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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 - PowerPoint PPT Presentation
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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
Marketing Co-OpDistribution
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
What is Channel Distribution?
Channels of distribution:• The path a product takes
from its producer (manufacturer to the final user (the customer)
Intermediaries
• Move products from the manufacturer to the final user
• Also known as middlemen
• Classified based on whether or not they take ownership of the product
• Merchant Intermediaries – take ownership
• Agents – do not take ownership
Channel Members
Wholesalers – business that buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses
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
Channel Members
• Drop Shippers – own the goods they sell but do not physically handle the actual products
• EX: coal, lumber, chemicals
Channel Members
Retailers – sell goods to the final consumer for personal use
Channel Members
Brick-and-Mortar – traditional retailers that sell goods to the customer from their own physical store
Channel Members
Non-store Retailing• Automatic Retailing
(vending machines)• Direct Mail• Catalog Retailing• E-tailing (online
retail)• TV home shopping
Agents
• Agents – do not own the goods they sell. They bring buyers and sellers together
Channels in the Consumer Market
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 customers1. Selling products at the production site
Luck Stone – sell stone directly from quarry2. Having a sales force call on consumers
telemarketing3. Using catalogs
Victoria’s Secret4. Using the internet
Channel B
Manufacturer to Retailer to Consumer
• Most commonly used channel for merchandise that dates quickly or needs servicing
Ex: clothing, automobiles, produce
Indirect Distribution- using one or more intermediaries
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
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
Assignment
Read through Chapter 21.1 in the textbook and complete the following questions
Page 453 – questions 1-3Page 459 – questions 3, 4, 5
Use each of these words in a sentence that illustrates your understanding of its definition
Channel of Distribution WholesalersRack Jobbers Direct DistributionDrop Shippers Indirect DistributionBrick and Mortar retailers Industrial markete-tailing Intermediaries
Distribution Review
1. In your own words what is distribution?2. What’s the difference between rack jobbers and
drop shippers?3. What are three different channels a product
could take to get to the consumer?4. Explain the difference between merchant
intermediaries and agents.5. Provide an example of a brick and mortar
retailer and what makes it a brick and mortar store?
Distribution Test Review
1. Explain the difference between direct and indirect distribution.
2. Provide an example of a product that one would buy in an industrial market vs. a consumer market.
3. Define: 1. FOB Destination2. FOB Factory Freight Prepaid3. FOB Shipping Point4. FOB Destination Charges Reverse23
4. What is the key difference between a rack jobber and drop shipper?