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
