls its retail stores
Backward integration
e.g., manufacturer controls raw material
Private Labels
Many retailers are integrating backward into private label products Advantages
May give retailers negotiating power with the manufacturer May offer significant margin opportunities May allow retailer to distinguish itself as the only place that offers that brand
Retailing
Retailers have been gaining power and momentum over the past 10-20 years Powerful retailers can make or break a new product
Types of Retailing
Categorize retailers according to extent of managers ownership
Independent retailers
Local florist
Franchises
Jiffy Lube
Types of Retailing
Categorize retailers according to their level of service which tends to be positively related to their price points
Full service
Nordstroms
Limited service
K-mart
Types of Retailers
Categorize retailers according to product assortment
Specialty: carry depth not much breadth
Toy stores
Importance of Operations
Flowcharting operations
Front-stage: elements customers see Back-stage: elements customers do not see
Must be run efficiently to support front-stage
What parts of the process flow smoothly? What parts do not? What parts of the process might be streamlined or eliminated altogether?
Importance of Location
Consider factors needed to be successful
Environmental data
population densities income and social class distributions median ages household composition, etc.
Franchising
Company can retain some control without complete ownership or capital expenditure
Franchisor: the company Franchisee: local owner
Pays fee and royalties
Product franchising
Ford dealer, Coca-Cola bottlers
E-commerce
Retail sales online are about $30 billion
Only about 3% of total retail sales Much potential for growth
Catalog Sales
E-commerce and catalogs are complementary
Many companies use both successfully 83 of the top 100 catalogers saw growth
Catalogs are preferred for browsing Catalogs trigger web visits Customer databases are utilized for customized catalogs, promotions, etc.
Sales Force
Utilized extensively by companies utilizing a push strategy For more undifferentiated products, a companys sales force is its most important driver of its performance