The Nature of Distribution

Channels
Distribution Channel – is a set of
interdependent organization
involved in the process of making a
product or service available for use
or consumption by the consumer or
business user.
 Why are Marketing
Intermediaries used?
The use of intermediaries result from their
greater efficiency in making goods available to
target markets.
Offers the firm more than it can achieve on its
own through the intermediaries:
Contacts
Experience
Specialization
Scale of Operation
Intermediaries play an important role in
matching supply and demand.

Producers produce narrow assortsments, but

consumers want broad assortments.
Intermediaries buy large quantities of many
producers and break them down into the
smaller quantities preferred by consumers.
 Distribution Channel
Function
Distribution Channel – moves goods from producers
to consumers. It overcomes the major time,place and
possesion gaps that separate and services from those
who would used them.
Members of the marketing channel:
- Information
- Promotion
- Establishing contact
- Matching buyers with sellers
- Negotiation
Others
(Physical distribution,Financing,Risk-taking)
Number of Channels Levels
Channel level – is a layer of middlemen that
performs some work in bringing the product and its
ownership closer to the final buyer.|

Direct Marketing Channel- Where is there are no

intermediary levels between manufacturer and
consumer.

Indirect Marketing Channel – Where there can be

numerous and a variety of intermediares involved in
bringing the good or service from the manufacturer to
the consumer or business customer.
RETAILING AND
WHOLESAILING
Retailing – It includes all the activities
involved in selling goods or services
directly to final consumer for their
personal, non business use.
Types of Retailers
AMOUNT OF SERVICE
self service, Limited service
and full service retailer
PRODUCT LINE
length and breadth of the
product assortment.
RELATIVE PRICES
Pricing structure that is used
by the retailers
RETAIL ORGANIZATION
independent,corporate,or
contractual ownership
organization.
 Retailers can offer three
levels of services:
SELF-SERVICE RETAILER – are retailer provide few
or no services to shoppers. Shoppers perform their
own location.
a. Self-service is the basis of all discount performance.
b. It is typically used by sellers of convenience goods
and nationally branded, fast moving shopping goods.
LIMITED SERVICE RETAILER -are retailers that
provide only a limited number if services to shoppers.
a. They carry more shopping goods about which
consumers need information.
b. Their increased operating cost result in higher
prices
FULL-SERVICE RETAILER - Are retailers that provide
a full range of services to shoppers.

a. These stores usually carry more specialty goods and

slower-moving items.
b. Personnel assists customers in the buying process.
c. They provide many services which result in higher
operating costs that are usually passed on to the
customer as higher prices.
 Classification of Retailing
Product Line
Retailers can also be classified based on the length
and breadth of their product assortments.

Specialty Store
 Department Stores
Supermarkets
Convenience Stores
Superstores
SPECIALTY STORE - carry narrow product lines with a
deep assortment within that line. These stores seem to
be flourishing because of the increasing use of market
segmentation ,market targeting and product
specialization.
DEPARTMENT STORE- are retail organizations that
carry a wide variety of product lines such as clothing,
home furnishing and house hold goods.
SUPERMARKETS -are large, low-cost, low-margin,
high- volume, self-service stores that carry a wide
variety of food, laundry, and household products.
CONVENIENCE STORE - Is a retail store located near a
residential area, opens long hours, seven days a week
and carries a limited line of high-turnover convenience
goods.
SUPERSTORES - Are stores almost twice the size of regular
supermarkets.They carry large assortment of routinely
purchased food and nonfood items and offer such services
as dry- cleaning, post-office, photo finishing, check cashing,
bill paying, etc.

RETAILERS ACCORDING TO THEIR RELATIVE PRICES:

DISCOUNT STORE - Sells standard merchandise

at lower prices by accepting lower margins and
selling higher volume.
OFF-PRICE RETAILERS -buy at less than regular
wholesale prices and sell at less than retail, usually
carrying a changing and unstable collection of higher-
quality merchandize.

