distribution unit
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DISTRIBUTION UNIT. Diagnostic - pre-test 3/10 – Explain the concept of Distribution Understand basic distribution concepts and channels Identify multiple types of distribution and the channel members. Distribution. Marketing Co-Op. What is Distribution?. Making the “place” decision - PowerPoint PPT PresentationTRANSCRIPT
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DISTRIBUTION UNIT
• Diagnostic - pre-test
• 3/10 – Explain the concept of Distribution• Understand basic distribution concepts and channels• Identify multiple types of distribution and the channel
members
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Marketing Co-OpDistribution
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What is Distribution?
• Making the “place” decision • Getting the product into the
customers hands
Concepts of Distribution:• In order for distribution to occur,
marketers must decide on their “channels of distribution” or how they will get the product to the customer
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What is Channel Distribution?
Channels of distribution:• The path a product takes
from its producer (manufacturer to the final user (the customer)
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Intermediaries
• Move products from the manufacturer to the final user
• Also known as middlemen
• Classified based on whether or not they take ownership of the product
• Merchant Intermediaries – take ownership
• Agents – do not take ownership
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Channel Members
Wholesalers – business that buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses
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Channel Members
• Rack Jobbers – wholesalers that manage inventory and merchandising for retailers by counting stock, filling it in when needed, and maintaining store displays
• Ex: potato chips, CDs, greeting cards
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Channel Members
• Drop Shippers – own the goods they sell but do not physically handle the actual products
• EX: coal, lumber, chemicals
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Channel Members
Retailers – sell goods to the final consumer for personal use
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Channel Members
Brick-and-Mortar – traditional retailers that sell goods to the customer from their own physical store
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Channel Members
Non-store Retailing• Automatic Retailing
(vending machines)• Direct Mail• Catalog Retailing• E-tailing (online
retail)• TV home shopping
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Agents
• Agents – do not own the goods they sell. They bring buyers and sellers together
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Channels in the Consumer Market
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Channel A
Manufacturer/Producer Directly to Consumer
Direct distribution – sales of goods or services directly to the customer, with no intermediaries
Ways to sell directly to customers1. Selling products at the production site
Luck Stone – sell stone directly from quarry2. Having a sales force call on consumers
telemarketing3. Using catalogs
Victoria’s Secret4. Using the internet
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Channel B
Manufacturer to Retailer to Consumer
• Most commonly used channel for merchandise that dates quickly or needs servicing
Ex: clothing, automobiles, produce
Indirect Distribution- using one or more intermediaries
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Channel C
• Manufacturer/Producer to Wholesaler to Retailer to Consumer
• Most common distribution method for staple goods, which are items that are always carried in stock and whose styles do not change frequently
EX: flowers, non-perishable food items, candy
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Industrial Market
Industrial Market –buy products to use in their operations; also called the business-to-business market
Industrial users have different needs than retail users• Direct distribution (the least
common channel in the consumer market) is the most common in the industrial market
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Assignment
Read through Chapter 21.1 in the textbook and complete the following questions
Page 453 – questions 1-3Page 459 – questions 3, 4, 5
Use each of these words in a sentence that illustrates your understanding of its definition
Channel of Distribution WholesalersRack Jobbers Direct DistributionDrop Shippers Indirect DistributionBrick and Mortar retailers Industrial markete-tailing Intermediaries
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Distribution Review
1. In your own words what is distribution?2. What’s the difference between rack jobbers and
drop shippers?3. What are three different channels a product
could take to get to the consumer?4. Explain the difference between merchant
intermediaries and agents.5. Provide an example of a brick and mortar
retailer and what makes it a brick and mortar store?
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Distribution Test Review
1. Explain the difference between direct and indirect distribution.
2. Provide an example of a product that one would buy in an industrial market vs. a consumer market.
3. Define: 1. FOB Destination2. FOB Factory Freight Prepaid3. FOB Shipping Point4. FOB Destination Charges Reverse23
4. What is the key difference between a rack jobber and drop shipper?