*

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Distributing
Products
Quickly and
Efficiently

Nickels

McHugh

McGraw-Hill/Irwin
Understanding Business, 8e

*
CHAPTER

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15

McHugh
1-1

15-1

2008 The McGraw-Hill Companies, Inc., All Rights

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Channel of Distribution

Marketing Intermediaries
Wholesaler
Retailer
Agents/Brokers

Role of Intermediaries
Create Efficiency
Value vs. Cost

15-2

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*
*

Distribution Effect on
Your Food Dollar (In cents)

15-3

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*

They All Started in 1962

Company

1st Store

Goal

Wal-Mart

Rogers, Ark.

Slash prices. Makeup

July 1962

difference in volume

Target

Roseville, MN

Discount retailer with

May 1962

strong sense of value

Kmart

Garden City, MI

Bring discount store

concept to suburban
malls

Source: walmart.com, target.com, kmart.com; Business 2.0, June 2003

March 1962

15-4

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*

U.S. and International

Wal-Mart Stores 2006
US
Retail
Units

Wal-Mart
International

Source: Wal-MartFacts.com, 2006

15-5

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Utilities Created by
Intermediaries
Form

Time

Possession

Place

Information

Service

15-6

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*
*

Wholesale
Intermediaries

Merchant Wholesalers
Full-Service
Limited-Function
Rack Jobbers
Cash-and-Carry
Drop Shippers

Agents and Brokers

15-7

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*
*

Retail Distribution Strategy

Intensive
Selective
Exclusive
15-8

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*
*

Identify a Retailer
In Your Area

Supermarket
Convenience

Store
Discount Store

Department

Store
Category Killer

Specialty Store
Factory Outlet
Superstores
Catalog

Showroom
Warehouse club

15-9

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*

Largest Mall in USA

THE MALL OF AMERICA in Bloomington,

Minnesota

Large enough to hold Thirty-two 747s

Four Gap stores
Aquarium
Full-size amusement park
More than 40 million visitors a year
(more than Disney World, Graceland and the Grand Canyon
combined)

Source: The Week magazine, April 2004

15-10

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*

The Wheel of Retailing

4. New Outlet
Enters
Low Price

1. Retail Outlet
Starts
Low
Price

Low
Low Price
Price
Limited
Limited
Service
Service

Low Price
Limited Service
Service
Limited
Out-of-way
Out-of-way
Location
Location

Passage
Of Time

3. Retail
Outlet
Higher
Higher
Higher
Prices
Prices
Higher
Higher
Status
Status

2. Retail
Outlet

Adds
Adds Service
Service

Adds Service
Raises
Raises Prices
Prices
Better
Better
Location
Location

15-11

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*
*

Nonstore Distribution

Electronic retailing
Telemarketing
Vending Machines,
Kiosks, Carts
Direct Selling

Multilevel Marketing
Direct Marketing
15-12

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*
*

Top Internet
Shopping Sites
By Millions of Visitors
in October 2005

Source: Investors Business Daily, November 23, 2005

15-13

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*
*

Top Internet
Comparison-Shopping Sites
By Millions of Visitors
in October, 2005

Source: Investors Business Daily, November 2005

15-14

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10 Ways to Increase
Sales on eBay
1.
2.
3.
4.
5.
6.
7.
8.

Accept multiple payment options.

Take good pictures.
Write detailed, compelling descriptions.
Work to maintain your eBay feedback rating.
Provide good customer service.
Open an eBay Store.
Let them Buy It Now.
Choose Multiple listing categories and upgrade
features.
9. Try shorter auction times.
10. Offer satisfaction guarantees, warranties, or returns.
Source: allbusiness.com, accessed August 9, 2006.

15-15

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Why People Dont

Shop Online

Source: Forrester

15-16

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Channel Cooperation

Corporate

Distribution
Contractual
Distribution
Administered
Distribution
Supply Chain
Management
15-17

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*
*

The Supply Chain

15-18

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*
*

Logistics

Physical Distribution
Inbound
Materials handling
Outbound
Reverse
Information
15-19

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Transportation &
Storage Modes

Railroad
Motor
Vehicles
Water
Pipeline

Air
Intermodal
Warehousing
Storage
Distribution
15-20