Primary Types:

- Independent off-price retailers

- Factory Outlet
- Warehouse clubs or wholesale clubs or membership
warehouse.
Classification of retailing – retail
Organization
Corporate Chain - two or more outlets commonly
owned and controlled.
Voluntary Chain - wholesaler-sponsored group of
independent retailers.
 Retailer Corporation - a group of independent
retailers that bands together to set up jointly owned
central wholesale operation.
Franchise Organization - contractual association
between a manufacturer, wholesaler, or service
organization.
Merchandising Conglomerates - combine several
different retailing forms under central ownership.
Retailer Marketing Decision
1. The retailer’s product assortment must match target
shoppers expectation.

2. A retailer’s price policy is a crucial positioning factor

and must be decided in relation to target market,
product and service assortment and competition.

3.The promotion decision involves deciding among the

normal promotion tools of advertising personal selling
,sales promotion, and public relations to reach
customers.
Place Decision

Location is the key to the retailer’s ability to attract

customers. The cost of the right location are a significant
part of the retailer’s overall expense consideration.
Most stores today cluster to increase their ability to pull in
consumers. And give them the convenience of one- stop
shopping.
 Forms of Clustering
CENTRAL BUSINESS DISTRICT - problems have occurred
with this form for several years due to consumers moving to
the suburbs. Some central business districts are making
comebacks by using tactics that have successful for shopping
malls.
SHOPPING CENTER - this is a group of retail businesses
planned, developed, owned, and managed as unit.
1. Regional shopping center - is the largest and most
dramatic shopping center. It generally contains between 40-
200 store and attracts customers from a wide area.
2. Community shopping center - contains between 15-40
retail stores.
3. Neighborhood shopping center- generally contains
between 5-15 stores and is close and convenient for
consumers. These centers are also called strip-malls.
 Wholesailing
The activities involved in selling goods and services to
those buying for resale or business use.

Wholesalers – are those engaged primarily in

wholesaling activity.
 Channel Functions of
Wholesalers
1. SELLING AND PROMOTING –
wholesalers help one another in reaching out to
members of the channels.
2. BUYING AND ASSORTMENT BUILDING -
wholesalers save their customers much work
3. BULK-BREAKING - wholesalers break large
lots into small quantities as s service for their
customers.
4.WAREHOUSING - wholesalers hold
inventories thereby reducing their customer’s
risk.
5. TRANSPORTATION - wholesalers provide quick
delivery

6.FINANCING - wholesalers finance inventories for

their customers thereby moving the risk away from
the manufacturing.
7. Risk-bearing - wholesalers absorb risk by taking
title to the goods they posses.
8.Market information -wholesalers give
information about market condition to customers.
9. Management services and advice - wholesalers
help their customers with the training function and
show them how to attract display
merchandise,promote merchandise and establish
inventory control systems.
 Three Major Types Of Wholesalers

1.Merchant wholesalers - independently owned

businesses that takes title to the merchandise they
handle.
1. full-service wholesalers
2. limited service wholesalers
2. Brokers and agents – don’t take title to the goods
and perform only a few functions.
3.Manufacturer’s sale branch and office- wholesaling
by sellers or buyers themselves rather than through
independent wholesalers.
 Wholesalers define their targets groups by
examining and classifying:

1. Size of customer
2.Type of customer
3. Need for service
4. By other means
 Marketing Logistics and Supply chain
Management

Marketing Logistics (Physical Distribution) - involves

the tasks of planning, implementing, and controlling the
physical flow of materials and final goods from points of
use to meet the needs of customers at a profit.

List and briefly discuss the marketing channel functions

to the right customers in the right place at the right
time.
It addresses:
- Outbound distribution
- Inbound distribution
- Reverse distribution
- Entire supply management
 MAJOR LOGISTIC
FUNCTIONS
1. ORDER PROCESSING- minimize cost of attaining
logistics objectives
2. WAREHOUSING- storage, distribution automated
3. INVENTORY- when to order, how much to order just-
in-time.
4. TRANSPORTATION- carriers affects the pricing of
the products, delivery performance, and condition of
the goods when they arrive.
INTEGRATED SUPPLY AND CHAIN - is the logistics
concept that emphasizes teamwork, both inside the
company and among all the marketing channel
organizations, to maximize the performance of the entire
distribution system.
Integrated Logistics Management - Recognizes
that providing better customer service and trimming
distribution costs requires Teamwork, both inside the
company and among all the marketing channel
organizations.
Involves
-cross-functional teamwork inside the company
- building channel partnership
- thirty-party logistics
THANK YOU! 