3 C's of Distribution

Corporate VMS

1 company/owner decides to manufacture AND distribute a product

Administered VMS

1 entity is significantly larger or more important to success than others, and therefore almost force competition

Examples of Retailers (3)

1. Best Buy 2. Walmart 3. Home Depot

3 C's of Distribution

1. Control 2. Coverage 3. Conflict

3 Forms of VMS

1. Corporate 2. Contractual 3. Administered

2 Examples of Wholesalers

1. Costco 2. Sams Club

3 Types of Marketing Channels

1. Direct Marketing 2. One-Level Channel 3. Two-Level Channel

3 Types of Coverage Strategies

1. Intensive Distribution 2. Selective Distribution 3. Exclusive Distribution

5 Key Functions of Physical Distribution

1. Order processing 2. Inventory Management 3. Materials Handling 4. Warehousing 5. Transportation

7 Functions of Wholesalers

1. Provide Sales 2. Provide Warehousing 3. Provide Promotion 4. Provide Physical Delivery 5. Provide Bulk Breaking 6. Provide Assortment Building 7. Provide Financing

Supply-Chain Management Goals (5)

1. Satisfy Customers 2. Sourcing 3. Planning 4. Relationship Delivery 5. Facilitation Delivery

5 Forms of Direct Marketing

1. Telecommunications 2. TV Home Shopping 3. Catelogs 4. Online Retailing 5. Direct Response Marketing

2 Types of Conflict

1. Vertical 2. Horizontal

2 Levels of Channel Integration

1. Vertical Marketing System (VMS) 2. Horizontal Marketing System (HMS)

2 Types of Resellers

1. Wholesalers 2. Retailers

Physical Distribution

Actual movement of product from Pt A to Pt B

Supply Chain

All activities associated with flow & transformation of product to end customer

Intensive Distribution

Be in as many places as possible Using all available outlets for distributing a product

Conflict

Between various levels of chains (wholesalers, retailers)

Resellers

Buy finished products to resell for profit

Contractual VMS

Channel members are linked by legal agreements

Horizontal Marketing System (HMS)

Combining organizations at same level of operation under 1 management

Wholesaling

Companies that facilitate promotion and movement of product between manufacturer and retailers

Coverage

Company tries to cover the market

Control

Company wants to maintain control over pricing

Vertical Conflict

Conflict between 2 marketing channels at different levels

Horizontal Conflict

Conflict between 2 or more marketing channels at same levels

Example of Horizontal Conflict

Conflict between 2 wholesalers

Example of Vertical Conflict

Conflict between a wholesaler and manufacturer

Selective Distribution - Good amount of ___, and good amount of ____

Control and Coverage

Example of products distributed under Intensive Distribution

Convenience products (gum, bread, milk)

Order Processing

Dealing with receipts from sales order information

Role of Channel Members

Deliver product at right time, right place, in right quantities

Warehousing

Design/operation of facilities for storing and moving goods

Inventory Management

Developing and maintaining adequate assortments of products to meet customer needs

Channel Captain

Dominant leader of a marketing channel

Example of Direct Selling

Door-to-Door

Example of Administered MS

Footlocker has to do what Nike says, because they won't exist without Nike

Example of Contractual VMS

Franchise like McDonalds

Marketing Channels

Group of individuals/organizations directing product from producers to customers

Transportation

How product is going to move from Pt A to Pt B. Plane? Bus? Rail? Boat?

Example of Corporate VMS

Levi Strauss owns Gap, BR, Old Navy

Supply-Chain Management

Long-term relationships among marketing channel members that reduce inefficiencies, costs, and redundancies

Direct Marketing is most desirable in...

Maintaining control

Example of HMS

Marathon and Subway in same place

Vertical Marketing System (VMS)

Marketing channel managed by a single channel member to achieve efficient, low-cost distribution "Common control/ownership"

Direct Selling

Marketing products face-to-face

Producers pricing is built in... with 2-level - ___ ____ with 1-level - ___ ____ with direct marketing - ___ ____

More Expensive Less Expensive More Profit

Materials Handling

Movement of product within physical location

Coverage

Number and kinds of outlets in which a product will be sold

One-Level Channel Definition

One level comes between producer and consumer

Exclusive Distribution

Only 1 outlet for selling in a relatively large geographic area

Channel Integration

Partnership with those who sell our product Various channel stages are combined under management of a channel captain

Channel Power

Power Struggle When 1 marketing channel has ability to influence others

Drawing of Two-Level Channel

Producer --->Wholesaler--->Retailer--->Consumer

Drawing of Direct Marketing

Producers ----->Consumers

Drawing of One-Level Channel

Producers ---->Retailers--->Consumers

Direct Marketing Definition

Product goes directly from producer to consumer

Example of Conflict

Sara dealership gives bad service on a sale of a Toyota car

Retailing

Selling to end customer for personal/household use Provide actual location for customer to buy product

Example of Selective Distribution

Shopping Products

Assortment Building

Taking units from bulk breaking and combining with other products to develop an assortment

Wholesalers do everythng to... and deal mainly with...

To keep costs down Business customers

What does placement do?

Tries to find a balance between the 3 C's

Definition of Two-Level Channel

Two levels coming between producer and consumer

Direct Marketing

Use of phone, internet, media, to introduce product to consumers who buy them through email, phone, internet

Selective Distribution

Using only some available outlets to distribute a product Select who we want to cover our market, who we want to deal with

Bulk Breaking

Wholesalers buying in large lots and breaking them down into smaller units

Financing

Wholesalers do everything to keep costs down, then provide financing to collect on the interest

Intensive Distribution is good for products with...

With high replacement rate With no service requirements

To be exclusive, product needs to...

be in high demand so that resellers want to be exclusive to you