The Nature of DistributionThe Nature of Distribution

Distribution’s FunctionDistribution’s Function

The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost.

The “when and where” is the function of Distribution

DistributionDistribution

PRODUCER

CONSUMER

DISTRIBUTION

Channel of DistributionChannel of Distribution

All intermediaries involved in the exchange process

Excludes pre-manufacturing (raw materials or component parts)

Facilitate movement of physical goods and title

PRODUCER

INTERMEDIARIES

CONSUMER

Channel FunctionsChannel Functions

Physical distribution

Communication &transaction

Facilitating

Transporting &storing

Reducingtransactions

Physical Distribution Physical Distribution FunctionsFunctions

Breaking bulk

Accumulating bulkCreating

assortments

Communication & Communication & Transaction FunctionsTransaction Functions

Gather & DisseminateInformation

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24

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Buying & Selling

PersonalSelling

AdvertisingSales

Promotion

Transfer of Ownership

Facilitating FunctionsFacilitating Functions

Extra Services

Credit Services

Risk Taking

Typical Channels of Typical Channels of DistributionDistribution

ANUFACTURER

ONSUMER

HOLESALER

ETAILER

GENT

Business-to-Business Business-to-Business ChannelsChannels

Direct

Wholesaler

Agent

Business-to-Business Business-to-Business Channel TrendsChannel Trends

Infomediaries & Vertical Exchange

Vertical Marketing Vertical Marketing SystemsSystems

Corporate systems - total ownership

Administered - strong leadership

Contractual - legal relationships

Planning the Channel of Planning the Channel of DistributionDistribution

Determining the structureMarketing mix strategyOrganizational resourcesExternal environmental factorsMarket characteristicsConsumer preferences and behaviorThe nature and availability of IntermediariesOther environmental factors

Intensive DistributionIntensive

Distribution

Seeks to obtain maximum

product exposure at the retail level

Seeks to obtain maximum

product exposure at the retail level

ProducerProducer

RetailerRetailer RetailerRetailerRetailerRetailer

RetailerRetailer

RetailerRetailer RetailerRetailer

RetailerRetailer

RetailerRetailer

RetailerRetailer RetailerRetailer RetailerRetailer

RetailerRetailer

RetailerRetailer RetailerRetailer RetailerRetailer

Selective DistributionSelective Distribution

Product is sold in a Product is sold in a limitedlimited number of number of

outletsoutlets

Product is sold in a Product is sold in a limitedlimited number of number of

outletsoutlets

ProducerProducer

RetailerRetailer RetailerRetailerRetailerRetailer

RetailerRetailer RetailerRetailer RetailerRetailer

Product is sold in Product is sold in only only oneone outlet in outlet in

a given areaa given area

Product is sold in Product is sold in only only oneone outlet in outlet in

a given areaa given area

ProducerProducer

RetailerRetailer

Exclusive Distribution

Channel RelationshipsChannel Relationships

Cooperation

Conflict

PowerCoerciveExpertLegitimate

Other Distribution Other Distribution Management IssuesManagement Issues

Reverse distributionOne Coca Cola

Distributor

One thousand retailers

OK

DifficultEthical, Political, &

Legal

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