MANAGEMENT
ESSION
IVE
DISTRIBUTION
Session Objectives
Define what a channel of distribution is and understand its
contribution to efficient and effective marketing effort.
Differentiate between types of intermediary and their
roles.
Appreciate the factors influencing channel design,
structure and strategy and the effect of conflict and
cooperation within channels.
Define logistics, appreciating the importance of customer
service and its implementation within logistics.
Identify the functions involved in logistics and the
decisions contributing to their management.
Types of Intermediary
Franchisees
Retailers
Wholesalers
Agents
and brokers
Distributors
and dealers
Intermediary Definitions
A wholesaler is an intermediary buys
products in bulk,
usually from manufacturers, and resells them
to trade customers, usually small retailers.
A retailer sells direct to the consumer and
may either purchase direct from the
manufacturer or deal with a wholesaler,
depending on purchasing power and volume.
Intermediary Definitions
A distributor or dealer is an intermediary
who adds value through special services
associated with stocking or selling
inventory, credit and after-sales service.
A franchisee holds a contract to supply
and market a product or service to the design
or blue-print of the franchisor (the owner
or originator of the product or service).
Intermediary Definitions
An agent or broker is an intermediary who
has the legal authority to act on behalf
of the manufacturer, although they do
not take legal title to the goods or handle
the product directly in any way.
Number of transactions
Creating bulk
Improving
Efficiency
Between
Producers
&
Consumers
Breaking Bulk
Direct Distribution
1
P
4
P
6
7
8
C
C
5
2
P
C
6
3
P
P = Producer
C = Customer
I = Channel intermediary
Between
Producers
&
Consumers
Breaking Bulk
Number of transactions
Creating bulk
Selling
Servicing
Installation
Improving
Efficiency
Improving
Accessibility
Providing
Specialist
Services
Location
Time
DISTRIBUTION
CHANNELS FOR
CONSUMER GOODS
Producer
Consumer
Producer
Producer
Producer
Agent
Retailer
Consumer
Wholesaler
Retailer
Consumer
Wholesaler
Retailer
Consumer
DISTRIBUTION
CHANNELS FOR
INDUSTRIAL GOODS
Producer
Producer
Producer
Producer
Industrial
Consumer
Agent
Agent
Distributor
Industrial
Consumer
Distributor
Industrial
Consumer
DISTRIBUTION
CHANNELS FOR
SERVICES
Consumer or
Industrial Customer
Service
Provider
Service
Provider
Agent
Consumer or
Industrial Customer
Channel Strategy
Channel
Channel
Strategy
Strategy
Channel
Channel
Selection
Selection
Channel
Channel
Intensity
Intensity
Channel
Strategy
Market
Factors
Channel
Selection
Distribution
Intensity
Competitive
Factors
Lack of ability
Product mix
Control
Product
Factors
Degree of close contact
Cost f product
Perishability
Bulkiness/complexity
Recruit sales-force
Producer owned
Intensive
Channel
Strategy
Distribution
Intensity
Buyer behaviour
Willingness of
intermediaries
Location
Channel
Integration
Producer
Factors
Channel
Selection
Channel
Channel
Integration
Integration
Channel
Integration
Distribution
Selective
Distribution
Exclusive
Distribution
Competition in Channels
Horizontal
Intertype
Vertical
Channel System
Competition in Channels
Horizontal
Retailer
(supermarket)
Retailer
(supermarket)
Agent
Agent
Competition in Channels
Intertype
Retailer
(supermarket)
Retailer
(independent)
Distributor
(full line)
Distributor
(limited line)
Competition in Channels
Vertical
Manufacturer
Wholesaler
Retailer
Competition in Channels
Retailer
(supermarket)
Retailer
(independent)
Distributor
(full line)
Retailer
(independent)
Distributor
(limited line)
Retailer
(independent)
Producer
Producer
Producer
Producer
Producer
Wholesaler
Retailer
Retailer
Consumer
Consumer
Consumer
Channel
Integration
Consumer
Wholesaler
Retailer
Consumer
Distribution
Intensity
Retailer
Wholesaler
Retailer
Channel
Selection
Wholesaler
Wholesaler
Horizontal Channel
Integration
Channel
Strategy
Channel System
Corporate
Contractual
Administered
Conflict Defined
Channel conflict refers to tensions between two
channel members which arise from incompatibility
of actual or desired responses.
Types of Conflict
Manifest
conflict
Underlying
conflict
Power Defined
The power of a buyer or seller is his ability to
control the decision variables in the marketing
or purchasing strategy of another member in the
supply chain.
Source of Power
Reward
Legitimate
Power
Coercive
Referent
Expert
Logistics Defined
Logistics is the process of strategically
managing the movement and storage of
materials, parts, and finished inventory from
suppliers, through the firm and on
to customers.
Transport
Warehousing
Outbound
logistics
processor
Inventory
Information
Customer
service