Topic 15: Distribution Strategy

List all the benefits of intermediaries

(1) transport the goods to consumers less expensively, (2) sell the goods to retailers more easily, or (3) sell the goods to a large group of consumers that already purchase from them.

Describe retailing from the perspective of a product manufacturer

(1) which (products) to stock, (2) where to locate stores and with which operating hours (place), (3) how to (price) products and services, (4) how to (promote) store patronage and loyalty, (5) how to configure brick and mortar stores as well as online stores (presentation), and (6) whom to hire and how to engage employees (personnel).

Recall how channel members add value through increasing customer benefits or reducing costs

-Product Benefits: enhance product quality, breaking bulk, provide variety of products -Service Benefits: providing a variety of added-value activities, such as inventory, promotion, payment terms, credit, delivery, installation, training, technical support, repair, consulting, and warranty. -Image Benefits: n build the brand image by selecting channel partners that reflect or enhance the brand. -Non-Price Costs: create increased efficiency, and thus, lower costs of exchange by reducing the number of transactions between producers and consumers.

Direct Distribution Channel

manufacturers sell products directly to consumers with no intermediaries. ex) internet sales

Indirect Distribution Channel

manufacturers sell products to customers through intermediaries, such as distributors, wholesalers, original equipment manufacturers (OEMs), and retailers. Manufacturers may choose to use an indirect distribution channel in situations where it is not efficient to sell directly to consumers.

Describe the four ways channels create value for customers

marketing channels enable the firm to create value for their chosen customers through four utilities: time, place, form, and possession. Marketers increase "time utility" for their customers by making the product available at a convenient time. Marketers increase "place utility" for their customers by making products available at a convenient location. Marketers increase "form utility" for their customers by making the product available in the form consumers want. Marketers increase "possession utility" for their customers by transferring product ownership to the customer.

Selective distribution

occurs when a company sells its product(s) through a limited number of qualified retailers and requires companies to take an active role in vetting and deciding on appropriate retailers. Selective distribution, in general, supports higher prices than intensive distribution.

Intensive distribution

occurs when a company sells its product(s) through as many retailers as possible. Marketers seek to make the product available in every outlet where customers might want to buy it. Convenience goods, such as packaged candy or soda pop, are generally good candidates for intensive distribution.

Exclusive distribution

occurs when a company sells its product(s) through only a few retailers. The retailer has the exclusive right to distribute the product in a specific geographic area. Exclusive distribution limits the total sales units of a product but provides the setting, service, and exclusivity needed to support super-premium prices. Exclusive distributors create selling environments that complement and potentially enhance the personalities of the brands they sell.

Mixed Distribution Channel

use a combination of direct and indirect sales.